originally published Saturday, December 09, 2023

All Misc Articles

PM sector investors have just been royally played – first they are encouraged to pile in on gold’s breakout to new highs, which occurred when it was already very overbought, and now they are being pressured into barfing their holdings before the sector turns around and then goes on to break out for real.

Here’s how powerful forces set the trap – and this, incidentally, is why in this age of instant communications it takes them 3 days to report the latest COT data after they are in possession of it – during the week before gold’s dramatic but short-lived breakout last weekend, and after the COT data cut off point at Tuesday’s close, they piled on massive short positions, especially in silver. Then, after allowing gold to break out briefly overnight Sunday - Monday, they tank the gold price in very thin trading, instantly destroying the bullish sentiment so that would be investors pull their bids and the price plummets. They did the same with silver.

Now we come to the 2nd part of their game to wrong-foot the majority of investors in the sector and fleece them not just once but twice – they force prices low enough so that the pain becomes unbearable and longs barf their holdings, which Big Money then happily scoops up at knockdown prices before the sector turns on a dime and goes roaring back up again. This is my take on it and I may be wrong. I believe that those who engineered these moves will cover their shorts with huge profits going into this week and reverse to long and we will see prices stabilize before they recover.

We were not caught out by all this because we were buying large and mid-cap golds well before gold’s failed breakout and then sat and watched, and started buying some additional stocks we wanted anyway last week as they dropped back to better prices. Our plan now is to use the current reaction to move in and make additional purchases of the best stocks. The article GOLD SILVER and GDX outlook after turnaround yesterday posted on site last Tuesday 5th gave the downside target areas for gold and silver for this correction and gold has now fallen into its target area, with silver dropping a bit beyond where we expected, which looks like a deliberate attempt to flush out those of little faith.

But here’s the thing – although gold made a failed breakout attempt, the breakouts by large and mid-cap gold stocks have not failed - on the contrary, what we have seen so far is a normal post breakout reaction back to the support at the upper boundary of the base patterns that they broke out of, which means that this is a great place to buy them.

Here’s an example, Agnico Eagle Mines. Does this look like a failed breakout to you? – it doesn’t to me. Just look at it – persistent heavy volume on the clear breakout from a Head-and-Shoulders bottom late last month causing its Accumulation line to soar, followed by a normal reaction back to support at the upper boundary of the base pattern. So while the MSM are trumpeting the failed breakout of “the barbarous relic” what I see here is a near-perfect buy spot for this stock, and many others. It could drop back a little more in coming days perhaps dipping into the top of the base pattern which will make it even more of a buy.

Want another example? – try this for size. After its Accumulation line trended higher for months, mid-cap gold Minera Alamos’ stock staged a spectacular breakout from a Double Bottom late last month on strong volume. It too has reacted back to the perfect buying area close to the top of its base pattern. There are many more examples, especially among the large and mid-caps, but you get the idea.

So don’t let the MSM (mainstream financial media) con you into turning over your holdings to Big Money here right before the sector turns around and goes marching higher again because next time gold tries to break above the key $2100 level it’s likely to succeed and usher in the major bullmarket that we continue to expect. They fooled a lot of people with that false breakout, even “old hands” like Adam Hamilton who must be cringing after posting Gold-Record Momentum which appears to have been written at the false breakout high. Overall though, Hamilton should be proved right in due course – he usually is - after the sector has recovered from this nasty Big Money contrived hiccup which is viewed as providing a last golden opportunity to buy the sector and add to positions, especially in the big gold stocks which are at a “dream” entry point on post breakout reactions.

So get to it.

Footnote – Minera Alamos will be the subject of its own update on the site shortly.

Posted at 12.50 pm EST on 9th December 23.

The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stockmarket analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.