by Craig Hemke, Sprott Money:

When I first earned my NASD Series 7 “stockbroker license” thirty-four years ago, I had the privilege to learn at the feet of industry veterans, some of whom had been in the business since the 1950s. They passed along to me some tried-and-true adages, most of which remain relevant today.

• With the ongoing breakout in the gold price above $2100, I’m reminded of one of those adages as I type this week’s post: “volume precedes price“. What does that mean? In stockbroker terms, an equity is dead money if it languishes at a low price and with low trading volume. (Does this sound like a few of your mining shares?) However, before price turns higher, trading volume often picks up. This uptick in volume is typically a sign of growing/new investor interest in the equity, and in many cases, this renewed interest in the shares eventually leads to a higher price.