Short-term Precious Metals Investing

Posted on November 16, 2007 , Filed Under Stocks

I’m a bit leary of recommending current continued investment into precious metals. The speed at which funds have flowed into and out of physical gold and silver is alarming. Now is the time to begin bargain research for gold and silver equities. I believe there may be a chance for gold to drop back to $750 and for silver to drop back to $14 levels. Investors who accumulated shares of gold and silver miners prior to the last two Fed rate cuts should be holding onto a profit. I would recommend selling half of your positions to lock-in some gains before the end of the year.

We are now in the middle of November and trading tends to be thin in December as we head into the holidays. Gold and silver have both met my 2007 price targets of $800 for gold and $15 for silver.

If gold rises above $830 and silver rises above $15.50 I would re-enter your equity positions. I believe there will be a volatility discount applied to precious metals equities as investors debate whether precious metal prices will stabilize and continue rising into 2008. You shouldn’t lose much in term’s of percentage gain by selling now and waiting to see how precious metals prices react in December, 2007 and January, 2008.

I sold my positions in Pan American Silver [[PAAS]] and Silver Wheaton [[SLW]] and I am waiting for attractive re-entry points.