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Monday, March 22, 2010

DANGEROUS TIMES

This rally is now deep enough into the daily cycle that it has become dangerous to chase it any longer. Sentiment has reached bullish extremes, some of which rival the `07 top. Again not the kind of conditions that would warrant pressing the long side any longer.

As much as I would like to see a continuation of the C-wave the odds are starting to pile up against it. It appears that gold is now in the process of putting in a left translated daily cycle. Today's move under the March 12th low is likely suggesting this cycle has already failed.


The bad news is this is starting to look more and more like a D-wave. The good news is that it will probably bottom in the next couple of weeks along with stocks when the market moves down into the next daily cycle low.

We should then begin the next A-wave advance. Those are usually fairly powerful. Often testing the highs in fairly short order.

If miners can hold above their February lows as gold breaks to new lows it would be a very bullish sign that the A-wave was ready to begin.

For the time being the safest position is in cash as we wait for the stock market to correct.

146 comments:

  1. Gary,

    Your remark about bullish sentiment extremes refers to the SPX, right?

    I think the investing sentiment about gold and PM stocks is just awful right now. EVERYBODY -- including practically every gold pundit and newsletter writer-- seems to expecting a pullback imminently. Have you considered this as a contrarian signal?

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  2. Hey Anon - I actually like the contrarian idea you've proposed, but not for the sake of being contrarian...

    Gary says this is the 'D wave'. IMO, Gold is going to peak in the coming weeks. If it does as expected, this will have been the 'A wave'. At the same week of gold's peak, we should see stocks (Q's, DIA and SPY) hitting new lows. DIA is at major resistance now. Expect to see either a much anticipated correction or consolidation any day now. Then, Expect to see GLD pivot downwards, while SPY is pivoting back up possibly around the end of this month (may be delayed until April)...

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  3. Yes sentiment in general is too bullish on the stock market. If I thought the miners and metals could resist a stock market decline then I would say yes sentment on gold is probably too bearish. However I don't think the metals will resist a stock market pullback.

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  4. GAry, Newbie Here --

    At Day 13 Gold was at a low. Would you term that low an intermediate cycle low since it was too early in the timing band amd the Day 24 Low falls becomes the cycle low because in the timing band?

    Another claification:
    Since Gold failed to make a higher High coming off the day 24 low and now has turned lower - that becomes a failed daily cycle?

    Also, it is condsidered left tranlated because the daily cycle high came too early in the daily cycle?

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  5. correct on all accounts except the intermediate low came either in Dec or Feb. We are quite sure yet although it's starting to look like Dec. and we are now in a failed intermediate cycle.

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  6. One more question

    What would you term the low at day 13?

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  7. Coming soon a 1.2 handle on the euro!!!...

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  8. Great, but what does this mean for the dawler? Should I dump all my UPP?????

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  9. Gary, what in the world is going on with NatGas? just dropping every day..

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  10. Your guess is as good as mine.

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  11. If this is a D-wave, what time period are we looking for in terms of the A-wave?

    Thx

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  12. Let me re-phrase that, when would we expect an A-wave peak?

    Thanks.

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  13. At the moment I'm expecting the D-wave (if that's what it is) to bottom with the next daily cycle low in a couple of weeks.

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  14. Gary,
    Why cant we be setting up a bollinger band walk in SPX/QQQQ, with pullbacks terminating at 20day MA? I think everybody hates this rally and waiting to hop in.

    Greg

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  15. What is a Bollinger Bnad walk?

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  16. Price tags upper bollinger band.

    Greg

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  17. Well the market can do anything but generally when sentiment gets this bullish and we are this late in the daily cycle it hasn't been a good time to try and chase a rally.

    Even if the move does continue a bit further the odds are it's going to give it all back.

    The market just needs to take a breather and work off some of this bullish sentiment.

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  18. Covered all gold @ 1100...will hold short oil, long dawler, short equities...I will now buy gold on weakness...no more shorting...for now...

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  19. Gary .. quick question. On the report you wrote that you felt the USD was on a cyclical bull ... I think we can all agree that the USD strength has kept the Gold price in check ... what would lead us to believe that an A wave ( esp. after a very weak C wave ) would materialize with a USD in a cyclical bull ?

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  20. Well for one this has also been a very weak D-wave. Remember gold is making all time highs in most other currencies. So there is buying pressure.

    But I think the A-wave will come as this intermediate cycle in the dollar rolls over and bottoms.

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  21. Gary,
    What do you think about DRR the euro short? Cup and handle formation is what I see.

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  22. If gold forms a swing low today, we may have to consider that the last daily cycle extended to 30 days rather than ended at 24. I realize the odds may seem low due to the expectation of an impending decline into a daily cycle low for equities, but it will still have to be considered.

    I would also note that the crash induced many changes in market behavior and also represented a divide between the first and second phases of the commodity bull. The typical seasonality and behavior of A-B-C-D waves in gold may not apply. A quick look at gold's weekly chart shows the action since December as a minor correction, and I doubt that when the next advance begins it will stop at $1225.

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  23. Could be a gift day to unload a bit more? I'm very tempted...

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  24. JH .. if you guys look at that chart posted on this thread .. its a pretty clear H&S pattern .. if this thing breaks down from here ... that 1040$ is a realistic target ...

    I would rather be a buyer at 1000$ - 1040$ or 1140$-1160$

    sold all my in the green stuff ( none ) and breakeven stuff ... stepping aside for now ...

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  25. I sold my green positions on Friday, I've got several larger positions that I may sell here and take small losses. Several positions are deeper in the red, I may half those. Right now, I'm about 60% cash position.

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  26. This is how consolidations occur. People leave the market, the question is will they be buying back higher in a panic frenzy?

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  27. i am about 50% cash ... still sitting on boat load of AUY shares ( and some SLW and AUY options ) which I will not sell .. esp. AUY which are worth 0.16$ .. ouch ( I paid 0.90$ )

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  28. I'm 100% dawler bull uup, waiting for all y'all to sell yer yella junk at 850 before I buy back in. Bon chance bugs

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  29. Gary, check out a 6 month chart of the 10yr Treasury (TNX). The last three months, since the high at the end of last year, sure look like a triangle consolidation to me. These are usually continuation patterns so we MAY be getting ready to steamroll right over any overbought conditions. I just can't figure out why gold is not sniffing out the same thing... it's possible that since the gold market is so small, it's getting slapped around by all sorts of cross currents.

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  30. well .. if I look at that H&S pattern, and if the break in the neckline stays broken ( I am estimating it at 1100$ ) then a realistic target for Gold would be 1040$ .. of course who the hell knows what happens next.

    Right now I am still trying to decide if there can be a A wave in gold with the $ in a "cyclical bull" ... especially with the perception that QE will be scaled back, or potentially removed. And i did use the word perception ...

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  31. Well, market has had little pullback despite Euro, GBP taking major hit. If only those currencies start bouncing, why wouldnt markets go parabolic?

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  32. I am sorry I don't buy this strong dollar thing. The dollar is only up because the Euro is still hurting. Naive to ignore what is going on with the rest of the currencies, unless you subscribe to the notion that traders will trade only based upon what the USD as calculated is doing; then the tail wags the dog.

    The biggest problem with the Dollar is that it is the base for everything, what happens when other currencies start to catch up with how crappy it is too? The USD still falls, but maybe not as fast as the now garabage Euro. So it seems that the USD is going up.

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  33. Anon .. we all realize the USD is weak, but, if the perception is its the strongest of the garbage currencies including the Euro, well,then people may buy as it the "safe haven" currency. The fact that these comoodities get traded in the USD certainly cant bode well short term for those commodities ... inc. gold.

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  34. well, then people may buy as it the "safe haven" currency

    Again something spoken with only the USD in mind and its calculation. Safe haven currency? CAD is about to hit par, and the AUD is doing very well too. The problem with investors is that that can't see beyond the Dollar and more so its calculation.

    So the argument is that the Dollar should go up, but compared to what. I could have made money on buying a can of beans in 2008 and re-selling it. I could have bought AUD and made about 30% on a currency year to date. Umm a currency!

    My point is that the crap we call the USD is dropping even now, and long-term it will be even more obvious. The fact is that we, as investors, are quite misguided in its calculation. The Euro is a big dog too, and is STILL giving the perception that the dollar is rising even though it is falling. The dollar seems to be rising because it is falling slower than the Euro....hence the appearance of the dollar increase, since it is relative.

    This is why I am having a hard time with Gary's analysis, with respect. Gary is frequently quoting the dollar calculation. Intrinsically it doesn't matter at all. If the Euro fails tomorrow, the USD would soar through the roof. But as investors, if we follow this stupid calculation, then the tail wagging the dog becomes the truth. Perhaps before the USD calculation was accurate in its value since it was the only piece of garbage out there, but now we have the Pound and the Euro. Choose your pain.

    Now, if 99% of investors see the USD as a calculation and believe this to be accurate, then the dollar will remain strong since people follow that flow. But at some point, as is the case in all fundamental stories the truth comes out. To this end, a bubble may exist in the USD, or not...but it for sure is not worth a cent of the paper it claims to be worth.

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  35. Gary Just saw this. You may have already seen it. Was there ever any doubt? http://beforeitsnews.com/ Comex data shows that the price of gold and silver are suppressed.

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  36. LOL if someone is supressing the price of gold they've been doing a damn lousy job of it for the last 10 years.

    Just ignore this goofy stuff.

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  37. Gary, it's pretty naive to completely dismiss gold price suppression/manipulation. Sure some claims/articles I've read regarding the matter are over the top and to be ignored, but the FACT that central banks have manipulated the price of Gold in years past (as proven by documents uncovered by GATA) should be reason enough to believe they are doing the same now...
    Joseph

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  38. Gary, I cant find your post about doubling bets while gambling in casino and the odds. Can you help me find it and post the link here?

    Thanks!

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  39. Like I said if, someone is manipulating the gold price they are soing a damn lousy job of it.

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  40. Gary
    Read an article about the housing mess and it talked about when one should consider buying a home...
    When 100 oz of the yeller junk equals the price of the avg home nationwide...unfortunately RE has a long way to go to the downside even at these levels...
    Dawler breaking out nicely this AM...1075 next level of support...will nibble long there but it may not hold...
    Still lawng dawler, short oil, short equities and flat gold here...

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  41. Gary,

    Don't think your going to see the market correction you are expecting. It may be time to nibble at Gold!

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  42. It didn't look like stocks were going to correct in Jan. either but the did.

    When sentiment gets this bullilsh and breadth this poor it's only a matter of time.

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  43. Nice move in the buck. Here we go.

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  44. Gary,

    What breadth indicators do you use in your analysis?

    Thanks.

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  45. I mostly watch the McClellan oscillator but I also track the NYHL and Advance decline lines.

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  46. Gary-
    I haven't heard you mention the coil on the USD weekly chart in a while. Still valid? Obviously, the break was up so maybe we should expect this move to be false? (This would fit with your dollar up while stocks, gold correct for a bit...then the A wave advance fueled by the dollar breaking down)

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  47. It's possible. Perhaps the initial small break down to 79 was just a slight fakeout.

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  48. Gary,
    Is it possible stock go in sideways correction (above 1150) while the daily cycles bottom and launch up once dollar tops out? Action so far seems to be indicating that may be in the making.

    KK

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  49. I cant't remember ever seeing a dialy cycle that just went sideways. They almost all move the 5 day RSI into oversold conditions.

    If we are starting the move down it's just beginning so it's normal to get some resistance to the move as investors try to stick with the momentum trade.

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  50. We need AAPL and the banks to join in before any serious downside can occur.

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  51. DXY just a hair above the upper Bollinger band today.

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  52. yup, seems like we will have a Bollinger Band Crash trade today (:

    -Galileo

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  53. The BB trade only works on the downside. Markets go up differently than they go down.

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  54. That being the case, GLD might be a BB Crash candidate.

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  55. It is getting close.

    Although I don't think I would take that trade at this time because the stock market could begin the move down into the daily cycle bottom at any time and it would probably take gold with it.

    At this point it's probably better to just wait and get in as close to the bottom of the cycle as possible.

    That's probably still a couple of weeks away.

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  56. Yeller junk headed to 1025...giddy up...

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  57. Anyone have a contrarian opinion about UNG, nat gas etf? Looks like everyone gave up on it...

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  58. I expect it will bottom along with oil and everything else in a couple of weeks.

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  59. The note auctions this week have not been going well. TLT and TBT volume bars stand out today.

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  60. Gary,
    I am not that familiar with miners, but if you were to name a quality stock and a turbo-charged, high beta, leveraged play on precious metals strength, what would be those 2 stocks?

    kk

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  61. I usually suggest investors stick with ETF's when buying miners because company specific risk is always high with these things.

    The one company that I would buy as a separate trade and not part of a basket ETF is SLW.

    It's not actually a miner, more of a silver bank. So it doesn't have quite the company specific risk that most miners have.

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  62. Gary, you gave me a ticking off a few months ago because I said I was a seller all the way to $1350. I didn't reply to your reply so to speak.
    What I didn't make clear when I originally posted was that I was not going short, but simply unloading part of my existing position which I had acquired lower down. It was a strategy that worked very well. I am now in buy mode on the juniors, but on reading you blog...which I take seriously... I have to confess ignorance.
    I have no idea what you mean by, "a left translated daily cycle".
    Please explain or point me in a direction where this concept is already explained.
    Sorry to put you to trouble !

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  63. First off let me apologize if I offended you, that's never my intent (although sometimes its tough even for me to stay calm with some of the vitrol I've had to endure)

    A left translated cycle is one that tops left of center. So if a normal cycle last 40 days then anything that tops in less than 20 would be considered a left translated cycle and the odds would be good that price would then move below the prior cycle bottom.

    If you are a sub there is a good explanation of left and right translated cycles in the terminology doc.

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  64. Gary-
    You are appreciated and add tremendous value.
    Just wanted to counterbalance all the negativity I see you exposed to. I am a fairly new subscriber.
    Thanks

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  65. This comment has been removed by the author.

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  66. I am a new subscriber as well. The first lesson I am still learning is being on the sideline without skin in the game. Notice my last post about a crappy etf that's been kicked down so long it should be taken out of business...

    Where is that 800 number again?, gamblers ananon?

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  67. Gary,

    What is the chance of gold breaking $1000? Gold seems set to fall pretty hard.

    Fred

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  68. I doubt it. Remember gold is making new all time highs in most other currencies.

    It's probably the reason this D-wave has been so mild.

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  69. If that's the case the dollar would be in free fall.

    Human emotions run in cycles of hot and cold so the dollar will eventually top and move down into an intermediate low.

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  70. we will see 84 in the dawler...nice pop today...still short oil equities and lawng dawler...flat yeller junk...but looking to get long very small here...buyers of 2 yr notes got slammed today....ouch!!!

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  71. Gary,

    You seem to have made a terrific call on the market.

    Re: the "goofy" notion of gold price manipulation by governments, see a new posting at Jesse's Cafe Americain, commenting about a new Daily Telegraph UK article.

    http://jessescrossroadscafe.blogspot.com/2010/03/browns-bottom-is-enormous-issue-in-uk.html

    There is an ongoing political controversy in Britain about Gordon Brown's sale of UK bullion in 2004.

    According to the article, the secret intent behind Brown's apparently clumsy dumping of gold at the bottom of the market was to ram down the price and supply ample bullion to bail out two overextended bullion banks operating in London at the time, AIG and Rothschild. Both were massively short gold. Sound familiar?

    This incident suggests a principal goal of government involvement in bullion markets isn't to hold down price per se, or shaft retail investors, it's to assist and profit systemically important bullion banks as necessary. The US Fed's fingerprints are all over this.

    From the article:

    "In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999. Mr. George said "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake.

    Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."

    ------

    It's not necessary to believe the government pulls strings on a daily basis. But your conviction that our (and the UK) government is completely hands-off the gold market, and nothing else in the economy, is baffling sometimes.

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  72. Let me ask you this. What difference does it make if you think gold is or isn't manipulated? Obviously all the manipulation in the world has not been able to hold back the bull market.

    So if the price can't really be controlled then why worry about it?

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  73. Amen, Gary. You never hear anybody on trading blogs complain about manipulation when their trades are working.

    All of the whinging about the Fed, PPT, etc. completely misses the point. Trading for the small home-gamer and professional alike is all about riding the market in the prevailing direction. Whatever and whomever might be moving it are irrelevant.

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  74. Gary,

    Who can know what effect they have? Does the CIA discuss its successes & failures?

    Sure, they probably fail a lot, like they do with everything else. It's like the alleged secret buying by the Chinese government. You have some unknown, extremely deep-pocketed player lurking offstage. It probably can't affect a long-term trend, but it might mess up the short-run, cause losses to longs, confuse technical signals, etc.

    Anyway thought you might find it interesting.

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  75. If you are worried about short term trends then just buy physical and forget about it.

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  76. Gary,

    Your false-first-move scenario out of the weekly USD coil seems to have played out, with a breakdown immediately reversed by a breakout in the opposite direction.

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  77. Gary,

    Easily 80% of the comment on this board is about short-run market analysis.

    This reminds me of exchanges I had with some of my economics professors. If it messes up the model, it will be assumed to be immaterial.

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  78. Gary,

    All my work shows we see SP1200+ before a significant correction. The fibs support it too.

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  79. Maybe so no one knows. What I do know is there is nothing that any of us can look at that will tell us the future.

    So all your work that says we see 1200 before a decline is about as usefull as the next guy whose work says we are going to 1000.

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  80. To "Strong" USD Anon on March 23 .. this is from a very interesting blog I read, Fund My Mutual Fund ... Blogger's name is Trader Mark .. essentially its an overview of whats happening in Europe, and the perception, right or wrong ( and he believes it to be mistaken ) that the USD is a Safe Haven Currency
    http://www.fundmymutualfund.com/

    Yesterday was one interesting day outside of equity markets...

    It is quite fascinating to see poor economic data - especially of the housing kind (yesterday's February new home sales were the worst on record, despite the US government bribing people to buy homes and near record low mortgage rates) - and European distress completely ignored by market players. Investors look to be under the belief that "where there is a will, there is a bailout" but seem to be ignoring this is simply inning 1 in a series of sovereign debt issues. Yesterday, Fitch downgraded Portugal's debt (the P in PIGS) [Mar 9, 2010: Portugal Tries to Front Run Bond Vigilantes], and EU members continue to squabble on the best way to bail out Greece. "To IMF or not to IMF, that is the question!"

    The US dollar climbed Wednesday to the highest level in more than 10 months against the euro on mounting speculation the EU would ask the IMF to help bail out debt-ridden Greece in a sign of European weakness.
    A French government source said: "There are different opinions on the degree to which the IMF would participate in an aid scheme. "There are some countries that want no IMF at all, some that would accept technical IMF assistance, some that are ready for a certain amount of IMF financing and others that want the Fund to be the only financial provider."
    Analyst at British bank RBS added: "The involvement of the IMF is a negative on the European solidarity front... because it challenges the idea that the euro area can sort its problems out on its own."
    The Fitch ratings agency meanwhile lowered Portugal's long-term debt rating by one notch and gave it a negative outlook, warning that a severe strain on public finances had reduced the eurozone country's creditworthiness.
    "The last time that we recall the greenback making such broad-based gains in the market was at the height of the Lehman Crisis, where extreme risk aversion prompted capital flight into the safe haven US dollar," he said.

    So with all this mess, the US dollar is winning the "least ugly" (for now) award. Remember, this is going to be a chronological crisis - and the US stands as the world's reserve currency; hence is at the very end of this huge daisy chain. So even as the US spends like a drunken sailor, it is the only country in the world that can get away with it due to being the largest and most liquid currency - and bond market. And perceptions will take a long time to change. The great irony is the divergence in the bond market and the currency market yesterday - the US dollar surged as a quite bad 5 year auction happened. Which might be the first signal of investors reluctance to fund the non stop debt explosion in the US. (or if you live on a grassy knoll, it could be our chief enabler China stepping back from the table to show the US what it could do ... payback for Google?)

    Either way, Miss Congeniality in the Ugly Currency Contest broke out to 10 month highs:

    here he has a USD Chart attached

    Made all the more hilarious by the fact that the US is already ahead of Portgual into the race to "the next Greece" - thankfully we have a printing press to make all our problems go away. Not so fortunate for such 'easy fixes' in Portugal, Greece, Spain et al.

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  81. Gary,
    Regarding your daily cycles low, there seems to be no weakness suggesting a sharp pullback is on the horizon. Looking back in 2009, there was a period between Early November to Mid January, where RSI 5 never registered an oversold condition. Could we be in similar environment?

    kk

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  82. In January we began a major correction? If you think we are in a similar scenario as January I really wouldn't want to be a buyer.

    I continue to think the best position right now is not to chase this rally. Sentiment is now skewed wildly bullish. That's never been a good time to be long.

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  83. Gary,
    I am not saying we are going to escape a correction. All I was questioning was the timing - from early november low to early february low (those were 2 occasions when RSI <5) was ~60 days, which is much more than the 40 day cycle you are looking for. My question is why can we drift/hold up in to earnings around mid-april and correct in to early may.

    kk

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  84. Sure anything is possible but that long cycle was very abnormal. It would probably be unlikely to see two such cycles in a row.

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  85. Today GLD is up, the market(as usual) is shooting higher, the dollar is slightly down and yet GDX is at best flat. Why?

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  86. The miners are probably still discounting lower gold prices ahead. We probably still have another 10 days or so before we can expect a bottom in gold and on top of that the market still hasn't corrected yet.

    Another possiblity is that everyone is selling and piling into the tech sector...which probably isn't a big plus for tech in the near term.

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  87. I am buying like crazy today, especially technology. I am thinking we will have another internet bubble and want to get in early. Gold will get smashed and the US dollar will gain heavily as we produce real econonomic growth and productivity gains.

    The US will again be the economic leader and commodities will tank.

    Thanks for doing the blog Gary.

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  88. I'm guessing that last comment was sarcasm?

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  89. Gary -- are you Toby Connor at Minyanville?

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  90. Jayhawk, no sarcasm. The US is already the most productive, educated and technologically advance country in the world.

    Things are being set up for the next internet bubble AKA Web 2.0.

    The US dollar will be king again with real non-inflated economic growth and commodities will get smashed ending this commodity bull cycle.

    Gold has already quadroupled and oil is up 600% since this cycle began. Btw, I am not beanie nor do I like beanie.

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  91. I will point out that most major bull markets can rally 1500% to 2000%. In that case gold has a long ways to go yet.

    If this is the start of a new secular bull then it started without stocks becoming cheap (never happened in history).

    If this is a new bull market then what is the driver to create the millions and millions of new jobs? (It's not going to be tech. Bubbles don't reflate...ever).

    If this is a new secular bull market how is it going to circumvent the unimaginable amount of debt that has been built up and is still building? We already built the last phoney cyclical bull on a base of ever expanding debt. Obviously that didnt' work so good.

    If it didn't work the first time what makes one think it will work this time by just quadrupling the debt?

    A lot of things need to happen before we can get a true secular bull market started again. So far the powers that be are hard at work trying to prevent those things. In my mind that would seem to indicate that it is going to be a long time yet before we can start another true secular bull.

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  92. Gary
    Any thoughts on the announcement about China's coming trade deficit.

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  93. Nothing off the top of my head.

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  94. Gary,
    What's the difference between the SMT blog and the Goldscents blog? Is the information and subscription service the same for both? And what's the deal with the name Toby Conner?
    Thanks

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  95. Yes its the same. Like I said several times last week Toby is the ghost writer for my new partnership. We started the GS site so we could separate traffic brought in by marketing efforts from the SMT.

    (My partners commissions are based on traffic to the GS site)

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  96. So you and Toby are two different people? Earlier someone asked and you said you were Toby.

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  97. No Toby is the ghost writer (me) for myself and my editor/marketing partner.

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  98. Cool, hope you do well. Minyanville is good site.

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  99. Thanks. One of my long time subs talked me into letting him promote my writings and see where we can take it.

    I've never had any ambition to do that myself (too time consuming. I have more important things to do...like rockclimbing).

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  100. Gary-

    My June GDX 48's are down 80%! :(
    SLW 15's down 54%.
    Should I just hold them?

    Brutal calls this year buddy, no offense. Hopefully, you will get your grove back or else Gary will need to go away and some new name like Toby will have to try and lure in new subs.

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  101. Hold them. PM's are getting ready for a BIG leg up! Just a few more days to go... not sure how many (could be tomorrow)... but we need a handful more of 'good drop' days... A buy opp is coming! Get ready!

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  102. Gary did advise selling positions a while ago. I did and it was a good call.

    I went short yesterday and some more this morning. The downdraft shouldn't last too long though.

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  103. I have to ask why didn't you sell them on the 9th when I said I was selling positions?

    At this point you might as well hold them since you still have plenty of time but no value.

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  104. Gary, wanted to see if you could do a post with some analysis on targets for the Dollar and Gold over the short/mid-term? Being a believer in the PM story, I've gotten dinged a bit this year but am anxiously awaiting an entry over the next few weeks.

    Frankly it has been impressive how well Gold and PMs have held up relative to the Dollar's huge move up. However the persistent Dollar strength has grated away a bit at my confidence in a meaningful move in PMs over the next few months, particularly factoring in your cycles.

    thanks

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  105. JJ,
    Gold has an intermediate cycle bottom due soon. The rally out of that bottom should develop into the A-wave advance.

    As strong as gold has been I wouldn't rule out a full test of the Dec. high.

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  106. Gary,

    As someone who denies there is manipulation in the gold market I would be interested in your take (specific response to the information/claims) on the latest GATA findings:

    http://www.gata.org/node/8466

    A trader clearly identified a couple of days prior to February 5th that there was going to be a price take down...

    I enjoy your blog, but it is frustrating to have you not even consider the possibility that the metals are manipulated at times...

    Joseph

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  107. At the time
    gGold was in the ending phase of a daily cycle along with the huge selling pressure coming off the stock market as it moved down into an intermediate low.

    Does anyone really think gold should have resisted that? It never has before. So I don't know why anyone would assume that anything different was happening that hasn't happened many times in the past.

    Again I have to ask if the market is being manipulated how in the hell has it managed to rise from $250 to over $1200?

    It's probbaly best to let the nut cases at GATA worry about manipulation while the rest of us just continue to ride the bull market.

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  108. BTW you really consider an article on a conspiracy theory website supported by nothing more than heresy evidence as proof there is manipulation? Seriously?

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  109. Gary, Are you accepting that a new deflationary environment is taking hold of the economy given the dollar strength?

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  110. LOL not even close. Nothing is deflating. The dollar strength is just a refection of Euro weakness nothing more.

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  111. Interesting you have that position now, given you have repeatedly said a rising dollar would indicate the markets expects massive deflation. We now have a dollar with multiple technical indicators saying cyclical bull. I would list them but I'm sure you know them. It really seems like deflation is taking center stage. How do you reconcile your LOL with the facts that the dolllar is rising.

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  112. I don't recall ever saying a rising dollar meant deflation.

    It certainly did in 08 but that doesn't mean it does now.

    I mean lets face it, nothing is deflating. Gold is just shy of $1100. Oil is still over $80. Gasoline is close to $3.00. The stock market is making new highs.

    It sounds like you want a rising dollar to signal deflation even though all evidence is to the contrary, but unfortunately our wishes don't usually shape reality.

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  113. Brian
    You are 100% correct with your deflation position...yes the dollar is higher against the euro, but have you noticed the yen lately...a double dip severe recession will pressure all assets across the board...just wait till the hot free money unwinds...it will be ugly...

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  114. Sold some yeller junk @ 1105...

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  115. Then Yen is about 7% stronger than one year ago. So what's your point?

    The printing press of BB will triumph. Trust me and Gary on that one.

    You should be massively short gold if you believe in monetary inflation. Please understand that Japan has not even had monetary deflation. There has not been a single event of true monetary deflation anywhere on the planet unless a country fixes its currency against a benchmark like the USD.

    The mild price deflation in Japan has actually been positive for the average citizen unless you are crazy Keynesian who obsesses about aggregate demand. God, I hate Keynesians. Especially Krugman.

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  116. Gary said: "LOL not even close. Nothing is deflating. The dollar strength is just a refection of Euro weakness nothing more."

    So when the $ is strong - its just Euro weakness, but when its weak, it's money printing and Ben?

    How convenient!

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  117. In better news.....

    Gold may be forming a reverse head and shoulders pattern on the daily chart. If it breaks $1140, it has about $100 of pop in it if not more.

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  118. The dollar is obviously weak or all the things I mentioned wouldn't be holding up in the face of a strongly rising dollar.

    The truth isn't that we are experiencing deflation right now, obviously we are not. The truth is that dollar strength is purely an illusion created by Euro weakness.

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  119. As much as I would like it not to be so I think at this stage of the bull market gold is still tethered to the dollar. In order to get a strong rally we need to see the secular bear market resume in the dollar.

    I'm certain it will eventually as none of the money printing schemes the Fed has tried have really made any fundamental change in the economy. So when things start to fall apart again the Fed will restart the presses.

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  120. Gary, you keep saying printing press. It seems like the fed is done with qe. With maybe there will be another deflation before they restart qe. Which pm will tank first.

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  121. Deflation seems to be lurking all around us in our daily lives, whether it is prices we pay for housing, consumer goods etc. The only place prices have been rising lately is the stock mkt, but that is just a correction from oversold conditions and will most likely resume the downward trajectory soon. Wal Mart even includes blurbs about deflation in their earnings reports. I can't really think of anything I have bought lately where I thought the price had really gone up.

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  122. I thinkk Ben proved that defaltion can be halted in its tracks in a purely fiat currency.

    We just experienced the worst deflationary scare in 80 years and it lasted all of 9 months.

    Debasing the currency in the 30's was also the presciption for the end of deflation.

    Deflation is a nice theory but it just doesn't hold up in the real world.

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  123. Gary
    C"mon oil/gas is sooo manipulated by the free money...demand has been dropping for the last 18 months...next...

    btw...IMF rejecting bids for gold...to low...they all think its to high...be careful...1025 soon...

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  124. Well oil and gas have deflated 50% from their peaks, same with the Nazz. Rents, house prices heading lower. Consumer goods prices lower, and this US society is just a big consumer society as we have shipped most manufacturing jobs offshore. Call it what you may but we are in a deflating economy. I believe what the govt has done is just add some salve to the wound. It will eventually fester. I suppose they could print forever but it seems eventually the populace will cry uncle.

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  125. What does that tell you that oil, gas, copper, gold, Platinum, Palladium, etc are still elevated despite little demand?

    Deflation is a decline in the money supply. It just can't happen in a fiat system unless the powers that be wish it to.

    Like I said, the proof is right in front of us. The worst deflation in 30 years halted in 9 months.

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  126. Gary,
    wait until the unemployment extension runs out. Look for the housing to take another leg down. After the elections, if we make it that far, we will have to pay for all if this.

    Oh, the bond market said to Ben yesterday, do NOT print anymore.

    I see a blow-off coming but the timing is the question. 1228 is about the 61% vib retrace and it's lights out, imho.

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  127. I agree with Gary. From a business point of view I see prices holding steady or increasing in our component costs. Other costs like consultants, services, fees and taxes are all increasing. Even wages aren't dropping. There's simply too much liquidity out there to allow prices to drop which is why I suspect the inflation numbers from the government are massaged to be low. This allows them to print money without acknowledging the inflation that they are creating.

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  128. I can't really think of anything I have bought lately where I thought the price had really gone up.

    Food? Heating? Education costs?

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  129. Locally and for items with lots of competition (like clothes), there isn't much inflation. Once you start looking at worldwide costs (in dollars) you see inflation. Since most of our "stuff" is produced in China and they purposely tie their currency with ours, this mitigates any inflation. If China actually allowed the yuan to float, we would see massive inflation.

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  130. gazzer ya gotsta give it up for da dawler! I called it on this blog in nov 2009. Dawler headed for post 85. Let's hear it one more time for the DAWLER!!! Give it up with that yella junk!

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  131. gazzer ya gotsta give it up for da dawler! I called it on this blog in nov 2009. Dawler headed for post 85. Let's hear it one more time for the DAWLER!!! Give it up with that yella junk!

    ReplyDelete
  132. gazzer ya gotsta give it up for da dawler! I called it on this blog in nov 2009. Dawler headed for post 85. Let's hear it one more time for the DAWLER!!! Give it up with that yella junk!

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  133. Inflation is a monetary phenomenon. The way that it leaks out into general prices is uneven and a function of what I called "intrinsic demand". It starts bubbles that go far beyond the underlying inflation. E.g. gold in 1980, oil in 2007-8 and housing in 2001-2006.

    Monetary inflation will have little impact on houses in Detroit and clothes from China where there is copious over-supply and low to moderate "intrinsic demand". Globalization and technology has also changed the inflation dynamic. In the 1970s monetary inflation had more direct impact. The main reason is that globalization has taken away the direct impact on labor costs.

    I suggest that people read up on the True Money Supply (TMS) that the Austrian school uses to monitor inflation. MZM, M2 and M3 are all sending false signals because they contain things like Money Market Mutual Funds. You don't create or destroy money when this component goes up since it is a purchase of an underlying part of a fund that the fund manager invests in securities. People are withdrawing money from MMMFs because they pay less than 1% interest. That creates a false signal and the deflationists will go on about that M2 yoy % increase is approaching zero. I would not be surprised if it goes negative.

    Similarly, M2 never even went negative in Japan over the past two decades.

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  134. Gary, you make some pretty confident calls and to be honest many have just been wrong. You've advised selling winners and keeping losers, you've mentioned that the government would have no interest in supressing the gold price and you've been calling the dollar down since the start of the year. Since you have paid subscribers and your giving investment advice freely over the web can you at least tell us more about your back ground? What qualification do you have to be advising people on how they should be investing?

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  135. His qualification is that he's made me tons of money and taught me how to be a better investor. Background? Weightlifting, I think :)

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  136. I don't think Gary is in the business of giving investment advice.

    He is an investor who follows the markets closely and gives his analysis.

    Follow him if you want or don't follow who the hell cares.

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  137. Gary have a good weekend my friend. I am gonna stick with you because I think you have the big picture right.

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  138. Why is it that the hyper-critical posts are always anonymous?

    (This is a rhetorical question)

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  139. Extremely tricky year to trade these metals.

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  140. Get ready for Dow 36000 folks!

    Even Dick Bove is now more bullish than I am.

    BAC and other big banks slated to quadruple within 3 years, he says.

    I think he's super drunk, but I like the call.

    Buy buy buy!!!!


    Beanieville

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  141. I never did like those lines of logic that state - "buy stocks b/c they are going to the moon" - but in their promotion of a price, they never give you a good entry point that reduces your drawdowns. Sure the DOW may go to 36,000 one day, but do I want to enter now? And even if it did go to some astrologically high value, shouldn't we trade the market until it gets there - swing trades? It's not going straight to that value - we know that... so let's focus on the pivots. For this year , there have been 2 pivots.... Jan 11th (approx) and Feb 5th (approx). Who knows what the next one will be, but it'll be clear that if you find the pivots, you'll be most successful - not necessarily identifying a LOONG term ending point. Furthermore, Obama said 'buy stocks' 3 days before they bottom on 3/6/09 at 666 (S&P). Obama's gov't just sold Citi stock - netting $8 billion for taxpayers. I'm going with Obama on this trade... selling some shares...

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