So, we can all write down $1088 as the 50% retracement and $890 as the 61.8% retracement levels. $960 is the “chop it in half” figure.

However, as mentioned on the Gary blog yesterday, I think there are more likely support levels at $1065, $1044.70 and $993.20

Requoting from yesterday:

1)**Honestly, in just going back an looking at the longer term gold charts, I am more prone to see the Feb 5th , 2010 trough at $1065 as a larger trough and point where Gold really started taking off that year. So I was just using prior peaks/troughs, that would be first support.

2) The $1044.70 is based on the Oct 30th, 2009 trough, because it most closely correlates with the different fib levels and moving averages of traders that kept coming up with 1050. I used to have the % of the written down because, it always matters where you start/end the levels on where the fib retracement points fall. People start at various places, but the 1045 zone should be one layer of support.

3) The $993.20 level is based on the Feb 20th, 2009 Peak, which was substantial. When Gold hit it’s spooky weekly bottom of $723.70 on Halloween Oct 31st, then that first impulse leg up made it to $993.20 on Feb 20th, 2009. I see that as a strong area of support and congestion from longer term gold traders that remember that first leg up. Programs and software and statisticians marked that area as resistance on the way back up to $1176.70 on Nov 27, 2009.

Guessing a price too high or too low is much worse than not guessing at all. What I learned from investing In Chinese stocks is that it is better to stay in a good equity and add when price goes down and take profit when price is high. The key is value. The gold and silver value is good since miners are losing money and you can buy cheaper than they produce it. This discount is a sure win if you stay long enough. When some of the producers go bust or change to producing other metals, PM price has to go up

Great points Lawrence. Yes there are certain miners that I have been nibbling at because the prices seem so low, and while they could fall further, I’ll just add to my position. However, I like to use price targets, to keep me from getting antsy and buying to early or selling too early.

Yeah, it was kind of long on the words. But I was trying to build a case that made sense without skimping too much on essential parts of the narrative. Short version is when the Shanghai crashes we are totally screwed!

I wonder if every market on the planet couldn’t all come down at once.

Like Rickards “snowflake” could start anywhere.

Thankfully it doesn’t work like that, bb or there would be no way for anyone to escape corrections, crashes or depressions. But as a general rule, there are always opportunities that pop up in the midst of even the worst economic calamities.

The other thing is that if you face ruin because your specific country is crashing (Zimbabwe, Greece, Wiemar Germany, Iran, Iraq, Argentina) due to bad politics, war, corruption, inflation, loss of confidence etcetera….there is always good old fashioned capital flight.

In other words, get the hell outa Dodge while you still can.

Under more normal circumstances though, economies grow and deflate more or less rhythmically and in somewhat predictable ways. We can in fact see the troubles coming. Often years in advance.

We live in just such times although there is considerable disagreement about the final outcomes we might face. And that aspect makes it difficult to choose amongst the alternatives on hand to protect ourselves from an economic upheaval that is all but guaranteed.

On gold based websites such as this one there is a strong belief that hard money and honest currency are the way to play the odds. Stacking in other words. But step out the door and walk across the street and we will encounter others who insist Treasuries are the best choice.

Or land…or collectibles…or US dollars….or basket of the best stocks.

For each market philosophy there is typically one answer that suits that crowd who promote it and their ideas often exclude the other choices. None of these ideas sit well with me though because none of them are all that flexible.

For those who really don’t know what the hell is going on there is a better solution. Diversify! This camp admits the markets are confusing and unpredictable. If they knew what to do any given day they would probably go all-in and make out like bandits.

But experience has taught them that most people lose at investing when you take a do-it-yourself approach.

So they just divvy up their nut into a pile of pots and hope for the best. I don’t like the diversification philosophy all that much. Mostly because I hate to admit defeat in respect of investment thesis but also because I consider those who give up so easily to be just lazy and unwilling to make the effort to grasp the basics.

That crowd can keep their bundled Mutual Funds that are hedged so effectively they barely earn a few percent in real terms each year. That’s the price of not knowing where the market is headed I suppose.

But when we really put our ears to ground and keep an open mind we can often arrive at the best answers and better appreciate the risks. Capital shifts around from one asset class to another an from region to region wherever the next best opportunity arises.

What bubbles today will be a dog tomorrow so naturally it makes perfect sense to target assets that are beaten and unloved. That’s where mining stocks and resources come into play in this discussion and it why I advocate for investing long term in this area.

Meanwhile, it is easy to get thrown off track by listening to too much analysis. Gloom is ever present and every good idea is readily squashed by well written arguments. Right now, miners look dangerous as hell for example. Just because too many are living on the edge of survival.

But we can readily acknowledge their time is coming. If a crash comes we do indeed expect all classes of stocks to be impacted. Miners included. What we don’t expect though is that they will all stay down for very long.

Therein lies the moment of maximum opportunity in my opinion. We just need to be careful not to squander our resources by buying target stocks and other beaten assets prematurely.

Good thoughts Bird.
I do believe I have seen charts showing different markets moving pretty much in unison tho.
Gold in other currencies than the U.S. dollar for example.
I guess there are exceptions, the Russian market comes to mind.
Maybe I see enough debt to bring them down at the same time, a domino effect.
Shares in good companies could be sold for liquidity should such an event occur, that might be an advantageous time to purchase.
I suppose there might be a chance the whole thing went “no bid”, but I would be looking to buy.
A good read.

If either URZ or URG fall below $1 again, I’ll personally be adding big to those positions, but not investment advice…..just the thoughts of a lunatic 🙂