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Jeb Handwerger

Jeb Handwerger

Jeb earned a Bachelors Degree in Mathematics and a Masters Degree. He learned most of his technical analysis from the school of hard knocks, managing…

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Are Gold and Interest Rates About To Take Off Higher?

Summary

  1. Major bullish breakout in precious metals and commodities on weak US economic data.
  2. Rising interest rates and a declining US dollar could be the catalyst.
  3. General Equity market may be topping after four year rally along with US bonds.
  4. Commodities, Energy and Metals may attract value bargain hunting investors.
  5. Two Junior Miners led the entire OTCQX exchange of over 10k companies spanning all the major sectors.

There is an old saying in the markets about selling in the month of May (NYSEARCA:DIA) and going away until the fall. Experienced investors in the junior mining sector (NYSEARCA:GDXJ) know that is the busy season for drilling and exploration. I think it may be time to sell the overvalued general equities in May and buy the highest quality junior miners drilling away in the summer months.

There are many good signs for a major bullish breakout in the beaten down precious metals, energy (NYSEARCA:XLE) and commodity sector which may be bottoming as the general equity, bond market (NYSEARCA:TLT) and US dollar (NYSEARCA:UUP) appear to have recently topped a couple of months ago.

Rising interest rates and the specter of higher inflation with anemic growth in the US could cause a return to the deeply discounted commodity sector.

I have encouraged patience in our wealth in the earth sectors and continue to search for the highest quality situations where we witnessed major gains despite an incredibly challenging bear market in mining.

Metals and Energy Breaking Out
Larger Image

Technically precious metals could be on the verge of a major breakout. Gold (NYSEARCA:GLD) is breaking above $1221 and its 200 day moving average. I believe it could test January highs at $1310 in the next few weeks.

I am closely following silver (NYSEARCA:SLV) and the increased volume breakout at the 200 day at $17.15. If it can clear that the next test is $18.25 which was the January high which could be hit this summer. Copper (NYSEARCA:JJC) looks very strong holding the 200 day moving average as the 50 day rapidly moves higher attempting to make a bullish golden crossover. Look for this to take place over the next month.

Similarly, I think oil (NYSEARCA:OIL) could bounce to the 200 day moving average following copper which would be around $68. Currently its trading around $60. Watch the uranium mining ETF (NYSEARCA:URA) which is quite possibly breaking through major resistance at $12.15.

Investment dollars are clearly coming back into mining, metals and energy as evidenced by the increasing volume. This could be lead by bargain hunting value investors who are looking to hedge their bets after a record long rally in the Nasdaq and S&P500.

Mining is not dead and still leads to the best outsized gains if you do your homework as evidenced by two of our top recommendations in 2014.

Two junior Mining Stocks lead the entire OTCQX in 2014, a global marketplace with over 10k public companies in all sectors. This is amazing as it occurred during the worst bear market in mining history and the huge bubble in tech (NASDAQ:QQQ), biotech (NASDAQ:IBB), housing (NYSEARCA:XHB) and financials (NYSEARCA:XLF).

Despite this macro trend over the past few years against wealth in the earth assets two of our featured companies rose to the top of the entire marketplace. This may be a sign that wealth in the earth assets may be making a major sentiment turn in the market.

 


See the best performers on the OTCQX in 2014 by clicking here.

 

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