fundamental analysis
Fundamentals & Technicals Pointing to Silver as the Next Big Trade
By Moe Zulfiqar for Daily Gains Letter | Oct 10, 2013
I have been a very big advocate of using both fundamental analysis and technical analysis together to get a better idea of what to expect next when it comes to prices, be it for stocks, precious metals, currencies, or other investment instruments. But when I use this strategy to look at silver, I can’t help but be bullish.
First, let’s look at the technical side:
As you can see in the chart below, silver hasn’t performed well since the beginning of the year—it’s down roughly 30% from its peaks in February—but few things have changed since it had sell-offs in April and June. The prices found support at the $19.00 level, and have not seen those levels again; as a matter of fact, the precious metal’s prices have been trending higher since then.
In addition to this, the moving average convergence/divergence (MACD), a momentum indicator, is suggesting that bulls are coming in slowly. Furthermore, silver prices recently crossed above their 50-day moving average, a move considered to be significant and in favor of the bulls.
Chart courtesy of www.StockCharts.com
On the fundamental side, there’s a significant amount of information that suggests the price of the white precious metal may increase going forward.
First and foremost is the relationship between gold and silver. I have mentioned in these pages before that we are seeing the fundamentals of gold prices getting better. The central banks are continuously printing, keeping easy monetary policies low, and those in the emerging markets are buying the precious metal. As the gold prices go up, silver prices will follow the same direction.
Secondly, the demand for the … Read More
Fundamental Analysis or Technical Analysis? How to Pick the “Right” Investment
By Moe Zulfiqar for Daily Gains Letter | Apr 25, 2013
There is a long-lasting debate among investors about how to pick the “right” investment. Should they completely rely on fundamental analysis or technical analysis? Or do these methods of analysis really matter?
While there are many theories on how exactly to select a stock, the group of stock advisors who believe in fundamental analysis and the group of advisors who follow technical analysis will both argue that their method is the only method that works.
Sadly, with this debate comes great confusion and a significant amount of questions.
The solution: instead of just getting fixated on just one school of thought, either technical analysis or fundamental analysis, investors should use both to make decisions about their investments.
In the long term, the fundamentals of the company are what drive the stock prices higher or lower. In the short term, stock prices are dictated by the overall market sentiment, as well as other factors.
Investors can use fundamental analysis to assess the company’s financial position. There are many ways investors can do this, but some key fundamental measures they should look at, including the company’s revenues and profit growth rate over the years, are the company’s cash flows, its ability to bring new products to the market, and its market share.
In addition to all this, investors must also take into consideration the survivability of a business. For example, when it comes to penny stocks, investors need to look at if the business is sustainable. If the company is burning cash and not really making any progress, it might run into troubles ahead.
Similar to fundamental analysis, there are many ways … Read More
