As we approach the end of the year traditional tax loss selling with be evident in many of the resource shares. This has been a terrible year on balance for these companies and it is reasonable to expect more pain as we approach year end.

However, this should be the last move down before this sector takes off to the upside, a move that has been much awaited by most of the analysts and newsletter writers.

Looking at the gold chart below, gold is looking to break out and a good chance it will be to the upside. We are forming a big triangle and have tested both the upper limits and lower limits.

But our belief is gold will test the bottom trend line once again before the upside breakout probably coming in January.

Events in Europe will surely dictate movements in all of the markets and the chart of the HUI (Gold Bugs Index) is even more complex for resource shares.

‘Playing’ the markets is very difficult and investors should focus on quality shares with a longer term view. Ignore the trader mentality you hear on the popular TV programs and stick with the more traditional investment strategy of buying quality shares for the long term.

No one analyst or newsletter writer has this figured out and it is up to investors to decide their risk tolerance and selection of companies in which to invest.

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6 December 2011
The Greedy Guru
Website: TheGreedyGuru.com
Email: support@TheGreedyGuru.com

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