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Tuesday, July 27, 2010

HOPING FOR A BREAK

I want to discuss something that came up on the blog Friday. An anonymous poster hinted that we were going to see more gold weakness in the days ahead because Paulson was having to sell his positions. Folks, big smart money traders like John Paulson don’t sell into weakness. These kind of investors don’t think like the typical retail investor who is forever trying to avoid draw downs. Big money investors take positions based on fundamentals and then they continually buy dips until the fundamentals reverse. The fundamentals haven’t reversed for gold so I’m confident in saying that Paulson isn’t selling his gold, he is using this dip to accumulate.

With that being said there are times when big money will sell into the market and it is why so often technical analysis as it’s used by retail traders doesn’t work. They do so in order to accumulate positions. Let me explain.

When a large fund wants to buy, it can’t just simply start buying stock like you or I would. Doing so would run the market up causing them to fill at higher and higher prices. Unlike the average retail trader, smart money attempts to buy into weakness and sell into strength. (Buy low, sell high). In order to buy in the kind of size they need without moving the market against themselves, a large trader needs very liquid conditions. Ask yourself, when do those kind of conditions exist? They happen when markets break technical levels. Smart money understands how to “play” the technical traders.

If Paulson is selling it is because he is trying to push the market below a significant technical level so all the technicians will puke up their shares to him. By running an important technical level he can trigger a ton of sell stops to activate, allowing him to accumulate a large position without moving the market against himself in the process. We saw this very thing happen in the oil market recently and also in February as gold bottomed.





Technical traders wrongly assume these breaks are continuation patterns but the reality is that very often they are just smart money “playing” the technical crowd so they can enter large positions. The key to watch for is an immediate reversal of a technical break. When that happens you know there was someone in the market buying when everyone else was selling. 9 times out of 10 it was smart money.

At the moment everyone is jumping on the bear side for gold. Remember we saw this exact same sentiment in the stock market 3 weeks ago. I knew the bears were going to be wrong simply because the market was way too late in the intermediate cycle for there to be enough time left for a significant decline.

The gold bears are going to be wrong also and for the exact same reason. It is just too late in the intermediate cycle for there to be enough time left for anything other than a minor decline.

I'm now waiting, and hoping for a break of the May pivot. I want to play that break if it comes like a smart money trader. That means I want to buy into the break instead of panic sell like most dumb money retail traders will invariably do.

 


The reason of course is that gold is still in a secular bull market. In bull markets you buy dips.

Also the dollar with the break below 82 this morning is starting to show signs that it is now in the clutches of the 3 year cycle decline. Every C-wave so far in this 10 year bull market has corresponded to a major leg down in the dollar. I'm confident this C-wave will inversely track the dollars move into that major cycle low due early next year.

Sentiment wise gold has now reached levels more bearish than at the February bottom. That means gold is at risk of running out of sellers.

And finally, and most importantly it's just simply too late in the intermediate cycle for gold to have enough time for a significant drop. This is the 25th week of the cycle and the intermediate cycle rarely lasts more than 25 weeks. That puts the odds heavily in favor of a major bottom either sometime this week or next. And don't forget gold is about to move into the strong demand season. Like clockwork gold invariably puts in a major bottom in July or August before the run up into the strong fall season.

The bears are going to be wrong again.

200 comments:

  1. Note also the divergence between silver and gold.

    A fundamental silver play FVI.TO

    ReplyDelete
  2. Gary,

    You keep going back to your intermediate cycle as evidence the market can't go lower. Doesn't that assume that the market is still in an uptrend though? Also I'm not sure why you discredit technical analysis when that is what you primarily use on your blog.

    ReplyDelete
  3. Justin,
    As anyone who gets the newsletter knows TA is my least important tool.

    First and foremost I look at the very long term trend. Then I track cycles with the intermediate cycle being the most important and the smaller daily cycle used mostly to try and time bottoms.

    Next and probably just as important as the cycles is sentiment. When sentiment gets too stretched we run the risk of running out of buyers or sellers.

    Those two, cycles and sentiment, were what told me you were way too late on your shorts.

    Then I track money flows. If institutions are buying or selling I want to follow them as they have better info than me and they control most of the money in the market.

    Finally I will use a bit of TA to try and time entries and exits.

    To your other point I'm not assuming anything yet. All I knew was it was way too late to be short even if this does turn out to be a bear market rally.

    ReplyDelete
  4. Gary-UK again.

    You got your break Gary, hope you are buying. All other goldbugs might not have noticed that gold has just punched decisively though it's long term daily support.

    I remember the last time that happened, gold bottomed at $681 I recall.

    Nice low-off top in the equity markets, great chance to add more shorts, days away from it all crumbling.

    He who laughs last boys....deflation taking everything down!

    ReplyDelete
  5. I found this post valuable.
    Thank you for your shared insights, Gary.

    ReplyDelete
  6. You haven't steered me wrong yet, Gary, and I have the itch to buy today. Trying to be patient.

    ReplyDelete
  7. I will buy on tomorrows options expiration.

    You've been consistently wrong on all your calls do you really want to have to hear me say I told you so again?

    You are a glutton for punishment :)

    ReplyDelete
  8. 6 consecutive red candles on gold weekly chart- first time since 2001! YIKES!

    ReplyDelete
  9. Actually this has been one of the mildest intermediate corrections in gold and miners so far. At the low the HUI was only down 14% from the recent highs.

    Usually we see 20+% pullbacks by miners during one of these.

    ReplyDelete
  10. I own more gold right here. Next order at $1080. Headed to the beach now.

    Good luck fellas. I don't have any reason to watch, so will leave it to others.

    ReplyDelete
  11. PM's collapsing like a 90 year old!

    ReplyDelete
  12. Gary - I play technical levels but I would never buy/sell a break - I wait for confirmed price action at all of these levels to ensure the big boys have stepped in and done exactly what you have said. A hammer candle after a drop on good support gives all the signs that the big money has stepped in and bid the break (a fake out or selling climax)(reverse for a shooting star at the top of a move).

    Once people learn to read price action properly (without all the trashy historically painting indicator lines) it will improve their trading massively. I always trade in the direction of the weekly and monthly charts too – so I look for pullbacks on the ‘worker’ (daily charts) to get back into the major underlying trend. People seem to overcomplicate trading – we need to remember we are trading human psychology in the main – that is why price action has stood the test of time – as human psychology doesn’t really change – hence Edwards and Magees 1930’s price action trading style still works today!!

    I would be keen to learn more about your cycles works as long as it doesn’t venture into EW theory – that only seems to be clear retrospectively, not on the RH edge of the charts!!

    ReplyDelete
  13. My opinion on EW is that it is the greatest tool yet developed to predict the past. Other than that it's worthless.

    If you want ot learn more about cycles my suggestion would be to just buy a month memebership so you can study the terminology document.

    ReplyDelete
  14. Gary-
    If we get no weekly swing low this week (I know unlikely) how sure are you we would get that weekly swing low the following week. I know we are late in the cycle. Maybe a better question would be how long can these intermediate cycles run? (25, 26, 27, 28 Weeks?)
    thank you.

    ReplyDelete
  15. Keep buying gents.
    Why the hell are you trying to catch the falling knife. This crap is down $100 BUCKS from the high and you are looking to buy here!!!!!
    Get your turkey head out of your ASS fools!

    Getting ready to plunge to 1150 soon.

    HUI at 435. Ouch the 450 level just got schooled.

    troll

    July 27, 2010 7:38 AM


    Anonymous said...
    C'mon guys, start buying this gold. You know its going up up and away.
    Shit, should have sold more. Not covering shorts until 1100 now.
    Humpty DUMPty.

    troll

    July 27, 2010 7:44 AM


    Anonymous said...
    I wouldn't buy until you see a positive divergence between GDX and GLD. Not seeing that so far. Volume on GLD is starting to drift into capitulation land, but there's always time to get in once the dust settles.

    July 27, 2010 7:46 AM


    Anonymous said...
    Hows that 1160 buy going!
    FOOL!

    July 27, 2010 7:47 AM


    Anonymous said...
    ANON :(

    You know who you are.
    Taking a nap are you.
    Now your only up 15.5%.
    You have given up over 42% of you gains from 26.5 to 15.5
    Just don't wait and give it all back. You really don't want to sell to me whan I cover shorts at 1000.

    troll

    July 27, 2010 7:53 AM


    Anonymous said...
    DO NOT buy this gold at these levels.

    troll

    Where the heck are all the bull-tards.
    In de-nile

    July 27, 2010 8:06 AM


    Anonymous said...
    Nice. Have the SMART MONEY blog all to myself today.
    Bulls, especially the gold ones, are getting corn holed today.
    OUCHIE!
    Say goodbye to 1160 soon.

    troll

    July 27, 2010 8:13 AM

    ReplyDelete
  16. Looks like we're getting the big break. I also cautioned my readers to be mentally prepared for a blow-out day. These summer doldrum periods tend to end with panic sells, and they have been the best buying opportunities throughout this bull market.

    ReplyDelete
  17. Dan,
    If you are nervous then just wait for the weekly swing.

    Troll boy you were wrong at the February bottom, for both gold and stocks. You were wrong at the July stock market bottom and you are going to be wrong again at the gold bottom.

    Notwithstanding that I rarely get the exact timing right but directionally I've been exactly right on all my calls. Do you really want to have to listen to me tell you "I told you so" a fourth time?

    ReplyDelete
  18. It does look like we will see a large volume bar today on GLD. If or should I say when gold reverses it will be apparent that large volume was smart money stepping in to pick up shares

    ReplyDelete
  19. Gary,
    Who cares who is right and wrong. As long as everyone makes money, which i am, everything is good.
    You can say I told you so a hundred times, but the fact remains you missed a $105 slide from the top. I did NOT! There will always be buying ops.
    Have at it with you strategy.

    ReplyDelete
  20. This crap is gonna slice right through 1150.....
    See ya!!

    ReplyDelete
  21. I hardly missed it. I'm using it to pick up more shares.

    Bull market.

    Buy dips.

    Buy low, sell high.

    Just commonsense strategies in a bull market.

    ReplyDelete
  22. Sell high buy low.

    I don't recall you selling much of anything $105 bucks higher.
    Did you?

    ReplyDelete
  23. It's all the WEEKLY MACD DIVERGENCE playing out, son! Posted this analysis A MONTH AGO at my blog hahahaha http://themarketbrothers.blogspot.com/2010/06/gold-shall-tank-soon.html

    ReplyDelete
  24. Troll boy has lost a load trying to short stocks. Don't think we don't know you did.

    I don't think anyone is going to buy this BS about how you are making money TB.

    ReplyDelete
  25. The troll boy envies Gary on an unhealthy level.

    ReplyDelete
  26. I sell into C-wave tops when gold and miners are extremely stretched above the mean. (I sold in mid Nov. 09 although that wasn't the C-wave top but it did get stretched)

    At the recent top that was not the case. Miners were only about 15% above the 200 DMA. That is not a time to sell.

    ReplyDelete
  27. N,
    Gold is just doing what it always does every 20-25 weeks. If you are as good as you think you are tell me were the bottom is.

    I think we are days or at most a week away. We may even make it on tomorrows OPX.

    Eventually you will learn the lesson of Old Turkey hopefully before the bull comes to an end.

    ReplyDelete
  28. And there is the difference. Troll boy is looking for the next $100 move in gold, while Gary and friends are looking for the next $1,000-$3000.

    And troll boy is wrong more often than not, besides having small profit potential.

    ReplyDelete
  29. I don't know where the bottom is. I only trade when conditions tell me to. But I do think that when we bottom, we'll make a lower high; the trend has turned. So I'm sticking with my short trade :)

    ReplyDelete
  30. BTW there was a severe weekly MACD divergenc in Sept of last year. that dind't stop gold from rallying all the wat to $1000.

    Technical traders can go broke trying to play divergences. They work maybe 50% of the time. And the only time I would even bother with them is when the cycles and sentiment are calling for a turn.

    ReplyDelete
  31. Seriously? You can look at a 10 year chart of gold and see a secular trend change in that chart?

    Gold isn't even close to dropping below it's 75 week moving average.

    ReplyDelete
  32. There was no confirmed MACD weekly divergence last Sept. Confirmed MACD div is when you get a crossover to the downside. When I look at the 10-year chart, I see 10 years of gains. Nothing moves in a straight line like that without a significant correction.

    ReplyDelete
  33. And you keep talking about miners this miners that... they suck balls. They haven't even made a new high above the March 2008 peak even though gold has been above that levels for many months.

    There you go, now you can move your troll meter to 100%.

    ReplyDelete
  34. What do you call the dip down into the 8 year cycle low in 08?

    The next one isn't due till 2016 BTW.

    It spunds to me like you are trying to pick a top in a bull market simply because it's gone up.

    I'm not sure that is going to be a very successful strategy. It certainly wasn't for the perma-bears during the last cyclical bull market and it certainly wasn't for the deflationists in February.

    ReplyDelete
  35. Jeez Gary.
    Just admit you missed the $105 (so far) drop and move on. And we will drop further from here. You keep trying to buy these dips getting longer and longer. You will eventually get crushed.

    ReplyDelete
  36. LOL!!! It's hilarious seeing all the "experts" come out at times like this.

    ReplyDelete
  37. No 100% just yet. We need a few more anon trolls to show up. You don't actually count as a troll since you have a name and actually are willing to debate your points.

    I don't agree with them but that doesn't qualify you as a troll :)

    Sorry.

    ReplyDelete
  38. Gary, we know you are a perma bull about to get his ass handed to you.

    ReplyDelete
  39. Look at a yearly chart, son. The past 9 years have had higher closes. This year seems on track to do the same. The long-term investors who look once a year weren't shaken; They need some pain too.

    Plus tons of people are getting long in the 1000-1200 zone. My friend just told me that his Mom finally invested in some physical gold to protect against inflation. LOL.

    Thanks for calling me an expert, anon. I feel really good now :)

    ReplyDelete
  40. Here we go with the troll meter.
    This is all you have to go on to initiate a position. So SAD.
    I can't believe people pay for this crapola.
    Fools keep buying. Please.

    ReplyDelete
  41. The fact remains this is the mildest intermediate correction so far. Gold isn't even down 10% yet and miners just barely 15%. Usually an intermediate cecline will knock miners for a 20+% loss.

    I said several weeks ago not to expect a major correction in gold this time because sentiment never really got excessively bullish. It takes extreme bullish sentiment to produce and extreme correction.

    ReplyDelete
  42. Looks like a mild D wave, which as DOC has pointed out may become the norm from here on out with the gold bull. Too much global demand is ready to step up to the plate and buy dips. Aden sister think once a close bellow 1175 hits, we could retest the rising 65 week MA or 1075 for POG, 16.50 for POS, 410 HUI where buying with both fists levels will be hit.


    So a nice A wave from mid August through Nov/Dec, B wave decline in Dec/Jan, setting up our most epic C wave with the 3 year low on the dollar ready to hit next Spring. Sound good?

    ReplyDelete
  43. Notice also that silver and miners are not confirming this move in gold. Gold is down to new lows for the move and the HUI and silver are not.

    Very unusual for silver not to magnify the move in gold.

    ReplyDelete
  44. Jay,
    This is no D-wave. It has none of the characteristics of a D-wave. We've just been in a very long consolidation of an ongoing C-wave and one that has been powerful enough to make new highs in the middle of summer when gold usually struggles.

    ReplyDelete
  45. What's more unusual from a longer-term point of view is that HUI didn't confirm the new highs in gold in May and late June. You never mentioned that. But now we get a tiny divergence to the downside, and you blow it way outta proportion.

    ReplyDelete
  46. We are also going to close the day with a Bollinger band crash tradeif gold ends the day here.

    Often an intermediate cycle will bottom with or within a few days of a BB signal.

    ReplyDelete
  47. N,
    The miners are just trying to break through a very heavy resistance level. Once they do the size of this consolidation should lead to a huge move higher.

    ReplyDelete
  48. Right Gary, I think the D waves from here on out will not fit the model we all are used to based on the extreme global dynamics going on with all fiat currencies in big time trouble. Everyone is on pins and needles waiting for the next shoe to drop. Then again, we could have had the mild D back in Feb, with this being the A/B? You said it doesn't have the characteristics of a D, but this C is strange too...Either way, it will go up.

    ReplyDelete
  49. N,
    I would strongly suggest you go back and read through the posts in early Feb. you will find the exact same thing was happening then as is now.

    We were very deep into an intermediate cycle then too.

    ReplyDelete
  50. Narayana,

    So, are you short gold, or shorting it today, or just playing pile on?

    And I said "expert", as in not really. :)

    ReplyDelete
  51. Jay,
    D-waves will not change because human nature doesn't change. Gold will end this C-wave with a massive parabolic move for the same reason it ends all C-waves with a parabolic move. It will have gone up long enough to convince everyone that it's going to the moon and traders will chase the momentum move.

    Then it will crash into the D-wave decline for the same reason it always does.

    Regression to the mean.

    ReplyDelete
  52. anon, when I said thanks for calling me an expert, I was being sarcastic :). I've been shorting gold stocks KGC and AEM for a couple months now. I will keep holding them because I don't believe gold will make a new high now. You can see my original post about shorting these stocks at http://themarketbrothers.blogspot.com/2010/05/gold-is-looking-ugly.html

    ReplyDelete
  53. GARY,

    I think you write great stuff with a good approach to investing and accumlating in a bull market. You are now one of the top 2 or 3 people I follow.

    I'm aware that your old blog going back to 2007 is still up, but without going through 50 or 100 entries (which I will do in the future) I have a curiosity you might answer.

    I would like to know how well you did (and WHAT you did), generally - in short form - during the 2008 crash. Just a few sentences describing how you handled it, how you got hit, how you recovered, etc.

    (I don't ask this critically. I myself lost 40% total net, but managed to recover it back on the rebound. It was a mess and nobody has the right criticize even great investors for getting hit hard.)

    Did you suspect parts of the drop coming? Did you lighten before the drop? Did you have most of your position, but bought on the way down to add more? Did you add on margin, but find that it kept going lower than you expected such that your additions overleveraged you and the extreme lows caused capitulation?

    Just a few sentences to summarize what happened and how it turned out. I'll review the full blog when i have more time. Thanks.

    --time zone guy

    ReplyDelete
  54. ANON :(

    You are such and arrogant SOB!
    Gold on the lows and going much lower. You are only up 15% now and losing it fast. Your the fool here for giving back over 45% of your so called gains.

    troll

    ReplyDelete
  55. By troll's definition (mildly retarded I might add), before the pullback I was up 100% of my gain.

    What a dipshit. LOL!!!!

    ReplyDelete
  56. N,
    How could you have been short for months based on a weekly MACD divergence when the weekly MACD didn't cross until July 7th?

    At most you've been short for a couple of weeks.

    And for miners it wasn't until the 21st of July that MACD crossed over.

    ReplyDelete
  57. I've been short two months. See my initial shorting post here:

    http://themarketbrothers.blogspot.com/2010/05/gold-is-looking-ugly.html

    This was before MACD confirmed divergence. But the fact that it did confirm makes me that much more confident in holding my position :). Too bad I'm not shorting today so that you could say I'm the dumb money that shorts into the lows.

    But generally, I would say I'm dumb money. I am not making enough from trading to live off of it.

    ReplyDelete
  58. T zone,
    I was mostly short oil drillers during that period. I called the bear market in November. About three weeks from the top.

    I will tell you that I got long too early in Sept. when the market moved 20% below the 200 DMA. Usually that is the point where we get a bounce. In hindsight I should have paid more attention to the cycles as mid Sept was too early for a bottom.

    ReplyDelete
  59. "You are only up 15% now " says anon.

    Wow, +15% is just terrible. Do you even hear how stupid you sound, chastizing a 15% gain with strong hand status? :)

    You'd be flipping out over a 15% gain, crapping yourself and screaming all over the place. LMAO!!

    ReplyDelete
  60. BoW numbers are starting to build on this minor pullback in the stock market.

    ReplyDelete
  61. GOLD making new LOWS!!!!!!!

    Hows that 1160 buy going!

    ReplyDelete
  62. All this laughing and whipping up on trolls makes me want to take an afternoon nap!

    I'll check on the markets later. Good luck all, even the trolls.

    ReplyDelete
  63. "Hows that 1160 buy going!"

    Gee, I'll let you know in a few months, maybe years. :)

    ReplyDelete
  64. N,
    Your post was on May 19th. You said if gold makes a new high you would know you were wrong. Gold did make a new high so if you did as you said you got whipsawed out of your position for a loss.

    So you obviously haven't been short for as long as you are leading us to believe and you are taking losses trying to get into a short positon in a bull market.

    Which is exactly why one doesn't short bull markets.

    ReplyDelete
  65. Actually anyone that bought at 1160 is still break even :)

    ReplyDelete
  66. Yep my post said I'd get out hahah. But luckily I'm not a disciplined smart money trader and I held on to my trade. Oh man, the irony.

    ReplyDelete
  67. Narayana,
    Do you really expect anyone to believe that?

    Just admit it. You are taking losses trying to short a bull market and probably a lot more than you let on.

    ReplyDelete
  68. Old Turky baby.

    Long after all the Narayana's and Gary UK's have destroyed their accounts trying to trade the rest of us Old Turkey's will still be getting rich :)

    ReplyDelete
  69. Hey Gary,

    Do you think the big boyz maybe were the ones who bought all of those puts expiring tomorrow? We usually have a 2-1 ratio of calls to puts but this time it is 1-2 which is unusual. You can see the breakdown here:

    http://www.fmxconnect.com/fmxmetalsconnect/post/2010/07/27/Gold-%28OG%29-PIN-RISK-ALERT-ndash3b-July-27-2010.aspx


    Full picture here:

    http://www.cmegroup.com/trading/metals/precious/gold_quotes_settlements_options.html

    Seems like it is in the benefit of all of these put buyers that the price stays around here. Perhaps they are going to exercise and get the physical? Dunno but it is unusual activity. It also could mean we take off after tomorrow's expiration which has happened. A couple of months ago they pinned it to the number and then literally within minutes of the expiration gold jumped.

    ReplyDelete
  70. Hey dumbass.
    When you exercise puts you get SHORT!
    Go back to sleep.

    ReplyDelete
  71. Might be I don't know. So far this has been a very mild intermediate correction and it for all intents and purposes tagged the 50% retracement of the last leg up so I think there's a good chance we could be at or very close to the final low.

    The intense troll infestation is also a sign of an approaching bottom.

    ReplyDelete
  72. Just keep hoping and praying gold goes up from here. Fat chance amigos!
    1000 or bust!

    ReplyDelete
  73. You have been warned!
    Get the F**k out of gold NOW!

    ReplyDelete
  74. No when you exercise a put you actually put your shares to someone else at a specified price.

    If you sell a put you are actually going long. some here may have sold puts as a way to bring in income. If they expire worthless they keep the premium. If not then they don't mind having the shares "put" at low prices because they expect the bull to eventually do his thing and correct the timing error.

    ReplyDelete
  75. The funds are going to take gold to 1150 overnight and tom.

    ReplyDelete
  76. Dang, Gary, you have to put a "NEW POST" note on your message board when you start a new thread. I've been talking to myself all morning. ;-)

    GDX back to the 200dema after it's second test this month. Doesn't seem to be confirming the lows in gold at the moment, and putting in a nice rounded intraday bottom to boot.

    ReplyDelete
  77. Option 101

    LONG put you get SHORT!!!!
    SHORT put you get LONG!!!!

    Don't try to confuse these morons on this blog G-mon

    WTF!!!!!

    ReplyDelete
  78. You said exercise not buy. If you buy a put then yes you are basically short.

    ReplyDelete
  79. Gary,

    To me cycles and sentiment are derivatives of price action, and actually almost anything people use to trade and invest all boil back to price action. So why people use all different kinds of things to gauge where the market is going is beyond me when mostly they should just focus on price action. Getting price action pays off anyway, getting other things supposedly right only pays if the price goes the right way.

    Cycles to me sound like they are similar to Elliott Wave in that they are open to interpretation and are hard to see. Sentiment I'm really not sure how you gauge unless you could poll millions of investors all the time and always have that data available. But in general sentiment is determined by price action anyway so I'd look at price first.

    Besides a few stocks popping here or there longs haven't made much in the last few weeks in this market either, especially miners which I started talking about multiple weeks ago being ripe for a correction.

    ReplyDelete
  80. Actually, that poster is just giving the sentiment from Harvey Morgan. Here is what he said:

    "Many of you have asked me about the puts and calls which expire tomorrow. Actually this baffles me in that the puts to calls remain at 2:1 ratio instead of the traditional 1:2 ratio.

    Always, the bankers fleece the calls. This time it is very unusual for the cartel to continue to raid gold which fleeces the calls but it places the puts in the money.

    The only explanation I have for the continued raids on gold is that the owners of the puts are the bankers themselves and they wish to take delivery."

    This is his blog:

    http://harveyorgan.blogspot.com/

    ReplyDelete
  81. Just bought some ABX and GG....looking for a pop tomorrow.

    Large positions for an overnight. Not for the faint of heart...going drinking after the close.

    ReplyDelete
  82. LOL now the trolling is pretty serious hahaha. Better move the meter to 100%

    ReplyDelete
  83. Interesting that Gary's recommendation of GDXJ as a proxy for the juniors is doing better than most everything else (including the majors and GDX). It isn't because of the silver component because that is down as well.

    ReplyDelete
  84. Just bought more. Too cheap to pass on. Maybe when I lose my shirt I can live under the bridge with troll boy. lol.

    ReplyDelete
  85. Looking at seasonal chart:


    http://www.seasonalcharts.com/future_metalle_gold.html

    Gold tends to really slide late july/early aug and then....ZOOM

    ReplyDelete
  86. RSI says gold is bottoming today or within 3 days. I nasty durables number will pop the gold sector nicely tomorrow.

    Long ABX and GG

    ReplyDelete
  87. Instead of worrying about all this I am about to go to the pool with the family, and maybe have a beer. I accumulated more PM's today as well, off of Gary's call (have to choose a point to buy at some point, and I am too lazy to do the work myself lol).

    I will say it again, but gold is not for the tame of heart. This drawdown is not even that big yet. Gold is a long-term hold, or a no hold. There is nothing inbetween that will make you money over a long period of time. I would be really stressed to be out of the market now! TA follows price action, and price action is as useless as arguing about deflation.

    Good luck fellas!(traders and investors alike)

    ReplyDelete
  88. Dumbass is awake from his nap. Thanks for the advice. Anyone civil here can possibly shed some light. If someone bought the 1200 put couldn't they exercise the put and simulataneously purchase a future right here at 1260 and be hedged and pocket the $40 spread? Or I suppose they could just sell the puts now. This is what I was getting at earlier. The options need to be exercised by 5:00EST so it will be interesting to see what gold does aftewards as I believe they need to be exercised today.

    ReplyDelete
  89. The volume on GLD today is impressive.

    ReplyDelete
  90. A 1200 put holder could exercise to open a short position with a basis of 1200 minus the premium paid and then collar the profit by going long an equal amount at 1160, to answer the question.

    ReplyDelete
  91. Gary
    You really don't understand options. If you do your explanation of it is not well at all.

    ReplyDelete
  92. GDX pulling back above the 200dema. If it keeps going, might have the makings of a tweezer bottom with last week's test if there is such a thing ;-)

    ReplyDelete
  93. Options are for people with small accounts, like troll boy and the newly destitute Fish N Chips UK.

    ReplyDelete
  94. Why yes, I did indeed just wake up from my siesta, and feeling refreshed. Thanks for inquiring! :)

    This whole making money thing sure is a lot of work! LMAO!!

    ReplyDelete
  95. Troll boy should start a site of his own, with all his fantastic calls.

    I bet he'd have a lot of subscribers! Just kidding.

    ReplyDelete
  96. This blog is going down the toilet these days. WTF is with the retarded Yahoo message board pond scum here?

    ReplyDelete
  97. And don't get telling us you're still short gold down here, TB. Nobody is that stupid. :)

    ReplyDelete
  98. Justin,
    Cycles are nothing at all like EW and sentiment tells you when too any people are on the same side of the boat. When that happens you run the risk of running out of buyers or sellers.

    ReplyDelete
  99. Pond scum comments? Sounds like you belong over at yahoo. nowhatimsayin?

    ReplyDelete
  100. I think N is right we probably have enough troll infestation to warrant a 100% on the troll meter.

    ReplyDelete
  101. BTW, perhaps one explanation for the action on this OPEX is the put writers shorting gold to delta-hedge their underwater position. Everyone assumes the market makers control the price moves in gold to their benefit ... perhaps this time around they were forced to hedge for being heavily if synthetically long gold.

    ReplyDelete
  102. Still short with a trailing stop.
    Looks like nap time for me. Tired of counting m to m profits.

    ReplyDelete
  103. What my brother also fails to mention is that when he says he's short KGC, its only about 20 or 25 shares, so really he makes basically nothing being right.

    Personally I don't think that gold will go down too much more like he does, but I would welcome it because that would mean we would have another great buying opportunity for gold and silver stocks.

    ReplyDelete
  104. A nap would be a good idea, troll boy. After some rest, you might start making some sense and get with the program. Staying short a bull market pullback is sooeycide.

    Sleep tight.

    ReplyDelete
  105. Alot of trolling, but no stress, except on the bear side(they are very nervous). Have all the bulls ran away, or have they adopted Old Turkey?

    An honest question to the bulls, since I haven't heard anybody really stressed out on the bull side. Gary's basement jokes, tooth ache boy, death threat bob, were all taken on by bulls with skin in the game last feb. I am not seeing that right now...hmm wondering.

    Any comments from the silent bulls, or are you guys all at the pool then?

    ReplyDelete
  106. Rest assured if TB is shorting gold then he's already been whipsawed out of positions many times trying to pick a top (just like our friend Narayana who refuses to admit it).

    That is the reason one can't make any real money trying to short bull markets. The tops and bottoms are just too unpredictable and one just ends up getting whipsewed to death. Then if they are lucky they might make a little of that back when a correction finally does come.

    Of course they almost always miss the bottom so then they end up giving back some of that too.

    Like I said I learned a long time ago that trying to short bull markets is a losing proposition.

    The ONLY time it makes any sense at all, and then just barely, is when the bull gets really stretched above the mean. Then at least you have the law of regression to the mean working for you.

    ReplyDelete
  107. YES TROLL METER AT 100%!!! I just closed out my short positions and went 200% long!

    ReplyDelete
  108. G,
    I know you don't track anything other than the Spyder's for money flow data but did you see the huge BoW data for GLD today?

    ReplyDelete
  109. Silent bull here: I sold my small margin position on the 20th and picked them back up today near the bottom - haven't touched my core, only the bit of margin I have. Slight discount. Plan to hold through the C-wave, even if it takes through spring.

    Going back to the pool now.

    ReplyDelete
  110. You fools are going back into the blood pool.....fools!!!!!
    You are buying way to early.
    You will see.

    ReplyDelete
  111. Theatricality truly begets credibility. ;-)

    ReplyDelete
  112. Question Boy(to give a temp name)July 27, 2010 at 2:26 PM

    Thanks for the response LowTax. I believe you are on the old Turkey side. Are all the bulls this way now? Anybody else that was here in Feb that still has skin in the game? Just curious, because I haven't seen one stressed out bull yet. Which to me means, old turkey or non-existant accounts.

    Blood on the streets never really happened on the blog, or even remotely close to fear of holding. Instead we have pool boys and nap boys. Plenty of scared bears, not a judgement, but an observation. The slightest poke and many of you guys fly off the handle.

    What has changed? I am Old Turkey now myself, if I didn't mention before.

    ReplyDelete
  113. "Instead we have pool boys and nap boys."

    LMAO!!! Good one, and my all-time favorite is still toothache boy. He was pure genius.

    ReplyDelete
  114. At some point after something fails enough times one finally comes to their senses and tries something different.

    After consistently losing money trying to trade gold I finally took Gary's advice and chose the Old Turky path. Now I'm finally making money.

    I think that says it all.

    ReplyDelete
  115. Trol-O-Meter pinned at 100%? Time to start squeezing the piss out of shorts. Thanks G.

    ReplyDelete
  116. I believe it was cavity-boy.

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  117. Anon 4:04

    I went the same route. I have the feeling that many of us bulls, simply stopped trading gold and learned our lessons or completly gave up. Those that gave up, have probably gone away. I guess the character of the blog has truly changed. Interesting...of course I am just posing a thought to why the bulls are so quiet.

    ReplyDelete
  118. I believe it was cavity-boy.

    You are correct.

    Those were some the funniest blogs ever. Crapping pants, bulls freaking out in a stressed funny manner, asking if wives could be written off for taxes, etc...Crazy stuff. Fighting for Lazy boys or the couch in Gary's house was a classic. Gold was tanking, miners getting killed, and the blog was trying to do rock paper scissor to see who would get the couch at Gary's place.

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  119. We are quiet because the situation is plain as day. Speaking for myself, there's not much reason to talk - you either believe our country is on the right path and will spend its way out of its massive debt (Keynesians), or you believe deflation will destroy it all, or you believe that human nature will virtually guarantee the outcome, as it always has in the past and that inflation is what we will all get.

    On the second point, current deflation is being battled by the Fed who have a virtually unlimited ability to reflate. Hence Gary's point about the greatest deflationary event having been stopped in just a few months. Bernanke has done his homework on the Great Depression - he will not let it happen again. He will follow Japan's moves and maintain a balance between deflation and inflation, guarnateeing slow and sluggish economic growth with relatively high unemployment but without any crashes a la the 30's. The private debt will move to the sovereign balance sheets and await maturity, just as in Japan. The deflationists don't believe in the Fed's powers but I do - they have a limitless ability to buy as much of anything they choose. The only outcome of such power is inflation, period. The only way deflation will win is if they CHOOSE to let it happen, which is against everything they've ever said and done in the past.

    The problem with their plan is that there is already too much global debt and it will have to be slowly inflated away. I don't think we'll get hyperinflation but I could easily be wrong since that outcome is highly unstable as it relies mostly on people's belief in the currency. If the general populace should decide they've had enough, money velocity will skyrocket and the house of cards will come down in a heartbeat. But even under a slow inflation, gold will soar as the amount of debt in the world is astronomical. They will attempt to walk a fine line but it will eventually get out of hand as the market is far too complicated for even them to handle properly.

    There will be inflation and the price of gold will anticipate this - regardless of temporary bouts of deflation. Make no mistake about this.

    ReplyDelete
  120. Hey first time here, very interesting site.

    Wanted to point out a few things about Paulson's gold position. I run a site dedicated to tracking hedge fund portfolio movements: http://www.marketfolly.com and have followed Paulson's gold stake through all of this.

    While I agree with your assertion that he wouldn't sell into weakness, you also have to consider a few unique circumstances around his position. Paulson's hedge funds have a fund share class option denominated in gold (rather than US dollars or Euros, like the typical funds). As such, he had to buy gold (via GLD) to essentially 'hedge' or round out this exposure.

    This is the main thing people mistake about Paulson's gold stake. He has a gold fund, yes. But that fund mainly invests in equity stakes in gold mining companies. Additionally, any positions he takes directly in gold in that fund are via derivatives, not the ETF. While some of his GLD position may be a directional bet in his non-gold specific funds, the majority of it is for his fund's share class that is denominated in gold.

    So think of it this way: He received $2 billion in redemption requests. Some of those are probably in the fund share classes denominated in gold. He loses exposure to that share class, what does he do? Reduce the GLD hedge that complemented the underlying share class. Might/might not be a reason as to why you're seeing GLD decline.

    Make no mistake though, Paulson is definitely bullish on gold as it is his bet against the US dollar. Just wanted to point out a few distinctions regarding his GLD position. I've covered his gold fund in-depth here for those interested: http://www.marketfolly.com/2009/11/john-paulsons-gold-fund-betting-against.html

    Keep up the good work with the site, look forward to reading now.

    Jay
    @marketfolly

    ReplyDelete
  121. LowTax,

    What do you think the Fed is waiting for then? Why don't they just hyperinflate now, since they should know what the outcome is like we do? Or do you think only we know the outcome and not the Fed? I wonder how many times Bernanke has read articles about himself with the word Helicopter tied to his name?

    The Fed is sitting their waiting and hoping like everyone else that things are going to get better. They simply aren't going to do anything drastic until after the market gets hammered back down again to a level that scares market participants sufficiently to warrant drastic action by the government.

    There's no record in history of preemptive hyperinflation, it only happens after governments panic and it typically doesn't happen during credit collapses like we have now. The Fed is just as likely to be powerless as it is to have some magical power to inflate due to public will being against a government that has run out of control.

    Finally the bond market is still in the SHOW ME stage. The bond market with long term rates hovering around 3% is saying it ain't worried one bit about inflation right now. But even though that fact is staring everyone in the face there are still plenty of people willing to die before giving up the idea that the inflationary outcome just might not work.

    In the end, why not just let the prices of the dollar, bonds, and commodities show you what the real threat is.

    ReplyDelete
  122. LowTax,

    What do you think the Fed is waiting for then? Why don't they just hyperinflate now, since they should know what the outcome is like we do? Or do you think only we know the outcome and not the Fed? I wonder how many times Bernanke has read articles about himself with the word Helicopter tied to his name?

    The Fed is sitting their waiting and hoping like everyone else that things are going to get better. They simply aren't going to do anything drastic until after the market gets hammered back down again to a level that scares market participants sufficiently to warrant drastic action by the government.

    There's no record in history of preemptive hyperinflation, it only happens after governments panic and it typically doesn't happen during credit collapses like we have now. The Fed is just as likely to be powerless as it is to have some magical power to inflate due to public will being against a government that has run out of control.

    Finally the bond market is still in the SHOW ME stage. The bond market with long term rates hovering around 3% is saying it ain't worried one bit about inflation right now. But even though that fact is staring everyone in the face there are still plenty of people willing to die before giving up the idea that the inflationary outcome just might not work.

    In the end, why not just let the prices of the dollar, bonds, and commodities show you what the real threat is.

    ReplyDelete
  123. Inflation has already come. Where is the future tense coming from. Justin sound like a coach that never had a team, but read tons of books on theory. Reality is that inflation has soared since the fed began printing.

    Even house prices are up
    http://www.census.gov/const/uspricemon.pdf

    The way you guys look at things is by comparing a high to a low and say deflation exists. Inflation has been persistent in everything over the last 10 years, over the last 20 years, etc. This deflation talk is simply foolish as long as the government keeps printing.

    An interesting site for food prices
    http://www.foodtimeline.org/foodfaq5.html

    oil prices
    http://www.ioga.com/Special/crudeoil_Hist.htm

    The deflationist view that because prices fall deflation exists is flawed because it only looks at an overpriced asset at its peak and compares it with the crash bottom. Comparing oil, for example, from its pre-bubble phase to now, would be more appropriate. If oil would have maintained below $35-$40, a case for deflation may have been made. In order for deflation to exist aggregate prices must fall continually for a sustained period of time, not just from an over-priced crash. If the economy were like computer prices, I would argue, a case for deflation may be made.

    Bond markets don't react to inflation and all that other nonsense. They don't factor in future inflation. They are a product of supply and demand. The higher the demand, the lower the yield. The magical belief that the bond market predicts inflation is dangerous if one invests in this. For all we know the Fed may be buying bonds as we speak. What may happen once the market smarten ups a little and faces facts that interest rates are stupidly low, inflation articles may come out, but that would not be the reason for the panic sell of bonds at that point. Bonds are in a bubble. Don’t know when it will burst.

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  124. In 05 the real estate markets were telling us that there was no problem lending money to people that had no chance of ever paying it back.

    In 07 the stock market was telling us that there was no problem with the economy or credit markets.

    Of course we now know the markets were wrong.

    BTW smart money already knew there were problems in both of these areas. Heck even I knew that real estate was in a bubble and I'm no genius.

    So to say that the bond market doesn't see inflation ahead the same as the real estate market in 05/06. Just because it hasn't recognized the problem yet doesn't mean it's not coming.

    All markets eventually come to their senses despite the fact that the humans that trade them can stay irrational for quite some time.

    And at the top of bubbles they can stay irrational for a long time.

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  125. Did anybody make money shorting housing in 2005? How about in 2006? In fact if you read books like The Greatest Trade Ever or The Quants (I've read both) it talks about how people PREDICTED the housing market to be in a bubble, yet lost a lot of money because the housing market bubble hadn't burst yet.

    So let me ask this question: Are they any smarter for having predicted the housing market to end in a burst bubble yet failed to profit from it due to taking positions too early? On the contrary, because they didn't listen to price action, and stubbornly held onto their trades, I think there's nothing special about their prediction because they didn't profit from it.

    Is the bond bull market going to ever come to an end? Of course it is. But betting on it ending before it ends is going to be just as unprofitable as housing. So you may think you're smart and predict an end to the bond bull market but you can keep saying the same thing for years and be wrong, just like the housing bubble.

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  126. Pulling up a chart of IEF, the 7-10 year bond fund, you'll notice a long term uptrend that is now attempting to move past the 2008 "panic" highs on high volume. Why would it be attempting to reach all time highs if a Ben Bernanke inflationary holocaust was around the corner? Answer: it wouldn't. When that chart starts to form a top, and break down from it, then I'll worry about inflation.

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  127. Hey Gary:

    Great stuff here. I've become a big fan of your sensibility and reason, PM bull or not.

    Any thoughts on the best ways to play the long side on the gold intermediate low and options expiry tomorrow / next week? I don't know miners well enough to feel comfortable buying calls but am antsy to make a few levered bets on gold and silver.

    Thanks and again, nice job here.

    ReplyDelete
  128. hi gary

    im thinking of signing up. As an investor , not a trader, what benefits are there, if any?

    You seem to be very forthcoming here for free after all

    great blog btw

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  129. Gary and others,

    To all you guys who keep talking about the gold options expiring TOMORROW (wed) are you aware that they expire on the "Expiration occurs on the fourth business day prior to the underlying futures delivery month."

    http://www.cmegroup.com/trading/metals/precious/gold_contractSpecs_options.html

    That's expiration on TODAY (tues). Why do you keep saying Wed?

    -time zone guy

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  130. Hi gary,

    spot gold is $1160 will u buy more at this level or wait for further corrections..

    Regards
    Vipin

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  131. Justin,
    I'm not betting against the bond market. I was just pointing out that you are basing your deflationary view on what the bond market is doing. I'nm saying the bond market is in that final stage where it is ignoring the obvious all around it.

    Asset prices have been experiencing inflation since March 09 and there is no sign of collapsing prices which would be a symptom of deflation.

    It seems everyone has decided we will have deflation first and then inflation. What they fail to notice is we already had it.

    We just had the worst deflationary spiral in 80 years and Ben stopped it in it's tracks in a mere 9 months.

    There has been no sign of deflation since then except your bond makret which I believe is just in the irrational grip of a final bubble stage.

    BTW Paulson shorted real estate and he was a year too early. He held his position and ultimately made billions.

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  132. Where's Gary_UK been hiding since his beatin'?

    A thorough drubbing, and right out of the gate, no less. He gives new meaning to the term "bangers and mashed." :)

    ReplyDelete
  133. Clark,
    There are a few free reports you can brows on the premium site.

    Just click on the link at the top right corner of the blog.

    Vipin,
    I did add my final position yesterday on the break below the May pivot. Did I get the exact bottom? Probably not, I almost never time it perfectly. But it was close enough and I was following my plan.

    If you are going to buy then just take your best shot and then be prepared to hold on even if you have a draw down.

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  134. Justin,
    I think what it boils down to is we both think gold is going higher. You are going to try to pick a bottom based on technicals. I'm going to try to pick a bottom based on cycles, sentiment and technicals (the least of the three).

    ReplyDelete
  135. Gary,

    To continue with my pondering. Have you noticed anything change in the character of your subscription base of old timer readers? Have they for the most part matured into the Old Turkey?

    Blood on the streets used to be one of many signs that I looked for, but there was zero to none on the blog this time for the most part.

    Thanks

    ReplyDelete
  136. QB,

    That might be what makes a C wave. Nobody wants to sell, but instead are looking to buy?

    I used to trade, and was even somewhat profitable after a 3 year learning curve, but realized that much more can be made identifying a bull and sticking with it. This is how I became an Old Turkey.

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  137. The problem with trading is that one can be correct on direction, but still lose money because timing is just as important as the directional call.

    Gary has minimized the damage poor timing will do to a portfolio.

    ReplyDelete
  138. To answer your question subscription base follows human nature.

    By that I mean as gold moves into an intermediate top tons of people jump on board. Then most of them get knocked off by the correction.

    Typical retail type traders. Buy high, sell low.

    I would say most long term subs have seen the light by now and have taken a position and are just going on with their lives rather than constantly watching their computer.

    ReplyDelete
  139. Gary
    Just started nibbling on the long side in gold here at the 1160. If it goes lower I will continue to accumulate. Where would you put a reasonable stop. Thanks.
    Robbie

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  140. Thanks all for the response! Old Turkey seems to be growing, myself inculded.
    Back to the pool or a nap. ;)

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  141. Rob,
    You realize that by using stops you are doing the one thing that can make you lose money in a bull market.

    Most of the people here have learned their lesson that the metals are just too volatile to trade successfully.

    IMO if you are going to buy in the PM sector then you better believe in the bull and be prepared to take an investors position.

    By that I mean when you buy you then just sit back and play Old Turkey until the C-wave tops.

    You don't freak out and sell for a loss if you don't time the entry perfectly. If that's the case then you just wait for the bull to correct your timing mistake.

    So to answer your question I would not put a stop on positions.

    ReplyDelete
  142. i m individual retail investor..a dumb one...i shorted silver y'day @ 17.85 :-)

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  143. Sounds like someone has been taking advice from wrong way TK :)

    ReplyDelete
  144. Gary (or anyone else familiar with GDXJ)- I'm thinking about buying some PM's here and see that GDXJ seems to be performing the best. Any idea why that one as opposed to GDX (or even many of the components of GDXJ)?

    ReplyDelete
  145. small caps are more sensitive to market movements as they are more volatile. the market has been going up so gdxj has been doing well comparatively

    ReplyDelete
  146. Gary..the cavity that I had in early February is acting up again...it is real sore. What do you advise?
    They already gave me a root canal.

    Keep in mind that I like pain.

    thanks

    ReplyDelete
  147. QB's got the idea, even though I'm not scheduled to start my nap until 1:30 or 2pm.

    However, I am looking forward to it. :)

    ReplyDelete
  148. Hi,

    I've been a sub since Gold traded around 850ish. I've built a position slowly over that time. Adding during most corrections (daily and weekly swing low reversals). I'm currently waiting for a daily and weekly reversal to add more. I guess i'm in agreement with Gary that a secular bull is to bought on dips. So far, it has worked well. I'm currently in a position to ride out corrections without stress. in fact, I find that I am enjoying them as they continue to offer me profit over time. I also have seen nothing but a wall of worry as late. Whenever gold rises, the talking heads pooh pooh it. When it drops they believe it is the end. I mean come on, we've had a 9% correction from the top, thus far in gold. With the levels of bearishness and antagonism I don;t see it as a top. During a top, people will buy the dips en masse like they did in 2000 as they continue to believe that gold will never go down. That's when long term subs on this blog will be calmly handing over their shares to the public, and looking for the next secular bull.

    Unlike Gary, I am not averse to shorting. I had my best year yet in 2008, but that was a much different time than now. I currently have no shorts in play as the market is way to unpredictable. In 08/early 09 the market was in a clear downtrend and it was easy to win with shorts. However, I did give back a percentage of my earning in late 09 as I began to specualte that the rally was over. I lost perhaps 20% of my gains from 08. So, I've learned and my tactics have changed, and I have to say its far moer relaxing to check in for a few minutes a day, then to be obsessively hunched over the monitor all day long.

    Anyway, for those of you asking, I believe Gary's subscription is one of the best values in the investment blogosphere.

    Good Luck from another strutting Old Turkey.

    Fubsy

    ReplyDelete
  149. Gary's new book:

    "Better Naps via Strong Hand Status".

    ReplyDelete
  150. Gary
    Thanks for the input. I think what i'm going to do is look at most of this as an investor say 75% of total and use the other 25% to trade with?
    Thank you
    Robbie

    ReplyDelete
  151. My new book:

    "How to Nap Like a Pro"

    ReplyDelete
  152. Let me state for the record that I'm not adverse to shorting. But I would only do it when there isn't a bull market somewhere.

    I did short oil drillers during the bear but like most gave a part of it back last July as I thought that was a bear market rally.

    That's the problem with bear markets they are hard to make money in and even harder to keep the money as they are so unpredictable.

    The government and Fed are always going to fight bear markets. They will print money and change the rules on you as you go. That's not the kind of environment that is condusive to being able to make and keep money.

    As long as there is a bull market somewhere it's much easier to ride the bull and more improtantly it's easy to keep ones gains.

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  153. Gary,

    I know you don't use stops, but what do you do when you are wrong? What if the bull market gold has in fact ended (I do not believe it has---this is a hypothetical.) What if gold goes back to $300 for ten years? My point is that if you don;t use stops you can be wrong once and it's game over. I made $600,000 trading over five years starting with $35,000 when I was young on Wall Street---and then lost it all because I was "sure" I was right. I have since made it back and I am not going to do that again! I have worked for 35 years to improve my trading and am in your 5% (traders who make money). It is in self-defense against "no stops." The "what if you you have the whole picture wrong" question is important I think. Market's can do ANYTHING. You don;t want to go broke because for the first time ever gold ended its bull without going parabolic (again, I'm not saying it has). Thoughts?

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  154. "Get Rich Napping 2 Hours a Day"

    Say, where's troll boy?

    ReplyDelete
  155. Here's the thing. Traders would like us investors to believe that a trading strategy avoids pain. But it simply isn't true.

    I'm going to use Justin as an example, or we could use Gary-UK, both are traders trying to avoid draw downs. But even so a trader must have conviction in his decisions. Both traders are short equities (at least I'm assuming they are since they haven't said they have covered yet) and both even though they are traders are having to now weather a drawdown.

    The only way to avoid ever experiencing draw downs is if you never mistime a trade. I think we are all smart enough to know that is impossible. As most people know almost every single trade one takes has some kind of drawdown no matter how well you time it.

    So despite what the traders would like us to believe none of us are immune to pain.

    The differece between an investor is that we have the secular trend on our side. A trader has his stops. Unfortunately those stops are the one thing that casues him to lose money, especially if they are placed improperly.

    So like someone else said earlier, a trader can still manage to lose money even if he is on the right side of the trade because he not only has to get direction right he also has to get the timing right.

    An investor takes the timing component out of the equation.

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  156. With "flash crashes" these days, stops might put one out of business. I still have a very strict stop level, but won't leave the order in for computers to pick off in our ever-thinning markets.

    ReplyDelete
  157. Anyone else old turkey on Gary's SSRI pick? -30% since Jan.

    These silvers have not done well this year, except for SLW.

    Sure, if you started a sub back a few years ago Old Turkey rules, but for the new meat we have yet to see some good results. I know eventually they will perform, but just know following Gary's calls will include some risky bets on the smaller silver mining market, not gold.

    ReplyDelete
  158. DG,
    Well first off one won't go broke unless they are leveraged because neither gold nor the HUI are going to 0.

    Second that is the risk one has to be willing to accept if they are going to choose the investor path. The down side is that maybe this time human nature has changed. The upside is you will get rich riding a bull market.

    One just has to decide if the reward is worth the risk.

    Personally I don't believe for one second that human nature has changed. Not in the last 5000 years and certainly not in the last 30 since the last bull market in gold.

    So I am willing to accept the risk.

    ReplyDelete
  159. Anon,
    That's why I bought a basket of silvers. I knew some would underperform and some would outperform. On average they should even out. One could also just buy SIL which wasn't available when I built my silver index.

    ReplyDelete
  160. Gary,

    If that recent post of yours was in response to me post, you still have not said what you do if you are wrong? Do you just hold until gold goes back to $300? One error in your life and your account is gone. I use stops and get hit. I take a profit on 30% of my trades, but make money (I am well ahead this year in a choppy market---I am only in the hole in gold!) For me it's all about risk management, position sizing, and intelligent entries. I agree completely that most people should not do this as they do not have the emotional discipline or experience, but don;t dismiss all trading. There are lots of ways to do this. Market Wizards has some traders in there who have made enormous fortunes over many years. "This is not a traders blog" seems fairer than "trading doesn't work."---because it does, if it's done well. Old Turkey is certainly easier---unless it's not still a bull market in which case you get pretty wiped out.

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  161. Gary - excellent posts as always.

    Do you also post on another blog http://goldscents.blogspot.com/

    seems to have identical content.

    It is posted by Toby Connor.

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  162. Positive divergence this morning for GDX vis a vis SPX and GLD. Rhymes a little with the February turn.

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  163. Sorry Gary. Our last posts crossed in the mail, so to speak. By "going broke" I don't mean going to zero. losing 80% of you savings is bad enough as you need to quintuple your money to get back to even! I of course agree that human nature has not changed and never will, but investing is about measuring human nature, not human nature itself. Things like: "When the bull is ready to end people will be lined up outside coin dealers" etc. are ways to measure that unchangeable herd-like psychology. Measuring is an art, and thus you can be wrong. I am not suggesting human nature will change, just that your read on it can be wrong.

    Also, I guess you agree that trading can work, but that it's for very few people. You can point to poor traders and say "see?" but then i can point to poor Old Turkeys" and say "see?" as well. The better ones in each style do well.

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  164. NovaGold (NG) getting down close to where criminals Soros and Paulson bought in. $5.50, if I ain't mistaken.

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  165. DG,
    I certainly would never make a blanket statement and say trading doesn't work. It obviously does if done right.

    Doing it right is very hard to do though. To begin with one has to fight their nature to gamble too big. Risk control is the single most important component of bebing successful as a trader and most people who don't have a money manager standing over them will violate this rule.

    If one makes this mistake they will lose money, no ands, ifs, or buts.

    But more to the point, as hard as trading is it's multiples harder when you add in a very volatile sector like the PM.

    And I think we all know that in order to trade successfully risk management is going to limit returns.

    That's not my goal in riding a bull market. I want to maximize returns. That can only be done by adopting an investor strategy.

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  166. Thanks, Gary. Fair responses. I appreciate intelligent dialogue without all the "Laugh My Ass Off" nonsense (that's just a different breed of troll in my opinion). One additional point. You can combine trading and investing. I sometimes enter a trade many times before getting it right. Buy at 20.40; stopped out at 20.10---buy at 19.80; stopped out at 19.30, etc. Then the last one sticks and I hold it for a year (this year I bought EUO at 18 and sold it at 24.50 for 30% in six months. The same idea with FXP---that's short euros and China. "Let your profits run" can be combined with stops, entry point work, position sizing, and risk management. I bought GDX yesterday and am hoping to hold it for a long time---if the market lets me. Once it is in the black I can become Old Turkey, but I am not going to hold it until it gets to 18 if I am wrong!

    Great blog, by the way. I think you are doing a real service for most people. I have more gold than I would without your blog. If it works I owe you a dinner!

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  167. DG,

    You sound like you're an experienced trader. I agree using stops is what separates people that are successful in trading to people that are unsuccessful. The simple fact is it takes a huge gain to offset a huge loss, and the only thing that prevents taking huge losses is using stops. It takes discipline to use stops but that shouldn't be an excuse for people not to learn how to use them.

    The fact is the "investors" on this blog are still going to have to go through huge temporary losses that may cause them to bail if they are too leveraged into the gold market and start to panic. They can talk all they want and say they would never do that but I'm sure the carnage of 2008 caused a lot of gold investors to dump shares at panic levels. I'm kind of confused myself how Gary says he was not in the gold market in 2008 experiencing big losses on his positions when he claims to be a long term buy and holder in the gold market.

    I personally have a long term position in gold but most of my trading account is devoted to swing trading the larger moves in the markets. I don't care what anyone on this blog says, by using stops you can free up capital to catch big moves in the markets and it also helps you identify when you are wrong and need to reverse your bias or just get out of the market in general. Especially in a bear market like we are in now where there are going to be a lot of big swings in either direction, including more big swings lower in gold to provide the bull the ability to move higher.

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  168. Thanks for the lesson, DG. Do you mind sharing how much your account is up this year?

    Just wondering your win/loss rate, profitablility etc. with that strategy?

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  169. Justin,

    I would like to be in touch with you outside of this blog as there's a chance we could help each others' trading and I am always looking for additional refinements. Is there a way to do that without publishing my email address for the world to see and spam me forever after? Where are you physically located?

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  170. Justin,
    I will always try to avoid a D-wave. When gold failed to hold the 850 level it was apparent the D-wave was dropping into the 8 year cycle low.

    To that extent I am going to be a trader in that I will always attempt to side step a D-wave. I will probably also exit positions (at least some percentage of them) when gold and miners get very stretched above the mean (like I did last Nov.).

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  171. You can send me your emails and I will forward them on if you like.

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  172. to Anonymous:

    I am up about 4% this year. I have enough money now that I am not trying to triple my money, but preserve what I have while still growing it well (4% for the year is about 7% annualized, which is fine with me in a 1% interest-rate world---and the year ain't over yet!).

    I win only about 30% of the time but the wins are large and the losses very small. i have spent many years working to perfect entry points (and am still wrong 70% of the time!) and risk management. Gary is right that it is very difficult emotionally and that most people will just buy high and sell low with poorly placed stops. His way is better for most people. I am just afraid that if he is ever wrong big time he will take down the whole ship.

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  173. Gary-
    At impending swing reversals do Miners typically lead the metals or vice versa OR does it just depend on the miners equity market correlation and what that market may be doing?

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  174. Dan,
    Sometimes they do. Sometimes they just follow gold.

    Unfortunately there are no hard rules that one can point to and say "this works every time".

    Way too often I see traders point to a period in history and say we are in a similar position. They then assume that because the market did one thing back then it will do the exact same thing this time.

    Needless to say they are often disappointed.

    Each period in history is unique with it's own set of fundamentals. Just because miners led coming out of one bottom doesn't guarantee they will lead this time...although I woulnd't take it as a bad sign :)

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  175. Gary-
    Thank you! that is what I was thinking but I do not have your history with Gold and its nuances!
    Also, I really love your macro Bull theme investing. From what I understand you have been long gold and in the past short drillers. Do you have a list of previous macro themes you have invested in the past? I am attempting to wrap my hands around your investing universe. I am sure it is larger than PM's and equities (and oil drillers)
    Would you invest in any Bull market you see developing?
    Thanks Gary--Appreciate it!

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  176. I don't want to piss anybody off, but this sideways, meandering action is making me sleepy. Naptime!

    See you guys in a few hours. :)

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  177. Gary,

    thanks for your agriculture tip couple weeks ago! Flood in China, locust in Australia, Drought in Russia. All looking gd for agriculture.

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  178. added more gold and silver in last two days. Nice call Gary. Time to just wait for the fall move higher. Still have 3+ weeks of summer to enjoy till kids go back to school. Have fun everyone.

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  179. Dan,
    I was long energy for most of the last bull got out when I saw the parabolic move.

    I exited a little early (I almost always do).

    Then shorted drillers expecting the massive parabolic move to regress to the mean...which it did.
    Exited that trade too early too :)

    I think most subs by now wait for my calls then wait a week before they act on them :)

    At this time there is only one secular bull market left so I am concentrating on that for now.

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  180. I am sure you don't realize this yet but you wii. This sideways action is not good at all for you bulltards. Very good for us shorties. 1075 is the target then 1000 where you will have lost all your gains and more because you will be buying on the way down.

    troll

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  181. added more gold and silver in last two days. Nice call Gary. Time to just wait for the fall move higher. Still have 3+ weeks of summer to enjoy till kids go back to school. Have fun everyone.

    N,
    I could have written that message myself. Enjoy the time boys and gals and only check the computer once and awhile.;)

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  182. ANON ;(

    You talk out yo butt,boy.
    Thats right just walk away and check back in ia week from now. You can't walk away 'cause your on here everyday watching your profit slowly slip away.
    See your sorry ass @ 1000 with all profits gone!

    troll

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  183. Keep buying this POS on the way down. You guys are going to get slammed. Technicals look so so so bad!. I really do not know wtf you are looking at but we have a ways to go to the downside.
    Hang in there my short friends. We will be covering when these stupid ass longs puke it to us.
    And by the way, being short stocks has been very rewarding. Of course I do not short and hold. There have been some great swing trades in the last 4 months. Overall the stocks are going down, bigtime.
    DEFLATION!!!

    troll

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  184. "so so so" bad? That sounds pretty bad. Do you have anything in particular in mind, or the whole schmeal?

    Sideways action isn't in and of itself a bearish indicator. Shallow pullbacks can be quite bullish (even so so so bullish, though that's probably overstating the case for now), allowing overbought conditions to bleed off without giving bargain-hunters (or squeezed shorts) much of an opportunity to buy/cover.

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  185. Nap boy here, and well-rested.

    troll, you really are an idiot to act like you've got your stock short under control, as if you're ringing the register. Stocks are so far up your butt we can't even see 'em.

    You got crammed, or you don't trade at all.

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  186. miners looking to roll over again tomorrow....stay tuned.

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  187. Another quarter-billion of SPY on the BoW.

    http://online.wsj.com/mdc/public/page/2_3022-mfgppl-moneyflow.html

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  188. To have a pullback be both shallow *and* low-volume ... not particularly bearish.

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  189. Another little positive divergence of note: SLW/SLV.

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  190. Just keep buying fools. This downward move is not over yet.
    DEFLATION.!
    The two year note @ .61% !!!!!!
    Fool-tards.
    Gold has a long way to go down.
    And you fools are going to wait your whole life to make money or dream of getting rich like it is spewed here.
    The gov't is not going to let you get rich. They WILL tax the living hell out of gold bullion or paper.
    Sell bonds to get reel money.

    troll

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  191. Nice EOD wrap-up, troll. Sturm-and-drang Dr. Evil stuff to summarize a dull day. I like it.

    Fool-tards? You can always tell an Eton man. :-)

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  192. If gold has another down day Troll boy will have a stroke :)

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  193. LOL And I'll still be napping by the pool!

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  194. troll=dollar guy, I believe

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  195. Do you mean Dawler Guy? If so, I don't think so. DG's tone wasn't quite so childish and repetitive. I kinda miss DG, truth be told.

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  196. I love my afternoon siestas, but anon has the best idea of all. Why just be a nap boy, or pool boy, when I can be both! :)


    Thanks, brother!

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  197. You are missing beach boy, beer and pizza boy, movie boy, sailing boy, video game boy, fishing boy, sport boy, I would say golf boy(but you might bump into Justin at the tee and have to hear his deflation rant.lol)

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  198. DG,

    E-mail me at tradrjustin@gmail.com if you want. Essentially I'm just a trend trader, trying to find something that breaks out of a consolidation, hold it for as long as I can, then sell it when it stops going up. I've been trading gold stocks since 2002 so I'm quite familiar with a lot of different miners and the gold market in general. The market this year has been a lot more challenging than last year, I'm mostly out of the market right now except for the short position/long dollar I was starting to establish in anticipation of a trend change, but so far no important levels have been taken out in either direction so it's pretty dull.

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