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Gold Juniors: World's Best Charts!

Stewart Thomson
Apr 6, 2010

1. I have some phenomenal charts for you to look at today. The GDXJ(nyse) and the ZJG(Toronto) Gold Juniors ETF investments continue to outperform the Dow. I expect that outperformance to accelerate, and perhaps exponentially so, over the coming year.

2. While every analyst has the right to state their case, the deflationists have been mauled by the scoreboard. Most of the world’s financial analysts, sadly, seem to make taking on GOLD an actual “mission”. Ever see the show “Mission Impossible”? Try Mission Insanity. I see their mission as utter insanity.

3. Be very wary about predicting the price destruction of a stronger and more experienced opponent, one with 5000 years of history as the greatest investment in the history of the world. Yet, like lambs to the slaughter, each and every economic cycle sees a new crew of “analysts in their own mind” step forward predict “the end of gold as an asset”, aka how to live life by the exception and succeed. Others come up with some decent analysis, but their wiener conclusion to “sell all your gold now, it might fall down $300 an ounce!” is something from far beyond the twilight zone. When you look at it all seriously, it’s actually sad. A frail little human with a life expectancy of 100 years or less, standing in front of the mighty gold bullion wrecking ball basically saying “I’m smarter, bigger, and better than you are”. How pathetic, and the scorecard bears out the equally pathetic 100% failure record of the gold bashers. Those Enron and Nortel stock certs look tasty, but maybe it’s time to add a little GM to make it 3 square meals of price plopped toilet paper.

4. But back to our story, your story, the gold juniors story. My own subscribers can vouch there was nobody as “gold juniors negative” in the gold community as I was, until gold officially launched the 3rd phase of the bull market by blasting over the neckline of the weekly chart head and shoulders pattern at 1033. My statement to those who asked me about juniors up until that point was basically, “Get Lost”. Taking out the 1033 neckline was the official launch of the gold juniors play as an asset class, one now set to dramatically outperform all other equities, in a multi-year supermove.

5. Here’s a look at the GDXJ to Dow ratio chart. What I see is a highly positive technical situation, with oscillator series like MACD flashing fresh buy signals.
GDXJ to Dow Ratio Buy Signals!

6. This next chart is one of the most exciting charts I’ve seen in awhile. It is the GDX to Dow ratio weekly chart.
GDX to Dow Weekly Chart

7. Take a good look at the volume ratio on that chart. The technical oscillators are not only flashing buy signals, but doing so accompanied by a massive increase in the GDX to Dow volume ratio!

8. I want to clarify my “Kill the Dow” positioning once and for all, although I’m sure there will be many more “final clarifications” required, which is fine, because we only learn by intense repetition, something few investors grasp. Please read the following carefully: I am shorting the Dow into strength from Dow 9000 to Dow 11,500 in a “range pyramid formation” against a bull long position built into Dow 8000-6500 between Sept 2008 and March 2009, with a long Chinese stk mkt (FXI-nyse) long position (built in the same time frame and one currently being sold in stages into massive near-vertical price strength). I am not net short the stk mkt, but there is an opportunity here to build a Dow short trading position into current strength and “arrive” in May in a pretty solid strategic position. Whenever you take any position, it’s important to give serious thought to the other side of the trade, essentially how to profit from you being wrong. You’re here to make money, not to be correct. There’s a subtle but key difference between between being correct and making money.

9. Generally speaking, you are going to wind up ahead of most investors if you focus on being long major assets with a strategic buy program into weakness, even if you are dead wrong about the current market direction. Here’s a look at the FXI to Dow ratio, and it is 100% clear that the Chinese stk mkt is in massive out-performance mode. Take a good look at this chart, which almost gives me goosebumps. It is a picture of an industrial revolution (China) versus an end of an empire (America). A lot of writers like to overlay charts and predict a “repeat” of past situations. Picture America in 1900 and the massive 50 year super-growth that followed. China is America in 1900.
China versus America Chart. The Beginning versus the End.

10. Take a close look at the technical oscillators. The longer term Stochastics is at the lowest point in 5 years and crossing to a buy signal. All 3 MACD series are on fresh buy signals. The grand daddy TRIX 15,9 series is down very low, and has yet to cross, but the 2 lead TRIX indicators already have, and if “Grandpa” does it could be signaling a multi-year outperformance move by China.

11. Those in the gold community telling you to sell gold stocks for whatever clam-baked reason, especially gold juniors, I’m sorry to say, are playing with fire and they are already getting burned. The gold punisher is going to put them in a blast furnace. There is no “non confirmation” between bullion and GDX. That’s a totally wrong analysis. Non-confirmations, I’m again sorry to say, are for little leaguers. If you want to play in the big leagues, focus on bull and bear full confirmations, not non-confirmations. Let me repeat in simple terms, where we are, how we got here, and where we are going:

12. The 2008-2009 asset destruction was a result of the banksters killing Lehman and bringing trillions in OTC derivatives into the “light” of mark to market accounting. They then closed the closet door again. There is still over a quadrillion dollars of OTCD’s in there, saved for another future day, but not for the immediate future. Marked to model is really marked to be inflated away, marked to locked in the closet until it’s time for the banksters next grand performance of blackmailing the Gman into stealing, not just trillions, but a quadrillion, from the taxpayers, who now look like they are dragging a debt ball and chain like slaves. It’s going to take a global central bank managing a global crisis that dwarfs the current one, to make the banksters quadrillionaires, so you know they are hard at work on laying the groundwork now. The above ensures that where we are going is to one place: gold retaining its position as the ultimate asset.

13. There is no non-confirmation between gold bullion and the Dow, and there no non-confirmation between gold bullion and the GDX or Gold Juniors. Gold bullion is leading the rest of the asset classes, leading them higher. The FXI and the Dow will follow gold higher, and the gold juniors will follow gold higher, then overtake it and start a parabolic move higher. Are You Prepared? Or did you blow out all our gold stocks into the 1085 selling climax that I alone in the gold community called a significant buy point, almost to the tick low into 1085. While most called it a sell point! You decide who made you money, and who took it away, and write your subscription checks accordingly.

14. It’s time to get a grip on reality, it’s time to get onside with monster players like my subscriber gold superinvestors T-Rex, KingKong, and the Lion of Lebanon, who are positioned now the coming gold juniors astroblast. The reality is the gold juniors are ramping up for an upside price explosion, the ultimate price geyser. The gold juniors geyser stands to dwarf even some of the best internet stock moves in 1999. Here’s a look at the GDXJ compared to the FXI, the Chinese stock mkt. Gold Juniors Powering Ahead of China! Buy Signal for Juniors!

15. “Yes I sold some gold bullion. With the proceeds I bought gold stocks to make even more money!”, to paraphrase billionaire subscriber T-Rex in action.

16. My message to you in the gold community is that it’s time to rise and shine. You have two choices: You can wallow in the world of self-pity and self-flagellation/flatulation and sell all your gold stocks because the wiener patrol that blew up in 2008 is terrified it will all occur again. If you want to be a wiener, then follow the wieners and it shall be so. Or, you can step up to the gold plate and walk boldly with the mightiest gold stock investors in the world, ride the gold rocket side by side with the champions, with confidence and professionalism, as a winner.

17. The supposed non-confirmation between bullion and the GDX is nothing more than gold bullion leading gold stocks higher, and because stocks are not the world’s greatest investment in history (which bullion is), it takes time-but nothing more than time- for the stocks to follow bullion higher. Gold companies were hurt by the 2008 sell-off. Not just hurt. Mangled. Major corporations were destroyed in many industries. It takes time to rebuild. You can’t demand a corporation to rebuild itself with the prize out of the cracker jack box. It takes time! Unlike the stock markets, bullion’s price was hurt, but the amount of actual damage done to bullion as an asset was zero.

18. Gold has never suffered any damage as an asset for 5000 years, and it never will, until the day that scientists learn to make it atomically. Think about that fact.

19. The final result of the OTCD-fuelled asset destruction spiral would have been the total destruction of the US dollar, and that was only hours away from occurring in Oct 2008, as all the banks of the world came within hours of closing. The decision was made to lock the OTCD’s in the closet and time-lock the door. The US dollar chart would have looked like one of the banksters’ kids took a crayon and painted a vertical line to near zero or even zero itself, in another few hours on that fateful day of Oct 2008, and gold would have had a vertical line to the sky. That’s the reality that the world’s markets are recovering from.

20. Super: The current 2 day supersurge in natural gas is only the beginning of the lion’s roar from this super-asset that is set to enter a superbull market. Those who maintained their pyramids of buys into price weakness find yourselves sitting with a major asset that is solid. Hands up everyone who thinks the performance of UNG-nyse yesterday was a “ripoff”. Those trying to funnel you into leveraged futures trading of the natural gas contract because the ETF fees are a “ripoff” are not helping you at all. You must be prepared to buy to zero in the natural gas arena. Jim “Mighty Man” Rogers called sugar a major play when it was a glut market destined to go nowhere. It tripled. He’s called silver to outperform gold here and now (it is and I’m looking at 28-33 as the next possible targets on the road to $200) and he’s calling for natgas to surge higher and outperform oil, perhaps even soar while oil falls! Are you smarter than Mighty Man? I say: No.

21. Natural Gas looks set to repeat the “out of the hole” performance of the Dow and the FXI from the 2008/2009 respective lows.
UNG-nyse ETF. Massive volume and price upblast!

22. All the technicals, almost without exception are flashing either substantial buy signals or at least carrying a very positive look. An out of the hole NG performance that could be 40% within a period of just months or even weeks. Don’t bet money that this is the ultimate bottom. You don’t know that for a fact. Key tactical point: Bet money on the asset on price weakness, yes. Bet money that weakness is the bottom, no. If your tactics left you missing the past 2 trading day party, learn from those tactics, don’t regret them. Natural gas is the most volatile commodity in the world so you need to come prepared. How? With buy points that extend to zero. Not “oh, I’m prepared to buy to zero, but I know it can’t take out these lows”. A real number of zero. Professionals are aware of the supply “glut”, yes, but markets trade on anticipation, on liquidity flows. If the glut in natural gas has hit its maximum point of supply versus demand, price should stabilize if not rise as the situation can only reverse. Does Mighty Man know something that you don’t? I wouldn’t bet against him, because you may not enjoy the learning experience. The most money made in any investment is the “out of the hole” move, and it where the banksters act in size, because the profit velocity is staggering. You can make years of profit in months, weeks, or even days. You can’t consistently call the bottom, call major turns, but you will be left behind, consistently left behind, and totally miss that vital out of the hole profit, if you don’t buy in anticipation of the turn. The turn may well be here, and those of you who followed me into NG were ringing your cash registers already, yesterday. This NG play is not a flip play on some bulletin board stock. It is multi-year professional buy program on a major asset.

23. NG junior stocks look to have a lot further to run, for those who want even more action.

24. Some writers are advising to use stoplosses on your gold positions. I term those “takelosses”. The very last thing on the market planet I want to do if gold or gold juniors decline in price is sell them at a loss. That’s at the absolute bottom of my market tactics list, so much at the bottom that it’s not even there. I’m going to be reviewing the gold juniors for GDXJ and ZJG on the site today and I’d hope today’s writing has brought many investors back into the “gold-positive” mindset and better able to handle the next 1085 “incident” when it happens. Handle it, yes, with buy orders.


Apr 6, 2010
Stewart Thomson

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