We Finally Have A Dip To Buy Gold (Plus Stock Pick Update) – Mike Swanson (03/04/2019)

Gold has been going up since the start of October to outperform the stock market and bond market. Buying gold hasn’t just been a safe haven play, but a necessary mechanism to beat the market by having some precious metals in an investment account.

And the mining stocks have been rapidly rising while FANG stocks have languished.

Finally last week we got a pullback in gold that will bring a good entry point for new buyers this month. There hasn’t been a real dip in the price of gold since November.

When you look at a chart it isn’t shocking that this dip happened.

Gold rallied up to its key $1350-$1370 resistance level that goes back for several years on the technical analysis charts. I believe it will go through this level this year, but it isn’t shocking that it would pullback off of it to consolidate and build a base first before it smashes through it.

It is that move through that level that will bring the masses into gold and cause people to chase higher prices. It’s too difficult for the masses to buy dips as they only chase, but this March dip provides an opportunity for investors to buy.

The current support levels on gold are now at the 2/3’s retracement point of the 2018 low and 2019 high now in the $1278-$1280 area. Below that huge support is in the $1250-$1257 area. That area is the confluence of the 50% retracement level and the 200-day moving average.

I doubt gold will fall that far, but that is the downside potential for this dip.

Don’t be shocked if gold falls a little more and then trends sideways into the FOMC meeting at the end of this month to stabilize and go back up.

I will be putting out gold stock buy recommendations for my private Power Investor group.

One thing I must say though is DO NOT buy the 3X gold stock ETF’s JNUG and NUGT, because the way they are designed they lose value when gold simply goes sideways and therefore are toxic for investors.

Even though gold has gone up since the price of gold bottomed in 2016 as you can see from this chart of JNUG it has been a disaster to hold.

Compare this JNUG chart to the price of gold and you can see how it can destroy your account if you were to buy it. The problem with it is that it is a 3X ETF that naturally decays overtime as it is loaded with options that just lose value as time goes on.

This ETF is below where it was in most of 2016 so avoid this ETF if you want to buy gold stocks and hold them for more than a few weeks.

There is no need to buy it anyway because the right gold stocks will up more than this ETF will anyway over the next few years.

The small-cap junior mining space is full of individual stocks that will do better than this ETF and have no crazy decay factors to them.

The triple ETF’s are really designed for daytraders who have some way of beating the computer robots.

If you got a way to do that more power to you – if not stay away from JNUG, NUGT, and especially DUST!

I’m not looking for the stock market to do much this week, but will be looking for another stock pick for you later this month.

Last month I first posted about TNDM on February 19th and it exploded going up 25% in a single day last week. Then on Friday it actually went up another 5%.

There really isn’t a good entry point in TNDM right now. The point of it is to show that when we do the work we can find good stocks in this market.

And we will look for another one this month.

Today though it looks like Tesla is positioned for a breakdown TKO this month too.

-Mike




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