This 4.5-year weekly has been like the Bible of Gold charts, predicting every major turning point over the last several years. We’re not there just yet, but we’re very close – bullion is poised to make a dramatic move out of a Q4 low into Q1, creating an incredible buying opportunity in Gold stocks on weakness like the one I’m mentioning again tonight.  

Gold In Loonie Terms – Key Takeaways:

• %K (Slow Stochastics, this indicator is critical) hit resistance over the summer as Gold soared to a new all-time high of $2,796 CDN, briefly topping nearest measured Fib. at $2,636
• Note the blue circles around the %K lows going back to 2016
• From the %K low late last year (a major buy signal), Gold surged 46%!
• Gains from previous %K lows circled in blue were 37% ($1,523 to $2,084), 15% ($1,522 to $1,748), and 16.7% ($1,499 to $1,749)
• Gold, since its summer high, has repeatedly tested $2,480 support – that’s a level it needed more than 3 months to overcome earlier this year (April to July)
• Rising 200-day SMA is now $2,408, providing another layer of support
• RSI(14), currently 56%, has held at or above 50% for nearly 2 years
• ADX indicator confirms a continuing strong bullish primary trend

Prediction:

Gold is preparing for its next big wave to the upside which will carry it to a minimum of $3,300 CDN ($2,500 U.S.) – next measured Fib. following $2,635.

This means bullion is headed for the following:

• ~30% move from the current price
• ~37% move from the 200-day SMA at $2,408 (if Gold were to test that level, possible)
• 49% move from major chart/Fib. support at $2,213 (if Gold were to drop that low – very unlikely)

The average percentage gain from the 4 most recent %K lows has been 25%. However, those gains have been accelerating the past couple of years.

4 x is a big move over just about any time frame but this happened in a little over 4 months, so should I really have been surprised to see some profit taking?

No. Absolutely not. I’m just a little surprised AUMB pulled back as much as it has. After hitting 98 cents the stock has worked all the way back down toward the level it previously broke out from, touching 50 cents briefly this morning.

Here’s the math: From 21 cents, that’s 77 cents up (to 98) and 48 cents down (to 50), or a retracement of 62%. As much as I wanted, hoped, and thought AUMB would keep trucking higher, the market doesn’t care about our feelings. The market does what it does and it’ll do what it wants to do, every time (even on Sundays). And how often does the market make Fib retracements of 50% and 62%? My oh my, it seems like every time! At some point along the way during a bull run that retracement will happen. You could set your clock to it. Fib. retracements are practically Mother Nature in action.

Yet again the market afforded a fantastic opportunity for me to feather-out then feather back-in with AUMB. I’m not discouraged. Well, maybe slightly discouraged. I just hope and plan to more fully capitalize on the trade next time. Hindsight is 20/20, but I’ve seen this same situation play out too many times before. I should know better.

To answer my question: How low can AUMB go? Maybe 45 cents, or another 10% down, worst case. But with AUMB already having completed a full 62% Fib retracement I think the pullback is complete. There’s really nowhere to go but higher from here – I believe that quite strongly.

What a gift, to be able to buy AUMB again under 60 cents. This thing is such a steal of a deal (I’ll remind you about many fundamental reasons why AUMB is a steal below). My only regret is not trusting the process more. Ebb and flow, like the tides. Two steps forward, 1 step back. These Fib retracements happen all the time, usually over a period of several months, following 3 x and 4 x plus runs. I reduced my AUMB position by about a tenth near the top, but wish I’d taken off more (of course) because I’d be buying with both hands right now.

AUMB is an excellent example of how speculating on microcap stocks can occasionally be “low risk with high reward” (exactly opposite of conventional wisdom, that microcaps are risky). 

If you don’t own AUMB, now is the time to buy. If you’re looking to add to this high-quality name already in your portfolio, now is the time to add.

11 reasons 1911 is a “high-quality” Gold stock with high reward potential and low risk relative to its paltry $15 million enterprise value:

1. Tight share structure with 46 million outstanding
2. Strong working capital position, should end year with $10M+ cash and no debt
3. “We have a district scale exploration opportunity capable of producing multi-million ounce Gold deposits and a market capitalization of billions, not just $100 million or something like that.” – CEO Ron Clayton
4. Production from seasonal tailings covers 1911’s overhead expenditures (at least through 2021)
5. Rice Lake Gold belt, 70+ km crustal scale fault, consolidated for the first time in history
6. Various styles of mineralization mean there was multiple mineralizing events, which is what’s needed to create major multi-million ounce deposits
7. Long and shorter term technical indicators are decidedly bullish
8. Dr. Scott Anderson, VP Exploration for 1911, is finding Gold. High-grade Gold, up to 858 grams from surface (never drilled target)
9. It’s estimated 50 to 100 x more has been spent exploring Red Lake, versus Rice Lake (dramatically under-explored)
10. “Turnkey move-in ready” mill capable of crushing 1,200 to 2,500 tpd would cost approximately $300 million to build from scratch
11. 18,000+ m drill program starting very soon, creating a seasonal (winter) drill play

About the writer: Daniel T. Cook, who joined BMR in June of 2016, hails from Texas and now resides in Florida after recently moving from Utah. Daniel has a strong passion for the junior resource sector and has followed the Venture and broader markets with great interest since he bought his first stock nearly 20 years ago at the age of 12. He became a licensed investment professional who was a Bright Future’s Scholar at the University of Central Florida, graduating in 2010 with a major in Finance.

Note: Daniel holds a share position in AUMB.