You guys are in luck... I finally got a reply from newsletter guy. He said yes.


This guy saved my butt last year from disaster in gold.

Thoughts on Gold

I mentioned in a letter last week that gold would be a gold short above $1600. Certainly the timing of the

Italian election and gridlock in Italy gave an excuse for traders to bid up gold to current levels. But does

POG have value like so many gold bugs are saying and are now pounding the table with both fists to buy?

I do not think so. I have argued why I think POG is going to drop and no matter what comes out of the FED

or what spin that some Bugs want to put on the FED minutes, what most are missing is that the FED will

reign in QE if the American economy keeps up the recovery through 2013. Another big key that ties

straight into QE is the US debt and out of control spending habits. In my opinion… there is still time to

come back from the edge of the cliff and apply fiscal restraint. The case for gold to continue to $3500 is

FAR from a sure bet like some would have you think.

So technically where do we go from here? Where is my short target? Right now ANYWHERE above $1600

is a good short target for a long to medium term trade (3 months to 1 year). But if you want bragging rights

to say you got the best out of the bounce then I have two targets. $1625 is my first short target which is

where stiff horizontal resistance is while $1650’ish is my second short target. I use the suffix ‘ish’ because

this is a moving target along the downtrend line. Depending on how fast or slow POG moves toward the

downtrend line… this target is and will always be moving lower. By the end of March this line will be under

$1640. So if you take the two points and average them out… I would be looking to short within this range.

Two ways to play the gold short

#1… You can place a bet before confirmation and guess price target and set stops on the other side of the

downtrend line which you continue to ratchet own as the trendline drops.

OR…

#2… You can wait until the two resistance areas fail and then short the momentum downward after you

have confirmation.

Because a lot of my subscribers are gold bugs and own physical gold silver. The EASIEST WAY TO

PROTECT YOUR CAPITAL IS TO SIMPLY ‘BUY INSURANCE’ against the your physical assets. The

easiest way to do that is to buy PUTS on the GLD. Depending on your level of comfort, how much you

want to gamble the strike price is at your discretion. Generally I go for options with a high open interest that

are near or slightly out of the money. I pick my expiry date because I feel that is the time when POG will be

at its weakest and hopefully corresponding low price which maximizes the potential gain on your PUT. It

also forces you to sell your PUT by JUNE. You could also layer them out to protect your risk from the price

not happening the way you expect within the time frame… but you are not maximizing the your trade. If you

believe your analysis is correct, then pick a trade and stick with it all they way out.

Insure You Gold…

The idea is to ‘insure’ your physical holdings against material ‘paper’ loss. If gold goes down to $1000… I

can guarantee you will be able to BUY DOUBLE the gold you own right now by insuring your physical

holdings this way. If gold finally breaks the down trend… you stop buying insurance.

SIMPLE.

But at this point in time, it is prudent to own PUTS on the GLD. If you do not own a lot of physical precious

metals, this trade falls in more of the speculative category and not an insurance type hedge.

ANOTHER WEDGE PATTERN ON THE HORIZON

If I were to hazard a guess on the price action of POG over the next few weeks I would expect POG to test

$1600 support and then try and move up towards $1640 to test the downtrend line. Expect a little bit of

strength and price indecision with a slightly bullish bias for the next 1 to 3 weeks. Gold is getting hemmed

into another tight trading range and is working ANOTHER WEDGE PATTERN. This pattern should

ultimately knock gold lower below $1550 and getting it moving towards $1400 area where I expect the

downtrend line and POG to meet in June for a summer rally.

The $0.60 Penny Stock Rule

I see a lot of patterns in the market to identify trades. Some of these patterns I NEVER hear anyone talking

about.

The one rule that I see appearing over and over again that no one talks about is the $0.60 penny stock

rule. It is very simple. $0.60 to $0.70 for any stock is a MASSIVE WALL of resistance. I don’t know why. I

don’t make the rules. I just point them out. So how does this rule work?

This is how I think it works. Psychologically an investor will go way out on the risk curve for leverage.

Why? Simply because most will buy based on the fact that small movements produce big gains and at

$0.60 the leverage that a ‘penny stock’ offers is lost.

So why is this important? Simple.

For a penny stock to move up and approach $1… psychologically the investment must be seen as more

legitimate by the investor and a ‘sure bet’ vs. a riskier stock bought sub $0.30. This psychological tug of

war between risk and reward plays out huge in this area.

So how do you trade it or know when confirmation happens?

Well nothing is certain in life... but generally $0.60 to $0.70 acts as any normal support resistance band.

$0.60 is an ultimate wall for many stocks to get past and if it does generally you like to see price action

move quickly to $0.70. Those stocks usually have very strong momentum and the breakout can happen all

within a few hours. When ARU first announced results the company pushed past this mark easily and you

knew to jump in. (Well at the time I didn’t know, but after watching stock after stock perform the same way)

you get a good idea. ARU was the first ticker to really jump on my screen like that but not the last. NOT-V

did a textbook run as well and broke through another key penny land support resistance channel at $0.30

to $0.40. HAT-V did the SAME thing when they announced acquiring Roughrider initially and ran all the

way to $1.50 within weeks. As you probably know the history with all three stocks if you at all have

followed my blogs over the years…

ALL WENT ON EPIC multi-dollar runs.

Usually the companies will make their way to $1 at least for a trade. Sometimes the company doesn’t have

that firepower and huge volume days and the signal isn’t as easy. What tends to happen is it hits a second

resistance at $0.70 and tries to forma base at $0.60 using it as support and you have a gradual melt-up

after the base is formed and moves past $0.70. If the SP cannot hold $0.60 support, the SP will fall back

significantly for a better entry point. In both cases the stocks are moving and following a trendline which

you can use in conjunction with horizontal support to pick the best entry points. Examples of this are OPL-

V back in December failing to maintain $0.60 and now KLH-V failing to maintain $0.60. OPL-V is trying to

maintain $0.60 and this mark may or may not hold… but even if it doesn’t… the base it’s built under $0.60

is looking like a good entry point. The time of year is not the best so you have to be cautious opening up

any bullish trades in March.

Another point to remember is I only use these bands as a BUY signal for momentum. They do act as

support for beaten up stocks like WRN and LIM but are not as accurate at predicting continuation in price

action. You do not want to own any stock that breaks support at $1 as they move well below that mark.

One final point… This $0.60 cent mark can be used as a sell signal too. IF you own a penny stock from

$0.20 or $0.30… a stock that does not even break $0.60 moving up that significantly or trade a couple of

days above… WILL MATERIALLY FALL BACK OFF $0.60.

I have seen this type of price action time and time again. If you own something from $0.20 and hit hits

$0.60 and stalls... don't be a fool. Sell it.

From now on… just call me 60 cent.

I want to leave you with this chart…



YES … AT $0.03 even with Ethiopia and Eritrea going at it and the worst results in the world… This is

what you call EXTREME VALUE.

Oh and they did actually have some really nice holes the last go round. So they no longer have the worst

results in the world. I knew this property wasn’t a dud.

I WOULD PUT THIS ON TOP 10 SPEC play for 2013.