Dec 28, 2013


1.   I’ll talk more about this in GU, but this is a chart that the gold community totally ignores, and one that has extreme relevance to commodity price action.

2.   Please click here now.  That’s the daily XME-nyse chart.  It covers the world’s biggest mining and metals processing companies.

3.   Note the lows of April and June, and please click here now.  That’s the daily GDXJ chart. 

4.   GDXJ also made lows in April and June.  At the June lows, the “bigtime” miners diverged with the gold & silver miners, and marched higher.

5.   I’ll talk more about why that is in today’s GU, but the bottom line is that I believe China is entering a new commodity-demand cycle, and XME tends to lead GDX and GDXJ.

6.   There’s also a key wedge breakout in play. 

7.   When I highlighted it on Thursday, the hedge funds had pushed the price back to the green demand line of the wedge pattern, and nobody cared about the breakout, let alone about the XME-GDXJ link.

8.   I didn’t feel physically ill, but I did feel uncomfortable, as I bought more GDXJ via pgen into the recent lows.

9.   It’s important to understand emotional reality, and not use emotion to make ridiculous statements about what is coming imminently in a market, either up or down. 

10.            For example, at the recent August highs of gold as it banged into sell-side HSR at $1432, I got emails from people saying the dollar was going off the board, so they needed to put everything in gold items right there.  Wrong. 

11.            I called it the Loss of Sanity, Part 2, event.

12.            Likewise, if GDXJ looked like the XME chart does now, how many gold community investors would be emotionally broken? 

13.            The answer is not very many.  They wouldn’t be ecstatic, but they would have a positive outlook. 

14.            GDXJ, and other precious metal stock charts, can look like XME.  Please click here now.  That’s the daily SIL silver stocks ETF chart. 

15.            After flat lining for a month in late November, the stokeillator has crossed to what appears to be something more solid, and it occurs at a key time of the year, just in time for institutional year-end decision making.

16.            April gold futures took out there June lows a week ago, but March silver futures did not.  I’ve talked heavily about the possibility of silver dramatically outperforming gold in 2014, and gold & silver stocks outperforming bullion.

17.            Take another look at the GDXJ and SIL charts.  GDXJ made a new low in November, but SIL made a double bottom.

18.            When silver leads, it shows overall strength in the metals market.

19.            SIL has also taken out the 3rd of 3 fan lines, which is a positive event.

20.            While things look positive for junior metals stocks in 2014 (for uranium, oil, and natgas stocks too), I wouldn’t get overly excited one way or the other. 

21.            XME was $90 in 2008.  It’s less than half that price now.  The growth of the net worth of the Chindian middle class has barely started.

22.            Just stay focused on being sure you have accumulated something into these low price areas, rather than predicting higher prices or predicting lower prices. 

23.            If there is another leg down before a significant rally, you need to be in an emotional state that allows you to buy that decline.

24.            If it rallies, say, 40{7d2759035a2769ee7a6afa7c646e6642b67314b0cd0e17ac0c6ae4f965ff87d9} higher, you can’t wade in to buy that rally high, while reading propaganda leaflets dropped into the gold community by the banksters, about ever-higher prices.


Report Card Day!  Please click here now.  What is that?  Answer:  You are looking at the long term monthly chart 10,9 and 15,9 TRIX indicators for XME.  The 10,9 is flashing a crossover buy signal, and the 15,9 looks set to follow.  That’s telling you that the rise of commodity demand, and hence the end of deflation in the West AND growth of the Chindian middle class are likely to become key themes in 2014.  The rise of gold stocks, and the very big rise of junior gold stocks, is what tends to follow that theme.





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