Friday, November 30, 2012

All That Glitters- Gold Stock Timing Models Remain Mixed

The timing models are showing some improvement this week, as the price of gold has declined, following the shares of gold and precious metal stocks lower. This is as money supply is stabilizing in, for now, around the $10.3 trillion for M2 money supply. The current reading on the timing models are more in a hold/weak buy mode with the 3-month model showing the most positive indicator at -0.99. The one year model estimate is currently coming in at a -0.12 while the 6-month model is slightly above the zero demarcation at 0.11. The following are the graphs of the three models vs. the Phily Gold/Silver Index through the current weak.

3-month model

1-year model

6-month model


It remains my opinion that investors should continue to wait for a better buying opportunity in gold and precious metal shares. This opinion is based on the mixed signals in the timing models and what I see as a negative setup in gold and gold stock index price charts. However, I would expect some volatility in gold and precious metal shares around the discussion and news flow surrounding the fiscal cliff.



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