Precious metals expert Michael Ballanger explains his strategy for playing the gold-to-silver ratio and discusses the post-summer outlook for metals investment.
The heat I took last week over my “Back up the Truck” call was somewhat comedic in that every guru out there was urging “extreme caution.” Meantime, what was I telling you that I was doing? I was buying every gold/silver share and call option that I could afford in the last two weeks of August.
Here it is: This graphic was called “Back up the truck!” Gold was $1,315 when I created it and now it is $1,354. The blogosphere went berserk with comments like “Kiss of Death,” and “Top Talk,” and “Wrongway Corrigan,” but a funny thing happened on the way to the pillory post—everything reversed to the upside and the miners and the metals have now completely worked off their oversold conditions and have reclaimed their respective 50-daily-moving-averages (which chart gurus LOVE to talk about). The blogosphere is now eerily quiet, and my inbox is strangely devoid of snarky emails. Go figure. . .
Back Up the Truck
The newsletter gurus were all slamming me for my total and unequivocal rejection of the art of “technical analysis” when it comes to gold and silver. “Let’s go to the charts!” opined one very popular guru as he told his listeners, “Don’t blame me!” if the U.S. employment report comes in “gold and silver hostile.”
Well—it did come in hostile, because the algobots had to juice the S&P 500 up several dozen points in order to offset the massive selling in the futures. Gold and silver were seriously oversold based on a 26 RSI (relative strength index) for gold. With the RSI for the GDXJ at 31 (see the chart at the top of the story), I decided …read more