A current fascination is the head and shoulders pattern in gold which is far from complete. One can be assured, that since everyone has noted this pattern, a potential positive resolution is still some distance away.
Cheerleader predictions about moon shots or turnarounds without supporting evidence should be regarded as mere speculation. Hoping, wishing and praying are not viable investment options.
Based on fundamentals we are all familiar with, the bull market in gold and silver is not over. If it were over, someone, somewhere, somehow reinvented the economic wheel of true value and I missed the memo. However, current technical results do not presently match the fundamental basis.
On a more immediate level, we need definitive proof the bull market continues. No positive trend change will occur without the daily time frame turning first. In that regard and as a first step...
While we wait for the bull market to continue, there is one area of undervaluation and low risk that requires immediate investigation. This can be clearly visualized in the XAU/Gold ratio, enterprise value or net asset valuation metrics.
In general, many include gold and silver producers as well as juniors that have…
At the beginning of the current bull market in 2000, gold and silver stocks were clearly undervalued. From late 2008, another undervalued and profitable event also occurred.
Today, we have a similar situation, conditions and pricing where very undervalued gold and silver stocks with significant defined "vaults of value" are largely ignored and forgotten. I expect that, beginning within the next few weeks up to 3 years, these good values will again be recognized and begin their rise from the deep to significant price levels.
The purpose of the Bonanza Project is to locate these important "vaults of values" and take advantage of the low valuations. The process is both an art and science. It is not some off the wall pipe dream or pie in the sky idea but a program based on mathematical undervaluation, a historical precedent and a reasonable chance for success. The concept is based purely on fundamental values, a low-risk, high-reward basis and a longer term speculative play, using excess cash only.
In addition to meeting undervaluation criteria, project math should include a preeminent focus and goal to obtain a stock price that subsequently provides at least a 100% gain over time. That should not be that difficult given the current low valuations.
When the 100% gain occurs, 50% is then sold for a complete return of initial risk capital and the rest rides for free. At that point, further monitoring of that stock is minimal while waiting for the much larger ultimate values envisioned by the stock's fundamental value.
Hope must be based on solid fundamentals and valuation history together with price performance, not on hype, speculation or fantasy.
Based on fundamentals we are all familiar with, the bull market in gold and silver is not over. However, there is a significant undervaluation in gold and silver stocks that provides an important low risk opportunity requiring immediate and further investigation for those with vision. Clearly, it's time to get involved.
|30 April 2012
Contact: Trader Garrett
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