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Graceland Updates
By Stewart Thomson
1. “The U.S.
Congressional Budget Office and the IMF have said that if the fiscal
tightening that is due to take place goes ahead without action from Congress,
the U.S. economy will probably fall into recession.” – CNBC News, Oct 23, 2012.
2. Surveys show that most money managers are focusing
less on the euro crisis, and more on the US fiscal cliff. They are also
worried that China’s housing market could implode.
3. While housing and employment statistics improved a
bit since QE3 was unveiled, many analysts have questioned the significance of
that improvement.
4. In the current environment, it’s very
difficult to envision Ben Bernanke doing anything that is fundamentally
negative for gold.
5. The next FOMC meeting begins today, and a statement
will be made tomorrow. Some governors may make statements to the press before
the meeting is adjourned, which could affect the price of gold.
6. Please click
here now. On this daily gold chart, there’s a small head &
shoulders top in play. The mathematical target of the pattern is about $1630.
7. It’s very difficult to pinpoint entry and exit
points, with an asset like gold, particularly in a “super-crisis”. Holding a modest
portfolio of short positions allows you to manage what I call, “the personal surprise zone”.
8. I like to approach major markets with an emphasis on
what the underlying asset is. Gold is an asset of the highest quality, so I
restrict all shorting I do, to 30% of my long position.
9. If gold declines towards the mathematical target of
$1630, I would book some profits on short positions, on the way down. I
suggest you focus on minor trend support areas to do scale out of your short
positions.
10. Some days are emotionally tougher than others, and
gold can get into a situation where it just doesn’t seem to want to
rally at all. If you hold only long positions, a period of time like that can
be extremely frustrating.
11. In contrast, if you hold some short positions, but
are overwhelmingly long the asset in play, you may find that you are able to
deal with falling prices with much less
stress.
12. Please click
here now. I want you to look carefully at the 3 blue lines that
I’ve highlighted on this gold chart. They represent HSR (horizontal
support & resistance) at approximately $1700, $1680, and $1650.
13. I plan to cover short positions at each of those
price areas, if gold goes down there. It’s important to understand that
if you book profit on a short position, the
exercise of doing so can make you more net long the asset.
14. For example, if you have $100,000 invested in gold,
and you are carrying a short position with a market value of $10,000, that
means you are “net long”
$90,000 of gold.
15. If you then booked profit on $3000 of your short
position, you would be increasing you “net long” gold position to $93,000.
16. The long-only
investor is arguably at a disadvantage, when compared to somebody who is net long, but carrying some strategic short positions. The reason
I say that is because it can be quite stressful to keep buying gold, as the
price declines. with no apparent bottom in sight.
17. If you are “ringing the cash register”
somewhat regularly, whether it is on the long or short side of the market,
it’s much easier to face the market with a smile.
18. Shorting the market isn’t for everybody. If
you are uncomfortable doing it, then it’s very important to trade
“smaller than you know is
rational”. On the rally from $1530 to the $1800 area, if you never
booked any profits on long positions, then I would not be buying anything on
this decline.
19. Instead, I would wait for gold to rise over $1800. A
substantial move over $1800 will turn that area into a major platform of
price support.
20. Please click
like now. Note the thick blue HSR line in the $1800 area. Gold has
touched that price zone 3 times, and sold off strongly each time.
21. Many
institutional money have expressed a
willingness to buy gold above $1800, and I believe they are sincere about
doing so. If gold trades above that “HSR platform”, you will be
in the company of some very powerful investors, as you buy.
22. Please click
here now. That’s the daily chart of the HUI gold stocks index. Gold
stocks are trading in a much more bullish pattern than gold itself, and I
believe the HUI can move higher, even if gold declines to $1630.
23. Please note the horizontal green line that
I’ve highlighted on the chart. There is massive price support on the
HUI in the 460-465 area.
24. There is also a bullish wedge pattern, and
I’ve highlighted that in blue. The wedge pattern implies that
regardless of what gold bullion may do, your gold stocks might be set to
blast higher. That would be a major morale boost for gold stock investors, and it could really happen!
Special Offer For Web Readers: Please send me an Email to freereports4@gracelandupdates.com
and I’ll send you my free GDX versus GDXJ report. Learn whether it will
be the juniors or the seniors that lead bullion higher, in the next leg of
the bull market, and how to position yourself!
Thanks!
Cheers
St
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