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I’ve
taken the last few weekends mostly off and skipped out on the free weekend
letter. I’ve got no particular reason for it, I just felt like I needed
a little break to enjoy friends and family and the unbelievable weather
we’re having this summer.
I’ll
likely take a few more off as well but I thought I’d get one out this
weekend as this particular Saturday mornings is pretty slow, at least after a
family breakfast and couple hours of playtime with four of my really cool fun
little nephews.
The
markets have been mostly taking some time off as well as they are not
trending up, or down, rather they are relatively rangebound
which is good for short-term trading which we’ve been taking advantage
of when we can.
Let’s
take a look at the precious metals charts whom are building out nice bases
still and in this time they are basically doing what I’ve been doing,
resting and taking some time off getting ready for a massive push.
Metals review
Gold
fell 0.85% this past week after hitting a resistance level just under the
$1,640 level.
We
took a trade in GLD on the breakout above $1,600 and sold around the top. Now
we are looking to enter another GLD trading position for a few months as the
seasonal time for gold to move up begins now and the stars seem to be aligned
for gold.
That
being said we always have to use stops and in this type of market, tighter
stops are best with uncertainly and rhetoric coming out of Europe still while
most anyone who’s voice seems to matters is on
the beach, but they are still talking.
Perhaps
they are a few sangria’s in and have more bravery than normal, hence
the bold talk of saving the Euro and the whole system in general.
The
buzz will soon wear off and the hangover is going to be massive.
Gold
is holding its support area and heading higher now and I’m looking for
a possible entry point.
Volume
in both the GLD ETF and the futures has been heaviest on days lower which has
me cautious on a trading basis. I’d prefer to see a little
consolidation and then maybe take a trade on a break above $1,635 or so.
Silver
rose 0.22% this past week and has much the same chart as gold right now. We
also traded SLV on it’s
breakout and then sold pretty near the top. I’d have much preferred to
see a larger move out of both gold and silver but it wasn’t to be, yet.
We’re
getting close to the start of a big move from what I can see and I wouldn't
mind taking a ride with a few trading positions.
Volume
has been higher on down days than up days for both the SLV ETF and the silver
futures which means there are more sellers than
buyers still.
As
long as silver can remain above $27 we should be good. It’s definitely
time to fill up the rest of your allocation for physical gold and silver.
Platinum
fell by 0.25% this past week and is nearing the end of this large triangle
pattern. The $1,385 area is strong support thus far while the breakout point
on the upside is the $1,430 level for now.
Any
upside breakout should see a very quick move to the 100 day moving average
which coincides with chart resistance at the $1,500 level.
Volume
is strongest on down days so far in both the PPLT ETF along with the futures
market. Any break needs high volume to confirm the move.
Palladium
rose 0.87% for the week past and is also in a large triangle pattern which is
getting close to a resolution.
I
know these consolidation pattern can be boring and
take time but they are what is needed for the big moves.
The
longer the base the larger the move to come. Enjoy the time off and lack of
volatility, it will be back before we know it, but hopefully not until the
sun and warmth have gone.
The
$560 level is support while a breakout above the $590 level would be a buy
signal as long as volume is strong.
Volume
in the futures is pretty stable here in this base building process while the
PALL ETF saw heavy volume as palladium topped out Tuesday and fell the
Wednesday and Thursday.
Fundamental Review
Some
of the biggest news lately has been the recent high frequency trading errors which cause over $440
million in quick losses to the company involved.
It’s
a dangerous space which literally profits off of us. Every single trade we
make these high frequency computers steal, yes steal, pennies off of us in
between the bid and ask price.
It’s
not a lot to us, but to them it adds up to huge gains over the space of a day
when they can do thousands of trades or in many cases hundreds of thousands.
These
high frequency computers make our job a little harder but a sound trading
plan and excellent entries and exits still trump them and make much more
money on a single trade.
The
market isn’t great for swing trading right now but these large bases
are leading to some huge moves coming in the not to
distant future.
One
of the most important and key abilities of a good trader is to be able to
recognize and sit out these periods and wait for the trend to emerge where
the big money can be made.
South
Korea has joined other central banks and bought 16 tonnes of gold which ups their gold reserves
by 30%.
I’ve
talked many times in the past about the issues in South Africa and the
reasons why I’m not an investor in gold mines operating there. One of the countries largest
gold producers is looking to expand their resources out of the country.
They are looking to South America, British Columbia, the Tien
Shan gold belt, Australia and the Philippines.
They
see that South Arica is not the frontier that it used to be and admit that
“in South Africa a lot of the gold mines are getting older and mature and
they’re getting deeper and further away”.
Another
CEO of one of the world’s largest gold miner has
been let go after a shareholder revolt. The facts are that gold
miners have been under-performing in a huge way and heads need to roll.
I
know our mining portfolio is not doing great but it’s at bargain prices
right now. This makes me very unhappy but if I were a new investor to the space
I’d be right giddy!
I
doubt I’ll have a free weekend letter out next weekend but I’m
still issuing daily letters to subscribers where I cover whatever is relevant
at the time as well as any leading stocks who are setup to move as well as
our ailing mining portfolio and the one shining star of 2012 for us, our
dividend portfolio which pays from 7% to 15% annually and is definitely
paying our bills!
Have
a great weekend and week ahead and thank you for reading.
Warren
Bevan
www.preciousmetalstockreview.com
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