[Chart of the Week] Equally-weighted Precious Metals

JC Parets
February 22, 2021

Last Summer when Gold ran into those former highs from 2011, it only made sense for price to recognize that overhead supply that had been in place for close to a decade prior. Even if only temporarily, that was big time resistance way back when, sending precious metals tumbling. So to ignore that seemed irresponsible (see Sept 3rd Conference Call).

Now, at the time we did not know how long this process would take, or if it was even necessary. No one knew. My suspicion, at the time, was that it could take months, maybe even quarters. But maybe longer, or perhaps would never even break out at all. I didn't know. No one did.

So we sat back and waited while basically every other asset class on earth ripped higher, except bonds. So you could have owned pretty much anything but gold and treasury bonds and done great since Labor Day.

Now, while the market has punished owners of gold, it's treated Platinum and Silver investors much better, especially in 2021. This makes the Equally-weighted version of Precious Metals MUCH more attractive than Gold on its own:

We'll have more on Precious Metals throughout the week, so stay tuned.

But a good old school strategy to Buy new 6 month lows within strong longer-term uptrends. I forget where this comes from, but it's always stuck with me.

Gold and Gold Miners all made new 6-month lows last week.

So if you believe they are in longer-term uptrends, which we do, then this is that.

This chart above is a much broader representation of precious metals. An upside resolution here back above those 2011-2012 lows is likely to prove to be a powerful catalyst for the group.

We still like Silver if it's above 27 as well as some individual mining stocks.

BUT, an upside resolution in the Equally-weight index confirmed this week would mean we should have much broader exposure to the space for the first time since last summer.

It's been a while. But has it been long enough?

I think this is the chart that will tell us.

JC

 

Check out our latest on Commodities as a Group here

 

Filed Under