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Winds of Change Blow for Precious Metals Mining Stocks

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At this point, it seems that higher precious metals prices will be seen this fall and winter.

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Let's now move on to a very interesting chart that will show us the performance of mining stocks relative to gold.



In the miners to gold ratio chart, we also see a breakout this week. This is important and encouraging for mining stock investors. The ratio has been struggling for a month to break out and we finally see a convincing move above the resistance line.

If a correction is seen and the ratio does not break below the support line, this will be a strong signal that miners will outperform gold in the month to follow.

To finish off, let's have a look at our own in-house developed indicator that serves as yet another confirmation of the recent bullish change in mining stocks.



On September 7, one of our indicators flashed a buy signal as it moved to the dashed line.

The medium-term trend is clearly bullish right now. If the correction is seen in the precious metals in the following days, as described earlier, we expect the bottom (and a great buying opportunity) to be confirmed by at least one of our indicators – just as previous important bottoms were (see the above chart for details).

Summing up, the miners are beginning to outperform the underlying metals and this bodes well for the future performance of the mining stock sector in the medium term. However, the following days may not reflect this bullish trend because the HUI Index is extremely overbought on a short-term basis.

Thank you for reading. Have a great weekend and profitable week!

For the full version of this essay and more, visit Sunshine Profits' website.

Twitter: @SunshineProfits
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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