Friday, May 16, 2014

A Simple Strategy For Gold Stocks

Here is a quite simple strategy to play in the precious metals markets.
  • We play only GDXJ  - this is an ETF consisting of junior precious metals stocks
  • There are only two positions: long GDXJ or short GDXJ
  • a BUY signal is generated when GDXJ over-performs GDX (big precious metals producers) - then we have LONG positions
  • the SELL signal is generated when GDXJ under-performs GDX - then we have SHORT position

Let us look at the chart below, which evidences this play:

Having played this strategy since August 2013 one could win 31.5 points (or $31.5 per one GDXJ share). This means a gain of 84%.
Presently there is a signal: go LONG GDXJ.

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