The fundamental investor will tell you no, but the investor who feels that hyper inflation is just around the corner will most certainly answer yes.

Theories aside, the fact is that gold stocks are on the rise and you have to decide whether or not you want your portfolio involved in the bullish price action. A quick glimpse of the Spider Gold Trust (GLD) offers a good look at the recent price movement.

My point of interest is the channel highlighted in green which has been formed by a series of higher highs made since the beginning of September. The trend is your friend, and until it is broken it can easily be supported.

Benefiting from this trend are all gold etfs and stocks (mining, explorations, production, etc.).  Two stocks I personally have been watching include both Randgold Resources (GOLD) and Buenaventura (BVN). Their charts lie below.

While GOLD has been subject to intense and quick price swings while building its horizontal base BVN has experienced more one way action. Between the two I like BVN simply because of its consistency and defined support.

Three other gold stocks to consider include Iamgold (IAG), Northgate Minerals (NXG), and Eldorado Gold (EGO). Investors Business Daily currently ranks IAG as #1 amongst its peers and its 30.8% move in the last five trading sessions affirms this leadership.

And lastly for those investors who want to play the bigger trend there are the gold etfs. The Spider Gold Trust (GLD) which we featured above alongside the Market Vectors Gold Miners (GDX) are the two most popular and widely traded.

Personally I am skeptical of joining in on the gold rush because I believe that the market has topped. While there are a lot of signs that gold will move higher from here, short term I feel that a market downturn will take down gold. Thus, I cannot classify myself as either a gold hater (bearish) nor a gold player (bullish). Perhaps I am a gold mediator (neutral). Yeah, that sounds good.

For the next week Elliott Wave International is offering complete 100% free access to the full Financial Forecast Service (shown below). This includes Monday, Wednesday, and Friday Short Term Update Reports, The Monthly Elliott Wave Financial Forecast Report, and lastly the Monthly Elliott Wave Theorist Report.

My personal favorite is the Elliott Wave Theorist which breaks down the market technicals and forecasts future movement. At the moment Bob Prechter and his team believe the S&P 500 has topped out and is on its way back down to surpass the March lows!

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Here is the link to the free week of access to Bob Prechter’s EWI forecasts. Free access is available until next week November 11th. See you there.

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If so you need to read the list below which consists of the 10 best ETFs based on overall return from the last month. Note: ETFs must trade atleast 50,000 shares per day to be included.

Top 10 ETFs For November 2009

1. Direxion: Energy Bull 3X, Symbol ERX, up 29.63%
2. ProShares: Ultra Oil & Gas, Symbol DIG, up 18.48%
3. Direxion: 30 Year Treasuries 3x Bear, Symbol TMV, up 16.95%
4. Direxion: Tech Bull 3X, Symbol TYH, up 14.48%
5. Power Shares DB Base Metals, Symbol DBB, up 19.52%
6. Barclays iPath ETN Oil ETN, Symbol OIL, up 12.49%
7. PowerShares DB Oil Fund, Symbol DBO, up 11.50%
8. PowerShares DB Energy, Symbol DBE, up 11.37%
9. Elements Rici Energy ETN, Symbol RJN, up 10.98%
10. Barclays iPath Copper ETN, Symbol JJC, up 10.81%

Pretty noticeable to see that the majority of ETFs are ultra etfs (2x) or triple leveraged etfs (3x). These ETFs are the most volatile of their kind and are inherently extremely risky. We suggest only trading these types of ETFs if you are an active day trader or a risk taking “son-of-a-gun”!

Research with Morningstar

To research these funds we recommend utilizing Morningstar Premium which provides fund rankings, holdings breakdowns, sector analysis, fee information, and more!

Further Reading ETFs:

• Best Online Brokers for trading ETFs
• 40 Great Inverse ETFs For Bearish Investors
• 24 Great Ultra Long ETFs For Bullish Investors
• Currency ETFs
• Water ETFs
• Alternative Energy ETFs
  
• US Treasury ETFs
• US Dollar ETFs

Some fun facts for you to consider:

• Out of the last nine trading sessions on the S&P 500, six have been distribution or heavy distribution days.
• Bye bye 20 day moving average support.
• Bye bye 50 day moving average support.
• There were 9 stocks down for every 1 up in today’s heavy volume session.

A great chart by Dave Singer also shows the massive rising wedge that has been forming (Note chart is of the Dow Jones and is from this past Tuesday, October 27th):

Click to Enlarge

These rising wedges are traditionally very bearish and this time around is no exception. It is hard to tell if the Dow closed out of this wedge formation as of today’s close so keep a close eye on this potential formation breakdown.

Also, check out the Volatility Index below which has spiked nearly 30% in the last four sessions:

I want to clarify that I am simply calling the rally since March as over and that we can see downside pressure for the short term, 4 – 6 weeks max. If we see the rising wedge collapse to the downside, MACD confirmation, etc. then that may turn this retracement into a different scenario with darker possibilities.

Overall though cash is back to being king. In fact I am back in 100% cash as of last week. Last time I went 100% cash was back in August of last year and we all know what happened after that.

Stay smart out there!

Before I dig more about Doug’s phenomenal success story many of you will probably need two questions answered and so I have them below:

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His return since inception is 129.92% vs the S&P 500’s of 24.56%. Does it get much better?

Doug focuses is on small and mid cap companies, monitoring thousands of CEO presentations and focuses in on special growth or undervaluation stories. Once the market recognizes this value and the stock jumps Doug exits for a nice profit.

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In fact, this post is the last communication before I unplug and pack my computers. The cable guys are coming on Monday morning so hopefully I don’t miss too much market drama.

See you then!

When a precious metal goes from being a popular long-term investment of buy-and-holders to the quick, get-away “vehicle” of day-traders, two scenarios are at work — and they both start with letters “B-U.”

And when the majority of mainstream pundits see a “new paradigm” in which prices continue to rise indefinitely, two scenarios are at work – and, you guessed it, they both start with the letters “B-U.”

Enter: the recent Gold Rush of 2009, when ALL of the above conditions apply. Everyone from hedge funds to housewives now hustle to hitch their asset wagon to the rising gold star. Which begs this question: Which of the possible two scenarios are at work: B-U-ll
— Or B-U-bble?

Here’s the difference: A genuine bull market is driven by a self-sustaining internal dynamic that’s reflected by a host of technical indicators. A Bubble, on the other hand, is the result of untenable psychology that could shift at any moment and bring prices plummeting down.

It goes without saying into which category the mainstream experts put Gold: namely, a new bull market that has years, if not decades more to soar. “Gold Will Hit $2,000 an ounce,” reads an October 8 Market Watch. And — “Gold Has More Upside… The metal’s bull run is just getting started,” adds a same day Barron’s.

I found hundreds of news items which agree about the long-term potential for gold’s uptrend. But not a single one could tell me why the rally would continue, other than because the experts say so.

To know whether a diamond is real, it must cut glass. And, to know whether the bull market in gold is real, it must encompass at least one of these FOUR traits:

1. A surge in demand that outpaces supply.
2. A falling stock market, which raises the “safe haven” appeal of precious metals.
3. A real (not imagined) threat of inflation.
4. An increase in value relative to major foreign currencies.

Right now, the Gold market can NOT check off a single one of these items. Case in point:

Supply: Demand for gold from jewelry makers – which comprises 60%-70% of the market – has plummeted to its lowest level in 20 years.

“Safe haven” appeal: From its March 2009 bottom, the U.S. stock market has soared 50% right alongside rallying gold prices.

Inflation: As the October 2009 Elliott Wave Financial Forecast (EWFF) notes: An increase in money supply is only inflationary if it is used to RAISE the total amount of credit. This is NOT happening, as both bank credit and consumer credit levels are contracting for the first time since World War II.

A gold rally in other currencies: Again, the October 2009 EWFF presents the following close-up of Spot Gold prices VERSUS Gold denominated in foreign currencies such as the Canadian dollar, the Australian dollar, the euro, franc, pound, and yen since 2007.

The major non-confirmation between these two markets is clear, as is the overlying message: IF demand for gold truly outweighed supply, then its value as measured in other currencies would increase.

The rise in gold is primarily the result of speculation and a falling U.S. dollar. These are exactly the “untenable” forces that contribute to a Bubble, not a genuine Bull market. The difference is only a matter of time.

For long-term forecasts and more in-depth, historical analysis for precious metals, download Bob Prechter’s FREE 40-page eBook on Gold and Silver.

This was an article by Nico Isaac of Elliott Wave International.