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Graceland Updates
1.ECNS (English China Daily News)
reports that "all may not be well", in the Chinese gold market.When gold crashed in April, crowds of Chinese
citizens were seen buying gold, but they may not have realized how much
further prices have fallen since then.
2."Small investors
throughout China now find themselves stuck with depreciated gold assets as
vendors tighten their purse strings, many of which are conducting trade-only deals.A woman surnamed Liu was shocked to discover that
the gold beads she had purchased for 390 yuan
($63.61) a gram at a Hong Kong market back in April were now only worth 264 yuan a gram at Beijing's Caishikou
Department Store on July 24, reported the People's Daily." - ECNS
News, August 6, 2013.
3.Small gold investors in China may not
be as committed to holding their gold, as India's citizens are, and they may
be started to worry about drawdowns of 30%, and more.
4.Small Chinese gold investors appear to
be somewhat demoralized, and I wouldn't count on them to buy any more price
declines in size, at least for now.
5.Regardless, my view is that
Western gold investors need to focus on today more than tomorrow.The
$1100 - $1200 seems to offer good support for gold, and the $1300 - $1400
area could be ideal for profit booking.
6.To fine tune this rough "range trade",
please click
here now.
7.As gold rose to key HSR (horizontal support
& resistance) in the $1320 area, my stokeillator
soared to about 90.I warned bullish investors that gold needed to rest, and
that's exactly what has occurred.
8.As of this morning, the lead line of my stokeillator is down to the 55 area.It
could approach the important 20 zone, within just a few days. That's where
minor trend price surges tend to originate from, and they typically last for
1 to 3 weeks.
9.Technically, silver looks a bit stronger than
gold right now.To view the current set-up, please click
here now.
10.The stokeillator
(14,7,7 Stochastics series) lead line is at the 39 level.Rallies can start from here, but unless you have no
silver at all, I would try to wait a few more days before buying.
11.Junior gold stocks are the favourite asset class of
many investors in the gold community, and a major upside breakout appears to
be "near, but not quite here".
12.Please click
here now.You are
viewing the GDXJ daily chart.From a technical point
of view, the more times that the price touches a downtrend line, the more
important an upside breakout becomes.
13.On this chart, GDXJ has touched
the downtrend line four times.Since GDXJ began
declining from the $100 price area last fall, there have been minor trend
rallies (one to three weeks in terms of time), but nothing more
substantial has occurred.
14.Watch that red downtrend line very carefully.A breakout above it could trigger an
intermediate trend move, favouring the bulls!
15.Going forwards, I think the senior gold stocks
will lag the juniors, for both fundamental and technical reasons.The
price of gold is less important to an exploration company than it is to a
producer, at least in the short term.
16.Please click
here now.That's the
GDX daily chart.A potential inverse head and
shoulders bottom pattern began forming, but the rally from the head area has
failed too quickly.The pattern is now a bit of a
mess.
17.Also, note the position of my stokeillator.The
lead line is still quite high, sitting at about 55.Patience is required.Bullish investors should hope that if
GDX moves under $25, it forms a double bottom in the $23 area.
18.Since the current downtrend began almost a year
ago, each GDX rally has failed to exceed the previous minor trend high.What that finally happens (hopefully on the next
upside move!), the intermediate trend downtrend will be defined, at least
technically, as finished.
19.In the meantime, that day is not today.It's very important not to get overly excited
trying to call "the low".The low will be defined by a
trending pattern of higher highs and higher lows that comes after the low
is reached.
20.My suggestion is to focus your "prediction
energy" on predicting whether gold stocks appear to offer value,
rather than when they could go "parabolic".
21.Gold stocks do offer value, but parabolic moves
usually happen only when massive short positions get force-liquidated
by banks, brokers, and dealers.
22.Please click
here now.You are
looking at a Bloomberg/CFTC table of speculative positions in various
commodity markets.Speculators clearly have huge net
short positions in five commodities, but not in gold or silver.
23.Unless speculators build a large net short position
in the gold and silver futures market, a parabolic move to the upside is not
very likely, at least at this point in the economic cycle.
24.The significance of an upside
penetration of the GDXJ downtrend line is probably underestimated, by most technicians.Many junior gold stock investors are probably
demoralized, and focused on bullion as a "growth with safety"
trade. I think this focus on bullion is a mistake.The
coming upside penetration of the GDXJ trend line should be the key that opens
the gold stocks gulag door, and sets all the prisoners free!The
only question is, are you ready for a breakout?
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