Gold Technicals- Getting Better

Graceland Updates 4am-7am


Aug 17, 2010

1.        “This is not working, let’s try something new.” –aprox quotation from Deng Xiaoping, head of China, circa 1978.

2.        Brilliant observation on Deng’s part.  Let’s have a round of applause for Gman Deng.  When you steal the entire wealth of your citizens for yourself, turn them into slaves, and murder millions of those who don’t share your “enlightened new era vision”, who prefer common senseinstead of your Frankenstein Movie, yes, Deng, you need something new.  Or maybe you shouldn’t have tried to fix what wasn’t broken by robbing and murdering millions.  Just a “minor” observation on my part.

3.        The past is the past, and Chinese corporations are moving forwards, as is the Chinese Gman, (probably temporarily in the case of the Gman).  Chinese citizens wonder if a day is coming where the goods in their dollar stores will be made in America.  I don’t see things going that far.  It’s a good thing that I don’t.  The 21st century will be about “the rise of many new major players” more than the new “Empire of China”.  Click here now to view Jim “mighty man” Rogers’ latest words on China, a view I not only share, but back up with personal buy action on the Chinese FXI-nyse, the “Chinese Dow”.  The 21st Century Front & Centre

4.        I’m prepared to buy the FXI to zero because my risk on the deal is that China fails to become a major economic power.  In my view, whether they become number one or not is irrelevant to me making money.  They don’t have to be number one, just a player on the international stage.  I would further argue that if they “blow it”, the Chinese Dow does not go to zero, but simply trades at a lower level where I would actually be even happier operating, because my risk to zero is smaller.

5.        Here are the FXI charts.  So far, so good.  There’s nothing on these charts that suggests to me that it’s 2008 again, (for anything except paper money).  Quite the opposite.  The  weekly chart has a huge h&s bull continuation LOOK (not really a chart pattern, but it’s what I term “head and shouldering action”) and there’s a smaller consolidation taking place now, which itself is large by most traders’ standards.  Here’s a look at thatconsolidation. Note the red and blue supply and demand line boundaries.

6.        The Chinese stock market daily chart is anything but oversold.  Only the 20,12 series of Stochastics is overbought, and it can stay that way for quite a while. Everything else is on a buy signal. Use my exclusive Pyramid Generator to put the 21st Century Chinese Empire in your corner, to professionally accumulate it as an asset, as a player, rather than play as a Vegas-style pot shot gambler.

Question: What’s the difference between Canadian Elmer Fudd Public Investors, and American Elmer Fudd Public Investors?  Answer:  “Enron is safer than gold!” – American Elmer Fudds.  “Enron is safer than gold, we agree, but Nortel is the safest!”  – millions of Canadian Elmer Fudds.

7.         “We’re going to keep rates low for an extended period of time”- Ben “Dr. Pinocchio” Bernanke, 2010.

8.        English Language Translation:  “We’re going to load Elmer Fudd’s stock and real estate market carcass into junk bonds & cash, in a ‘growth with safety’ propaganda show of epic proportions, a multi-year process so the lobotomized price chaser is totally comfortable sitting inside the paper money blast furnace.  Then we hold a lotto to see which of our 6 year old kids gets to unleash the gold punisher, and turn on the blast furnace!  Call Orville Redenbacher, because we’re going to need a major supply of popcorn for this long play comedy!”  – banksters, aug 17, 2010.

9.        Attention Silver Bugs:  I know you were told silver was going to play 2008 again. There’s a 66% chance silver goes higher, not lower, per Edwards and Magee.  Not just higher, but takes out the $21.46 highs of this bull market.  Silver and gold stocks are confirming gold’s price action.  There is no “non-confirmation” and those who think there is are welcome to join Elmer Fudd in the paper money blast furnace while I get richer, in silver.  Here’s a look at the classic symmetrical triangle in play on the silver chart. When price oozes out to the apex, the chart pattern becomes totally unreliable, a pot shot entity.  While you can’t “demand” any chart answer to your market wants and needs, the bottom line is that the ideal point of breakout from a symmetrical triangle comes at about 2/3 of the way to the apex, which is where we are…now!

10.     Whether it is a primary, intermediate, or minor trend move, silver tends to confirm the action of gold with an oversized move in the same direction, after lagging in the earlier stages.  With the stock market possibly poised to rally, we could see silver do very well here in the very short term as gold looks somewhat “tired” in that same very short term.

11.     Here’s the daily gold chart via one of the higher quality gold funds.  Note that price has recovered to just over the 61% zone Fibonacci retracement marker.  That’s often an indication price will recover the entire move. Those of you who liquidated your gold holdings because you “knew” that the mark to model (hide it in the closet and shove it down Elmer Fudd’s throat) solution for a quadrillion dollars in otc derivatives was working, well, you just lost out on a fabulous $75 upside move, as did those demanding gold fall to their various supertargets well below the 1160 marker.  I bought paper gold all the way down, then converted it to physical near the lows, accomplishing two goals:

12.     First, I bought gold on sale while others liquidated.  Second, I increased my physical holdings at a point where I was unsure how I would hold up mentally if price declined far more.  If you have, for example, 100 ounces of physical in your hand, versus 100 ounces in a trading account, I can virtually guarantee you will feel fear when the price falls in your paper account, but not with your physical, even though you hold the same amount of gold! Win the mental game, and you win the profits-to-you game!

13.     Various writers can clarify a certain point at a certain time near-perfectly. I urge you all to click this “big picture of clarity” link on the otc derivatives situation, which is what 99% of what the crisis is all about: Big Jim OTCD’s Big Clarity Picture

14.     Here’s a link to Jim’s website:

15.     I refer to Jim Sinclair as “Big Jim” because he held 22,000 comex gold longs in the last bull market.  In today’s world, that is the equivalent of a position of 200,000 contracts.

16.     I’ll leave it your hands, to decide if various alignments of Space Rocks (be careful when you play with God’s toolbox, your masterplan to play super-prophet could enrage the owner of the toolbox, and rather than a golden genie, you become a mouse in a maze) are more important than a quadrillion dollars in OTC derivatives, hundreds of trillions of which are likely worthless, making the net worth of the world arguably….less than zero. I’ll leave it in your hands, to decide to if you think it is a good idea to bet against Mr. Big and climb into the banksters’ paper money blast furnace and huddle up beside Elmer Fudd, for safety of course.

17.     What Jim is saying with perfect clarity, and something I screamed about when no golf ball advisor knew what an OTCD was, is that the sole real cause of the crisis is OTC derivatives, and zero has been done in the real world, to address that epic problem.  The OTCDs continue to weigh on the world, a quadrillion dollar asset destruction steamroller driven by the gold punisher, and OTCDs are the reason that the gold community has been so wrong in calling for “inflation any day now”.  There is inflation of goods, but not of overall asset prices.  I took a course on OTC derivatives when they first came out.  After passing the course, I threw the text book in the garbage.  That’s all that OTC derivatives are:  Garbage.

18.     Garbage that is sold to price-chasing wienerheads by the banksters, with the sole purpose of turning themselves into trillionaires now, and quadrillionaires next.  Congratulations to the banksters.  They succeeded in accomplishing stage one of their goal!  Congratulations to Fudd and the Fundsters.  They’ve put their grandchildren on a multi-hundred trillion dollar payment plan to enrich the banksters.

19.     Here’s a look at the GDX Daily Chart. Note the head and shouldering action I highlight.  While gold bullion looks a bit “stretched” after the $75 upside party, the GDX, like silver, looks set to confirm the price action in gold.  Should the stock market begin to rally, and my sense is it likely will do so, you could experience a fairly solid bout of cash register ringing on your gold stocks. The right shoulder is higher than the left, indicating a strong situation, and the head and left shoulder are now morphing into the head of a larger and more symmetrical h&s, another positive sign!  Here’s a look what I mean on a 2nd GDX chart: GDX h&s #2

20.     You want to be a buyer of all gold stock weakness; don’t clown around here, because the hourglass held by the gold bear clowns is running low on paper money sand.  Drive yourself towards a focus on the juniors.  A focus does not necessarily mean putting more total assets in juniors than other areas of the gold arena.  It’s a focus, not an obsession.  Some writers talk about the “safety” of juniors compared to seniors.  That’s a totally moronic statement.  Gold bullion is the world’s lowest risk investment, while gold juniors are the world’s highest risk, ironically. (Not counting OTC derivatives and anything Elmer Fudd Public Investor recommends to hold for the long term at his price entry point)

21.     You don’t need 99% of your money invested in juniors to make a lot of money.  If your management team is killed, so could your investment be killed.  There’s “only” about abillion risk factors in play with juniors.  One of the biggest risks is price volatility risk, 2nd only to “off the board” risk in terms of danger to you. You need to manage price volatility risk with a pyramid of buy orders to zero, or you risk being obliterated by the reality of the insane and growing price volatility in the juniors sector.  Let me repeat with a nuclear powered foghorn, what almost nobody (other than juniors stock supertrader GoldLion) in the gold community is clueing into:  A mountain of back-breaking work has been put in by all the stakeholders of many juniors operations, over many many years.  The results of that work are about to rise up like a golden volcano!

22.      Regardless of any selloffs that will occur going forwards, in the juniors as a group, you are going to start to see “takeover mania”, as well as “positive announcements affecting the stock price mania”.  Individual juniors are starting to see their stock prices jumping on drill action and news action.  That is the theme of gold juniors here and now, and it is highly likely to dramatically accelerate over the next 6 months!  My question to you is:

23.       Are you prepared?….prepared for the party? If you own no juniors, or blew yourself up on them in the past, my suggestion is to focus on the GDXJ-nyse and ZJG-tsx ETF funds.  Diversify over price, not lottery tickets.  Takecontrol, not analysis drivel after gold has rocketed and the banksters are unloading onto those analysts and their flocks of price chasers, and remember that even if gold is going a million dollars higher, all that matters is whether the banksters are capable of knocking you off of your golden horse with a $30, $50, $100, or $300 hit when you “know” it can’t happen. Only price diversification can protect you from the vicious and never-ending attacks of the banksters.

24.                Special Offer for Website Readers: Send me an Email and I’ll rush you my free Juniors Grid Stalker report! I cover the “flying five” juniors most likely to outperform the GDXJ.  Learn to stalk the Gold Grid side by side with the professionals!  Thanks! st

Stewart Thomson

Graceland Updates

Written between 4am-7am.  5-6 issues per week.  Emailed at aprox 9am daily.

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Risks, Disclaimers, Legal
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 consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:

Are You Prepared?