Good luck and good trades.
Here's a rush transcript.
Hi, this is Sean Brodrick for Oxford Resource Report.
Today, I’m going to talk about three potential winners, and two potential losers.
First, let’s talk about gold. I’ve been pounding the table about this metal since July. Now, it’s paying off.
Gold accelerated to push above overhead resistance at $1,400. My new target is $1,650. Others are more optimistic – CITI Bank just put a $3,500 target on gold.
Before we get ahead of ourselves, let’s think of how to play it. You can buy SPDR Gold Trust, or GLD, but I don’t recommend it. If you want a fund that tracks physical precious metals, try the Central Fund of Canada, symbol CEF. The fund holds both gold and silver and recently traded at a 2.2% discount to the metal it holds.
When I first talked about the CEF to Oxford Club members back in July, its discount was over 7%. That couldn’t last – and the CEF is up 14.9% from my recommendation. But it still looks good, and should rally along with gold and silver. If gold rallies to $1,650, CEF should rise at least another 16% -- potentially more.
And what if you wanted to play miners? Some miners have done extraordinarily well – a pick I gave Oxford Club members in July is up more than 80%. And some are still bargains. But unless you’re willing to do a lot of research, you might want to stick to an ETF.
Many people would buy the Market Vectors Gold Miners ETF, or GDX. And there’s nothing wrong with that – I think it’s going to $46 this year. But you might want to consider the junior gold miners ETF, or GDXJ. Here’s why …
You can see that the GDXJ is testing overhead resistance. More importantly, it has outperformed the larger-cap GDX since July, and it’s been outperforming gold itself since early August. Things could change, but junior miners are hot.
Gold and silver aren’t the only things rallying. Oil is breaking out, thanks to rising global demand and worries about spreading conflict in the Middle East. In fact, we’re in what I call the Third Oil Shock, something I speak about on my blog.
You can play the oil breakout with a fund like the USO. But since commodities in general are rallying, why not buy a broad commodity fund. My pick would be the DB Commodities Tracking Fund, or DBC. Look at a weekly chart.
You can see that the DBC rallied through one level of overhead resistance. Now, it’s testing a weekly downtrend. I think it will break out. A breakout should bring the DBC to at least $30, and perhaps much higher.
Now, how about losers? Well, as I talk about on my blog, the Third Oil Shock is very hard on retailers. Let’s look at the biggest one, Wal-Mart.
Wal-Mart looks cheap, but I think it’s going to get cheaper. My target is $66 a share. Many retailers are in the same boat. As consumers pay higher oil and gasoline prices, big-box retailers get the short-end of the stick.
You can see that Caterpillar put in a triple-top and is now breaking its recent up-trend. It has must-hold support below that, and if that doesn’t hold, CAT could go much lower.
These are not hard and fast recommendations. These are just ideas. I am not your investment advisor. Do your own due diligence before you buy anything.
This is Sean Brodrick for Oxford Resource Report. Thanks for watching.