The S&P 500 Recovery Hits The Precious Metals Stocks

May 14, 2019 12:51 PM ETGLD, IAU, PHYS, SGOL, UGLDF, UGL, DGP, GLL, GLDI, OUNZ, DZZ, DGL, DGLD, DGZ, BAR, GLDW, UBG, QGLDX, AAAU, GLDM, IAUF, PHYS:CA3 Comments
Bob Kirtley profile picture
Bob Kirtley
2.74K Followers

Summary

  • There are pros and cons for each sector of the market and sooner or later they all have their day in the sun.
  • We could argue that "the time to buy is when there's blood in the streets." A saying that is attributed to Baron Rothschild, a member of the Rothschild banking family.
  • Gold and silver and their associated stocks need an ignition to set this sector on fire.
  • There is the possibility of a trade war between the U.S. and China which could derail the markets.
  • The Federal Reserve may implement a rate cut followed by the reintroduction of Quantitative Easing which would devalue the U.S. dollar and be supportive of gold heralding in a new rally in this tiny sector.

Preamble

In today's modern world of investment opportunities, there are a myriad of attractions for an investor's hard earned funds. There are pros and cons for each one of them and sooner or later they all have their day in the sun. Investments on offer include but are not limited to; currencies, real estate, land, art, antiques, bonds, stocks, coins, various funds, cryptocurrencies, etc.

Our particular interest is the precious metals mining sector which unfortunately has been battered over the last five or six years and remains very much in the unwanted category. However, we could argue that "the time to buy is when there's blood in the streets." A saying that is attributed to Baron Rothschild, a member of the Rothschild banking family. He made a fortune by investing in the uncertainty that followed the Battle of Waterloo against France when his peers were disposing of their holdings. Is the precious metals sector bleeding at the moment? We don't think so, but this sector is most certainly close to it and worthy of further consideration.

The Gold Bugs Index (HUI) Chart

The chart below shows that there is strong resistance at the 180 level and despite a number of attempts to break out the precious metals mining stocks have failed to do so. The technical indicators such as the MACD and the STO are in the oversold zone with the RSI sitting just above the 30 level which is regarded by some technicians as a buy signal should the stocks drop below this level.

http://gold-prices.squarespace.com/storage/HUI%20chart%2012%20May%202019.jpg?__SQUARESPACE_CACHEVERSION=1557624708341

The recent sell-off from 180 to 150 wiped 16% of the value of this index and it coincided with the recovery of the S&P 500 which experienced a pullback in the fourth quarter of 2018. Those losses were regained in the first half of 2019 as the

This article was written by

Bob Kirtley profile picture
2.74K Followers
Bob Kirtley has traded options and stocks since 1980. Bob Kirtley spent many years working on Oil projects including some in Alberta, such as the tar sands installations in Fort McMurray. He lived and worked in many different countries, as that is the nature of the construction business. Planning and cost control are key to a projects success and he tries to apply those disciplines on a daily basis when dealing with investments. His training in such areas as SWOT and Risk analysis can be applied from time to time. His qualifications include being chartered in the United Kingdom, which is similar to that of a Professional Engineer in Canada, along with a Masters Degree in Project Management from South Bank University, London, England. He has been working for a number of years on a full time basis representing a group of investors in England.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: www.gold-prices.biz makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents our views and replicates trades that we are making but nothing more than that. Always consult your registered adviser to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this letter. Options contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. Past performance is neither a guide nor guarantee of future success.

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