As Gold and Silver Reawaken, It Is Time to Buy Cheap Miners like Pan American Silver

(This is an excerpt from an article I originally published on Seeking Alpha on May 21, 2012. Click here to read the entire piece.)

Gold and silver have languished since reaching their last peaks in 2011. {snip} Last week, gold and silver reawakened and made sharp reversals. {snip}


The dollar index restarts its surge
The dollar index restarts its surge


GLD successfully retests recent lows
GLD successfully retests recent lows


SLV successfully retests recent lows
SLV successfully retests recent lows

Note that the dollar’s resurgence since hitting a bottom a year ago explains most of the weakness in gold and silver {snip} Neither gold nor silver will be completely out of the penalty box until they each break their respective near-term downtrends as shown above.

The stocks of miners of gold and silver have suffered even greater losses than the underlying precious metals. {snip}


Goldcorp has broken down after a tight series of lower highs and lower lows in 2011
Goldcorp has broken down after a tight series of lower highs and lower lows in 2011


Pan American Silver has been in decline for over a year
Pan American Silver has been in decline for over a year

Source for charts: FreeStockCharts.com

{snip} On Friday, Fleck wrote “Gold’s fortunes will soon reverse.” In that piece, he makes several provocative observations, including a quantification of the amazingly low valuation for PAAS {snip}:

{snip}

{snip} If you do not have any exposure to gold or silver, this is a great time to start with a sizable position and then plan to add in increments if the market serves up yet lower prices. If you already have a sizable position, then now is the time to nibble on some more of your favorite choices in precious metals. {snip}

{snip}

Be careful out there!

(This is an excerpt from an article I originally published on Seeking Alpha on May 21, 2012. Click here to read the entire piece.)

Full disclosure: long GLD, SLV, GG, and PAAS

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