Today’s markets move faster than ever. A profitable trade one day can turn into a substantial loss overnight. Protective stops are smart but trigger unnecessarily with high volatility. You could have three perfectly executed trades in a row, and the fourth could wipe out everything.
I grew tired of the instability and blatant manipulation in precious metals, over the next few weeks, I’ll be switching to an Accumulative Metals Portfolio (AMP). The strategy will be simple, easy to follow, and in theory, should improve long-term gains. But best of all – I’ll sleep better.
An accumulation strategy works best in long-term bull markets. In my article Gold Price Forecast for The Next Decade, I explained how gold could exceed $8000. At that time, I wasn’t sure what would kick off the decade long bull market. Now, it’s clear to see the coronavirus is the perfect trigger.
An accumulation strategy is simple. Select high-quality investments and add to them regularly (weekly or monthly). Some may choose to buy when prices fall below a specific level, say the 50-day EMA. For me, I’ve decided to buy/accumulate when our Gold Cycle Indicator falls below 100 (currently 132).
Here is an example of an equally weighted portfolio. Depending on your risk tolerance, you may choose to be overweight or underweight certain areas. In my strategy, I’ll look to add to whatever stocks are underperforming on a percentage basis. As the bull market advances, I may need to eliminate or add different stocks. Below is an example using google docs.
All-in-all, I don’t think the world will ever be the same after COVID-19. As governments continue to print money and debase their currencies, the rush to precious metals will only intensify. My long-term target of $8000 in gold may be conservative. Physical bullion is favored and should be the first thing you buy…if you can find some. After that, you may want to consider high-quality miners.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.