20472 Chartwell Center Drive, Cornelius, NC

Transcription

1 20472 Chartwell Center Drive, Cornelius, NC

2 Gold Fever As we start a new decade, we can look back in stunned disbelief at the financial and economic wreckage that we must now attempt to rebuild. Our nation has been witness to the largest bank failure in history in Washington Mutual, with $307 billion in assets. We ve watched the fall of financial giants like Lehman Brothers and seen the nationalization of private lending institutions like Fannie Mae and Freddie Mac. We have a laundry list of bankruptcies so large that they rocked the investment community. Industry giants like General Motors, WorldCom, Conseco, Chrysler and CIT Group have all fallen in the wake of this crisis. In the aftermath of these events, consumer confidence has eroded to its lowest level since the Great Depression and investors are desperately seeking a safe haven as they anxiously await the future. This economic uncertainty has set the stage for Gold to take a starring role in the long-term investment outlook. Unlike many other securities the price of gold does not rely on the strength of paper currency. In fact, since the price of gold is measured in US Dollars, as the value of the dollar declines the price of gold rises. Gold also has the ability to hedge other investments against inflation. As inflation rises and devalues currency dependent investments, the value of gold goes up. Finally the demand for this precious metal is greater than the supply--a ratio that is key in both short-term and longterm price trends. This demand is directly linked to gold s global acceptance as wealth. The rapid economic expansions of developing countries like China and India have only added to the demand for this commodity. These factors and others have contributed to gold s rise from $255 an ounce in 2001 to its recent high of $1,200 an ounce. World-wide, heads are turning in the direction of gold for its profit potential as well as its ability to safe guard wealth in an unstable economy. Weekly Spot Gold Price (USD) versus the US Dollar Index from January 2001 to current. While gold clearly provides a unique investment opportunity, it can also present a challenge to even the most sophisticated investor. Anyone with a brokerage account can buy shares of a gold Exchange Traded Fund (ETF), an 2

3 Exchange Traded Note (ETN) or individual gold mining company, but there are hundreds to choose from ranging in price, volume and volatility. Volatility is also a tricky aspect of the Gold Market as a whole. Sudden large swings in price can cause emotional reactions that result in poor position management. Last, but not least, is Timing. When is the right time to buy gold securities or add to your position? When is the right time to sell and stay away? VectorVest has been providing the answers to these difficult questions for more than a decade. The VectorVest Gold Advantage VectorVest provides a range of proprietary indicators that make it easy to identify when to buy, what to buy and when to sell gold for both long-term investors and short-term traders. Each industry group and security in VectorVest has a unique analysis that includes: Value- Value provides the company s current worth. If the Value is higher than the price the company is undervalued, if the Price is higher than the Value, the company is trading at a premium. Relative Value-RV presents an alternate view of value, indicating the long-term price appreciation potential regardless of the current value. Relative Safety-RS is an indicator of risk. It s computed from an analysis of the consistency and predictability of a company's financial performance, debt to equity ratio, sales volume, business longevity, price volatility and other factors. Relative Timing-RT is a fast, smart, accurate indicator of the price trend. It analyzes the direction, magnitude, and dynamics of a stock's price movements over four different time periods to reveal the trend and reflect changes in price momentum. Value, Safety, Timing-VST-Vector is the master indicator for ranking every stock. It combines the information from RV, RS and RT to create a single indicator that will rank any list of stocks from best to worst. Recommendation VectorVest gives a Buy, Sell or Hold recommendation on every stock, every day. The recommendation reflects the cumulative effect of all the VectorVest parameters working together. The recommendations are mathematical and not influenced by opinion. Stop Price-The Stop is a clear cut indicator of when to sell a long position or cover a short position. The VectorVest stop price is based on a 13-week moving average then fine-tuned according to the individual securities fundamentals. Exclusive Group Indicators: RT Ranking-VectorVest ranks all Industries by Relative Timing (RT), a price momentum indicator, in the Industry Viewer. The industries that are moving up the fastest in price will be at the top, while those falling the fastest in price will be at the bottom. RT ranking provides the current position of each Industry relative to all other Industries in VectorVest regarding price momentum. Buy /Sell Ratio-This indicator divides the number of Buy Recommendations in a group by the number of Sell Recommendations. This ratio indicates the health of the industry as a whole. This indicator has been nicknamed The Canary for its uncanny ability in warning of danger; just as Canaries did for Miners historically. These indicators can be used together or individually to help you select the best buying opportunities in the Gold Industry! 3

4 Golden Opportunities Technique #1 - Using RT Ranking & VST-Vector VectorVest s Industry Viewer tracks more than 200 Industry Groups, ranking each one by RT. The top performing industries will be at the top of the list, and the worst performing groups will be at the bottom. When the Mining- Gold/Silver Industry is rising through the ranks from the bottom, it provides an excellent time to think about investing in Gold Mining Stocks or adding to your positions. To access the Industry Viewer, simply click Viewers on the main toolbar and then select Industry Viewer. On August 18, 2009, the Mining Gold/Silver Industry had fallen to #218 out of #225 industries. As of 9/3/09, it had risen steadily to #43. Every Industry Graph in VectorVest has the ability to chart the RT Ranking so that it s immediately obvious when the Mining Industry is taking off or plummeting in relation to other groups. To add the RT Ranking field to your Industry Graph: 1. Click Edit Field List on the graph. 2. Scroll to RT Ranking under the heading Fields to Hide. 3. Double-click on RT Ranking to add it to the Fields to Show list. 4. Click OK. Now let s take a look at the stocks in this industry group as of 9/3/09. To do this, close the graph and double click on the Mining (Gold/Silver) Industry Group for the list of stocks. The stocks will automatically appear ranked from best to worst using the VST indicator. The VST-Ranking provides a fantastic way to quickly cherry-pick your stock from the best of the group. 4

5 How did the top 10 perform? Just click QuickTest for an instant price comparison of any list of stocks. 5 From 9/3/09-12/4/09, the top 10 stocks ranked by VST went up 33% in just three months for annualized rate of return of 130%. This basket of stocks included 90% winners and more than doubled the performance of the HUI (The Gold Bugs Index). Note: If you prefer to use a list of your own stocks, just add them to a VectorVest WatchList for an instant ranking and analysis. Technique #2 - Using Industry Buy/Sell Ratio & VectorVest Strategies for Short-Term Trading You ve learned that VectorVest gives every stock a Buy, Sell or Hold Recommendation. This information is used to provide the BSR or Buy/Sell Ratio of each Industry group. The ratio indicates the health of the group as a whole. There are several requirements that a stock must meet to receive a VectorVest Buy Recommendation, the most important one is that the stock must already be rising in price. By tracking whether the number of stocks receiving this Buy Recommendation is rising or falling in relation to the number of Sells we can gauge whether the health of the group is improving or faltering. Just like RT Ranking, we can use the same steps to graph this indicator. To add the BSR field to your Industry Graph: 1. Click Edit Field List on the graph. 2. Scroll to Buy/Sell Ratio under the heading Fields to Hide.

6 3. Double-click on Buy/Sell Ratio to add it to the Fields to Show list. 4. Click OK. This is an 18-month daily graph of the Mining (Gold/Silver) Industry Group from 7/7/2008 to 1/4/2010. When the BSR is making a series of higher lows and higher highs it verifies the group health is improving as more and more stocks rise to become Buy recommendations. This is the easiest time to invest in gold. As the BSR for the group peaks then begins a series of lower highs and lower lows the odds of selecting potential winners becomes much more difficult. So make it easy and buy gold stocks when the BSR is on the rise! We used this information systematically, for a simple effective way to time the Gold Market. When the BSR is rising week-over-week for 2 consecutive weeks we have a Bullish signal that indicates it s okay to Buy Gold Stocks, when the BSR-ratio has fallen week-over-week for 2 consecutive weeks we have a bearish signal that indicates we should stop buying Gold Stocks and just let our stops indicate when to exit out of any remaining positions. We also took advantage of the VectorVest search engine tool to select the best Gold stock to buy. To access the VectorVest s search engine: 1. Click Research on the main toolbar and select UniSearch. 2. In the Search Directory, scroll down to the group Strategies Special Searches. 3. Double click the Group and select the Strategy Gold Digger. 6

7 This search looks for stocks in the Mining (Gold/Silver) Industry exclusively. The stocks must be priced greater than.50 and have an average volume greater than 100,000. The stocks that meet these conditions will be sorted RT ascending. The key to this strategy is the sort. The RT Asc. sort will put the stocks that have suffered the worst down trends at the top of the list. Because we are shopping for these stocks at the right time i.e. when we see the Industry BSR is on the rise they have the most potential for explosive recovery. These are the perfect candidates for bottom-fishing! All we have to do is click Run Search to find these stocks! The VectorVest Portfolio Manager allows you to backtest trading systems and see the results. The following portfolio was tested from 11/28/08-1/7/10 and went from $25,000 to a total of $68, Timing Dates used were based on the weekly Industry BSR moving in the same direction on a week-over-week for 2 consecutive weeks. Signal changes are indicated by color. All positions were found using the Gold Digger Strategy. New positions were only added during Up signals (shown in blue). All positions were purchased and sold at the next day s open price. A 35% gain or a 15% loss was used to close positions during both Up and Dn signals. 7

8 Technique #3 - Slowing it down with the Stop-Price & ETFs The speculative nature of trading Gold Mining Stocks is not for everyone. There are still plenty of profits to be made by long-term gold investors that would like to reduce volatility and take a less active trading role. VectorVest also has a much slower approach to identify where major turning points in Gold may occur over extended periods of time. The timing aspect of this technique uses a moving average crossover of the VectorVest Stop-Price along with a moving average of Relative Timing. These indicators are applied to the Gold Bugs Index, HUI to minimize the volatile swings in Gold stocks. Once we have a signal from our timing system, we use a special strategy in the UniSearch Directory that compliments this method. The strategy is called The Midas Touch and will identify the most widely traded Gold ETF, GLD, as it s rising. We demonstrated the entire technique in a special video presentation that can be viewed by clicking THE MIDAS TOUCH or visiting The Midas Touch Portfolio, Up 157% from 7/12/2005 to 12/19/2009. Go for the Gold with VectorVest The financial world as we ve known it has undergone a dramatic transformation. Events and consequences have left an indelible mark on every investor, forever changing the way we view investing. All investors need to be armed with the best tools obtainable to protect and grow their portfolio in the present, as well as the future. VectorVest not only provides the most powerful and flexible investment tools available but also provides the education to use them to make money in any market. Regardless of investment style, experience level or portfolio size, VectorVest can help you Go for the Gold! 8