Monday, December 31, 2012
Claude Resources Inc. (CGR) when are you going to get your *** in gear? Yes, I bought more shares of CGR earlier this morning at 53 cents a pop. It's not that I woke up today planning to buy more. I have more than enough of this stuff already. But I looked at the daily True Strength Index (TSI) (7,4) and saw something rather odd - it was a double trend line break BUY signal.
So I flashed through all my locations to see if there was any news, any change in projected earnings, any company filings, anything whatsoever to raise a yellow flag.
So then I looked at CGR on the weekly chart with the TSI (7,4) and wondered again if I was seeing things. After the open today price was trading at around .525 - .53 and the weekly TSI was showing something like -0.91. Wow, I thought. That is an extreme reading - incredibly extreme considering this is a weekly chart, not a daily!
I tried again to find any reason in the world to not buy more. Nothing turned up. So I started watching the stock and thinking, thinking, thinking. An elephant with a kazillion shares was sitting on the ask at 53 cents - holding a lid on price.
Then, the elephant just kinda disappeared. I've always wondered about these things and have developed a theory. Heaven only knows if it is an absolutely insane theory - maybe someone can let me know.
Anyway, if someone owns a kazillion shares of some small miner and wants to bleed all the blood they can out of the remaining shares that may be out there, what better way to discourage competition from other buyers than sit their fat *** on the ask and tell all interested buyers to take a hike. It's a ploy.....it's a way to intimidate and discourage buyers.
Would you be encouraged to buy when someone sitting with a kazillion more shares than you is posturing to dump their load right then and there? Talk about 'look out below'.
And it could even be a good tactic to scare little sellers into selling their shares before the elephant decides to sit down on everyone and smash the price down another 10%.
Anyway, and as I was saying, the elephant just kinda disappeared. That was my cue to buy, and that I did.
Here is a daily chart of CGR:
And here is a weekly chart of CGR:
My TSI Trading record has been updated.
I see the elephant has now parked at 55.5 cents but has been hit for 100k shares since I last looked. Tisk, tisk, tisk. If my theory is correct that may not have been what the elephant had in mind. Maybe the vultures are circling overhead?
Whatever - it's all a game. But I also think it's just a matter of time before the rules of the game get reversed in my favor.
Happy New Year's everyone!
Friday, December 28, 2012
I have told my 2008 tale of being trampled over by the bull to a person here and there, but with the bull once again making so many investors feel like road kill I suppose this is as good a time as any to write this post and forever offer hope to all who can benefit from my experience.
In short, gold is in a huge bull market and that means that timing mistakes, even colossal timing mistakes like the one I made in the late spring of 2008, will get corrected in the investor's favor. But as I will remind you repeatedly, one has to be patient.
Other than patience, the other *qualifier* to my optimistic promise is that one's investment does not include options, which expire, nor futures contracts which are subject to margin requirements and liquidation, nor thinly traded grey market securities that come and go with the wind, nor mining securities with make-believe balance sheets (no assets, lots of debt and lots of hype).
I'm talking about the financially sound mining companies and ETFs that fall precipitously in price due to the sometimes vicious market conditions that gold's bull calls its turf.
And now to my story.
In the late spring of 2008 I took a shine to a silver mining company - U.S. Silver Co. (USA.TO). The fundamentals for the company were appealing to me. It traded on the Toronto Exchange but was really an American miner operating exclusively in the State of Idaho and possessed great assets, management and lots of potential . The political risk of owning USA.TO was nil, something I was beginning to understand was a valid consideration when investing in a miner, and the company had no debt but lots of asset value.
U.S. Silver had done a remarkable job of not only attaining an impressively strong balance sheet in a short number of years following its start-up, but also appeared very close to achieving break even or positive earnings. I surmised that silver would appreciate strongly in the future and this miner should do really really well. And add to all this the fact that U.S. Silver was a small miner flying under the radar *undiscovered* and well, what else could a guy ask for?
My good friend and mentor Gary Savage advised me that this was the wrong time to buy a small cap miner - and probably a bad time to buy any miner, for that matter. Looking back now I absolutely appreciate what he understood at the time (the 2008 C-wave had topped just a couple of months earlier and the D-wave of an 8 year cycle low to follow would likely be vicious).
But did I listen? Well, yes. Of course!
I listened just well enough to remember to this day that I did not take his advice, unfortunately.
So I bought U.S. Silver for right around $2.40 a share and just held on. As you can see from the chart below, silver rallied for a couple of months after my stock purchase but my miner just kept slipping. Near the end of these first two months the stock made a bolt northward - nearing my purchase price. Hey, I wasn't down too much at that point - so I stuck with my optimistic investment thesis and continued to hold.
Then from mid-August through early September 2008 all hell broke loose. Silver plummeted and so did my stock. A brief relief rally in late September gave me a draft of hope, but that teaser was immediately followed by another sky dive in share price that occurred with incredible velocity.
By mid-November the share price on my *under the radar* *value worthy* investment had lost 93% of its value.
|Click on any chart to ENLARGE|
Incredibly (for me at the time), I managed to sit still for another 6 months and continued to hold. By May of 2009 the price of U.S. Silver was starting to zoom higher and I took that as my signal to finally exit at around $1.20 per share. I realized a staggering loss of 50% on the year-long position while consoling myself that I could have done worse - much worse. And as you will see on the following chart that exit was pretty good timing as the stock thereafter went back to sleep for another 15 months.
The lesson I had not yet learned - and that is now forever burned into my conscience - is that gold's secular bull will entirely correct one's timing mistakes - no matter how poorly timed - if one is patient. I settled for a 50% loss not believing this truth. The next chart will reveal that I could have instead received a nearly 100% gain - if I had been patient.
From the disheartening low of 15 cents in November 2008 U.S. Silver screamed 2766% higher - reaching $4.15 by November 2010.
My investment thesis that U.S. Silver was a sound company fundamentally, flying under the analysts radar and therefore temporarily undervalued by the market was proven true, just not on my timetable.
The lesson I learned from the bull was to be patient. It's great when I am on top of my trading game and executing in sync with the bull's timetable. That is my ideal situation. I absolutely love the challenges of trading in real-time and like to think that, for the most part, I am pretty good at it.
But for times like now, when my positions are all entirely under water and I have obviously not stayed in sync with the bull, the best thing I can do is be patient.
Honestly, I do not consider selling any position I have now at a loss. I just will not do it. The bull has taught me the lesson about its promise to correct my timing mistakes if I am patient, and I'd like to think I finally learned the lesson very very well.
I hope my thoughts will help you make good trading decisions that, with patience, will always be profitable!
As something of a diversion from the work I have been doing on designing and back testing strategies I decided to revisit some earlier work I had done on gold's secular bull ABCD repetitive pattern. The twist that is new this time is the use of the Excel spreadsheet to record dates and prices and then manipulate the data to shake out trading day counts as well as raw and percentage measurements of the various waves. Once I got into this project I decided to include the weekly (intermediate) cycle data and additionally keep an eye out for Fibonacci relationships.
It turns out that gold's secular bull, now in its 11th iteration of the ABCD pattern since 2001, has indeed been keeping a few secrets guarded and I will point these out to you as this article progresses.
Our first chart simply shows the price gain each ABCD pattern has achieved in succession. Gold began its secular bull on February 15, 2001 with a low price that day of $255. After its first ABCD pattern gold began the second ABCD pattern just $9.10 higher ($264.10) than where it began, and so on.
The following chart looks at the number of trading days in each of the 10 concluded ABCD wave patterns and provides a sum of the results. I have always been fascinated with the symmetry and Fibonacci relationships I notice in gold's price movement, but it was a complete surprise to discover that the total number of trading days in the A-waves, added to the total number of trading days in the B-waves EQUALS the total number of trading days in the D-waves!
Next up is a microscopic view of the 10 infamous parabolic C-waves with a close look at the % gains each achieved from Day 1 to peak as well as the number of trading days for each.
The percentage gain each C-wave was able to achieve from its genesis seems to support the concept of a parabolic. That is, the rise (% change) becomes generally steeper over time.
9 of the 10 C-wave lengths were related to another C-wave in terms of a Fibonacci metric. The only C-wave length that left me puzzled was 7 (57 days).
I was truly dumbfounded to discover the relationship between the 2006, 2008 and 2011 C-waves.
The fourth and final research chart will now be the subject of our attention. This chart concerns itself only with the 32 intermediate cycles that have completed since 2001.
I made reference to which of the ABCD waves each intermediate cycle was involved. In the early years of this secular bull, the ABCD pattern was absorbed entirely within a single intermediate cycle. As the bull morphed, one intermediate cycle took care of the A and B-waves while the following intermediate cycle took care of the C and D-waves.
Further along in the structural evolution, one intermediate cycle took care of the A and B-waves, a separate intermediate cycle was then allocated to the C-wave and a concluding intermediate cycle for the C-wave finale and ensuing D-wave.
This gave the C-wave one intermediate cycle all for itself (2003). In 2005 the C-wave had two intermediate cycles all to itself. In 2006+ the C-wave had three intermediate cycles all to itself. By 2009+ the C-wave had 5 intermediate cycles.
Again, this is substantial proof that as this gold bull is progressing its very structure by morphing and becoming increasingly more parabolic in nature.
The color scheme I used in the above chart is light blue for an intermediate cycle during the A and B-waves, bright green if an intermediate cycle ONLY during a C-wave, dark green if occurring at the parabolic top of the C-wave and continuing into the D-wave, and dark magenta if the intermediate cycle was exclusive to a D-wave and its conclusion.
The Total Retracement of IC column with percentage figures considers the starting low price of the intermediate cycle, the highest intra- day price achieved and the percentage that this amount is retraced by the end (low) of the intermediate cycle.
The IC Begin to Peak column with percentage figures considers the starting low price of the intermediate cycle and the percentage price is able to climb above the IC beginning measured at its peak.
If interested, one can determine which intermediate cycles are left and right translated using the two columns that count trading days. A cycle is considered right translated if the peak occurs 'to the right' of the midpoint day of the cycle's length.
For example, the first IC is 113 days and topped on day 65. The midpoint of a 113 day cycle is 56.5. This example is right translated because the top (day 65) occurred 'to the right' of the midpoint day (56.5).
The second IC was 90 days and topped on day 36. The midpoint day was 45 so this IC is left translated as the top occurred 'to the left' of the midpoint day (36 comes before 45).
There are a number of other interesting observations that can be offered from this data, but I'll give it a rest.....for now.
Off topic: I continue to think we will see gold trade intra-day sometime in the next week or so below $1636. That should mark the true conclusion to the first IC of the 2012 C-wave and begin the second. As you may have noticed from the data in the final chart, this IC has been the strongest of any first C-wave IC to date both in terms of % gain from low to peak and in terms of the percentage of retracement.
Hold on 'cuz this bull ain't nowhere near done just yet!
Wednesday, December 19, 2012
I hear sirens in the night and people screaming, but where is the fire? I don't smell smoke, I don't see the flames and I don't know where the excitement is centered.....it seems everyone has felt the burn on their skin....but not me. This is eery and I will be the last one to know what everyone else knows, I suppose. That bothers me. Maybe these rose colored glasses of mine need a new prescription? Hey, anything is possible.
But in the meantime, while feeling increasingly isolated, alone and indifferent, I'll share with you what I see and how I make sense of gold's current situation.
|Click on any chart to ENLARGE|
The 2006 parabola was followed by the shortest and most shocking D-wave ever. In just 22 trading days it retraced it's C-wave by 53%!
The first intermediate cycle of the C-wave that followed was rather brief - a mere 12 weeks and used only two daily cycles. This was followed by a second intermediate cycle of much grander proportion, using 6 daily cycles - the final two of which were left translated.
The first IC retraced 56.9% of its advance and dipped just below the 200 dma. The second IC retraced 50.2% of its advance and closed below the 200 dma on its final day.
I guess you are wondering why I am writing about gold's behavior in 2007? Hang on, I'm about to get there......
The chart above is one I posted a week or so back. It shows my observation that this C-wave's first IC was right translated, consisted of 5 daily cycles of which the final was left translated. Very standard stuff.
It also showed my thinking that the second IC was comprised of a first daily cycle that had just concluded on Day 28 and was right translated. Again, very standard stuff.
Well, I was wrong. The bull was not done fooling people and it fooled me too.
Very similar to the fake out manuever it performed in early February 2010, it treated all arrogant enough to think they had it figured out (starting with myself) to one last mighty buck - thrusting itself below the 200 dma. With everyone dizzy and confused gold then took off and never looked back.
The chart above restates my understanding of what is going on. That is, the first IC has concluded as of yesterday - Day 31 of a stretched and final daily cycle. It had 6 daily cycles of which the final two were left translated (as in 2007). Price reached somewhere around $1662 which is a perfect 50% retracement of the IC (as in 2007).
The concern regarding both gold and the US Dollar falling at the same time is a valid one. My observations of that correlation are that this condition does occur and provided it is not prolonged, gold will decouple itself and reverse direction higher as the buck continues to plunder. The time periods from which I offer this observation are:
Sept 2003 and
Another time I will detail my 2008 story which will make clear why I will not sell my positions, no matter what the analysis....but for now I gotta go to work.
It's a bull market. Be sure of that, always!
Sunday, December 16, 2012
Okay, I could not resist the price again. But this time I only bought 5k shares last Friday of Claude Resources Inc. (CGR) for 54 cents.
There really is nothing more I can say other than the market has priced this stock/sector wrong. A person who can be patient will receive a reward that is going to be rather impressive.
My TSI Trading record has been updated.
Here is a 27 year look at the XAU:Gold ratio.
|Click on this chart to ENLARGE|
I think it fair to say that miners are about as cheap in comparison to the price of gold as they have ever been.
And another chart of the ratio with a little closer view - 15 years.
|Click on this chart to ENLARGE|
My thoughts about gold's daily cycle count, and so on, has not changed. We are now in the second daily cycle of the second intermediate cycle of the C-wave. For starters, if gold has not yet completed it's daily cycle, as some fantasy, then it is a left translated daily cycle. This has never happened in a single C-wave, save for the obligatory occurrence as the final daily cycle of an intermediate cycle.
Further, a take out of $1672.5 would then define that the first intermediate cycle was left translated. There has never been a left translated C-wave intermediate cycle, save for the intermediate cycle that included the C-wave parabolic top (2002 and early 2004).
I suppose the bull is entitled to redefine it's rules any way it pleases, but from my vantage point I have to go with the odds (99.999%) that the rules are the rules - and there is no possibility that this daily cycle is either redefined as stretched, left translated or the final daily cycle of the first intermediate cycle of this C-wave.
For now, the price of the current Day 6 daily cycle suggests that $1684.1 is the price level that should not be breached. At this moment we are trading just $2.00 higher. Great entertainment, don't you think?
Wednesday, December 12, 2012
I was fortunate to scrape together a few new coins and get them into my trading account yesterday so that I was able to make this purchase of another 10K shares of Claude Resources Inc. (CGR) ahead of the FED announcement this morning at 57 cents.
I would have been very happy to buy something else as I already own a whole lot of this stock. But what to buy? After searching through the 200 or so miners that I keep an eye on, this one made the most sense (for me).
I like that CGR has only 6% debt and trades at 50 cents on the buck (.5X tangible book value). I like that it has shown a succession of profitable earnings years and that the 2013 earnings are projected to more than triple (even with gold priced to go nowhere). I like that it trades on the AMEX and is not a pink sheet OTC. I like that it has been consolidating at this price level for the past 6 months and has made a triple bottom. And finally, of all the miners it is one of the very few with a True Strength Index (TSI) trend line break BUY signal.
My TSI Trading Record has been updated.
Sunday, December 9, 2012
Every once in a while investors in precious metals and their miners go through a phase where they simply cannot see the forest for the trees. My sense is that many investors are going through such a phase at the present time. I hope what I will discuss in this brief effort will give many a renewed focus on the journey of the gold bull and the motivation to not get thrown off any time soon.
About a year ago I wrote a very detailed analysis of gold's cycles - daily and intermediate - as well as the repetitive ABCD pattern which gold is presently repeating for the NINTH time since 2001. The link to that easy to read analysis with great charts is here: Gold's Secular Bull Cycles and its ABCD Pattern.
The key point to note is that gold's intermediate cycles, averaging 4.5 months, are made up of smaller daily cycles that average 24 days. The intermediate cycles are usually right translated. This means that intermediate cycles do not top until sometime after (to the right) of their midpoint duration. That is, an intermediate cycle that ultimately lasts 20 weeks, trough to trough, would peak sometime after the 10th week. Similarly, the daily cycles nested within the intermediate cycle are also usually right translated. So, a daily cycle of 22 days would reach it highest intra-day price sometime after the 11th day, and so on.
However, there are left translated daily cycles and left translated intermediate cycles. And their occurrence is surprisingly predictable.
Left translated daily cycles occur as the final daily cycle of EVERY intermediate cycle. If you take a look at the charts I created a year ago (link above), you will see an orange arrow pointing upwards at each intermediate cycle bottom. You will also see a red dot above price just before the arrow. The red dot identifies the top of a left translated daily cycle, while green dots identify the tops of right translated daily cycles.
Having attempted to restate these basic cycles characteristics of the gold bull, this brings us to the present situation and the chart below.
The current C-wave ( and IC 1 = Intermediate Cycle 1) began on May 16, 2012. To date, a single intermediate cycle has been completed. It consisted of 5 daily cycles. The first 4 daily cycles were right translated, as expected, and the final daily cycle was left translated. No surprise there, either.
As I think it is very likely that the first daily cycle of the second intermediate cycle completed last Friday with a low of $1684.1, we are just today beginning the 2nd daily cycle. This is the time to BUY!
Those who have been focused on the trees and not the forest are understandably very wary at the moment. Those who understand that gold is continuing its journey exactly to script do not have a worry in the world.
I have been absorbed with writing computer trading strategies for months now and honestly not looking at things as carefully as I am at the moment.
In the perfect view of hindsight, I wonder what the heck I was thinking to buy any mining position long from around early September forward. Well, I wasn't thinking, obviously. My point is that buying into the 4th daily cycle is already late in the game as it is likely to be a left translated daily cycle.....and even more likely to be followed by a fifth daily cycle that is left translated, as was the case.
So if you have wondered why I have not been selling any positions, perhaps you now understand. The optimal time to unload was quite some time ago and so patience will get it right the next time. It is a bull market, after all.