I used to half joke with some of my investing friends that the best time to buy stocks is during or right after a crash. Think 1987, 2000-2002, 2008-09, and now perhaps Gold Miners?? Well, before we get too far ahead of ourselves, lets examine evidence of a “Crash”: I like to use crowd behavioral, empirical, and technical evidence in combination.
On April 12th I wrote a blog post titled Precious Metals Melt-Down, and How To Manage It.I talked about how gold, silver and gold mining stocks have been flying under the media radar for over a year and that they were not catching the attention of traders, investors and the public anymore. I also said it would take some sharp price action (breakdown or rally) for it to be front and center again on TV, Radio and Newspapers.
The precious metals sector has been dormant since both gold and silver topped in 2011. But the long term bull market remains intact. As long as we do not have the price of gold close below the lower yellow box on the monthly chart then technical speaking precious metals should continue much higher.
It is an endless debate for investors interested in gold. Should they buy a direct play on the gold price, either gold bullion itself or even so-called paper gold with an ETF such as the SPDR Gold Shares (NYSEArca: GLD)? Or should they invest into gold equities, particularly the larger, higher quality gold mining companies?
Paradise has been lost. At least for the gold bugs.
We're not saying the decade-long bull run in gold is over, but there are ominous signs to that affect. Take the case of the SPDR Gold Shares (NYSE: GLD) for example.
It has been a wild ride for investors in 2011, but when all is said and done, the top performers in terms of sector ETFs this year aren't likely to surprise anyone. Well, one might be a surprise, but the others not so much.
The Market Vectors Junior Gold Miners ETF(NYSE:GDXJ) is trading higher by 0.06 cents to $37.41 a share. The popular ETF of the smaller gold mining stocks has rallied sharply higher since August 5, 2011 when it traded as low as $31.62 a share. Traders can watch for intra-day support around the $36.85 level.
Gold and its seemingly never-ending run to new heights got another boost on Monday with Goldman Sachs (NYSE: GS) saying the yellow metal could be trading as high as $1,650 an ounce in a year.
