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Sunday, June 6, 2010


It's sad to say but I'm afraid 90/95% of all retail traders/investors are not going to successfully ride the gold bull.  The reason of course is that they are deathly afraid of draw downs.  It's glaringly apparent every time gold pulls back or suffers the slightest correction.  Immediately a slew of traders come on the blog and warn of impending doom.  "Gold is going to $600" (think Elliot wave).   Some are even brave (maybe I should say 'foolish') enough to short.  Here is one we hear alot lately, "miners are going to get crushed if the stock market enters a new leg down in the secular bear market".  

Pure nonsense!

Let me show you what happened to gold and miners during the 2000-2003 bear market.

During one of the worst bear markets in history gold rallied over 50% and miners well over 200%.  So this notion that the precious metals sector has to get hit during a bear market is simply ludicrous.

Now I know what you are going to say, "just look at what happened in `08".

The reality is that the crash in `08 was a very special set of circumstances that aren't likely to repeat.  Up until September the bear market was following the normal path most bear markets follow.  Slow grinding declines followed by explosive counter trend rallies.  Gold was holding up amazingly well during this period as were miners.  Both were actually up significantly during the first 5 months of the stock market bear.  It wasn't until gold entered a normal D-wave correction in March of `08 that either corrected at all.

In September a rare event happened that drastically changed the entire fundamental picture of the bear market.  At that time roughly $700 billion in debt came due.  The financial system needed to roll that debt over but couldn't as the credit bubble was in the process of imploding.  That led to one of the few true stock market crashes in history.

The ensuing panic led to a selling climax in every asset class even including, to some extent, gold.  The actual price of physical gold never even came close to dropping to the levels of the paper market.  Smart money investors were taking advantage of the irrational selling by buying up every single available oz. of physical gold on the market.  At the time premiums on physical were over $100 above the paper price.

The point I'm trying to get across is it took a very special set of circumstances to create the kind of selling climax that could take down the precious metals sector.  Those circumstances are not present today.  The EU has already gone to the printing press to halt their debt problems.  The US has done away with the mark to market rules and Ben stands ready to print so we have no looming debt crisis in our future.  

So if we are about to enter another leg down in the secular stock market bear the odds are it will be another slow grinding affair, very similar to the 2000-2003 bear.  There will be plenty of sharp counter trend rallies and one can bank on the Fed throwing more and more trillions of freshly printed dollars at the problem all along the way.

And that my friends is the fundamental bedrock of the gold bull.

Now let me show you a long term chart of the last great secular bull market.

This is just about text book for a big secular bull market.  We see a very extended period of consolidation below a key resistance level.  Eventually that resistance level gets broken.  Once it does it's like a damn breaking, the force then becomes unstoppable, ultimately reaching heights far beyond what anyone can foresee at the original break out.

In oil's case the secular bull rallied almost 300% above the $40 breakout level, topping out with a massive parabolic move lasting about a year and a half (remember me saying bubbles tend to last about 1 to 1 1/2 years as the final phase tops out?).

I want to point out this happened in oil, a commodity that was virtually impossible for the average Joe to invest in.  This was a bubble driven purely by the investing community.  Remember this because it's important.

Now let's take a look at the next secular bull, one that's still in the baby stage.

Gold has just recently broken out above the old 1980 high of $850. It hasn't even doubled yet much less rallied 300%.  Now if you think gold rallying to $3500 is ridiculous you are absolutely correct. There is no way gold is going to stop at a mere 300%.

Unlike oil, gold is readily available to the public and ultimately that is what drives the final stages of a secular bull market/bubble. When the public comes into the market their panic buying drives the final parabolic move to unbelievable heights.  We saw perfect examples with both the tech and housing bubbles.  The public was deeply involved in both.

And now, for the topping on the cake. The precious metals markets are infinitely smaller than the stock market, real estate markets or energy market. That means it won't take anywhere near as much money to drive these markets to incredible heights.

Look at that chart of oil again. A 300% gain in a very large liquid market without ever drawing in any perceptible buying from the general public.

Now look at that chart of gold again, only this time with fresh eyes. The possibilities are simply staggering.  I wasn't kidding when I said this will be the greatest bull market any of us will ever see in our lifetime.

If, and this is a big if, you can ignore the nonsense from the Nervous Nellies or the gold Bears (a breed destined for extinction) and just hold on to your positions you will ultimately reap unimaginable rewards as this bull progresses.

Now I will say that yes, there are times to take profits in bull markets.  You take profits when gold and miners are stretched far above the 200 day moving average.  Everything eventually regresses to the mean.  So when we see the HUI 40-55% above the 200 DMA then yes, you should think about selling at least some portion of your positions.  But to sell positions with the miners 3% above the 200 DMA is ... well, it's just plain dumb. This isn't the time to sell it's time to buy, buy, buy.

Let me say this as plain as possible.  If you want to get rich from this, the largest bull market you are ever going to see, you don't listen to the traders and you certainly don't adopt their flawed strategies.  You simply can't think like that if you want to ride this bull.  You need to think like a value investor.  When you see value you scoop it up no questions asked. And if the market is foolish enough to give you an even better bargain down the road you buy more.

Unfortunately here is what happens. Retail investors are unable to buy value. For the average retail investor to buy he needs emotional confirmation. I see this all the time. "Wait till the breakout for confirmation before buying." The problem with that approach is that most breakouts soon fail. If one waited for the recent breakout above $1225 to buy they then had to weather an immediate draw down. 

I saw this in spades at the December top. Retail traders entered in droves during that time. They were getting the emotional confirmation they needed. Then when gold corrected they either got knocked out for a loss or they held on just long enough to get out even. Most simply don't have the patience to ride the bull on his terms. They want the bull to do what they want, when they want. I suspect more investors have been lost to boredom that draw downs.

The best strategy right now is to just sit tight. Remember this is still just a baby bull and it has a long long way to go yet.


  1. Gary, in % terms, how much are you up (or down) since the start of the bull?

  2. Hmm I haven't bothered to look in a long time. Not as much as I should be I will say. I had to learn my lesson about trading during the first part of the bull just like everyone else.

    Luckily I did and I don't waste my time with that anymore. Now I just try to avoid D-waves if at all possible. That's about the extent of my trading skills at this point.

  3. There is a scientifically proven inverse correlation between Blog post length and validity.

  4. My next post will just be "Got Gold?" ;)

  5. Buy gold and come back in 5 to 10 years. Treat the term as a prison sentence, or a bad marriage. Cash only, no leverage. Forget about trading here! Options will destroy you too, even leaps! Gold will hit, but the ups and downs are unknown. It may take years to recoup certain events. In this way I wouldn't trust leaps. If you don't buy into the gold bull, then don't buy into anything about gold. Dollar cost in if you like over the years...this isn't a quick 2 month trade, it is a long-term buy and hold(not forever, but until it is done) position.

    Understand the perspective, before you invest. This is not a day trade. If don't agree with the perspective, you will lose money, so you are best not to even dabble!

  6. One word

    DEFLATION and there is not a damn thing the fed can do about it. Look at most commods and WMT is lowering prices across the board. Gold will go higher but lower first. Even holding something long term even in a bull market does not guarantee profits. Ole uncle Warren is about to get his drawdown of a lifetime. He is just like the rest of the den of thieves.
    GL to all.

  7. I beg to differ. Ben halted the worst deflationary spiral since the depression in 9 months. The deflationist always seem to overlook that one small fact :)

    Deflation is a choice in a purely fiat monetary system.

    If the Fed were willing to destroy the currency they could simply print enough money to mail every man, woman and child a million dollars. How well would the deflation theory hold up under that kind of onslaught of paper I wonder?

    And don't even pretend it couldn't happen, it already has with the rebate checks.

  8. I don't see the point in trying to convince the gold bears. Gold is within 1% of its all time highs and yet they are talking about deflation. They have been wrong for TEN SOLID YEARS and yet they speak with absolute confidence.

    Part of what's driving them, I think, is a certain "non-buyer's remorse" -- they've missed a ten-year bull already, so they hate gold and wish it would decline already. Perhaps, if they're short-sellers or Elliott Wavers, they also got short at the 2009 bottom and are still waiting to be right on that call as well, so they have to keep chanting to themselves about deflation.

    At some point, of course, they will be right about gold. Unfortunately, at that very moment, they will capitulate, get long gold, and ride it down for years. My guess is that this will happen at around $5000/oz.


  9. Oh, and while we're at it, there's also the constant refrain that "Gold's rise is due to temporary fears in the market, and as soon as those fears abate, Gold will collapse."

    I heard this during the collapse of the tech bubble. I heard it after 9/11. I heard it during the Iraq War. I heard it during the banking crisis. Every time, the short-term event ended... and gold kept going higher. And now I'm hearing it during the PIIGS crisis.


  10. Your distinction between "paper gold" and "physical gold" is completely ludicrous. The premium was nothing more than a short term fabrication shortage of gold in types demanded by (generally panicky) retail investors - small coins.

    Major gold exchanges (CME) and ETFs allow buyers to take delivery of the gold they have purchased. Believe me, if there was a hundred dollar an ounce profit in buying gold futures or ETF shares, taking delivery, and selling the physical gold, Goldman Sachs (and the other big players) would have done that, made a fortune, and caused the price difference to quickly convernge to zero.

  11. The problemn with that scenario is that there was no physical supply to buy. You couldn't get gold. probably because GS did buy up all the physical supply.

    And in case you haven't noticed panicky retail investors don't buy they sell especially when prices are falling.

  12. The problemn with that scenario is that there was no physical supply to buy. You couldn't get gold. probably because GS did buy up all the physical supply.

    Yup...the reason I buy physical and sleep very very very well each night now...I just don't care about the on going babbling. I know Gary uses this blog as a sentiment reader, but blah...buy physical, sell when it hits 5000(well maybe higher)...but we are not even close yet to selling. I hate miners btw, just not for me. No goldbug, waiting to bail on gold as soon as we get to that parabolic point(like Nasdaq point, not c-wave or d-wave stuff). Until then drinking beer, reading this blog as traders scurry. Tells me alot too. I mentioned before, but for those that want to run this bull, but don't have the bull balls(like Gary, and not me!) to hold miners during drastic drawdowns, buy physical and enjoy the sleep time.

    Gold is going up...a real easy bull for patient money...

    Delfation..I hope so!!!!!!!!!! The world, not just the fed, will print the hell out of all currencies... Sure gold might fall, but this is not the long-term fundimental play. Buy gold because the amount of currency is going up(hence value goes down)...I am a strong beer drinking buyer....I buy, I sleep, and buy some more, and sleep even more. This is an easy bull, and easy to make money within the next decade. Costs me some beer money and that's about it! Beers in relaxation at the pool while mouse clickers(as I was once) waste time and valued life on BS blimps on the chart.

    The rehab trader

  13. What is everybody STUPID!!! Just go and buy gold and collect unemployment and in two years when unemployment runs out you will be wealthy beyond your wildest dreams. HAHAHAHA

  14. Gary, I would argue that the breakout on your gold chart was actually around $400 or $500 at the latest.

    therefore the current price of $1200 is indeed 3x the price of the $400 breakout

    also if you compare your oil and gold charts - the '08 drawdown in gold looks eerily similar to the '06-'07 drawdown in oil and now the parabolic top

    if the last 4 years in gold does not look parabolic to you, you are in denial

    the problem with you gold bugs is your inability to adapt to or admit a change in thesis

    I don't know whats going to happen, I'm just going by what I see and that shit looks parabolic

    try posting a yearly chart of gold

  15. $400 was not a signficant resistance level. The old highs of $850 are the level one has to focus on.

    I would also point out that if you look at a chart of gold beginning in 2000 and ending in May of 06 it would lok extremely parabolic however as we now know it was nowhere near the end of the bull.

    It's all relative. By the time gold gets to $5000 the recent move will look like nothing.

  16. Gary,

    I think you oversimplify the situation when you say just buy and hold and go hang out on the beach. You also ignore reality when you claim retail investors are “deathly scared of a drawdown”. They have good reason. Let me remind you that of the 5 silver stocks you hold in your portfolio that all but SLW are down 50% or more today from the March 08 highs. People buying in that time period have no chance of getting rich from the precious metal bull market. They are just hoping to some day get there money back and maybe make a decent return. I appreciate your efforts to help us not get thrown off the bull, but an investment advisor needs to be able to do more that just tell us to buy and hold.

  17. I know what you want, it is what every retail investor wants, someone to see the future for him.

    Unfortunately no one is ever going to be able to do that for you.

    You also made my point exactly with the silver scenario. Retail investors just want to get back to even. They will sell just as soon as they do. Whereas I just want to hang on for the big ride.

    Long after the average retail investors has jumped ship my silver stocks will be up many hundreds if not thousands of %. One just has to have the patience to let the bull work.

    It's also why I buy a basket of silver miners and not just one. I spread the risk out so that one underperformer doesn't destroy my portfolio.

    But make no mistake before this is over the gains made in silver are going to dwarf anything made in gold.

  18. Shaping up to be a timely post, Gary.

  19. Actually, that is not what I want at all. I realize that is not possible so I stay grounded in reality and just look to you for good market analysis. My point is that you shouldn’t scoff at retail investors for being afraid of draw downs. In fact, you should honor the fact that retail investors are afraid of another crash like 2009 and look to you for guidance to help avoid a repeat. It provides little assurance to have you tell us to stop being chicken-shit and be a man. Actually, it weakens my confidence in your advice. What I like to see, which you generally still provide, is detailed technical analysis with charts, fibs, momentum indicators, cycles, sentiment, etc. I guess you probably go to the extreme on the “don’t be scared” thing as a tactic to keep us on the bull. I am just trying to point out that it is not effective and would prefer to see you realize that retail investors have a legitimate concern of market draw downs. I am not looking to have my hand held during scary times, I would just prefer to think that if market conditions changed to where another 2009 type event were to occur that you would be on the lookout and not just continue to issue blanket statements like “retail investors are scared…..etc”.

  20. Jesse,
    You've given me an excellent topic for tonights report :)

    In regard to draw downs just reduce your exposure. Instead of 75-100% invested go to 25-50%.

    You will sleep better during drawdowns. Of course you won't make as much during the bull but that is the cost of controling your emotions.

    FWIW I think I will be able to spot another crash before it happens. The conditions aren't really condusive for that right now and gold is certainly not in crash mode, it's not even correcting. Miners will ultimately follow gold.

  21. Oh No! Not the guru lecture again, :)

    Currently, I am not that worried about a crash and am comfortable at near 100% invested level. I just want to make sure you are keeping a close eye on things while I am hiking in the mountains.

  22. Not so much a lecture as an example of what happens in bull markets. And what one has to do in order to ride those bulls.

    Needless to say nothing unusual is happening right now. The bull is just doing what bulls do. Going up and taking as few riders along for the ride as he can.

  23. You shorts should have listened :)

    Never short a bull market.

    And you traders should have just held on. What was that I heard last week? Something about how gold looks like it had topped and is heading down?

    Tell me what does it look like now?

    Old Turkey is the man!!!!!!

  24. What is everybody STUPID!!! Just go and buy gold and collect unemployment and in two years when unemployment runs out you will be wealthy beyond your wildest dreams. HAHAHAHA

    Yup...in the green since, forgetting about the mouse clicking. Started buying in around $900 in gold terms and up around 30%. Again not to big on the percentage, but sure beats down 50%and clicking fees away. Still buying every couple months.

    So yup call me the dumbest idiot out there. Please do, the more people calling me a dumbass the longer this ride has got to go. Time for a nap!

  25. Lots of Head n shoulders on the miners out there. SLV looks nasty on the daily.

  26. Gary- not sure if you saw this on Minyanville, but it appears someone named Toby is using your material: http://www.minyanville.com/businessmarkets/articles/bull-bull-market-secular-bear-market/6/7/2010/id/28633?utm_source=twitterfeed&utm_medium=twitter

  27. Anon,
    You just keep trading technicals and continue to lose money. The rest of us will just hang on and get rich :)

  28. why gold going up? n e thing bad goin to happen with stocks?

  29. I write for Minyanville under the ghost name Toby Connor.

  30. Don't make it so complicated.
    The tech bust had little effect on all commodities, on the contrary by the end of 2003 most had risen.
    However in 2008 the liquidity squeeze caused many investors to sell because they received margin calls. A pretty good reason to sell, wouldn't you say so.
    If the markets tanks than the gold price will fall back for the same reasons as it followed the market reluctantly in 2008.
    If a crash will be the case gold could revisit 1100 - 1150 before it rises again.

  31. Is the market headed for another crash or should I load up on gold and silver right now?

  32. Even if the market has another leg down, second legs ususally only last 3-5 days before they are over.

    And besides that gold and miners are showing no inclination to follow the market.

  33. Gary-
    I see gold briefly broke out above 1242!
    Any new revelations regarding this breakout?

  34. Atilla is calling for a crash again, even though he got it so wrong since last year. What do you think Gary? Are you saying at worst case we sell for another 3 to 5 days and that will be the end of it?

  35. That is how second legs down usually unfold. I think we are getting very close to QEII and I think gold knows it.

    I will comment on it in tonight's report.

  36. Down down down I'm so scared. I thought crashes only happen in October!?

  37. If you are worried about a crash then why would you be invested in stocks. I've been pleading with everyone for over a year to invest in the only remaining bull market.

    That bull is up nicely today in defiance of what is happening in the stock market, which I must say is absolutely amazing consediering the selling pressure that is coming off the markets right now.

    It won't take too much more of this to begin a huge flood of money into the one sector going up.

  38. it is absolutely amazing......if that is the right word...and even if a person believes it....it is still absolutely amazing.....small tremors start a large earthquake maybe....UNFOLDING RIGHT IN FRONT OF US LET YOUR MIND WANDER WOW

  39. My name is Chin Chong and I go burritos.

  40. Hey ching chong, back up the truck and ditch the burrito, the PMs are heading for the moon! It's time to buy, buy, buy.....just ignore any big fat head & shoulders you may see forming!

  41. More food for thought. If you had purchased EUR with USD on its launch day in Jan 1999 then you would be exactly break even today.

    However, the gold price on Jan 4, 1999: $287.85.

  42. The Elliott Wave is predicting the fall of gold. Gold will be crushed. Why dont you respect it? It has predicted both up and downturns in the market. When was Prechter ever wrong?

  43. LOL when was Precther ever right? He's underperformed a simple buy and hold strategy for the last 10 years. As a matter of fact he's massively underperformed the S&P.

    If your goal is to lose money then by all means follow the EW crowd.

  44. Prechter was telling his minions to go leveraged short last fall, as I recall. Early is the same as wrong, esp. when it comes to leveraged positions.

    His calls on gold have been worse than a flipped coin.

  45. Congrats on another humdinger of a day. Long and strong the last bull market on earth before WWIII. :)

    I ain't sellin, and I'm hardly even watchin' prices these days other than end of day.

  46. Elliot Wave:
    Man, this must be some of the dumbest fundamental and technical analysis techniques out there I've EVER seen.
    I remember clearly in 2006 when one of their professional sales people got my details off The Bloomberg and tried to hard-sell me over a couple of weeks this piece of crap "system" or so-called theory of markets.
    I'd heard so much about it from my colleagues in the dealing room, but I knew straight off the bat from the two week complimentary subscription that EW's an instant fail.
    Prechter has a cult following. Cult is the key word here.
    As for waves, you can count them any way you like. Useless.
    Very simple folks, if you're stupid enough to follow EW, then you stand to lose BIG TIME.
    Hand it to Prechter though for being an excellent marketeer.

  47. Very true. Notice how he's mostly bearish and his predictions are always end of the world. Shock and awe marketing.

    Basically worthless crap.

  48. Christmas is coming - but don't buy your snow shovels today! For now, enjoy summer and buy beach towels!

    My point: To say that gold is going to the moon, may be a completely true statement. But don't waste your money on a 'snow shovel' when you could be 'at the beach'.

    Long term, Gold may be in a secular bull.

    But on the near term (30 min bars and even daily bars), GOLD IS OVER BOUGHT! Steer clear.

    Both investors and traders - beware of buying gld (pall, silver, etc).

    If Gold is going to $5,000, hypothetically, we all know that realistically it won't be going there within the next 6 or even 12 months. Herein, we can afford to ONLY buy GOLD on the dips! We've got time.

    Wait until the "real gold dips" before you buy!

    Real dips worth buying:
    Sept 08 - see the positive divergence using MACD?
    Nov 08 - no positive divergence using MACD, but a chance to add at lower levels
    April '09 - MACD is negative, add on a RSI2 dip
    July '09 - MACD is negative, add on an RSI2 dip
    December '09 - same thing...
    Feb 2010 - same thing...
    March '10 - same thing....

    Today: MACD is positive, RSI2 is overbought. It feels good to be up, indeed. If we go up with Gold any further, we're about to have negative divergence using the price versus MACD or RSI. Get ready for a nice sizable correction. After that point, we'll all be very happy to have bought the dip (options, futures, heavy margin, etc).

    Let's all be on alert for the long term and short term buy signals. When combined, (as seen above), they limit your drawdowns. (I use MACD and RSI2 on daily charts).

    Gary's words: "The best strategy right now is to just sit tight" - that means, don't buy, don't sell - but for me, especially DO NOT BUY.

  49. When a big leg up gets started it will begin from overbought levels. If you wait for a pullback you will never get in.

    During legs up oscillators are useless. The true measure of overbought is whether gold and miners are stretched above the 200 DMA. Once the HUI gets 35-60% above the 200 DMA then it's overought.

    At the moment neither gold or miners are even vaguely overbought in the true sense of the word.

    Thinking like a trader will just guarantee the bull leaves you behind. One simply can't think like that. They must think like a value investor. When you see value scoop it up no questions asked and quit worrying about meaningless drawdowns. The bull will correct them anyway.

  50. "When was Prechter ever wrong?"

    Are you serious?

    When was Prechter ever right? He is literally a stopped clock. If you've followed him you've lost out on thousands of percentage points in gains in stocks in the 1990's, gold and commodities in the 2000's, and even worse, you've lost a fortune short-selling these bull markets.

    Where are all the billionaire followers of Bob Prechter? There are only poor, angry deflationists who have been waiting for decades for Dow 500.

    Please, just give your money to a good charity.
    Don't give it away to people smarter than yourself by following Bob Prechter.

  51. if my memory is correct it took 25 years for the dow30 to pass it's 1929 high eg 1954

    of course the depressionary collapse was still heavy on peoples minds....kept going up until gold was unpegged...must have been incredible disbelief

    gold took almost 30 years to pass it's 1980 high


    and of course the secular top was when interest rates were approaching 20 percent


    take my hat off to you Gary

  52. Gary
    Weekly swing high in the dollar is now 88.16 after Friday's new high. Good setup to take that out here.

  53. The dollar made new intra-week highs today so it's not possible to form a weekly swing until at least Friday after next.

  54. Gary, when is the last leg of the bull market you've been alluding to? I'm still waiting to go all in.

  55. LOL if I knew that I would leverage up to the max.

    No one can tell you the future so just take your best shot and then hold on.

  56. Massive crash day coming up soon. Talking 10% plus down day with no crazy computer driven reversal. All will be hammered, including the miners and silver. Gold will weather the storm well, perhaps only taking a 1-2% haircut. HUI is heading to 350, gold may eventually this summer go back to the 1050 mark, silver in the 14's, SLW will be 13-14. The overall market will be in a period of selling over the next several weeks...Some chop over the summer, then QE2 later in the summer/early fall. See a rally starting the few months before the November elections and some traction/confidence restored for a bit as the elections will give folks hope that this insane government will be held in check. Once all see we can't right the Titanic, the final leg down of this bear market will trounce stocks during 2011-2012. 666 will break, dollar will collapse, only physical gold and silver will make it out alive.


  57. Miners have never fallen while gold was rising and they aren't doing it now either. I think your fear of HUI 350 is a bit irrational.

    During the 30's deflation homestake mining rallied huge.

  58. DG,
    When do you expect gold to head back down? I'm getting killed with these shorts.

  59. In mid '06 to the end of that year, WTIC dropped from $80 a barrel to $50. Then, it ran up again. I could foresee a similar event in gold coming very soon.

    For the last few months, I've been saying that gold would peak around the time that the market would be making new lows.

    We can all agree that the great crash is still yet upon us...

    Watching for negative divergence in gold... then gold crashes for a couple months. WHY WOULD ANYONE BUY GOLD if SPX runs to 1300??!!?? For there to be a last leg in SPX, gold will very likely take a LARGE dip... fundamentally it makes sense. Am I wrong here???

    Then, around the time that SPX is topping, gold will hit a bottom - - - THAT is your buy.

    Again, if you can buy at any time (since "drawdowns are meaningless"), you may as well buy on the dips. DIPS COME - just be patient enough to buy on them. It's easier said than done - even I have a problem waiting to buy the dips - but we should at least encourage each other to do what we think is right, even if we don't have the patience to wait ourselves...

  60. Here's the problem. In bull markets the dips come from higher and higher levels. And when they do come no one can buy because they are worried about draw downs and not picking the exact bottom.

    Gold just dipped and did anyone take advantage of the dip? Not if the sentiment of this blog is any indication.

    So not only will you miss a big leg up with this strategy but you won't actually be able to buy during a significant correction anyway.

    Like I said just take your best shot and then hang on.

    Oh and by the way gold isn't going up becauise the market is going down. It is going up because it is in a secular bull market. To think gold will go down because the market is going up is just nutty.

    Gold has been rising along with the market and with the market declining for almost 10 years now. Gold is it's own market with it's own fundamentals completely separate from stocks.

  61. Speaking of Prechter, he is now calling for the EUR to rally.

    That appears to be a good indicator that it is heading toward parity. But the Prechterites will all genuflect since the EUR will surely see a dead cat bounce in the near future.

    In any case this race to the bottom for currencies is a mug's game.

  62. Does anybody know the intrisic value increase in SLW when silver goes up?


  63. POW! New highs in gold. Thanks, Gary, now back to the beach and just leavin' it alone.

  64. Gary-
    Please forgive me for any redundant questions.
    I am assuming you are most confident we are now in the C wave continuation pattern. Any approximate (as best you can) length of time for this C wave blow -off.
    Thanks Immensely--

  65. Gary,

    That was a good example. Thanks for that perspective. Picked up a few juniors this morning, about 95%invested now.

  66. http://economictimes.indiatimes.com/markets/bullion/Gold-could-fall-40-from-peak-Prechter/articleshow/6024572.cms

  67. http://economictimes.indiatimes.com/markets/bullion/Gold-could-fall-40-from-peak-Prechter/articleshow/6024572.cms

    Prechter: "gold market psychology showed a 98 per cent bullishness in the metal, the highest ever recorded for any physical commodity."

    Ha ha ha ha ha ha ha ha ;-)

  68. Yeah wrong way Precther has missed for so long that I doubt any of us take anything he says seriously anymore.

    Let's face it he's just a good salesman but with a worthless product.

  69. Pretcher is a douche bag and has been wrong since the early 80's....back when Gary was benching 145.

    Read the book "Pit Bull" about a trader who used to use him back then but eventually dumped him because he was ALWAYS bearish and predicting the end of the world.

    Read Martin Armstrong for reasons outside inflation/deflation on why gold will explode. The bond holders are going to be completely crushed in this MEGA bull trap being set now.

  70. Anon. - About Martin Armstrong,
    I have held my thoughts on him. What's his story? He's in prison for something he did or didnot do?

    Or is he just a gamer? Anybody?

  71. Brilliant guy, long term cycles, has some incredible calls including 87 crash, now in jail some think was railroaded while others say he did wrong.

    Read his articles and draw your own conclusions. He doesn't see a great depression coming, FYI

  72. Hi all,

    Where do you guys buy and sell physical gold and silver? Trying to see if there is a better place out there.


  73. I've used APMEX and think they are great. Others like Tulving.

  74. California numismatic is very reputable

  75. Gary-
    Please forgive me for any redundant questions.
    I am assuming you are most confident we are now in the C wave continuation pattern. Any approximate (as best you can) length of time for this C wave blow -off.
    Thanks Immensely--

  76. This is looking like a C-wave continuation.

    I'm not smart enough to tell you ahead of time how far it will go. I know what to look for at tops though. So I will just keep my eye on it and when I think it's about to roll over into a D-wave then I'll start exiting.

  77. Thanks Gary--
    Appreciate your hard work!

  78. Alert alert! Silver and the miners are not confirming golds highs by having new highs themselves. Silver is forming a double top while the HUI is forming a giant head and shoulders. If you don't believe me take off the gold goggles and drop the pom poms for a moment and look at the charts yourself. The main indices are also forming heads and shoulders as well. You've all been warned! UUP guy

  79. Certasinly possible but again absolutely meaningless to the big picture.

    Just take your best shot and then hang on. It really is as easy as that.

  80. I'm worned out. This yoyo market is draining. Time for cherries.

  81. well gary my point is now is not the time for your readers to be taking their best shot and ending up in a big drawdown. I'm actually do you a favour as when it happens you will have them all post moaning and blaming you for investment decisions they've ultimately made themselves. You can thank me later :-() uup guy

  82. I suspect you were the same person doing us a big favor last Aug. with the whole triple top nonsense to.

    Folks just ignore this nonsense. Guru boy can't see the future any better than anyone else.

    If you believe then get in. If it doesn't pan out then just do something else for a while and the bull will rescue you.

    If you don't believe, then don't buy, but don't whine if the bull leaves you behind.

  83. I just shot the wad. If we crash, what then?

  84. My gosh if you are worried about a crash then you certainly don't want to go all in. Just take a 25 or 50% position. Something that will allow you to sleep at night.

  85. Gary, nope wasn't me, I just found your blog this year! I see your strategy clearly now, just bite the bullet and buy buy buy, ignore any negative signs as in the end the bull will just correct them. That doesn't sound like sound advice to me but fair enough, it's your blog so I won't interfer by posting what I see. Guru boy

  86. Anonymous said...
    I've used APMEX and think they are great. Others like Tulving.

    June 8, 2010 11:36 AM

    Gary said...
    California numismatic is very reputable

    Thanks a bunch!!

  87. You do realize there are always going to be negative signs? If one waits till everything lines up perfectly then they will be entering at the top. That is always the time when the technicals are saying buy.

    At the moment we have a clear set of higher highs and higher lows. That's a big positive.

    Gold just broke to new highs. Another big positive.

    Neither gold nor miners are overbought. Another positive.

    The intermediate cycle isn't even in the timing band for a low yet. Another positive.

    The bullish percentage for miners is in a range more indicative of a bottom than a top. Actually it's a long way from prior tops. Again a big positive.

    The Gold:XAU ratio is still way too cheap. A huge fundamental positive.

    Even the shorter daily cycle has another week to two weeks before it will enter the timing band for the next short term low. That's a short term positive.

    Patterns are in the eye of the beholder. If you are bearish then you are going to see a head & shoulder top.

    If you are bullish then you are going to see a cup and handle with a breakout today.

    So like I said just take your best shot. If you are nervous then only buy what you are comfortable holding.

  88. Guru boy,

    I've got an idea. Since you are so confident, why don't you short gold?

    Or, if you're already short gold, perhaps you can put on a little leverage.

    I suggest using DZZ, which is a double-short gold ETN.

    I also suggest using margin -- as much as you can get from your broker. Borrow money from your friends and relatives as well. An opportunity like this comes once in a lifetime!

    Good luck -- be sure to check back in with us in a year or so to let us all know how it turned out!

  89. >why don't you short gold? Or, if you're already short gold, perhaps you can put on a little leverage... I also suggest using margin -- as much as you can get from your broker. Borrow money from your friends and relatives as well.

    That's just mean man.

  90. This is not a short-term position for the new guys. Need to understand where gold will be in 5 years. If your looking for a quick fix in and out on a C-wave, you are missing the big picture. If you believe gold is up in 5 years and by alot, you buy now and hold. If you don't believe in the big picture, don't get into gold at all..as the market is so tight to begin with.

    This is not a short-term in and out trade.

  91. Amen to that. The volatile PM markets have been eating up and spitting out short term traders for years now.

  92. One positive for us gold bulls, Timmy Knight's latest post uses Gold for his "favorite kind of short". :)

    Sweet. I always feel much better when on the other side of his trades.
    He might be right for a day or two (most), but it means we have lots higher to go!

  93. The K-Ratio is computed by dividing the value of Barron’s Gold Mining Index (GMI) by the Handy and Harmon price of gold. The index reflects the relative value of the price of gold stocks to the price of the underlying metal. When the ratio of the price of gold stocks to the price of gold is low, it is a bullish signal. Conversely, if the price ratio of the gold stocks relative to the metal is excessive, it is usually a good signal to sell the gold stocks.

    The K-Ratio works best at extremes. The rule of thumb based on past history tells us that a K-Ratio at 1.20 or lower indicates that gold is cheap compared to the price of bullion. A K-Ratio reading of 1.90 or higher is extremely bearish and indicates extreme overvaluation of the gold stocks.

    The latest weekly reading on the K-Ratio shows a very bullish reading of .96 (Barron’s Gold Mining Index of 1158.99 divided by the Handy and Harmon Gold Price of $1203.50). Since 1975, readings at or below 1.15 on the K-Ratio have resulted in gold stock gains 90% of the time over the next 12 months with an average gain of 40%. Lending anecdotal support to a large rally in the gold stocks is the overwhelming number of bearish articles on gold by the mainstream press. From a fundamental perspective, of course, it does not hurt that logical minds are beginning to question the value of paper currencies of numerous sovereign nations.

  94. For the life of me I can't see how Tim Knight makes any money. His calls are short term, constantly changing and he uses stops on everything. That kind of trading usually ends up in a death by a thousand cuts.

    I agree with Gary that a chart can look bullish or bearish depending on the time frame and tick interval. A lot of chartists will put in a moving average set just right to confirm their position. It's mostly wishful thinking IMHO.

  95. I think we all know Tim loses lots of money. He often has on hundreds of positions. How can one possibly keep track of them all? I would have an ulcer in less than a week.

    Anyone trying to immulate this strategy is mostly just throwing all their money away on commissions. And that is if they are lucky enough to break even.

    Over trading is a classic novice mistake and always a portfolio destroyer...as is shorting a bull market.

    BTW how is that gold short going for you DG? Still averaging up?

    LOL another classic newbie mistake.

  96. Gary,

    I don't disagree with you about the PM bull; I am cautiously bullish myself, and Gold is indeed holding up nicely for now.

    However, the way you advocate that the price of gold is in a bull market and how any pullback will be compensated over time makes me skeptical.

    If some one proclaims that much clearvoyance-like certainty, as if there cannot be the slightest doubt in the world, usually that person has more of an agenda rather than the open mind necessary for investing.

    It reminds me of some one like Prechter, who is surely a great and intelligent mind, but tends to be so stuck in his view that more often than not he gets it wrong.

    I think in investing there is no such thing as a sure bet, no matter the arguments you have.

    It seems, you don't even remotely reflect the possibilities that this bull might not continue as great a bull as you proclaim it will. To me that does not seem a safe way to analyze price action or a safe way to give advice to fellow investors.


  97. When did I ever say that gold was not in a long term bull? When did I ever mention shorting the PMs? Annon sounds to be your over sensitive to any negativity posted on the PM.....sounds to me your carrying more than you can handle, perhaps you should lighten up. Anyway opinions are like arseholes I.e. Everyone has one. Mine for now says I'm expecting a pull back and so I will act based on that. If I miss out on a rally, no big deal - the PMs aren't the only bull I'm trying to ride. The dollar has been extremely nice to me. My main goal is not to lose money, after that it's make money whether it's gold, dollars or pork bellies, I don't care. Guru boy

  98. Basil, my point exactly, this one eyed unshakeable obsession that the gold bull has a long way to go and that we will see 5000 gold is not a healthy investment mindset. Being dogmatic has seen many sent to the poor house and a stratergy that says buy the bull, bite the bullet and take your best shot, don't worry about stops as the bull will certainly correct any drawdowns and if you are comfortable go ahead and use 100% of your capital is pure folly. Well nothing is certain and let me explain. A backlash is already begining in Europe against anymore keyensian kick the can down the road tricks and now you see these austerity plans becoming the focus. Let's say the fed changes tack also and decides that we take the pain now, or let's say Obama grows some balls and forces them, Gary where would that leave your thesis and bank account? Now I know your already thinking no way it can't happen, impossible, etc...well that's the kind of dogmatism I'm talking about that could send you to the poor house. Guru boy

  99. It doesn't matter what Obama does.

    There are two reasons the gold bull will continue. The US has accumulated debts so huge that the only way to service them is by printing. There is no way to deny this. The only other option is to default. If you think the USA will default on it's debt rather than print then don't buy gold.

    The second reason has nothing to do with fundamentals and everything to do with human nature. No big secular bull market in history has ever ended until it entered the bubble stage with the public coming into the market.

    If you think human nature has somehow changed then don't buy gold.

    I don't think for a second that human nature is any different today than it was in the 1400's when the Tulip bulb mania swept through Holland. Obviously it isn't as we've already seen two bubbles in the last 10 years.

    So all in all I'm confident human nature is going to drive the gold bull into a final bubble stage just like it drove tulips, tech and housing.

    BTW your so called dollar bull is imaginary. Prices for nothing have been coming down appreciably. If the dollar was truly rallying your purchasing power would be increasing drastically.

    Tell me are you still paying almost $3.00 for a gallon of gas? Has tuition dropped? How about health care, is it dropping or rising? Has the price of your groceries all of a sudden collapsed?

    My gold has gone from buying 13 barells of oil an oz. to buying 17. The story is the same across the board. The purchasing power of gold is rising.

    Folks there is a lot more to investing than just watching a line on a chart. As you can see the dollar chart has duped some people into thinking they are riding a bull when in fact they are not.

  100. Wow! Great post Gary!

  101. ANON 4:02

    Yes sir...shorted more yeller 1240-1250...my avg is coming up nicely...technicals are for a nice correction coming in ole yeller...we'll see...

    D G out...

  102. "The problemn with that scenario is that there was no physical supply to buy. You couldn't get gold. probably because GS did buy up all the physical supply.

    "And in case you haven't noticed panicky retail investors don't buy they sell especially when prices are falling."

    Do you ever read what people write, or just keep spitting out the same canned answers regardless of the facts?

    One could have (and still can) buy CME futures and take delivery. That is always one of the cheapest ways to buy physical gold. You are basically locking in a price (and there is no "premium" beyond commissions).

    There was absolutely never any shortage of good delivery bars, the form of gold used in the vast majority of all (non-retail) trades.

    And I seriously doubt it was Goldman Sachs buying up all of the one-tenth ounce coins from the Treasury causing them to run out.


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