By trial and error! (I first became interested in gold and silver as an investment in the mid-1960s). My rate of success has slowly but steadily improved ever since.
My focus is on the mining companies that can profitably produce precious metals, including those companies that are involved in ‘streaming’. (Streaming or Royalty companies provide funding for miners to enable them to continue digging, in exchange for a physical portion of the assets that the miner produces).
I also select exploration companies that have proven assets, experienced management and a good track record. Any junior miner that is in the process of building a mine in a safe mining district appeals to me.
During the past 20 years it has become obvious that the prices of precious metals and their producers are steadily moving in an upward trajectory, energized by the ‘money printing’ by practically every central bank in the world. Here is a chart that tells that story.
This chart courtesy Bloomberg and Bravos Research shows the mountain of debt that is the result of excess money printing and profligate spending. Investors world-wide have historically sought safety in precious metals, during periods similar to the current situation. Meanwhile, this trend shows no sign of slowing down. Unless and until governments decide to balance their budgets, this upward trajectory in monetary destruction can be expected to continue.
This knowledge is very important to those of us who are willing to invest our hard earned money in precious metals.
I am willing to share my trading secrets with you, because I have benefited over the years from the many pioneers who ‘blazed a trail’. People like James Blanchard III, Jim Sinclair, Ted Butler, the people at GATA including Eric Sprott, Bill Murphy and Chris Powell.
These men of vision showed us that it made sense to invest in gold and silver, while they warned us that bullion banks would try to suppress prices.
The main ‘plank’ in the way I build my portfolio is the determination that the vast majority of well-researched gold and silver producers, along with established royalty companies can be bought and held long-term, or sold into rallies and replaced with similar investments, with confidence that the vast majority of positions will yield a profit.
Before I invest in a gold or silver stock or ETF, I analyze the technical aspects of that investment.
- The trend must be rising or showing signs of being ready to rise.
- The Advance Decline line must be positive.
- GDX or SIL must be in uptrend, to show support from within the sector.
- Relative Strength Index (RSI) and Commodity Channel Index (CCI) must be positive.
- Short-term moving averages must be in positive alignment, or on track to be positive very soon.
- I eliminate all emotions. I remain riveted on my goals.
By using these guidelines and taking partial profits during over-bought periods I have been blessed with 162 wins vs 9 losses, during the past 12 months, for a track record of +95%.
In closing I present a very bullish gold chart. The blue arrow shows price rising above the 50DMA, ready to move towards lateral resistance at the green arrows. A confirmed rise above the top arrow calls for a technical target at $3,900.00. The Supporting Indicators (RSI and CCI) are positive and the Moving Averages are in positive alignment and rising. The pattern is called Advancing Right Angled Triangle, or ARAT.
Should the reader be interested in more of this type of analysis, simply ask to be put on our mailing list. Send your request to Peter Degraaf itiswell@cogeco.net. Our reports are also archived at peterdegraaf.com. This website has thus far received over 500,000 visits.
DISCLAIMER: Please do your own due diligence. Past performance is no guarantee of future gains. Peter Degraaf is not responsible for your trading decisions.
