JWU AUG 21

Aug 21, 2013

 

1.    Please click here now. Double-click to enlarge.

2.    One of the most enjoyable parts of junior gold stock investing, is the nice upside surprise that can happen to many individual stocks (Sangold included), after the bulk of the stocks have stopped rallying and are selling off.

3.    The lower quality stocks can take a while to join in the upside fun, so it’s wise to show some patience with them. 

4.   Many companies are out of cash, and it takes them longer to start rallying, but they can move explosively when they do.

5.    Even at 15 cents a share, it’s important to act professionally.  Would you sell any gold at $2000, if you bought it at $1500?

6.   How about if you bought gold at $500, and it went to $3000, would you sell a bit?  I would.

7.   If Sangold moves from 12 cents to 17 cents, that’s like gold going from $1200 to $1700.

8.   Overall, the chart of Sangold, and many juniors like it, looks like a nice candidate to go in a “bottom feeder” newsletter.  A big decline is followed by a rectangular basing period.  The company has raised capital with some dilution, and seems stronger than it was.

9.   Management is humbled by their total inability to predict what was coming to them, from my “loss of sanity” highs of October 2010.  That’s good news.  You want the company you invest in to be run by people who have taken a beating and survived, not by people who brag that no beating can happen to them, or to you.

10.               What’s the downside?  Well, the downside is that the current rally fades, and it’s followed by several more years in the gulag.  Stocks that have raised cash might survive that.  Some would not.

11.              Having said that, I’m more concerned about the fate of bullion in 2014-2015 than I am about gold stocks.  I’m not predicting it, but there’s a solid chance that gold makes new lows but gold stocks do not, and there’s an outside chance that gold stocks actually surge, alongside silver, in 2015, while gold limps along.

12.              Please click here now.  Doulble-click to enlarge.  That’s the daily GDXJ chart, and price could still rally to the highs near $52.68, even while it is overbought.  My big concern here is not that the gold community is talking about higher prices (that can easily happen).

13.              My concern is how sure they are that price is NOT going lower.  Once you become adamant about where price can’t go, that attracts banksters, like sharks to blood.  It’s said that a shark can smell 1 drop of blood diluted in a swimming pool.  The blood of adamance is in the air, and that’s dangerous for all the minnows in the gold stocks community pool.

14.              Instead of celebrating a 50{7d2759035a2769ee7a6afa7c646e6642b67314b0cd0e17ac0c6ae4f965ff87d9} -100{7d2759035a2769ee7a6afa7c646e6642b67314b0cd0e17ac0c6ae4f965ff87d9} gain in the price of their stocks, the minnows are engaged in an adamance contest, to see who can be most adamant that price can’t go any lower.

15.              Even more horrifically, if we DO go higher from here, I’m predicting the gold stock minnows become even more adamant than they are now, that price is going EVEN higher!

16.              I’m cheering for higher prices more than the gold stock minnows are, unknown to them, but it’s so you can ring your cash registers, not so you can join the adamance contest.

17.              I’ve mentioned certain emotional states of the gold stocks community, at certain periods of time in the past, at key chart points.  The charts look ok to great here, depending on the individual issue in play.

18.              All that’s missing is the negative sentiment required to create a new leg higher.

19.              Please click here now.  That’s HECLA mining.  Note the red circles on the minor trend highs at $4.03 and $4.10.  It’s all very interesting to predict HECLA higher if it takes out those highs, but it’s a lot more interesting to get richer with it…

20.              By buying, if it falls to buy-side HSR at $3.34 and $3.08.

21.              I’ve mentioned the possibility that gold stocks bottom but gold doesn’t, in 2014.  With silver stocks, I’m much more open to that possibility.

22.              I think that 2014 is the year of the taper caper, and it’s the year of maximum “all is well” propaganda. 

23.              Silver stocks will be labelled a buy by institutional money managers, because of the industrial use of silver will supposedly boom, based on the great economic recovery.

 

Gridtime!  I would pay keen attention to the arrival of silver stocks at all buy-side HSR zones, over the next 12 months, and act on them.

 

Thanks!

           Cheers

           St

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