Thursday, August 7, 2014

Gold Complex Trade- A Positive Risk/Reward Set Up

Every now and then I will present to you the timing and risk-based modes I employ to assist in my decision making in the gold and precious metal investment complex, sometimes to highlight a trade, my thinking as it concerns the metal markets, general trends in the precious metal complex, and what not. Now, we are starting to see a positive bull confirmation in the results.

Over the last few months when I have spoke to the models, you must have thought I have sounded like a broken record, as the models have generally remained in negative territory (which for any new reader, a negative indication on the models suggest positive future price performance in the precious metal equities) It no different presently, as the three model calculations I employ hover around -1 to various degrees. Just look below.

6-Month Model, Present results; -0.8

1-Year Model, -0.7

Long-Term Model, -1

What has changed is that the risk model has flipped from a negative (here negative numbers indicate worse future performance relative to less negative and positive results) indication to just over the 0 demarcation.  Again, look at the below chart.

Risk Model- 0

These results are suggesting investors should position themselves in a positive investment stance in the precious metal complex. Although I do have concern that present geo-political  tensions will add to volatility, I also think that the turn in the risk model and positive buy signals in the timing models in conjunction with positive techincal indications in the precious metal shares (for instance, see RGLD) suggest a positive risk/reward environment in the metal investment complex.

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