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Trading Diary: Gold, silver, copper back on the plate

Written By | Feb 6, 2017

WASHINGTON, February 6, 2017 – As we’ve duly noted in our companion column Monday, stocks and stock market averages seem to have returned to their apparently preferred sideways direction, meandering in a narrow range while remaining slightly in the red.

Between politics and economics, there has been a lot of news to digest since January 20, with more fireworks likely to come. This makes even headline-driven HFTs (high-frequency traders) nervous enough to be careful with their bets.

Read also: Monday Markets: Stocks back and fill, digesting recent rally

Actually, reports are coming in that there have been net dollar outflows from stock-based funds over the last couple of weeks at least, even in the face of that new record set by the Dow Jones Industrials. That’s certainly a sign of nervousness, or caution at the very least. And after all, nothing goes straight up or down for that matter.

Aside from occasional, mopey days like today when stocks seem to lack all conviction, the market has moved steadily up since November 9. Common sense calls at least for a pause at this point if not an outright correction, so old-timers, at least, are holding cash right now, which can sometimes be the very best investment.

As for us…

Trading Diary

We’re in the midst of another boring day of portfolio “housekeeping,” adding tiny bits to commission-free ETFs we like—namely a number of Schwab ETFs associated with market indexes, including value stocks; a quartet of Guggenheim equal weight sector ETFs—consumer staples (symbol: RHS), S&P 500 (RSP), healthcare (RYH), and tech (RYT); and the Powershares Sector Dividend Dogs (SDOG), a larger, broader play on stocks picked like the classic Dow Dogs but derived from a larger universe of stocks.

In fact, regarding the latter, we’ve decided to pass on the actual Dow Dogs this year and ladder into SDOG shares as a way of participating in that action in a broader way. We may pick up a few more of these shares today while they’re down as they, too, are part of a growing portfolio of ETFs we can trade at our brokerage without commission. This simple fact allows us to accumulate shares in tiny increments, allowing us to micro-average into a position without getting dinged for a commission each time we do it.

We already have a position in the Swiss gold bullion ETF (SGOL), again sans commission, and wish we’d bought more a couple of weeks ago when it was getting hammered. We’d also sold our sister position in the Swiss silver bullion ETF (SIVR) for a slight profit but with we’d held on.

As a silver bullion substitute, we began a position today in an actual silver mining stock, the Canadian miner Silver Wheaton (SLW), a classic leveraged silver play that can really take off if the situation is right.

We may also get back into Newmont Mining (NEM), a gold and silver mining company that made us some money last year. Prices for gold, silver and copper, while always volatile, seem to be staying strong for now, which will greatly enhance the profitability of these mining shares, or so we believe.

As for traders and investors who roll their own portfolios like the Prudent Man, do be aware that precious metals, while fabulously profitable if you get your timing right, can also lead to many a Maalox Moment if your luck runs out.

Conclusion: Aside from these small ETF moves, however, including those sallies into the world of precious metals and materials stocks, we’re still being more than a bit careful here.

While we have clearly favored Donald Trump and his wrecking crew as a positive but perhaps painful corrective for a post-Obama America headed straight for Soros-supported globalist hell, this administration will probably be giving us the most headline-risky trading action we’ve ever seen in our increasingly long time on this planet.

What that means for small traders and investors is this: While optimism is justified, headline-risk volatility is likely to be the common denominator for now, both up and down. So Prudent People like us are avoiding big stock purchases in favor of little ones until further notice.

Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17