Predicting the stock market is impossible, right? That’s always been part of the risk involved there. You just never know what could change at any moment. The key to solid investments is an understanding of market analytics, and during one workshop at the Cambridge House conference in Toronto, Roger Wiegand of Trader Tracks helped investors understand how gold and silver stocks play off other stocks in the mainstream market, which not only offers a bit of valuable insight into how things should work, but also how to make certain you’re getting the best for your investment dollars with a few market prediction strategies.

“There are some things that happen in the S & P’s, the Dow, the NASDQ, and so on that are signals for trading or not trading long and short in our favorite junior and senior gold and silver stock,” said Wiegand.

It’s information about those signals that can help traders and investors alike get a better return on every single dollar they put into the market.

Wiegand went on to explain several different points.

·        The NASDQ serves as a leading indicator because it goes a bit faster as a result of the telecommunications and software companies involved, so it serves as a forward leading indicator as to what might happen in the rest of the stock markets.

·        Moreover, the S & P has the most money, so if you look at futures charts, it offers clues as to what the market might do in the near future.

·        The Dow, the S & P’s, and the NASDQ can all serve as tools to see exactly what might happen within the precious metals market in the near future.

The markets, though, aren’t the only indicators for investors. The US dollar severs as a solid indicator too. While the dollar and gold prices can climb together, it’s fairly rare, and when it does happen, it’s a solid indicator that something is changing in the market.

Those factors outstanding, the big question is whether gold stocks will chase the cash and futures gold market too or whether they’ll shift with the major market indices. Gold, though, is breaking new ground, and that’s a positive sign for the market as a whole.

Just as markets and the dollar can have an effect on prices, so too can an election cycle, and with the November 2 election coming up, the chances are good that those with enough political clout to do so will prop up stocks to make their own candidacies look good to voters. In any average year, September and October are scary months for the market. As November begins to approach, however, stocks either stabilize or increase in value. In an election year, however, the tables turn dramatically, and while the stocks are likely to look good up until the election, the market tends to notice a dramatic sell-off in the post-election season.

Just having the knowledge necessary to make some predications, though, isn’t always enough to ward off problems. Wiegand said that with as many economic problems as the US is facing, inflation is coming as is a weak dollar and some potential market problems. Looking to long gold and long silver strategies as well as short dollar investments is probably the best bet right now according to his theories. Additionally buying the Canadian dollar and Swiss francs offer lots of beneficial possibilities.

The key for Wiegand, though, will always be a conservative approach.

“We encourage people to try to not have too large a portfolio,” said Wiegand. “The management problems are just too great. Things are becoming volatile in fast markets, and we’re getting fast markets across the board not only with computers, but also with all the ups and downs within each particular market, so what you need to do is you need to only work on a handful of things. Be very careful about risk control. If you can control risk, pretty much everything else will take care of itself. You’re going to be successful. It’s not that difficult to find good stocks and good trades. What is difficult is preventing major losses.”

Personally, Wiegand only trades in the futures markets for gold, silver and grain, but he suggested that gold is steady in the long term, and it offers a good return on profits. The real idea behind Wiegand’s theories is that spread trading makes the most sense. It limits the upside, but it also limits the level of risk involved.

Wiegand offers investors and traders alike his insights through his newsletter, available at WeBeatTheStreet.com.