Another Strategy for Your Investment Toolkit

Over the past few editions, I’ve been giving special attention to technical analysis, serving up ‘real-time’ examples of how you can take advantage of the information stored in charts.

But let’s be clear: technical analysis, or what you might call chart reading, isn’t just for the traders or sophisticated hedge funds; it’s a critical tool for long-term investors.

How so?

Well, imagine that you were looking to take a long-term position in a certain company, based on some kind of driver or strong fundamental outlook.

Let’s say it’s a company that produces bauxite, the raw ore that hosts aluminium.

Now, imagine that the supply is potentially constrained for some reason, such as declining quality of Chinese-sourced bauxite, which puts pressure on international markets.

That, by the way, has been a possible tailwind for the bauxite market in recent months.

Anyway, that’s the fundamental outlook. But it doesn’t tell you whether the market will actually respond with higher prices.

Commodity markets are extremely dynamic, with a wide variety of demand and supply factors occurring simultaneously across the world.

And that makes it almost impossible for the individual investor to understand whether a company or commodity offers investment upside.

Charts offer clarity

So, this is where charts can offer valuable information that you’re not going to find within the mainstream news outlets.

You just need to understand what to look for.

To show you what I mean, here’s a snippet of what I wrote to my paid readership group in the final quarter of last year, offering an outlook and investment strategy for the coming months.

It was titled:

‘Focus on Sectors Offering Real Value, Producing Real Things’

And this is what I detailed:

Precious metals have been the clear winner in 2025.

Gold stocks are soaring, so I won’t be jumping into this market unless we see a decent pull-back.

Meanwhile, silver and platinum have also performed well, but specific stock opportunities are limited.

Silver is predominantly mined as a byproduct of gold and copper production. Platinum miners are outside our reach, given that most operators are either South African or Russian-owned!

However, you’ll notice that we maintain some exposure to both in the D&D portfolio.

Next come the base metals, things like copper, zinc, and aluminium.

This market is starting to move… Note below, a chart of the London Metal Exchange Index (LMEX).

It consists of six metals with the following weights: aluminium (42.8%), copper (31.2%), zinc (14.8%), lead (8.2%), nickel (2%), and tin (1%).

As you can see, the technicals appear solid and are setting up nicely for a potential price breakout:

Source: Trading View

[Click to open in a new window]

To me, this set-up suggests that base metals could overtake gold as the key outperformer in the resource market next year.

Notice the timestamp on the chart: September 2025.

There were other key explanations I detailed in the piece that also boosted the outlook for this group of metals.

Anyway, what happened to the base metals index since that update was published to my paid readership group?

Source: Trading View

[Click to open in a new window]

Bang!

The index has soared, breaking above its key resistance level and rising around 23% since September last year.

That’s just one example of how you can use charts to your advantage; they offer an important ‘back-reference’ to your fundamental outlook.

Charts are among the best ‘forward-looking’ indicators in the market, but again, you need to understand how to read them. And that takes time.

They’ve given me enormous clarity into what would otherwise be an incredibly choppy market.

If you want to get insights like these and stack the investment odds in your favour, you can find out more here.

Until next time.