It’s Christmas Eve and while it’s been a spectacular year for supreme money gold, gold stock and silver bullion investors may feel a bit like the Grinch stole a piece of their Christmas.
Are these feelings valid? The answer is complex and today I’ll cover some tactics to help investors view their investing glass as mostly full rather than partly empty.
The big picture chart for the dollar versus gold. Most people start investing to get more fiat rather than more gold. That mindset brings problems from the outset; when the inevitable drawdowns begin, the distraught investor tries even harder to get more fiat, as it continues to fail against gold.
Clearly, investing needs to be approached with a mindset of getting as much gold as possible. The superiority of gold versus fiat can help an underwater portfolio become a positive one.
The weekly gold support zones chart. Another error that investors make is to constantly try to forecast what’s next for the price as their main order of business rather than prepping to buy and sell the major zones of support and resistance.
When their forecasts go awry, as they eventually do, an investor who isn’t prepared for the price to arrive at a major buy zone is emotionally distraught and generally unable to buy.
The $2450 zone is clearly an important zone to be prepared to buy. The $2800 zone is also an important price point. Rather than focusing on whether there will be a “breakout” above it, investors should be prepared in advance to buy a drop into it from $3000 or higher. The bottom line:
Forecasts are helpful to tweak buy and sell size, but they should not be the main tool for investor action.
During the “price sale” of 2008, I was able to buy Dow 7500 and gold $728 (and urge investors to do so too) because these were major support zones created years before zones that I had allocated capital to buy if market prices ever went there.
Whether I predicted the market to decline as it did or when it did didn’t matter. What mattered was the ability to take buy-side action at a critical time to do so.
Only significant preparation now will enable an investor buy $2450 or $2800 on drops into those zones, if either exciting event occurs.
Of course, all preparation with no prediction can quickly put an investor to sleep. The good news is that an emerging symmetrical triangle on the daily chart suggests $3000 is the next “port of call” for gold.
Most Western gold bugs learn about gold through its fear trade. They are aware of the rise of China and India, but they tend to focus on the fear trade side of things there too. Hidden hoards of the Chinese PBOC and dramatic government stimulus announcements get their attention, while the mundane but relentless growth of the love and celebration trade gets little Western press.
This trade brings enormous stability to gold, and a focus on it can help Western investors view gold market tops and crashes as simple opportunities to buy solid sales in the price.
The weekly INDIA ETF chart. The Indian stock market looks shaky in the medium term, and this is going to increase investment (fear trade) demand for gold there in addition to the indicated surge in love/celebration trade demand.
What about the US stock market? In the short-term, a rally is likely, but there is technical damage beginning to appear for both the Dow Industrials and Transports. 
This long-term monthly cycle chart is ominous. It projected the 2022 swoon (and 2008!) and it suggests the most ominous one of all could be dead ahead!
There is also disturbing synergy between the market and politics of today, and 1929. Having said that, cycle swoons can indicate a crash in the price, or a sideways ooze. There is additional synergy between the current market and 1966 when interest rates began a 15-year surge.
Gold surged over the past year while rates also surged. Then the Fed announced an emergency cut of 50bps and rates surged a full point from there on both the 10-year and 2-year bond! Then the Fed cut again, and rates blasted over the neckline of an inverse H&S bottom pattern!
The big trend for rates is higher. Much higher. The 40-year cycle for rates is up and most investors appear to be wasting time trying to buy bonds and go short rates. A right shoulder of the big inverse H&S pattern has yet to form, and that’s making it even more likely rates to rise.
The exciting CDNX venture stocks chart. The world is likely headed towards a mix of deflation and inflation. The uncertainty is good for gold, and it will encourage unconventional risk taking amongst money managers.
Every day there are CDNX stocks surging 20%, 50%, and even 100%. What’s intriguing is that there are more and more of them. This is good news for all good stocks, not just the tiny ones. A breakout over 630 for the CDNX could be a generational game changer for the sector.
What about the senior miners? The GDX daily chart. There’s a bullish non-confirmation in play with RSI and the price. Stochastics (14,7,7 series) is significantly oversold.
This is a buy zone for gamblers and aggressive traders. Investors can buy gold but there are not quite enough “green shoots” in play to make it a solid buy zone for more conservative gold stock bugs even though we’re entering a Chindia-oriented gold bull era!
A look at the weekly chart. As the price appeared to be breaking out a month ago from the huge C&H pattern, some institutional money manager froth appeared, and I urged investors to prepare for the formation of a handle.
That has been occurring, and now the key 14,5,5 Stochastics oscillator is oversold. There could be a few more weeks of handle formation, but the daily chart suggests a more bullish scenario. Gamblers need to gamble, and investors need to invest. With a focus on the ongoing formation of big support zones rather than just what might be next, all should be ready to face the supreme money grid lines with confidence and zest!