Gold declined again this week, trading as low as $1,263.80 an ounce yesterday, basis the most active December futures contract. The downtrend has now persisted for seven of the past eight weeks. That’s on cue with our cycle forecast for another move lower this month, followed by a major cycle turn date to the upside.
Now, let me head off the skeptics at the pass; those of you who are wondering why we’re buying now, ahead of the next major upturn.
First, there’s an age-old adage on Wall Street that nobody rings a bell at the top or bottom of a market move to alert you. In fact, most investors get it wrong by persisting in the belief that the prevailing trend will extend into the future, even long after a reversal has taken place.
Mark my words, many investors will miss the bottom and upturn in gold, silver and mining shares this year, and will most likely miss out on the big potential gains the cycles are forecasting through mid-2018! And 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 show an earlier bottom and upturn in silver and junior mining shares. Perhaps as early as next week, as you can plainly see in the cycle chart below …
This chart for silver shows a key cycle turn date, and fresh uptrend possibly starting by the end of next week. Ditto for the cycle chart tracking junior mining shares. That said, a few words of caution are in order. 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: Wheaton Precious Metals (WPM). The stock is under pressure today as I pen this, just like most miners. But the shares have rock-solid support between $19 and $20 per share, just a few percent below today’s price.
Now let’s look at the upside potential. WPM traded as high as $47.60 just a few years ago when gold last peaked … AND it has grown into a much more profitable company since then.
The upside potential therefore is easily 130%-plus from here, just to get back to its old high! The more likely profit potential is 200% to 300% in the next phase of the gold bull market the cycles forecast.
Think about the reward-to-risk ratio: 200% to 300% in upside potential vs. 5% to 10% downside risk! Folks, it just doesn’t get much better than that!
In fact, all your recent portfolio additions including: WPM, as well as ProShares Ultra Silver ETF (AGQ) and First Majestic Silver Corp. (AG) 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
