Larry,
It looks like gold & silver shares are getting fairly overbought. I also notice that CNBC is starting to call attention to the precious metals again. If we get a pullback, do you think it would be a good time to add some more PM shares? Any particular stocks you think look strong?

Jim

Jim,

Yeah, they’re pretty overbought on the daily chart. However, on the weekly chart they look like they're just now getting going again. Many of them are just now clearing their 40-week moving average for the first time in awhile. So, sure, I think they should be bought on pullbacks.

I’m not going to surprise you with my favorites -- NEM and PAAS.

But I think the ones that are on the weekly Parabolic SAR list look good -- GG, GFI, HMY, AU, RGLD, HL, AEM, ABX.

There’s a new signal that will show up on this week’s list -- Ivanhoe Mines (HUGO). They mine gold and copper. It’s a $5 stock that’s starting to perk up. Also, old friend Wheaton (WHT) has broken out after forming a very nice base.

Larry

whatever happened to the PRECIOUS METAL ETF? did that ever happen?

-ja

Larry,
Sorry I don't think I made myself very clear. I was wondering if you thought now would be a good time to purchase more PM shares or with the market being overbought would it be better to wait for a pullback? I do have some NEM and PAAS already I'm looking to add to my positions.

Thanks,
Jim

Jim,

Your question is really one of philosophy and money management. So I can only repeat my philosophy about precious metals. I have 10% of my portfolio in pm that I’m not planning to sell until I think the primary bull is over, and I don’t think that’s going to happen for a long time to come.

I also add to my core position from time to time. When I do that I do use stops. My stop on NEM is still at 37 (as discussed in more than one SMR). For my shares of PAAS (over and above my core position), I’m using a weekly Parabolic SAR stop, which is currently at 12.87. I bought the latest shares of both stocks at prices that are only slightly above my stop so my risk is just about out of it. I believe in giving pm shares plenty of room to work. My reasoning is that I believe that in a few years today’s prices will seem trivial and it won’t matter if we bought pm shares when gold was at 400 or 420 or when silver was at 6 or 7. Those prices will just be fond memories.

In my previous post I said that I thought many pm stocks were overbought on the daily chart but not so at all on the weekly chart. Another way of explaining that would be to say that if you’re trading the shares on a short-term basis (days to weeks) you should wait for a pullback even if it means that you end up paying higher prices because precise timing is important to short-term traders. But if you’re trading on an intermediate (weeks to months) or long-term (months to years) basis you can go ahead and buy now because in that case the weekly chart is the more important one.

Larry

Joe,

Here's some news on the gold etf from a couple of weeks ago...

http://biz.yahoo.com/ifunds/040913/20040913_goldetf_new_etf_st_1.html

It looks like we may have it before the end of the year.

Larry