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February 10, 2012 / Jeb

Gold, Silver, Industrial and Base Metal Miners Set To Outperform Gold

Gold’s accelerated move to $1900 in the summer of 2011 past overhead resistance indicated the market was waiting for an inflationary QE3.  The market got a surprise as Bernanke waited until 2012.  This was no surprise for my readers and precious metals declined lower in the second half depicting a surprise move with gaps lower.

Luckily we were able to call the top in silver in April 2011 and gold in September 2011 as it reached overbought conditions, locking in partial profits.  On April 28, 2011 I wrote,“Remember that I am recommending partial profits if your winnings enable you to play with the house’s money and you are still holding silver from our August  2010 Buy Signal at $18. Other readers who have not been able to build a position can wait for the inevitable pullback as additional buying opportunities.”  A few days later in May we saw a volatile decline in silver of close to 40%.

Likewise in August of 2011, I became concerned of a correction in gold as it reached overbought territory.  On August 5, 2011 I wrote, “Although the technical picture for precious metals is improving, there will be periods of volatility as the global markets shake. A consolidation in gold would be normal and healthy.”  A few weeks later gold topped and corrected for the rest of 2011.

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