Gold Stocks Are Turning Up - Mike Swanson (04/13/12)


Something funny is happening in the mining stock world. Gold and gold stocks have been in a correction since last September and it has gone on for so long that many people are giving up on them just as it appears that this correction may be coming to an end.

Just a few days ago the well respected commentator Dennis Gartman declared on CNBC that the gold bull market that began ten years ago is over. His reasoning - the recent FOMC minutes release proves that “the game has changed.”

He is not the only one negative on gold. Jonathan Hoenig, who appears on FOX News as the "capitalist pig" also warned yesterday that gold would continue to fall and punish gold bugs.

But in reality this looks to me the time to be buying gold and I just put my money where my mouth is by buying back into a big basket of gold stocks Wednesday morning. I sent the buy list to my private Power Investor members and did a podcast with Dave Skarica talking about gold.

And yesterday gold stocks did indeed turn up off of their recent lows.

On a short-term basis yesterday's move came after gold stocks became oversold on a daily chart and most of them time when they get in this position and move like this they at least rally for a few days, but I think this rally is going to end up being an important bottom, which would make buying now a great investment.

I it is the long-term chart that makes me think this.

Over the past ten years there have been five times in which the HUI and XAU gold stock indices have fallen below their long-term 200-day Bollinger Bands. Each of these drops have made for fantastic buy points in the gold secular bull market.

Unless Dennis Gartman and the other bears are right then this moment in time will also mark another wonderful buy point in gold stocks - the kind that only comes around a couple of years.

Now if you are familiar with my writings and my book Strategic Stock Trading this may look to be a different way of buying stocks than I normally advocate, because I often talk about buying stocks at the end of a big consolidation phase and before a big bull run starts when the long-term 200-day Bollinger Bands get very narrow.
This is a good way to time a new bull run.

But you can also use these long-term bands as major buy points when a market falls below them to accumulate positions. That is what I'm advocating to do with mining shares now.

To listen to the podcast I did with Dave the other day "click here.

for more:

Podcast: I Talk About My Purchase of Gold Stocks Today with Dave Skarica - Mike Swanson (04/11/12)

When Is A Good Time to Buy Mining Stocks And The Gold Market Vectors ETF Trust (NYSEARCA:GDX)? - Mike Swanson (04/10/12)

Why I'm Excited About Trading Rand Logistics Limited (NASDAQ: RLOG) - Mike Swanson (04/08/12)

Podcast: David Morgan Talks About the Current Correction in Mining Stocks and The Opportunities to Invest Now - Mike Swanson (04/05/12)

Podcast: Jordan Roy-Byrne of TheDailyGold.Com Talks About Capitulation Selling in Gold Stocks - Mike Swanson (04/05/12)

Podcast: Are Gold Stocks A Coiled Spring Ready to Explode? - With Dave Skarica of AddictedtoProfits.net - Mike Swanson (04/03/12)

Comments

did you mean Gartman said bull market, Mike?

Charlie

Yes, Gartman said bull market and the good news is that he is usualy wrong.

Check out this article from ETF Daily News. I particularly like the long term gold chart annotated with Gartman's pontifications.

http://etfdailynews.com/2012/04/12/dennis-gartman-is-a-fraud-in-yen-term...

GDX has been moving up after it hits the 200 day Bollinger Band. For the last several cycles the prices have been making lower highs and lower lows. Do you think we will continue the lower highs and lower lows? Yesterday EGO came out with projected gold prices for tne next several years. Prices went from $1650 down to about $1300 in the next 5-6 years. During the Q & A session no one ask sbout the price projection. What to do?

Dick

Dick M


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