Precious Metals And Miners Bottoming As Facebook Debut Flops
May 23, 2012 by: Jeb Handwerger
SeekingAlpha.com
We are witnessing a few cautionary signs that indicate a radically overbought U.S. equity (SPY) and U.S. bond market (TLT). Stealthily, the gold (GLD), silver (SLV) and mining equities (GDX) are bottoming.
The strong uptrend in the equity markets since October of 2011 has caused many investors to join the herd in the latest investment fad entitled "social media."
Take a look at Groupon (GRPN), Zynga (ZNGA), LinkedIn (LNKD), etc. Their vogue will not last forever. Sentiment for the social media sector may be reaching an euphoric extreme, while the mining stocks have fallen into public disfavor.
The gold and silver miners (SIL) are bottoming at historic low valuations while the initial public offering of Facebook (FB) is valued at 100 times trailing earnings. This is an abiding concern of ours.
This eerily reminds us of the dot-com bubble in 2000. Recall a company such as "theglobe.com" which made the largest gain in history on the day of its IPO only to be bankrupt two years later. The CEO was also in his twenties. The brokers were able to find a myriad of buyers beating at their gates. As the French say, "The more things change, the more they remain the same."
Fast forward 12 years later and so many lemmings are buying Facebook stock that the marketers happily sold an additional 25% more than originally planned.
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There is a growing body of evidence that gold has formed a potential double bottom around $1,525. This area in the low $1500s represents a strong area of support.
More: http://seekingalpha.com/article/612831-precious-metals-and-miners-bottoming-as-facebook-debut-flops?source=marketwatch
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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