A Smart Way to Play the Metals

We’ve written about the gold miners in the past, most recently this past October. We remain bullish on gold and the other precious metals and believe they will begin rising in the near future.

But while precious metals have been languishing, there remains another metals opportunity that has been moving higher for almost 2 years and looks as if it could continue its uptrend well into 2018.

Mining Industry History

The metal and mining industry is traditionally a leading indicator of future strength of the economy. These stocks have moved higher as the US and world economies have recovered (and expanded) at a quick pace. Industrial metals are expected to be an important part of the US infrastructure rebuild that’s predicted to begin next year.

XME is the ETF for metals and the mining industry. This includes both the industrial and the precious metals. XME has the following weightings:

Weightings for metals and mining industry ETF, XME

XME triggered a Stock State Indicator (SSI) Entry signal back in March 2016 at about $20. It has moved into the SSI Yellow Zone nine times in 21 months, yet each time has moved back higher into the SSI Green Zone. It’s currently trading near its 2-year high above $33 which is a gain of 65 % since triggering its SSI Entry signal.

XME currently trading near 2-year high above $33

The volume-at-price chart shows that XME just broke above an area of strong resistance. If it can hold this level, the next area of resistance is at the $37 level.

Volume at price chart reveals XME broke about strong resistance

XME was trading mostly in-line with the gold miners for most of 2016 until making a sharp move higher at the end of the year. It’s been trading markedly higher since then and continues to move up at a much greater rate than the gold miners.

The Takeaway

Our proprietary time-cycle forecast is very positive for XME and shows that it could continue rising through the first 8-10 months of 2018.

Time cycle forecast reveals XME could rise higher in the next 8 – 10 months

The metals and mining industry is low-tech and doesn’t generate many headlines, but it has been outperforming many other “sexier” investments. For those interested in generating income, XME pays a 3% dividend at the current price which is 50% higher than the S&P 500.

The entire TradeStops team wishes you and your family a Merry Christmas and a blessed holiday season. And we hope that you find only gold in your stockings, with no traces of coal.