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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 Gulag Exit Tactics

Graceland Updates 4am-7am
Mar 6, 2012

  1. Are you financially invincible? I think you are, and not just because you own gold bullion. About a year ago, I asked the gold community to consider "going on the aggressive" against the "dollar bugs". In a war, the ultimate winner tends to have the greatest intestinal fortitude.

  2. While many investors fear "2008 again", I would argue that it's time to use the 2008 experience to understand your own invincibility. Most of the gold community held junior gold stocks in 2008, and the average portfolio experienced what can only be described as a nuclear winter. This crisis is likely to go on for years, and perhaps for decades.

  3. There's almost nothing that the gold bears can do to you that you haven't experienced already. You can use the 2008 experience to spend the coming years discussing how afraid you are of "2008 again", or you can use it to laugh in the face of your opponent.

  4. Use that intestinal fortitude to your advantage. Rather than showing your opponent how high gold stocks can go, show them what you can endure on the downside. Click here now to laugh in the face of your opponent. There are a myriad of technically positive events happening on that GDXJ chart, but without a supreme will to win, you'll never make it to the exit door of the gulag.

  5. The $29.65 to $31.95 price band represents substantial resistance. Since October 2011, GDXJ has made three attempts to penetrate it. I warned that you need to take a run at a heavy door with a battering ram, rather than just knocking on it and hoping the hedge funds open it. The bigger "chart resistance doors" require numerous charges at each door.

  6. GDXJ is showcasing the type of technical action that is required to successfully penetrate this overhead resistance. A potentially powerful head and shoulders bottom pattern is shaping up very nicely. Price is declining into what is likely the right shoulder of that pattern.

  7. There is light support at $26.25 and $25.25, which I've highlighted with thin horizontal lines. I'd like to see buying at both of those support levels, if they occur.

  8. The left shoulder was firmly established by the $23.65 low. The head was defined by the $22.58 area low. The right shoulder could be completed at any point in the $23-$26.50 range.

  9. What action should you take if the head & shoulders pattern fails, and the price of GDXJ melts through the low at $22.58? Well, my humble suggestion is that you laugh hysterically in the face of your opponent if that happens. It's probably long past "due date" for the gold community to stop investing, and start fighting.

  10. Note the thick black downtrend line that I've highlighted on the GDXJ chart. When price surged above that line in February of this year, I warned you that a pullback to that line was perfectly normal technical action, and that pullback is in play now.

  11. As many of you know, I believe in quarantining different investments. I use separate accounts to hold each major investment. Take buy or sell action based on the price movement of the investment in play, rather than just the net liquidation value of a "master account". Some brokerages will allow you to operate multiple accounts from a single control screen, and this is a highly useful tool.

  12. I like to do the same thing with technical indicators. I isolate them into small groups or view them totally alone. It's very important to maintain maximum clarity and simplicity, especially when the metals are falling, as they are now.

  13. Click here now to view the current Williams and Stochastics series chart for GDXJ. I've put an orange circle on the longer time frame Stochastics indicator. That marks the indicator as neutral.

  14. The Williams and shorter time series Stochastic oscillators are both circled in blue. A blue circle indicates that the item is oversold and buys can be executed. Against the backdrop of the h&s pattern and the pullback to the thick black supply line, the position of these oscillators is very positive.

  15. Click here now to view the "MACD tri-light" for GDXJ. All three MACD series are showing a clear and rising trend. Don't ask why the price of GDXJ is declining. Just buy it professionally, as it happens.

  16. The last indicator I want to highlight for GDXJ, and hence for the gold juniors group as a whole, is the CCI indicator. Click here now to view the current CCI action.

  17. We are clearly at a point where the indicator bottoms and begins to turn upwards. Whether that turn comes today, tomorrow, or a week from now is irrelevant to the professional wealth builder.

  18. There has been great talk about quantitative easing, new metals exchanges, China's forex programs, and other factors that are fundamentally bullish for gold.

  19. Those are all very interesting, but in the final analysis, the greatest bullish fundamental factor for gold is your personal ability to endure every price tick of this crisis with the biggest smile you can create for yourself.

  20. The stock market is quite high, although it can go higher. Click here now to view the short term price action of the Dow. At this stage in the crisis, you can't buy little sell-offs in gold stocks or the Dow with large amounts of risk capital. Volatility is building, and it could spike dramatically higher.

  21. I wouldn't waste time shorting the Dow, but some of you may want to buy a few put options anyways, to help manage the stress of making it to the exit door of the gold stocks gulag.

  22. Click here now to view the longer term weekly chart for the Dow. There is no question that price is "up there", and there's no question that a decline in the Dow could put enough pressure on the price of GDXJ to complete the right shoulder of the gold juniors head and shoulders pattern there.

  23. A gold price of $1400 or higher is more than enough of a foundation to power gold junior stocks higher, so that last thing you need to be worried about is the gold price, at this point in time.

  24. Worry only about laughing in the face of your opponents as "Sir GDXJ" works to complete his right shoulder and touch the black supply line. The technical indicators show that GDXJ is building momentum for a serious attack on resistance in the $30 area, and the only question is, are you onside?

Special Offer For Website Readers: You've been devastated by the apparent failure of gold and silver to surge dramatically higher after what appeared to be a "sure thing" breakout from a wedge pattern. Send me an Email to freereports4@gracelandupdates.com and I'll send you my "Horizontal versus Sloping Trendlines" report. Learn how to properly use sloping trendines with horizontal ones, to maximize management of risk and reward!

Thanks!
Cheers
St

 

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