THE MICIK MARKET LETTER
Gold Update

Alan Micik snippet
May 17, 2012

MML wrote the following for subscribers on May 6, 2012 (GLD @ 159.47, Gold @ 1641). Note that our views and/or positions may or may not have changed from May 6, 2012.

$U.S. Gold

Our many thoughts on this dichotomy between gold and gold shares has been extensively discussed in our recent Updates, so we are now going to draw some conclusions.

First, “something” will cause “Fear” and mass capitulation in the Goldies as that is what markets do at bottoms. There is no MML Evidence that this has taken place in this sector. Recently, we sent all Subscribers our 1/1/12 Goldie Report which showed the potential for the Goldies in early 2012 when we spotted bullish divergences and what we would look for in a current bottom. No bullish divergences are now in Evidence.

Second, MML believes the Goldies are leading the way lower for gold, as they have done since gold’s September high. Let’s compare the two. As one can readily observe, from September until early March their respective highs and lows were generally “in sync.”

However, from the early March highs, GDX has plummeted compared to GLD. The current “holding pattern” in GLD has encouraged Goldie investors to hang on, thus no capitulation phase has occurred in the shares. Unfortunately, that leads us to our final conclusion.

MML’s conclusion, and forecast, is that there is only one clear-cut level that will cause “capitulation” in the shares and gold, and that is for Mr. Gold Market to meaningfully break the $1620 level (GLD 158), which will cause a break in gold’s long-term uptrend line creating massive “Fear,” instead of the current bullishness and complacency in gold ETF holdings. If this long-term uptrend is broken, everyone will press the “sell” button at the same time, the drop will cause “capitulation,” Spot gold may break $1500 and possibly approach $1460 (GLD @ less than 142). But, on a long-term basis, $1460 would just be a normal correction for Mr. Gold Market. This is what the Goldies relentless decline has been about (if we are correct) as they race ahead on the downside anticipating this normal cyclical correction in gold.

This is a bold forecast, but we write to be right, even if the message is not bullish. We own gold, always have, always will, but markets are cyclical as well as secular in nature (we recently wrote about the distinctions between them for Subscribers).

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MML's "hedging" positions now have closed profits of $184 per ounce since November of 2011. With gold at $1544 at Tuesday’s close, our physical gold is now worth $1,728 per ounce (184 + 1544 = 1,728). This record, to the best of our knowledge, is the best "hedging" performance of any market letter that publicly shares their results. For MML Traders that have used our “hedging” entries and exits for trading, it has been a profitable year.

In our May 10, 2012, 321gold Post (from our Subscriber Update of April 29, 2012), here, http://www.321gold.com/editorials/micik/micik051012.html MML noted, on any move under GLD 159.20, we would “hedge,” and MML recommended a 50% “hedged” physical gold position. Subscribers can always elect a larger (or smaller) “hedge” depending on their specific investment profile and tolerance for risk. When MML “hedges,” we provide a Stop for GLD (which is used for “hedging” via deep “in-the-money puts”). We always cover our “hedge” at the first sign of “Fear,” because that is the most prudent long-term strategy for a gold “hedger.” We never sell our gold.

If you would like to review our current MML forecasts for gold, silver, the $U.S., $U.S. Stocks, or $U.S. Bonds, do consider a trial subscription (details are listed below). In deference to our subscribers, we have an 8 trading day “Quiet Period” from all Updates before any Posts.

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Al Micik
email: atmmail@sbcglobal.net

The Micik Market Letter (MML) covers opportunities in any market sector when low-risk opportunities are identified for the investor and/or trader. Ongoing coverage is provided for gold and physical gold hedging strategies. Silver & GDX are periodically covered when low-risk opportunities occur. MML uses proprietary indicators combined with technical analysis, and contrary opinion. Unlike other market reports, we do not have regular “publication dates,” as the markets create the dates of action, and thus the communication to our subscribers. Individual shares in any sector are generally not covered, but nor are they excluded. By using baskets of stocks (ETF’s), we seek to decrease our risks and have improved liquidity when it’s time to exit a position. This enables us to use reasonable Stops, and we use them on every single trade in order to limit our own emotions. This is a new 2011 publication, but the editor has 36 years of market experience.

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DISCLAIMERS: Market opinions and recommendations detailed in this letter, while expressed in good faith, are not guaranteed, and losses will occur with any investment strategy, including this service. Each investor/trader/hedger must carefully manage to their individual risk tolerance and use “stops” to control their risks. At no time should the subscriber infer that opinions or recommendations are customized actionable advice, or be construed as an inducement or suggestion to trade or invest. The editor, publisher, associates, directors, consultants, employees, and accounts under management may, or may not, have positions in securities or derivatives described herein. Actions taken as a result of reading MML is the sole responsibility of each reader. MML is not and does not profess to be a professional investment advisor. Readers are advised to consult with their own professional advisers, attorneys, and accountants before making any investment decisions. By your reading MML (an independent market research letter) you fully and explicitly agree that MML will not be held liable or responsible for any decisions you make regarding any information discussed herein.

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