Bull Flag Breakout For Gold Stocks
Stewart Thomson | Feb 19, 2019 02:33PM ET
As US markets re-open after the holiday, the world’s “queen of assets” continues her glorious ascent to higher prices. This is the magnificent short term gold chart.
The rise above $1332 ushers in my new short-term target: $1355!
Gold is well on its way to becoming a mainstream asset like stocks and bonds.
The reason for that is the “citizen wealth effect” created by the relentless rise of China and India. These gold-oriented nations are well on their way to becoming the most gargantuan economic empires in the history of the world.
It’s simple mathematics: There are eight Chindians for every American, and about half of the Chindians are under the age of 35.
It’s an unstoppable force that I refer to as, “The Gold Bull Era”.
In the West, gold has been traditionally bought only when major stock, bond, currency, and real estate markets get into trouble.
In contrast, Chindian citizens view gold as the “ultimate asset”, meaning they buy it in both good times and bad.
This view is beginning to gain acceptance amongst Western analysts and money managers and I’m predicting it will continue to do so for many decades.
Gold’s role as ultimate asset was showcased in the September-December period when it rose while US stock markets tumbled.
Most gold bugs were stunned by the incredible price action, and even more stunned as the GDX gold stocks ETF soared too!
Now, gold is rallying while US stock markets rise, and most analysts are again somewhat shocked as their attempted top calls for gold fail repeatedly.
This type of “win-win” price action is unique to gold and I’ll boldly state that it is essentially here to stay!
On this daily chart, gold looks like a freight train that cannot be stopped.
From a big picture technical perspective, this type of daily chart action is expected and normal. This is what I consider to be the greatest weekly chart in the history of markets.
Gold appears to be rallying from the final right shoulder in a multi-shouldered inverse H&S bull continuation pattern. Incredibly, that pattern itself appears to be just the head of a much more gargantuan pattern with a target price of $3000
In this situation, the current “freight train” technical action being showcased by gold on the daily chart is perfectly normal.
This is the key VanEck Vectors Gold Miners (NYSE:GDX) daily chart. A spectacular bull flag breakout occurred on Friday.
In pre-market action this morning, the price is gapping higher.
That’s another look at GDX on a short-term chart.
With the bull flag breakout now in play, stop-loss enthusiasts can now raise their protective profit-locks from $20.10 to $21.75.
This is the silver stocks ETF chart (NYSE:SIL).
A classic staircase chart pattern is developing. Traders can raise protective stop-loss orders from $24 to $26.
I recommend that all investors carry some silver and associated miners in their portfolios and the $26 stop-loss level for SIL-NYSE allows investors to board this precious metals “freight train” with minimal risk and maximum potential reward!
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.
Risks, Disclaimers, Legal
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?
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.