On Friday, the price of gold closed at an all-time high, and the price of silver ended the day at $31.26 an ounce. It went up over 4.50% that day. Both are now running away from people, even though this rally in them began back in late February. That’s when silver was still trading below $26.00 an ounce, a resistance level that had held it down for almost two full years. Silver even stayed below $26 for most of March, giving people a few weeks to get in before it broke out.
And gold was trading below $2100.
Now those resistance levels are long gone and the rally is accelerating.
Here is a chart of silver.
I was banging the drum on buying gold, silver, and mining stocks back in March when silver was under $26, making nonstop Youtube videos trying to alert people to what was happening. Once silver smashed through $26, I figured my job was done doing that, making my last Youtube video on April 8.
I’m all about talking about good entry points and looking for them in great opportunities, instead of just telling people to chase something going up a lot, even though that is what gets the most Youtube views and clicks.
So, what does one do now?
It’s clear we are in an early stage two bull market in the precious metals world, and the best buying opportunities in a bull market come on pauses and dips to the 150 or 200-day moving averages, but it’s going to take a long time for those moving averages to get hit again.
Instead, it looks like gold and silver are making breakaway moves and are running away from people.
It isn’t a shock, because there is a reason for it.
You see, in new bull markets, once the momentum starts you often get violent upward moves at the very start of them.
If you think about the US stock market, this current cyclical bull market for it, began when the market bottomed in the fourth quarter of 2022 and then really got going when it then made a powerful breakaway run in January and February of 2023.
It looks to me like this classic early bull market action is now what is happening with precious metals and mining stocks.
When it happens, if you aren’t already in then all you can do is buy some small positions in market leaders, and look for stocks or situations that have lagged a bit for now.
That’s why I was talking about high dividend paying palladium and platinum miner SBSW last week and made a buy in it this month.
Of course, there is more to the precious metals complex, than gold and silver, and the price of copper has completely exploded, going up more than just about anything else in the financial world.
Copper heavily weights the BCIM ETF, which I own a position in and wrote about back in March.
Again, these moves are so violent, because they are early in a bull market.
You often get big gains in a bull market in the first few months of one, and notice how BCIM was in a stage one base until it cleared the $22.00 price level and its upper 200-day Bollinger Band at the end of April.
I personally do not need to buy more precious metals or mining stocks, as I bought all the more I need to have a good position back in February and March. I want to have some cash reserves to force me to keep looking for other trading ideas outside of them going forward and for diversification purposes. I don’t put all my money into one sector or asset class.
However, I got a tiny account with a few thousand in it that is in cash, which I had forgotten about, and am thinking about buying some of the physical palladium ETF – PALL – in it.
Palladium is the only metal that has not broken out yet.
It may continue to lag all year, so if I put a small amount of money into it I’m willing to be patient and not care what it is doing, because I think a day will come when it will go up in a big short squeeze. There are a lot of hedge funds short palladium in the futures market, while the “smart money” producers and hedgers are net long.
Here are some charts I’m watching this week:
DRD looks like it could be poised for a violent upward move.
I own it.
AU might pop after closing above its March high on Friday.
I own AU.
And China appears to be starting a stage two bull market right before our eyes, after having been in a bear market since early 2021, as you can see from the FXI ETF.
Let’s see what happens this week – should be a fun one for silver bulls and gold bugs!
-Mike
