New Low Observer's  Instablog

New Low Observer
Send Message
As a contributor to the New Low Observer (, we intend to give new insights on a low risk approach to trading in dividend paying stocks for tax deferred accounts. The New Low Observer ( is not intended for... More
My blog:
New Low Observer
  • Gold Stock Indicator Points Down 0 comments
    Feb 8, 2012 1:44 PM | about stocks: DUST, NUGT, ABX, GG, NEM, AU, KGC, AUY, GFI, GOLD, EGO, SLW, BVN

    On November 2, 2011, we posted an article titled "A Strategy is Needed for Lagging Gold Stocks." In that article we made reference to a Gold Stock Indicator that we've been using to determine the best times to buy and sell gold stocks. Below is the same Gold Stock Indicator covering the period from November 18, 2010 to February 7, 2012.

    In this example of the Gold Stock Indicator, we've provided the percentage change when the Direxion Daily Gold Miners Bear (NYSEARCA:DUST) [in red] and Direxion Daily Gold Miners Bull (NYSEARCA:NUGT) [in green] are bought and then sold when the Gold Stock Indicator has reached the opposite trend line. In this example, the opposite of the NUGT trendline is the red trendline and vice versa. We've excluded the respective peaks and troughs in consideration of percentage change. We only used the periods when the indicator first crossed the opposite trend line.

    DUST and NUGT are ETFs that carry the highest risk of loss because they are intended to move at 3 times (3x) the NYSE Arca Gold Miners Index. The top 80% of the NYSE Gold Miners Index comprises of the following companies: Barrick Gold (NYSE:ABX), Gold Corp (NYSE:GG), Newmont Mining (NYSE:NEM), Anglogold Ashanti (NYSE:AU), Kinross Gold (NYSE:KGC), Yamana Gold (NYSE:AUY), Goldfields (NYSE:GFI), Randgold Resources (NASDAQ:GOLD), Eldorado Gold (NYSE:EGO), Silver Wheaton (NYSE:SLW), and Comp de Minas Buenaventura (NYSE:BVN).

    DUST and NUGT are speculative vehicles and not investments meant to be held on a long term basis. Additionally, as the trend for the Gold Stock Indicator has been in a long declining phase, we expect that this pattern should reverse substantially at some point. However, based on the current trajectory, we have May/June 2012 as our tentative reversal period.

    Disclosure: I am long DUST.

Back To New Low Observer's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.