Gold Stocks & King Daddy
Oct 9, 2012
- Greece is back in the news. Street demonstrations are in play today, and across the EU, the IMF predicts ongoing deflationary pressures. They are urging the ECB to keep rates low, for an extended period of time.
- Please click here now. That’s a two day chart of the euro, and you can see the negative reaction to the ongoing turmoil.
- The Dow also broke its two day lows this morning, following the euro’s tumble. To view the break, please click here now.
- Regardless, on numerous occasions, Ben Bernanke has stated his commitment to print money, and lend it to the EU. In the big picture, his endeavor is very positive for gold prices.
- Please click here now. You are looking at the two day gold chart, covering the same time frame as the euro and Dow charts. Note that gold “refuses” to take out its lows.
- While the short term picture for the euro may be negative, the picture for gold is much less so, and real wealth certainly isn’t built and maintained, by attempting to ascertain the next 5% move for gold.
- Most of the emails I’m getting now from gold investors are focused on the theme of an “imminent price correction”, and a lot of gold market commentary in the mainstream media is turning cautionary as well.
- This overwhelmingly negative sentiment leads me to believe gold prices are likely to move higher, even in the short term.
- I’m a little worried that many of the investors selling gold-related items in this price area may be booking losses, rather than gains. If you bought a gold stock at $10, and it fell to $2 during the 2011-2012 wipe out, should you sell it at $5 now, to “avoid a correction”? The answer is a thunderous “no”.
- Please click here now. That’s a one year gold chart. The $1535 area lows are highlighted by thick green lines, and the $1815 area highs are marked with thick red ones.
- I believe that gold is “preparing” to leap over the $1815 highs. If you are properly capitalized, you should have no concerns at this point in market time.
- I’ve marked some key “rebuy” zones on this chart. They are the five HSR lines (horizontal support & resistance) that I’ve highlighted in blue. I doubt that gold will decline to any of these price points, before rising above $1815.
- Regardless, I’d like you to be prepared to buy each of them, with limited risk capital. Also, if you lightly shorted gold into the rally towards $1800, you could book profits on a decline to any of those same HSR lines.
- In a super-crisis, it’s critical for precious metals investors to “think big”. If a decline to point number 5 on that chart at $1610 seems like a nightmare, then you may want to consider reducing the amount of risk capital you are bringing to bear in the market, on your entry points.
- I’ve referred to the entire $1535-$1923 price area as a “training zone”. It’s an opportunity, to learn to focus on the bigger market movements, and the more important price support areas, which are $1432, $1577, $1805, and $1923.
- Focus on applying capital on the buy side into those prices, rather than trying to analyse your way to riches by calling the next short term move. Gold is the ultimate asset, and ultimate patience is required to build wealth with it.
- A large part of successful investing is facing fear, and refusing to yield to it. Please click here now. You are looking at a long term weekly chart of the HUI gold stocks index.
- I’d like you to make note of the overbought state of many of the oscillators.
- There is a terrifying head & shoulders top pattern in play, and the current highs are occurring at the same time as gold fights with the $1800 level.
- My question to gold stocks investors is this: Is that head and shoulders formation a legitimate price pattern? Or, is it just a meaningless shape on the chart? I’m convinced that it’s just a shape.
- My professional opinion is that no gold-related item should be sold at a loss. If it’s sold at a loss, then it shouldn’t have been bought in the first place. I’m not afraid of that supposed top pattern at all. Here’s why:
- Please click here now. If you are a gold stock investor, I would argue you need to look at this long term monthly HUI chart a lot more often than you look at the short term charts.
- I call it the “King Daddy” of all gold stock charts. Please make note of the two previous highs to the left of the chart, at 519.68 and 516.16.
- The HUI has already taken out those highs on this rally, and appearing to be “flagging” here, not correcting, for a price blast up to the 638 area highs, which is your real profit booking area!
Oct 9, 2012
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