Gold Miners: It's Time To Buy

While the war worshippers of the world take turns waving “I love Poohtin!” and “I love Jackboot Joe!” pom poms (and wave them far from the front lines of the war. The citizens of India, aka the “A Team”, are back on the buy!

Commercial bank traders tend to aggressively cover short positions and go long on the COMEX as Indians begin to buy… and a base pattern usually appears on the short-term charts when they do that.

That’s the case now. An inverse H&S pattern is in play. It could “fail” and morph into a bigger pattern, but here’s the bottom line:

Traders can cover short positions and investors should be joining the Indian citizens with modest buy programs.

The banks are key players in the movement of gold into India, so it makes sense that they are COMEX contract buyers as their dealing volume rises.

The long-term gold chart. The RSI oscillator has moved closer to the 50 zone but Stochastics is still very high.

That’s why I suggest buying with modest size rather than “backing up the trucks” to buy while trying to call some kind of “final low”.

Investors should be fully prepared to buy again at $1808 and $1780, with a focus on both bullion and the miners.

Clearly, the government of China is ramping up the use of alternative energy… energy that doesn’t need to be imported through a Western government gauntlet of “my way or the highway” sanctions.

It’s obvious that America’s favourite war mongering draft dodger is President “Jackboot Joe”, and it’s equally obvious (from his actions towards the citizens of Russia) that he won’t hesitate to try to cut off the flow of oil to China’s citizens if he goes to war over Taiwan (while in his own backyard he leaves the citizens of Cuba to rot under decades of sanctions).

For the past six months, China’s gold imports have been coming in consistently at roughly 150 tons a month. Is this the new normal?

I’ll suggest that it is. American investors are taught (brainwashed?) to celebrate good economic and stock market times by selling their gold.

The opposite mindset exists in China and the country has two “Golden Week” holidays every year. I’ve predicted that by 2040 the Western “Gold pays no interest so sell it if rates rise!” mantra will go the way of the dodo bird. I’ve also predicted that China’s energy consumption will be almost all green by 2040 too.

For now, this huge base pattern on the Chinese stock market suggests the good times that began in November… and are set to accelerate.

The fabulous FXI and gold chart. The synergy is stunning. A range trade over the next few months is the most likely scenario for both markets, followed by a “barnburner” rally in the summer.

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What about oil? Investors should keep the buy and sell zones simple, and I do that here. Oil is in a key buy zone now.

Like gold, oil is likely to range trade for the next few months and it could reach my next buy zone at $65… before beginning the next stage of what is likely an Elliott “C wave” towards the $130 area highs.

The overvalued US stock market is doing “better than expected” mainly because the money managers have a crowd mentality that if they all buy together, the market won’t fall, and for now that mantra is working.

The interest rate chart. The money managers are fighting the Fed, and they’ve won a few rounds in the fight.

I’ll suggest that the Ides of March is a time that will bring concern that the anticipated rate cuts aren’t going to happen, and the crowd of buyers will get thinner.

What about the miners? I get some despondent emails from investors who sold bullion (or never bought it at all) and invested heavily in the miners after big rallies. They did it with a buy and hold approach to the market.

My mantra is that the miners are great investments, but only if core position size is limited and most buying is done at support zones for gold. The good news: Gold has just arrived at one of those zones ($1830-$1780).

It’s unknown if GDX forms a huge double bottom pattern or begins a major move higher now. What is known is that the $27-$26 support zone is in perfect sync with gold $1830 and $1808. It’s time to buy, with the expectation of locking in gains of 20% in 1-2months (annualized 100%-200% gains). With Chinese demand solid, India on the buy, and key moving averages providing a floor of support at $1808-$1780, the time is now, to press the mining stock buy buttons with gusto!

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Thanks!

Cheers

St

Stewart Thomson

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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:

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