"Gold Stocks vs Bullion: Battle Time!"

http://www.321gold.com/editorials/thomson_s/thomson_s_101210.html

Stewart Thomson

email:

stewart@gracelandupdates.com
Oct 12, 2010

“…now the big money is in gold stocks…. You are missing out on gold, yes. Missing out because you are focusing on bullion instead of gold stocks with your buy orders. The reward to risk ratio is orders of magnitude higher on gold stock now than it is for bullion… If you “have” to chase price, do it with the item that has yet to move. Do it with the item that stands to go to Pluto. That item is: Gold Stocks. There is a plethora of underpriced gold stocks sitting on the table…

Let’s look at the Gold Stocks, because that is where your gold market buy money should be going, and going there now. Why? Because the price of bullion is now at a price that is going to send gold stocks to Pluto, that’s why. Here’s the bottom line: Trading gold bullion from $1350 to $1500 in a price chase is an 11% move for the peanut parade. Many gold stocks could double, just on that move. I’m here to play large, not to play tiddlywinks. It’s been a sweet ride on the gold bullion Clydesdale work horse. Now it’s time for the Gold Stocks Indy 500 race car to take centre stage. Here’s the actions you need to take to get prepared right now. Click here now: GDX Daily Chart. Look carefully at the blue uptrend line I’ve drawn on this chart. Price volatility has been microscopic. So far, the GDX has acted like the gold bullion Clydesdale. That’s about to change. Money has been made using my pyramid generator to buy and sell within the ATR (ave true range) of the GDX, as it has risen and fallen across that blue up trend line, which is a rough line of the mean average of the gold price. The power for the current GDX rise on the daily chart, technically, comes from the consolidation pattern established between May and August, between approx. GDX $45 and GDX $54.

Don’t forget that price did not actually break out upside from that consolidation until mid September, as it rose to the $55 area. Price has only risen to $58, while the target is at least $63, just from that tiny consolidation on the daily chart. Look at the RSI. It is not overbought. It is at 60, and has yet to even approach a severely overbought condition….

From both a risk and a reward perspective (except for the risk of going off the board; on that front bullion is the hands down winner) gold stocks are overwhelmingly the better play, right here, right now, and that’s just looking at the peanut plays that are projected on the daily charts.

Want to play in the real big leagues? If you want to book a financial ride to Pluto, then you need to take a hard look at the weekly chart for the GDX. Here it is! GDX Weekly Chart..... gold stocks are not overbought on either the daily or weekly charts. Gold stocks, as a group, are screaming buys… The minimum target for GDX, basis the super monster head and shoulders bull continuation pattern on the weekly chart, is GDX 100. That’s the minimum target, not the maximum target. Numbers like 200 for GDX and 300 on the GDXJ are not outside the realm of rational possibility, and the question is:

Are You Prepared?