Stealth Wealth

No sooner had I posted preliminary findings from studying the chart of Durban Deep than the sod obliged me by dropping 6% while the HUI climbed 2! Such is life.

Mind you, when I posted a promising projection for DROOY I was not thinking in terms of 48 hours. However, I was thinking in terms of 48 days or so….

Durban Deep is sometimes referred to with a mixture of affection and frustration as 'DROOPY' by wags on the Gold Eagle forum due to its recent lackluster form in the wake of a string PM market.

DROOY is a South African mine with a vast gold reserve that is, as the name suggests, deep underground. As such it costs a lot per oz. to mine. This means that if costs rise (higher Rand pushing up wages, for instance) or the 'POG' (price of gold) falls, DROOY quickly becomes uneconomic. However if the POG rises above production costs, DROOY suddenly and explosively becomes profitable. DROOY is highly geared to the POG. On Friday an attempt by gold to break out of present resistance at 390-ish failed, and many DROOY holders liquidated on fear of a pull-back in POG even as the dollar's vulnerability looks set to push the Rand even higher. However, next week the TA people will have seen the following charts. Some GE forum posters have already twigged the formation I am about to develop…

Diamonds form around major turns in markets. All the SMs are showing diamond formations right now. The difference here is that the price action has turned up, not down. Before I decided on the diamond's shape I tested both the ascending and descending sides by seeing how many echoes of these angles of inclination I could find in the chart. I have drawn the most significant parallel lines in - dark olive descending and dark red ascending. I have also drawn in a diagonal down the diamond, plus some echoes of this line too.

More and more I am discerning symmetry elements in the charts I study, probably because there has been a paradigm shift in the markets around 2000+. Secular bears have become secular bulls and vice versa. What goes up must come down, and often with a similar velocity.

The rightmost tip of the DROOY diamond is also the point of a symmetrical triangle. In a bull market I would expect this to resolve to the upside. (Friday's action (Oct 24th) was merely fishing for the bottom of this triangle.) Further corroborating evidence for an imminent upside breakout is given by the chart below.

Previously I have postulated that the classic Head & Shoulders formation, and it's inverse, is really a sinusoidal 'turning a corner', if you know what I mean. In any case, it is clear to anyone with even a modicum of TA knowledge that this is a very bullish formation. Before 2004 the Roodeport Rocket should have taken off, leaving the Symmetrical Triangle of the second chart (RHS of diamond) in the dust! Previously, in The Gold Detective I suggested that Gold would be well over $400 by Christmas. If it happens, that could be just the fuel to get this stock off the ground. You probably want to know what my price objective for DROOY is now. My answer is short and sweet -

MERRY CHRISTMAS FROM RODIN

Contrarian Christmas Presents

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Contrarian Thoughts

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Buy and/or Store Silver & Gold Bullion in the UK

www.contrarianthinker.com/two_services_for_the_serious_phy.htm

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