Monday, December 12, 2016

Top Five Picks Portfolio 2017 Is Available Now

One year ago (on December 16, 2015) I started my medium - term experiment called the Top Five Picks Portfolio. Now it is time to show the performance of my picks:

As the chart shows, my five picks delivered a nice result: 133.8% since December 16, 2016. In that period the broad precious metals market, represented by GDX, delivered a return of 47.1%. As for metals, gold is 8.4% up and silver is 19.8%.
It means that the leverage (defined as the portfolio return divided by the return delivered by gold) delivered by my portfolio is 15.9:1 while the leverage delivered by GDX is 5.6:1.

Well, I am satisfied. Very satisfied.

That is why I want to extend my experiment into another year. 

However, there is a problem. Now gold, silver and the entire precious metals sector is in its short-term downward trend. It means that many investors are wondering whether this bull is still alive. Well, in my opinion, the bull is alive. Look at the chart below:

source: stockcharts

The upper panel shows the price action of GDX (the broad precious metals stock market). Clearly, since August 2016 this instrument has been in its downward trend.

However, the next two charts show two ratios indicating the current sentiment in the precious metals market. The first one, the GDXJ / GDX ratio (junior miners stocks to big gold stocks) holds generally well. Now it is at around the same level it was in August, when the current correction started.
The same pattern is visible at the second chart, the silver / gold ratio. It is slightly below the level printed in August.

What does it mean? In my opinion, it means that not everything is as bad as the gold bears think. I would even say that these two charts are the best confirmations that the bull is still alive. If the bull were dead, the entire picture would be much different with the silver / gold ratio steeply going down and junior miners being much weaker than big gold.

Understand me well - I am not saying that the current correction in gold is over. For example, the American investors are still selling gold, which is best evidenced by GLD reports (the amount of gold at GLD vaults is going down).

On the other hand, silver and the precious metals related stocks are sending mixed signals:

source: stockcharts

Although gold prints lower lows, silver and GDXJ do not. Yes, I know that I am showing an ultra short - term pattern (which can change, for instance, today) but these ultra short - term patterns combined with a longer - term patterns delivered by two popular ratios (silver / gold and GDXJ / GDX) confirm my thesis that not everything is bad with the precious metals market.

If I am correct and we are still in the bull market in gold it is a good time to start a new portfolio of five stock picks. I am sure that the best time to invest in stocks (no matter what stocks) is when nobody wants to buy them. And precious metals stocks are now one of the most hated assets. Well, it should sound familiar to many of my readers. Just one year ago we had a similar situation - nobody was interested in precious metals stocks and the market was full of opinions that gold was heading for $1,000 or $800 per ounce.
Simply put, it was the best moment to invest in precious metals stocks. I did it and won.

Now I am doing it once again...

O.K. As you know, this year my Top Five Picks Portfolio is offered as a paid service. The price, nonrefundable, is $50 (fifty US Dollars). The payment box is in the section Top Five 2017. All details are there as well.

So, if you are interested in my portfolio - please, go to the section Top Five 2017

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