Punishing Gold & Silver Late Comers
Last week I wrote about gold, silver, rare earths and quantum computing sectors showing classic signs of greed and euphoria. Recall the man on the train to NYC who told me to “buy gold” and “those AI stocks”. Then I had a friend advise me to load up on silver. This friend had never offered me investment advice. Of course, the gold commercials are back. And the pundits on TV have revised history about buying gold 50-75% lower than current levels. I heard them speaking about $7000 and $10,000 gold by 2030. Funny, not the stuff you hear at bottoms when everyone tells you why you shouldn’t own something.
I don’t know whether this trade is in the third or fourth quarter of a game, but risk far outweighed reward. Over the past three sessions we have seen two downside reversals with Tuesday showing a significant loss. Of course, gold is still up enormously. Markets do a great job of punishing late comers, those who buy simply because everyone else is buying. And then they get shaken out on the first plunge.
Silver looks worse than gold. While a bounce is likely coming sooner than later, I would be cautious about anything other than a short-term trade. There appears to be lots of dumb money in the sector with some folks using borrowed money to do so.
In the stock market a small trading range is what I see right until new highs are made which should be coming. As I have since mid-April, all weakness looks like a buying opportunity.
On Monday we bought JNK, HYG, SPYQ, WMS and SPHB. On Tuesday we bought more SPHB, more PCRX and more XLC. We sold JNK, HYG and RSPF.
