Gold & Gold Mining Stocks Are In Rotation

Technical Analyst, Trader, & Founder of Technical Traders Ltd
March 3, 2014

In the past month we are now starting to see a new bull market start and that is in the precious metals sector (gold, silver and mining stocks). Also we see commodities as a whole showing signs of a bull market. Commodities tend to perform the best when the US stock market is nearing a major top.

After exiting my gold investments in August 2011, gold and the entire precious metal sector has been in a large correction phase within its cyclical bull market.  Crude oil has also been trading sideways for years. Because of this I have not been active in trading or investing in these two commodities.

These two commodities Gold and Oil) are what I focused on trading when they were in strong rising or falling trends.  That is how I came up with the name for my ETF trading newsletter

Anyway, with that said, lets jump into some gold forecast and gold stock analysis because precious metals are firing up again and there are some big opportunities in 2014 emerging as we speak.

All trading and investing strategies should be based around trading with the underlying market trend. The best way to understand and identify what trend the market is in is through stage analysis. This theory because popular by Stan Weinstein as he explained how the market trades in four different stages which I explain in detail in my new book.

Gold and It’s Market Stage Analysis:

The key to investing is to be buying and holding investments which are starting a new bull market (Stage 1 & 2). You don’t want to be holding securities that are in a stage 3 or stage 4. Investing in overpriced assets that are showing signs of a market top similar to the 2000 technology sector, and 2008 financial crash is not where new investment capital should be put to work.

Most investors only focus on the major indexes to gauge the market strength and ignore other asset classes. But knowing that there is almost always a new bull market starting whether in a stock, sector, world index, commodity, real estate, bonds, or currency etc. So it only makes sense to rotate money out of mature markets and into new fresh investments that show growth potential.

Money Is Rotating Into Gold Stocks

In the last two months we have seen gold mining stocks surge in value and the best way to gauge this is through the $HUI gold bugs index chart.

While the SP500 index shown in the upper half of the chart with its broadening price pattern and rising volatility, we can see the $HUI index has turned bullish and is actually the strongest sector in 2014 thus far.

Reasons Why My Gold Forecast Is For Higher Prices:

• Issues in Ukraine could lead to a disaster and this crisis could send gold soaring as a fear trade. Gold    typically rallies during a war…

• Since December Gold formed a series of higher lows and highs.

• Gold Weekly and Monthly Chart has broken breaking above my downtrend-line.

• The daily gold chart is above the 150 SMA. The bulls clearly remain in control at this time.

• China´s Gold imports are up over 30% compared to Hong Kong this past January. The sharp drop in the Chinese Yuan was likely a big contributing factor.

• Gold being a hedge against inflation, the strong rise in commodities this year could trigger higher than expected inflation in 2014.

Gold Investing Conclusion

In short, investing for long term growth does not need to be complicated as a self-directed trade. Nor do you need to be hoping for your investments to continue grow year after year no matter of the stock market direction.

With very little effort each year (position rotation) you can rotate your investment capital out of mature markets and into assets which are starting a new bull market. All this can be done with exchange traded funds and following my Model ETF Portfolio available to my followers.

Chris Vermeulen  

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several financial hubs like


Pure gold is so soft that a strong man can squeeze it and shape it.
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