By Jordan Roy Byrne
Market Oracle
Those familiar with Jesse Livermore and the book Reminiscences of a Stock Operator know who Old Turkey is. He was Mr. Partridge, an old trader who dispensed great wisdom in few words. Those at the office nicknamed him Turkey because of the way in which he strutted around with his chest puffed out. Livermore gleaned wisdom from Old Turkey which included the importance of never losing one’s position and placing the utmost importance on the major trend. “It’s a bull market,” he often repeated. Precious metals shares are breaking out again after a brief consolidation. It’s time to channel your inner Old Turkey, realize this is a bull market and act accordingly.
The evidence is overwhelming. After rebounding strongly to start the year, the mining stocks corrected through May. The June reversal on record volume created the first higher low. The miners then sustained that strength by closing the month and the quarter with the kind of strength not seen since the bottoming process began in June 2013. In addition to the price action, the miners have outperformed the metals in strong fashion and especially in the last five weeks. These are reliable signals of a new bull market.
Analysts like to be cautious and sometimes prefer to avoid momentum plays but the charts lead me to believe that the momentum is building and has plenty of room to run. From time to time I’ve posted charts of my top 15 index. I wanted to create a much broader index consisting of quality companies with more of an emphasis on larger companies. The first image below is a weekly chart of my new top 40 index. It includes 28 gold stocks and 12 silver stocks. The median capitalization is nearly $750 Million and 15 of the companies are worth $1 Billion or more.