Could Current Jobs Data Benefit Gold and Silver Investors?
At times such as these the economy reminds us of the inscription that Dante read posted to the gates to hell, "Abandon Hope, All Ye Who Enter Here." Gold Stock Trades takes a different view of this grim admonition. At the risk of sounding pollyanish we should look for the silver lining instead of succumbing to panic.
Can the economy get any worse from here? Perhaps, yet the situation brings to mind an old aphorism, "The worse things were...the better they got." The Gershwin Brothers put the same thought another way- "With gloom to lead the way, I've seen more skies of gray, then any Russian play can guarantee." The time to buy stocks is when the lumpen are terrified, instead of euphoric.
This year investors have been engulfed by the perfect storm resulting from the Japanese Earthquake and Tsunami, Middle East and North African turmoil, credit downgrade warnings in the U.S., and the exacerbation of Eurozone debt fears amongst others. What does this all mean? The global market has had all the slings and arrows of outrageous fortune thrown at it. This chaos has had a positive effect on precious metal stocks that has not been reflected in its current price.
New comers to the arena are being given a golden opportunity to participate in an underpriced and oversold mining sector. Gold (GLD) is close to all time highs yet miners have recently been basing at 52 week lows (GDX).
This represents an unusual opportunity, which becomes increasingly evident. Central banks are increasingly buying gold. Witness the recent acquisitions by Mexico, Russia, China and India adding to their repositories of precious metals as they choose to diversify away from the U.S. dollar(UUP).
This dollar bounce and mining stock selloff is providing one of the best opportunities for long term mining investors to enter the market during this short term liquidity crisis.
There is currently a short term consolidation and pause in the U.S. dollar decline. This is a phenomenon resulting from the extreme weakness of the Euro (FXE) and the need for liquidity rising from the potential exit from QE2. With the end of QE2, liquidity becomes increasingly important and is the obverse of all of the stimulus that had been previously provided by the Fed.
Looking forward to the 2012 election and the rest of the summer it may become evident that a QE3 in whatever semantic guise, may have to be instituted to buoy the economy, improve employment and postpone a financial crisis. Already Obama has addressed the nation that he will propose a massive infrastructure stimulus after today's horrendous jobs data.
This unemployment crisis may benefit the long term holders of precious metals and mining stocks as interest rate hikes will have to be kicked down the road to some future date. Quantitative easing and stimulus projects will also be instituted putting us into further debts.
To reiterate, there are too many well publicized negative considerations when the see-saw of speculation tilts to one side. It is entirely possible that the equilibrium is somehow going to be restored. In time, there has got to be a morning after. Precious metals will inevitably occupy their rightful place in the investment universe. Miners have bounced off 2011 lows and are now positioned for a major reversal, while gold and silver are consolidating near key resistance levels.
To receive my daily intelligence report click here.
Tweet
Author: Jeb Handwerger
Jeb Handwerger
http://goldstocktrades.com
I started reading charts at eleven years old. One day my father, a market trader and technician found his library of books on technical analysis mysteriously disappearing. He later found the textbooks under my bed. For many years day and night I studied technical analysis and charting, working and learning from my father who has over 50 years of trading experience. Technical analysis is my passion and love.
In 2001, I started noticing the junior mining stocks and gold as having a tremendous upside. For the past 9 years I have researched many juniors and have identified the major winners using technical analysis and finding top management.
I earned a Bachelors Degree in Mathematics and a Masters Degree. I learned most of my technical analysis from the school of hard knocks, managing real money for myself and for my family.
Constantly perfecting my craft, I have traded for two decades of success in many different markets. I have been asked to post ideas to some of my students who have taken my course in charting and technical analysis. I have made an excellent living trading stocks for myself.
Investing in stocks is risky and could result in losing money.
I am offering ideas for your consideration and education. I am not offering financial advice. Please do your own due diligence. I am not an investment adviser. I invest my own money in the stocks I suggest. I am an investor communicating my opinion of the markets with other investors. I will be straight-forward and honest.
I am not a promoter cloaked as an analyst. Unlike some other "advisory" services I do NOT accept payment in ANY form from the stocks that I mention be it in cash, options or equities. I am free and independent of any taint or conflict of interest. Simply check their disclaimer statement as mandated by the SEC for your protection. It might be a revelation to you or at least "let the buyer beware".
Sign up for my free newsletter where I will post my "up to the minute" ideas and analysis of the markets. Comment and ask questions as we are all learning and growing. Empower yourself and learn how to anticipate opportunities.
All material on my newsletter and blog is copyrighted. I do not mind you sharing my information and work as long as you cite Gold Stock Trades.
Copyright © 2010-2012 Jeb Handwerger
Circle Us