Friday, November 2, 2012

All that glitters- buying opportunity is developing in precious metal stocks

I am beginning to see a buying opportunity develop in the precious metal stocks. Despite lower than expected money supply, which according to the forecasting model used results in a step down in money supply estimates, the timing models improved in the latest week. This is a result of the pullback in the price of gold, which as of this writing is down more than 2%, declining past the $1,700 per ounce price point. Similarly, the price of the Gold Spider ETF (ticker GLD) is down a similar amount and is plumbing its 200-day moving average.


As for the latest models, the 1-year model registered in at a -0.55 in the latest week, down more than 0.5 points from the revised -0.03 last week.

 
As for the 6-month model, the model turned decisively negative (or positive as a timing tool), falling nearly -0.70 points to -0.08 from more than 0.6 last week. The model has finally fallen below the 0.


Lastly, the more volatile 3-month model fell by the most of the three timing tools, declining 0.80 points over the week to -0.82.



I think we are at an interesting juncture. All three models are in a semi-buyable range. I say semi as I would prefer a stronger signal, but you can't get everything you want. In addition, both the GLD and the Market Vectors Gold miners ETF (ticker GDX) are probing their respective 200-day moving averages. I would watch Monday's trading closely to gauge if we are close to buy point in the precious metal stocks or the semi-buyable entry point becomes "more favorable".

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