-- Posted Tuesday, 15 November 2011 | | Disqus
By Stewart Thomson
1. Gold at $1800 was a touch “up there”, but in the bigger picture, the weekly chart is ultra-bullish. Click this gold liquidity flows table now. The commercials (banks) have added both longs and shorts, as of the Tuesday, November 8th cut-off date for the latest COT report.
2. Their action of adding some longs suggests they expected a short term move higher, which happened.
3. The heavy add of short positions suggests they understand that gold has ran about $270 higher, from $1530 to about $1805. It’s definitely not a time to be adding long positions for anything but a flip trade.
4. I can’t see any benefit to you in buying gold on anything but a $100 price sale, or more. Look at a $100 move now, as you looked at a $10 move a few years ago. I understand that leveraged traders have a hard time letting go of the idea that a $100 price swing is “big”, but it has to be done.
5. Use your understanding of what gold is, not loans from the banksters, to build wealth in the gold market.
6. If you can’t view a $100 swing in the gold price as a blip, you should immediately adjust your trading size, until a $100 move is something that makes you yawn.
7. Click this gold weekly chart now. Note the momentum (ROC) indicator at the bottom of the chart. Despite a move up of nearly $300, this ROC indicator is still in a position where enormous rallies begin!
8. This weekly chart for gold is “soaked” with technical buy signals on the indicators and oscillators, but if you can’t yawn when the price corrects $100, you may not get to the honey pot of profits that awaits you at much higher gold prices.
9. The recent correction in GDX against the dollar caused a lot of pain amongst gold stocks investors. As with gold, you need to expand your “price horizons”. Click this GDX chart now, and take note of the 3 key HSR (horizontal support and resistance) zones, at about $67, $58.50, and $50.
10. The fall from $67 to $50 on GDX caused a veritable implosion of gold community morale, and I believe a lot of that implosion can be attributed to a focus on making “pots of dollars”. My suggestion is to build your fundamental faith in the companies you are invested with. If you have that faith, you embrace price sales on their stock.
11. What’s the difference between buying a gold stock at 15 cents, and watching it go to $1.50, versus buying one at $10 and hoping it goes to $100? Focus on getting your stocks at the cheapest prices possible, and “how high they go” will look after itself.
12. In the energy sector, natural gas and uranium represent two low-priced fuels. I’m invested in both, but if you had to choose just one, which should it be? In the medium term, natural gas has a supply glut that could persist for several years. Uranium is the better choice, from that perspective.
13. Still, a dramatic spike in oil prices seems close at hand, and that could cause a much faster unwinding of the supply glut for gas than currently seems possible, as a substitution factor comes into play.
14. Click this natural gas chart now. The technical indicators have mostly flat lined, leaving investors who can buy greatest on-sale prices as legitimate players. You don’t have to have deep pockets to buy, but you do have to mimic those who do, keeping your buys small. I carry a short position in natural gas at all times, at 20-30% of the size of my long position, to manage the insanity of the what is arguably the world’s most volatile commodity.
15. Leave your bottom calls at the door, when you enter the accumulation room for natural gas! In terms of money management, my natural gas holding is about 10% of my gold bullion holding. Don’t just buy willy nilly in size, without giving thought to the actual size of your overall position.
16. The uranium chart is much more interesting. Click here now to view the action. Price has banged into the upper green Keltner line, which has been a good place to lock in a bit of profit on a number of occassions.
17. It’s important to trade out only a small portion of your accumulated uranium holdings at these basement price levels. If you own gold at $20 an ounce, why would you sell it all at $1800 an ounce? You won’t get it back cheaper than $20. Approach all major assets with that mindset. Get mean with those who try to pry your purchases away from you, with their “it might go lower” stories.
18. Uranium at these ultra-low levels is probably akin to gold at $500. That’s not $20 an ounce, but it’s solid value. I’m an accumulator of uranium, via the uranium fund highlighted on the chart, every 10 cents down. I don’t want to miss any price sale, but I don’t want to play bottom caller or turn caller, either. Some of you may prefer to use the US-exchange traded URPTF, rather than the U-TSX version.
19. I never bought Angela Merkel’s “nuclear energy is evil” propaganda, and nor did China. China’s construction of dozens of new nuclear plants is unchanged by her statements. I believe Asian demand for uranium is set to grow for a very long time. Their actions will make your richer, if you are patient with your accumulation of uranium.
20. I’d like to call all silver bugs’ attention to the Dow. Silver is industrial as well as precious. Crash season for the Dow (Aug, Sep, Oct) is over. Silver dealer “GoldLion” thinks an acceleration of the Dow’s move to the upside is near at hand, and that is likely trigger a near-immediate out-performance of silver against gold, and against the dollar.
21. The appointment of two Trilateral Commission members to the Prime Minister position in Italy and Greece adds a level of perceived control and stability to the Europe situation, and institutional money managers revel in such perceived “it’s all fixed now” propaganda. It doesn’t matter what is fixed or what isn’t.
22. What matters is institutional liquidity flows, and institutions are likely on the verge of pouring money into the Dow and general stock markets, which could cause a silver price super blast to the upside, based on perceived industrial demand growth for silver.
23. I’m locked and loaded with silver, for such a move. My own take on the situation is that the entire $0-$50 price area for silver represents a giant base pattern or launch pad. Sometimes, when silver starts to really move, investors get very excited, which is alright, but it’s important to remain calm and rational with your market actions. Focus on getting more ounces of unleveraged silver during substantial price sales, and you won’t need bankster loans and flip trades to make solid profits that are truly here to stay.
24. Sales of size for silver have occurred repeatedly in the $0-$50 price zone. If you buy these sales, you don’t need a price parabola to put enormous profits in your pocket. The reversion to the mean, alone, makes you a solid winner, and the possible parabola becomes a huge bonus!
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-- Posted Tuesday, 15 November 2011 | Digg This Article | Source: GoldSeek.com