I’m more excited now about making money in the financial markets than I have been in years, but less excited about the online internet world and financial media, which is all being increasingly driven by content drivel pushed by algorithms, which have programmed people who watch news and political videos to always be angry and scared and the financial audience to want to be told that they can buy a crypto coin or a single stock and get rich with zero thinking or work.
It’s why Cathie Wood remains such a big media star, despite her performance. That’s one reason I stopped doing Youtube videos for awhile a few weeks ago. One thing I’ve been doing is going back to some of the books I read when I first started trading in the markets. I’ve been studying the moves of traders of one hundred years ago, such as Jesse Livermore, and a few obscure ones that came before him, that were actually more successful then he was.
Is it time to double down on precious metals and mining stocks?
Here is a video clip, from a few years ago, I found of Stan Weinstein, who is the author of the book Secrets For Profiting In Bull And Bear Markets.
His book had a huge influence on me, introducing me to the concept of stage analysis.
My advice to anyone new getting into the markets is to stop trading, stop watching Youtube or listening to podcasts, and read this book.
Ignore the gurus and develop your own strategy and then come back and start listening to people who help you find ideas that work within it.
Weinstein had a huge newsletter in the 1980’s, but by the time I got into trading he had retired that newsletter and was only consulting with a few clients for $25,000 a piece.
He pretty much disappeared from the internet, except for a few rare interviews – which this video clip is one of those few.
In it he talks about his favorite time to buy – the time where you would “double down” like you would if you were playing blackjack at the most optimal time.
In the markets when this pattern appears is when you can find the most stocks lining up with the pattern I call The Two Fold Formula.
What Weinstein is describing, as his favorite buy point, is the first pullback or consolidation pattern that occurs after the breakout transition from a stage one basing phase to a stage two bull market.
With gold this has taken place, and that first consolidation buy point came in March.
I added to my core 14% metals position on the last day in February and then increased it in March to build my full position during that optimal buy point.
At that time silver was trading under $26 and the consolidation buy point ended when silver closed above that level.
Now, once again, gold and silver and many mining stocks are going sideways and pausing again, to give another entry point.
This time though, as a whole, the big cap gold and silver stocks are outperforming the price of silver and gold.
That’s good confirmation for bulls, but it’s causing some of the mining stocks to just run away from people.
Take a look, for example, at shares of NEM.
On Thursday, NEM reported earnings and when it did explained how rising gold prices are now creating a huge jump in revenue growth.
It’s quarterly EPS jumped from 40 cents to 55.
“Average realized gold price was $2,090, an increase of $86 per ounce over the prior quarter,” the company said. “Gold AISC [All In Sustaining Costs] per ounce was largely in line with the prior quarter at $1,439 per ounce, with a slight improvement from lower sustaining capital spend.”
And now gold is over $2300, so the next earnings report will show another jump.
It’s starting with big cap mining stocks.
We don’t have as good of a buy point now in them, or in gold and silver, as we did in March, but this is still a good one for people who did not get in or need to buy more.
The trick in trading is to buy enough where you can make some good money, but not so much that you end up getting shaken out on any little pullback.
So, anyone who buys here would have to give themselves some room for any pullbacks.
A simple tip is don’t own too much of anything where you have trouble sleeping.
Not all mining stocks have gone up as much as NEM.
There are some that have not broken out yet, but the big cap stocks like NEM are likely to be the sector leader going forward.
Also, not all precious metals have broken out. Palladium, which has a big hedge fund short position on it, and platinum are lagging gold and silver, and industrial metals, and should breakout at some point, but I’m not sure when that will be – it could be weeks or months from now.
Lots of mining stocks are still going sideways this month.
Take a look for example at FNV.
As a way to find an entry point, one could buy FNV and put a stop loss on it below its 50-day moving average, which is at $115, and look for other mining stocks with a similar pattern.
I own FNV.
BTW – the China stock market is on the verge of breaking out.
I mentioned it a few weeks ago and FXI broke out last week.
Meanwhile, Bitcoin has been lagging the performance of the Nasdaq, gold, and silver this month.
That lagging action may be a warning sign that the crypto craze this year is peaking.
Every year that crypto has had a craze when it ends the cryptos totally crash.
Bitcoin will probably go sideways for awhile and then we’ll have to see.
However, I would NOT want to be owning Bitcoin now.
If I did I would sell and move into metals and mining stocks immediately.
I don’t care what Cathie Wood says about crypto – I would get out!
It’s funny – compare how Cathie Wood talks – wild predictions to get people to buy with no strategy – to how Weinstein talks – looking for optimal patterns and using a strategy.
It’s two different ways of thinking about the markets, but it’s Wood technobabble that people want and that’s why the algos promote her.
However, no one will go back to look at anything people like Cathie Wood says two years from now.
And Bloomberg, Yahoo Finance, CNBC, and Benzinga keep pushing her…..
-Mike
