Gold Stock Alert
Sheeple vs Slizzards
The signs of a major bottom in the stock market are beginning to appear. That represents both great risk and great opportunity. The chance of a major bottom between now and the third week of October is excellent.
We wouldn't be major sellers of gold stocks. The risk of missing a move higher is greater than the risk of making a major move down. But downside risk exists. What I would look for is a possible plunge in the gold stocks followed by an immediate move back to where we started.
I'll use as an example a stock I bought on the day of the bottom in May of 1970. It closed on one day at $15 - opened the next day at $12, plunged to $9 and closed at $13 - all in one trading day. Therefore, it would be a prudent and potentially lucrative move to put in buy orders on your favorite gold shares at 30-40% below current levels and hope for a plunge.
If you wait until the day of the move, you will miss it. The market maker slizzards would have scooped up all the cheap shares which they intend to sell to you at higher prices later in the day. Remember, many gold stocks suffer from a severe lack of liquidity. Make that lack of liquidity your friend and ally during a plunge.
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