I suspect there are a number of members out there like me, that
is: we hold gold stocks for the long term for a variety of reasons
(usually related to some form of distrust of the US dollar and/or
US financial system...a contrarian play of sorts), but TRADE all
other stocks based upon charts and technical indicators.
Obviously, we've been right about the price of gold the past 5-7
years as its risen manyfold, yet we haven't been able to capitalize
on that viewpoint (in fact, we've taken a beating), as we wait and
the miners fail to follow through to the upside like we all
envision.
Personally, I'm not in a position to buy a significant quantity
of physical gold and silver since the majority of money available
to me for investment is held within a brokerage account inside my
retirement plan. So I try to make the most of my options by
trading other equities short term based upon charts, etc. while
holding a core position in mining stocks for the longer term.
The former has served me well thanks to this website but the
latter has not...and I suspect many BPT members have experienced
something similar, so my question is this:
Is the correlation gone and is it time to ditch the notion that
one can make a leveraged play on the price of gold and silver by
purchasing mining stocks for the long run? In other words,
should the precious metal mining stocks be treated no different
than any other equity, and if so what's a good strategy for
unwinding the position I have on?
And one final question for Steve or Matt: If that's the case,
why do you spend an inordinate amount of time covering that sector
compared to any other sector out there? Or is there benefit
to investing in some mining stocks for the longterm?
I have been trading for 10 years and I have held physical gold
and it has been very profitable. I have occasionally sold and
re-bought (very rarely). However I avoid gold stocks like the
plaque! Gold bugs are wimps when it comes to holding gold stocks
IMO. They panic and dump at the slightest reason. Far too much
volatility for me. FWIW
Good question Richie. My view on mining stocks is that they are
not a good long term hold. Coming from Australia, most of our
market is dominated by mining companies. You only have to take a
look at our various indices to see that we have really been under
performing the us market for the best part of this year. The mining
companies have relatively poor yield as well so they are not great
from the dividend perspective either. The share prices of miners
are very cyclical. I find that they are good to trade short to
medium term, but not good for a long term buy and hold strategy.
That's my take anyway. As for gold and silver, have you considered
buying etf's? That way you get exposure to the price of each metal
without having to purchase the physical.
yep pretty much roger, gold stocks are MUCH weaker than the
metal, that's not what you want to see them start to outperform.
PM stock have also been getting killed with earnings, this
has not been a good earnings season for anything, IAG was the
latest casualty yesterday. Since GDX is a composite
of all these stocks, was only a matter of time before it got nailed
too.
there is huge negative macd divergence on the daily chart - not
going away anytime soon by the looks of it.
it may be oversold enough at around 40 to start to show some
momentum change - maybe.
meanwhile DUST is a good way to play it - until negative
divergence starts to show up there. DUST / NUGT
are good ways to play the ups and downs b/c they move sharply and
when they reach o/b/s, will show divergence very clearly.
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Important question about the gold mining stocks
Posted by RichieD on 15th of Nov 2012 at 07:08 am
I suspect there are a number of members out there like me, that is: we hold gold stocks for the long term for a variety of reasons (usually related to some form of distrust of the US dollar and/or US financial system...a contrarian play of sorts), but TRADE all other stocks based upon charts and technical indicators.
Obviously, we've been right about the price of gold the past 5-7 years as its risen manyfold, yet we haven't been able to capitalize on that viewpoint (in fact, we've taken a beating), as we wait and the miners fail to follow through to the upside like we all envision.
Personally, I'm not in a position to buy a significant quantity of physical gold and silver since the majority of money available to me for investment is held within a brokerage account inside my retirement plan. So I try to make the most of my options by trading other equities short term based upon charts, etc. while holding a core position in mining stocks for the longer term. The former has served me well thanks to this website but the latter has not...and I suspect many BPT members have experienced something similar, so my question is this:
Is the correlation gone and is it time to ditch the notion that one can make a leveraged play on the price of gold and silver by purchasing mining stocks for the long run? In other words, should the precious metal mining stocks be treated no different than any other equity, and if so what's a good strategy for unwinding the position I have on?
And one final question for Steve or Matt: If that's the case, why do you spend an inordinate amount of time covering that sector compared to any other sector out there? Or is there benefit to investing in some mining stocks for the longterm?
I have been trading for
Posted by tomW1 on 15th of Nov 2012 at 09:31 am
I have been trading for 10 years and I have held physical gold and it has been very profitable. I have occasionally sold and re-bought (very rarely). However I avoid gold stocks like the plaque! Gold bugs are wimps when it comes to holding gold stocks IMO. They panic and dump at the slightest reason. Far too much volatility for me. FWIW
Mining stocks
Posted by payday on 15th of Nov 2012 at 08:00 am
Good question Richie. My view on mining stocks is that they are not a good long term hold. Coming from Australia, most of our market is dominated by mining companies. You only have to take a look at our various indices to see that we have really been under performing the us market for the best part of this year. The mining companies have relatively poor yield as well so they are not great from the dividend perspective either. The share prices of miners are very cyclical. I find that they are good to trade short to medium term, but not good for a long term buy and hold strategy. That's my take anyway. As for gold and silver, have you considered buying etf's? That way you get exposure to the price of each metal without having to purchase the physical.
sector looks to plunge in
Posted by roger on 15th of Nov 2012 at 08:12 am
sector looks to plunge in sympathy with the broad market
yep pretty much roger, gold
Posted by matt on 15th of Nov 2012 at 08:59 am
yep pretty much roger, gold stocks are MUCH weaker than the metal, that's not what you want to see them start to outperform. PM stock have also been getting killed with earnings, this has not been a good earnings season for anything, IAG was the latest casualty yesterday. Since GDX is a composite of all these stocks, was only a matter of time before it got nailed too.
gdx
Posted by roger on 15th of Nov 2012 at 09:26 am
there is huge negative macd divergence on the daily chart - not going away anytime soon by the looks of it.
it may be oversold enough at around 40 to start to show some momentum change - maybe.
meanwhile DUST is a good way to play it - until negative divergence starts to show up there. DUST / NUGT are good ways to play the ups and downs b/c they move sharply and when they reach o/b/s, will show divergence very clearly.