I know this is hard to do, especially when one is weathering draw downs. And of course a liberal dose of gloating from the bears during these times doesn't help either. But let's not get sidetracked by the little things and let's face it the haters are going to show up every time gold corrects. We really should be used to that by now. They've been doing it for 10 years.
The cold hard reality is that gold is still in a secular bull market and the naysayers are having to ply their trade from ever higher levels.
So let's take a look at what's really happening shall we.
The single most important point everyone should keep in mind is the breakout above the 1980 high of $850. If it wasn't for a once in a generation stock and credit market collapse I don't think gold would have ever dropped back below that level. Even so the move was very brief and has now been tested at the last B-wave bottom.
Folks I seriously doubt the world will ever see sub $850 gold again. Just like we've never seen sub $250 gold after the breakout in the 70's. So anyone forecasting $700 gold just doesn't understand how bull markets work. It just ain't gonna happen.
Next came the breakout above the last C-wave high at $1025.
That breakout was also tested during the February yearly cycle low. I doubt we will see gold back below $1000 for the remainder of this bull market.
Now gold is trying to breakout and hold above the next big resistance level of $1200. The initial break in December was repulsed. Now we have a second break that is in the process of testing the breakout.
Now I have no idea whether this breakout will be the one that holds or whether gold will have to consolidate a bit more. But sooner or later gold is going to break above this level and never look back.
I think we probably have enough time left in the current intermediate cycle for it to happen soon, but if not, I'm confident it will happen and I'm on board and ready for the ride when it does.
My suggestion is when you start to get sidetracked by the daily wiggles or the intermittent draw downs you come back and look at these charts and stay focused on what really matters.
I agree, the dump today was margin calls (due to the Germany thing) and the need to sell liquid assets. I added to today. GDX bounced right off of support.
ReplyDeleteIn the end the market will do what it has to do whether that's gold up or down despite anyones best guesses. My fault with your analysis is that based on 'seriously doubt' your risking all your capital. I think it's certainly possible that we have a repeat of 08, it certainly seems to me that the stars are aligning for another bout of deflation blow out. I am by no means a hater but I do like to enter my trades at the right time. My sympathies for all those in draw downs, we've all been there, I hope you don't have to suffer for to long.
ReplyDeleteMy assumption is that any serious deflation and the Fed will just crank up the printing presses again.
ReplyDeleteLet's face it Ben stopped the single worst deflationary event in 80 years in it's tracks in less than a year.
I really doubt he will allow deflaiton to even get the slightest toehold this time before rurning on the presses.
But I'm hardly risking all my capital. There is no way gold can go to zero and as I only invest in ETF's or build my own ETF by buying baskets of stock there is no way for me to lose all my capital.
Wouldn't it be nice if one could always "see" the right time? Unfortunately without a crystal ball it just isn't possible.
ReplyDeleteGold is late enough in the daily cycle that we could get a bottom at any time.
At this point the prudent approach is the "old Turkey" one. Hey it is a bull market after all!
No turkey here fellers...ole yeller is quikly cumin to 1170...jest lowered all btc to 1150..we are goin there lik a magnet to metal...lawng capitulashen cumin...johnny paulsen goin to git out i a recken...soon...back to very shart stox...btw i be not sellin dawlers at thez levels...she bee goin hier...
ReplyDeletehope u fellers mak sum benjies twoday...
Dawler Guy out...
anon@9:45pm says "... but I do like to enter my trades at the right time."
ReplyDeleteLOL!! Me too.
Anyway, today is the "right time" for me to add the last of my free cash- 25% to SGOL and DGP, then buckle up and take the summer off.
Cheers and good luck to the gold bulls.
That will get me 100% invested, no margin as yet, but a possibility of additional 50%.
ReplyDeleteNot fond of margin as it's easier to ride the secular bull knowing they cannot take me out.
Well Today will be a kind of MAX PAIN day, I bet to see at least 8%down moves in all of my miners, which will kill approx. 20k$ value of my holdings. These strong swings are tough if you have no vision but lukyly I think at the end , whenever that will be, it will be worth the pain, and hopefully I will not suffer any negative long term effects for the rest of my life;)
ReplyDeleteLOL the bull will certainly do his best to drive one crazy.
ReplyDeleteGary, I'm curious why the example of Japan doesn't question the ability of the Fed/Treasury to ultimately beat back the forces of deflation. Japan has their own set of printing presses, and for decades they've been unable to fill the void left by the popping of their credit bubble.
ReplyDeleteActually Japan for the most part was depending on massive savings to prop up their bubbles. They didn't actually resort to full on printing until just recently when they finally ran out of money.
ReplyDeleteThe US is already into the money printing process. The same process that halted deflation in the 30's and recently.
Bernanke was correct, a determined government can halt deflation as long as they are willing to destroy their currency. I think Ben is willing to do so and eventually will.
Any thoughts on palladium/platinum as leading indicators for the PMs?
ReplyDeleteDeflation-meisters don't understand that gold performs even better in those conditions than inflation.
ReplyDeleteI'm gittin' in there and mixin' it up again today.
Platinum and Palladium both are consederably above their Dec. highs which suggested gold would follow and it did.
ReplyDeleteLike I said it's a bull market. The stock market is moving into an intermediate cycle low. That is pulling everything down like it always does. Gold is probably also moving into an intermediate low. Once we get through it gold should break through that $1200 barrier and the next leg up should be underway.
In reality this is the best miners have ever held up during a stock market move into an intermediate low.
ReplyDeleteOnce we come out the other side I expect miners to break through the old highs and be off to the races.
Gary, When would you start adding to current positions to average down on GDXJ and SIL.
ReplyDeleteAll, This reminds me of the summer of 2007 when all my longs got redder than heck and then Aug. 16 hit and we bolted to the DOW top in Oct/Nov before topping out and recession hit.
ReplyDeleteWhat is different is I was 100% long. Now I am 50% long with gold/silver and 50% cash.
If we break 1044 hard on S&P, then I will hold what I have and begin deploying 50% cash to the single or double short ETFs so I can hedge my losses.
If we bounce from S&P 1050 area then 50% cash - go long FAS QQQQ and SPY.
Anyone got any problems with my logic? TIA
Anon,
ReplyDeleteI would wait till gold forms a swing low.
Tom,
For me personally I wouldn't waste time shorting as long as gold remains in a bull market.
There just isn't a heck of a lot of profit potential on the short side and double inverse ETF's are so volatile they are almost impossible to hold on to during the wicked counter trend rallies.
One certainly doesn't want to sell the break below 1044 that would be a huge mistake. Sentiment is already wildly bearish. Even in a bear market that always leads to a violent rally.
If the market breaks 1044 then you need to wait for the bounce and sell into bullish sentiment. It's pretty tough to do but that is how you make money on the short side.
Of course one runs the risk of Ben embarking on another mad printing spree and derailing the shorts.
Hey he did abort a left translated 4 year cycle. I still can't believe it.
All in all the dangers on the short side are too large and the poential reward so small that it just doesn't make sense to waste time and capital in that direction as long as there is a bull market to invest in.
I have said it many times, look at the Japanese money supply figures since 1990. They did not ever "run the presses", especially in the early 1990s.
ReplyDeleteTheir recipe was classical Keynesian deficits with government spending, which of course failed miserably. And nearly all Japanese debt is held internally by pension funds, etc..
Further, Japan has never had deflation as defined properly, i.e. monetary deflation, i.e. shrinking of money supply.
where are the many hits that your blog usually sees in extreme times? -3.5% today seems really bad!
ReplyDeleteI suspect it's because gold and miners aren't really getting hit that hard.
ReplyDeleteI entered full positions with the HUI between 430-440 so anyone who entered at the same time isn't really even into draw downs yet.
It isn't as much fun to kick someone when their down if they aren't really even down :)
We already saw huge inflows into the SPYDER's yesterday and sentiment has reached extreme bearish levels so we should be getting close to an intermediate bottom and so far the precious metals sector has weathered this splendidly.
How's that HUI will decouple from the overall market thing working out?
ReplyDeleteLike I said the precious metal sector is holding up splendidly :)
ReplyDeleteWell, on a one month chart GDX is +1.58% and SPY -9.82%.
ReplyDeleteGary,
ReplyDeleteIn any case, the HUI chart certainly seems to negate the C-wave, now.
It´s hard from time to time but your insightful analysis keep me focussed. Thanx.
ReplyDeleteAnon,
ReplyDeleteHardly, if anything it strengthens it. If the sector shows this kind of relative strnegth during extreme stress imagine what's going to happen when that stress is lifted.
Like we keep seeing, gold holds up while the miners get hurt. I wonder when this will change, or might it stay like this and we should be in gold only?
ReplyDeleteGary,
ReplyDeleteThanks on your thoughts to my post.
GANG, I may be old but I am always ready to learn new things and change my directional ways.
Here's an example:
http://www.youtube.com/watch?v=SeMFZ05YgDY
Gary,
ReplyDeleteA couple of questions for you:
1) You mention buying more when gold hits its next swing low. How do you when that will be, and at what price?
2) Do you use the double long gold ETF (DGP) for part of your gold position? If not, why not?
3) What does the paid subscription buy me? How often do you publish? Do you track only gold, or other markets as well?
Thanks in advance for your answers!
Pretty nasty out there today. Are we getting to oversold yet?
ReplyDeleteGonna test Feb lows on miners? Not likely with the real thing holding up so well, says me.
Watch for panic selling right here folks.
ReplyDeleteBuy on the capitulation
Good times. Silver miners taking some serious blows. I have not done the math but a personal favorite of mine is down 25% or so in one week! Blood in the streets for sure on these silvers (CDE, HL, SSRI, PAAS, etc).
ReplyDeleteI've said it before, if you are going to play a gold bull by using it's unproven younger brother silver (esp a leveraged play with things like SVM and SSRI), be prepared to endure massive losses. Positions entered back in January on SSRI are down 23% still.
I think at this point, a much more catiuous approach would be to out weigh gold (75/25) and speculate on the silvers later in the game. Grab a core position in physical (I still think gold for now)...Hang onto this stuff for until we see dow/gold ratio even out. Take your other capital and put a decent chunk into the funds like CEF, PHYS. Then the miners...Go with the stronger golds for now. I guess that would be a much more conservative take on this.
Why do I have the feeling that last weeks high in Gold was a Bull Trap?
ReplyDeleteLooks like the CBs are starting to sell the dollar. The SNB has been working overtime the past few days selling CF and buying Euro and the Fed's swap lines are going to prop up the Euro further. There's a bottom in the market somewhere in this deep dark hole...
ReplyDeleteNo BOW numbers today anywhere to be seen. Interesting
ReplyDeleteGuys, for Bow or SoS don't forget it's OpEx week. You often gets skews one way or the other. This crazy market movement won't help any. There usually is one big BoW for the SPY on Opex week. Look up the history.
ReplyDeleteOk so I am a newbie to buying silver / gold.
ReplyDeleteWhat is best bang for my money ?
Gold eagles? Krugerrands? Silver eagles? Morgans? and does quality matter?
I like em all!
ReplyDeleteMix up the one ounce golds--Maple Leafs, Eagles, Buffalo's, same deal on the silvers. Silver rounds are another option...Some like to get the 90% junk bags, 100 OZ bars. Shot gun approach is what I'm doing.
PS-
ReplyDeleteI've had great experiences with APMEX. Others like Tulving-but you will have to buy 20 OZ of gold per shot with them.
GoldMoney or Bullionvault is your other option for holding some sort of physical, but they vault it. Much more liquid if that is what you want.
Dawler Guy,
ReplyDeleteYou think the dawler's done for now?
Y'all need to listen up folkes...be sellin me dawlers, thinken dem dar centraal banker be buyen euros. Lawng euros for the pop...still no intersest in da yella or white junk...
ReplyDeleteReally annon, do you think it's wise to be taking advice from someone who can't even spell??? Hey 'dawler guy' can you elighten us all to your shoe size and if it matches your age?
ReplyDeleteWell, my equities account certainly doesn't look good EOD today...
ReplyDeleteTommy D: Thanks for 'Hash Pipe'
"Damn, that shit was dope"
;-)
@anon May 20, 2010 12:15 PM asking about which coins to buy. here is my 10 cents( it use to be two, but inflation over the years..haha)
ReplyDeleteIf you live and pay taxes in the USA then you should buy eagles or Buffalo's only. They are legal tender, therefore not subject to reporting or taxes. What you would be doing is trading Federal Reserve Notes for US Government money. Buying maple Leafs or Krugs, bars, silver rounds, they are treated as collectibles for tax purposes. Holding for over a year and they will be subject to 25% tax on profit...and do you really want to give the Den of Thieves (Congress) any more money than they are already stealing from you? Just something to consider before you buy. Also, deposits with bullionvault or goldmoney are also subject to US taxes for Americans. This is not meant to criticize those companies, as they seem very reputable, but just to give you the tax implications.
This is all starting to recall the mighty deleveraging of Feb. '09. Indicators are deeply oversold, yet buying rallies are weak and soon snuffed out. Personally, I don't think sitting in cash until the smoke clears is such a terrible idea.
ReplyDeleteSpot gold was all over the frickin' map today.
what happened to oldster with his plan of just waiting for gold to break above the old high and go long?
ReplyDeleteI hope Gary's putting together a good nightly pep talk 'cause I'm feeling pretty low, just like my account balance. Roubini's talking about another 20%...
ReplyDeleteRoubini is a permabear so his opinion is worthless.
ReplyDeleteI watched the first segment of Fast Money and many of those guys were ultra-bearish. They are generally sad pack followers. When gold hit $1240 they were going crazy about gold.
http://finance.yahoo.com/tech-ticker/dow-slumps-3.6-%22we-are-on-schedule-for-a-very-very-long-bear-market%22-prechter-says-492864.html?tickers=^DJI,^GSPC,^IXIC,^RUT,^VIX,IWN,TLT
ReplyDeleteIf you really want to be gloomy.
Pima,
ReplyDeleteOf course ther is no way to know for certain when a bottom is in but this late in the cycle I will be looking for a swing low as the most likely bottom for gold.
IT have a few unlocked reports on the premium site if you want to see what it entails. Just follow the link at the top of the page.
I cover both eht market and gold and to some extent the dollar and other commodities.
I publish every day.
http://www.finance.si/galerije/2139/12/
ReplyDeleteRiots will continue to spread. Own real assets like gold, and plenty of lead.
Hang the sumovabitches that stole it all!
I really ain't worried. Miners will come down with stocks, and even PM's to an extent, but as gold resumes it's bull market it will bring miners with it.
ReplyDeleteSince my risk tolerance isn't as high as most here, I only own gold etfs. However, the ONLY question one must ask is "Is gold done, or will if go higher?"
Gold will go higher, perhaps not next month, but that focus is too short, IMO. Last week everybody was a champ, and now they hurt, but stay focused. Gold is the ONLY bull market left. That makes it even more attractive than when 2 or 3 asset classes are all working.
Buy and hold gold for the surest trade you'll ever have.
Anon, I agree - gold is certainly the surest trade. However, right now miners are getting pounded and I wish I would have taken profits when they ran up so hard a couple of weeks ago. I just wasn't thinking clearly - I should have lightened up and worked up some cash.
ReplyDeleteWTF is happening to platinum...a big ole OUCH!!!!
ReplyDeleteDeflation fellers...ole yeller at 1170 but no cuver until 1150...jest a little there...will prob git filled twonite...1100 here we cum...sold a ton ov equity vols twoday...holy cow...git-r-done...cuvered lots of equity sharts for opex...greight tradin twoday...wished every day was lik twoday...
you fellers have a goot one...
The Reel Dawler Guy out...
During the current bull run the 150 Day SMA has been solid support on Gold.
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=2&mn=0&dy=0&id=p51465313861
Gold seems to have fallen below 1170, down more than 6% from the highs last week.
Currently stands at 1126 which would be a 10% correction from the top.
Hey Gary... what are your thoughts on the fact that gold is up for it's 10th straight year. Even bull markets have corrections don't they?
ReplyDeleteLike I've said before the most powerful bull market any of us will ever see.
ReplyDeleteFWIW there have been 6 D-wave corrections so far.
Boy, Jimbo Crammer from CNBS really nailed this one. I don't care what anybody says about how good, or even average his record is, I knew I had some pain coming when he started screaming to buy gold! LOL!
ReplyDeleteI'm now just about fully invested in gold etfs (SGOL and DGP), and will consider margining 50% sometime next week, IF miners stabilize.
Dawler boy better git his yaller soon. Miners being taxed at higher rates around the world won't help the stocks, but gold will benefit from lower production. That said, miners will eventually follow gold higher. Sellers right here would be suckers, IMO.
I certainly wouldn't sell, this is a secular bull market but I wouldn't buy on margin either. Definitely not until gold forms a weekly swing low.
ReplyDeleteThanks, sounds like a good plan, especially since I'm not too fond of margin anyway.
ReplyDeleteI'll finish up with my etf buys today (still have a great mark in DGP), getting me at 100% of capital, then wait a few weeks to see if we get a weekly swing low to use 50% margin (max).
You should have sold on the 14th.
ReplyDeleteIf you didn't sell today.
Be smart.
Keep your profits.
Don't let them vanish.
Be desperate for the pivots.
Use stop loss orders wisely.
Most of all, buy on the dips.
If one isn't emotionally equiped to withstand drawdowns then one will have to use stops but that is not how the big money is going to be made.
ReplyDeleteIf one wants to come away from this bull rich then they have to quit worrying about the day to day wiggles.
Pick a spot get in and then sit tight. If you don't time it perfectly don't fret about it. The bull will correct your timing mistake.
Stopping out of positions just ends up whittling away at your cash. That's how one ends up losing money in a bull market.
As I said the other day the easiest way for most people to ride the bull is to just buy physical. It's almost impossible for the bull to knock physical holders off.
I sure hope gold doesn't go back and test that 1000-1050 breakout area!
ReplyDeleteI have to ask, what difference would it make?
ReplyDeleteDo you think central banks are going to change their policy and just let everything collapse?
Or do you think they will just print even more?
Do you think that some how a test of the 1025 breakout means the gold bull is dead?
Do you think that this will be the one secular bull in history that doesn't end in a bubble as the public comes rushing in?
If you think any of those things will happen then get out now and stay out. If not then go on vacation for a while. You will make a lot more money and you won't end up letting your emotions cause you to do something foolish.
Cripes, NG and SVM are both down 25 % this week!
ReplyDelete"I have to ask, what difference would it make?"- Gary
ReplyDeleteYou're right on all fronts, and I know it. I guess the only difference ti would make is whether I soil myself or not. :)
LOL Well there is that I guess.
ReplyDeleteIf you were stopped out of gold at 1220, and then you buy on some future dip a couple months later, how is that going to lose money?
ReplyDeleteThe only way to make money in any market, especially bull markets, is to buy on the dips and sell on the peaks. And in bear markets, short on the peaks and cover on the dips.
And even if you get stopped out prematurely, just get back into your trade on the next dip, if you feel that it was premature.
Leverage the laws of Compounding interest.
** 10 separate trades/investments yielding 30% each is a 1300%+ return. **
Don't try to make money from the "day to day wiggles" - catch the swings - the big swings. My personal goal is to catch 30% swings (minimum) in one direction. Then, when I think a price is switching directions for at least 2-6 weeks, short it!
You'll tell me that "it's impossible to catch the pivots". TRUE. But when you got 100 different pairs of eyes, watching the prices and charts daily, it should be 'more possible'. Point is - you guys watch gold daily... you watch gold prices by the minute. But then talk about profits to be gained years from now. !?!?! What's the point of watching and writing to each other about minute price movements if you're not going to try and benefit from all this close observation???
Point: BENEFIT from the eyes. Find the pivots. They are out there.
Whether we like it or not, gold pivoted down on the 14th hitting a high of 1249. We should have all been attentive to that and notified one another quickly and loudly of the downturn. While some were doing that, others were talking about putting in orders to buy.
Com' on guys....
Gary, I am doing a small experiment on something you posted with your premium service. Just going to see if I get some results. It's a small position in ADM Only thing green in my hand, lol.... This old company may weather this storm too. Just thinking what might work and still give me a dividend..
ReplyDeleteWell "wise guy" anon@6:49, I hope you bought about ten minutes ago, b/c NG is 10% off the low already. And when did gold rip 30% from a pivot anyway? Even from the low in February to the highs was only 19.5%.
ReplyDeleteAnd that all sounds great in hindsight but in real time there is no way to know that 1249 was going to be the top. Heck we heard all kinds of top calls on the way up. If one had paid attention to any of them they would have been out a long time ago... and missed most if not all the move.
ReplyDeleteHere's the problem; you say if you mistime a trade you stop out and then re-enter lower. The problem is that you are now whittling away at your capital. What happens if the next entry is also mistimed?
You stop out agian and lose more capital. Then another failed attempt to buy the dip and by that time you are so gun shy you can't pull the trigger anymore, so you decide to wait for some kind of confirmation... a move to higher highs or a breakout.
Then of course the market pulls back after a breakout and you stop out again. Now neither strategy is working and your stops are just eating away at your capital.
Trading while it does allow one to sleep at night will for the vast majority of people just mean they ultimately lose money in a bull market.
Those that can just go on vacation and let the bull do his thing in his own sweet time will get rich from the bull.
You ONLY avg. 1300% over 10 trades? That's not so good! :)
ReplyDeleteYou'll be the world's first trillionaire by 2011.
Yeah, smartass, why don't we just all listen to you, and you tell us when to get in. I see you don't count your stop-outs in your fabulous returns, while using hindsight to tell us where the top pivot level was.
ReplyDeleteWith hindsight, I can beat 1300% returns over ten trades!
How about this then...
ReplyDeleteIf you've got profits, lock them in using stop losses. Point is, you've got to capture those profits at some point (near a peak ideally), so that you can reinvest them at a lower point (a corrective dip).
As well, if you've bought gold at a peak and are now looking at a loss, then you should first learn from your mistake, and second patiently wait (years possibly) for the bull to correct your costly mistake.
I can live with that, I guess.
But all I know is that every downturn is not only a decrease in net worth, but it isn't an increase in net worth (as shorting is profitable, whether or not we like it). So, it pays to try and find the pivots. It pays, whether or not we're good at finding pivots. So the lesson for me is 'keep trying to get good at it' - don't just 'give up and rest' on the long term bull market.
NG down 25%
ZSL up 25%.
Makes a difference...
Thanks, Gary, for responding. I'll take a look at your example reports this weekend. I am much better at figuring out price levels than I am at timing, so I suspect I would get something useful out of your cycle work.
ReplyDeleteHave a great weekend!
Now that makes more sense, but how close do yo keep stops, on GLD for example. 10% away, and yoo're killing your returns, while .5% away would have stopped you out many times before the 19.5% rally since February, not only denting returns, but on a jump higher the next day, would leave you out of the trade.
ReplyDeleteNo perfect answer, of course.
That is the problem with trailing stops you limit your returns. The tighter the stop of course the less one will make on winning trades.
ReplyDeleteIf you are also going to continue to stop out of mistimed trades then what ends up happening is your winners are smaller than your losers so you still end up losing money in a bull market.
In a volatile market like the precious metals the only sure fire way to make a huge sum of cash is to buy and hold.
I do however attempt to exit at C-wave tops as my one consolation to trading.
Of course even that is tough to do in real time when the bull throws one a bunch of curve balls.
The best we can do is use history as a guide.
So far history is suggesting there should be more to this C-wave so I'm going to continue to hold on.
miners are having a tough time staying positive today, probably means we are not going anywhere for a couple of days until we digest this move down for gold. very annoying
ReplyDeleteGary, The miners have turned positive after big start down today. Could this be the reversal.
ReplyDeleteWould this be a good place to add to GDXJ and GDX positions.
Appreciate your good work.
Treasury to sell $113 billion in bonds next week. What a coincidence with the market downturn? Everyone folking to buy treasuries.
ReplyDeleteWithout a swing low you are just guessing but as long as you can hold on you could certainly buy into severely oversold levels.
ReplyDeleteJust don't do so thinking you are getting the exact bottom because you may not be.
100% cash...I don't have the balls to weather what you guys are willing to go through. I won't get rich, but I will sell at the bottom if I stay in during any large drawdowns. Still up since Feb, so taking profits.
ReplyDeleteI will sleep tonight and over the week-end. If this turns into a C-wave, I will chase the move and miss some of it I guess.
Just a note for those that have normal emotions, and don't have the balls that Gary has!
Gary, it looks like this decline is more like the one AFTER the 2007 mini crash. It may be that we simply get one more pop up to slightly higher highs and setting the stage for divergences leading to the final decline. I hope so anyway - I've bled enough and need to recoup a bit... Check out the chart here:
ReplyDeletehttp://market-ticker.denninger.net/archives/2338-So-We-Now-Have-Financial-Reform.html
I guess it may look that way to Karl but it certainly doesn't to me. In Feb. 07 we had a mini-crash just like we did a couple of weeks ago.
ReplyDeleteThe crash low was tested a couple of weeks later with a 2b reversal just like we are getting today.
During the mini-crash in 07 put/call ratios spiked to multi decade highs just like we got yesterday.
It looks to me like we are still followiing the 02-07 template minus the middle part of the bull.
The Fed's massive liquidity is amplifying all the moves. The rallies are more intense which of course then leads to more vicious selloffs when they come which is then followed by an even more violent rally.
If the pattern holds we should come out of this and explode higher into a final (I'm guessing) blowoff top.
For the Gold bulls..from Jim Sinclair
ReplyDelete"Quote Of The Day
"Price is often the domain of panic. Time, however, is always the domain of profit."
–CIGA Eric
Thoughts For The Day
1. Financial salvation cannot be achieved by the faint of heart.
2. Since not looking at the prices has been a successful strategy in Gold (over $1000 profit since we started) why do you continue to torture yourself and your emotions by computer screen paralysis?
3. Those of you that consider yourself scalpers and traders also have to consider yourself smarter than quants, algorithms, flash trading systems and Goldman. That is one hell of a reach.
4. If you are a confirmed speculator/gambler why not pick on Google and leave the gold shares alone?
5. What makes you think that you will be long on payday if you use TA for meaningless and temporary tops?"
me thinks Gary might agree with most or all of the Jim's comments
He does.
ReplyDeleteShort the peaks guys... by buying the 'inverse ETF dips' - for both gold and the indexes.
ReplyDeleteS&P has further to go with its decline. We only JUST crossed under the 200DMA.
S&P might bottom and reverse for its last leg back up on either June 2nd or June 19th . I'm REALLY unsure which it will be. I'll be buying both dips with tight stop losses.
I don't think I would use that strategy until the market breaks the yearly cycle low at 1044.
ReplyDeleteBreaking the 200 DMA isn't a negative sign. As a matter of fact over 70% of the time the market is higher a month later after breaking below the 200.
With sentiment as negative as it is right now it's just not a great time to be short. Selling into this kind of negative sentiment isn't even a winning strategy in bear markets.
One needs to sell into bullish sentiment but we still need to see some indication the bear has returned before doing that. The first sign would be a break below the yearly cycle low.
Posted this on ZH last Sunday night, in real time:
ReplyDelete"on Sun, 05/16/2010 - 23:11
#355781
Gold up $14, I've shorted right here, stop at 1244.2. If it is going to collapse, 11 CST was the time and place. If not, long tomorrow on a pull back."
In the past I've also made real time calls on this site regarding the dollar, and posted I was going to be the most short I have ever been in the stock market when I stopped by last weekend to see how you guys were doing.
The point is, Gary says here you can only know where tops are in hindsight. True, but there are high probability points in time and price you enter a market with little or no risk as shown by the short of Gold at $1242. If I was wrong, small loss. The trade is up $65, the risk was $2.20, not too bad. Although I will be flamed here for Voodoo as you call it, there are and will continue to be high probability low risk set ups to enter and exit markets using time and price relationships.
Miramar, you ROCK! You must have a 12 inch penis and not be a total douche to have nailed that trade. Good job, tiger.
ReplyDeleteCertainly there are resistance and support points one can enter at with stops above or below to minimize risk but that doesn't mean any of those points have a better than 50% chance of getting stopped out.
ReplyDeleteOne can trade this way and their winners "should" be larger than their losers. The problem is with tight stops one often loses more times than they win. So of course your winners must exceed your losers by a decent margin to consistently make money.
As long as one uses sensible position size that's not too terribly hard to do.
What you can't do is take a huge position. A string of losers in that case will seriously dent your capital.
That is the one limiting factor to making the big bucks trading. Risk control keeps losses to a miminum and most traders down't have to weather large drawdowns but that same risk control prevents one from making the big money.
You don't become a Buffett, Rogers, Soros or Paulson by trading.
You get to that level by understanding the fundamentals driving a bull market, getting on board and holding on.
miramar-
ReplyDeleteset up you on blog with your trades documented by Covester. Until then, shut your ass up.
Paulson shorted the housing market, Soros shorted the Sterling, PTJ2 shorted Black Monday, all great trades. Buffet has a huge put trade on now. Everybody is a trader, just different time frames.
ReplyDeleteWell of course there will come a time to sell gold so one could say even a buy and hold strtegy is still a trading strategy.
ReplyDeleteBut what I'm talking about when I say trading is market timing.
If one puts on a position in gold with a stop then they are trying to time a move in the makret regardless of whether the secular trend is up and all long positions willultimately be winning trades.
If one is going to attempt to "time" markets then they have to exercise risk control and limit position size, simply because timing a market is competely different that investing in one.
As long as that is the case, and it must be when trading, the overall expected reward is drastically reduced.
Understand I'm not suggesting one can't trade successfully. I'm just pointing out the limitations imposed by trading prevent one from making the big bucks. What trading does is prevent one from having to endure big drawdowns.
Unfortunately that is what what one has to be prepared to withstand if they want to make the big bucks.
So everyone just has to decide what is more important to them. Sleeping well at night or the reward of getting rich off of a secular bull market.
Gary, I see you still have the mental giants hanging around, congratulations. Really, personal attacks instead of some sort of an intelligent discussion, really?
ReplyDeleteCheck back with you next weekend. Gold is due a bounce, I'm still long Euro and Sugar riding the short covering. Later.
Again. Set up your own blog with Covester so we can track your trades in "real time". You post one comment you made on ZH? Big deal. Let's watch your trades from here on out or are you afraid you will fail the test?
ReplyDeletehttp://www.covestor.com/
ReplyDeleteHere's the site, report back when it's all set up.
KTXBIA
Hi Gary,
ReplyDeletethe 'problem' is that the future of anything including stocks and PMs is never certain. The bull market in the PMs was 'ongoing' in 08 before many of the miners lost 90% and more. That's a far stretch for even a volatile investment in a 'bull market'. SLW e.g. was praised for being cheap in 08 before it collapsed to 2.50 within a few months. Now it's up again, went even a little higher. Has it now become a risky be again. If not, what changed?
I know, you will say money printing, but that's just another argument I am skeptical of. If Bernanke is so much in control and as powerful as you make him sound, how could he miss the crash of 08. Yes, he reacted, just a little late, and then it took some time before the money sunk in, I guess. Why was he late? Was he surprised, didn't he expect the credit crunch? What makes anyone think he'll be better prepared next time? Because now he's ready, only back then he wasn't? I don't buy that.
Also, there are many bright minds who think the low of March 09 was THE low; and then many other bright minds foreseeing it will be broken to the downside, suggesting a variety or schedules for this to happen. They all know the story about Bernanke and the printing press; but to some it's like the story of Santa Claus; it works until you find out there's no Santa Claus.
While I don't disagree with the thoughts you present here on this blog on how the price of PM will take us all up with it, I am somewhat baffled about just how convinced you are that your view is the right one. With so many great analysts disagreeing about almost everything in this market and with the world of investment upside down, how can anyone be that certain of anything? I can assume probabilities e.g. that if an investment seems cheap (agriculture, silver, natgas) it might turn higher at some point rather than not, but even that's not for sure; in addition, gold having made new all time highs just recently is nowhere near cheap, or is it?
B,
ReplyDeleteActually my belief in gold has virtually nothing to do with the Fed and everything to do with human nature.
No bull market in history has ever topped until it entered the bubble phase. That is solely due to how human emotions operate.
Bernanke is just supplying the fundamental driver to get the ball rolling. At some point the bull will continue on without the fundamentals just like oil did in `08.
That final parabolic move wasn't driven by anything fundamental. We had so much oil at the time that tankers were sitting in the gulf with no place to unload it. That was pure emotion.
Gold will be the same way only the precious metals market is a much thinner market than oil, so when the public comes in it will drive the bull to much much higher heights than what happened to oil.
So my belief in the bull is about 25% grounded in fundamentals and 75% based on human emotion.
Anyone here has any experience with http://www.crawfordperspectives.com
ReplyDeleteHow are their track records? Their cycles seems very complex to understand me little guy. Infact I could not understand many things written on their website..
Arch Crawford has one of the best track records. From what I have read I believe he's been called best market timer Mark Hulbert (marketwatch) and by Timer digest more often than anyone else.
ReplyDelete@miramar. I am not going to flame you. I think that is great you made a call, put on the trade and you made some cash. excellent. But for some of us, like me, I don't have the time or desire to try and trade daily or short term moves within a week or two. Some folks do, just not me. I actually tried that couple years ago and some trades worked out well and some lost me lots of cash. So I just decided to be more prudent, watch my position sizes as Gary suggested and now every single position I have is green. All my gold/silver and the small positions in miners and that includes this recent pullback. Sure I might not make as much as someone who trades daily, but I am in "strong hands" and don't fret the wiggles on the charts. Plus it allows me a good nights sleep. Good luck with your trades. Hope it works out well.
ReplyDeleteSheesh, I just learned the tax rate of physical etfs in 28% (if held over 1 year0 vs. the typical 15% long term capital gains rate for miners.
ReplyDeleteAlso, DGP and the futures backed etfs seem the best tax structure with 60% short term, 40% long term rate.
Thoughts?
Correction on DGP, because it's an ETN (not etf). ETNs are taxed like ordinary stocks at year end, so no tax is due if you’re still holding them.
ReplyDelete"set up you on blog with your trades documented by Covester. Until then, shut your ass up."
ReplyDeleteNo options, futures or FX? Pretty worthless if you ask me.
hi gary this gold bull almost scares me half to death
ReplyDeletemost bulls run longer and higher than almost anybody could reasonably fathom...which of course leads to the ultimate frenzy
and what about the dow/gold ratio....heading back down to 1 or 2 or 3 or what wow
what would the gold chart from the 1930s to 1980 look like if it was not pegged
inflation is not even close to a problem yet
gold leads inflation follows interest rates lag what do you think gary
the last major secular top was 1980 ... 20 year bear .. just recently broke the old 1980 high , wow