That’s why I like to turn to someone who has an even better grasp of what’s moving commodities like gold and silver and other metals.
That is American Wealth Underground editor Michael Robinson.
He’s been riding the ups and downs in precious metals and rare earth metals for well over a year now in his portfolio. And even with the major pullback we’ve seen in silver prices, Michael is making gains for his subscribers.
We’ve featured guest articles from Michael on this topic before, and you’ve been asking for more. Here’s the latest commentary from last Wednesday.
After several punishing days it looks like the Great Resource Correction has finally subsided — at least temporarily.
So, I want to thank you for sticking it out during this difficult time. In the past three weeks I’ve received very few notes from readers anxious about either giving up gains or actually incurring losses with our natural resources picks.
In one sense, I was glad to see the correction. No doubt we gave up some short-term gains on existing positions. But I see lots of buying opportunities in stocks that had simply gone up too quickly.
So, I bargain-hunted. Against this backdrop, next week I will be recommending a new rare-earth exploration stock. This company owns the most strategically important mine of its kind in Europe, a region in a near-panic to acquire more rare earth metals.
In that regard, the recent resource correction has given us the chance to acquire this exciting company at sharply reduced prices. And today’s rally allows us to lock in some gains on the Rare Earth Giants of North America I recommended almost a year ago.
In a moment I’ll tell you how to protect those sizzling gains on half the positions. First, however, I want to remind you once again that resource stocks remain subject to corrections during what I believe will be a long bull market for energy, precious metals and rare earth metals.
That’s why we recently took gains of more than 60% on half our silver positions. You may recall at the time I said we might see gains evaporate even further before a recovery would occur.
It’s too soon to know if silver stocks will maintain the strong momentum we saw in early trading today. At deadline, [CENSORED] was up more than 5% as [CENSORED] gained 4.5%.
As of today we’re up about 65% on the half we are still holding. With [CENSORED] that figure stands at 48%.
We’ve owned [CENSORED] for about six months, which is usually the minimum I like to hold a position. So, if the market turns dramatically against us in the next few weeks we may need to close out the remaining portion and buy it all back later at more favorable prices.
With so much volatility in the markets today it’s hard to predict how long the natural resources rally will last. These days the slightest bit of bad news seems to cause tidal waves of panic selling.
But as of now the rally remains broad based. In fact, every natural resources stock in the portfolio showed gains today.
For [CENSORED], that was welcome news. It was up 2% in early trading today for cumulative profits of just under 9%. After the company recently announced new financing, we saw half our earlier gains evaporate in just a few days.
This performance got me to thinking we really ought to protect profits on the rare-earth-exploration stocks I recommended in May 2010. All were in a special report titled “The Rare Earth Giants of North America.”
They’ve all shown terrific returns with our “weakest” position yielding nearly 200% profits. Though I’m bullish for the long haul I think we need to protect ourselves against volatility while remaining open to a renewed rally.
(Sign up for Smart Investing Daily and let regular editors Sara Nunnally and Jared Levy simplify the market for you with their easy-to-understand articles.)
Here’s what I recommend you do: Lock in gains on half of each position with trailing stop-losses.
You can do this yourself online if you have an Internet brokerage account.
This approach is designed to remove the guesswork on when to take gains. The market will decide for us so we can relax and go about our business of looking for new investment opportunities on the road to creating wealth.
Editor’s Note: This article had specific stock recommendations that have been censored because they are still open positions in the American Wealth Underground portfolio. But these names, and those in Michael’s report, “The Rare Earth Giants of North America,” are available online to all subscribers.
You can learn more about these companies by joining American Wealth Underground, and if you hurry, you might even be able to catch the alert that releases the name of that strategic mining company in Europe.
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