What's up with gold and silver? The precious metals have fallen
off a cliff over the past few days.
In order to preserve profits, I recently recommended that
Small Cap Investor PRO
subscribers sell half of their initial investment in one of our
junior silver mining recommendations.
Of course, we love to take gains - and the 62 percent profit on
half of the position means quite a few shares of fresh
opportunities can be purchased for essentially zero risk.
So my message today is really about new opportunities, not just
preserving current gains.
I think we'll see a fresh opportunity to buy silver and gold
mining stocks over the coming weeks. The evidence is fairly
compelling that the drop in gold and silver prices is nothing more
than a pull-back in a long bull market run.
Let me explain by discussing silver first.
The drop in the price of silver shouldn't come as a big
surprise. Silver has been on a heck of a run. I won't go into all
the political or fundamental reasons why silver could have pulled
back today - because there's one big trend that I believe is more
Check out the 10-year chart of silver below and you'll see that
in almost every year for the past 10 years the low price for silver
occurred in the beginning of the year. The exception was 2008, and
we all know what happened in that crazy year.
I remain bullish on silver, and consider the bull-run to still
be intact. Now is the time to be watching your list of compelling
silver mining investments, and getting ready to start accumulate
Three great silver opportunities are in my special report,
Sierra Madre Silver Profits
. We recently booked a 62 percent gain on half of one of these
positions, and are ready to add back shares if the stock pulls-back
more. The other two stocks in the report are buys right now.
***The pattern for gold is not much different from that of
silver. In fact, according to the gold miners bullish percent
index, we are approaching the annual bearish extreme for gold
mining companies. This index indicates that gold miners are
overbought when the index is over 80, and oversold when the index
is below 30. It is at 40 right now, after plummeting from 90 in
November of 2010.
Looking at a ten year chart of gold prices, there is compelling
evidence that gold hits an annual low in the beginning of the
There is no guarantee that silver and gold prices will again hit
their annual lows in the beginning of 2011. One thing about markets
is that they tend to reverse predictable patterns. But until that
pattern breaks, I see little reason why investors wouldn't put
themselves in position to profit if the pattern holds.
If you're bullish on gold and silver prices, it appears from the
information we have available that the best time to be buying gold
and silver securities is in the early part of the first quarter. If
you're not buying now, when will you?
Get your list of gold and silver mining companies ready. And be
prepared to start accumulating shares on weakness. I always
recommend dollar cost averaging (both when buying, and when
selling) to spread out the risk of your purchases.