Open thread for investors/traders

Here’s the dilemma.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8116117/New-commodity-funds-may-be-next-financial-bubble-FSA-warned.html

The Financial Services Authority (FSA) has been warned that new commodities funds being launched by investment banks pose a danger to the metal markets and are a bad deal for investors.”

If you follow my investment/trading notes on Stockcharts, you will know I’ve been grappling with problems of perception.

On one hand I see what is happening at the socio/economic/monetary level and since 2002 I have advised clients and friends to be invested in gold and silver bullion with a mining share component for leverage.

On the other hand, I realize we’ve had a very good run for 8 years. But this is not what bothers me. I think that gold and silver will serve us well for at least the next decade. What does bother me at present is the fact that the big global banks led by Goldman Sachs as well as some of the pundits that have been proven to be deleterious to your financial well being like Jim Cramer are now fully enamored with investment in gold and mining shares…. and that lights-up a big honking warning light in my peanut brain.

Mindful of the life cycle of an investment trend, I am hyper sensitive to perceived changes in the landscape.

Since the beginning of September last, although I have held-on to my bullion holdings, I have sold a significant chunk of my mining share investments and have gradually hedged the rest until last week when I became fully hedged.

But… but… since then both bullion and the mining share markets have gone on to new highs.

What to do!??

Here’s the thing. Although I can see that mining share ETFs like GDX or XAU have gone on to new highs accompanied by technical signals (MACD) that confirm the higher highs if only barely in some cases (it is much clearer on GDX), I cannot see the same technical behavior in the individual miners.

GG, EGO, IAG, ABX and a host of other miners are showing what is known as “technical divergence” on the daily or, in the case of AEM where the daily is looking good, the weekly.

Your opinions are solicited. Am I fretting for nothing and should instead go with the flow or do you feel caution is warranted?

If you don’t want to share in public, shoot me a PM

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