Gold Charts R Us Bungeejump Harry Schultz Archives Posted May 11, 2004 2-week trial of GCRU $45 -- yes, sign me up! The following is an excerpt from Harry Schultz' current GCRU, dated May 5, 2004. Gold Charts R Us - sent weekly by Email - $US100/mo for 3, 6, 9, or 12-month subscription periods (fax +$120 per 3-months) - you can subscribe here. Welcome to GCRU #111 on May 5, 2004. We've had a bungeejump since last Wednesday. Gold fell $23 & bounded back $15 as I write. I said lastime I suspected gold would touch 400 "any minute." That came true! Gold touched 400.00 precisely when NY opened on Wednesday but then fell like the proverbial rock, a massive $13. WHY? Simple. The Chinese premier announced what was already widely reported as "planned" but his announcement suddenly made it real. He said China will restrain credit to slow the overheating economy. On that news every commodity fell. Gold was just one among many. The commodity-currencies fell too (C$,A$). The US$ was already up, as I reported in my PS lastime, but went further on the news. I thought/hoped 390 would hold but I said: if it didn't, there was support at 380, 370 & worst case 360. Those stipulations helped U keep your cool, I hope. I also said the Trading Zone of 430 to 390 could be expanded to 430-380. And so it came to be. I think 380 holds. I'll tell U why in a minute. Note, the US$ did not go to a new high when gold went to a 7mo low, proving this was a commodity-wide mkt move. Nor was it a currency-related move, as the euro didn't go to a new low when gold did. In sum, the hot commods cooled off via a Chinese take-away of the spring rolls. Instead it was chop-suey. But we need not worry. The 2nd wave of commodity bull mkts is normally equally as strong as the 1st wave - but traditionally more yo-yo. A trader's delight, a buy&holder nightmare. Most of the commod mkt correction is over. CRB rose 2.66% Monday despite non-stop China-great-wall-of-worry talk in press & on every TV news show 24hrs a day. Hahaha. But, take care in each sector & in each stock. Best sectors: natural gas, crude oil, gold, in that order for the moment. I've been buying nat.gas & oil stks recently for diversification (eg, DVN, NFX, WGR). Don't buy RoyalDutch or Shell. Total is OK. Why will gold hold over 380? Unusually, the clues are not to be seen in gold stks, which look sad, but in the currency charts. A week ago, it started to be apparent there were bullish downwedges (now confirming) in the main currency charts & a bearish upwedge in the US$. The Magee conclusion must be: the currencies are about to rise, the US$ drop, & gold benefits. This should be underway now. That's the good news. The so-so news is that these wedges have a modest target, ie, back to their starting points. It means eg, the euro goes back to its Feb peak & gold likewise back to its last high at 430. It does not mean it can't/won't go higher; we just don't have a solid basis for the next target or the next correction after 430. But no doubt one will show up on charts by the time we get there. U must be aware by now, if not previously, that silver is the nervous metal, goes up fast, comes down fast. Ag shares even more so. Their volatility is so severe, I'm deleting their charts, moving comment on them to the back pages for now. NZ just raised interest rate to 5.5%, due to "inflation." Sez more hikes pos. This supports my view for currencies rise, $-drop, & big move in inflation-on which I'll devote 2 pages in HSL this coming weekend, a blockbuster & epic Big Picture with a 6-year forecast! This recent gold fall has smashed the buy&hold crowd. Our crowd sells when stops are hit or when prices rise to pre-determined profit levels. We buy in order to sell (higher or lower). They buy in order to crash&burn in big corrections, or they ride up&down&up&down (emotionally & financially) without ever banking profits. Buy&hold is stubborn, profitless & lazy. By the way: Gold bullion is the MALE element in mkts, relatively steady. Gold shares are the female element, more emotional - eg, higher highs & lower lows. We get clues for the future from both, but it's vital to avoid depending on the female shares for major buy/sell action. Don't let the tail wag the dog. Bullion is still king. I'm removing the charts of CDE, MR-T & NEM on grounds of bad behavior. They'll be covered in the back pages til they recover, if they do. I'm giving a stay of execution to IMG-T & WRM-T, & extending their coverage in back pages. I said lastime I'd be placing buy orders under the mkt. That turned out to be correct strategy. In future I plan to include specific bargain-hunt prices here. GCRU is a works-in-progress, as I said in&from the 1st issue. It's time to polish/change some tactics. Will avoid most "buy on 1&2 day close" & buy more breakouts at mkt - so we get in earlier (& out earlier) with stops. Also in place of "buy on strength" (which leaves decisions to U), I'll say: "buy at 13-stop" which means U get in precisely at a predetermined strength level. It risks buying false breakouts but the bigger risk is buying too high. With close stops, the risk is minimal. If U don't want close stops, use deeper one. It's OK to do your own design. Always the challenge is: do U try to buy low & sell high, or, buy high & sell higher? I favour doing both. But the success key is how U do the buying & selling. In GCRU we have been playing it "safe" via 1&2 day closes for both buys & stops; also re buying after low level test completed. But in my personal trading I don't usually play it quite so safe. Why? Because it risks getting in too high on each up-leg. And missing bargain lows (can be protected with stops). Admittedly I have the advantage of intraday decisions but under these new GCRU procedures, I think I'm building in a sensitivity to price that is almost as good as intraday decisions. So I'm refining GCRU to do it "my way" as my one-time friend Frank S. put it. My Way is marginally riskier. But the rewards are greater & if U use stops, the risk is small. I don't know but I suspect many don't like/use stops, & they got a bloody nose last wk. Stops are not usually optional. I may need to refine these strategies further. Let me know if U like this new approach, doing it My Way, a bit riskier but I think more profitable. We'll see. Bye, from your in-house alchemist & gold guru, Uncle Harry (If it's Wednesday, It's Gold Charts R Us) PS: The 120min charts last nite reveal a startling island reversal in US$, very bearish. And a similar island reversal in the euro, very bullish. Euro also broke up from a downtrend. Weave these together & U have a strong bull signal for gold. Target: 430. U see, dear reader, how it is usually darkest just before the dawn? All gold boats rose Tuesday, will now race to the underside of overhead supply. Many (most?) will slowly eat thru it over coming weeks. Relative Strength matters much now & easily measurable. Also last night, the US Fed gave a cigar smoke signal that interest rates will rise. That's also gold bullish. Am adding a new gold stock to GCRU: KRY-T. Interesting chart. A good gambler buy, with stop. Thanks for your very nice letters. Will quote some nextime. Bye, Uncle 1 picture is worth 1,000 words. This chart picture shows the specific potentials of the strategy of buy-sell-buy-sell vis the buy & hold non-strategy. The chart & the numbers speak for themselves. If U had just bought & held, with no trading, your gain in this period would have been approx: 0.37cents per share, after holding for 108 weeks! Going by advices given in GCRU, we were stopped out 6 times for losses, & took profits 12 times. The winners doubled the losers. Nobody calls the shots precisely & neither did we. Some no doubt did better than we; some less. But if U catch the bulk of the moves, or even half, it doesn't matter if U miss exact bottoms & tops. PS: the theoretic profit via buying at each low was 228%. If U also shorted at each top the profit was: 384%. PPS: using our Spinner indicator, above, gave vital buy/sell clues, backed up by daily charts. Lots LOTS more follows for subscribers! Email this page to a friend ### Who is Harry Schultz? Chevalier Harry D. Schultz, KHC, KM, KCPR, KCSA, KCSS, is the highest paid investment consultant in the world at US$2,400/hour-US$3,400/hour on weekends (International Edition Guinness Book of Records 1981-2002). To keep in touch with developments around the globe, Harry draws from correspondents in many countries, plus mountains of international newspapers, magazines, and other data. At the top command posts of Harry's elite team are Chief Market Analyst, Paul Griffiths, and Research Editor/geopolitical analyst Gordon Frisch. Loyal HSL and GCRU subscribers in 90 nations are much more than simply names and addresses; Harry and his team consider them part of their cherished global family. Harry is regularly quoted in books, articles, and interviews and by other newsletters (the "alternative press"). Arthur Hailey, a longtime personal friend and HSL subscriber, based his character Lewis Dorsey in the bestseller The Moneychangers, directly on Harry Schultz. Harry has lived for extended periods in 18 nations, and shorter periods in many others. Knighted five times, Harry is a man for all seasons and a true citizen of the world. Contact: E-mail: HSLmentor@racsa.co.cr Fax: Costa Rica (506) 272-6261 Fax: Switzerland (41) 21 652 0525 Mail: POBox 622, CH-1001-Lausanne, Switzerland 2-week trial of GCRU $45 -- yes, sign me up! ______________ 321gold Inc ref: 08135