Breakout

The heavy metal trade: Time to take a look at gold and copper

Jeff Macke
Breakout

Heavy metal investors have had a rough go of it lately, but Jeff Hirsch of the Stock Trader’s Almanac says it’s time to get long industrial copper and precious gold for a trade. In the attached video Hirsch explains how he came up with these contrarian plays.

“Copper comes into the seasonal low in December,” says Hirsch, “As the industrial season comes into a standstill in December that’s when you see the bottom.” His firm is recommending the iPath DJ-UBS Copper ETN (JJC) and Southern Copper (SCCO) as easy ways to participate.

View photo

.
As for gold, Hirsch is jumping into the mine with other bottom-callers after his screens suggested some of the miners were overdone on the downside. “We looked for stocks for good valuations (based on) price to sales, price to earnings, some decent revenue and earnings growth and good debt to cash ratios,” the results were, as he puts it, “littered with gold.”

Those who bought gold anywhere near it’s peak over $1,900 in 2011 have been feeling the pain all the way down to $1,200, but Hirsch says that looks like a decent low. He likes some of the foreign production companies and thinks the metal itself is sitting near support.

As Breakout viewers know these are ideas rather than recommendations. Traders can try anything they want but it’s always a good idea to have an exit plan and stop in place just in case.

Rates

View Comments (39)

Recommended for You