Metals and miners - play it smart and make a bundle.

First off, I think we are trying to put in a multi year bottom for metals and miners.  I have been looking for a major peak in the stock markets and that might take until May to play out (walk away in May because of the negative January Effect that nobody has forgotten even if not mentioned in polite conversation).  So again, the broader markets may require some more time to finish their topping process but in the mean time, metals and miners are CLEARLY nearer a bottom than a top.  Buy low, sell high and all that.  Unless of course you think that gold and silver are barbarous relics and you believe that fake paper money is the new gold.  Just like Bitcon, err Bitcoin was the new gold, right? 

Wake up folks: THERE IS NO SUCH THING AS THE NEW GOLD and there never will be.  There will just be new marketing stories about how gold is dead, blah blah blah and in every case you will find some kind of mania behind it.  People will claim that something is gold-like or a gold standard but these always just turn out to be gold plated con jobs.  ALWAYS.  There is only 1 real gold.  It is the old gold, the elemental gold.  Good old number 79.  Or if you prefer, E175 of the Codex Alimentarius.

JP Morgan did not stutter, he did not hesitate and he did not lie when he said that gold is money and everything else is not.  You can literally take that to the bank.  It's dollar price can fluctuate over time but its buying power will remain about the same within a reasonable swing.  The same amount of gold bought the same amount of goods in Egyptian times as it does today.  That means that what is fluctuating is the value of the dollar, not the value of gold.  The universe does not revolve around the Earth and its green paper.  The Earth revolves around large stars which are the source of gold.  The Earth revolves around gold whether or not it is apparent to most people.  Fake, un-backed paper money comes and goes.  Always has, always will.  It does a Bitcoin flash in the pan but then always evaporates back into the ether from whence it came.  But gold is forever.  It is literally forged only in the explosions of stars that have at least 8 solar masses (8 times the mass of our sun) AKA supernovae.  It is physical and it does not corrode or evaporate and it cannot be devalued by bureaucrats with pens and malintent.

As the dollar gets nearer and nearer its eventual, inescapable, inevitable demise, it gets more and more volatile.  It is very much like the final days of a star.  That volatility plays out as its price against gold.  Gold is not volatile like most people have been taught to believe.  It is the paper that is volatile.  Failure to understand this basic point is complete and utter economic failure.  It means your brain has been overcome by the propaganda of the dollar system.  It is a very dangerous place to be, especially with your long term retirement savings.

But for day to day gambling it cannot be ignored and so back to the charts.  In this Feb 19th post, I correctly warned about resistance in the metals rally using the TRX chart as a proxy for all metals and miners.  That model so far has played out well but it is by no means confirmation.  However, the odds for this model went up considerably today since the TRX chart broke to a lower low coming off of a declining double top that occurred right on the downsloping 2-4 line.

So now, the most likely plays are as follows.  They are given not in order of likelihood but in order of confirm-ability:

1. What I labeled black 4 is really wave 1 up of the new metals bull.  So far we have only seen 1-2-3 of a new bull market.  It is just doing an a-b-c to the prior 4th and it will bounce here at the black line and then break out at the top blue circle.
2. Same scenario as 1 except that it considers the bottom of the triangle to be its prior 4th and so it will go down to the horizontal blue line and then  bounce to a higher high.
3. Wave 4 of an ending diagonal just finished, metals and miners are headed for a lower low that will touch the bottom of the channel before bouncing up and out.
4. Same as 3 except that it goes below the bottom of the channel and likely includes a high volume capitulation throw under.  #4 would be by far the most bullish setup.  Buy low, sell high.  You would at that point just buy a package of these Jr Miners and treat them as non-expiring call options that you bought for pennies on the dollar.  When gold swings up again, these things will skyrocket.  Don't worry about volatility if you buy below the lower green line. You got good value as long as you got some diversification where fraud at 1 company can't Mt. Gox you.  That is now a technical term in my parlance.  To be Mt. Goxed is to have bought into a fraudulent situation or a mania that collapsed on you, resulting in 100% loss.  It's just another way of saying that you got caught in the role of Patsy in the scam.  Hey, it happens!  These scammers are GOOOOOOOD liars!

Regardless of anything else, once that top channel line is broken you have a clear buy signal and then you set your stops just below it.  You cannot lose badly with this strategy!  But you must set those stops and be willing to walk away if you get a false breakout and then a break back down through into the channel.