Gold and Silver Provide An Entry Point For The Few That Will Take It – Mike Swanson (02/8/2021)

So, I got a few people mad at me over the past ten days. Last week on Monday I enjoyed seeing silver gap up on the Reddit “short squeeze” talk, but I also expressed doubt that a short-squeeze was really going to happen – I even showed that there wasn’t even a big short position to even squeeze.

Reddit and Gamestop fans, or cheerleaders, went in a rage on Facebook comments for my disbelief in their victim narrative in response to some interviews I did, while a few silver bugs got upset at me for not believing that silver is manipulated by shorts.

I do not know a single person obsessed with manipulations that is successful at trading or investing. NOT ONE; and I have been doing this for over twenty years now. This tends to be a loser’s attitude where one that uses the issue of manipulation to explain to themselves why they are failures in the markets – the real reason is usually they are pure gamblers with zero strategy and zero willingness to learn one.

I personally made ZERO trades in response to the Reddit story or silver’s gap up. I own silver, gold, and mining stocks not because I believe there is going to be a short-squeeze, but because I think they are all going to be good investments for the next several years.

This is why you buy stocks.

AMC is now the number one most owned stock by the most number of people on Robinhood in hopes of another short squeeze play.

I am done with Robinhood traders so I put in my final word about Reddit and Gamestop in this Friday post. Becoming a part of a Reddit herd does not look like to much fun to me and by the way it is designed Robinhood encourages herd behavior among its users.

THAT is its real scandal, not the fact that it had to limit trading because so many of its users are on margin buying into short squeeze tops. There are coming Congressional hearings into Gamestop and Robinhood. This REAL scandal is what they need to look into, otherwise they will be engaging in a smoke screen, giving the crowd only what they want to hear and not what is good for them. It is time for people to be tough and mean on what is going on, because so many are going to wipe out when the game is over.

The only way to help them is to get them is to get them to stop crazy gambles and to buy something real.

There is also record margin debt in the markets and it is growing at the fastest rate in history!

The best thing the regulators can do in the markets now to reduce systemic risk is to RAISE the margin debt limits across the board on all stocks and all ETF’s and on everything else!

And if your Congressman or Senator engages in the small traders are victims because Robinhood limited their trading narrative then you need to call them, curse at them, and never vote for them again!

And if you have a child or grandchild that is using Robinhood to trade the best thing you can do for them is delete the app right off of their phone!

If you think that sounds too harsh then I’d suggest downloading the Robinhood app on your own phone to take a look at it and see how it is designed and how limited the information is on it for its users. Look at it and ask yourself how could anyone possible figure out what is a good thing to buy or sell by using it…..

….and then ask yourself what then provokes people on it to buy?

Guide people to real resources that can help them. Get them to invest in things that can go up for years.

As for gold and silver last week, nothing really changed for either of them. Both have been locked in a consolidation now since last August after screaming up in a massive Spring rally. When markets surged as much as they did they tend to then consolidate for months.

Take a look at the gold chart.

Silver is closer to its 2020 highs than gold is and is likely to lead it on the next rally. By briefly falling below 1800 last week, gold though now has a nice buy support entry point.

At the same time, many mining stocks are firming up for a good entry point too. My favorite indicator to analyze the metals trend is the GDX/GLD ratio, which measures the performance of mining stocks to the metal. The stocks tend to lead the metal so when gold is on the verge of a big plunge the ratio goes down first. But it is not doing that.

Instead, the ratio is going sideways, to confirm that this is a consolidation for the metals and actually is in a position where it could breakout, which would be a bull trigger.

I have a position in the GDX. Here are four big cap mining stocks I own in a good buy spot now.

I own all four of these stocks. They look like they have good entry points here to me. One could buy them and just put a stop loss on them below their December lows. KGC and DRD have obvious simple entry points right here. My top stock pick for this month is also lined up good, simply trading on recent resistance.

-Mike



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