Gold Stocks: The Need To Bleed Stewart Thomson
Feb 28, 2017
- In terms of technical analysis, gold stocks recently reached what I call a “Need to Bleed” price area.
- Please click here now. Double-click to enlarge this important GDX daily chart.
- A very large inverse head and shoulders bottom pattern is in the late stages of forming, and this is great news for gold stock enthusiasts around the world.
- Most technical chart patterns are quite small and they tend to fail. This one is bigger, and it has a very aesthetic look.
- The price target of this impressive pattern is the $30 - $32 area. That represents a substantial percentage gain for investors, if it plays out.
- I’m a GDX buyer this morning, both for myself and for the funds I manage.
- Please click here now. Gold bullion is displaying very solid price action. Following a likely pullback to $1245, my next technical upside target is $1275.
- Should gold experience a deeper pullback ahead of the US debt ceiling deadline and FOMC meeting on March 15, investors should be eager buyers at $1220.
- Gold is the world’s ultimate asset. It continues to be very well supported by the price action of the “risk-on” US dollar against other key fiat currencies.
- Please click here now. Double-click to enlarge.
- After breaking down from a large head and shoulders top formation against the Swiss franc, the US dollar has formed a bear wedge.
- It’s now on the verge of breaking down from that wedge. When the dollar fails against the franc, it tends to also fail badly against gold.
- In time, I think the dollar will re-test the lows all the way down at the .9550 area, which means that gold will likely soon trade at $1338.
- Please click here now. Double-click to enlarge this dollar versus yen chart.
- The 112.50 support zone for the dollar has been repeatedly tested, and it is barely holding. A meltdown under 112.50 that occurs while the dollar tumbles against the franc would be extremely good news for gold.
- Please click here now. Double-click to enlarge. That’s another key dollar versus yen chart.
- The dollar broke down from a double top pattern at the same time as it broke down from the H&S top pattern against the franc. As that happened, the dollar was crushed by gold.
- The dollar could now be said to be trading sideways against the yen in a very bearish symmetrical triangle formation. These types of triangles tend to consolidate the existing trend, which is now down for the dollar.
- Is the technical situation for the world’s dollar bugs becoming perilous? I think so. The dollar looks to be targeting 107.50 against the yen, which also corresponds with $1338 for gold.
- Most dollar bugs are also heavily invested in the US stock market. I think many elderly Americans are hoping that America can relive the glory days of the 1950s, when the US dollar and stock market were almost invincible.
- Unfortunately, America’s debt levels (personal, corporate, and government) make this a wishful fantasy at best.
- To understand the reality of sustainable wealth building in the twenty first century, please click here now. Is Donald Trump going to make the American nation great by restricting the arrival of highly educated Indian engineers into the United States?
- No, but he’s going to make American inflation great for gold stock investors! Deportation is inflationary because it reduces the US work force by about 3% - 7% in size. The time is very near when US corporations will pass on these new wage inflation pressures to their customers.
- China and India are going to develop a much closer trade and working relationship. It’s going to happen very quickly, while America descends into a stagflationary nightmare, blasting gold stocks higher for many years into the future!
Feb 28, 2017
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is a retired Merrill Lynch broker. Stewart writes the Graceland
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