Precious Metals and Miners Show Impressive Relative Strength In Weak Market

By: Jeb Handwerger | Tue, Aug 2, 2011
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Our indicators set us firmly on the highway marked gold(GLD), silver(SLV), uraniums(URA) and rare earths(REMX). As J.P. Morgan famously said in which way the markets will go he responded, "It will fluctuate." It is up to us to interpret the fluctuations, represented by the twists, turns and detours along the way.

For us as we have frequently said the arc of the precious metals universe moves slowly but the path remains steadfastly upward. A secular trend must be respected until our metrics signal the inception of a long term downtrend. Precious metal movements develop over a long term period varying from approximately 10 to 25 years. We are nowhere near the top of the hill. Our studies continue to keep us resolutely on the highway to major profits.

We are beset by the news of the discouraging employment situation. The politicians are quick to assign blame or defend their positions. They regale us with statements designed to score political points. We listen to there speeches and realize that the debt ceiling debate is nothing more than political posturing for 2012.

We decide to stay on the road we have chosen as there have been no meaningful moves to cut the deficit. In this uncertain world, we wonder if these "pundits" really know the direction in which they are going. Maybe they realize they must rely on Bernanke to devalue the dollar (UUP) to pay off soaring debts. QE3 anyone?

The data continues to show a jobless recovery. The commodity markets have rebounded in the past few weeks possibly factoring in that Bernanke may make moves this summer with QE3. When politicians wish to stimulate the economy through accommodative measures, negative economic data is released. Eurozone Fears, U.S. Debt Ceiling, high unemployment, and weak manufacturing indicate that we are being set up for the acceptance of dollar debasement by whatever means and guises necessary.

Out of the shouts and political spouting we seek safe havens. We respect the preservation of capital and do not spend promiscuously. The public talk is all about placing caps on spending. In reality, we see little of that. Instead, the spigots are turned on in a continual flow and turned off in a deceptive trickle. We are convinced that as we seek safe havens so shall we reap a harvest of profits. An experienced technician follows time trusted metrics in a disciplined approach to market analysis. The strategy is based on the long term trend and that is why it is crucial to keep a cool head in this volatile, emotional and news driven market.

Gold Stock Trades seeks to uncover the major direction of the markets. The art of technical analysis is based on choosing the major direction knowing that the markets present us with often confusing twists and turns.

This is precisely the very nature of the marketplace as it attempts to confuse and misdirect the speculator. There can only be a limited number of winners in the casino. Gold Stock Trades recognizes the road taken.

JJC Chart

As we write the ratio of declining to advancing issues on the NYSE is overwhelmingly negative, yet the precious metals and miners reveal impressive relative strength in a down market. These statistics reveal to us the importance of staying solidly on our safe haven course of gold(GLD), silver(SLV) uranium (URA) and rare earths(REMX).

We are keeping an eagle's eye on these consolidations which we regard as the necessary basing process. The basing formation takes time to form. Patience and fortitude as we continue to say, are our guiding credos.


Disclosure:Long GLD,GDX,SLV



Jeb Handwerger

Author: Jeb Handwerger

Jeb Handwerger

Jeb Handwerger

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.

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