Metals and Mining, Silver, and Gold

Gold. Gotta have it. Sooooooo presssssioussssss, my pressssioussssss.......

OK, that said, Gold is a good investment. So is silver. Here's why:

in 1973, a Mustang Mach 1 would cost you about 32oz. of gold. In 2010, a Mustang Mach 1 would cost you about 20oz. The value has improved 60% over those years.
Is that a good way of testing the value? Probably not, because materials and technology changes, making today's Mustang costs lower, but you get my drift. For an average "thing", Gold today has more value than Gold in 1973.

So buy, and keep gold. Besides, I hear it's good to eat....dentists used to stick it in your mouth.

Now, How about Silver? For that same Mustang, it would have cost you 1600oz. of silver in 1973, and today, it would cost you 945oz. Wow, almost a 70% value gain!

Who's the winner for long term investment? And why is that? The answer may be that silver gets used, and gold gets hoarded. Bottom line, if you want an investment that has improved over the years, it looks like Silver substantially outperforms gold.

so if you want to invest for your kids' future, buy them some silver now, and give it to them 35 years later. But I'm afraid ol' Rock can't wait that long. The actuarial tables are against it. And besides, this is a Anonymouse Traders blog, not an Anonymouse Investors.

So let's start with the sectors. How's the metals and mining sector performing? To find this out, we look at a daily chart of XME. For 43% of its value, XME consists of the following:

MEE SWC FCX HL WLT ATI CDE BTU PCX

Ok, that's not completely metals, but it does have some content.

Here's the XME chart:

Although there's a lot of information on this chart, please look at the "relstrength 20 day" portion. That chart plots the stock price in reference to the S&P500 price, with a smoothing over 20 days (1 month). That line shows how this stock performs as compared to the S&P. There's no oscillators, it's just raw price.

As you can see, the XME has marched with our rally, staying around the same as the S&P (the 0.00 line on the RelStrength 20 day chart), to a little positive, until the last couple of weeks where we've gone to a .09 higher than the S&P. You heard the pundits say "commodities are doing better than anything", but it looks like there may have been better choices than metals and mining for this time period.

Now let's look at the Gold Miners, GDX, which for 72% of its value it has

ABX AEM GG ASA KGC SLW NEM

and a couple others I don't have the tickers for. This is much more precious-weighted. Let's look at the chart:

It looks like it is in not too good shape. Why is that? Well, GDX is heavily weighted with NEM, and NEM has tanked since September/End, being substantially negative compared to the performance of the S&P. If you take out NEM, then GDX is running around .11 over the S&P. I'm sorry I can't do a chart of that for you, you'll just have to take my word.
So taking away NEM, it seems Gold miners have been doing better than the metals and mining sector.

I don't have a chart for the Silver miners' sector, because they kind of mine Silver with Gold, and I can't find an ETF that's silver mining only. But looking at PAAS CDE, and SLW, they are running over .15 better than the S&P. Well, it stands to reason, looking at our Mustang measurement.
Here's the chart for PAAS as an example:

Now, let's look at the metals themselves. the GLD chart:

It's barely tracking the S&P!! How about SLV chart?

Now we've got something. It's been running positive from the S&P since Aug 10, and hitting .15 better than S&P from time-to-time.

As a conclusion, we can see:
1. XME metals and mining is not the best place to be.
2. The miners are doing better than the metals
3. Silver is outperforming Gold by a substantial margin
4. The silver miners are outperforming the gold miners by several percents.

Where to invest?
Silver. The miners first, then the metal.

Except I like NEM, I always liked the underdog (I like you too, Mutt). I think it has a chance to catch up to the others. The only reason it's down is because of the guidance it gave in the last conference call. I read a transcript, and I think that's BS especially if we see GLD go up in price.