Now that everyone seems to hate or at least have moved on from the precious metals, let’s take a closer look. This morning I made a simple post about gold noting that its status of a higher low to December needs to hold to keep its volatile uptrend intact. So that level (1238.30 to be exact) can be used as a ‘stop loss’ on a constructive view for the metal.
So I thought I’d buy it (and silver) at a discount using CEF (Sprott Physical Gold & Silver Trust) rather than buying and storing metal or using GLD and/or SLV.
While gold has been making a move lately vs. GYX, Copper & Palladium, the fundamental picture is still not great. But we are not so much talking about fundamentals here as we are about over sold metals that will at some point rally and at the current time seem to be a good portfolio counterweight, especially when selling at a discount (-3.6% to NAV), since unlike cash they do not pay out interest.
As for the chart, it stinks. Okay, so what? We noted the breakdowns in GDX and GDXJ last week. This killed the bounce scenario and now here we are with a questionable risk ‘on’ world and brutal precious metals, but an asset dropping to its ‘higher low’ testing point with gold bugs in retreat. You buy things when they are at a discount, not a premium.
CEF is getting oversold by RSI and this appears a good time to start a position for those who want exposure; which I have done per the Trade Log. This update is not a recommendation so much as a notice that I took a position as the bottom feeder I usually try to be. Barring a real rebound in risk ‘on’ spirits it could work out for a good rally at least. We’ll see, but the discount and oversold price to what is still a higher low seem like good reasons for someone wanting exposure to take a shot.