Four Golden HSR Kisses
On Friday and Monday, there was gargantuan volume in the gold market. On the COMEX, more than a million contracts changed hands over those two trading days.
That’s a snapshot of Monday’s volume, just in the June contract. The total was more than 700,000 contracts.
There are rumours that Spain and Portugal were dumping gold, raising cash to meet IMF & ECB austerity demands. A lot of selling probably also came from large hedge and pension funds.
Some gold analysts blame the media for creating this tidal wave of selling, but most bank analysts had already turned negative, several weeks ago.
Large funds and sovereign nations don’t sell their positions because a journalist on CNBC says, “the price might fall down”.
They sell after doing serious conference calls with major bank analysts, or after getting huge margin calls from prime brokers at those banks.
Who was on the other side of this “tidal wave” trade? It’s likely that this Friday’s COT report will show that commercial (bank) traders did most of the buying. It’s quite possible that by the close of Monday’s trading, they were holding anet long position, for both gold and silver.
Hopefully, some members of the global gold community were able to do some buying, too. My main motto is, “always trade smaller than you ‘know’ is rational”, because of the nature of the market.
If you apply that mantra to gold, silver, and related items, you were probably a modest buyer yesterday, as I was.
Most analysts operate from a foundation of price and time targets. Instead, I suggest you operate from a foundation of price zones that define where I buy or sell. I have very little idea if the price is actually going to those zones, but I know precisely what I will do if it does.
I’m very interested in gold as an “end”, not a “means”. What I mean is that I view gold as an asset, so the goal of holding it is quite simply to get more ounces of it. Most investors take the opposite view. They use gold as a tool to try to make “dollars of wealth”. That should be an important goal, but not the only one.
Some investors approach gold with the idea that fiat currency is inherently bad, so gold must be held for protection. That’s a valid reason to own gold, but it still doesn’t quite get at the heart of the “wealth building matter”.
There are a lot of good reasons to own gold, but the simple fact is that gold is wealth itself, so it should be accumulated at key price sale points.
I’d like you to stand back from all the drama surrounding gold right now. Keep an open mind, because almost every analyst in the world is telling you that gold is going lower now, and that may or may not be true.
I get up a lot earlier than most analysts do, so I’ll dare to suggest that the early bird often does get the (metallic) worm.
That’s the 5 minute bars chart, for silver. The landscape has changed dramatically, since yesterday afternoon. The price is now rising, and there’s a breakout from a bullish wedge pattern in play.
There’s also an inverse head and shoulders pattern on that chart, featuring many shoulders, which is quite bullish.
Trees grow from a seed, and so do primary moves in the market. You are looking at a bullish silver seed. Only time will tell if this seed produces a huge tree, but denying the reality of this seed is silly.
That’s the monthly chart for gold. The price areas where I promise to be a substantial buyer of gold, and related items, are highlighted in blue on that chart.
When gold was trading at $1923, the four key price areas to buy gold were $1577, $1432, $1266, and $1033. Those were the prices then, and they are the same now.
I call them HSR zones (horizontal support & resistance). They are vastly more important than cycles, trend lines, Fibonacci retracement numbers, volume patterns, and oscillators.
In the gold market, HSR on the monthly chart is the holy grail of wealth building.
Quite frankly, if you want to come out of the financial closet, and admit you sometimes kiss your gold, those are the only 4 price points to prove your love. Four golden kisses is all that “Queen Gold” will allow you to give her, on the huge monthly chart price grid. Think about that.
Yesterday, gold traded at one of those key “kiss points”, $1432, and it’s trading under that price now. I dare everyone in the gold community to come out of the closet, and give your gold a small “$1432 buy kiss”. The “banksters” might have a cartel. The gold community has a kissing contest. Love always did beat war, but does any gold investor really understand?
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?
Stewart Thomson is president of Graceland Investment Management (Cayman) Ltd. Stewart was a very good English literature student, which helped him develop a unique way of communicating his investment ideas. He developed the “PGEN”, which is a unique capital allocation program. It is designed to allow investors of any size to mimic the action of the banks. Stewart owns GU Trader, which is a unique gold futures/ETF trading service, which closes out all trades by 5pm each day. High net worth individuals around the world follow Stewart on a daily basis. Website: www.gracelandupdates.com.