Gold Charts R Us

 

Welcome to GCRU #57 on Apr 2, 2003. After those 7 1/2 weeks of gale force winds blowing against us, the wind has changed. J Downtrend lines have broken on 85% of gold shares & bullion has made an upside breakout from its bullish downtrend. Whew! What a relief. The reversal came on schedule for the 8 wk cycle I referred to in last GCRU. Bullion’s wedge target is 380-390. IMO, that means new highs for all the better quality golds. Between here & there are 2 levels of resistance, ie, the neckline of the mini H&S top, & the tops of the shoulders in those H&S’s. •• Refer to Profits-101: sell into strength. We don’t buy stks to ride them up & back down & up & down. We buy to sell, to make profits, not to collect like rare stamps. ••There are 3 ways to sell: 1. Sell at mkt when U have a modest profit. . 2. Place a close stop under your stock so U ride it up & get stopped out if it turns down—but U must raise the stop everytime the stk rises. 3. Some of each, ie, sell 1-3 stks into strength at mkt & use trailing stops on 1-3.  A variation of selling into strength can also be done by placing orders to sell 1-2 pts above the current price, which might get hit intra-day. I use all of these. ••And don’t forget to upgrade your portfolio. Don’t marry them. Be ruthless. Without Ruth. The other day I sold my Harmony because it was underperforming & simultaneously placed the funds in Randgold, which has been outperforming. ••Naturally U’ll be prepared for volatility on the way to 385 & 400 & beyond. A surprise Iraq regime surrender would help US$ & S&P, hurt oil & metals. But major long-term gold uptrend will remain in place, just as longterm S&P downtrend will remain. ••Most GCRU members did not lose their nerve during the 7+ wk correction. In fact I’ve received a big batch of renewals converting from 3 & 6 mo to 1-year. ••The unfortunate rock-fall in an AgnicoEagle mine sent its price down sharply, will thus distort some gold indices, just as Royal Gold did recently. Agnico’s reserves are unaffected; the gold is still there! Just a delay in mining a higher grade area.

 

 ••Member Denis Kirouac of Canada wrote me: “Thank U very much for your generous offer to all of us to extend our subscription to GCRU for a month, free. Not only are U known for your expertise & wisdom, but U are also a great human with a heart of GOLD. I’ve a concern I would like U to address if pos. Re our core positions in the golds. I do take profits on my trading positions, but find that not doing anything with my core position is very depressing to see huge gains turning into huge loss. Would having a trailing stop of let’s say -20% on gains be appropriate?

 

I find some of your stops meet very low support & if I was to sell my core at that level, I would have loss of profit plus loss of capital. Or should we keep our core positions all the time in this bull market? Best wishes, DK, Life Member, HSL.” Great question! I’ve said 2-3 times before, but obviously not loud & clear enough, that it’s up to U whether U trade 33% or 50% or 75% or even 100%. This core concept isn’t my personal habit in shares, but most people feel “safe” with a core they don’t sell. Some think of it as insurance, &/or some don’t like to trade much. But even insurance can be sold & bought back cheaper. My personal preference is a core in gold bars/coins, & trade 100% of the gold shares. So, yes, Denis, a -20% trailing stop on gains would be fine!  Even -15%. I see no reason to let profits disappear into losses just because of the word core. So when pos, put the –20% into effect from a profit level, but even from the purchase level if U want to avoid big risk. The only shares I regard as core are the ones I have certificates for, & even they are not forever. Each of us have different situations, knowhow, preferences. Study these options & decide which approach suits U best, keeping in mind: time & profits. ••If U want to be truly mkt-sensitive, U should consider selling short in gold futures (or shares) when we get chart signals. I do. I hedge my longs with shorts when a sell cue unexpectedly appears. Shorting is not risky if U are long more than short. More on that nextime. ••Re the war: Prayers R Us. ••GCRU also means (this time): Gold Core Rethinking & Understanding. ••Faithfully, your alchemist guru, Uncle Harry   

 

Presstime PS from Uncle Harry: gold broke out upside on Monday. The US govt’s PPT (Plunge Protection Team) & price-fixing cartel pushed the price down on Tuesday, trying to reverse the breakout. Early Wednesday in Asia & Europe they hit gold again, strongly. As this is written, before NY opens, they haven’t reversed it but trying hard. Our Spinner & Macd indicators remain bullish. Via this govt & cartel intervention, it’s going to be a battle getting to $400, like getting to Baghdad, but both will succeed in due course. We must be patient & stick to disciplines. Gold will prevail. The cartel will fail. There is no rush!


Gold Charts R Us