When it comes to investing, a technician I am not. I don’t try to be, I don’t pretend to be, I don’t even wanna be. To me watching technicals is like going to a horse race and watching everything but the horse. It’s just one gambler trying to out-gamble another. And, just when you think you got it figured out, a fresh horse enters the race and the favorite loses. Or… overnight, subprime mortgages wipe out 20 years of savings and send all the technicals into the trash bin.
Ever hear the line, “When the markets go up – you make money! When the markets go down – you make money!” These are words spoken by a true technician. They make you believe if you watch the technicals, it’s impossible to lose. Need I say more?
Then there are the fundamentalists. If I had to be cast in a specific investor light, this is where you would see me. What’s the big picture? What’s the long term prospect for success? How can I position myself to take advantage of rising stocks, rebounding real estate and buy low opportunities. In the long run I think fundamentals win. A good horse can have a bad day but in the long run it’s a winner. A good stock can be pushed around by short sellers but in the long run the company makes money and pays dividends. And a good commodity can be stuck in technical doldrums at the same time supply is vanishing. In the long run fundamentals win. To me, the secret is diversification. Hope for the best but prepare for the worst. Never put all your money on one horse.
I speak like there are only two types of investors – two ways to make decisions about what to invest in. Truth be told there are those in each camp that have amassed great wealth. They not only diversify their investments but they are diversified in their strategies. One of my analyst friends, Brian, is one such investor who watches both the technicals and the fundamentals. He watches futures contracts and weighs the longs against shorts. He watches the scrap metal market and uses supply demand fundamentals to get a pulse on industrial growth and he watches charts.
About 10 days ago, Brian called and said it’s looking good for silver. Silver was below $19 an ounce and Brian said the technicals indicate a quick 10% move to the upside. I was especially intrigued, because I think the supply demand fundamentals are screaming – Buy silver now at today’s low prices! Perhaps silver technicals and fundamentals are aligning. Last night, at one point, silver traded above $21.20 for a short period.
So I called Brian today and congratulated him on his call. I couldn’t help but ask, “what next?” The answer I got was way beyond my comprehension but it seemed to again coincide with my beliefs on the direction of silver. In short, Brian said, “the shorts are gone and the longs are free to run, the bell curves are empty and beginning to fill which will cause a stair-step rise in the silver price.” He went on to say, “Silver bottomed in July 2013. It hit that bottom again a few days ago which clears the way to the upside.” Then he concluded, “If we see silver break through $22 an ounce we could quickly see it in the high $20s.”
Then he asked me what I think. I said, “I told you so.” ………..Surely I jest, but it does look like technicals and fundamentals are now sending the same message. Silver is headed higher. For more on the Brian indicator I would be honored to have you follow me @DaveTheGoldDr. And if you disagree with anything I say here or otherwise, remember these are just my opinions that are sometimes shared and other times not.