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Gold: Book Profits as Volume Disintegrates

Morris Hubbartt
Weekly Market Update Excerpt
posted Feb 18, 2011

“Throw the old rule book away. Metals are going much higher. I have said for weeks that this Gold correction is a gift. Use the gift while it’s yours. We are on the verge of seeing all time highs and you will likely never see these prices again.” – Morris Hubbartt. Feb 18, 2011.

UUP (US Dollar Proxy) Chart

US Dollar Analysis:

• I just issued a sell signal on UUP on Feb 16. That saw readers book a nice short term gain.

• Longer term, the US dollar is in major trouble, and I want to give you a one-time lengthy explanation of why that is, so here we go:

• First off, all US citizens should be concerned about the actions of the Federal Reserve. The Fed’s power to print and heavily influence the economy in the world of central banking, is second to none.

• You know the quotation from the great American president Thomas Jefferson, which is, "I believe that banking institutions are more dangerous to our liberties than standing armies." Consider this idea: That quotation should be repeated every day… by our teachers to our school children!

• Instead, our children seem to be repeating this statement from our current President, “Banking institutions are too big to fail. We will all work for generations to make them as rich as we can, while impoverishing ourselves.” The failure to repeat Thomas Jefferson’s quotation regularly to our children, is directly reflected in the current disastrous decline in the dollar.

• You have all wondered how the equity market has continued to float on thin air. Here is the answer: The current key area of interference in our markets by the Fed is called the POMO. POMO is the Permanent Open Market Operations program. POMO allows the Fed to pump money into Wall Street, by buying Treasuries from the Primary Dealers. Primary Dealers then put that fresh capital from the Fed into the stock market. This action is putting huge pressure on the US Dollar, but creating the illusion of prosperity.

• The S&P 500 is now 15% over it 200 day moving average; a higher spread than any time in the last ten years!

• This Federal Reserve and the administration are meddling with the greatest economic system in the history of the world, the free enterprise system. Influencing markets sounds like Hitler and Mussolini, not Washington and Jefferson. The aim of all fascist movements is the elimination of large-scale capitalism.

• Destruction can come quickly in all areas. Take the construction of a house for instance. It can take several months to build, yet with a five gallon can of gasoline and a match, in thirty minutes it’s gone. Likewise, the dangerous and illegal games being played by the Feds could implode almost instantly, causing the destruction of our dollar.

• Today’s American citizens have no Gold. 98% of them have none. Most Americans citizens still believe the old saying “Sound as a Dollar!”. I believe some are starting to figure things out, as they watch the administration spending money, as if it actually wants national bankruptcy! 

• The giveaway programs are starting to remind me of Brezhnev in the Soviet Union in the 70’s. The people got fed up with his vile and corrupt government, so he enlarged the Vodka rations, turning a large segment of society into drunks. Nobody cared about anything, except their next swallow of alcohol, so Brezhnev was free to increase his robbery of the people.

• Handouts to society are used in America today in a similar way to Brezhnev’s vodka, and the dollar’s failure to rally displays a currency that is now an alcoholic. The administration uses working taxpayers’ hard earned money to buy votes for themselves by handing part of the money back to those who are not working, and spending it on themselves. In time, the handouts become opium, with the people dependent upon our government. A people dependent on government handouts makes our currency dependent on handouts. For the DOLLAR, handouts are the electronic printing press. 

• Use my fundamental analysis of the US currency here, to help you sell dollars, and buy Gold! If our nation encourages citizens to hold Gold, then even if the world fiat currency system fails, the economy will continue to function, because you have a means to trade! Since our administration is not encouraging gold ownership at all, it is critical that you accumulate it yourself, because a nation without adequate gold insurance is a nation destined to fail in a dollar crisis! On all dollar rallies, buy Gold in size! I’m going to walk you through the charts now. Try just to look at the analysis. If you focus too much on the recent rally, and imagine it just must continue to make yourself feel good, you could open yourself up to making some serious trading errors.  

Gold and Precious Metals

SGOL (Gold Proxy) 6 Mth Chart

• I issued a profit booking alert for SGOL on Feb 15. Another solid win! Gold and GDX were the last of the precious metal sectors to hit my short term targets, and some readers asked if they should sell early. The patience paid off, and you booked the win as I issued the sell signal.

• Right now, I know it seems impossible now that Gold could fall, but my analysis implies that the corrective action will continue into the next few weeks, probably to new lows under $1300.

• Officials in China have proposed the Central Bank should increase the Gold reserves to 10,000 tons, giving China more gold than Fort Knox! America needs to do the same, and much more! The cost of gold insurance is rising, and America has almost none! China’s plan is to get the Gold. This will take years to accomplish and will keep a rising floor under the price of your Gold and Silver.

SGOL 14 Month Chart

• A look at the 14 month chart indicates the correction will continue. The volume in the recent counter trend rally has been soft. A rollover in price is very very likely in the very near future.

• With that being said, I want you to be accumulating aggressively as price goes lower!  

Gold Juniors GDXJ Chart

Gold Juniors Analysis:

• I issued a Super Force profit taking alert on Feb 8 at $34.30 for you on GDXJ. You booked a phenomenal 11.57% gain from the previous buy signal. The current signal is a SFS 25 Profit Taking Alert. That is a weaker signal, and further price rise often occurs, and that is exactly what is occurring.

• An additional 6 trades were booked in gains this week and the SF60 trading service now has a track record since mid October of 95 wins and 0 losses. I don’t book losses because I only trade viable long term assets.

• Technically speaking, the short term targets have been met after the first leg down into the correction. Now that the targets have been met, we are looking for price to rollover and go down. The volume analysis is verifying my technical price analysis.

• Secondly, it is important to keep a long term perspective. My SFS Momentum Stock Ratio is indicating a price target of $75.00 per share within the next 12 months. So, the correction is likely to continue, while long term, prices are going much higher.  

GDX 6 Month Chart

• GDX also has a SFS 25 profit taking alert as of Feb 8th. This signal scored you a 6% gain from the previous buy.

• GDX has now reached my key inner box target. Volume has continued to fade as price has gone higher. Short term, we are coming into an area of resistance. I am predicting the correction to resume very soon.

• Due to the market panic in 2008, GDX continues to be undervalued when you consider where the price of Gold is. My SFS Momentum Stock Ratio for GDX is indicating a price target of $72.00 in the next 12 months! So, as the correction plays out, keep these SFS ratios in mind, because prices will likely go much higher for you!

SIVR (Silver Proxy) 6 Mth Chart

• There currently is SFS 25 profit taking signal on silver. Silver has exceeded my short term target, and has opened the door to $50 in time as an intermediate term target! Stay tuned for stronger profit booking signals!

• Everyone who owns physical silver should be aware of the physical market, not just the paper market. The buying of physical metal is overwhelming the shorts on the Comex. Own the physical product, own the good stuff! I put more money in physical silver in the 28.00 area and it’s already a short term winner. Longer term, I might even hold it into the next bull market because these prices in time will never be seen again!

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About Super Gold Signals:
Our Surge Gold Signals are created thru our proprietary blend of the highest quality technical analysis and many years of successful business building. We are two business owners with excellent synergy. We understand risk and reward. Our subscribers are generally successfully business owners, people like yourself with speculative funds, looking for serious management of your risk and reward in the market.

Frank Johnson: Executive Editor, Macro Risk Manager.
Morris Hubbartt: Chief Market Analyst, Trading Risk Specialist.

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