Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

General Outlook for Gold and the Mining Stocks

Commodities / Gold & Silver Stocks Aug 04, 2012 - 07:12 AM GMT

By: Vin_Maru

Commodities

Best Financial Markets Analysis ArticleGeneral Outlook for Gold and the Miners - It is our firm belief that the precious metals sector has bottomed out and the downside is very limited from here on out.  While there doesn’t seem to be an immediate rush back into the sector, now is a great time to be acquiring physical metals, but more importantly producers with growth profiles. That’s where we really see the value and upside potential.  Now would be a good time to start adding and scaling into any new positions you plan on taking.


If we would have to make a speculative/educated guess/evaluation, by looking at the charts and fundamentals for precious metals and the miners, we believe that the worst is over.  We are fairly certain that we have seen the bottom over this past summer and building a good position in the physical, ETFs, and select miners right now is looking very promising.

Support has pretty much held throughout the summer and it’s looking good going into the fall.  While we still may see one more down wave, it would be more of a fake breakdown below support just to scare the remaining weak hands.  If that happens, I would think backing up the truck is a good idea, and start getting aggressive in adding exposure to the sector.  Buying at support around $1570 is a good place to start adding to positions.  Over the next few weeks we expect gold to trade around $1600 (+ or - $30) in a sideways trading range.

The HUI is still lagging gold, but a solid base under 400 has been building and it looks like a good time to add at support around 390.  If you look at the chart below, it started a major correction back at the beginning of March (when we suggested selling) and made a bottom in the middle of May.  Since then the index has traded sideways between 390 and 460.  A particular item to note on the chart is a 3 fan formation that seems to be developing since March.  If the summer lows and support holds at 390, then a re-test of 420 and the 50 dma should come soon, this happens to be the top of 2nd fan line.  If it crosses above the 2nd fan line and holds above the 50 dma, it could trigger a move to 460 and overhead resistance, with a possible move to the 200 dma at 485.  This is something we will watch for and take one day at a time.

Juicing Profits with Covered Calls on the Senior Producers

If you are interested in options strategies for a flat market, you may want to consider writing calls against the shares you currently own or if you plan on take a position in the senior producers over the next few weeks.   This is great way to squeeze some extra money out of the market by writing covered calls while still maintaining a position in your favourite seniors.

If you own or are buying shares in major producers (which is a good idea as long as PM stay flat), make some extra money by selling call options slightly higher than market price (up to 20% higher is a good price) with a covered call option strategy.  This way you get to own the stock, collect dividends if the producer pays them and then collect the premiums by selling the calls.  If the stock breaks above the call strike price, you have the shares to deliver, and can still buy back your position at spot or wait for a slight pull back.

If you are unfamiliar with the covered call strategy, you can learn more about it by a simple google search or by visiting the Investopedia site discussing covered calls, below is a brief description from their site.

Definition of 'Covered Call'

An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset in an attempt to generate increased income from the asset. This is often employed when an investor has a short-term neutral view on the asset and for this reason hold the asset long and simultaneously have a short position via the option to generate income from the option premium.

Summary of Strategy

Our subscribers have been provided some good ideas for buying several senior producers.  There are many small to mid size producers which we also like and a few great exploration plays that are also on our radar.  Over the next few weeks, we will provide some additional companies which also merit owning a position in.  While it may not be feasible to buy shares in all these companies, you should create a basket of producers and exploration companies in your own portfolio.  At the moment, all the producers have great value (even if you bought at today’s prices) and most will do very well in the next few years.  You could literally throw a dart and pick anyone of the majors and they will all raise in share price once gold starts rising.  Our goal is to help find the ones that have greater upside potential and organic growth.

If you are familiar with options trading, you should consider buying some call options in many of the majors.  If you are very knowledgeable about options, consider the covered call strategy we just suggested with several of the majors that don’t have a great growth profile in the next year.  With a covered call, you want the stock to sit sideways while you collect the premiums for selling the calls.  If you don’t understand covered calls, we suggest you stay away from them or ask before you initiate this strategy.

For the moment, we suggest slowly picking away at the junior and explorers as they are usually the last to rise in price in a normal cyclical move higher in precious metals.  Could this time be any different?  Absolutely, they have become so cheap that many are trading for cash value and very little value is given to proven reserves.  This could change at any time and this is something we will watch for when all boats start rising with the coming tide into gold and the miners.  We feel that tide is coming soon and you want to be positioned to ride the wave once it does arrive, and looking out on the horizon all we can say is: SURF’S UP.

If you enjoyed reading this article and are interested in protecting your wealth with precious metals, you can receive our free blog by visiting TDV Golden Trader

The Dollar Vigilante is a free-market financial newsletter focused on covering all aspects of the ongoing financial collapse. The newsletter has news, information and analysis on investments for safety and for profit during the collapse including investments in gold, silver, energy and agriculture commodities and publicly traded stocks. As well, the newsletter covers other aspects including expatriation, both financially and physically and news and info on health, safety and other ways to survive the coming collapse of the US Dollar safely and comfortably. The Dollar Vigilante offers a free newsletter at DollarVigilante.com.

© 2012 Copyright Vin Maru- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules