Also, Jeb Handwerger’s newsletter covering precious metals is suggesting this morning in an alert to clients that they start planning exit points to secure profits in GLD and SLV.
“You must be prepared to accumulate your products when there is a panic and sell them when there is euphoria,” he notes.
The publisher of the “Gold Stock Trades” report still expects the yellow metal to reach $1,800 an ounce and silver to surpass $60 by 2012.
But he also believes a correction is in order and that such a move would provide further upside to both metals.
GLD has not reached the stage where it can be considered as trading under “overbought” conditions, Handwerger writes. It still hasn’t hit technical overhead resistance levels yet, but “it may do so over the next few weeks,” he warns.
Although the Fed’s quantitative easing program of buying $600 billion in Treasuries is approaching an end, Handwerger sees more government intervention in markets as likely.
That might provide more support for precious metals. “Think about selling some of your gold holdings at that time,” he states.
“(SLV) is close to 70% above the 200-day moving average, moving parabolically and surpassing overhead resistance, while GLD is only 12% above the 200-day moving average. This is extremely divergent from the historical mean. We are in a buying hysteria and short squeeze in silver.”
It might be interesting to note that analysts polled by Reuters today are predicting that gold’s decade-long bull run will continue over the next four years, although at a slower pace.
Read the full article from Barron's by clicking here.