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You Have Questions for the God-Emperor?

God Emperor of Dune
Don’t dare ask me about the dollar, small pleb!
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Quickly, quickly now, as the spice melange takes maximum hold…  I shall reveal the revelations of the spice dreams as controlled by special Bene Gesserit training taught exclusively to me by Madonna.

First, I reiterate, with cement-like, no…concrete-like certainty, the devolution of this market will be marked by the application of much spice melange to my upper respiratory tract, especially my nostrils, where it is most tasty and vision-producing.

I envision our dollar to be entering some significant retrace territory on the weekly chart here, and soon, trouble:

As you can see, we are not yet oversold on the weekly (we should not be as we bottomed a mere two weeks back), but we are approaching some significant Fibonacci retrace levels at 61.8% of the latest large drop from the March to December ’09 period.

Not coincidentally, that huge dollar drop brought us our relief market.   Now I think she gets ready to drop once again, as the dollar “recovery” continues to weaken at the firm but effeminate hands of Ben Bernanke.

The dollar daily is even more immediate:

As you will note, on the daily, the Gom Jabbar  lies even closer to the neck of the weakling dollar, as it is overbought already after a mere 11 days since it’s last bottom-scrape.    A mere word will bring it to it’s knees, and I think that word is “Fibonacci.”

Or it could be “black candle,” even though that’s two words, technically.

No matter, gold held fast today, and as I commented to M. Le Docteur earlier today, whenever gold and the dollar rise simultaneously, it usually means one of them is about to break.   Today, the dollar blinked first but recovered.   The rest of the week should tell our tale.

In the meantime, gold and silver miners may continue to consolidate here.  While you are eating that sandwich and waiting for them to break out once again, take a gander at ANDE, the old Jacksonian agricultural stalwart.   I expect MON to recover here with the rest of the ags as well.

May the great red beard and moustaches of Frank Herbert bless you all, and good night!

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Not Much Longer Now

Almost done 

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Some of you get a tad nervous and that’s understandable. You haven’t been sailin’ the seas lo these last ten years with a chest of silver and a chest of gold amid-decks, watching the waves break over your port bow and the rigging whip up under many a Jamaica squall.

‘Tis a pity, as it’s rendered many of ye as feckless and gray-faced as a feral stoat during the slaughtering season when it comes to any down-draft in ye positions. 

If there’s one thing I could keep in your mind it’s that the PM”s are a volatile lot.   Like a powderkeg in a burning fireworks factory, ye shall be shaken about before ye’re borne to heaven.

But your time is not yet, and neither is it the hour for hand wringing.   There may very well be one last shake of the lamb’s tail before we ascend over again into the high surf and the sun scuppered seas.   I say “may” because with silver’s recent strength leading the prow, it’s just as likely we take off like a shot tomorrow, mimicking the dolphins of tech like CREE and VECO, the latter of which blew out it’s numbers tonight and should offer boundless booty to ye faithful who stuck with her.   As well, POWR should benefit from that triumph.

As usual, I think it’s the weekly charts that give the best perspective, and the weekly of $GOLD should be no exception.  Look here on the direction I think we should take in the coming month.  That short dip may very well be our last gasp at these levels, and if so, I’ve amasse some dry powder to partake in more ANV and SLW in the coming week.

My best to you all, as ye make yer way through the shoals of Uncertainty.

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Happy 4th, You Awl

[youtube: http://www.youtube.com/watch?v=ghz4_kikLkE 450 300]

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I’ve gone full weepin’ Patriotic American soft on this 4th of July evening, just about an hour before by second son achieves the age of Manhood (were we Hebraic, we’d throw a Bar Mitzvah.  Instead we’ll just wish for mitzvahs for him).   Yes, he’s a 4th of July baby, and full of vim and vinegar and heartbreak, just like America.   Right now, he’s set on the Air Force Academy and flying superfast jets.  

Next year, who knows?  Maybe the seedings of a bad Tom Cruise movie.

But as always, I have hope, and that hope is dependent upon the good people of America, whom I meet every day.   None more so than in the marvelous South, God bless it.   Wouldn’t it be ironic if they had to secede all over again, this time in the hopes of preserving of Lincoln’s Republic?   Stranger things have happened… I passed by Lincoln Memorial University on the way to the beach … and it was in Tennessee.  

I must tell you, however, that things feel more connected down here, less amorphous, and even less cynical.  Maybe it’s the ocean, or the hermit crabs.   More likely it’s the people. 

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Enough philosophizing, I have to slay dragons.   A nameless droog from Fly’s blog (one who is not even a PPT denizen, curse his eyes), has remarked that we of the gold bug variation are in deep scheiss from this point onward.  

I have trouble accepting that prediciton and declare such droog, “asshattish,” in response.

Let’s look at our daily $HUI again, like we did two days back… and see if things have changed much:

I have trouble getting worried about this daily chart.   As you can see, we can hit $440 and still be okay, as we have not become totally oversold yet.   Still, that doji yesterday tells me we haven’t much to go here. 

Meanwhile, our nemesis, the Bernanke Dollar, broke some significant barriers on Friday:

That break of the consolidation zone doesn’t bode well for the dollar ($USD) going forward, even in this low RSI environment.   The weekly tells the better tale of broken hearts and broken trends…

New first target?  $82.oo.  That target should bode well for stocks too.   Be well, friends– and Happy 4th to you all.

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Operational Leverage

 operation

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I’ll be quick tonight with two illustrations which should show why I’m in (mostly) miners rather than physical gold or its paper substitute, the [[GLD]] ETF. 

First, I think we can agree we’ve been in, and we remain in, a secular bull for the precious metals, as this monthly chart on the price of gold illustrates:

Note the four times price appreciation over the eight plus years?   Not bad, huh?  Well, let’s look at the miners over that same period.  Remember, they benefit from what we call “operation leverage,” which means that in a rising price environment, they can leverage their fixed costs and really ramp profitability quickly.

Note the effect in our [[$HUI]] monthly chart:

Note the shorter time period and the far steeper gains?  Note also that the miners have yet to catch up to the recent new highs in gold.   I believe that time is coming soon, and may even be upon us as the dollar approaches a crucial double top area.  

More on that as it develops.   My best to you and your own personal operating levers.

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Golden Doom?

spacegold 

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I think some of the calls for gold’s downfall I’ve been seeing coming out of the Deflationista Community may be a mite premature.   As a matter of fact, I don’t think we’re seeing anything here more than a sharp pullback from an extended four week move.   Given that the move was a breakout, however, I think we’re headed for continued gains after it’s been consolidated.  

First, the weekly gold chart shows where we we’ve come since the breakout from the larger consolidation in October of 2009:

What we’ve been seeing for the majority of 2010 has been a consolidation of that late 2009 breakout… until we just recently (over the last four weeks) began to break out of that consolidation as well.   This last week was merely pullback from that break as well.  Note the daily:

Now we are oversold even from that brief pullback.  This is not to say there won’t be additional consolidation, but only that we should not confuse the ill health of the overall cyclical stock market bull with the far better condition of the continuing secular bull in gold.

Enjoy the day, I shall be about, but busy.

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Loin Girding Time

lion

That’s “Loin” not “Lion!” 

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We’re a little bit over a year into my tenure here, and we’ve probably had three or four “one of those days” days since I started. 

Today was one for sure.

This is life in the PM bull, friends, and we should be used to it by now.   I expect we are not fully shaken out, although that over 10% move in the $XAU index today might have scared some people off for the next decade or so.

That said, opportunities abound.   [[EXK]] was even up by the end of the day, and Silver Wheaton Corp. (USA) [[SLW]] filled two large gaps from the prior month’s work.  In hindsight, I likely should have taken the opportunity last week to sell some calls, as I’ve done in the past, but frankly, I was just too busy.   That’s why I choose to play long term secular bulls like the gold and silver markets, however, and that strategy has served me well.

So buck up Cowboy, and get ready for some more bull-riding, pleasant and not so much.   The good news is those with some dry powder can still grab some great names, perhaps as early as tomorrow morning.   I’ve mentioned Allied Nevada Gold Corp. [[ANV]] before (I also like Eldorado Gold Corporation (USA) [[EGO]] here), and you will remember this weekly chart from a couple of days back:

Note we’ve touched that trend line today, as I’d predicted.   We may do so again tomorrow, but that mid $17’s area remains a primo area to pick up some nuggets.  

On the silver side, besides the two I’d mentioned above, I think [[PAAS]] is still one of your better bets, and riding that weekly trendline like a refusnik on the potato line.  

Feel free to stop by here, or The PPT to discuss stocks and trends.  I’m here for you during the roller coaster times.

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