I have a great number of friends that pride themselves on being
"technical analysts" and many of them are actually very good,
especially the ones that are students of market history and even more so the
ones that are "old" and by that, I mean "older than me."
I love the guys that can tell you what happened in the fall of 1987 and
recite off the top of their head that intraday high and intraday low of
Tuesday October 20, 1987, when the Dow Jones had its first 500-point intraday
swing, especially when they can tell you what they had for lunch that day.
Most impressive, though, are those analysts that will make a technical
assessment and state categorically that the next move will be "up"
or it will be "down" and that brings me to the ones that I
detest-the "wafflers," the ones that tell you that the next
direction is up unless we get a breakdown through point B in which event the
next direction will be down. You know them; they fire up a chart of weekly
gold prices and paste arrows on the "big, ugly, red candle" that
now MIGHT be pointing to a down market UNLESS gold rises and NEGATES the
signal. The wafflers are the types of market forecasters that give race track
touts are good name; they are constantly being drawn into these traps that
are set by the bullion banks and their legion of tape manipulators and in
doing so, they take their ovine subscribers with them.
Below is the chart of the candle that was supposed to send shivers through
the hearts of the gold bulls and, as you can see, it was precisely the
"fake-out" that I wrote about last week, the type of tape-painting
exercise that these amateur technical "analysts" fail to decipher,
because in the end, technical analysis simply does not work with any degree
of reliability in the precious metals arena because the interventionalists
read those same charts and backed by central bank financial muscle, they will
slam anything that the sheep will act upon and especially "big, ugly,
red candles."
I posted the chart above on January 29th.
Here is what I wrote on January 27th:
"I took advantage of the weakness on Thursday morning to add to
the GDXJ under $36 and added a spec position in the Feb $35 calls at $2.45
with the thinking that that "big, ugly red candle" is one big,
ugly, red FAKE-OUT planted by the Commercials to accelerate selling volume
into which they will continue to reduce their still-large short position
(126,374 contracts) such that by Wednesday, the HUI and their junior brethren
(GDXJ) have continued their advance."
I told you that I was going to take advantage of that signal and BUY the
GDXJ (VanEck Vectors Junior Gold Miners ETF)vFeb $35 calls at $2.40 and I did
and although I have been trading them, I exited the position today with the
GDXJ up over $7.00 from the "big, ugly, red candle" bottom on Feb.
1 and got a print at $7.00 to close out the position. The shares I bought at
$35.63 are now comfortably ahead but I also exited the position at $41.50 and
will remain sidelined due to an RSI (relative strength index) screaming into
the 70s where we have seen just too many trading tops for my liking. For the
record, now that the chart shows a clear TECHNICAL BREAKOUT above the
200-dma, I have used that as an excuse to get ahead of the bullion bank
heathens that are going to lure in all of that guru's subscribers that waited
for a week to enter the market and now that they have, the Cretins will
pounce. With the RSI above 70, the stage is set for a reversal.
The big news for today was the performance of my newest holding, a
fascinating Angolan diamond project that while certainly not for the faint of
heart being from West Africa, the market cap of Gem
International Resources Inc. (GI:TSX.V)(C$.11) at a fully diluted $8m
gives this sparkler a real kick at a 10-20 bagger. Located 20km south of the
fourth largest diamond mine in the world, it is a compelling project with
production estimated to begin from alluvial mining in 2017 and exploration of
some thirty-two subterranean targets believed to be kimberlite pipes to
commence shortly thereafter. It is a complicated deal but one that allows
substantial upside for all shareholders because while there is always risk
while dealing in the Dark Continent, having the Angolan government as your
partner removes a great deal of uncertainty in terms of permits,
environmental and community relations. The shares traded up to a multi-month
high today on big volume and appear poised for a further advance.
Things seem to be normalizing these days as spouse and dog are now talking
to me again. Since taking the pledge of cranberry tea and mango coconut
spritzers on January 1, the two other inhabitants of this house are finding
themselves lured into an odd sense of complacency where sudden noises from
snowmobiles screaming across lovely Lake Scugog send them both scurrying
under beds. I am sure they secretly await the moment where a treasured framed
photo of old Auntie Gertrude goes sailing across the room or a quote machine
is found hissing in a snow bank, the steam rising off and into the woods.
Alas, no such unpardonable occurrences will return to this humble abode as
long as gold and silver are left to their own devices and away from the
malodorous, muddling hands of the bankster vermin. And that is precisely why
my partner vacuums while watching BNN and how Fido has learned to read a
quote screen.
After all, forewarned is forearmed.
Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University
where he earned a Bachelor of Science in finance and a Bachelor of Art in
marketing before completing post-graduate work at the Wharton School of
Finance. With more than 30 years of experience as a junior mining and
exploration specialist, as well as a solid background in corporate finance,
Ballanger's adherence to the concept of "Hard Assets" allows him to
focus the practice on selecting opportunities in the global resource sector
with emphasis on the precious metals exploration and development sector.
Ballanger takes great pleasure in visiting mineral properties around the
globe in the never-ending hunt for early-stage opportunities.
Disclosure:
1) Michael Ballanger: I, or members of my immediate household or family, own
shares of the following companies mentioned in this article: None. My company
Bonaventure Explorations Limited owns 1,000,000 warrants at $0.10. I
personally am, or members of my immediate household or family are, paid by
the following companies mentioned in this article: Gem International
Resources Inc. My company has a financial relationship with the following
companies mentioned in this article: Gem International Resources Inc. I
determined which companies would be included in this article based on my
research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of
Streetwise Reports: None. Streetwise Reports does not accept stock in
exchange for its services. The information provided above is for
informational purposes only and is not a recommendation to buy or sell any
security.
3) Statements and opinions expressed are the opinions of the author and not
of Streetwise Reports or its officers. The author is wholly responsible for
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All charts and images courtesy of Michael Ballanger.
