I’m adding more gold to the Jubak’s Picks portfolio today, April 8.
After a rally off the February 8 low on hopes that the global economic recovery was gaining steam, I think we’re due for a swing back to fear on disappointing growth numbers from the European Union, on stubbornly high (and perhaps rising) unemployment figures from the United States as more discouraged workers rejoin the ranks of those actively looking for work, and on worrying growth and inflation data from China. ((For more on these macro trends see my posts https://jubakpicks.com/2010/03/26/coming-to-a-wal-mart-near-you-inflation-from-china/ , https://jubakpicks.com/2010/04/08/the-greek-crisis-goes-on-and-on-an-on-with-no-light-at-the-end-of-the-tunnel/ , and https://jubakpicks.com/2010/04/05/so-yes-weve-got-an-economic-recovery-but-how-strong-is-still-an-open-question/ )
 The technical charts of many individual gold stocks and the Market Vectors Gold Miners ETF (Exchange Traded Fund) now show that gold mining shares have clear recent resistance and look like they’re headed higher—for a while anyway.  I’ve noted a number of times recently that in a market where trends don’t last all that long, investors don’t want to fall in love with any stock. An ETF, since it’s just a vehicle that tracks an index, is somehow less lovable. Which is why I’m picking it here over any individual gold stock. This ETF also holds shares of some silver miners and silver (as well as platinum) right now is outpacing gold so this pick gives me a way to gain a little extra lift.
I’m setting a very tight target price of $52 and a very short time horizon of August for this pick. If and when the ETF hits that target, I’ll re-evaluate.
Full disclosure: I don’t own shares of any stock or ETF mentioned in this post.
I live near the SWC mine and there was an article in today’s Billings Gazette that Norlisk was looking to sell its majority stake in SWC. SWC has done well since getting hosed by GM in their “pre-packaged” bankruptcy (so much for “Buy American”)
GLD and GLXJ broke resistance on March 31 and appear to be trending up; but, both have already run-up some 10 percent since. NG, OTH, looks less promising near-term from a technical perspective (yearly charts look good, though.)
Interestingly, the talking heads on TV were predicting a “significant” correction in gold a month or two back…haven’t heard same since then.
Does anyone know the tax effect of this particular gold ETF?
I read somewhere that gains from gold and ETF that holds gold are taxed higher than stocks…How about this one?
lotteollie,
Thanks!
Ed: I very seldom buy anything on my own that I don’t intend to hold for a while. I let Jubak’s picks sorta fill that void. I did buy a bit of PAL for the long term, but it ran up so fast I decided to take my winnings. After continuing to read Mark Anthony at seekingalpha I decided that it was a real opportunity that I should stick with and jumped in with both feet (OK- one foot). Right now it’s a long term until MA says otherwise.
Mike: Buying a single stock (as opposed to a fund) in a country like Russia scares me. You may be interested to know that NILSY was the largest palladium miner around. Palladium was a metal that was retrieved as a result of the nickel production, which is usually the case. Not with SWC and PAL – however.
This article may prove to be of some value to you. MA knows Norilsk. Best of luck to you.
http://seekingalpha.com/article/185739-palladium-the-bullish-case-now-looks-even-stronger
Cheers
Robert:
…pretty simple: I sold when it was at the top of the Bollinger band and now I’m adding it back at the bottom of it’s Bollinger band… No hard and fast trigger. I’m good with Jim’s fundamental analysis and $130 target but when a stock shoots up like POT did, with a huge pre-market gap etc., odds are good there will be repercussions of an emotion swing. Today I snagged POT at the very bottom and if I can find that price again with market indicators steady, I will continue to add.
Re stops: I don’t like trailing stops as long as a computer is nearby. Trailing stops have only helped me when I’ve been out of town, the rest of the time they just cost me a couple of percent of profits (at best) or triggered unintended sales just before a good wave upward. Every trade we make has timing implications and I’ve never been able to successfully hedge that. My brother has developed some conditional trading mechanisms based on technicals, but he helped program the main trading engine of the NYSE some years ago. I’m in health sciences. For me, if I believe in a trade, I make the best deal I can and move on. That’s my preferred approach.
I’ll give you a two health-related stocks for your watch list: CHSI and AMRN. The former – good to run with the new legislation. The latter – very risky but IMO the risk is at bargain prices.
Best to you all!
Speaking of miners & metals, anyone own NILSY, a nickel miner? Thinking of buying it.
For Francolargo:
I am curious, did you buy POT today on technicals, or Fundamentals ?
Was there an earning report that made you want to buy it here ?
Did you put in a stop ? Please where did you put in your stop ?
Ed and friends,
I agree, it makes sense that gold will be ‘cheaper’ in China if the yuan appreciates, and that equates to ‘worth less’, and that suggests that it is no longer a hedge against the depreciating dollar (to which the yuan is no longer pegged, in this scenario), and that means sovereign gold may come on the market and depress prices. The question is, in what kind of quantities and when? I believe that any significant reversal in China’s sovereign gold strategy – one of the spurs behind our buying GG, BTW – could drive significant market movement. Alternatively, holding the gold and selling the dollars would be nice for gold. If there is, say, a 3% yuan appreciation, is that a ‘middle of the road’ play where the $ and gold would drop together? I am 100% behind hedging dollar depreciation, but want to consider whether market volatility in gold is likely to increase, making short-term ETF plays more difficult. …though I grant that other commodities are relatively unstable as well… [Bought back into POT today, BTW…]
lotteollie,
If you’re playing palladium for the long LONG term, then you’re right, don’t sell. I personally try to time it.
francolargo,
China’s currency appreciation should have no effect on gold, unless you live in China. Then gold would be cheaper for them (although not necessarily cheap per se). However, due to the popularity of gold in China, you might see an increase for demand, which could give gold a side boost in dollar cost. But don’t expect that boost to be significant.
PAL and SWC have been great investments. I am not at all sure that they are topping. I’ve been following a guy that goes by the name Mark Anthony at seekingalpha for over a year. He knows palladium. When he tells me to sell, I’m getting out, not until then.
i worry that the ‘big guys’ can manipulate gold almost as much as it seems they manipulate oil. Now, that influence may wash over time, but I’m never comfortable with an entry point and am overweight GG already. Question: How much influence on GLD if China appreciates their currency?
terryw,
To paraphrase the old Garrett Morris SNL line, “Palladium has been pery, pery good to me.” 🙂
Seriously though, it’s up to you. I’ve always believed that if someone isn’t comfortable with an investment, then they shouldn’t put their money into it. Ever.
I am staying away from IAU/GLD, platinum, and palladium. Useful, but more trading vehicles for folks
Jim,
I picked up some GLD Monday when it cleared resistance. But it’s nice to have you on the bandwagon!
Speaking of precious metals, avoid platinum and palladium now. They’re topping.
However, they should be buys again soon. PALL should drop to somewhere in the $44.50-47 range, and PPLT should drop to the $163-165 range.
What about the Junior Gold ETF, GDXJ?
I am also looking closely at NG, held heavily by George Sorros