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The Big Picture for Gold

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Posted by Stewart Thomson via Graceland Updates

on Wednesday, 08 August 2012 08:30

1. To view the big picture for gold, look at the chart below (click HERE for Larger Image) . Gold has been consolidating for almost a year. 

2012aug7gold1

2.  Two key symmetrical triangles have formed, and they appear to be acting as the “firing pins” that will help gold begin a major price advance.

3.  Please click here now.  You can see that gold pulled back towards the middle of the green triangle, and then quickly bounced higher.

4.  As of this morning, gold is also trading above the larger dark blue triangle, which technically confirms a breakout. That breakout should produce serious follow-through to yesterday’s price action, for the rest of the trading week.  

5.  Please click here now.  Is that a chart, or a piece of sculpture created by Michelangelo?  I would argue that the GDXJ chart qualifies as “chart of the year”. 

6. Many individual junior gold stocks are coming to life, and this GDXJ chart suggests a virtual price geyser is imminent.  Note the small but beautiful head & shoulders bottom.  It is a complex pattern, featuring two heads.

7.  The neckline of that pattern sits at about $20.30, denoted by the thin black line of HSR (horizontal support & resistance).

8. GDXJ had a great day of trading yesterday, but Canadian markets were closed.  Many hedge funds engage in what may be called “nefarious” shorting of junior resource companies on the CDNX exchange.

9.  When Canadian markets open today, I want to see GDXJ blast up through the neckline and over the green downtrend line.

10. The two green trend lines denote an enormous bullish wedge pattern.  The GDXJ chart could be termed a “snorting bull”.  The chart showcases a double bottom pattern, a head & shoulders bottom, and a bullish wedge.

11. I don’t think that junior gold stock investors could ask for a more bullish chart than this one.  

12. The amount of pain endured by the average gold stock investor in this crisis rivals that endured by 1990s technology stock investors.  The difference is that you are likely about to be rewarded in a very big way!

13. Silver fans should click here now.  Note the bullish pullback to the apex of a triangle pattern.  It’s technically bearish if the price “hangs around” the apex, and bullish if it can quickly move higher.

14. In this case, price has moved higher, opening the door for a run towards $28.50.  Silver is trading less aggressively than gold is now, which is what I want to see at the beginning of a major bull phase for precious metals.

15. August 7th is my “official start date” to the Dow crash season, and it runs to October 31.  The Dow rarely crashes, but I still like to be out of the market during crash season.

16. Platinum is a metal that is much more volatile than gold and tends to crash badly when the Dow crashes.  In 2008, platinum fell over 60%, while gold only fell by about 30%.

17. Is platinum hinting that the global economy, and perhaps the Dow, are about to take a hit?  Please click here now.

18. While the gold and silver charts look superb, there is a nasty head & shoulders top pattern in place on the weekly platinum chart.

19. It is sitting on strong price support on the longer term charts.  Please click here now.  You can see that $1340 and $938 are two key areas of enormous price support.

20. I would be a modest buyer of platinum in the current $1400 area, and a much more substantial buyer in the $900-$1000 area.

21. Please click here now.  GDX performed like a champion yesterday, and I expect more of the same action all week long. 

22. Note the HSR line defined by the circled low at $43.98. GDX is chewing at that resistance like a pitbull chews on balsa wood.

23. If GDX can get over $44, I think it will quickly surge towards the HSR created by the circled high of $48.72, and the circled low of $49.22. 

24. The 2011 gold stocks debacle was arguably as bad as the wipeout of the early 1980s or the lows of 1999, but the gold community, and the stocks it invests in, possess a resiliency that never existed in the technology sector. Welcome to the golden age of the gold community.  It starts now!

Special Offer For Website Readers:  Send me an Email to freereports4@gracelandupdates.com and I’ll send you my free CPI report!  Learn what cost push inflation is and how QE helped to create it.  I’ll explain why CPI is the most powerful driver of the gold market now, and which stocks could benefit from it!

Thanks!

Cheers

              St

Stewart Thomson

Graceland Updates

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

 


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