1. Establish core positions in Gold Stocks and don't look at them for a year or two. Gold stocks will probably be substantially higher in the next couple of years.
2. Try to buy Gold Stocks on dips and take profits on rallies.
Also, on the table below, make sure to look at the charts under the 'Big Picture' column.
HUI / Gold metal Ratio: Use this chart as an indicator as whether gold stocks are in a major uptrend, or in a downtrend. If the ratio is in an uptrend, it means the gold stocks are out performing the metal and it's a good time to buy and hold gold stocks. However, if the trend is down it means that gold stocks are under performing gold and you should sell gold stocks.
Major buy signals are generated when downtrend lines are broken, and then the 50 MA then appears to be very useful as a support level to keep an investor/trader in the major run up. After the buy signal is generated, as long as the ratio chart stays above the 50 MA, investors should hold their gold stocks. It appears that a trader/investor can ride the majority of an uptrend and be out during the big consolidations and pullbacks by employing this simple method.
The ratio chart gave a major buy signal back in August, but fell below the 50 MA which gave a sell signal in late November.
Current Analysis: The ratio is trending up and the 50 day moving average has also been broken which indicates gold stocks are now out performing relative to the metal - not surprisingly given the positive divergence via the MACD.
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Long term, gives the big picture |
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gives a close up view. |
