morris4Submited by Morris Hubbartt:

The dollar’s huge head and shoulders top formation is maturing.  The target is 72. It will be activated when the dollar closes under 78, for two consecutive days.  A breakdown under 78 should be accompanied by gold breaking above $1800.

Over time, markets oscillate from undervaluation to overvaluation. The chart below demonstrates how gold stocks go from one extreme to the other, forming a channel that can be bought and sold.
In terms of undervaluation, gold stocks are now stretched to the point of challenging the 2008 panic low! 

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US Dollar Collapse Chart

 

morris1

 

  • The dollar’s huge head and shoulders top formation is maturing.  The target is 72. It will be activated when the dollar closes under 78, for two consecutive days.  A breakdown under 78 should be accompanied by gold breaking above $1800.

 

  • The long term outlook for the dollar is not good.  Printing a trillion dollars a year, via QE, is the main catalyst causing the creation of this huge top pattern.

 

Dow Versus Gold Chart

 

morris2

 

  • I have projected that early February would likely see the end of the move up in the Dow, and gold would resume its leadership of all markets then.   My last buy signal for the Dow came at about 12,400.

 

  • The market has risen about 10% since then, and I have sold most long positions.  I am lightly shorting the market now.  My Dow 14,000 target is now just 2% above the current price.

 

Gold Bollinger Bands Chart

morris3

 

  • The gold market trend is very close to turning up.  Note the highlighted boxes on the chart. Bollinger bands are not what generates my trade signals, but are tools I use to confirm them.   The bands are painting a very constructive picture for gold right now.

 

Gold Patience Chart

 

morris4

 

  • As you can see, I have not put the final column on this chart in green color, because the smart money commercials haven’t bought heavily in this area, yet.  Their buying is needed to start a trending move higher.  It’s so close that I can almost “taste it”.  This is the point in the bull cycle where investor patience is critical.

 

  • Sentiment is constructive, due to an overly-negative public attitude towards gold.  Also, Hulbert’s gold timer surveys continue to show great negativity by the timers who are historically poor performers. This is positive for gold prices.

 

  • Gold is the premier asset to hold in a debt crisis, and that is precisely why my largest personal holding is gold, followed by silver.  My recommendation is that physical metal should comprise 70% of all resource-oriented portfolios, and 30% of your entire net worth.  I trade the other 30% of my portfolio with a proprietary timing system.

 

Trading Rules

 

  •  I want to talk today about swing trading.  Traders should keep most of their assets in physical gold bullion, rather than going “all-in” with their trades.  That might seem “boring”, but it’s a necessary part of the trading game.  If you use leverage, you must use tight stop losses, but that is not a guarantee that you’ll outperform unleveraged traders.  The odds are high that leveraged traders will fail, with or without stop losses.  Leveraged swing trading is really gambling, but most participants won’t admit it.

 

  •  Even when trading without leverage, the amount of account capital you allocate to every trade must be strictly controlled.  Trading rules are not made to be broken.  I allocate 1-3% of account capital to each signal generated by my timing system, not 30% or 300%!  If you allocate huge gobs of capital to my system trades, in the hopes of getting rich quick, you’re more likely to get very poor, very quickly.  Traders must understand that Rome isn’t built in a day, but it can be burned down in a day!

 

  •  I’m a little concerned that many investors are taking huge gambles in the gold market, particularly on the short side, trying to make back junior gold stock losses.  This gambling strategy is like jumping from the fry pan into the fire.  In trading, money management is much more important than calling the market.

 

Gold Stocks (GDX) Channel Chart

morris5

 

 

  • Over time, markets oscillate from undervaluation to overvaluation. The chart below demonstrates how gold stocks go from one extreme to the other, forming a channel that can be bought and sold.

 

  • In terms of undervaluation, gold stocks are now stretched to the point of challenging the 2008 panic low!  

 

GDX Bull Wedge Chart

morris6

 

 

  • Gold stock investors are bloodied, but not beaten.  Each recent technically bullish event has been crushed by the bears, but battles must be lost to win a war.  Now a bullish wedge pattern has appeared on the GDX chart.

 

  • Will the bears crush this pattern, too?  MACD and the slow Stokes are predicting an upside breakout.  Regardless, patience is clearly required, to succeed as a gold stock investor!

 

GDXJ Channel Fight Chart 

 

morris7

 

  • Junior gold stock money flow indicators continue to demonstrate underlying buying by strong hands is in play.

 

  • I call this the channel fight chart, because a small bearish channel is converging with a large bullish one.  The bears have been winning most of the junior gold stock fights lately, but the bigger channel usually wins these confrontations.

 

Silver Bollinger Bands Chart

morris8

 

 

  • The Bollinger bands are suggesting that yesterday’s frightening sell-off is a “fake out” move.  Further gains are indicated, before a more substantial correction occurs.  In the short term I’m looking for this pullback to end in the vicinity of the dotted line between the two main Bollinger bands.  From there, silver should make a beeline for the resistance area at $33.  Happy trading!

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  1. SD posters…the intelligent ones…you know who you are…I beg your indulgence this one time.  I am THOROUGHLY FED UP with the line of BS being shoved at us be the MSM (mainstream media).  Case in point, the Sandy Hook debacle.  It WAS  a debacle.  That’s the proper word.  As far as ANYONE getting SHOT–with ANY kind of WEAPON–leaves much to be debated.  If you believe your gummerment is CAPABLE of such deceit, deception, self-indulgence, etc, then PLEASE DO THIS: Go to http://www.beforeitsnews.com and see for yourself about Sandy Hook, and the rest of what is happening behind the scenes.  I’d be interested in your feedback on the subject….God bless you and yours, keep stacking, and prepping.

    • I am not concerned about conspiracy theory’s concerning Sandy Hook.  The fact of the matter is that an incident happened that they are using to spark a gun grab.  It won’t be the last incident.  The only thing we can do as common citizens is get right with God, and do the best you can to prepp.  And, try to live the best way we can.  All the rest is smoke and mirrors and if we are not careful it will make us insane.  I am working very hard to maintain my present “acceptance” state of mind.  I accept that our nation is in a terminal condition and we must make the best of bad hand.  Period.

    • My guess is that he was doing yet another pump and dump and is now happily ensconced in Bora Bora with his 22 year old mistress and a s***load of money.
       

    • This isn’t to defend Alex Jones but what is truth?  Metals manipulation was a conspiracy theory a few years ago.  Now, not so much.  Why limit yourself to information.  Good or bad.  It’s up to the viewer to decide but what is harmful is not having the discussion or dialog.  You personally have the right to pick and choose what information you want to listen or read about. 

    • Yeah, people used to piss and moan about old Joe McCarthy and his commie hunts back in the 1950s.  Made fun of old Joe… hated him too.  Once the USSR collapsed and info began to flow out about what the USSR and its KGB really were doing, Old Joe wasn’t even right by half.  Hard to say if the libs that hated McCarthy did so because he was a fierce anti-communist OR because he was RIGHT!  lol
       

  2. The big money is fleeing bonds with those bubbles ready to explode. The sheeple are flocking to the equities like 2000 and 2007. Equities will collapse when the truth of earnings and paper valuations are exposed. Big money 1, Sheeples 0.
    Where to invest? MMAs; Manipulated Monetary Arbitrations, are paper with a sign on its back saying ‘screw me’. Hypothecation central if you ask me.
    Where will the smart money go once the dumb money is racing to buy the bubbles? It’s going to precious metals, commodities and hard assets like land, even to POS McMansions in California. We have two years before the jig is up.

    • I follow the simple rule of closed systems when confronted with dishonest systems. This might seem obvious to some, but when the majority of people are into something then it is doomed to fail. Based on the fact that given so much resources a 50/50 in/out is a push and when it is overly owned the lesser part cannot support the larger part. This works with most things especially markets, government, education and welfare. Like gambling, not everyone can win.

      To qualify this on another level, if capitalism works as it should, then everyone can win. Money earned from real work and production is invested into a building. The money is borrowed, the banks make money. The money buys materials, the suppliers (on all levels) win. The money buys builders, people with a job wins. The building produces goods, labor is hired to run it, labor and owners make money. The people with those jobs buy goods… on and on. The initial money multiplies many times over and is created in an honest way. This is why capitalism works and the other systems fail. Honesty and integrity are the key words in true capitalism.

      Another part of my philosophy is if something is being explained and the person explaining it does it in such a way that it appears complex, then that person usually has little understanding of it. All things can be explained in very simple terms when those things are fully understood. The use of ‘big’ words usually indicates a lack of understanding.

      Also, an answer is already contained in the question. The problem is knowing what the right question is, people usually ask the wrong question.

  3. @Crissy, so why doesn’t capitalism work as it should?
     
    I remember one day in college Economics 101, when the professor gave a lecture on Reaganomics.  After the day’s lecture was over, I waited until the auditorium-sized classoom of 200 people completely cleared out, and then walked down to the podium where the professor was puting away his papers.
     
    “So, why didn’t Reaganomics work, when the theory sounded so promising?” I asked him.
    “If I really understood economics, do you think that I would be working HERE?” was his reply.
     
    And THAT was the very beginning of my understanding of economics!

    • ” so why doesn’t capitalism work as it should?”
      I already answered that in the explanation. It does work, it requires honesty and integrity from all parties involved. It especially needs a system that punishes wrong behavior instead of rewards it. The elements needed to have true capitalism are missing, therefore we don’t have capitalism.

      College professors are the worst ones to ask if you want a real answer. They live in a fantasy land and have no clue. Ask an honest business person that has actually built something and made a profit if you can find one that is left.

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