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The bloodletting times are behind us

Harry Schultz snippet
Aug 22, 2005

The following snippet is from Harry Schultz' current GCRU, of Aug 17, 2005. 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.

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Welcome to GCRU #173 on Aug 17, 2005 (in our 4th year).

Unless I'm looking through the wrong end of this telescope, the Big Picture for gold stocks is pretty easy to describe this week. At least easier than usual. The consolidation led to an upside breakout, as I said was barely starting to happen as I wrote the PS lastime, & as I shorted the US$ & bought the euro on that pending mini-trigger. Thereafter, gold did indeed break out from the 440-445 holding zone, raced up to 455 (basis Dec futures) & began evolving into its new stature. Which is: the bloodletting times are behind us for gold shares (thank heaven) but not fully evolved into a new & major bull leg. Yet, that seems an almost bankable assurance.

••• Gold is testing its peak of last March at 456-459. All such tests take time to evolve, so we use this moment to plan our strategy, "knowing" that the wind is starting to catch our sails. We can loosen our stops a bit to give stocks a bit more breathing room. We can buy into mini dips (via individual charts) & plan to double up on breakouts of either patterns or resistance price levels. This is a no-stress moment, which we richly deserve.

•••• Yet it doesn't mean we can let our guard down entirely as U can see from the Schultz Gold Stocks Advance/Decline Line which amazingly shows continued sideways action! The sun doesn't shine on flowers in the shade. While the robust golds are rising & looking good, a lot are not rising, meaning the average gold is simply standing still! That's why we keep deleting the underperformers in GCRU & adding (or bringing forward from the back pages) those that perform nicely. That's part of what U pay for in case U didn't realize it. And if U continue to hold weak stks, then don't expect a brilliant bottom line. It's easiest to prune by gradually selling off chunks of the weak & putting those funds into the better performers.

•••• Our Keeper of the Spinner keys, Paul, says: "Most Spinner lines are in a steadfast bull mode, with blue confirming lines rising above zero, but red timing lines at or nearing overbought extremes - which opens window for backfilling/shorterm consolidation phase." So there!

••• The Schultz Gold Index (SGI), gold's Nasdaq, indicates higher highs possible but unlikely to see mega moves while the SGS A/D Line remains in sideways drift. But I don't think that will last much longer.

•••• Silver needs a rise over 7.40 to underpin gold's breakout move. A close at 7.25 would probably bring in preemptive strike buyers.

••• To cover all bases, I must say: this evolving moment must see gold hold over 438-430 on dips to maintain its bullish momentum.

••••• Non-US$ currencies are all of a different hue! 3 Their overall color is yellow to green. Euro broke up, now pulling back a touch. Ditto SwFr, maybe will make a R/H&S. £ raced to 181.60, will probably move sideways for 2wks to make a right shoulder. Yen broke out, shocking all the shorts, looks positive, may dip a hair to .91. C-$ broke out of R/H&S, headed much higher, is best of the pack. A$& NZ$ both in strong uptrends but now face overhead supply If A$ tops .775, could streak to the moon. Even Mars. And the US$ index itself is correcting upside from its recent 3 wks fall. Is a short or re-short on rally to 88 +/- IMO. This is not a currency advisory letter, but I throw these comments in to give U the flavour of the forces that affect gold.

••• CRB is correcting, probably to 307-308.

•••• I covered my 10-year note short at nice profit & now searching place to re-short.

••• Copper to new high.

••••• Merrill Lynch's 8/15 Precious Metals Calendar quality analysis says "Gold stocks valuations are pricey, but not excessive in view of likely higher bullion prices ahead, longterm" which they foresee. They say: "Since July 18, the S&P/TSX Gold Index has risen some 11%, on the back of a 6.0% move (to a 5-month high of $446/oz) for bullion. Gold equities have traditionally enjoyed a period of 'seasonal strength' from mid-summer to mid-autumn (with average returns of 24% & 9.4% for gold equities & bullion in 15 of last 17 years)."

••• Best looking golds in the glitter beauty contest: Anglo American again, Cameco maybe, FNX-T maybe, Gammon Lake, Meridian Gold, Rio Tinto again & forever (?), Teck Cominco maybe, Virginia Gold again, Yamana maybe. With so many good contestants, U can see why I say the gold Big Picture seems clear, & rosy. Certainly no ocean of top patterns as we saw in the dark ages, months ago. So eat (healthy stuff) drink (bottled water) & make merry, for 'tomorrow' we may see the kingdom of $500 gold & beyond. ·

••• Oh, one last thing. My friend Chick Goslin [email :: website] confirms what I have long said here, but not lately, so worth reiterating & getting his take. He analyzed his own trading for last year & found he had made profits of over 7 figures (over a mil) but that the overwhelming majority of trades were via taking profits of only $1000 to $1,500 per futures contract (in crude complex have to adjust this number up). Is risky when U try to maximize profits. Or using the area of 100 to 150% of margin profit works out very well. Many times when I do this, price will keep moving after I get out at this profit level, but when I hold onto a token number of contracts to try to maximize profits on those, am surprised by how many times I will end up getting out at same or worse profit than those where took profits at lower levels." This applies to stocks as well as futures. Take modest but acceptable profits as U go. An alternative is moving stops up VERY tight after U have reached that minimum profit target, & keep moving up. I tend to take the profit, via a fixed order price, which sometimes is an intraday high not seen again. Or I sell at the open if I liked the closing price & fear it may not hold there. But U can use a mixture of tactics, not the same in all situations.

•••• See U in the PS.

Bye from here.
Uncle Harry

COMEX Gold

Yamana Gold

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[In this weeks issue: Agnico (NYSE & Tor) - Anglo American (Nas) - Cameco (NYSE & Tor) - Coeur D'Alene (NYSE/Tor) - Cvs Corp (NYSE) - Eagle Plains (Toronto) - Fnx Mining (AMEX & Tor) - Gammon Lake (AMEX/Tor) - Gold (NY) - Gulfmark (NYSE) - Lihir (Sydney & Nas) - Manitowoc (NYSE) - Meridian (NYSE & Tor) - Newcrest Mng (Oz) - Newmont (NYSE & Tor) - North American Gold (Tor) - Novagold (AMEX & Tor) - Orezone Res. (AMEX & Tor) - Perseverance (Oz) - Rio Tinto (NYSE) - SGI - SGS (A/D line) - Sierra Pac Res (NYSE) - Teck Cominco (Toronto) - TREND INVESTORS - USD (NYBOT) - Viceroy Explor. (Tor) - Virginia Gold (Tor) - Yamana Gold (AMEX & Tor)

All charts created with TradeStation by Omega Research 2000.

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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! Copyright ©1964-2006 F.E.R.C. All Rights Reserved. Archives

Reprinted with kind permission at 321gold Inc