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1. The only chart I see
that looks better than this
GDX bull wedge chart, is this
GDXJ chart. Both charts are showing classic breakouts from bull wedge
patterns. Another few days of consolidation in advance of the jobs report is
probably just what the “breakout doctor” ordered, at this
point in price and time.
2. Please click
here now. That’s a ratio chart of GDXJ versus gold bullion. Note
the position of the “King Daddy” TRIX indicator.
It’s flashing a massive buy signal for GDXJ.
3. If you look at ratio charts of GDXJ against silver and against the
Dow, you will see a similar set-up. Gold junior stocks are probably about
to enter a period of substantial outperformance against every asset class.
4. I like to see the
general commodity indices rising nicely when junior gold stocks begin to
rally. Please click
here now. That’s the CRB general commodity index, and if you look
at the technical indicators and oscillators you can see powerful buy signals
in play.
5. Note the lows at 292.39,
293.50, and 298.22, and the highs at 324.99 and 326.02. A small rally has
already started from 298.22 and I think there’s a good chance that the
CRB price bursts out of this congestion zone on the upside.
6. Individual commodities
are showing similar action, which is a very bullish sign. Please click
here now. Natural gas is one such commodity, and it is pushing into
horizontal resistance in the $2.23 area.
7. It’s very important not to
get carried away with calling a turn for gold stocks or commodities. Amateur
investors tend to think “space helmet on” means “Place
huge buy orders now, because the price of the asset is about to blast higher!”
That’s not how the professional investor thinks.
8. To the professional
investor, the term “space helmets on” means that positions
accumulated into severe price weakness may be about to experience a period of
tremendous price strength. That’s really all it means.
9. The professional is
prepared to endure much more price weakness if the “blast off alert”
goes awry. The professional will continue to accumulate while the amateur
becomes demoralized.
10. Trade smaller than you
know is rational, so you can continue to accumulate alongside professional
investors when there are problems on the “launch pad” of
your stock and commodity rocket ships.
11. If you place a
tremendous amount of capital in any one price zone, you run an even more
tremendous risk of finding yourself deeply underwater. You’ll soon be
cursing the asset instead of continuing steady accumulation.
12. This is a good time to
add light short positions in assets like natural gas. The rally gives natural
gas accumulators a breath of fresh air, and fresh short positions give you
added emotional and financial firepower to manage your “personal
surprise zone”.
13. If the price of “ole
natty” takes out the bottom at $1.90, you’ll be very glad to
be holding those short positions while continuing your overall accumulation
of this mighty asset.
14. While all gold stock
accumulators should own bullion, be very careful about falling into the same
trap that “Elmer Fudd Public Investor”
fell into when the general equity market entered his personal surprise zone
in 2008-2009.
15. The “growth
with safety” play in the gold community is a move out of gold
stocks and into bullion. When the public moved out the stock market in
2008-2009, and into low-yield bonds, the stock market promptly rose almost
100% in eighteen months. Many Dow stocks tripled and quadrupled. The
public will never recover what their “growth with safety” play
cost them.
16. I believe a very similar
situation is at hand for the gold community. Gold stocks appear set to
dramatically outperform bullion, yet many investors are looking to move into
bullion to avoid further drawdowns in gold stocks.
17. Enormous drawdowns in
gold stocks are just part of this game, and in my professional opinion, it is
only lottery winners who experience tiny drawdowns.
18. If the heat in the gold
stocks kitchen is too high, I would consider buying the Dow rather than
bullion. As the dollar comes under more and more pressure, institutional
money managers are likely to buy the general stock market and push it
dramatically higher.
19. The problem with that
play is that the Dow is quite high right now. Selling gold stocks low and
buying the Dow high is not how to build wealth. It’s a tactic that
could impoverish the investor.
20. The best time to enter
the Dow is after a crash. May to October is the weak price season for the
Dow, and August to October is what I term, “crash season”.
Wait for the Dow and its component stocks to fall hard before moving any
capital from gold stocks into it.
21. If you are experiencing
50% drawdowns or more on gold stocks you should understand that such action
is normal in good times. In this super-crisis, those drawdowns
should be considered modest or even tiny.
22. Try to step “outside
the drawdown box” and focus on accumulation, patience, and the
mind-boggling size of this crisis.
23. Gold stocks are not
short-term bonds. They are bucking broncos, and riders need to understand
that wild drawdowns are not the exception, but the rule.
24. At this point in time, it is highly probable that junior gold stocks
are set to dramatically outperform all other asset classes. If that happens,
great! If not, well, that’s why you carry some short positions and
some bullion!
Special Offer For AheadOfTheHerd Readers: Send me an email to freereports4@gracelandupdates.com
and I’ll send you my “Reader’s Choice” report. I
maintain a database of hundreds of junior resource stocks followed by gold
community investors. Which ten look the best right now? I’ll show you!
Thanks!
Cheers
St
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