Gold Stocks vs Gold Bullion. Battle Time!

By: Stewart Thomson | Tue, Oct 12, 2010
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Oct 12, 2010

  1. Repetition is one of the key building blocks of excellence. Factory owners know that replicating a small profitable production line with a big one is the key to massive expansion. Easier said than done.
  2. Some say that repetition is boring, but if you ask a soldier in combat if repetition is boring, the answer is, altogether now, "No!".
  3. In the market, buying price weakness and booking profit into strength seems boring, until you actually do it. Then you find yourself in a near life and death battle with your emotions of greed and fear.
  4. Martin Armstrong has wondered out loud whether gold stands to break upside out of the defining bull market up channel. Or, whether it stands to collapse back to $1000 before blasting to new highs.
  5. Most gold market investors don't have any tactics in place to handle either scenario, and are really counting on Lady Luck to carry them through the remainder of the bull market.
  6. It's very important that investors remain extremely calm and rational. When you handle large sums of money for people, and I do, you need to bring a level of professionalism to the table that takes into consideration the hopes and dreams of investors, while managing risk at the same time. Again, easier said than done. You cannot be ruled by your emotions. One mistake can create a huge catastrophe. I'm personally not interested in being involved in a market catastrophe, not at all, and I don't subscribe to the mantra, "well, everyone is in the same sinking ship as I am".
  7. Here's a wakeup call for those of you who feel you are missing out on gold's move:
  8. You are.
  9. You failed to buy any gold on any correction for the past 10 years, and now the big money is in gold stocks, not gold bullion, and you are stuck in the bullion trough, stuck on the wrong road, stuck chasing price, again. It will end horribly for you, another failed price chase, followed by another session of massive loss-booking, from the fetal position.
  10. Here's how to prevent that horrific future from occurring: Get your hand off the gold bullion buy button. What are you doing? Just the fall into $1200 from $1266 caused massive loss-booking!
  11. What do you think is going to happen when your accounts, and those of the fundsters, are fully laden with gold and even leveraged beyond fully invested with gold? The answer as to what is going to happen is the banksters, who have a printing machine and unlimited money, are going to place "ask" orders into the gold market (that's sell orders for those who need a translation), and do so at a size level you probably can't comprehend right now.
  12. They can sell vastly more gold than you can buy, and after all the gold market players are 100% invested, the banksters are going to start dumping a mountain of gold sell orders into the market, as they have dozens of times since the gold bull began. The bottom line: just like has happened millions of times in all markets in the past, all the current price chasers in gold bullion will be destroyed.
  13. Let's leave aside the bullion I bought into the lows of the gold bear market, bullion I sat with for years while one investor after another spit in my face, almost literally, while they engaged in the greatest stock market price chase since 1929. Let's leave aside the fact that I told my people to get out of the stock market in Dec 1999 and told you to return to the stock market in March 2009 at Dow 6500 into the day of the exact low.
  14. Let's leave all that aside, and just talk about the bullion I bought into the lows of 1156 and took delivery of, the gold I clearly told you to buy as I bought, while the other 90% of the gold community liquidated in failure.
  15. That gold, my gold, is now sitting at an aprox $200 an ounce profit, while those who are buying now, telling me how smart they are to chase price, are sitting at exactly how much profit?
  16. Hmmm. Let's see, $1360 minus the $1345 price at 5am as I write this sentence while the price chasers lie in bed, is how much exactly? Oh yes, here's the answer: A minus $15 dollar an ounce return on investment, coupled with "big plans".
  17. You are missing out on gold, yes. Missing out because you are focusing on bullion instead of gold stocks with your buy orders. The reward to risk ratio is orders of magnitude higher on gold stock now than it is for bullion, except for the risk of going off the board.
  18. If you "have" to chase price, do it with the item that has yet to move. Do it with the item that stands to go to Pluto. That item is: Gold Stocks. There is a plethora of underpriced gold stocks sitting on the table, yet the gold community is surging into bullion. I see it as total madness. Understand what bullion is, or be destroyed by that very reality. Gold Bullion is the world's lowest risk investment. So go ahead and play price chaser with bullion. Here's what is coming to you: The banksters are going to take you to the gold woodshed for the financial beating of your life, and it doesn't matter whether you get your beating at gold $1200 or gold $12,000. It ends with you beating on the sell button from the fetal position. That pain is caused solely by disrespecting what bullion is.
  19. I mention it only on the rarest of occasions, and now is one of those times when I think it is appropriate: Gold Bullion is other-worldly. When you chase price you are disrespecting that other world, and attacking your own soul. You decide if that is a good wealth building plan. Jim Sinclair, the world's largest gold trader in the last bull market has stated, "97% of you won't believe me when I tell you it is over." How many are really listening?
  20. If you didn't buy into $1156, here's the bottom line: You only have a million more opportunities to buy weakness, to buy from those who are buying now. They will sell to you while they beat on the sell button from the fetal position. Let's look at the Gold Stocks, because that is where your gold market buy money should be going, and going there now. Why? Because the price of bullion is now at a price that is going to send gold stocks to Pluto, that's why. Here's the bottom line: Trading gold bullion from $1350 to $1500 in a price chase is an 11% move for the peanut parade. Many gold stocks could double, just on that move. I'm here to play large, not to play tiddly winks. It's been a sweet ride on the gold bullion Clydesdale work horse. Now it's time for the Gold Stocks Indy 500 race car to take centre stage. Here's the actions you need to take to get prepared right now. Click here now: GDX Daily Chart. Look carefully at the blue uptrend line I've drawn on this chart. Price volatility has been microscopic. So far, the GDX has acted like the gold bullion Clydesdale. That's about to change. Money has been made using my pyramid generator to buy and sell within the ATR (ave true range) of the GDX, as it has risen and fallen across that blue up trend line, which is a rough line of the mean average of the gold price. The power for the current GDX rise on the daily chart, technically, comes from the consolidation pattern established between May and August, between aprox GDX $45 and GDX $54.
  21. Don't forget that price did not actually break out upside from that consolidation until mid September, as it rose to the $55 area. Price has only risen to $58, while the target is at least $63, just from that tiny consolidation on the daily chart. Look at the RSI. It is not overbought. It is at 60, and has yet to even approach a severely overbought condition. In contrast, here's the Gold Bullion Daily Chart. Look at the red circle I've drawn around the RSI. From both a risk and a reward perspective (except for the risk of going off the board; on that front bullion is the hands down winner) gold stocks are overwhelmingly the better play, right here, right now, and that's just looking at the peanut plays that are projected on the daily charts.
  22. Want to play in the real big leagues? If you want to book a financial ride to Pluto, then you need to take a hard look at the weekly chart for the GDX. Here it is! GDX Weekly Chart.
  23. Note how I've highlighted the RSI indicator with blue arrows and a blue circle. We can go much, much higher. The "2008 again for gold stocks" gang... is the kindergarten gang in my world. Recess is over, and it's time to send the 2008 again kiddies back to gold school. Notice the huge green HSR (horizontal support & resistance) that I've drawn in GREEN colour. Not blue or red, but green. As in traffic light green for you. Again, let's contrast the bullion chart with the gold stocks chart, and determine which is the better play. Click here now to view the Gold Bullion Weekly Chart. Notice how skewed buying is now in terms of risk. RSI is definitely in the overbought zone. Gold is overbought on daily and weekly bullion charts, and gold stocks are not overbought on either the daily or weekly charts. Gold stocks, as a group, are screaming buys whereas bullion offers, at best, wet noodle upside. Yet most investors are in a line-up to buy those wet bullion noodles, while ignoring the superplay at hand in Gold Stocks! The minimum target for GDX, basis the super monster head and shoulders bull continuation pattern on the weekly chart, is GDX 100. That's the minimum target, not the maximum target. Numbers like 200 for GDX and 300 on the GDXJ are not outside the realm of rational possibility, and the question is:
  24. Are You Prepared?

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Stewart Thomson

Author: Stewart Thomson

Thank-you

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 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?

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