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Precious Metals: The Forgotten Asset Class


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After spending most of its trading day in the red, gold staged a sharp turnaround in the final hour, rising 0.7% to $1,771.30 an ounce --marking a new 2012 closing high. Silver fell 0.3% to $34.25.

A year ago it was the calm before the storm in the metals market. Silver was on its way to a parabolic move that saw prices peak at $48.58 an ounce in late April. And gold --which was trading around $1420 an ounce last February-- climbed to a record high $1920 an ounce in early September.

These moves made precious metals the hottest trades last year; so much so that investors seem either unaware or unimpressed by their strong performance this year. Silver is outperforming most commodities, up 23% year-to-date, and gold up 12%.

For investors like Dan Fitzpatrick, president of stockmarketmentor.com, this is exactly why he believes gold and silver are the "forgotten asset class" and just the type of opportunity he's looking for right now.

"Look at gold, look at silver, they've actually consolidated really nicely in a healthy way," says Fitzpatrick. "They haven't broken down, it's not a top, it's just some really great price action to get these stocks and metals down to levels where investors are starting to buy them."

Despite weakness late last year, Fitzpatrick believes the uptrend still remains. Remember gold fell below $1,600 an ounce in mid-December, breaking below its 200-day moving average for the first time since January 2009.

"Gold spent four weeks below it's 200-day moving average, after having been up above it for two, almost three years," he points out. "That's a pretty good track record."

Given his positive stance, Fitzpatrick likes the largest metals etfs, SPDR Gold Shares (GLD) and iShares Silver Trust (SLV), but says if you're technically inclined, look for some opportunities in metals stocks. His favorites include Yamana Gold (AUY) and Silver Wheaton (SLW).

Are you still buying the gold story? How about silver? Let us know in the comment section below or visit us on Facebook.