Precious Metals ETF Alloc. System Update

As mentioned in prior posts, I began blogging on this developing Gold and Silver ETF Allocation System via the "CAPS System" on Motley Fool's site, fool.com. Due to the scoring-system used at CAPS though, I am making this blog the primary location online where I will document my progress refining this System and its performance in the market. This entry below was originally posted May 18, 2007 @ CAPS. I've copied it here to provide a complete history to the reader who wishes to research my Allocation System development over time and confirm the transparcency of my process. One can obviously view the original entry from that point in time via my CAPS blog there but I encourage one to primarily follow my Allocation System via this blog, Greham's Day in the Sun.


Since May 2nd when the last portfolio changes were made here upon signals generated by this Allocation System, the precious metals have continued their slow correction. As predicted in the prior blog post though, the performance of both Au and Ag has been very similar. Over the past 11 trading days since May 2nd, SLV has declined 3% while GLD has declined 2.4% The Allocation System--intended to keep us 100% invested in the Precious Metals at all times--has had us properly deployed in both Silver and Gold instruments during this time that both have performed at parity.

The latest results from futher work using these data indicated that this correction in both Au & Ag should put in it's bottom in the next few days. It could even have been that today represented the bottom and the next rally could begin as early as tomorrow. It could also be a few more days but the declines should be exhausted and the trend begin up again by middle of next week. It is a bit tougher to call at this time because there is no comparable historical period of data given that SLV is only about a year old now. Other historical data sources tested as surrogates for SLV, the silver ETF, so far haven't behaved close enough to trading in the actual ETF's to work to my satisfaction. However, barring some exogenous major event in the markets in the coming days, data thus far does seem to indicate the correction process is about complete. Within one week we should know for sure.