Gold: Time to Go All In

by JDH on February 11, 2017

Let’s look at the charts, shall we?

As the 10 year chart of gold shows, the down trend that began with the peak in 2011 is still in place.  We are not yet in a new bull market, but it would appear we are getting close.

The uptrend and downtrend lines will collide in the next few months, and I’m guessing the break out will be to the upside.

Want more proof?

Take a look at NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS, a 3 times leveraged basket of gold miners, over the last eight months.

The down channel that started in August 2016 is clearly over.  The Fibonacci retracement levels show that plotting from the high in November to the bottom in December, NUGT has now retraced 62% of the decline.  That’s good news.

Or perhaps it’s just a bunch of mumbo-jumbo, since you can draw whatever lines you want.

I prefer to be the optimist, and that’s why this week I was selling on strength at the beginning of the week, and then buying on weakness on Thursday and Friday.  I am no where near being fully invested, but I am adding to my positions, and I’m optimistic for the action over the next few months.

Remember 2016: gold did great in the first six months of the year, and then collapsed in the later half of the year.  Will that pattern be repeated?  I have no idea, but the first quarter is a seasonally strong time for gold, so I plan to “make hay while the sun shines”, but also keep this on a short leash, and take profits as they present themselves.

Alterra Power

On an unrelated topic, Alterra Power announced very impressive drill results this week.  Alterra is a renewable energy company operating in Iceland, British Columbia, and Texas, and the geothermal well they drilled in Iceland was off-the-charts impressive.  The stock popped up on the news, but AXY.TO – Alterra Power Corp. is well off it’s highs, and is at an excellent buy point.  This will not be a 10 bagger in a week, but it’s a great, long term, core, lower risk holding, and provides great diversification away from gold.  I like it.

That’s the update.  Thanks for reading.  More next week.