Prepare for a Spike in Silver and Gold Prices

By Jeb Handwerger of Gold Stock Trades

NEW YORK (Gold Stock Trades) -- The U.S. election results are in. The people have chosen. Subscribers are well aware of the changing rules of the game, conforming to the latest economic developments. There may well be a period of negativity relating to the general markets due to the U.S. election, fiscal cliff and year-end tax-loss selling.

We may see both parties come to some sort of conciliatory agreement to save the holiday season. This is known after the election as the honeymoon phase, when previously antagonistic parties feel the need to think "Can't we all just get along!"

What should investors in the precious metals market do next on this wave of Obama's win? The way we see it is to wait for any initial reaction of pessimism to subside. Precious-metal devotees are a special breed that still must operate within basic rules of the game. What is the market signaling to us?

Immediately after Obama's victory, there has been a selloff in the general market. Note carefully that gold and silver have held up well despite a significant decline in the Dow Jones Industrial Average and S&P 500. The market will do whatever it can to confuse, misdirect and obfuscate. The recent decline in the S&P 500 not only was unmatched by the action in gold, but we note silver is outperforming as well.

What could the recent market response tell us as to what our next move in the gold market might be? Possibly, reverting to one of our favorite mantras: "patience and fortitude."

We may well be witnessing negativity from the abdication of disgruntled Romney supporters. This is generally the standard reaction of depressed players quitting the scene at the wrong time. This is a psychologically skewed, emotional reaction to leaving the battlefield.

Napolean was famous for having said, "One engages then one waits." Similarly, as precious metal players we have taken our positions and hopefully a buy-and-hold strategy along the secular upward charts will turn out to be the prudent course.

Miners and precious metals have outperformed over the past decade and may do so for a considerable while longer as we are nowhere near bubble territory.

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