Is It Time to Pull Up the Brink’s Truck on Gold?

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

This week, the world watched as a massive hurricane came barreling into the southeastern coast. Yet there was another hurricane of sorts that slammed markets this week, and that was the hurricane of selling in gold and precious metals.

Indeed, gold, silver and gold mining stocks were collectively crushed this week, falling to their lowest respective levels since June and experiencing their worst respective weeks since November 2015.

The reason for the dulling in gold has a lot to do with the very real possibility of a U.S. interest-rate hike in December. Recall that last month, the Fed basically told us that’s what it wanted to do in the statement accompanying the September Federal Open Market Committee (FOMC) meeting announcement.

GLD

Well, this week, those rate hike fears actually started to ramp up in earnest. The result was a higher U.S. dollar, as well as a decline in dollar-denominated assets such as gold and silver.

SLV

Now, because of the sell-off in gold this week, I’ve had a lot of newsletter subscribers, Weekly ETF Report readers and clients of my money management firm ask me if now is the time to “back up the Brinks truck” and move into gold, silver and gold mining stocks.

My answer here is: Not just yet.

While gold, silver and precious metals miners have fallen back down right about to their respective support at the 200-day moving average, the general sense I get today is that the sellers are still in control.

GDX

I want to be patient here and wait for gold to firm up support at the 200-day moving average before adding any exposure to the segment. If this happens, it would represent a nice buying opportunity for gold, silver and the miners going forward.

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If, however, we continue to see fear of higher rates and the resultant stronger U.S. dollar push these sectors lower, then obviously an entry into gold, silver or miners here would be premature.

Finally, I know it’s usually a hard thing to know when to get back into a sector after a significant pullback. Knowing how to read the charts and using key technical support areas, such as the 200-day average, can be a huge help, but that’s still probably not going to get you back into a sector that’s corrected at just the right point.

Yet the key here is to not worry about getting in exactly at the right time. As long as you get back in at a discount to where the sectors were trading before the pullback, you are likely to be in good shape for the long run — or at least until the next move higher in these sectors runs out of steam.

If you’d like to find out more about how to use charts, how to determine key technical support levels and how to put a plan in place that gets you back into markets in time to “back up the Brinks truck,” then I invite you to check out my Successful ETF Investing advisory service today!

 

Churchill on Socialism

“Socialism is a philosophy of failure, the creed of ignorance and the gospel of envy, its inherent virtue is the equal sharing of misery.”

— Winston Churchill

The most-excellent British leader framed the struggles of his day in terms of principles, right and wrong and good and evil. If only today’s politicians would follow the Churchill example.

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Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week about what Clinton, Trump and Deutsche Bank have in common.

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Exchange-traded fund investment expert Doug Fabian introduces an emerging market fund focused on bonds.

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