This is long as I want to include context. Tune out if you are...

This is long as I want to include context. Tune out if you are in a hurry. I do not want this going over anybody's head. Mandelbrot is the mathematics of chaos; a brilliant theory used in geology and insurance and so on. Do not be bluffed by the term.


Hi DRE readers - and tomiculturist, there is nothing to disagree with on your charting. Yet charts can be used for review or prediction. Trends do change as seen in gold during December 2011 just 500x Pi days from the 2011 tops of September 5th and 6th. Your take on this is review, and the current circumstances, which is appropriate in the moment. I am looking at momentum in my charting and taking the long view as DRE are cashed up for a few quarters thanks to a timely top up late last year. We all have different time horizons according to our individual circumstances so I am absolutely not knocking your charts; good work.

REE is in the toilet and base metals are weak. This is a cyclic situation and I commend Green Bull and others for a steady head and lack of emotion when the current climate is causing so much stress for so many. This will change soon enough IMO but that is not days as I am focused on the long view as stated. Context is everything. Price is a show; that is used by large players to push us smaller investors around.

Only gold is holding up here with silver weak enough for a gold: silver ratio read of 91.5! And the uneducated (in gold) think gold is expensive and trading at or near record highs... In 2011 that ratio hit 30 = now THAT is a top. Did investors also think that gold was expensive and therefore subject to a huge correction during the 5 quarters through 2008 and Q1 2009? Yes of course and it was because of recency bias. The GFC was ugly and I took on a client that had been smashed by that correction; which now looks insignificant in the rear view mirror. A lot of people sold into that crisis.

I am going to share a chart on gold now that illustrates my point about how gold is geared for a rally not a fall. A fundamental shift is underway as evidenced by the largest most informed investors on the planet. They are accumulating and taking possession via the EFP mechanism and by standing for delivery in the US too. DRE are savvy operators at the Board level - extremely so. And the exploration team are specialists I have high regard for; work ethic and ability as seen by results to date. The Board can see this playing out.

We are in unprecedented times with the overthrow of the Davos crowd and a banking crisis causing a liquidity crisis. Is the talk of a quantum financial system accurate? Does this resolve ahead of the US election, a key final fighting ground. The tree is being shaken just like it was in 2008. In October that year I penned an article titled "Wait Until You See The Whites of Their Eyes." I have seen all this before but many investors newer to the ASX may not have.

Recency bias is a force in the market. It creates an illusion. Was property expensive in 2005; you bet = record highs. That asset class continued to reflect policy settings, monetary and fiscal, while investors continued to clamor for "easy" gains. It faltered in 2008 like gold and then took off again making new highs for many years at multiples of previous highs. Gold will do the same and it is set up as this chart below illustrates. Gold tops out when the quarterly (3 month bars) goes into the upper band (see RSI box). ALL previous tops presented this way. WE are NOT at a top in gold; not even close.

Before gold launches it consolidates and right now we have seen this for 3 1/2 years already. Momentum studies I have completed in great detail are extremely positive too. Feast your eyes on this chart as proof of concept (on a predictive basis). The chart is from GoldOz; a log scale to filter out some of the recency bias. 1 and 2 are self similar (Mandelbrot concept) in RSI and price. Ditto A and B. Note the time scale is increasing through time as iterations play out, just as is evident in pictorial portrayal of the Mandelbrot set.


I hope this calms some nerves and that HC is gracious enough to allow it to remain published. I would be all over the WWW if I wanted to promote. DRE are focused on gold at exactly the right time. WA is ripe for discovery with modern techniques, both on and outside the Yilgarn Craton.

GLTAH CW