Wednesday, December 23, 2009
Bullish Scenario Prediction
Now that I am fully invested in Gold stocks in my trading accounts, I am biased as all hell. You have been forewarned. I believe we are starting a "big one" here. I am talking about the start of a massive leg higher in Gold stocks and Gold. I believe Gold stocks will outperform Gold over the next several months.
In a typical move, the senior blue chip Gold stocks will lead the move, then the mid-caps and small cap stocks will follow. Every stock is different, but watching the senior blue chip stocks like Newmont, Barrick and Goldcorp is a good idea for Gold stock bulls whether or not you think these firms are good investments.
My take is that Newmont and Barrick, in particular, have already telegraphed their intentions for the intermediate term. First, here's a 15 month daily chart of Newmont Mining (ticker: NEM) thru today's close:
Barrick (ticker: ABX) is showing a similar pattern using the same type of 15 month daily candlestick chart thru today's close:
A similar appearance is present on the S&P TSX Global Gold Index, which is expected because this index is weighted toward larger cap firms like Newmont, Barrick and Goldcorp:
Template for what comes next? I think it's the late 2001 to spring 2002 run. Here's a chart of the $HUI Gold Bugs Mining Index around that time:
I think we're in for a massive bull run here in Gold stocks. And I think the charts are even more bullish for the senior Gold stock indices now than they were before the 2001-2002 run. Here's a 15 month chart of the GDX ETF to show you what I mean:
No flat correction this time. There is too much buying interest to allow a full correction. I think GDX is going to 90 at a minimum before the spring is over and I expect the psychologically important 100 number to come into play for this popular Gold stock ETF. I think Gold is going to a minimum of $1400/oz. during this time and $1500-$1750 is quite possible. If the next bull leg higher in Gold stocks has started as I am anticipating, I don't think there will be much time for rest along the way until we get to the end of January.
I am irrationally exuberant on Gold stocks and Gold right now. I am wildly bullish. I smell new all-time highs in Gold and Gold stocks and new secular lows for the Dow to Gold ratio dead ahead. I think this next move is going to get the public interested and start to prime this secular bull market for the mania stage, which HAS NOT STARTED YET.