I’m starting to get hate mail again.
Why? Because investors are jumping on the latest precious metals rally as if the train has already left the station. Even though I have been warning that one more low is needed before metals can really take off to the upside.
It never ceases to amaze me how emotional investors can get when it comes to gold and silver.
That’s too bad, because getting emotional is by far the No. 1 reason why investors lose money, in any market.
With that in mind, consider my updated weekly gold chart.
Take a look at gold’s recent bounce. It’s nothing but a blip, and a tiny one at that.
In fact, every one of my indicators tells me the bounce will soon end and a new leg down will shortly unfold, taking gold as low as the $1,050 to $1,070 level.
Silver looks pretty much the same. I expect one more leg down to the $15 to $17 area.
Why wasn’t the June low in gold at the $1,170 level and silver at the $18.22 final lows? In short, because neither metal hit their major long-term support levels precisely on cue. They came close, but not quite close enough.
You see, markets are much more logical than most would lead you to believe. True, there’s a lot of background noise and market action that seems illogical and can throw you for a loop.
But when you truly dissect any market and look at it through the lens of a microscope, which you can do easily today with massive computer power, you’ll see that virtually all market action has repetitive patterns, and that time and price must always converge on cue to get important turning points.
So what does the timing look like for the next leg down?
First, as I just noted, the current bounce should soon end, probably within days.
Then, gold and silver should move lower into the week of Sept. 23, with Sept. 26 being the target day for the major low.
You can see what the cycles show in this chart here. It highlights the most probable timing based on an analysis of over 1 billion different permutations of 12 years of gold data, or 3,060 daily data points.
After that low, gold should be off to the races. Ditto for silver. But …
Mining shares should bottom sooner!
It’s not unusual for mining shares to either lead or lag the precious metals. They can top or bottom before or after the underlying precious metals make their important tops or bottoms.
In the most recent cycle, most mining shares topped out the week ending Sept. 2, 2011, roughly one week before gold did.
And, according to my timing models, it appears that in general mining shares will bottom before gold does, as soon as the first week of August.
You can see the action in this cycle chart of the Amex Gold Bugs Index (HUI). Like the above gold chart, this cycle analysis is based on over 1 billion crunches of 3,053 different data points for HUI spanning the past 12 years.
It shows that the current mining-share bounce should end soon, give way to another downdraft, and then bottom on or about Aug. 6.
Then mining shares should be off to the races, before gold and silver bottom.
Which is precisely why I am now getting ready to issue my first mining-share buys in years.
These will be my first mining-share recommendations since I told my paying subscribers to sell all of their mining shares and grab profits barely one month after gold peaked at $1,920 in September 2011.
If you had heeded my major “buy” and “sell” signals on the yellow metal since then — and you acted on my signals to buy and sell some of the top gold-mining shares — you could have grabbed substantial long-term profits like:
• 150.6 percent in AuRico Gold
• 288.8 percent in Harmony Gold
• 301.5 percent in AngloGold Ashanti
• 415.4 percent in Newmont Mining
• 541.1 percent in International Minerals Corp.
• 554.8 percent in Gold Fields Ltd.
• 750.1 percent in IAMGOLD Corp. — enough to turn every $1,000 invested into more than $85,000.
And believe it or not, those are not even close to the biggest gainers you could have jumped on:
• Agnico Eagle Mines jumped 850.2 percent
• Kinross Gold Corp. surged 877.8 percent
• Newcrest Mining rose 1,059.4 percent
• Goldcorp increased 1,248 percent
• Royal Gold, one of my favorites, soared an amazing 2,957.9 percent
That gain in Royal Gold alone would have been enough to turn every $10,000 you invested into $305,790 … and a $40,000 investment into more than $1.2 million!
Keep in mind that not only did those who acted on my signals grab substantial profits, they avoided huge losses as most mining shares then plummeted, on average, 68 percent.
Unfortunately, it’s impossible to travel back in time and grab those entire moves. Nobody can. But that’s OK because — as I’ve been warning you recently — gold and silver are bottoming and so are mining shares.
Thing is, this time around investors are going to be very careful when they purchase mining shares. Only a handful of mining shares will spin off huge profits going forward.
The reasons are many, and I have been documenting them almost daily in my recent columns. I don’t want you to invest in the wrong mining shares. If you do, you could lose substantial sums of money even as gold and silver begin their next phases up.
To grab your share of the huge new profit potential coming in mining shares, take these critical steps immediately.
First, make sure you have plenty of cash on hand and that your brokerage account is set up and ready to trade mining shares and mining ETFs and leveraged ETFs.
It’s all up to you and what you can afford, but my recommendation is to commit at least $25,000 to trading the next bull market in the precious metals.
Second, never forget that you can’t just run out and willy-nilly buy any beaten-down mining company. For instance, though I liked Barrick Gold before, it’s now off my buy list. In fact, it’s on my list of 10 mining shares to dump right now.