Bill Cara: Junior gold list up +15.9-pct in 15 days, Wed., Mar. 29, 2006, 5:20 PM

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March 29, 2006

Junior gold list up +15.9-pct in 15 days, Wed., Mar. 29, 2006, 5:20 PM

Greed drives the market. But you ought not to be a pig about it or you'll get slaughtered.

Exactly three weeks ago, I wrote up a list of 13 smallish gold and silver producers from my visit to PDAC 2006 " as I had promised. None are penny stocks. They all are owned by financial institutions, with solid underlying production of precious metals.

The list is up an average of +15.9-pct over 15 days. Greed rules.

Here is where I have to let some air out of the balloon.

As you know, I tell you I try to make between 5 and 14-pct gains in a couple months. If I am fortunate enough to do that, I can after netting out my losers and partial winners manage to keep close to Warren Buffett's long-term track record.

So +15.9-pct in 3 weeks exceeds my personal objectives. I'm out.

Here's why.

Number one: I don't want to teach greed. I'm not a greedy person. I'm a disciplined professional; and I teach a discipline to anybody who cares to listen.

Number two: My discipline calls for the application of RSI rules. When RSI on the Daily price data gets over 70 and 80, I get nervous. I don't sleep well. And at the close today, Taseko Mines (TGB), Crystallex (KRY), Hecla (HL) and Northern Orion (NTO) had a combined average RSI of 88. That's a wake-up call.

Number three: Trading is about earning percentages every day, every week, every year. It's a long voyage. There is no place for ego.

You know; every day people somewhere in the world write me to thank me for teaching what I do. I do it for that thanks, and nothing more.

I'm afraid that if I started to teach greed, I'd very soon disappoint you, and I wouldn't receive your letters of thanks.

And then I wouldn't want to do this blog.

Now I have to go do an article for TraderDaily.com. I'll do it on Silver because that's what everybody in the world is talking about today. Even today, without prompting, their editor suggested it would make for a good story. LOL

******************

Not to leave you on a downer: I do believe this cycle will take Silver (long-term) to $15 or higher, and Gold (long-term) to $700 or higher, and $625 this year (intermediate term). The next daily cycle that has RSI values below 50 for the leaders, I'll start to take note again.

If you decide to hang in, be extra careful after the SLV (Silver metal ETF) is issued and begins to trade. Just when everybody thinks good things are going to happen, usually they get surprised.

Posted by Posted by Bill Cara on March 29, 2006 05:20:40 PM | Category: Goldminer Producers , Trader Tools

Discourse

Actually I was mostly out of my trading position at 2:40 this afternoon. (Had to take the girls to the doctor and couldn't wait around for the close, not that it would have made any difference.) Core holding of gold and some miners I picked up on 3/10 at the low remain. May miss some upside but I don't care.

Posted by: MarkM at March 29, 2006 6:45 PM [link]

"There a tear in my beer" ....no tear in these beers...bud & tap

Posted by: Bullring at March 29, 2006 7:55 PM [link]

Golden days have past? I have scaled out of some lower priced mining stocks (mostly silver, not gold) which have been big winners but I am not inclined to wholesale toss the mining stocks or my GLD/IAU shares.

It strikes me that as I look stock by stock many have only just broken to the upside. Rydex PM assets do not reflect speculative extremes we have seen at past intermediate term peaks, in fact most of the asset rise is due to nav appreciation NOT new flows; CEF premium has actually been falling, not rising.

I agree with the view one should reduce exposure anytime we get the spikes we've seen in these smaller ccompanies, but I am inclined to remain overweight the group (preference for gold over silver).

I actually (gulp) bought some ABX back today while selling some TIE and HL.

Meanwhile the market is rising... at least until quarter end.

Posted by: stockman at March 29, 2006 8:02 PM [link]

stockman..i sold tie also, but bought back ccj
(you led me onto this one a month or two ago)

Posted by: Bullring at March 29, 2006 8:09 PM [link]

BR-

I have traded around CCJ, scale-add on energy strength a few days back as well. I am also long your BUD, on LT chart and form 4. I actually like the LT chart on TAP better but I haven't drank a silver bullet in years... and no 4 so I am in for a liitle BUD instead.

I was stopped on POT a while back, it has been a great stock for me in the past. Unfortunately I am out of that one as it moved nicely today.

All this talk of party stocks reminds me of a song... 'It's hard to kiss the lips at night that chewed your a__ all day' speaking of which I have been stopped out of my STJ amd MDT positions, remaining long BSX and SYK.

I still hold a (smaller) position in TIE, but I have been involved with it for a while and have started to feel attached. Great example of extraordinary returns that come from SOME form 4 (sponsored) positions.

Posted by: stockman at March 29, 2006 8:25 PM [link]

stockman said:

"It strikes me that as I look stock by stock many have only just broken to the upside. Rydex PM assets do not reflect speculative extremes we have seen at past intermediate term peaks, in fact most of the asset rise is due to nav appreciation NOT new flows; CEF premium has actually been falling, not rising."

I would not characterize this as anything but a ST move, nowhere near to an intermediate term peak. If gold does not break out to new highs here, you could say that the corrective phase isn't even over yet, although you'd have to have a close of about 545 to convince me that it's still on and I'd sure as hell be a buyer of the miners around there.

Posted by: MarkM at March 29, 2006 8:45 PM [link]

Hah! Serves me right! I see gold up $6.70 early on the Iran mess. That trading position would look even better today but you can't undo these things. Still have the core position. These miner RSIs are gonna go through the roof!

Posted by: MarkM at March 30, 2006 5:09 AM [link]

as I write, gold is up $7 bucks to 580. Can we characterize this is a break out to new highs? I'm inclined to hold, but then again I haven't been holding the smaller miners, which have been on a tear since Bill's posting.

Posted by: EJStockman at March 30, 2006 5:13 AM [link]

A simple approach and one I use is to watch the price oscillators (like RSI).
When they are "overbought" I look to sell.
I wait for the uptrend line to be broken to the downside.
Then I sell.
It may go higher then, but no guesswork involved.

Posted by: g034 at March 30, 2006 6:53 AM [link]

EJ-

A variation is to take a portion off the table when certain RSIs are hit to lock gain, hold half or so but tighten stops. Everyone has a different method. Don't want to give gains back but don't want to be so tight as to miss ride. Some look at BB for this or average true ranges to figure stops or just have a percentage or dollar figure in their head.

Posted by: MarkM at March 30, 2006 7:13 AM [link]

I may pare back some today, but I'm inclined to side with (go figure) stockman on this one. I do watch the RSI and don't see some of the bigger miners as extremely overbought. I don't think Bill was sounding the alarm on a huge downward spike but rather issuing a caution against getting too heady over the small miners' run up. I do thank you all for the continued advice and tutelage. just trying to learn, have fun and make some wise and informed investment decisions...

Posted by: EJStockman at March 30, 2006 7:46 AM [link]

USGL RSI(14) trading around 84 after big bump today. Will probably sell into strength. Other miners still have manageable RSI (i.e. GG, GFL, AGI, HRG.) Long all mentioned.

Posted by: Dave at March 30, 2006 10:23 AM [link]

The shorts are takin' it in the shorts today. Glad I still have SOME of my position. Sheesh, did I get SCHOOLED here.

Ther will be re-entry points (Uh, won't there?) :)

Posted by: MarkM at March 30, 2006 10:29 AM [link]