Gold & Uranium: Rules Of The Range
Dec 28, 2010
1. Golden Crystal. Whether you buy breakouts (difficult) or price weakness (best), it is important to keep your charts simple and clear. Here’s the Gold Bullion Chart at around 3am this morning.
2. Notice the focus on the “here and now”, which is the $1370 to $1390 price range. The actual range is more like 1372 to 1392, but it is important to always focus on your failure to analyse, rather than your ability to analyse.
3. Markets rarely do exactly what analysts predict, and the banksters have the very best technical analysts and computer models, so it is very easy for them to create an apparent upside chart breakout or a sell signal, and then quickly send price in the other direction.
4. Your only defence is to be very loose in your views of the importance of particular chart points. A failure of a chart support point signifies that price could be in a new trading range, not that you should sell your gold.
5. Once you “devolve” into a mental state of plopping huge chunks of risk capital in and out of the market based on where you think price might go next, you are finished in the market. Respond to what is, not what might be.
6. Here’s the GDXJ Daily Chart. The key “here and now” numbers for you on GDXJ are $42, $37, and $33. Thinking to yourself, “if 37 fails we could drop to 33” is not going to make you any money, nor build you more GDXJ shares.
7. A move under $37 on GDXJ or a move over $42? Which move happens next is the focus of 99.99% of analysts and investors following the juniors.
8. I’d like to define what each scenario is, as opposed to predicting which comes first in time. I believe this distinction is important now, and about to become all-important going forwards in 2011-2012.
9. A move up and over $42 means your existing juniors are worth more US dollar paper credits per share you own. The same applies to bullion. A move over $1430 means your gold, per ounce, is worth more paper credits per same ounce. On the other hand, a move under $37 means you buy bigger share positions in your junior items and in bullion.
10. Question: Are you wealthier when you own more of a gold juniors company as a percentage of the outstanding shares, or wealthier when you own less of it, but the paper credit price per share is higher?
11. The single greatest error I see in the gold community stems from the mistaken belief that gold is in competition with paper money. Most investors are in a competition with paper money. There is a still a maniacal obsession to get more paper credits, more gold.
12. The key to getting more wealth is getting more ounces of gold and more shares of your gold stocks that mine or are poised to mine that gold.
13. The key to getting more ounces of gold is letting go of the obsession with measuring how high gold is going against paper money. If your gold rises against paper money, are you really any wealthier?
14. No, you are not any wealthier when gold rises to $2000 if you bought at $1000, unless you sell then, and buy more gold after price has fallen, so you then have more ounces. Gold is wealth. In relative terms, you gain wealth if gold rises to $2000, because everyone else is holding govt debt (paper money) that is falling in value. If they are getting poorer, you are, relatively, richer.
15. Unfortunately, in absolute terms, unless you are building more and more ounces of gold, you are not getting any wealthier. Watching those around me get poorer while I hold the same amount of gold I always have does not convince me I’m getting richer. If everyone is sicker than I am, does that make me healthy?
16. The system of “buying breakouts” and various other investment schemes are essentially all rooted in getting more govt debt, more paper credits, and being overly sure that it is more wealth. Sadly, even if gold rises to $100,000 an ounce, you are not one bit absolutely wealthier then than you are now, if you own the same number of ounces of gold then, as you own now.
17. Try increasing the amount of gold you own by 5% a year, rather than the amount of paper credits you own by 8% a year. Use the fluctuations in the paper money price of gold to build yourself more ounces of gold. The paper money price of gold is a measurement of the growing poverty of those with no gold, not a measurement of your wealth.
18. It’s now almost 7am, and gold has blasted to $1400, finally blowing thru the $1390 resistance.
Here’s the New Gold Range Chart.
The range is $1410 to 1390, but that doesn’t mean price can’t rise above or below that range. Those are the short term range markers, not some sort of free money for you guarantee. $1390 is now a price where shorter term professional investors get more ounces, more shares.
19. The demand line in the 1390 area is just that; a line of demand. It is not some sort of guaranteed protection against lower prices, nor is it “bad” if price goes below 1390. 1390-1410 is the here and now short term reality for Gold. Accept it, and take action to get more ounces, more shares, on weakness into that 1390 area.
20. Here’s a look at the Uranium Asset Chart. Note that www.stockcharts.com finally has accepted my request to include the US symbol for the Denison Mines Uranium Participation Units fund. Note the clear range I’ve delineated between approx. $8.50 and $7.50. Here is a 2nd look at the chart, showing a pyramid formation within that price range.
Uranium Range Chart With Capital Allocation Zone.
21. Notice how I placed the base of the capital allocation pyramid below the blue demand line on the chart. You want to use your “buy net” to catch Uranium as stoplosses are always triggered right below key support points. It is right below those points where the banksters play their games, and you want to ride the back of these buy sharks with your buys too.
22. Here’s a look at an allocation of $100,000 in that zone. You may only have $10,000 to allocate in the $7.50 - $8.50 zone, or you may have ten million; it doesn’t matter. What matters is: Tactical Allocation of Capital. Click here now to view that allocation: Uranium Buy and Sell Points Table.
23. In the above example, I’m buying the Uranium fund every 10 cents down in the $8.50 – 7.50 zone, and slightly below it, but you may want to buy every 25 cents down, or every 5 cents down, or whatever number suits your lifestyle realistically, not your demanded annual returns fantasy.
24. For example, for some of the money I handle, I was a buyer of GDX yesterday every two cents down! Obviously I’m being rewarded today, as gold goes into the new range and GDX looks set to go into machine mode on the cash register! Here’s the GDX Chart. Note the number of blue circles on the chart. These are technical phenomena that indicate price is poised to turn higher. Remember, price is not poised to turn higher “forever and ever, therefore buy, buy, buy!”. Price is poised to turn higher and enter a new range. You should have already bought. We are a long ways from being “overvalued” on gold stocks. Remember my constant admonishments to focus on what even a little bit higher bullion means for gold stock; vastly higher prices, but one floor of stairs at a time!
Dec 28, 2010
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