Graceland Updates
1.About a week ago, as gold rallied into the $1170 – $1190 area, the
roadmap I laid out for gold was “first a scary drop, and then an upside
pop”.
2.For an updated roadmap for the gold price, please click
here now. That’s the daily gold chart.I suggested gold would quickly
decline to the $1130 apex area of a beautiful symmetrical triangle, and
that’s exactly what has happened.Gold is trading at about $1131 this morning.
3.What caused the decline?Well, from a fundamental perspective, gold has a
rough general tendency to decline ahead of the US jobs report.In the bigger
picture, gold tends to move in response to the ebb and flow of Indian gold
jewellery demand versus supply.
4.The current decline from the $1190 area to about $1131 can mainly be
attributed to these factors, and also to Janet Yellen’s stubborn refusal
to make a firm commitment to a rate hike.
5.The gold market is looking for consistency and transparency.It’s getting
it from the Chinese and Russian central banks, but not from the Fed.As a
result, there’s a risk that gold declines to the $1100 - $1120 area, before
Friday’s US jobs report is released.
6.Note the position of my 14,7,7 series Stochastics oscillator, at the
bottom of the gold chart.The lead line sits at about 28 this morning.It
should be in the 20 area by 830AM on Friday, when the US jobs report is
scheduled for release.
7.That’s good news for all gold price enthusiast.The technical and
fundamental “stars” are lining up very nicely, for a sharp post jobs
report rally!
8.Please click
here now. That’s the daily GDX chart.I asked the entire global gold
community to give serious consideration to pressing their gold stock “buy
button”, if GDX traded under $15.It did so, but only briefly, yesterday.
9.This decline was needed, from a technical standpoint, to set up the
right shoulder of an exciting inverse head and shoulders bottom pattern.The
target zone of $20 - $21, pending a breakout above the $17 area, is roughly
the 162% Fibonacci retracement line.
10.Gold stocks are probably now entering a “Goldilocks” type of
situation, because a rate hike that causes a US dollar rally would benefit
most of the world’s gold mining operations.
11.They produce gold in non-US currency, and get paid in US dollars.
12.A rate hike could also create a rally in both the dollar and gold
bullion.That’s because modest rate hikes would add clarity to an unclear
situation.Real rates (nominal minus inflation) could decline as Janet takes
action, and money could flow out of real estate and into gold.
13.Bank loan activity would increase sharply with rate hikes, reversing
the multi-decade decline in money velocity!
14.A rise in the bullion price would clearly benefit mining companies.In
the current environment, which is the opposite of the 1979 environment, rate
hikes are extremely bullish for most gold mining stocks!
15.I understand that a lot of gold stock investors switched to bullion
from gold stocks, after the duties in India were implemented.
16.I think that “growth with safety” trade should now be
unwound.Going forwards, gold stocks are the better play than bullion,
although from a system risk perspective, all investors should own a
significant amount of both gold and silver bullion.
17.Please click
here now. That’s a snapshot of the spectacular gold price action taking
place in the South African rand.I realize that a lot of “old timers”
in the Western gold community have some bad memories of strikes and other
issues in South Africa in the 1970s and early 1980s.
18.I’ll dare to suggest that….times have changed!Chinese companies are
becoming eager to invest in South African mines, and the dollar/rand rally
has created a massive breakout in the local gold price.Note the beautiful
ascending triangle in play on that chart.Australian engineers have been hired
to help mechanize key mines in South Africa, and they still hold some of the
biggest reserves on a per mine basis.That’s very attractive to Chinese
players, who plan carefully for the long term!
19.My proprietary trading system at www.guswinger.com
has generated about $54 per GDX share in trading profits since 2011, and done
so while GDX itself has, unfortunately, slipped from about $55 to $15.Trading
enthusiasts who like the concept of buying and selling gold stocks with
limited drawdowns, can send me an Email at admin@guswinger.com.I have a nice excel
file document with the entire trade-by-trade track record.This system is
ideal for business owners, who don’t have the time or inclination to look at
the market during the day.Thanks.
20.If Janet Yellen wants to get serious about repairing what is wrong with
the Western world, she needs to move decisively towards a dual policy of
modest rate hikes and modest gold revaluation.Rate hikes steer amateur
investors away from dangerous “risk-on” equity and real estate
markets, and towards bank accounts, where professionals can loan depositor
money to small businesses.That boosts money velocity, which boosts GDP!
21.Rate hikes also put pressure on the ability of Western governments to
borrow money, which they promptly waste on insane bombing and regime change
programs in the Mid-East, and silly entitlements programs at home.A modest
and fully transparent US government gold buy program, of just thirty tons a
month, would quickly help end global deflation.
22.If Janet doesn’t want to revalue gold, it really doesn’t matter,
because the central banks of China and Russia ultimately will do it for her,
with their transparent and consistent monthly buy programs.It’s only a matter
of time, and probably not much time, before India’s central bank announces a
similar buy program, to stay competitive with its BRIC brethren.
23.2016 is clearly setting up to be a wonderful year for gold stocks, and
silver stocks look even better!On that note, please click
here now.That’s the daily SIL chart, and quite frankly, it looks awesome.The
short term upside implications are clear.Note the beautiful oversold position
of my key 14,7,7 Stochastics oscillator at the bottom of that chart.There’s a
very solid inverse head and shoulders bottom pattern in play.I’ve set the
price target at ten dollars per SIL share.
24.Next, please click
here now. That’s another look at the SIL chart, and it’s clear that the
first inverse H&S pattern could be morphing into the head of a vastly
bigger one!Is the enormous silver demand growth in India creating this
pattern, or is it the potential for substantial Western reflation?I think
both catalysts are in play, and silver stock investors around the world are
poised to benefit, in a very big way!
Thanks!
Cheers
st
Stewart Thomson
Graceland Updates
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Stewart Thomson is no longer an investment advisor. The information
provided by Stewart and Graceland Updates is for general information purposes
only. Before taking any action on any investment, it is imperative that you
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