Gold declined again this week, trading as low as $1,263.80-a-troy-ounce yesterday, basis the most active December futures contract.
The downtrend has now persisted for seven of the past eight weeks. That’s on target with our cycle forecast for another move lower this month, followed by a major cycle turn date to the upside.
Silver is now outperforming gold by a slight margin. The most active December futures contract gained about 1% this week from Monday’s gap-lower opening through the close of pit trading this afternoon.
That’s to be expected since the cycles are forecasting an earlier bottom and upturn date for silver, and ditto for junior mining shares.
Now, let me head off the skeptics at the pass. Those of you who are wondering why we’ve added new positions this week, before the next major upturn.
First, there’s an age-old adage on Wall Street that nobody rings a bell to alert you about the top or the bottom of a market.
In fact, most investors get it wrong by persisting in the belief that the prevailing trend will extend into the future, long after a reversal has already taken place.
And mark my words, many investors will miss the bottom and the upturn in junior mining shares this year. And they will most likely miss out on big potential gains that the cycles are forecasting through mid-2018! You do NOT want to be one of them…
Second, while it’s true that gold may not bottom until late this month, or early December, the cycles clearly point to an earlier bottom and upturn in silver and junior mining stocks. Perhaps as early as next week, as you can plainly see in the cycle chart below …
This chart for junior miners shows a key cycle-turn date and a fresh uptrend possibly starting by the end of next week. Ditto for the cycle chart tracking silver by the way. Both appear to be on track for a bottom before gold and large-cap mining stocks. And that’s great news for your portfolio.
That said, a few words of caution are in order here. Please do not take the forecast turn date of Nov. 10 as gospel. In a perfect world, it would be great if markets turned on a dime with the forecast date. If so, I’d be living in Bali placing a handful of trades each month and fishing or sipping mai tai’s by the pool in my ample free time!
Remember, Larry always cautioned us that these turn dates can be a tad early or late by anywhere from a few days to a few weeks. But it certainly puts us in the ballpark for a change in trend, which is a huge advantage over the vast majority of investors.
Third, the best way to take advantage of an approaching upturn date is to be a scale-in buyer. What does that mean? Well, going back to my first point: You’re never gonna catch the exact low or high in markets, unless it’s just dumb luck.
That’s why you don’t wait for a certain date on the calendar to go all in. Instead, you buy high-quality stocks during the bottoming process, when they’re still on-sale, to gradually build out your portfolio.
Case in point: Golden Star Resources Ltd. (GSS). Sure, the stock is down today as I pen this, retracing some of the big gains yesterday after a great earnings report. But the shares have rock-solid support between $0.70- and $0.75-per-share, just 10 percent or so below today’s price.
Now let’s look at the upside potential. GSS traded as high as $6 just a few years ago when gold last peaked … AND this fast-growing junior is much more profitable now than it was back then.
The upside potential: GSS could easily gain 600%-plus from here, and that just gets back to the old high! More likely the profit potential is even greater during the next phase of the gold bull market the cycles forecast.
Think about the reward-to-risk ratio: 600% in upside potential vs. 10% to 15% downside risk! Folks, it just doesn’t get much better than that!
The fact is, all your recent portfolio additions including: GSS, as well as ProShares Ultra Silver (AGQ) and Sabina Gold & Silver Corp. (SGSVF) have huge upside potential and very little downside risk at this stage of the game. So, continue to hold these, and all your open positions.
Plus, expect more trade alerts to come in the weeks ahead, as we get positioned for the buying opportunity of a lifetime.
Good investing,
Mike and Sean