-- Posted Thursday, 18 May 2006 | Digg This Article
For three weeks or so now we have been in peaceful repose with the majority of our investible funds in the GLD ETF. We await the return of the Gold/Silver Ratio to reverse and favor silver, and perhaps even the underlying precious metals mining stocks. We still hold four or five junior producers or explorers, but no majors or mid-tier miners. I suppose we could have gone to cash, but in this world of sudden disruptions and political jealousies we'll stick with our gold, thank you. The fundamentals of world crises and shortages haven't changed.
We have always tried to give you the necessary technical analysis basics to accomplish your own investment strategies. You must do some of the lifting yourself. Afterall, it's your money, not mine. You might have to use your own ingenuity, and even create your own charts. If you don't care enough to preserve your own wealth, then you're on the wrong page. When setting up 403B's for public school teachers and university professors I never recovered from their prevalent attitude that the "system" should do everything for them. As lifelong bureaucrats they had everything given to them so that upon retirement they did not know how to think for themselves. They had accumulated piles of money for just hanging around long enough in a monopolistic work environment.
In this G/S Ratio chart we see the ratio at 52.39 and right on the mid-ranges (dotted lines) of the Bollinger Band and Keltner channels. Past observation shows us we can expect a reversal at any time, BUT in all likelihood will go up to the upper boundary lines of each indicator.
We want the MACD bars to turn back down co-incident with a bold line crossover on the SlowSTO indicator at the bottom. It is not important that the stochastic lines exceed 80 or even 50 on the scale only that the crossover occurs.
When these elements of chart behavior occur, we can be pretty darn sure that the thing to do immediately is to swap our GLD for the SLV. We want to be there while we assess the relative attraction of the precious metals stocks to the "physical" silver. All the while we've kept our genuine physical metals intact and undisturbed. Unless you have a phone line to a Swiss account, or an account with GoldMoney it's too cumbersome and awkward to swap them around.
Now, what you would do is run ratios for the relative strength of the HUI to SLV and GLD, and see if the relative value of the stocks are more favorable than owning the metals.
It's the same drill we've done over and over again, and we've found it keeps us out of big trouble, and alive to invest another day.
- - CV
-- Posted Thursday, 18 May 2006 | Digg This Article
