Many of you know that I have been waiting to be a buyer, calling for a $ rally that would take gold down-my intitial target buy range was $1525-$1550. With today's intra-day low at $1558, gold is almost there. With the recent downward price action, just about all gold stocks, ETF's and so on, finished the day with RSI's in the 20s. Normally any RSI below 30 is a buying opportunity.
For now, I am not going to be in a hurry because I expect the $ to rally more-especially against the Euro. If I am correct just about all commodities will fall in price, over the course of the next few weeks to 2-4 months-prompting a "deflationary scare". The policy response will be more QE from the central banks-BOE may add to their program and what I am especially looking for is the ECB to be "active" with their QE and lower rates. So, I don't want to buy too far ahead of those policy responses as it will take a few weeks of weak economic data for central banks to ramp-up more QE.
The other issue is since some much momentum money has been accumulated into GLD, gold stocks etc., it may take some time before those that want to sell to "upchuck" their positions. As part of that process, I expect a few "head fakes" to the upside before the ultimate rally to $2500-$3000 occurs.
Coming out the other end, if I get the deflationary scare first with some hints the more QE to be the policy response, then just about all gold securities will do well-but my preferred choices will be gold stocks. My current short list is:ABX, GG, NEW, HL, FCX. I prefer the gold stocks this time because:
1)They have performed so poorly this past gold rally-prompting mgts to change philosophy towards shareholder value vs maximizing production
2)Dividends are worthwhile
3)PEs are compressed
Other than the macro "bells" I hope I hear w/r to the "deflationary scare" and central banks responses, the market should let us know, by relative performance that gold stocks have either:
1)stopped falling and/or
2)trading better than gold itself
OT but... I am looking to do some "Lynchian" investments for my kids, buying co's whose products they "endorse." Got some more Chipotle on its recent puillback below $250 and now wondering where you think Apple might be a buy? Thanks.