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Jeb Handwerger
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Gold Stock Trades Editor Jeb Handwerger is a highly sought-after stock analyst syndicated internationally and known throughout the financial industry for his accurate and timely analysis of the equities markets, particularly the metals and mining sector. Subscribe to his FREE Newsletter right... More
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  • Silver Price Breakout Suggest Demand As A Safe Haven Asset
     Silver had very powerful break out today as investors are seeking assets that are safe and will retain value during a debt crisis.  Silver is  seeing demand at these price levels as it is historically cheap relative to gold.  If the ratio came down to the levels it was in 2006 it would be close to $27 an ounce.  Silver is soaring because investors are realizing this is a hard asset, it is money and it is historically cheap compared to gold.

    Gold has reached overbought conditions from my July 28th buy signal.  Right now gold is a bit overbought while silver is at an interesting buy point, having found support for the fourth time at its long term 200 day moving average.  Today’s breakout of the symmetrical triangle, a very bullish chart pattern, is a sign that silver has built up a lot of internal strength and could break out into new three year highs. Remember, silver is significantly below all time highs while gold has already broken into new highs.

    While I am bullish on gold, I believe investors could see a higher percentage move in silver.  I have also alerted my readers to a specific  mining company which has recently found a major discovery in Mexico.  Pure silver discoveries are very rare.  Silver supply is mostly produced as a byproduct which makes supply very inelastic.  A new pure silver discovery in a silver bull market could receive a nice premium.

    I believe silver will make a major move on this break out. Investors are looking for a safe haven, protection and value in silver.  Gold has already made a significant move and is quite overbought, while silver has not participated to the same extent.  The gold silver ratio should move to historical norms which could mean a major move for silver.

    If you do a study of the point and figure chart of the relative strength of silver versus the S&P500 since 2001, its strong uptrend is apparent. Each time silver falls back into support, it breaks out and makes significant rallies.

    The break above the red bearish resistance line and a double top breakout coupled with the daily chart symmetrical wedge pattern demonstrates that silver has reached a critical juncture and could make a nice move.



    Disclosure: I am long gold and silver mining stocks
    Aug 25 3:12 PM | Link | Comment!
  • Update on S&P 500 and Gold
     This is an excerpt of what was sent to premium subscribers before the Fed Meeting. 

     

    This was sent out to premium subscribers this past Sunday.

    The S&P 500 had an exciting and volatile week. It started the week gapping up and ended the week filling the gap as I predicted. On Monday, I told premium subscribers that the market closes gaps and does not like “vacuum” areas. On Friday that gap was closed due to

    the negative jobs report. The 200 day and the top of Monday’s gap acted as support and at the end of the day reversed higher.

    The S&P 500 is overbought and there are some key levels we need to look at this week. If SPY breaks $113.25 on high volume, it would lead me to reverse my bearish bias. If it breaks down below the 200 day and breaks the bottom of Monday’s gap, which is $110.75, it will provide another short opportunity. I believe the odds are in favor of the latter, a breakdown, as there are signs of decreasing volume on this rally and overbought conditions as well.

    My goal in this newsletter is to protect reader’s portfolios and provide highly rewarding trades while limiting downside risk. There are occasional periods, such as now, of very negative market signals like high volume sell offs, death crosses, the breakdown of leading stocks and a break of higher lows. This is the first time I have encountered these signals since 2008. I recommended getting out of the U.S. equity market then. I managed to protect my assets as well as the assets of my followers and I am, again, recommending that now. I cannot claim prophecy, but I have studied history and I do see the warning signs that all traders must be aware of. This tactic, though

    imperfect, protected me from the 2008 bear market when many people were wiped out. No method is foolproof, but it is crucial to have a trading plan and a clear set of rules.

    Over time, you will see that discipline and persistence lead to exceptional performance. You can always buy back in when the conditions are more favorable, but when there is risk and negative signs you need to watch out. As time passes, it is clear that it is worth the risk of being “whipsawed” out of the market and being compelled to buy back in at higher prices rather than taking a substantial loss.

    Last week our stop was triggered on the SPY short. I will update this week when key levels are broken to the upside or downside. Stay tuned.

    Gold Reaching Resistance at 50 day Moving Average

    My article from July 27th, which was published on major financial websites, stated my opinion at a time when many analysts soured on gold.  You can check out my archive on Kitco.com or my blog at goldstocktrades.com for further review.  I mentioned that gold has come to long term trend support, a 50% fibonacci retracement coupled with an oversold condition.  Instead of selling, which many analysts were recommending, I upheld that it was at an important buy point.  

    Since that day, GLD has rallied sharply up to its 50 day moving average which is now acting as resistance.  Clearing this may take some time.  Be prepared for a temporary pullback.  Gradually, over the next couple of weeks I do expect it to clear the 50 day moving average and the key resistance point which is $119.20.  Momentum is on the bulls’ side now as the MACD shows an important crossover from an oversold position.  RSI has moved above 50 which is a sign of strength.  I would like more volume to come in as the Fed will need to make some easing adjustments in the next week. These developments should be good for gold and silver.  

    To subscribe to my free newsletter for timely updates visit my website at http://goldstocktrades.com.




    Disclosure: LOng Gold and Silver Mining Stocks
    Aug 11 12:34 PM | Link | Comment!
  • Quantitative Easing Before Election? Jobs Data Shows Stimulus Not Working
     The November 2010 election is right around the corner. As the Democrats praise the federal stimulus and Barack Obama as the savior of the American capitalist system, Republicans who also initiated a bailout now reveal where the money was spent frivolously and recklessly in order to gain votes. Regardless of which party gains power, the fact remains that government spending has increased exponentially and it has not positively effected the job market one iota.  The job market is, frankly, terrible.  Our children and grandchildren are likely to experience high inflation, high unemployment and even higher taxes, the very problems that Greece and Spain are struggling with now.  The only solution the Fed is offering is to throw more money into the system to prevent a downward deflationary spiral.

    The strategy of my choice for protecting assets is in quality junior mining companies with great management, a strong cash position and expanding resources.

    The European crisis demonstrated that now, instead of the credit crisis being just a private sector issue, entire governments are defaulting.  Due to reckless spending in many areas, these countries have positioned their constituents with a great burden.  Spain is now facing close to 20% unemployment.  There are states in the U.S. that are running huge deficits and in danger of defaulting.  A downturn in a highly leveraged global society such as ours has the potential to be devastating.

    In order to for the Democrats to win the November election, they will do everything possible prior to the big day to inflate the stock market. I suspect within the next couple of weeks, we will see a second “jobs” stimulus and quantitative easing actions. They need to act quickly to inflate asset classes, the stock market and Joe the Plumber’s 401k plan if they want a shot in the next election.  A “jobless” recovery  is going to be a major flaw to the Democrats control of Washington.

    This rally is not broad based at all, lacking volume and market breadth.  Market breadth tells us if this past rally was broad based, meaning that in a healthy market price corresponds to the amount of stocks participating in an uptrend.  It is concerning when you observe a disparity between the stock price and the advance decline line. This usually indicates a “fake” market, because only a handful of stocks are participating. A sustainable market is one in which many participate.   The advance decline line gives you a clue ahead of time if a rally can endure .

    The Nasdaq is lacking broad participation.  The Nasdaq’s advance decline line, which is more correlated for the small cap companies, needs to get involved with this rally before this market turns bullish.  Even though price was close to three year highs, the advance decline line is not nearly the same level as three years ago.  This is a false rally with a few select large cap international stocks moving progressively higher.  The U.S. will enjoy a real recovery when we see small caps participating and moving higher.  Obviously, we are not there yet.

    Today’s negative job report could be the catalyst to start another leg down.

    Over the next few months we are going to see  formidable efforts by the Congress, the Federal Reserve and the White House to prevent the economic fallout that the markets were teetering on during the European Sovereign Debt crisis.  If  these markets are not successfully restored in time, we can expect a major political change in November.  Has the stimulus really been effective? Looking at this chart, it appears that this is not the case.

    Gold and silver may make a major move in the next few weeks. I’ve said before that gold was at a major buypoint due to long term trend support.  The jobs report was very bullish for gold investors.  The Fed is expected to make another stand and gold, silver and base metals should outperform considerably.

    Disclosure: I am long gold and silver mining stocks.



    Disclosure: Long gold and silver mining stocks

    Disclosure: Long gold and silver mining stocks

    Disclosure: Long gold and silver mining stocks
    Aug 06 2:13 PM | Link | Comment!
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