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Here are the links from this past week...
What to Watch for in Gold & Gold Stocks
We penned this on Friday. Its simple, let's see if they hold the 400-dma's.
Video: Gold Stocks Correction Analysis
We published this on Thursday.
Weekly Market Summary
From the Fat Pitch Blog. Great coverage of the stock market.
The Markets Graduate to Commodities
The latest from Erik Swartz. The post includes numerous charts that are actionable.
Video: Hugh Hendry Talks Chinese Devaluation
From Real Vision via ZeroHedge.
Has the Reflation Trade Turned the Corner?
Informative piece from Chris Ciovacco.
Premium Snippets
Chart 1: Junior Gold Index, Weekly Chart.
This index contains 18 companies and the median market cap is roughly $200 Million in US$.
A week after we highlighted the lack of a correction and the sector refusing to correct, it starts to correct. Does this index look like something you want to buy right now?
It recently peaked at 570 and closed just below 511. So it has corrected about 10%. The strongest support looks to be around 445 to 460. The upper end of that is the 38% retracement of the recent decline. A move down to 425, the 50% retracement would be a 17% decline and a total correction of nearly 25%.
There have been chances to buy some stocks off 15%. The odds now favor many juniors correcting 20% to 25%. Better buying opportunities should be ahead.
Chart 2: Gold vs. FC & Gold vs. Global Equities
Gold's relative strength against foreign currencies and global equities preceded the strong sector rebound by a few weeks. Gold has already corrected some in real terms and now Gold in US$ is following suit as the US$ index bounces.
Gold/FC closed at 55. There should be very strong support at 52-53. Gold/global equities could also decline a bit more before testing strong support. For this rebound to develop into a real bull market these ratios must show strength in the next few months.
The past few weeks we've made the case of buy weakness and buy and hold. Buy that 10% to 15% weakness. Well now that could become 20% to 25%. Some of the best juniors could correct that much and not just the smaller exploration companies that doubled recently.
In TDG #458 sent Saturday I noted two quality companies that I missed during the recent rebound. They took off before I could buy them. One is my favorite Silver company and I was not real bullish on Silver at the time (doh!). I hope it corrects so I can buy it. The other is a company that is cashed up and is thought very highly of by a very respected and discerning newsletter writer.
What do you do if you are worried about a big correction? If you are 75% invested, you can use a 3x hedge and basically be neutral in your portfolio. If you have a lot of cash then look to buy quality that is off more than 20%. You can also reevaluate that 75%. Is there something you missed? Are there a few stocks in your portfolio that could be replaced with something better? (Like the one's you missed).
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