first majestic silver

Gold Stocks A Green Light To Buy

President of Graceland Investment Management
May 4, 2022

As gold surged into my sell zone at $2000/ounce, I laid out the $1835-$1775 area as my preferred “rebuy” zone for investors, with a focus on the miners.

As gold reacted, I urged eager gold bugs to focus on profiting from inflation and rate hikes directly, by shorting the bond market.

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TBF bear bonds ETF

Tomorrow’s rate announcement from the Fed could mark a short-term peak in the rally. Trading profits can be booked, but any pullback is a fresh buying opportunity for investors who are not yet involved… in what could become the biggest bond market meltdown in the history of America.

While the Fed and rate hikes make the headlines this week, it’s physical demand for gold that mostly determines the price trend.

On that note...

Chinese lockdowns and a failing stock market there have gold buyers in a lackluster mood.

India?

April demand in India was almost non-existent, and it shows in the price action.

The good news is that the medium-term looks much better from here.Jewelers are forecasting 10%+ growth for fiscal 2023.

That is in line with my ongoing forecast of 8% a year for the next several decades.  

Some miners are trading where they were when gold was $500-$600/oz and that’s obviously disappointing. The good news:

My recommended strategy for playing the miners is to hold some core positions but to focus on trading them by buying at my gold bullion buy zones, with a plan to sell them quickly with 20% to 30% gains.

Average investors can outperform the best money managers in the world with this time-tested strategy.   

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GDX daily chart

There is support on the chart at $34.48 and a significant “price sale” is certainly in play.

Having said that...

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important daily gold chart. 

As price has descended towards my massive buy zone at $1835-$1775, the 14,7,7 Stochastics oscillator is confirming the zone as one for solid investor buy-side action.

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SILJ junior silver stocks ETF.

No analyst could have forecast all the “zigs and zags” on this chart before they occurred, but investors who bought the junior silver miners at my key gold bullion support zones have done incredibly well…

Provided they sold at my sell zones too.

There’s now a right shoulder of a solid inverse H&S pattern in play on the SILJ chart, with the low of the right shoulder occurring as gold nears $1835.

Mining stock sentiment?

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While bullish sentiment is “midships” at about 50, that’s where momentum-oriented breakouts often occur for gold, silver, and the miners.

Also, note the reliability of the Stochastics oscillator (14,7,7 series); gold staged solid rallies from each of the Stochastics buy signals.

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GOAU chart

Note the solid position of the Stochastics oscillator as “Queen Gold” makes her way towards $1835.

I’m a big believer in investing with the brain… and the heart. For some investors, GDX is the way to play the senior miners. For others, it’s GOAU.In the big gold bull era picture, I don’t see one as better than the other. Investors should buy that which is closest to their heart. It could be individual miners. It could be GOAU or GDX, but when it comes to the brain, it’s all about buying as gold approaches $1835, a price where gold bugs can thrive!

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Stewart Thomson is president of Graceland Investment Management (Cayman) Ltd. Stewart was a very good English literature student, which helped him develop a unique way of communicating his investment ideas.  He developed the “PGEN”, which is a unique capital allocation program. It is designed to allow investors of any size to mimic the action of the banks.  Stewart owns GU Trader, which is a unique gold futures/ETF trading service, which closes out all trades by 5pm each day. High net worth individuals around the world follow Stewart on a daily basis.  Website: www.gracelandupdates.com.


A gold nugget can be worth three to four times the value of the gold it contains because they are so rare.
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