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.
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