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Silver and gold prices and gold stocks and silver stocks are ready for a new uptrend. The gold and silver prices both broke out of their downtrends of 5 months last week. The recent Fed announcement to keep rates low through 2014 was viewed as bullish news for precious metals and gold stocks. This news created a technical breakout that could gain more momentum in the next few months and the rest of 2012. In addition, the gold stocks and silver stocks also saw big price and volume days on the Fed news. This article will look at reasons for more upside pressure for both traders and investors.
This blog finishes up some very compelling reasons to own gold and silver and the gold stocks and silver stocks. It also takes a look at owning some of the junior mining stocks in gold and silver. Finally, we end the blog with our top junior mining gold? stocks and the top speculative mining gold and silver stocks. Many could see huge gains in the coming months and years but they will see times of very big swings so buyer beware on the timing.
Gold and Gold Stocks Technical Breakout From Downtrend:
Silver and Silver Stocks Technical Breakout From Downtrend:
Precious metals for numerous reasons will have upward price pressure for the next few years and beyond. This report focuses more on silver for getting the larger return of the two metals but gold will see strong appreciation as well. MR would expect gold to see at least a 50% increase and to possibly exceed $3,000/oz in the next 5 to 10 years. We believe silver may even see a double from the current levels. Specifically, MR expects silver to exceed $60/oz over the 3 to 5 years and $100/oz in the next 7 to 10 years. The following reasons explain the upward pressures pushing both metals, but especially silver, much higher in the future. This is a continuation of a previous blog ? Top Stocks To Buy Now | Gold Stocks | Silver Stocks.
Reason #6: Individual investors and numerous countries are accumulating and stockpiling gold and silver.
Gold is a safe haven in times of wars and political and economic uncertainty. This is the world we live in. The recent times of economic uncertainty in 2010 have proven that very point as gold and silver have clearly outperformed other asset classes. Gold and some gold stocks have been outperforming for the last 10 years. And, history has shown this kind of result many times. Because of the economic uncertainty and even some creeping doubts on the US dollar as a reserve currency, countries have recently been increasing their gold reserves and stockpiles by large amounts (China, India, and Russia to name just a few). For example, in October 2009, India purchased 200 tons of IMF gold. This was the single largest purchase of gold by a central bank in the past 30 years. This is bullish for gold stocks going forward.
And the real wild card could be individual investors in China. In the past, the Chinese government forbade ownership of all precious metals. But now, the ban has been lifted. In fact, China is offering silver and gold bars for investment. The state-run China Central Television (CCTV) is running a campaign encouraging the population to invest in gold and silver. That means there are over a billion potential new silver and gold investors ready to stockpile their own reserves. This should also help push up gold stocks and silver stocks. This is especially significant when you consider the average savings rate in China is 30 to 40%. This increased demand could significantly affect the supply.
Reason #7: The fast growth of the emerging market middle classes and their huge demand for commodities to support infrastructure growth will put enormous upwards pressure on commodity prices across the board, including gold and silver. And, of course, that will be good for gold stocks and silver stocks.
MR has previously written about the growing middle classes in the emerging market countries like China and India. The strong growth and large population numbers are putting huge demand pressure on all commodities for transport, jewelry, infrastructure for businesses and residences, agriculture commodity related products, etc. This increasing and high demand worldwide for commodities in general will push gold, gold stocks, and silver and silver stocks prices up along for the ride.
Reason #8: Decades of very low gold and silver prices stalled and postponed production and exploration that ultimately has significantly lowered their supply sources. Lower supply will boost the price which is good for gold stocks and silver stocks.
Gold production peaked in 2001 and has been falling since then. Lower supply will be swamped by increasing demand for gold and silver going forward. New gold and silver locations are limited and production is still not what it used to be. Furthermore, the relative cost of finding new precious metals through exploration is extremely high in today?s economy. So gold stocks and silvers stocks and their profit margins should increase.
Reason #9: The emergence of the gold and silver ETFs, GLD in particular, has changed the supply curve of gold in the world.
GLD is backed by real gold bullion that must be purchased. It is a proxy for real gold. Therefore, momentum in the GLD ETF as an investment actually lowers supply which will continue to put upward pressure on the price. This upward price movement will increase the momentum to the upside which will reduce supply again. It is setup for a parabolic move at some point and silver will be in the same position to benefit. This could provide doubles and triples in some of the junior mining gold stocks and silver stocks.
The final question is how to best invest in silver and gold and the best gold stocks and silver stocks. There are several ways to do it. Of course investing in silver collector coins is one way. Other ways that are a bit easier to do involve some select Exchange Traded Funds or individual stocks.
The first chart is our top rated junior miner stock list and the second list includes the top speculative gold and silver mining stocks. We believe these are very good stocks to buy now.
Best Speculative Gold Stocks and Silver Stocks:
Other ways to play this uptrend move in the gold and silver prices other than gold stocks and silver stocks is with ETFs that track the real asset prices. Here are the top ETFs for investing in the underlying prices and avoiding the individual risk of mining companies. Remember, mining companies can be shut down with flooding, strikes, cave-ins, etc. They carry more risk than the ETF?s following the asset price. Also, an ETF basket of gold stocks minimizes the individual company risk as well (see GDX).
Gold ETFs: GLD, IAU, SGOL, DGP (2X), UGL (2X); Silver ETFs: SLV, SIVR, AGQ (2X)
Gold Stocks Miner ETFs: GDX, GGGG, GLDX, PSAU, GDXJ (Jr. Miners); Silver Stocks Miner ETF: SIL
Gold and Silver Price Mix ETF: DBP
Precious Metal Basket (Gold, Silver, Platinum, Palladium) ETF: GLTR
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CEO Jalexa Trading Consultants, LLC
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