What's Next for Gold and Gold Stocks?

[portart]

No, but I will tomorrow. I see all commodities making a comeback soon. Inflation is coming this time and you can see it forming everywhere but the markets usually signal it before the consumers catch on.

The most important thing here is that we don't stray from our min 25% gold exposure no matter what. It's smart to over weight gold here as I did in my VP using the gold ETFs as a high percentage earning tool in my VP to enrich the comeback from last years malaise. No doubt some great gains do exist there if gold can maintain it's momentum. But as I said earlier, these things move most dramatically in the beginning so you have to get in early. Overall, if you are patient, you can buy and add during pullbacks assuming the trend has changed. That is 64K question that holds the key to buying in hard and holding tight.

One thing I have learned in investing that trends don't change often and they don't change easily. I would like to believe the trend has changed back from gold up, market down but I am leery because it started right at Jan 1st. and not because of a single economics point of view that you can put your finger on. Essentially it goes like this. Most all investors are hung up on YTD totals. You don't have to be a genius to see market up 40%, gold down about the same amount for 2013. Common sense says it won't be market up another 40 and gold down 40 this year. So year end, like clockwork, the gold stocks bottom, gold bottoms and the market sold off...a little, maybe 5%. This is just a little too tidy for my taste so I am going to hedge and take some profits off the table until I am convinced the trend has turned. I can't say when but the change will be tested. We are not getting any panic buys into gold and panic sells out of the market. Consequently, the trend may be just taking a break to offset change of year totals. This could be a lot of moving money around and not a sea change.

We got a lousy jobs report so gold got another bump, this time to $1,300. But think about this. If the jobs number was just as expected, would gold be where it is now? I say no. If we had a true change in the trend, gold would go up regardless and probably would be closer to $1,400 then $1,300. So I am cautious for all these reasons.

Personally I believe this is a false economy propped and created by the Fed. However, that and $2.00 will buy you a cup of coffee. If trading was just common sense, we would all be rich as hell.  This is why I believe totally in PP and speculating on the edges with money I can afford to lose. It has worked to protect my life savings and I would rather miss a run up any day then get pummeled and lose 40% of my savings, not to mention my sanity.

When I was much younger, I was a market gunslinger and made , for me, huge amounts of money taking outrageous bets. I was extremely lucky and my instincts were awesome. I got in and out of AOL before it cracked and made a lot of money buying XM radio at 4.00 and selling at 50 (I had a lot of it). I made great money on uranium stocks following James Dines who I still read but now I make my own picks. No one is hotter then James Dines when he is on his game. If you don't read his newsletter, your missing a really great and entertaining read. He wants to sell newsletters so he is a bit pompous but you learn to read past all of that.

The big thing to remember though was it was great time in the 90s then in a huge long bull market where guts and instincts paid off. It it was a bear market, I would have looked like a dummy and lost my ass. The trend saved me. Identifying trends is, in my mind, outside of inside knowledge on something, the key to success in investing. Trying to know when a trend starts and ends is hard. Hard enough to know I that I won't make a call on it with all my money on the table. This is why I love PP. It keeps you in the game, gets you gains over time and lowers risk.

Last year tested all of us. This year will be better but bonds doesn't offer as much fuel as when you are in a rates falling world so you have to make it up in your VP, being smart and making smart bets. I am up 4.5% on my total portfolio in a little over a month. I am not anxious to give that back being greedy. I have a feel for things right now and until I am proved wrong, I am going to follow them. 

[Kshartle]

I'm finally making money on these gold stocks and you want to talk caution Portart?

GDXJ is going to be up 200% this year and at least another 150% this year. And I am going to pull in my retirement date after I sell at the top.

The economy is a complete disaster. Hold onto slips of government paper promises at your peril.