19 July 2010

Chart Mysticism

It is always good to get different perspectives on the markets. Bruce Edwards has worked in the refining game for many years, currently with Sabin Metal Corp. As a way of keeping in touch with his former and current clients he has a web site where he posts his Chart Mysticism on the markets.

He has a chart at the bottom of the page called Gold Shares and Industry Ranking. Bruce explains it thus: "The chart is an index of Gold Mining Company Shares (upper line) and a 10 week moving average of their relative performance when compared with 98 other Dow Jones Industry Groups. I have been keeping this chart since 1993 and it has been excellent predictor of the future relative performance of gold and gold mining company shares. When the lower line is at the high end of its range everyone loves mining company shares and gold. When it is at the lower end of its range everyone hates the group. A long term investor should sell when the lower line is high and buy when it is low."

3 comments:

Golden said...

Hi Bron,

Is there a and more detailed chart with accompanying table of data.

Am I correct in my reading of the chart that now is a time to sell gold
(assuming the peak...red line...is just past a high in its range?)

Also thank you for a great blog.

It has helped me a great deal in understanding the processes involved in the gold industry and how this can be interpreted in a biased way leading to incorrect assumptions and conclusions.



Golden

Bron said...

I suggest contacting Bruce directly.

Thanks for the support. Because people are making serious investment decisions based on it, I don't think it is right to be casual with the truth when commentating on gold.

Justin said...

Be interesting to know the criteria he uses to select miners for his index.

My 'index' of shares is totally out of favour. In fact, despite buying when the blood was in the street in '08, as of today I might as well have left my money in the bank.

Selling today I would have gained very little considering the risky, speculative nature of these small & medium sized gold miners.