Jeb Handwerger: Is a Surprise Rally Forming in Gold, Silver, and the Miners? – The market does whatever it can to confuse, misdirect and obfuscate the investor.  It is entirely possible that a grand strategy underlies Bernanke’s game plan.  With recent markets creating more skies of gray than any Russian play can guarantee, there are plenty of storm clouds hovering over head to throw the investor off his track.  This is exactly when the markets may be forming a base for a surprising upward market move.  

The Federal Reserve will accelerate its counter attack on deflation by continuing to introduce liquidity into the market place.  It will be no surprise to observe him follow through his oft stated promises to use whatever monetary arrows he carries in his formidable quiver.  Already QE3 is being discussed as unemployment levels stay dangerously high.

He is a Princeton PhD whose doctoral theses is based on mitigating deflationary depressions such as the one that occurred in the 1930’s.  It was a period which resembles the traumas through which capitalism is now progressing. 

Not withstanding the many negatives that confront global investors such as the Eurozone convulsions, rising U.S. unemployment and swollen bank overhangs—These may be the obfuscatory factors to throw panic into the psyches of speculators. Cash abounds in the treasuries of American corporations such as Apple, Google and other industrial coffers.  If we are indeed facing a rally it may be comparable to a change of speed thrown by a pitcher to confuse the batter who was used to 98mph fastballs. 

Gold Stock Trades focuses on sectors that may in the future be buffeted by deceptive curveballs.  Using this metaphor the batter adjusts his swings to keep his eagle’s eye on the ball and a firm grip on the bat. 

We reiterate the coming rally will be substantial especially in precious metals, uranium and rare earths.  Watch silver.

Silver is just beginning to breakout of a consolidation and is moving above its 50 day moving average.  Gold Stock Trades believes it held long term trend support.

Gold (GLD) is forming a bullish consolidation for eight weeks after hitting its early September high.  Look at the rising trend and the pattern of higher lows and increasing momentum.  This indicates a possible breakout forming.  More anon.

At present the Fed has more moves at its disposal than existed in those dark days of The Great Depression.  Monetization of debt will be continued as a “Bernakian Tactic”. 

Do not be be hasty in throwing in the towel concerning our oversold and undervalued rare earth and uranium sectors.  It may be exactly the wrong time to move into the U.S. Dollar and Long Term Treasuries, which is precisely what the herd is doing. 

Recently the Swiss National Bank moved to put a floor on the Euro to prevent the safe haven Franc from continuing to appreciate.  So far this action appears not to be working as well as expected. Cheap currencies will increasingly be the order of the day, not only in Europe, Brazil and Japan, but in the American monetary system.  This may well have been a tactic designed to push up the U.S. dollar in advance of Bernanke’s QE3 pronouncements as investors panicked out of undervalued mining equities and moved into the grossly overbought greenback and long term treasury market.

What does all this mean for GST subscribers?  Sooner or later attention will have to be paid to real wealth in the ground hard assets.  The masses may leap from Yen to Franc to Greenback, eventually monies will be attracted to real mineral wealth in the form of gold, silver, rare earths and uranium. 

The road upward particularly in the rare earths and nuclear sectors may try investors patience as they complete bases.  Technically the longer the horizontal base, the more profitable the rise from that foundation. 

A valuable characteristic of point and figure charting is the base count, which has invariably indicated the broader the width of the base, the more elevated the potential objective. 

In addition, there is a large short interest position in many of the GST chosen rare earth and nuclear situations.  The short sellers will in time be “hoist by their own petard”.  They will be compelled to cover and the consequent run should be dramatic on the upside. 

Consider the ever increasing growth of the cell phone industry worldwide.  Smart phones are no longer luxury items in today’s world…at least not in the minds of teenagers who live on Itunes. 

Rare earths are going to be in increasing demand by not only the new high tech devices but a host of other nascent industries such as hybrid autos and military applications.  Rare earths and nuclear energy represent not only the waves of the future, but the essentials of the present. 

The world is not coming to an end despite the sea of red that we are currently progressing through.   The extreme pessimism as represented by current market developments and bearish, myopic analysis from banks presage a bottoming formation which is requisite for potential turning points. 

Gold Stock Trades will be watching the events unfolding as Bernanke reaches into his quiver to produce arrows of stimulation in whatever guises necessary.   Remember the worst thing were the better they got.  Stay tuned to my free newsletter with up to the minute market analysis, interviews with leading executives in the mining industry and sector updates in precious metals, rare earths and uranium by clicking here.

Jeb Handwerger




I am offering ideas for your consideration and education. I am not offering financial advice.  I am not a financial or investment advisor.
I am a fellow investor and trader sharing his thoughts for educational and informational purposes only. 

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