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Stewart Thomson

Stewart Thomson

Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is…

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Gold: MACD And The Greed Factor

Graceland Updates 4am-7am
Oct 11, 2011

  1. Gold likely has a 2/3 chance of rising to $2300, and a 1/3 chance of falling to $1100. Click here now to view my gold chart that roughly highlights the current short term range.

  2. The pattern is technically an ascending triangle, but there is a tendency to place excess confidence in modest technical price patterns like this one, and that confidence is usually followed by great disappointment.

  3. Greed is the cause of 99% of investor pain, and there is far too much greed in the gold community. When the gold price nosedived towards $1530, I got emails from investors who were tremendously weighted in gold stocks, and especially from those over-loaded with gold junior stocks.

  4. Many of these stocks were purchased before 2006, or more recently near the highs. If you are allocating huge percentages of your net worth into gold juniors at high prices, you are making a tremendous financial error, regardless of the upside potential reward.

  5. Yesterday most of these investors took the day off, and gold roared to over $1680 by the evening. While it's a positive technical event that gold took out the $1675 area highs, it's also a fact that $1680 marks nearly a $150 increase in price from the $1530 area lows!

  6. If you were in virtual agony at $1530, you had a chance yesterday to lighten up a little bit, and get your gold stock holdings oriented towards what you need, rather than what you want.

  7. Since the lows were hit around $1530, GDXJ has soared from about $25 to almost $31. That's an enormous move, but barely noticed by investors. Click this GDXJ chart now to view a phenomenal set-up on the 60 minute chart, and a dire warning for those over-invested in juniors because of greed.

  8. GDXJ has soared about 20% from the lows near $25. That's an enormous move in a short period of time, and this action has produced some solid "head and shouldering" action on the 60 minute chart, against an excellent background of powerful COT reports for gold bullion, and some very oversold oscillators on the gold bullion daily chart.

  9. Your personal actions in the market should revolve around your positioning, not projections about GDXJ. If you were able to buy into the lows around $25 with only modest discomfort, then you can focus on my "cut back on trading and increase core positioning" mantra.

  10. What if you didn't buy anything into $25 on GDXJ, but instead found yourself holding huge gobs of your net worth in juniors that were deeply underwater? Well, then you need to use the Canadian Thanksgiving holiday for what it was designed for; give thanks for this rally, and put your financial house in order. Carry the positions you need, not the positions you want.

  11. GDX, the ETF that holds senior and intermediate gold stocks, has soared from about $50 to almost $57. That's not the huge gain you have seen in GDXJ, but it is still a very sizable move in a very short period of time, so the same GDXJ tactics need to be applied here.

  12. Are you over-loaded in gold seniors and intermediate stock, or were you reasonably comfortable in the $50 area that GDX corrected to? If you were curled up in the fetal position, screaming, and throwing rocks at your quote screen, you may possibly have an issue with greed, to put it mildly.

  13. I'll be here long after most market timers are gone, because of the moderation I apply to my positioning, whether it is bullion, dollars, food, energy, or stock. Do you want to be here at the end of the crisis, or are you operating with the tactics of a coin toss? Is it, "heads and I'm richer than Bill Gates"? If so, know that "tails" could put you in the poorhouse, permanently. Again, the lessons of greed have absolutely nothing to do with the battle of gold against the dollar.

  14. As the crisis moves forwards, the volatility is only going increase, and it will do so exponentially. Those investors who are looking for a 1979-1980 type of gold move are going to be severely disappointed.

  15. This coming parabola is going to be much more massive, but there will be giant declines in price too, dwarfing anything anyone in the gold community has ever experienced. Even the strongest pros are going to be severely tested, emotionally, as the crisis rolls on.

  16. While a move over $57 is definitely a positive event for GDX, and could ignite an acceleration of the current rally, ask yourself what you are going to do if, rather than rallying into the pot of gold at the end of the rainbow, the price of gold and related items instead begins to plummet, and tests or breaks the recent lows.

  17. If you are somebody that is gripping your gold and related positions with an iron hand, and hold a permanent cash position, you have little or nothing to worry about.

  18. On the other hand, if you were burning on fire at $1530, I have to wonder why you would not use $150 of strength in the price of gold to bring your holdings to a percentage of your net worth that is more manageable, more logical, and quite frankly…. more sane.

  19. Greed is a monster far worse than any bankster or Gman could ever be, but few want to understand. Do you? Because of the obsession with greed, few will end this crisis any richer. Many will be financially destroyed.

  20. Let me repeat that greed has nothing to do with the battle of gold versus the dollar. It is an internal battle. Only the mirror can get you through this crisis. Look hard into it, and professionally manage what you see there.

  21. Click this 60 minute GDX chart now to view a technical picture almost as great as the GDXJ chart. There is some multiple head and shouldering action.

  22. If the price of GDX rises towards $59.70 and declines towards $54.98 a full multiple h&s chart would be apparent on the 60 minute chart, with a target of around $68 for GDX.

  23. Click this unique gold bullion MACD chart now. Notice that I deleted the price chart. I am showing you only the MACD indicator, so you focus all your attention on that item.

  24. The chart covers a bit more than a year of time, and it looks excellent. The shape is a big excavator digging up a pile of dollars, to put into your pocket! Look hard into the mirror, and use all gold strength to adjust your positioning to what you need, rather than "what you greed", so the next time an event like the $1920-$1530 waterfall occurs, you can be buying or holding, with relative comfort, rather than screaming or pounding the sell button. See you out there, on the gridlines!

Special Offer For Website Readers: Send me an email to freereports4@gracelandupdates.com and I'll send you my "Hi Ho Silver!" report. I'll give you my five top tools to manage yourself in the coming parabola zone, so you build maximum wealth with a degree of comfort you never believed possible in this crisis.

St out


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