Gold, Miners And Dow Index: Key Investor Tactics (Part 2)

​“He will lose the election, that’s for sure…Ford lost to Carter after the 1973 oil shock, Carter lost to Reagan due to the second oil crisis in 1979, and Bush lost to Clinton after the Kuwait invasion. The Democratic field is poor, but Trump is dead.” – Legendary economist Nouriel Roubini, March 2, 2020.

Corona is the kind of crisis that Roubini is referring to, a crisis that destroys a presidency.As America’s debt clock spins out of control, Trump calls for more rate cuts, to enable even more debt.

It’s a vicious cycle; a problem created by debt is “solved” by enabling even more debt.To manage the situation, all investors should own some gold.

Corona threatens to maul Trump’s stock market “poster boy” and destroy his legacy, but the stock market moves mainly in relation to actions from the Fed.

Wise investors remember that as Robert Mugabe ruined the Zimbabwe economy, the stock market surged more than gold!

In the case of the United States, the election of Bernie Sanders might cause an initial stock market swoon, but a dovish Fed and inflation from his policies could turn the US stock market into an investor haven like gold.

The short-term US stock market chart.

I’m as open to a stock market that rises as I am to one that falls.Investors should own some exposure to stock markets, but only if they are prepared to buy more stock at much lower levels… levels that may come as a big surprise to investors!

I’ve highlighted key buy zones with green circles.

A key investor rule of thumb is, “let the first fish get away”.Before deploying fresh capital, I recommend waiting for a deeper fall in the market, down towards the 21,700 area.

The big headwinds for the stock market now are the lack of value buyers to cushion any decline, and the end of stock market buybacks.The buybacks are drying up as Corona wrecks corporate earnings.

What about gold?Conspiracy buffs will note that gold, silver, and the miners often fall hard along with the stock market, but when the stock market recovers, they tend to lag.

The miners did have a good day yesterday as the Dow surged, and that’s encouraging.

I like to keep things simple, and the buy, sell, and optional stoploss zones I highlight on this chart are very simple.

I outlined $1566 as a key buy zone long before the “price sale” from $1690 occurred. Here’s the bottom line for investors:

Buy gold stocks and silver in the $1566 area for gold, and sell a portion at $1613, $1650, and $1690.

My infamous “sleigh ride” chart.

The Dow rallied back to the neckline of a concerning H&S top pattern.It now looks ready to begin a fresh down leg against gold stocks!

What happens if the $1566 support zone for gold fails?Well, that would make $1446 the next key price area for buy-side investor action.

I hope that $1566 doesn’t fail, but if it does, I want investors to be in an emotionally strong state of mind.

If that support fails, swing trading can help.It can play a decent role in any gold-oriented portfolio.

The exciting GDXJ swing trade chart.

I’m adding trailing stops to my https://guswinger.com trade service, to reduce drawdowns and allow bigger trade size, for more investor excitement!

Medium and long-term investors should stay focused on my sleigh ride chart and my gold bullion support and resistance zones chart.Focus on the miners, but only take serious action when the price is at key support or resistance for gold bullion.This approach minimizes risk, maximizes potential profits, and keeps emotions on the positive side of the spectrum!

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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form.  Giving clarity of each point and saving valuable reading time.

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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 qualified 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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