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Sunday, August 8, 2010

SOMETHING BIG IS BREWING

Now that we have a weekly swing low and a higher high I think the odds are heavily in favor of the intermediate cycle bottom being in place for gold. Just like all the calls for a market crash back in June, the calls for sub $1000 gold are probably going to be a bit premature. I really doubt we will ever see $1000 gold again during this bull market.

It was simply getting too late in the intermediate cycle for gold to have enough time to make it all the way back to $1000. Just like we had run out of time in June for the head & shoulders pattern in the stock market to have any realistic chance of completing.

This is one of the big drawbacks to relying solely on technical analysis. At bottoms the technicals will always look terrible. If one basis their trades solely on technicals they will forever be selling at bottoms and eventually they will destroy their portfolio.

History has show time and time again that trading based solely off lines on a chart just doesn't give one an edge in the market. I would say the many technicians over the last month have just added even more data to support that conclusion.

Now don't get me wrong, I'm not saying I don't use technical analysis, I do. I just don't use it exclusive of everything else. When cycles, sentiment and money flows are calling for a trend change then I ignore the charts and prepare to change directions. This is exactly how I spotted the stock market bottom and what I think will turn out to be the bottom of the gold correction.

Now I want to take a closer look at that correction, because despite the dire warnings of the gold bears, something pretty amazing happened during this correction.

Over a 6 week period gold pulled back a very modest 8.6%. That was considerably less than the 17% correction the stock market suffered and in fact one of the mildest intermediate declines of the entire secular bull market.

Even more amazing was the correction by mining stocks. I know a great many investors and traders became disgusted with miners and probably gave up on them during the last 6 weeks. But the reality is the 14% correction in miners is again one of the mildest intermediate pullbacks of the entire bull market.


I originally thought the HUI might hold above 450 for the remainder of the bull market. Admittedly I missed on that one. It dropped 20 points lower than that and spent a total of 12 days during this correction below 450. All in all though I wasn't too far off :)

What I really want to call attention to is the silver market. I think something big is brewing under the surface in  silver.

Invariably silver follows gold and it usually magnifies any move, especially on the down side. So if gold drops 1% silver can be expected to shed 2-3%. At intermediate cycle bottoms silver will almost always fall apart. Often it will slice right through key technical levels. Without fail at intermediate cycle lows silver will look broken.

During the current intermediate bottom however silver did something that up to this point was just unheard of. As gold dropped into the intermediate low silver diverged positively from gold.


As gold was breaking down out of the bear flag on its way to $1155 silver did something its never done before. It ignored gold. As a matter of fact silver just continued to consolidate in the $17.50 to $18.50 range that it has been in for the last 4 months.

Folks something is going on in the silver market. Perhaps we have a supply problem brewing, who knows. What I do know is silver is now acting differently than it ever has before and I want to own a big chunk of silver and silver miners as we head into the final stages of this C-wave.

135 comments:

  1. Gary,
    Do you give any credence to the statements of Ted Butler with regards to JPM being short an unusually large position in silver? Also, that the CFTC has the authority and seems willing to enforce position limits now that the finance bill has passed. Ted further states that JPM is now covering their shorts and postulates that they will no longer short as much as they have in the past.

    Your thoughts?
    Joe

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  2. I agree. The volatility is really tightening on Silver. I am hoping for a few more weeks of consolidation followed by a big volume breakout so I can add to my positions.

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  3. I mostly tend to ignore the conspiracy threorists.

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  4. Did you know that everyone who said the earth was rounded were deem conspiracy theorists or heretics hundreds of years ago?

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  5. Hardly. Most educated people at the time Columbus sailed knew by then the world wasn't flat.

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  6. I have been hearing about JPM's gigantic short position in gold and silver since gold was at $275 and silver was at $4. If JPM has had that trade on for ten years, they would have lost %400 of their capital by now. I think they would have covered a long time ago.

    The answer to the idiot conspiracy theorists is always the same: if there's been a conspiracy against gold for the past years, then I hope it continues, because gold has gone up %400 since then.

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  7. If anything, JPM and Goldman are already positioning themselves to participate in the gold blow-off.

    If history is any guide (and it is), they will find a thousand ways to fleece retail investors of their money when they all pile into gold at the very top.

    When the gold bull market is over in five years, you will hear all sorts of stories of how JPM and GS participated in their own high-end version of Glen Beck's "Goldline" scam.

    There will be Congressional hearings where Jamie Dimon or his successor will act very contrite about all the money they made at the expense of retail investors during the gold bull. Then JPM will take a slap on the wrist and move on to the next bull market, while goldbugs wait another twenty years for $5000 gold to come back.

    And no, I'm not a troll. I've been 100% invested in gold and silver equities for ten years. I've made a ton of money in gold already. But you should understand that this bull market is like any other. It will end in a spectacular parabolic top in 2-3 years, and then gold will grind lower for 20 years as it did in the 80s and 90s. Dumb retail goldbugs will be left holding the bag, losing money for 20 years as they wait for gold to make a comeback, and spinning conspiracy theories on internet message boards to explain why they keep losing.

    In short: don't listen to the conspiracy theorists. They will lose you money.

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  8. Gary,

    Would you recommend GLD, or something more physical like PHYS? PHYS carries a bit more premium.

    Thanks,
    Brian

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  9. Gary,
    If these are just conspiracy theories. Then what about the COT data that says 4 or more traders comprise the majority short positions in the COMEX (and they are short an obscene amt of silver)? Is this a fact? If so, perhaps JPM is possible hedged through derivatives?

    I find myself scratching my head trying to figure out fact from fiction on the internet. Is it a fact that silver will be pretty much depleted in the next couple of years?

    Joe

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  10. As far as I've been able to tell there is nothing in the COT reports that names actually traders. The 4 largest traders could very well be the 4 largest gold miners hedging their production for all I know.

    The conspiracy theorists look for some reason gold or silver isn't doing what they think it should and I'm afraid they probably find the boogie man where there really isn't one.

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  11. I doubt that silver is going to be depleted anytime soon, based on the silver that miners have in the ground. There's a whole lot of silver produced as a byproduct of mining other metals as well, such as gold. There is also a vast amount of scrap silver out there.

    However, silver is a tiny, tiny market. As such, any big player could try to do what the Hunt Brothers did and corner the market. It is actually very easy for me to imagine a few large hedge funds driving the price of silver into a parabolic spike.

    The irony is that "manipulation", when it finally happens, will be silver's friend. It is much more likely to be manipulated to the upside by hedge funds marking it up than downwards by some vague conspiracy led by JPM.

    There is much more money to be made for the big players by jacking silver higher than by trying to force it lower.

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  12. Galileo was called a heretic and conspirator and almost got himself executed for claiming the world was rounded.

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  13. The word you're looking for is "round".

    Not "rounded".

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  14. Get long bull markets, and sell short the downtrends, bitchez.

    It seems everybody wants to know the reasons something goes up, as if that will somehow provide an edge. I'm just happy to know the most likely direction, and leave others to debate why.

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  15. Galileo wasn't even born until 70 years after Columbus had sailed to the new world. By then everyone knew the world wasn't flat.

    I believe Galileo almost got executed because he suggested the earth wasn't the center of the universe. The church didn't take to kindly to that notion.

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  16. Actually, Galileo's heresy was heliocentrism (the sun at the center of the solar system, not Earth), not advocating a round Earth (which the ancient Greeks had figured out quite some time before).

    What any of that has to do with the PM markets, I can only guess.

    In the short run, it's not hard to imagine big money pushing around the PMs as part of the usual OPEX/stop-running games.

    If we are meant to believe the CBs and/or the bullion banks are running a multi-year conspiracy to suppress the price of gold and silver, the price chart would suggest they've done a wretched job of it.

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  17. It seems to me that when silver finally breaks through its old highs at $21/oz, it's going to go on a massive tear -- maybe to $30.

    Combine this with the HUI finally breaking through its old resistance levels, and you could have a recipe for an explosion in silver stocks -- let's hope.

    DWS

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  18. Same thing, Gary. The point was he was a heretic and conspiracy theorist, and in the end he was proven right.

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  19. So do you really want to use that as proof some mysterious banking cartel is manipulating the precious metals market?

    The fact remains no one can change the course of a secular trend. Any attempt to do so will just accelerate the move.

    Depress the price of gold and it will just bring out more value investors to take advantage of artifically low price. That leads to shortages. Shortages lead to spiking price...as we've seen recently in the wheat market. We also saw the same thing happen in the fall of 08 in the very same precious metals market.

    All this nonsense manipulation talk just doesn't hold up in the real world.

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  20. If you are going to argue manipulation, then there should be a purpose. Why would some group of people suppress the price of gold and silver, despite having their accounts losing hundreds of %? Also knowing that if they are pushing prices down, that value investors can accumulate slowly, which would cause the problem to get even worse.

    So to those that believe in pm manipulation, I would like to know why you believe JPM or others would purposely lose money over such a long period of time. That is not to say a group of people can’t or won’t corner a market, but this is easier on the bull side and sell as things go parabolic. If JPM were making money on the shorts, it might make sense, but the short side has been a major losing trade. Anybody have a notion to why then?

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  21. The conspiracy theorists live in a fantasy world of good vs. evil. Gold is "good", for some strange reason, so the forces of "evil" must be secretly conspiring against it. It's not about making money, it's a moral struggle.

    In this fantasy, JPM is willing to lose billions or trillions to suppress the goodness that is gold. Why? Because they're a mystical brotherhood, like the Illuminati or the Trilateral Commission, determined to wage war upon... a mineral.

    These people have watched "Star Wars" way too many times.

    There is nothing moral or immoral about gold, or any other currency or commodity. If JPM can turn a dime being long gold, they'll do it. Their only motivation is profit.

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  22. If the markets believed that gold was a substitute for money and fractional reserve debt, gold would be worth far more than it is now. There is simply not enough gold in the world to support global economic growth, which makes it obvious that the markets don’t share your enthusiasm for gold or your paranoia about real money, i.e. the money that you don’t like.
    Gold is a traded commodity that rises and falls in value, just like everything else. The retail dupes who fell for this gold-is-sacred nonsense after the late 70′s gold bubble ended up getting their clocks cleaned.

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  23. The irony with gold is that, if anything, we are moving further and further from any sort of commodity or even a paper based money. We are evolving to the point where money is just a thing. It is becoming plastic and will soon be electronic. It will not even be tangible in 500 years is my guess. The “gold is money” argument is sold by the Glenn Becks of the world (who have a vested interest in pushing the product – literally) and other people who don’t understand how monetary systems changed in 1971 and have not studied the history of money. Nonetheless, there is no reason to expect these misconceptions to change.

    Money is effectively an IOU. Who cares whether it comes in gold form or paper form or electronic form? All have their weaknesses and none have really proven to serve society better than another (except in terms of transportability in which case gold is the obvious loser).

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  24. I would have to say that those who bought gold at $35 an oz. when Nixon took the US off the gold standard hardly got their clock cleaned even after weathering a 20 year bear market.

    It's all about the long cycles. You buy when a secular bull cycle begins and you sell when it ends. Gold is in the middle of a long term secular bull cycle. Stocks are in a long term secular bear cycle.

    Certainly these cycles will end when gold becomes ridiculously expensive and stocks stupid cheap. At that point one should sell their gold and buy stocks again for the long haul.

    It really is as simple as that. Long periods of under and overvaluation.

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  25. Gary,
    That seems so simple. Amazing how our nature, and fear/greed etc...keep us from profiting as we could. I have learned a lot about patience and riding a bull from you and visiting your site, reading the nightly reports etc...but I know how difficult it is to ride a bull from beginning to end without taking money off the table, even as certain as I am that that would lead to the greatest profits. Funny.

    I am now, however, able to ride a bull and buy on dips without selling for months at a time. I just know that if I bought Gold in 1999 (I did but sold due to impatience and naivete) knowing what I know now, I would not be holding the same positions I bought then.

    Oh well, here's to Old Turkey, buying bulls on dips, and selling on parabolic moves. I did increase my positions in the GDX and GDXJ on July 28th within pennies of the recent bottom thanks substantially to your insights.

    I have to say I'm enjoying my days at the river much more than I enjoyed sitting infront of the screen trading incessantly in the past few years.

    Mitch

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  26. Gary,

    It's interesting that you completely discount the precious metals manipulation theory, yet you fully believe in the Ben Bernanke can print us into oblivion theory. To me either one of those is unprovable and irrelevant, so I'm not sure why you fully believe in one yet don't believe in the other.

    On the gold front I think it would be interesting if the next major rally in gold didn't come from below the 200 ema, especially since this is one of the longest periods we've held above the 200ema during this gold bull market. Ultimately I think people will be better served to wait for that condition to deploy their cash, if they are truly trying to "buy the dip".

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  27. Justin,

    Bernanke actually did say he would print money to avert deflation. It's on record.

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  28. Justin,
    It's not that I think Ben wants to print us into oblivion it's that our debt has now spiralled out of control to where we have no other option.

    Realistically there is no way to service our debt now other than to debase the currency. The only other option is to simply default on our loans. I just don't believe the United States will willingly choose that as long as we can continue to print.

    In regards to gold the current C-wave still isn't as long as the last one and it certainly never reached the extremely stretched conditions above the 200 DMA that other C-waves reached before regressing to the mean.

    So all in all I don't see anything unusual about this that would require gold to collapse in a D-wave decline from this mild level.

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  29. Justin,

    You don't see a difference in kind there?

    The first is a conspiracy theory, floating around for years worth of a PM bull market for some reason.

    The second is just an investment thesis, based on previous public statements and actions on the part of the Fed. It doesn't require a secret narrative or private knowledge or tinfoil hat, though whether it plays out as outlined is yet to be seen.

    Seems different enough to me.

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  30. That Bernanke *can* print us into oblivion is not disputable or controversial. The Fed is capable of printing a near-infinite supply of money with a few keystrokes of a computer. Bernanke himself made this point in his infamous helicopter speech.

    Whether Bernanke *will* print us into oblivion is another question entirely. I certainly hope he doesn't, for the sake of the country.

    Gold doesn't require that scenario to reach $5000. All $5000 requires is a pervasive recognition of the very real possibility of it happening.

    We are moving on a continuum from irrational optimism to what will surely be a nadir of irrational pessimism. In 2000, the markets were pricing in the idea that the business cycle had been tamed, that the US's debt would be paid off overnight, that there would be no more problems, ever. Someday soon the markets will price in the End of America, and the market will be just as wrong then as it was in 2000. Then the cycle will begin all over again.

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  31. I think basing an investment thesis off of what a politician (or pseudo politician like Bernanke) says they are going to do is worse than taking the opinion of the average joe on the street or some guy on the Internet, since politicians tend to lie more than anybody out there. I definitely wouldn't want to risk my money against what they say they might do.

    The mechanics of it all don't make sense to me either. How does the U.S. hyperinflate when the entire world has essentially the same problem in one form or another, which is a massive debt problem. Especially when the main currency the dollar is valued against is a fragile economic union which is certain to come under more and more stress during the next economic downturn.

    I'm not trying to start another argument because we've heard from both sides, but I'd just think more people would be better off following the voice of the market versus the voice of Ben Bernanke.

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  32. But I have been following the voice of the market. Pull up a 10 year chart of the dollar and tell me what the secular trend is.

    Then pull up a 10 year chart of gold and tell what the secular trend is there.

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  33. You claimed that Bernanke can't print us into oblivion.

    I responded that, under a fiat currency system, Bernanke can print us into oblivion, and that it's almost universally understood that he can, and that even Bernanke himself has admitted as much.

    This is not the same as "basing an investment thesis on what a politician says he's going to do." Bernanke has not said that he intends to hyperinflate the currency away. If anything, he has insisted that he won't, while his actions have proven the contrary.

    Misrepresenting someone's argument in order to knock it down is known as using a "straw man" argument. It's a feeble tactic, and a sign of rhetorical weakness.

    As for your second point, I don't believe the US will hyperinflate. We are currently facing two cross-currents -- the deflationary vortex of massive global debt vs. central banks' attempt to counteract that debt via money printing, or "quantitative easing". One force is deflationary, the other inflationary.

    The central bankers' hope is that the two will cancel one another out. Unfortunately, that's not how it works. While a central bank can provide liquidity, it can't control where that liquidity goes. In 2000, Alan Greenspan hoped that his liquidity injections would counteract the collapsing tech bubble. That liquidity only created another bubble, in real estate, and to a lesser extent in oil and commodities. Now the world's central bankers (not just the Fed) are hoping that their QE will shore up the banking and real estate sectors. But as we have seen, that's not how it works. Money always goes where it is treated best. As a result, we will continue to see deflation in some areas (housing, wages as a result of wage arbitrage), and inflation in others (commodities, health care). For the average citizen of the developed world, this is unfortunately a scenario for a lower standard of living as his wages and assets are falling while his costs of living are rising. Mind you, this is not a prediction -- it's a continuation of secular trends that have been going on for ten years, if not longer.

    The biggest error in thinking out there is that of binary thinking -- of "inflation" vs. "deflation". The reality is that the two can and do co-exist. We have lived with powerful inflationary (commodity prices) and deflationary (Chinese wage arbitrage) forces for some time now.

    Your other mistake is to think in Dollar vs. Euro terms. You ignore the third leg of the currency system, which is the Yen. As an exporting nation with anemic domestic consumption, the Japanese cannot permit their currency to appreciate as it has been doing. Their manufacturing sector will be destroyed. They must resort to aggressive quantitative easing. What this means is that ALL of the world's central banks are aggressively printing money, not just the Fed.

    I do not believe that "the dollar will be destroyed", as most here insist, but that *all* major currencies will be destroyed, as they all are fundamentally very weak. (We have witnessed this recently, as gold rose even as the Euro fell during the Greek crisis. We are seeing gold appreciate in all currencies. If gold were merely the beneficiary of a weak dollar, it would be holding steady in other currencies).

    Therefore, we will not see a devaluation of the dollar vs. the euro or yen, because central banks will be forced into competitive devaluation. Instead, we will see all three currencies lose value against real assets, i.e. gold, silver, oil, and other commodities. However, we will not see classic wage inflation because of the wage arbitrage exported from China and India. All of this is a recipe for higher gold prices, and all of it is already in progress.

    Now, please don't misrepresent what I'm saying just to be argumentative, OK?

    DWS

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  34. You claimed that Bernanke can't print us into oblivion.

    I responded that, under a fiat currency system, Bernanke can print us into oblivion, and that it's almost universally understood that he can, and that even Bernanke himself has admitted as much.

    This is not the same as "basing an investment thesis on what a politician says he's going to do." Bernanke has not said that he intends to hyperinflate the currency away. If anything, he has insisted that he won't, while his actions have proven the contrary.

    Misrepresenting someone's argument in order to knock it down is known as using a "straw man" argument. It's a feeble tactic, and a sign of rhetorical weakness.

    As for your second point, I don't believe the US will hyperinflate. We are currently facing two cross-currents -- the deflationary vortex of massive global debt vs. central banks' attempt to counteract that debt via money printing, or "quantitative easing". One force is deflationary, the other inflationary.

    The central bankers' hope is that the two will cancel one another out. Unfortunately, that's not how it works. While a central bank can provide liquidity, it can't control where that liquidity goes. In 2000, Alan Greenspan hoped that his liquidity injections would counteract the collapsing tech bubble. That liquidity only created another bubble, in real estate, and to a lesser extent in oil and commodities. Now the world's central bankers (not just the Fed) are hoping that their QE will shore up the banking and real estate sectors. But as we have seen, that's not how it works. Money always goes where it is treated best. As a result, we will continue to see deflation in some areas (housing, wages as a result of wage arbitrage), and inflation in others (commodities, health care). For the average citizen of the developed world, this is unfortunately a scenario for a lower standard of living as his wages and assets are falling while his costs of living are rising. Mind you, this is not a prediction -- it's a continuation of secular trends that have been going on for ten years, if not longer.

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  35. Gary,

    You said that the gold bull will end when the gold to dow ratio is around 1.

    Is there some basis for this ratio?

    And if this is going to happen, does it also make sense to short the dow while long gold all the way to the end of the bull?

    I know you have repeatedly and passionately warned us about staying out of the stock markets. Nevertheless I'd like to hear your thoughts on this.

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  36. I suppose one could but if the Dow:gold ratio goes to one because the Dow stays at 10,000 while gold rises the short part of the equation would just contiually lose money. Shorting is just an inefficient way to make money especially if there is a bull market to invest in.

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  37. I think if one wanted to short the Dow side of the equation they would be better off doing so after it became apparent the next leg of the secular bear had begun. In my opinion that still remains up in the air.

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  38. Here is the chart of the Dow:gold ratio
    for the last century. Notice the swings are getting bigger in each direction. Just basic human nature and the reason I think this time gold may become more expensive than the Dow for a brief period.

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  39. Gary,

    As usual, thanks for your insightful comments and the chart :-)

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  40. This seems on-topic:

    http://www.businessinsider.com/why-ben-bernankes-next-round-of-quantitative-easing-will-be-another-huge-flop-2010-8

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  41. Gary

    I trade through TDAmeritrade..Seems i can not trade in canadian miners which are listted on .To or .V exchanges...but i noticed that for every miner which is listed on .TO and .V there is corresponding stock on OTCBB or Pink Sheet market..are they same? is it same to buy a stock on .TO or .V verses buying same stock on OTCBB or pinksheet

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  42. You can trade canadian stocks but you will have to call Ameritrade and find out what the symbol is for the stock. It will be different than what stockcharts shows.

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  43. I can't believe anybody is dumb enough to be short stocks.

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  44. LOL wrong way TK is always dumb enough to short stocks.

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  45. I can understand taking short side trades for intraday positions, but staying short (and wrong) is just devastating.

    Rest easy, tk will find a way to spin his comments into a big, big victory.

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  46. Look out below! I'd say we were 90% to crack big within the next day or two. On the FOMC announcement? I hope I don't get too stubborn here if they keep rallying.

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  47. Call it conspiracy theory, gold bugs, tin hats or whatever. Gold is in a bull market because governments all over the world are debasing their currency by printing money out of thin air. Gold’s role throughout history has been a means for individuals to protect their wealth against just such type of government action. Gold continues to rise because more and more people are coming to the realization that the only way to protect what they have earned from governments is to buy gold. It has happened many times in history, after all, human nature never seems to change. It’s really that simple.

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  48. Here's a fun fact I read published by someone I had reason to believe: No fiat currency in history has lasted more than 50 years. We went off the gold standard about 40 years ago. If the dollar lasts for another ten years it'll be the longest lived currency ever. Governments have never been able to resist the temptation to enrich themselves and their constituents. Nor have they here and now. Just something to think about...

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  49. agree, DG.

    Gary talks about gold being the only bull market right now. Turns out, there is another bull running right now. That other bull is GOVERNMENT! However, the bull in government has been running for a long time, is it possible that it's getting tired? Wouldn't it be great if it has already peaked? Fat chance, I know. I suspect the bull in government will soon move into its blowoff top phase.

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  50. Fun facts should be checked before posting them as facts.
    now I did not check it myself, but the Dutch guilder as a fiat currency was born somewhere in the 14th century and existed as fiat currency until recently we accepted the euro

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  51. Gold is the catch all. I prefer oil, but oil has too many drawbacks that we saw already. It peaks and then collapses. Gold is in a bull, because chicken little might be right for once. Okay not that bad! But it does seem like all major countries are going through a change. US reserves in questions, all major currencies debasing, no possibility of paying debts back, still massive unemployment around the world(20%-25% seems be the new norm). Food prices rising despite massive worldwide unemployment. Deflation, as people call it, is not possible for an extended period of time. The system was not designed for prices to fall. Ben's best hope is to keep prices stable. Which creates the same effect as inflation, that is a loss of purchasing power. And if deflation were to succeed, the dollar would be a loss anyways. So whether we agree on a gradual demise, a quick end, an implosion, an explosion, the dollar is set to be destroyed as it is. Just like the dollar changed when we got off the gold standard, it is set to change yet again (so destruction through change, not necessarily apocalypse). Gold is the only investment that can be trusted right now. We are therefore erroneous to value gold in dollars or currencies. Gold versus stocks, gold versus oil, gold versus debt, etc. Believe it or not, even if an established gold standard is not developed, a gold measurement will probably be used. That is without a standard in order to compare prices we constantly run on quicksand. The system was never designed to be maintained in perpetuity. The post 1970 system was designed through growth of the money supply to give the illusion of growth. In reality, all we do is increase prices, that allows people to borrow more, which allows prices to get higher and allows people to continue borrowing. The climax to this event was the housing crash. Now the post 1970 period must change, Ben can only hope to sustain the system as a new change is brought about. The rich always get richer, and the poor stay poor. But it is curious to see families change from post 1970. From one family income, to needing two-parents working, to two-parents working and taking on debt to still compensate for the loss of purchasing power. The illusion of growth is easy to measure with the Dow: gold ratio returning to 1. If by definition the sustained growth of gold is in reality only the growth of the money supply, then if true growth were achieved the Dow:gold ratio should always be growing relative to itself over a long period of time. Peaks and collapses along the way.

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  52. From Wikipedia's guilder entry:

    "The Netherlands was initially on a bimetallic standard, with the guilder equal to 605.61 milligrams of fine gold or 9.615 grams of fine silver. In 1840, the silver standard was adjusted to 9.45 grams, with the gold standard suspended in 1848. In 1875, the Netherlands adopted a gold standard with 1 guilder equal to 604.8 milligrams of fine gold. The gold standard was suspended between 1914 and 1925 and was abandoned in 1936."

    If it's convertible to metal, it's not fiat.

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  53. Actually, the guilder was born in the 17th century, not the 14th (1680 to be exact) and was made of silver, so not fiat. In 1875 the guilder was on the gold standard. Perhaps yout you had not known what "fiat" meant. Wikipedia did not say what was up between 1875 and 1940, but that is not very long lasting. For myself, I do not feel like researching the history of every currency one at a time, but if you do and find one let me know.

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  54. I stand corrected as to fiat currency but for abandoning the gold standard in 1938 - 2002 is longer then 50 years no?

    The first Dutch guilder (means gold)was minted in 1378 for Earl Willem 5 And bears the name "goudgulden"

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  55. All this talk about fiat guilders is putting Nap Boy to sleep.

    I'm turning in for a few zzz's. Even if gold isn't flying again, quality of life is through the roof!

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  56. Anon:
    You say: "If it's convertible to metal, it's not fiat."

    The American dollar, imho, went from gold standard to oil standard. That said, the measurement is this -- If a country stops trading in dollar and wants to trade in another currency, the USA goes to battle.
    That's our standard and take it or leave it. Know the rules and all is fine.

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  57. Don't buy Canadian miners OTC. If you use TD Ameri then you can buy them in Toronto with a phone call. It will cost $30 or whatever rather than $10.

    Otherwise use Interactive Brokers, Swissquote, or even a Canadian broker. However, Khalid had a bad experience trying to open an account with the latter.

    The best and cheapest option is IB.

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  58. 1938-2002 is more than 50 years, but the currency ceased to exist when Germany took it over. Besides, the quibbling over the details is not the point. The point is that if the currency is fiat it means the gov't controls it. If they control it they will use it to accumulate power and buy votes, whence it dies in short order. Whether it is 50 years, 61 years, or some other relatively short amount of time is besides the point. Until human nature changes it will probably always be so. Maybe we have grown up enough as a race and it won't happen this time, but it sure looks like we are going down that same road again, as countries always have.

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  59. Gary,
    The site obviously has issues with all these anonymous people posting without even the decency of making up a *fake* name so a civil discussion can occur among them all.

    A number of sites that allow anonymous comments still allow for a feature where those comments can be distinguished and responded/grouped. Minimally some do this by simply printing the IP address of the comment. This works but it isn't preferred privacy wise.

    An alternate I have seen is where you could post only part of the IP address (last 2 bytes, for example)...or, another mechanism i have seen, is where the IP address is mathematically used to create a distinct image which is then posted next the the comment. The image shapes/colors can show similar posters (although it is hard to respond to "green squiggle line" instead of a name.)

    I don't use blogger so i don't know what options you have. But i suspect they have something to force these clowns into some kind of structure.

    If it matters to you and if you have a few minutes it might be worth it to check.

    -TZguy

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  60. Gary,
    Note this would also get rid of the "Gary UK" problem too.
    -TZguy

    ReplyDelete
  61. Gary, I agree with TZ Guy. It's a little ridiculous to have an exchange when there are 13 guys named "anonymous."

    ReplyDelete
  62. Killing anonymous wouldn't be my preference and it would stop many posters who don't like to register for stuff (like me). But being able to simply distinguish is the key.

    It appears that you could simply disable the "anonymous" option on posting and leave "Name/URL" which at least requires *something* to be entered and is still anonymous.

    --TZguy

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  63. Gary,

    What do you think the Fed will do tomorrow and how do you think gold and the miners will react. Just curious on a prediction.

    ReplyDelete
  64. I wholeheartedly agree with TZ Guy. Let's do away with anonymous posting.

    ReplyDelete
  65. The "Name/URL" option for posting is STILL anonymous, but you have to type *something* into "Name" which solves most of the problem.

    Gary: should just be a 1min setting change.

    (I'm now using "NAME/URL" posting)

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  66. TZ guy will be screwed when we all just type in anonymous. :)

    ReplyDelete
  67. If I can't stay anonymous, I swear I won't depart any more of my wisdom on the others!

    ReplyDelete
  68. Even thought the gold longs are slipping some today, I'm sure glad I'm not short equities. What a mistake! TK is toast.

    ReplyDelete
  69. Unfortunately blogger doesn't allow me to post IP addresses.

    I can take the anon option off but then everyone will have to register a google account to post and that's a hassle.

    So I think I will just leave it as is for now. If the useless troll comments get too tiresome I can always set the comment section up so that I review every comment before I allow it to post to the site.

    I'm reluctant to do that though because the trolls serve a very usefull purpose.

    They help us time bottoms.:)

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  70. Too bad. I covered about 1/2 my shorts. Small losses will never kill you. I still think we are going to have a juicy crack soon, but arguing with the market is a good way to go broke (I did that once 30 years ago. Never again!) As I mentioned before, I lose over 1/2 the time, but when I hit one it's often a nice ride. We were up 40 at one point, and then dropped to down 5 or so. Had we continued down as I had expected, I'd have made pile. Cutting it off cost me a little. I try to find approximately 5-to-1 risk/reward setups and this morning was one. Last time the market was set up like this and fought higher anyway it took a few weeks, and then we had the May flash crash. I had fun that day!

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  71. FWIW the half cycle low already occured so that isn't due and the daily cycle low doesn't arrive until about day 35-40. So cycle wise there is no pressing need to drop at the moment.

    There has also been no large money flows out of the SPYDER's lately.

    Before I would ever be willing to take a counter trend trade (I never do) I would want to see some sign that big money with better info than me was stepping aside.

    I've always suspected that if one would just avoid counter trend trades they would improve their lifetime average 10-15%.

    Over an entire trading career that would amount to millions of dollars.

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  72. Yes, Gary, but you yourself have said that the money flow data is not a short term indicator. Neither is the cycle. That's why, for example, I covered at the close on the 261 point down day. But I was sure glad I was short for it! The money flow and cycles tell me whether to keep the good entry point and become "strong hands" about the trade. If I am trading counter-trend it's a quick exit. I do agree that without discipline trading counter trend will kill you because you'll hang in there hoping for a move that won't ever happen.

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  73. Maybe you should go back through the last several years and see how many of your counter trend trades paid off. If it turns out they are costing you money then maybe you might want to eliminate them or wait till the market pushs into the timing band for a correction before taking one.

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  74. I have done that in the past, and it was worth it. Haven;t looked for years though once I convinced myself. You and I are just on different time frames. I bought 1000 GAZ this morning at 9.71. I can't even tell if that's in an uptrend or downtrend and don't really care. (That was a BB Crash trade, by the way----but my version of it, with reason to think it would work right away instead of over 14 days).) I just fade extremes. I am more careful with stops and entries if going counter trend, and no doubt the "with the trend" ones are more profitable, but the counter trend ones are also profitable, so I take what is given to me. Anyway, I think we'll just disagree on this one. I always appreciate your comments, though. Thanks.

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  75. The $SILVER daily is starting to look like one of your coils, Gary.

    ReplyDelete
  76. Good eye, anon.

    Is that a coil by your definition, Gary?

    Rockets ready for blastoff?

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  77. BurgermeisterMeisterburgerAugust 9, 2010 at 2:29 PM

    The silver coil, wassupwiddit?

    ReplyDelete
  78. It does appear to be a coil forming on silver.

    TZ,
    I wouldn't waste my time with these comparison charts. They make for nice articles but are worthless for making money. The fundamentals are different for every time period so don't expect the markets to act the same.

    Most of the time the charts aren't even vaguely similar yet someone will post them together assuming we are going to see the same thing happen. A great example right now is this obbcesion with the 37 - 40 period.

    The reality is that the Fed tightened too quickly in 37. Bernanke has already assured us he won't make that mistake again. Trying to compare the current market to the 37 market is just an exercise in futility.

    The big picture is that stocks remain in a secular bear market. Unless human nature has changed this secular bear will continue until stocks become ridiculously cheap but I can virtually guarantee the path we take to get to that level is going to be different than any other bear market and one trading based on what happened in 37 or 87 or 1907 is just going to lose a lot of money.

    Just follow the cycles, sentiment and money flows and eventually stocks will get cheap. When they do it will be time to sell our gold and start loading up on stocks for the long haul.

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  79. Gary,

    "everyone will have to register a google account to post and that's a hassle."

    It's a BIGGER hassle trying to figure out who said what. At least, registering a Google account is only a ONE TIME HASSLE.

    ReplyDelete
  80. Most anons won't do it and we will lose our valuable troll meter :)

    ReplyDelete
  81. Most anons won't do it and we will lose our valuable troll meter :)

    Very true! I love the trolls..get with the program. lol

    But honestly, I think the blog brings more and better things out with anon support of not worrying about being ridiculed. Us married folk already get enough of that at home. :)

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  82. gary,
    did you delete posts regarding diamond discussion? they were there now not there


    ???

    ReplyDelete
  83. I didn't delete them. Must have been the author.

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  84. DWS,

    You mentioned something about "the Japanese cannot permit their currency to appreciate", yet the Yen is making 12 year highs. How do you reconcile that divergence?

    All I need to settle the inflation/deflation debate is the charts. Like I said before until bonds end their secular uptrend, and commodities make new highs, it's the deflationary scenario that is in control. All other arguments to the contrary are just wrong in my opinion under the current picture.

    The dollar is actually in a cyclical bull market right now which also supports the deflationary view. I could possibly see the completion of the dollar cyclical bull with the end of the bond bull market, and maybe the resumption of the commodity bull all taking place in another big trend change.

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  85. Why would you say commodities have to make new highs? They have clearly been in an inflationary state since early 09 or late 08 in some cases. A cylical bull if you will.

    As you say the charts don't lie.

    Some things are indeed in a deflationary state. Housing prices being the biggie.

    But I don't think it's an all or nothing game. We can certainly have inflation in some areas while others deflate.

    That is exactly what we are seeing. Asset prices are inflating and have been for the last year and a half. Real Estate is still deflating mostly because of a severe oversupply problem.

    The bond market is just the bond market. It's been in a bull market for the last 30 years.(which BTW is about as long as a bull cycle ever lasts in bonds)

    However I think we will look back in several years and see that bonds topped in March of `09 when the Fed declared their intent to force long term rates artificailly lower. In case you haven't noticed bond prices still haven't regained those highs.

    Using the same logic you conviently apply to commodities then that means they are now in a bear market unless they can make new highs.

    You can continue to fight the short, intermediate and long term trend if you want. Certainly being short you are ultimately positioned in line with the secular trend but as we found out from 2002 to 2007 a cyclical bull within a secular bear can last a long time and bankrupt anyone who jumps the gun too early.

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  86. QE seems to be priced in right now. I think it might make sense to short Treasuries or go long USD (perhaps versus the overbought Yen) to hedge the possibility that the Fed does not do QE, which should lead to a short term sell-off in gold. But what do I know. The market is acting crazy, all dislocated. Anything could happen.

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  87. Justin,

    "You mentioned something about "the Japanese cannot permit their currency to appreciate", yet the Yen is making 12 year highs. How do you reconcile that divergence?"

    The Yen is indeed making 12 year highs. It is practically parabolic. The Japanese cannot allow this trend to continue, or their export-based economy -- already feeble after decades of deflation -- will simply implode. Therefore, they will be forced into aggressive QE, if not an official currency devaluation. What this means is that you can expect money-printing on a global scale, not just in the United States. This is good for gold, and bad for everybody else.

    It seems the debate here is between two parties that conveniently choose to ignore 50% of the equation. Gary and the inflationists choose to ignore the bond market. You choose to ignore gold and other commodities. If we were in a pure deflation scenario, gold would not be at $1200. If we were in a pure inflation scenario, bonds would not be making 30-year highs. Clearly we are in the midst of a crosscurrent between these two forces. Like the weather, the prevailing wind can take one direction or another. For instance, in 2007, the prevailing wind was inflationary, as evidenced by oil prices. In 2008, the prevailing wind was very deflationary, as evidenced by collapsing commodity prices as well as gold. If the prevailing wind were deflationary right now, gold would be at $800, if not $300 or $200. Oil would be at $30 or $18, as it was in the disinflationary 1990's.

    It's only because people seem to feel the need to belong to an ideological team -- Team Inflation or Team Deflation -- that they fail to see that the global economy is much too complex for simple labels such as these. At the moment, the only thing that's clear is that both forces are gaining steam.

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  88. Doesn't seem crazy to me. It's just rallyingout of the intermediate cycle bottom with a few small corrective moves. Just seems like normal bull market rally out of a corrective low.

    If it fails to make new highs and then takes out the July low we will have pretty good odds the bear is back. But until that happens I think we have to give the benefit of the doubt to the bull.

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  89. Commodities to me look like they completed a parabolic blowoff move in 2008, then crashed, and now we are seeing the typical bounce rally that doesn't exceed the former high that you usually get off of a parabolic move. The Nasdaq did a similar thing in 2000 before resuming it's bear.

    Bonds on the other hand look like a more intact bull market to me, you can look at bonds on multiple time frames and see that some of them are making new highs, while others are consolidating into patterns that could breakout to new highs. Take a look at IEF and TLH and see how they are making new highs on high volume. Yes bonds have been in a long term bull market but contrary to what you're saying they haven't topped and in fact are making new highs.

    The most interesting thing to me is how no one has picked up on the trend change in the dollar, maybe by next year if we stay in YEAR THREE of a pattern of higher lows and higher highs for the dollar some people will start to pick up on it. Only time will tell I guess but I can still count dollar bulls on perhaps two hands if I try hard enough.

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  90. Actually I published the public sentiment chart for the dollar in tonights report. At the recent top sentiment on the almighty dollar was even more bullish than at the 09 top when the dollar made it's recent peak.

    Even now after crashing harder and more aggressively than even what we saw during the QE phase sentiment is still right in the middle of it's historic range.

    Which just means the dollar is going to have to fall a lot further before sentiment swings to the extreme bearish levels that create longer term bottoms.

    The three explosive rallies over the last two years are exactly the kind of violent counter trend moves one sees in a secular bear market.

    Until sentiment reaches trully bearish extremes again I have no doubt the dollar will continue generally down until it finally bottoms at the three year cycle low next year.

    We are however due for an intermediate cycle low soon. That should probably serve to get the dollar bulls all riled up again right before the bottom falls out and the dollar rolls over again.

    The kind of collapse we've seen the last two months isn't a correction in an ongoing bull markets. That is a sign of something that's broken fundamentally.

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  91. Anon,

    I'm not trying to ignore anything, I think the total picture spells out a more deflationary view than inflationary, when you include charts of bonds, stocks, currencies, commodities, gold, etc.

    Of course that could change and if it does, according to the charts, then I will change my bias accordingly as well. I guess I'm on Team Deflation right now but I'm a fair weather fan that can jump ship at any time.

    As far as Japan goes I think that is as good example as any of following the market and avoiding relying on theories or reasons as to why something should happen, because obviously all the reasoning behind why their currency should be weak is flipped on it's head with what has really happened.

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  92. Gary,

    So what are we observing on the Euro then, a healthy uptrend? The dollar has simply corrected back to a support level, the only reason the move was so extreme was because you had an extreme move in the Euro that needed to be worked off, and vice versa on the dollar.

    The simple fact is the dollar has failed to make a new low in 2 years the doomsayers on how the dollar is about to collapse keep raging on. The dollar had similar huge moves and corrections during it's last bull from 1995 to 2002, oscillating 11 and 12 points multiple times while still in trend on the upside. Nothing wrong with that type of action it just confuses people who haven't identified the change in trend yet.

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  93. I think its safe to say most everyone here is following the safest and most powerful trend of all markets.

    The would be the secular bull market in gold. There is nothing in that 10 year chart that says this is anything other than a long term bull. (Regardless of fundamentals or theories.)

    We don't even have the stretched conditions that would warn of an impending regression to the mean correction.

    During the last two C-waves gold stretched 52 and 38% above the 75 week moving average.


    As of today gold was 12% above the 75 WMA.

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  94. "Commodities to me look like they completed a parabolic blowoff move in 2008, then crashed, and now we are seeing the typical bounce rally that doesn't exceed the former high that you usually get off of a parabolic move. The Nasdaq did a similar thing in 2000 before resuming it's bear."

    Gold has exceeded its 2008 high by about 20% at this point and is right now only about 3% from its all-time highs.

    DWS

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  95. So far every three year cycle low for the last 10 years has made a lower low and every three year cycle has been unable to move above the high of the previous 3 year cycle. Lower lows and lower highs. That is a secular bear market.

    Until the dollar can start making higher highs and higher lows it will remain a secular bear market.

    It has a chance during this cycle to hold above the last 3 year cycle low but the cycle is still extremely left translated. Most of the time those kind of cycles drop below the prior cycle bottom.

    Cyclically the dollar is not in a strong position and the odds are against it breaking the secular bear pattern. Until it does this will remain a long term bear market.

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  96. The dollar has already penetrated, and is still holding above a major low it put in its former bear market in 2004, which is the 80 level. It is also still holding above the 2009 low which is a higher low than the 2008 low. On top of that the Euro has made a new low for its bear market, and bonds which are essentially dollars for the future are breaking out to new highs. That's a fair amount of technical evidence for me to suggest a cyclical trend change in the dollar is forming. Really once the 88 level is violated to the upside for good most dollar bears will be forced to admit we are in a dollar bull or lose money if they are still betting against the dollar.

    One other thing I find ironic is extreme bearishness still remains on the dollar across the investment world yet it has failed to make new lows in 2 years, including after Ben Bernanke and QE 1.

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  97. Justin is a debater. He does not have skin in the game. He has lots of money, probably from family (because he clearly has no clue). I may be considered a troll, but he is 3 steps above me with the amount of pure crap he pretends to know about. Frankly, I respect off-shoot opinions; I am one of them. But with Justin, no skin in the game, talking.....man that gripes me the wrong way. I already know I am an asshole, but dealing with people like Justin makes me feel so much better about myself as a person.

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  98. I don't think you're being fair to Justin, Keyes. He has explained his position clearly enough at every opportunity. His technical arguments are mostly matters of fact and easy to see on a price charts.

    The debate about where it all goes from here is where reasonable people can disagree, and in this case do.

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  99. Alright; then he should have his money where his mouth is! Dg, I can respet..he has been yelled at and pushed, but he stated his position. Justin just floats, never really saying anything. Put down 50% of his net worth on what he has to say and I would be an active listener!!!!! And he would have my respect, lose or gain!!! Until then BS comments don't belong. Quite frankly even my own dribble is starting to make more sense.

    Asshole out!

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  100. Hmmm...Hi all....Gary_UK again.

    Copper & platinum down
    USD up
    Yen up
    Aussie dollar down
    Scrap metal down
    Equities down in Asia & Europe

    World economy shrinking fast, watch the action in equities over thae next few months, when i'll be counting my profits, I'm going to ride this wave all the way down to sub 800 SPY, it'll take 3 months I reckon.

    You can almost smell the bulls panic...save us Ben, they plead. Not yet he wont.

    I am no expert on Gold/Silver like our host...but I'd bet silver will be hit very hard, and maybe gold(paper) too.

    I hope so, I want to buy some around $950ish.

    Deflation bugs, get used to it!

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  101. Until the next 3 year cycle low price is meaningless. You can say that the dollar has held above the 08 low and it surely has but we haven't had the 3 yer cycle low yet.

    If that can hold above the 08 low then you can say the dollar has made a higher low. But until that cycle bottom is put in you just can't say the pattern of lower lows and lower highs has been broken because it hasn't.

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  102. GaryUK says "when i'll be counting my profits, I'm going to ride this wave all the way down to sub 800 SPY"

    I might even give the short side of stocks a shot, UK, and if we both ride to 800, I'll be up 15-20% more than you as I haven't gotten stuffed like you before it starts to work.

    Quit acting like you have this trade under control, you're already out of business.

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  103. Fish n Chips,
    Shut your pie-hole. You've already wrecked your reputation on this site with your amazingly inacurate call for stocks to dive, though I'll give credit on your timing. You really nailed that one.

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  104. Well Gary, Three times I have posted "immediate drop coming" and three times you have said no one can make money shorting into uptrends. We did not get a negative money flow day. We have not hit any kind of a cycle top. yet here we are facing a stiff gap down opening---and on FOMC day. That's not "supposed" to happen. But here we are. I covered some shorts yesterday due to my "small-losses" discipline, but will make back much more than that today (my largest short, which is also posted, is China, and it is getting hammered). My point is just that there are lots of trading/investing styles other than yours that work. I have outperformed the S&P for many years in a row now (except in sharply up or down markets. If we rally 30% I will only make 20% or so). Yes, what I do is much harder but people develop odd styles sometimes. The question is whether they work for them. I love the sport/game of trading. I also got tired of the bloggers. I love the guy who said The shorts got SPANKED" on Friday. Well, funny, I don't feel spanked. How have your long positions done since you wrote that, buddy? Sorry for the rant, but i think my point has been made and proved. (I'm sure this post will annoy someone for some reason. Let the flaming begin!)

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  105. Frankly, I think you all suck. Market is cratering again.

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  106. DG,

    The most annoying thing about your posts is the sissy-mary closing "let the flaming begin". :)

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  107. Good than it worked! Got ya.

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  108. DG,
    I didn't say one couldn't make money with counter trend trades.

    I said;

    "I've always suspected that if one would just avoid counter trend trades they would improve their lifetime average 10-15%."

    And then I asked you if you had backtested your counter trend system to see if it was actually making you money over the long haul.

    Don't forget you covered half your short yesterday so this trade hasn't been a big winner. And that is the problem with trading. You can be right on direction but miss the timing.

    Missing the timing is what causes most traders to not make money and most to lose money.

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  109. I've done the math, and although DG prides himself on his trading ability, he's up maybe $110 so far.

    Not bad for a month of pecking away at his keyboard!

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  110. I would point out that ones win loss percentage is irrelevant to making money. The reason you make money is because you control risk.

    When you said you only risk .5% of your account on any one trade I knew immediately that you were most likely a profitable trader.

    It's not what you make, it's what you lose that determines long term success.

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  111. Gary says "Missing the timing is what causes most traders to not make money and most to lose money."

    I'd say improper sizing is an even more responsible for poor trading results.

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  112. I'd like to build on a prior comment that the world economy is too complex to be described by either the label of inflation or deflation.

    Hearing comments from both sides from this blog and eslewhere can really make things confusing for me sometimes(lol).

    So from a practical point of view I try to untangle my thinking by trying to do the following:

    1. Differentiate Between Asset classes. Some are inflating and others are deflating and maybe still others are moving sideways .

    2. Differentiate Sequence. An asset class can move through different stages at different times. e.g. stocks deflated from 2007 to 2009 Mar. Since then they have inflated.

    3. Differentiate time frames. Are we talking about a few months, years or decades?

    4. Differentiate Global vs Local. USD goes up does not necessarily mean deflation. It may just mean the Euro is going down.

    From an investing perspective, I feel that these are the more useful dimensions for my thinking.

    But whether it is inflation or deflation, we know that all over the world there are huge sovereign debt issues. Govts can choose to default or debase. Either way this is good for gold and other precious metals. I seriously doubt too that austerity measures are going to get us out of debt.

    I do believe gold's bull market has less to with inflation and more to do with currency/default issues.

    As such I take Gary's advice: stick with gold and PMs and keep it simple.

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  113. It's true that the big winners only come occasionally. The entry needs to be right (the easier part for me), and the market needs to not go against me for even a half day (harder). I thought we'd gap open down Monday, but instead we had a lame rally. Today, however, I can ride the shorts as long as I like so it's not "not a big win" just yet!. My Friday post predicted a 150 point down day by Wednesday. My game is to lose tiny, or win big. The big wins are rarer but I only need a few a year. This isn't one of them but I will still make good money overall on this move, which is a lot better than the with-the-trend longs are doing. They will win if the trend is still intact, but I don't like sitting through decent-sized drawdowns. I may be out of my shorts by the end of the day if this gets ugly enough. And I certainly agree that the vast majority of traders do not get the timing right and are constantly whipsawing themselves.

    Meanwhile, I understand that the close above 1204 locks in the bottom in gold for you and that therefore dips should be bought. I'll see if I have the guts to add too a current loser!

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  114. Gary--
    How many gold daily cycles are there in an intermediate cycle? We are on day 9 on both looks like? Intermediate cycles tend to last in the 20-30 week range? Thanks

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  115. 4-5 daily cycles usually in an intermediate cycle.

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  116. Just for the record, the guy who said I am up $110 so far is an idiot. Using pre-market quotes I am up $1700 today alone! The 500 FXP I posted is up $750 (closed at 34.08; now at 35.50---bought at 34.41 so a $500 profit). I have no clue what he is even talking about. And I don't post all my trades (shorted 1000 GE yesterday at 16.45, so there's $200 on a tiny position.) And if you don;t enjoy trading, don;t do it. With all respect to Nap Boy, my idea of fun is not going unconscious---it's trying to outwit the market and the smart guys on the other side of the keyboard!

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  117. I am wondering if smart money is driving things lower to buy in before Ben speaks. Gold and silver seem to believe Ben will not be as dovish. May buy more at open and if I am wrong, simply hold as part of my core position.

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  118. Since going old turkey, I get bored easy. So what do you kind fellas think will happen at the Fed meeting?

    Anybody want to place a friendly (monopoly money) bet? Since we are talking monopoly money, I will bet(although very improbable!!) that Ben will lower interest rates to negative just because it would be cool if he did it. Anyways, sorry for not posting for awhile, but things to do. Ya know.

    Pool boy

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  119. I'd gladly wager pool boy except the Fed announcement comes out smack dab in the middle of my nap time.

    Thanks to Gary and strong hand status, I barely need to watch anymore. Like pool boy, I'll try to be more active here instead of just relaxing with a big smile on my face. :)

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  120. In case anyone is wondering, we still have more work to do on the downside, IMO. The conditions that set up this drop have been greatly lessened but are not gone, so if we rally much more (to down 80 or so?) I will redo the shorts I covered this morning. We tagged the "down 150 points" level I mentioned Friday, so that requirement has been fulfilled.

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  121. I'm a buyer (adding) to GLD if it can pull back to $115.80 or so before I take my siesta.

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  122. Highlighting the wisdom of holding a basket (or ETF) of juniors rather an a concentrated position in any one company, we have JAG.

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  123. One definitely doesn't want a big stake in any one junior.

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  124. And the other side of that coin would be AAU. AAU found some gold. Jag can't seem to get what they have out of the ground.

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  125. Interesting take!
    Adds to the inflation/deflation debate!
    http://mises.org/daily/4602

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  126. How come DG quotes his dollars at risk at .5%, but then tells us he's
    up $1700?

    Is $1700 good? What % up are you. Consistency is key, and what if you're up only .25%? Or what f $1700 is up 20% of account. Big difference in determining how excellent you are at "outwitting the mkt". It just seems like selective reporting to me.

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  127. For example, as I type I'd down $7300 today.

    So is that considered good performance-wise, bad, or can't you tell from the data I've shared?

    Gary knows the answer.

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  128. I have posted a ton of trades with sizes. If you still can't figure out what's going on, that's fine. That old response was to the guy who said I was up "$100." I'm pretty done responding to these individual comments from now on. I will post occasional market comments when I think it's we are at a crucial point. If you are not interested you can skip them. By the way, the risk is .5% because I cut off losers. the gains are bigger because I let them run.
    The Dow has tagged the down 80 level I mentioned and I put out a few more shorts. Hope I get to keep them for a bit!

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  129. technicals are out the window on a fed day. good luck, massa DG

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  130. Who does DG think he is, criticizing me for napping my way to the top! :)

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  131. BurgermeisterMeisterburgerAugust 10, 2010 at 9:46 AM

    Looks like silver is busting out of that coil, and to the downside, just like Gary suspected.

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  132. DG lets winners run? We haven't seen him do that, yet. Sounds good, and I've seen that idea a million times in just about every trading book.

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