My 1st Million At 33 – yes, you can do it too

The recent big moves by precious metals after US decided to stand pat was more than amazing. Some mining stocks went straight up by 20% in two days. Such is the volatility and the nature of the precious metal investments.

The effect after US Fed meeting was that US dollar was lower, which sent both euros and gold to go up. This Thursday, it is widely expected that ECB is going to raise rate by a quarter point. The question that few are asking is that what if it doesn’t. I think if there is a surprise, it may be a really big one.

European countries are certainly right now are quite split on the new euro with an unfied monetary policy. Many countries, for example, Spain, are suffering the same housing bust in the United States. Others are experiencing more economic slowdown, and cannot afford more tightening. The inflation hawks in ECB so far however have been just talks (like the counter-parties in USA). It’s obvious however that if there is no rate raising on Thursday, this ECB is going to lose its precious credibility.

I’m not going to venture to bet on an otherwise outcome of no rate raising. Based on the levels of the currency markets, with Euro going up much higher after US Fed stood pat, most bets seemed to be on a ECB rate raise. A lower dollar has been very good to precious metal-related investment. However, if ECB doesn’t raise rate, I think it’s probably going to lit up fire in the precious metal complex. When one of the most hawkish major central banks stopped at the real actions, who else is going to put a lid on the inflation, and therefore on the gold price?

Gold currently is trading near its next resistance level at around $950. A break through here will certainly be huge. I personally believe that the likelihood of that the precious metal correction is already over is quite high, possibly in the 75+%. Both the time duration and the magnitude of the HUI correction has been about 50% of the seven month rally since last August. My biggest worry has been a sharp pullback in crude oil, pulling down precious metals together. However, it looks like gold is ready to move up already. And there is no sign of a lower crude oil, which is still in its Elliot wave 3 of 3. The Elliot wave 3 of 3 could be anytime now for precious metals. I highly recommend buying if any dips come along.

Disclosure: I own lots of precious metal and mining stocks.