Here are some ideas I am working on for timing a more significant entry into the gold miners. I am definitely a long-term bull on precious metals and am looking for some leveraged upside. But the downside risk is still pretty high at this point. You can try to average down and probably other tactics I don't know about, but I think it's helpful to keep an eye out for a full-blown reversal. The case for a bottom + Extremely bearish gold sentiment particularly in the US, usually associated with bottoms + Obvious EOFY flush + Many funds have sold out / reduced holdings already + Apparent physical shortage coupled with asian demand + Short squeeze potential in futures market + Commitment of traders report analysts highly bullish + Continuing debasement of currencies + Strong AUD/USD downtrend ? Long-time bulls turning to bears ? Trend riding by algos exaggerating declines ? China demand for resource stocks worldwide ? Soros buying call options on junior miners The case for more selling + Companies still working out response to lower gold price + Reporting season sell-off when impact becomes known + No reports of explorers shutting down + Gold still unpopular in mainstream + No confirmed uptrend, pullbacks to 10EMA at best on most stock/index charts + Continuing manipulation by bullion banks + Continuing political need to keep gold low and faith in USD + Inflationary and deflationary forces at work = volatility + General ASX weakness ? Technical analysis raises possibility of 50% retracement in gold bull run to ~1000-1100 Could go either way in the short term ? Gold is now below average cost to mine - reduced supply could help drive prices higher ? Expectation of some miners starting to hedge again (this was not profitable for last decade) ? Baby thrown out with bathwater, good companies to recover eventually ? Capital raising issues for unprofitable miners as macro situation unfolds and if gold price stays low ? Unpredictable effects of a disconnect between physical and paper markets ? Regulatory risk - more in the playbook from authorities to keep gold down (think confiscation, increasing taxes etc) ? None of the usual signs of gold having been in a bubble, e.g. low participation rate even amongst funds At the moment I think we'll have yet another sell-off. Probably around mid-late August when reports start coming out and the next Gold futures contract rolls over. The selling has already been massive, but we should see an extremely sharp spike down, unprofitable explorers going out of business and more mainstream media coverage of the gold 'bull market failure' to indicate a bottom. Let's discuss.
Another West Australian gold miner has gone into administration: http://www.abc.net.au/news/2013-07-03/wach-apex/4797452
asx:ABY copper miner as well http://www.abc.net.au/news/2013-07-05/copper-mine-sale/4801626 I was going to throw some money into them a few months ago. Lucky I didnt. With all these smaller copper producers going down actually takes silver/gold supply off the market as well, it is a common by product of copper mining.
I can't wait for this downturn to start treading higher. I'm getting sick at loosing at every investment I've bloody made in the last 3 years. Im starting to feel like a looser, it's just good I know I'm not one
I don't know if the bottom is in - you won't know until after the fact But one lesson I have learned over the years - avoid companies with debt LIKE THE PLAGUE This is even more crucial if you are trying to buy into industries in difficulty A company with major debts is at the mercy of it's bankers They can call the receivers in at a moment's notice They can force assets to be sold off at fire sale prices to pay off debt If rationalisation occurs it is the strong companies with the cash that have the upper hand and will survive
^+1 This quote seems even more relevant now than when it made: http://forums.silverstackers.com/topic-30906-wow-just-got-a-peek-at-my-daily-portfolio-movement.html
