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Monday, June 28, 2010

PATIENCE

If you are one of those people who absolutely loath ever taking a draw down then you might want to wait a bit before jumping in with both feet.

Gold is due for a daily cycle low any time now. It is possible that the low formed last Wednesday.


I would like to see a more decisive decline to mark a cycle low though. If you are a long term "OldTurkey"  type investor just ignore the daily cycles. But if you are still trying to enter positions with as minimal draw down as possible you might wait a bit and see if gold experiences a larger drop this week into a more normal daily cycle low.

77 comments:

  1. Gary, is it true that silver tends to drop with the market while gold may not.

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  2. If we were to get a selling climax in the market silver will be affected to some extent. For the most part though silver will follow and outperfrom gold. Massively so at C-wave tops.

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  3. If market is supposed to bottom at 2012 with Dow at 5000 or below, wouldn't that be considered a selling climax and wouldn't silver trade down a lot lower?

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  4. We just had a selling climax and silver hardly budged. The entire precious metals sector is decoupling from the stock market.

    And it's usually only during the very last days of a selling climax that selling pressure overwhelms everything.

    Of course once the selling pressure abates fundamentally strong sectors roar right back.

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  5. Do you like silver at these levels or do you think it'll come back a bit?

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  6. Welcome back, Gary. I trust you had a nice time away.

    Nice way to start the week.

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  7. I'm an Old Turkey investor so I don't really care where silver goes in the short term. I did buy on Friday but then again I don't freak out if I buy a short term top.

    I did have a good time. I have a few pics from the trip that I will include in tonights report.

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  8. Oh crap, silver is crashing right after I bought in.

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  9. anyone here a long time subscriber of arch crawford? Need to know how is his service which is based on astronomy

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  10. Nothing against the guy but how can the position of the stars possibly affect the stock market?

    Didn't we quit believing in magic several centuries ago?

    I guess if enough people follow it it might be a self fulfilling strategy but I can't come up with any logical explanation for why the stars and planets would govern human emotions.

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  11. Gary, interested to get your opinion on this article. Fed printing

    This certainly looks highly possible over the next few months if the economic measures continue on their current path south...

    Thanks

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  12. My basic investing premises for the last 10 years has been and continues to be that the USA will continue to fight the bear with the printing press. They have done nothing in all that time to make me think otherwise.

    At the recent G-20 meeting Obama pretty much guaranteed we are going to continue down this path in the face of the rest of the world initiating debt reduction measures.

    As long as the US continues to pile debt on top of debt then our only exit strategy is to print trillions and trillions of dollars.

    I trust them at their word. So I will continue to buy and hold gold.

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  13. Actually, there is scientific explanation on how positions of stars and planets can affect the stock market.

    We know the moon have an effect on the water of the oceans via gravitational and electromagnetic forces, causing high tides and low tides based on its relative position to the Earth (as well as the Sun's positioning relative to the other two).

    As such, it is not far fetched that planetary alignments can affect us via the same gravitational and electromagnetic forces. After all, our human body is 70% water.

    That translates to effecting us neurologically and emotionally. That is why on certain days when the market is down a lot, people are likely to get nasty or argue with their love ones.

    My own child (and planetary alignments affect kids and women even more so then men because of their more emotional nature) tends to throw more tandrums on days when the market is down huge.

    Certain planetary alignment affects us more so than others.

    I can almost bet that back in the year 2000, many people could attest that it was one of the worst years in their lives. Because astrologically, it was indeed a horrible year.

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  14. And of course I don't need to explain how our emotions can affect the market.

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  15. Well if someone could show me a study proving that the moons gravitational effect has any bearing on human emotion then maybe I would buy it. But I know of no scientific, double blind, study to that effect.

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  16. Overwhelming double blinded studies will show up when people have incentives to divert funds to the studies. There are as much double blinded studies (which is little if any) that emotions affect the stock market as there are studies on planetary alignments and their effects on the stock market, yet we all intuitively know and can logically drawn the conclusion that emotions can affect markets.

    I wouldn't always make double blinded studies are the determinant of all truths.

    For example, there are no actual double blinded studies that I'm aware of that says precious metals must go higher when governments print money like mad, but of course you know that it usually does because you can draw inference from the past as well as come to the logical conclusion that there is no way paper currency can be appealing when governments are printing them like drunken sailors.

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  17. Amazing to me the dollar is rallying when we have stated and reinforced that we will "print money" at the recent g20 meetings. not only will we print money but austerity and debt reduction is the rage in europe. This to me means weaker dollar?

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  18. That kind of makes my point. I can come up with a logical reason for why gold must rise when governments print money.
    I can't come up with a logical reason why people must sell when the moon or stars are in a certain position.

    People sell when they foresee a recession coming (or maybe it has already arrived. Like in late fall 07).

    Smart money sells when sentiment gets extreme or markets get stretched far above the mean. Those factors are logical to me.

    Just because the gravitational pull of the moon makes the water in our bodies want to slightly shift to one side or the other doesn't make sense. And what happens if we turn around wouldn't the gravitational pull then be in the opposite direction?

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  19. Gary-
    Amazing to me the dollar is rallying today when we have stated in the past and reinforced AGAIN that we will "print money" at the recent g20 meetings. Not only will we print money but austerity and debt reduction is the rage in europe (at least for the time being).
    This to me means weaker dollar?
    Am I just being impatient?
    Thanks.

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  20. LOL Probably.

    Gold needs to drop into a daily cycle low and it could still fall into an intermediate cycle low. We haven't passed the timing band for that yet.

    My advice is to just adopt the Old Turkey strategy and go do something else for the rest of the summer. We certainly aren't going to finsih a C-wave in the next few weeks so there's really no need to even watch gold at this point.

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  21. Hi Gary,

    A fall to what approximate level would constitute a daily cycle low?

    Thanks,

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  22. I wouldn't begin to try and predict a target but we can't have a bottom until we get a swing low.

    Don't forget there is still the possibility for an intermediate cycle low. That would mean the next daily cycle would fail to make new highs and fall below this coming cycle low.

    It's just impossible to predict these things and trying to do so usually just means one loses money in a bull market.

    It's best to just use the Old Turkey strategy.

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  23. HUI will break below Gary's "It will never trade below 450 ever" soon. One should never say never. GLT all longs. OUCH!

    Sam

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  24. I have to ask. What difference would it make if the HUI breaks back below 450?

    Do you think that would signal the end of the bull market and that miners will never break out to new highs?

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  25. Sam,
    Most of us have gotten burned so many times trying to trade the bull that these wiggles are just meaningless at this point. Everytime one sells expecting a dip the bull does the opposite.

    It has become obvious that the only way to make money in this kind of bull is to just hang on.

    If you can't see that by now maybe it's time to go to the optometrist and get some new glasses :)

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  26. Hi Gary,

    Gold trading at $1235, is this the tgt for daily cycle or can it go further down.. can we enter gold at 1230-1240.

    Regards

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  27. Gary, you wrote: "Nothing against the guy but how can the position of the stars possibly affect the stock market?

    Didn't we quit believing in magic several centuries ago?"

    My comment would be that just because we don't understand how something works, or why, or what the mechanism is that allows it to work, does not mean that it's not possible. We didn't know how aspirin works for decades, but just because we couldn't find the mechanism did not prevent it from working. We still don't know how homeopathy works, but tests on infants and animals show that it does, and neither of these subjects have the ability to produce a placebo effect.

    What we see is the most concrete expression of the phenomenal existence. There may be a lot going on on levels that are invisible to us.

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  28. Pima,
    Then let me just say that I see no evidence that astrology is any better than any other TA system.

    When put under the microscope of historical testing they all perform at 50% or less.

    One might as well flip a coin.

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  29. Gary,

    Okay, that makes sense to me. The real test is: Does is work?

    You seem to give some credence to cycles, having mentioned daily cycle low due. I'm guessing you are using cycle analysis because you see evidence that it works--it's there in the charts. It would be interesting to understand its mechanism, but it's really not necessary. I like your pragmatism.

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  30. Gold has topped. I'm no technician but I am a mathematician and my wife runs a psychic business.

    I have lots of experience with graphs and Gold HAS topped folks! My wife also saw this same scenerio in her tarrot cards.

    Coincidence? I think not!

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  31. The problem is that you can't trade that without risking missing a big rally.

    Some one came on just a few weeks ago assuring us gold had topped. Welll as we now know gold had not topped. The bull surprised us yet again.

    The same thing happened in Sept. of last year. Folks were sure gold had made a double top. Thos folks missed a very large rally.

    The only way to guarantee you ride the bull is by using the "old Turkey" strategy.

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  32. The miners are not confirming today's weakness in GLD/SLV.

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  33. Gold has topped for a few days, maybe, but you better get long into this 3-4 day "bear mkt" tarot boy! :)

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  34. Old Turkey all the way....but just in case I call couch in Gary's basement. I figure on dibs are gone after the last drawdown! :)

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  35. After 10 years of this bull market haven't any of you learned yet?

    Geez how many times must you get punched in the face before you learn your lesson.

    Like Gary says its like watching a mouse in a maze always running down the same path over and over. Making the same mistake time after time.

    When do you finally learn your lesson. Just hold your position and ignore the wiggles.

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  36. "After 10 years of this bull market haven't any of you learned yet?

    Geez how many times must you get punched in the face before you learn your lesson."

    Either way I still get the couch!!

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  37. I never learn. I can't be taught. I'm a self taught mathematician.

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  38. GDX currently down 0.9%, GLD down 1.3%. Perhaps miners will make up the difference soon, but as it is they are outperforming gold.

    Last week, they were outperforming both GLD and SPX. No guarantee they hold up going forward, but the signals are not entirely bearish at the moment, imo.

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  39. Big GAP down in the markets tomorrow!

    Wow. Big gap down.

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  40. Seen elsewhere- -(ie not from me)

    The purpose I’m telling this story is to let you know the option market behavior today was very strange. Contrary to what says in many books, the put call ratio is actually a leading indicator, a sudden drop in put call ratio like we saw today may mean big guys know some good news ahead of our retailers and are preparing for the celebration. So bears be careful here, although personally, I don’t trade on such kind of story or speculation but it’s no harm to be prepared.

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  41. Fast Money panel agrees that Gold is top heavy and that the parabolic move has already happened. They say the smart money is leaving! lol

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  42. Parabolic is stretched 25-40% above the 200 DMA.

    That obviously hasn't happened yet.
    Nope just a normal correction within an ongoing bull market. And there is no guarantee it won't just be a very short dip into a daily cycle low.

    This is why one can't trade this and expect to make money. Just as soon as you sell that's just about the time the bull does something unexpected and there you sit with no position.

    Re-read Old Turkey and then read it again...and again until it sinks in.

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  43. Old Turkey all the way!

    Just checking in and see gold was down, but thanks to Gary I'm still up just over 28% in DGP and I spend most of my time hanging out with chicks.

    Pullbacks should be bought.

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  44. Gary,

    If Gold went from 300 to 1200, isn't that up 400% not 200%?

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  45. I was trying to mark the chart at the top of the 03 C-wave at $400. That was the time I recognized the bull market.

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  46. Have all the silver I want (got that a while ago), and most of the gold.

    Still have more to get, but I'm almost hoping there's a sell off when equities finally implode.

    After having traded 3x small caps for the last few years, I barely even notice the fluctuations in PMs, silver included.

    And you don't need a study to see the Moon's effects. Just mark full and new Moons on the SP chart. The rest of financial Astrologasty, I dunno.

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  47. Did the cycles say the markets have bottomed. I loaded SLV at the top today. Arrgh!

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  48. @ Anon

    You may want to consider looking at purchasing rather than trading PMs. I find it makes my decisions a lot more cautious, as liquidating the physical is more cumbersome. Even buying an illiquid fund like GTU (which I like for it's low premium) gives me pause.

    I think the bull market will erase your 'mistake' (which is only one of timing, and it's only a mistake if you guessed the trend wrong and/or can't take the drawdown and bail, and/or were levered).

    I now I book my profits in PMs instead of USD. A very different (and much more relaxed) mindset for me.

    GLTA

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  49. Where are my car keys?June 28, 2010 at 9:35 PM

    Emotional sentiment seems kind of negative....Silver and gold have not done anything that bad yet....I am getting the popcorn when this baby really tanks..maybe we can get 400 posts in a day...here is a preview of what to expect for the newbies....

    Steps
    1) Slight fear
    2) it tanks some...okay...drinking increases, and we get the "Gary help me" posts. We feel better.
    3) the gold bears start to come on and very boastfully speak about how they were right, and even lose the anon mark.
    4) then we tank harder and faster. The process of capitulation sets in. Usually bottoms as Gary's own emotions get involved. People start giving death threats, and relate person problems at home...etc. This is the popcorn stage as the insanity sets in.
    5) Most people say "I will never touch gold ever again, if only I can break-even."

    Save yourself some trouble, gold will tank...and you might get caught in it. Either hold on for the bull or let her go altogher. This bull plays dirty too, so there are no rules. Every tech chart is violated all the time, the rules change at a second glance.

    We talk about blood on the streets. Gold does worse...after it shoots and cuts and stabs, it takes out the defibrillator and crushes you as many times as it can. It is a distructive beast that will rip your manhood from you and make you wish that was all that it would take. Or if you are a female, it will tear your unborn children from your womb. The lure of riches by holding the bull will force the trader to hold on until he breaks and loses 30% to 75% depending if he invokes the power of leverage. The bull knows your tricks and will lend you money and finance your greed, knowing that it will take it all back in the blick of an eye. This bull hates its riders, and will do everything in its power to eat your home and money.

    So either,
    1) staple your dead weight body to the bull in some manner that doesn't allow you directly by choice or indiretly by using any leverage to get tossed off. and then go play xbox and drink some beer.
    2) Skip the bull and play xbox and drink some beer.

    Just a note in dramatic to expose the newbies to what to expect when it does come....Gary's D-Wave of DOOOM....a flare for the dramatic, but cycles aren't the most accurate tools...just like anything else....OLD TURKEY now...but learning the hard way in shame!

    Some like to measure their pride on this gold trade...it won't work..you will be the last to capitulate.

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  50. Keys, you sound like another Jehovah Witness. Silence is golden.

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  51. Hi Gary, I have been wondering shy silver is underperforming relative to gold in the sense that gold crossed its previous 1980 high of $850 and has cruised 50% higher to $1250 in this bull, but silver is nowhere even near its previous high of $50. So the bit about silver outperforming gold (on the way up and down) doesn't seem to have held up in this regard. Any comments??

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  52. Just be patient. When speculation really starts to run hot silver will soar.

    Just be thankful it's still so cheap and you can still buy at a huge discount.

    Personally I love half price sales don't you?

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  53. Is this capitulation? Is that what cycles are saying?

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  54. But the market and PM are crashing yo.

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  55. Shorted ole yeller 1240 last night...this looks very heavy... 3% 10's looking to long TBT down here...

    Good day fellers...

    DG out...

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  56. Gary, if the us dollar keeps on going higher, wouldn't gold and silver crash?

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  57. Gold's crashing.
    Buying ZSL today.

    SPY is crashing.
    UUP is a buy (dollar)
    Oil is crashing
    China... crashed.

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  58. The dollar has been going up for months, has gold crashed or rallied?

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  59. Geez, DG are you seriously going to make the same mistake twice?

    Can't you learn your lesson about shorting a bull market?

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  60. What if the dollar doubles from here, wouldn't gold and silver get cut in half or something like that? What if biotech makes a new discovery like you say and the market rallies to new highs? Wouldn't that kill the PM's?

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  61. What if the bull market just keeps climbing a wall of worry like bull markets do?

    Would that mean that gold just keeps going higher like it's been doing for the last 10 years?

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  62. Oh darn, market is crashing right after I loaded up yesterday.

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  63. "Keys, you sound like another Jehovah Witness. Silence is golden."

    A JW no...silence...really! Look it is a flare for the dramatic, as I mentioned, but that is nothing compared to how people will act during bad times. Which this is not!!! Anyways this "JW" has "preached" what they needed to say. You can apologize when we get 500 posts in one day from people that are rational right now, but won't be when the time comes to hold.

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  64. Sh%t, what are the cycles saying now? I'm totally margined and scared! Get me a beer for consolation.

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  65. Anon,
    Do you realy expect anyone to believe that nonsense? No one is that stupid to get margined long in this kind of environment.

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  66. Dow below your 9939 level..end of the bull Gary?

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  67. Sh%t, what are the cycles saying now? I'm totally margined and scared! Get me a beer for consolation.

    HAHA!

    Don't need to be a prick...you know. As I said, come back when things get really bad, and you are stuck holding during a 30% drawdown and then make fun of me then. Until then maybe you should follow your own golden advice! :)

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  68. Both the Dow and transports have to close below their low points for a Dow theory sell signal. That hasn't happened yet.

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  69. Oh my, what a brutal day!

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  70. The thing is that the person that can hold through a 30% draw down is the one who will end up rich while the manic trader type who is forever trying to avoid draw downs will walk away from the greatest bull market of our time with little or nothing to show for it.

    And if they insist on doing things like shorting a bull market they will most likely lose money during the greatest bull market ever.

    It's all about the end result folks.

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  71. Gary,

    Is there much of a difference between AGQ and SLV?

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  72. Gary Do you see as a possibility, in an a effort to halt what appears to be still significant deflationary forces at work, the Fed going on a printing spree some time this year causing the dollar to decline and the markets like the Dow and S&P to gain considerable traction and reach new highs in the next 2 years or so? If so, what should that spell for gold (need I ask:))

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  73. AGQ is double leveraged to the price of silver. So keep that in mind if you buy it that it will be volatile. (hint: take a smaller position if you can't weather volatility)

    G,
    Since this has been the Fed's response for 10 years now do you really expect them to do anything different this time?

    I have little doubt Ben will fire up the printing presses again soon if he hasn't already.

    I have no idea where that could send the market and don't really care. Hopefully almost none of us are trying to trade the stock market anymore.

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  74. I'm with ya on that. However, I was really wondering what effect the printing presses would have on gold. As I see it, deflation for the first time would have world wide devastating effects. Those potential effects have only grown over the years since we were unwilling through our politicians to experience what would have been a mid contraction comparatively speaking in 2000. And since the world thinks we got 'em in this mess we ought to get them out, printing resulting in a devaluation of the dollar (I would expect) would be the only viable option at this point unless we want to go through a deflationary depression.
    So, assuming they print as you do too, gold (and silver) I would expect to really outshine most other assets. Thoughts?

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  75. Well certainly they will shine (pun intended).
    The running of the printing presses has been the fundamental driver for the gold bull for 10 years now.

    If those presses again go into overdrive to stave of deflation then that would in my mind only spur the bull on to greater and greater heights. Aka the fundamentals would only be getting better and better.

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  76. In TBT now...nice position...short stox and not cuverin..still long oil w/ short puts...and back shortin ole yeller...

    Good luck fellers...

    DG out...

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