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Sunday, September 26, 2010

GOLD RISING AGAINST ALL CURRENCIES

The question was posed that perhaps gold is only rising because the dollar is falling. While every C-wave has been driven by a collapsing dollar you will see in the next several charts that gold is rising in every currency. Every country is debasing their currency.









As you can see gold is rising in all currencies even in the strongest of all currencies, the Yen.

What's more, gold is also rising against all other commodities since late `05.


Remember how I've pointed out that oil was the leader during the first phase of the commodity bull and how it should under perform during the second phase. That is because the fundamentals are now impaired in the energy markets but are improving in the precious metals sector.

I've been of the opinion that the gold:oil ratio will now remain in a range above 13 for the rest of the commodity bull with occasional spikes above 20 as C-waves progress.


At the moment the gold: oil ratio is at 17. I expect that will move up to or above 22 by the end of the current C-wave sometime this spring.

243 comments:

  1. Nice post Gary.
    I want to add to my core this coming week. Do I wait for a cycle low ?

    ReplyDelete
  2. Gary,
    What do you offer that is different on the premium site that I don't see here?

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  3. STK,
    There is a link in the upper right corner of the home page that will take you to the premium website. I have several reports there that I have unlocked.

    You can get an idea of what the daily updates invlove by reading a few of those free reports.

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  4. C,
    If it was me I would wait a bit and see if we get the expected pullback into a daily cycle low this week.

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  5. Gary--First time posting here, but as a subscriber, I thought others might be interested in this question. Martin Armstrong just posted his latest gold missive. Was curious if you've had a chance to read it and your thoughts on his cycle analysis (recognizing it is different than y ours).

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  6. Gary,

    I tire of hearing of the low stock market P/E's of the good old days. It just never happened.

    Since 1970, the average 4 quarter trailing P/E for the stock market is 20.85.

    Now, the 4 quarter trailing P/E is highly dependent on interest rates. For purposes of this study I have defined the average interest rate to be the total of the t-bill, the 2yr bond and the 10yr bond divided by 3.

    When interest rates have been between 0 and 5%, the 4 quarter trailing P/E has been 23.86 during the last 40 years.

    When interest rates have been between 5-10%, P/E has averaged 19.44.

    When interest rates have exceeded 10%, P/E has averaged 9.35.

    If you're waiting for high interest rates to enhance your gold holdings, good luck.

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  7. I'm really hoping for a nice healthy correction in silver this week so I can put more money to work.

    If we get it, I think I'm going to sell a few December 72 puts on AGQ to pocket a nice premium. I figure if AGQ gets down to $72 I'll be happy to own more of it. : )

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  8. Actually no secular bear market in history as ever ended until P/E's reached single digits and more importantly dividends were at or very close to par with P/E's.

    Interest rates are irrelevant.

    A secular bear market has nothing to do with interest rates. It has to do with valuation and human nature.

    Long term bear markets don't end until the pendulum swings to extreme undervaluation. That's the way every one in history has ended and it's the way this one will end because human nature is still the same as it was in 74, 82, 47, 37, 32, 20 & 09 ( I think I got those bottoms right).

    To think otherwise is to expect this time to be different and it's never different.

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  9. I just quoted you the facts. If that looks to you like P/E ratios are not dependent on interest rates, then I don't share your viewpoint.

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  10. Wes,
    An average PE over 40 years is meaningless. During that time P/E's fluctuated between 42 and 7. At the secular bull market top they hit 42 at the 74 and 82 bear market bottom they were 7.7 & 6.8.

    If I remember correctly Hays was trying to peddle his undervaluation theory either right before the 07 bear market started or perhaps it was in early 08 I can't remember exactly when it was. But obviously he missed by a mile (actually several miles).

    Trust me this bear market is doing the same thing all bear markets do. It's cleaning out the excesses and eventually we will see multiple compression take stock valuations down to ridiculous levels.

    That's the point where we will sell our hideously overvalued gold and buy great companies for pennies on the dollar.

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  11. I kind of miss all the back and forth banter and attacks. It took the focus of the Fed's criminal enterprise which rots your currency every single day since we convinced you to let us "issue money".

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  12. Gary,

    You're exactly right about Hays and his model being completely wrong about valuation in 07. In fact, he hadn't been right about valuation this century.

    As a result of his bad call(s) (he was pretty embarrassed by all this) he got a hot-shot data man to come up with the model he is currently using. He shows the back testing results on his web site.

    As I said, it's a proprietary model, so I know little about the exact details, but he has discussed it extensively. His site offers a 3 day free trial, more than enough time to evaluate the model (which he discusses at length in an archived article).

    I'd love for you to take a look so we could explore it in more detail.

    Please don't just assume it's wrong because you "know" we're in a long term bear market, because I am also aware of other bear market predictors ( developed by people completely independent of Hays) that haven't triggered either. One is the Confusion Index.

    Also, there are economic indicators in addition to the Conference Board's Leading Economic Index that are quite strong.

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  13. I somewhat enjoyed the entertainment before, with the arguing and attacks. It took the focus off my criminal Fed and our foreign counterparts, which have stolen the value from all paper currencies.

    Now go back to your tv's, and forget what I've said. Instead, remember that everything is ok.

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  14. Wes,
    Don't forget the Fed threw several trillion dollars at the economy. That will briefly buy one a reprieve but ultimately it just creates a bigger problem.

    We got a front row view of this in action during the last decade as Greenspan opted for this "cure" when the tech bubble burst. The end result was he created a housing and credit bubble.

    When those burst it gave us the most severe recession and worst stock bear market since the Great Depression.

    Now Bernanke is going down the same road. The end result will be the same. It is going to ultimately create and even bigger problem than the bursting of the credit bubble. It is going to lead to currency problems which is many multiple worse than a credit bubble imploding.

    Bear markets are an important component of capitalism. They serve a purpose. That purpose is to clean out the excesses created during the preceeding bull.

    Then problem comes when governments try to prevent the bear from doing what it needs to do. Their interventions just lead to more and bigger excesses that still have to be cleansed from the system before the next bull can begin.

    And that bull has nothing to do with interest rates.

    The simple fact is that a new secular bull market can't begin until we cleanse all this excess debt from the system and we need the next "new industry" to come on line.

    Once those two conditions are met and stocks reach true bear market bottom valuations then we will see the start of the next secular bull market for stocks.

    In the meantime don't get distracted by fancy proprietary valuation models. Just stay focused on the one remaining bull market. And when the cleansing is fianlly allowed to happen and valuations do reach true extremes then be prepared to sell your gold and buy stocks with both fists.

    And trust me when that time comes it's going to be the hardest thing in the world to sell your gold and buy stocks.

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  15. Bede-Armstrong article is on jesses cafe american blog

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  16. Here's the link to the Armstrong article, which I saw at Jim Sinclair's site (I did not see it at Jesse's site):
    http://www.martinarmstrong.org/files/Gold%20an%2011%20Year%20High%20for%202010%2009-17-2010.pdf

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  17. A recent quote from Richard Russell...
    "Both the Congressional Office of Management and the Treasury list a total shortfall of $4.5 trillion coming due during the next 12 months. And this shortfall is supposed to be paid off with less than half a trillion dollars.

    How will this work? Easy, they'll have to print the money. This will put pressure on our beloved Yankee dollar. As the dollar fades away, it will require an increasing number of dollars to buy an ounce of gold. This, then, is the secret of gold's relentless climb."

    It looks like it does not matter what the outcome of the Nov elections is. As long as there is a huge debt to be dealt with and whoever is in office will still have to face the issue. Gold will continue upwards.

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  18. Thanks Discreet and John G. I found it in both places.

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  19. Bob Hoye has made some pretty good calls last couple of years through this crisis (although last few months he seems to have been off on this main move.) He isn't to be ignored, although he can be wrong like the rest.

    Anyway...end of last week he issued this publicly:
    http://www.321gold.com/editorials/hoye/hoye092410.html

    An alert regarding silver exhaustion.

    --TZ

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  20. Clearly gold and silver hold special status to the financial powers and clearly they are stomped on heavily to try and keep lower.

    FROM RICK ACKERMAN:

    "...Just look at this comparison graph (above) showing the extent of forward selling (days of production) by the largest traders in various commodity markets to get a feel for the level of forward selling that gold and silver are subjected to by the big commercials, compared to other commodities. Why would world markets need so much forward sold silver and gold? Doesn’t everyone know that gold has very limited industrial use (especially compared to platinum or copper), and since photographic storage has moved from cellulose to silicon, industry’s chief consumption points for silver have also diminished drastically. And, if this much gold and silver really is changing hands out there, then why are eligible COMEX inventories sitting at 20 year lows? If the Big Commercial traders are laying on these enormous short positions as part of a legitimate hedging strategy, then why wouldn’t the same strategy work with crude oil? Or Wheat? And, most notably — why wouldn’t this same hedging strategy work with copper? Is it purely coincidence that there is so much concentration by a few mega-banks on the short side of the open interest in precisely the two elements that have served as the most viable forms of money for longer than any other medium in human history?

    http://67.19.64.18/news/RickAckerman/2010/9-23ra.jpg

    --TZ

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  21. Something got cut from my last post.

    I was proposing that because moderation of EACH post is insane. So when gary is in bathroom or climbing we can't talk?

    And blogger doesn't appear to allow white or blacklists. So the options appear limited.

    --TZ

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  22. Ok...this is crazy. My posts are appearing then disappearing. They are also shifting order.

    Is this the best we can do in 2010?

    --TZ

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  23. I think I will just pick someone to monitor the site when I go climbing.

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  24. WES,

    Discussing AVERAGES of P/E ratios is like saying the average of gold last decade is $700 - it isn't a very useful measure to either discuss or make money from. What is relevant are lows or highs of significance that can be bought or sold. I don't want to get into the whole interest rate thing, but Gary is right regarding how this will end. Valuations will continue to grind down until the exesses are wrung out and PE's return to single digits.

    It will help all to visualze here
    http://www.decisionpoint.com/TAC/SWENLIN.html
    (bookmark..it updates continually)

    The first chart is the one that matters, the second is peak earnings valuation which I think it's useful.

    You will see that NOW...*ten* years after the stock market peaked, it is STILL currently at a *worse* valuation than the 1929 peak.

    This situation will most likely not be resolved with a crash (you guys shorting should realize this). It will resolve with a flatline around dow 10k for another decade or so while inflation errodes value and gold catches up.

    --TZ

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  25. My take on metals here for what it is worth. This is the week 'they' HAVE to get this stuff lower if there is any hope of slowing things.

    Last week was the first weekly close above that large gold wedge. Having it hold or go up this week pretty much seals the breakout. A pullback into wedge would make it a weekly fakeout (for now) and give some weakness (last week I was talking about a daily fakeout).

    With everything at or near new highs after a 2 months strong move it simply has to happen now. They don't get a much better to time to pull this off than now so if a drop does NOT happen this thing is gone.

    Note people should read this (long) post:
    http://www.zerohedge.com/article/guest-post-shoeshine-boy

    What it demonstrates/explains is that gold, unlike most other goods, has supply that DROPS as it rises. The guys in charge know this. The higher they allow it to go the LESS is available and the tighter things get. That's why they have to slow it and if they can't they are in trouble.

    -TZ

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  26. You can trust me to monitor the site, Gary. I've done such a fine job with our currency, and since I don't really produce anything of value, I can stay here all day! :)

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  27. Hi Gary,

    With all this talk about gold being in a bubble, I am wondering if in one of your next postings talk about the conditions leading up to the previous gold bubble in 1980.
    History might teach us something about what a real gold bubble looks like :-)

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  28. The conditions for a bubble to exist are the entry of the public into something they consider to be a "sure thing".

    When we see lines at the local coin dealer then gold will be in the bubble phase.

    It usually takes about 1 to 1 1/2 years once the publis starts to catch on befoer the bubble finally runs out of buyers and pops.

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  29. Gary, do you invest in dow, spx or just gold & silver?

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  30. I cover the market in my nightly newsletter but I don't waste my time or capital trading them.

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  31. Gary, " I don't waste my time or capital trading them."

    Are you suggesting SPX not going up except Gold & Silver?

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  32. The percentage gains will be much harder to come by and much smaller than in the PM sector not to mention the general stock market is still in a secular bear market.

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  33. Gary,

    look at last 30 years chart,
    SLV from 5 to 20,
    GLD from 30 to 120,
    SPX from 100 to 1200.

    SO indeed GLD may outperform SPX next 30 years ( just a guess).

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  34. It's been doing so ever since the secular bull market began in 2001.

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  35. European Central Banks Halt Gold sales

    http://www.cnbc.com/id/39376353

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  36. This is one of the very few times when gold has not traded down into options expiration. This is incredibly bullish in my opinion, and dictates a continuation in the run up in gold.

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  37. Gary,

    If you were going to add a bit into the daily low and hold it until the spring would you choose AGQ or GDXJ?

    Thanks!

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  38. Gary,

    If you were going to add a bit into the daily low and hold it until the spring would you choose AGQ or GDXJ?

    Thanks!

    ReplyDelete
  39. I buy stocks with the paper I print to make them go higher, but people in the know are losing faith?

    http://www.zerohedge.com/article/insider-selling-buying-surpasses-1400-1

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  40. oa92000,

    run the same numbers for gold, silver, and stocks beginning at year 2000. You'll see that gold and silver are clearly in a bull market, whereas stocks have gone nowhere in 10 years. The next 5 to 10 years are likely to be a continuation of this pattern.

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  41. TZ,

    I just made a post, and it appeared within a few seconds. So it appears that no one is "monitoring" the posts. The only requirement for posting is that you have to post using your google account. No more Anon's.

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  42. I've turned off the moderate feature for now...until the infestation resumes.

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  43. Hi Gary
    I should say that my post yesterday about gold rising against a falling dollar was in relation to the action of the past 2 or three weeks only.

    I posted it as a caution, really, that the current move is not necessarily motivated worlwide.

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  44. [I think I'll take my photo off - I feel I'm sticking out like a sore thumb...]

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  45. I've been so busy destroying currency and Americans' well-being that I never learned how to put an image up on my profile. Let's give it a try...

    ReplyDelete
  46. I for one, like the no-anonymous posting system. It's ridiculously easy to create an account but takes enough effort to limit the frivolous, drive-by posters.

    Keep it like that Gary.

    Thanks!

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  47. John, How do you think I feel with my pic out there?

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  48. Gary, based on your weekend report, you are expecting the daily low to come in this week ?

    I am thinking about when I should be adding my leverage back on, as I unloaded all of it last week.

    much improved commenting system.

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  49. My game plan is to add it back in if gold tests $1265...or if a swing high gets negated (sign that gold may not correct).

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  50. For those who've asked how best to invest in this PM bull market I would suggest looking at the Tocqueville gold fund, TGLDX. It also has a good chunk of silver represented in it as well, and the performance has been fantastic (especially off the '08 bottom but really throughout the bull mkt).

    Not meant to be traded (<120 day redemption fee) but good for long term PM holdings

    TGLDX holdings

    fact sheet

    complete holdings


    Another very good one with a great long term record is the USAA PM fund, USAGX, which is also more than just a gold fund.

    Performance comp chart

    chart

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  51. Gary,

    What would be the indication that a swing high was negated? What should we look for?

    Thanks

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  52. any comments on Gold ATMs? or has this always been in the news?

    http://www.cnbc.com/id/39381947

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  53. Well first gold has to form a swing high. Then if it quickly gets reversed before leading to a correction it would be a sign that gold may not correct here at $1300.

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  54. Nick,
    I expect they will arrive just in time for Gold's D-wave :)

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  55. Steven,

    A swing high is negated when the market trades back above the high and closes above the high. Volume usually comes in because the shorts have to cover (buy stops are hit).

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  56. Is there much difference between AGQ and SLV? Aren't they both basically silver ETFs?

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  57. AGQ is a ultra fund. It will move twice as much as SLV.

    So if silver rallies 1% AGQ should rally 2%.

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  58. Okay, the shares are 4x as expensive, does that consideration come into play?

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  59. Sorry if I am missing the obvious.

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  60. Price is meaningless. The percentage gain is all that matters.

    One will make the same profits if they were to buy one share at $1000 and it rallied 10% as they would if they bought 100 shares at $10 and they rallied 10%.

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  61. Those Ultra ETFs are great if the market is moving in a single direction without too much deviation. If the move up becomes choppy, these ETFs tend to underperform. Personally, they worry me a little.

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  62. Peter,

    I trade the QLD, which is 2xQQQQ. I've traded it for years and it always seems to yield 2XQQQQ.

    If Q's up 10%, QLD up 20%. Same thing on the downside.

    I'm not sure why this one is different, or if any others are like this one.

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  63. The problem with the leveraged ETFs is that they are supposed to track the underlying on a daily basis. SSO will go up 2 times more than the SPY on a daily basis, which doesn´t mean that it will be up 2 times the SPY after 30 days, for example, because the leverage is adjusted every day. So usually the leveraged ETFs will always underperform on a longer time frame.

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  64. I agree, but QLD always tracks just like advertised for some reason.

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  65. However they can outperform as long as the trend is in the right direction. Case in point from the Aug low SLV is up 20.4%.

    During the same period AGQ is up 43.6%.

    I'm using AGQ right now because this is the single best opportunity for the C-wave to finish and the trend should be strongly higher. If I thought PM where going to be locked in a trading range then I would avoid ultra funds.

    I will certainly exit AGQ when I think the C-wave is coming to an end.

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  66. wes .. you tradng it or holding it ?

    If you are trading it ... you are fine , if you are holding it, then I suggest you google "danger of leveraged ETFs". I have read it because I got hammered on one.

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  67. Gary is bang on .. like I said, if the trend is in one direction, you should outperform. If the market is choppy, you will lose , even if the overall trend is up.

    Dont forget, these reset daily. If you are up 10% one day, and the next day down 10% .. overall, you are down.

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  68. Even if you are trading unleveraged ETF's you will end up down if you gain 10% and then turn around and lose 10%.

    The ole' saying "it's not how much you make that determines success or failure it's how much you lose" has a lot of truth to it.

    This is why it's so important for traders to control risk.

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  69. From what I understand the following is the issue. Let's say one starts with $100 over 4 trading days. Say the stock goes up $10 one day, $10 down the next, up $10 the next and then down $10 again. The underlying asset stays at 100. But with a double ETF and assume you put $100 in....the first day the return (1+10/100*2)*100=120, the second day would be (1-10/110*2)*120=98.18, the third day would be (1+10/100*2)*98.18=117.82, and the final day would be (1-10/110*2)*117.82=96.4.

    So despite the underyling asset returning 0%, the double ETF returned -3.5%. One should be also concerned with 1x funds too. The real problem is the etf being based upon percentage returns and not dollar returns.

    Of course if the trend is up, you can make a mint.

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  70. Gary: What do you think about the dollar sentiment right now. According to Daily Sentiment Index (DSI) there are just 5% dollar bulls right now. At the top in June 98% were bullish, so looks like the dollar is ready for a bounce.

    http://www.tradersnarrative.com/dollar-at-extreme-low-sentiment-euro-euphoria-4760.html

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  71. This comment has been removed by the author.

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  72. I suspect the "dollar sentiment index" is another Precther creation. It's pure BS.

    The public opinion poll is at 40% as of last Tuesday.

    Anytime you see something claiming sentiment is 98% or 5% it's almost always a bogus index to back Precthers shock and awe marketing strategies.

    And even if I'm wrong about this being a Precther creation it's still total nonsense.

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  73. I continue to be suprised there hasn't been a hit or pullback on the metals. I don't NOT thing the guys in charge have lost full control.

    As the dollar looks to be getting some strength this evening and the metals look week I see this story out:

    http://online.wsj.com/article/SB10001424052748703694204575518222145769804.html?mod=WSJ_hpp_MIDDLETopStories

    Remember that the Fed will communicated, behind the scenes, with reporters like this when they have policy 'adjustments' or propaganda they need to spread.

    Smells to me like something is starting. Note that the inclination of this article is that QE2 will not be as drastic or sudden as people are expecting.

    --TZ

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  74. Wes,
    Actaully even QLD will underperform over the long haul as the market trades agasint it. Case in point the NDX is only down 5.6% from the 07 highs. While QLD is down 41.6%.

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  75. You guys trading AGQ over silver futures really don't have the ability to think critically (or you are simply stubborn).

    The arguments have been plainly made before. I am amazed when people get hard facts yet continue in the opposite direction.

    --TZ

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  76. Gary,

    You're right. I stand corrected.

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  77. QLD and AGQ track as advertised.
    A lot of people don't realized what they actually advertised.

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  78. That's tight, TZ, we have not lost any control over mkts. Witness this "flash crash" in a normally quiet stock. Imagine you bought at 40, had a break even stop placed there, and got filled at $5 bucks today? LOL! Just a taste of what's to come.

    Confidence is shot, and only a fool would buy/hold stocks any longer, even in a 401(k) We'll continue to shake things up, take people's money, and send more Americans into poverty every day.

    We're coming for you next!

    http://www.zerohedge.com/article/44-4-less-second-todays-flash-crash-brought-you-courtesy-nasdq-and-broken-circuit-breakers

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  79. Wes,

    Here's a quick calculation you can do. Take the April high in QQQQ and QLD. Take today's close in both.

    If you run the numbers, QQQQ is down 2.488 percent. But QLD is down 6.954 percent. If QLD tracked QQQQ over time and it always came out exactly twice what QQQQ did, then QLD SHOULD be down only 5 percent. Instead, it's down nearly 7 percent.

    If you're day trading, double and triple funds work great. But over time, they decay, and the choppier the market, the worse they perform.

    One way you can work this IF your broker will let you is to SHORT the double inverse fund that tracks the direction OPPOSITE to the direction you believe the market will go. In other words, if you are bullish, short QID instead of going long QLD. That way the decay will work in your favor.

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  80. pima,

    Calculating from the March 09 low, QLD is up MORE than twice QQQQ. This is strange.

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  81. Wes,
    It's because from the March 09 low the market has been moving in the right direction for QLD.

    I gave the recent example of AGQ and SLV since the August bottom. SLV is up 20.4% but AGQ is outperforming at 41.6%.

    The double funds do fine as long as the market is moving in the right direction. It's when the market goes against them that they start lose faster than the underlying asset.

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  82. Gary: No it´s Jake Bernsteins creation, but I think EWI uses it sometimes. I really got no experience of his DSI-indicator but have seen Tradersnarrative recommend it and that guy is good. But it could be that the sentiment indicator isn´t really that good. I´ve just seen it a couple of times and then it has been pretty good timing.

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  83. Any thoughts on this?

    http://i24.photobucket.com/albums/c12/redi5e/Untitled-1.png

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  84. I think the sentiment indicators that Prechter uses are DAILY and not longer-term ones. If I am correct (I thought I read this someplace) then sure there will be days when 95% of the people think the price will go in one direction or the other.

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  85. PM's finally taking a step back, and still the USD can barely move higher.

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  86. Such a strong come back though... I wonder if this correction will be much like what we had at 1211...

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  87. If this keeps up, I'm going to have to crank up the presses again!

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  88. Gary,

    Isn't that another swing reversal in the stock market ?

    I was trying to make the point Friday when the market gaped higher that it rarely pays to buy strength.

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  89. No swing high yet. There is no guarantee that any rule will work 100% of the time. Look what would have happened if you waited when silver shot out of the consolidation.

    Most of the time you just have to take your signals and if it suffers a bit of a drawdown...well that's investing. If you are never going to allow yourself to experience a drawdown then I can guarantee you are going to lose money in this business.

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  90. Where is Gary_UK? He should be gloating that he's only down 10% more, but now the decline has started so he's right.

    Perhaps he couldn't figure out how to open a google account?

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  91. http://www.kitco.com/images/live/gold.gif

    They ran the stops at 3:30 and only got about 6k contracts before almost a full rebound. Impressive. Still little weakness.

    --TZ

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  92. Good morning all,
    I slept through the alarm. Good thing too.
    Ok, Gary or anyone, If we a lucky enough to receive a over-bought correction then maybe the Fibonacci retrace will work on some of my holdings. Maybe look for a 23.6 or a 38.2 retrace???
    WOW, just as I type this my account rallied about 1%. Good news or people buying the dips???

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  93. Wow, that may be all we get for a correction given this new strength to a new high in gold.

    About 25 pts to the low overnight on the futures; and that was for only a blink of an eye (long one minute candle).

    It sure will get some chasing here I would think, as they never got an opportunity to buy any kind of pull back, unless trading futures (which is a relatively very small bunch, and not much "retail").

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  94. The dollar got up to about 80 overnight. That might be all she's got in her, which is very pathetic.

    Now setting a new low here.

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  95. Gotta buy the dips!

    p.s. If you want a good laugh, click on the link to S. Bernanke's profile.

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  96. Was the the daily swing low??? We went under Gary's swing low number and then reversed!

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  97. Too much printed cash in the world and everybody is waiting for a dip (i'm on that list too)

    --TZ

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  98. There's a very good chance that todays move is confirming a runaway move.

    Although technically today will be an outside day so we don't really have a swing low.

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  99. Many of the miners tagged their 20 day moving averages this morning and have reversed, the stronger ones (SLW) tagged their 10 DMA.

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  100. Hi Gary,

    Would you buy today? or give it a couple of more days?

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  101. Gary, when do you put your leverage back on? I'm waiting to follow your lead!

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  102. Perhaps put a little on today and see what happen tomorrow.

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  103. Gold Spikes After BOE's Posen Demands More QE, Wants To Buy Corporate Debt
    By Tyler Durden
    Created 09/28/2010 - 08:19

    All is fair in love and central bank war. Which is why we see the following headlines from England, showing just how important it is in the global game theory, which has now turned to outright war, how important it is to defect first.

    * BOE's Posen: I think further monetary easing should be undertaken in UK, subject to debate
    * BOE's Posen: If QE does not work, then time for further fiscal stimulus, corporate debt purchases
    * BOE's Posen: Additional monetary stimulus should begin in the form of addition QE gilt buying
    * BOE's Posen: Possible that QE will not be able to create sustained recovery on its own
    * BOE's Posen: Still open to argument, vote for easing at Oct. MPC meeting is not foregone conclusion
    * BOE's Posen: Sees CPI falling well below target without stimulus, 1990s Japan style scenario possible
    * BOE's Posen: Possible that QE will not be able to create sustained recovery on its own
    * BOE's Posen: Most signs point to CPI falling well below target, wage spiral seems impossible
    * BOE's Posen: Believes better BOE and more central banks did large-scale asset purchases together

    Gold obviously jumps, cable drops, and central banks everywhere are battening down the hatches

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  104. Gary,

    what is going on today?

    Head fake? What are the possibilities now for a correction still into Monday or Wednesday of next week?

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  105. I hate gold! Worst beast to invest in. Just when you think it will do what you want, it turns around gives you the finger and goes on its merry way. Now we have a potential head fake to a head fake.

    I am back in at 120%...I did sell some leverage like many others, but I am getting nervous about missing the big picture. I am a horrible trader, and yet I can't resist my sinful ways at times. Anyways may go up to 125% if we ever do correct, if not old turkey and go about life instead of trying to save 1% when risking hundreds of percent. I fully expect a pull back, but I can't trade it.

    Can't wait until lunch for that beer.

    As always good luck to all.

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  106. I am with you keys--
    I almost hedged (with extra cash) to make the impending correction less painful. I did not-- (just because I had not convinced myself yet) and what do you know a very nice reversal.
    Crazy stuff!

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  107. I caught myself getting emotional and panic buying this morning. I closed those positions (small profit) and went back to what I've had.

    I want to buy cause I'm "missing it" like everybody else is feeling. The math and cold logic is saying that's crazy right here.

    I'm gonna override my emotions and wait for any additional buys.

    --TZ

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  108. I'm in touch with a few others who watch/trade market too and the rush to buy seems universal this morning. Historically that doesn't work out well.

    If you even scroll up and look at my and other comments we have all mostly become convinced this will never drop again for this move. Maybe it wont. I just know I got burned in the past when believing that. It will ALWAYS drop again at some point in the future.

    I agree it looks incredibly strong and we might be at that situation where it simply overwhelms anybody short (or waiting to buy) and surges. I don't know.

    I do know that if I was long with massive gains from the 1155 low that I wouldn't be adding here. So the fact that I don't have a huge position and am missing gains doesn't give me an additional reason to buy.

    --TZ

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  109. This is a high emotion day. We all feel it, no? That usually signals something significant. Either recognition of a massive runaway is setting in, or this is a big capitulation buypoint and we decline for the next few weeks.

    It's one of the other. This is not a normal day.

    --TZ

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  110. I still think October is shaping up to be absolutely massive. 1320-1340 this week is easily attainable.
    That was one very weak correction, I think the options exp. action was very telling...
    We shall see

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  111. If *somehow* the metals today reversed back down into the LOWS for close we would have our answer. As INSANELY unlikely as that seems you have exact reason it would signal a buying capitulation.

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  112. If *somehow* the metals today reversed back down into the LOWS for close we would have our answer. As INSANELY unlikely as that seems you have exact reason it would signal a buying capitulation.

    The fact that I'm even suggesting it might happen in and of itself feels stupid. That in and of itself is important.

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  113. So far there still is a divergence between the miners (GDX) and he metial. I will wait to buy.

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  114. I fully agree with TZ, we are due for a correction.

    But we were due a week ago. I am not trying to convince anyone that they should buy in now; I just can't bother with getting anxious over each percentage move anymore. I most likely will suffer a drawdown, but at least I will be able to sleep now since I do have my positions fully in. I was nervous about QE2 coming at any time. I was nervous about BOJ announcing another round in an attempt to crush the Yen. A whole bunch of other fundamental items that suggest that PMs should go up much higher in the long-run. Tie that in with Gary's note to being in a vacuum after we break these current levels. I had a very hard time sleeping over the week-end knowing that I was going against my own investment strategy (mind you only on the leverage). Found my opportunity to get back in at a price slightly below my sell price on Friday, so I took it.

    Tie that in with gold being a prick of an investment, blaagg I had enough. Old turkey 101 even for my leverage now; I will modify when Gary calls for a D-Wave most likely. In fact I am not even going to look at my account for a week...I was focusing too much on the wrong things, need to break that sinful pattern now.

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  115. KEYS,

    I agree - every reason I had for a correction has turned out to not work. Not a single one.

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  116. Gold surging through $1300. I'm getting the hankerin' for Mexican food. Gary's treat!

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  117. Gary,

    I'm confused. Can you explain in detail why we don't have a swing high in SPX ?

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  118. This comment has been removed by the author.

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  119. This comment has been removed by the author.

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  120. Keys-
    We think alike-- You express my nervousness,anxiety,and logical reasoning better than I can. Thank You.
    It allows me to do a simple post!

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  121. How come my comments disappeared? I'm a sub!

    Don't tell me Gary is part of the crooked propaganda we get everyday? Can't be, so must be somebody is whining or threatening Gary about my avatar?

    What's up?

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  122. Hmmm. My apologies, but the comments are up again. Don't know what happened, but it's been spotty since Gary changed the system to register first.

    Is this happening to anybody else?

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  123. Part of the problem is that if Gary deletes a post it doesn't say that it was there but 'removed by blog owner'. Instead it just disappears.

    However I also seem to get posts that come and go due to the service itself.

    Between the two of these events happening you never really know what the issue is.

    This is by far not the best on the internet, but I guess it's marginally good enough.

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  124. Wes, To form a swing high again on the SPX we should not drop below today's low and close above yesterdays high - Gary can correct me if I misunderstand this concept.

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  125. Wouldn't today be the swing high in PMs?

    Kind of the like the theory that the dollar would break below 80 (swing low) and bounce, analogous to silver breaking 21.50 (the last two days), and now we should get our bounce?

    It is one confusing bull. HL was at 5.89 today! I though I'd only get that when silver was at 20.5 or lower!

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  126. People are dumping dollars like they are paper or something

    :-)

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  127. What are y'all using as a trading platform? Anything good, bad, indifferent?

    I have ShareBuilder and I don't like it much. Market orders are $10 up to $10k in order size, then it switches to some ridiculous percentage basis. Net effect is I can't place any order over $10 grand without doing it in pieces. Not efficient.

    Any help out there?

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  128. Josh -

    Interactive brokers is $1 up to 100 shares.

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  129. As a matter of fact - here you go:

    http://interactivebrokers.com/en/general/education/comparebrokers.php

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  130. Dang it! If that's the shortest pause for breath miners are going to take, Gary's runaway move is ugly reality. Barely caught SLW in negative territory before it popped back up and I now have to chase a few others after having lowered my margin last week. This thing is a monster!

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  131. Dang it! I was really looking forward to a measured pull back and swing low so I could add to my parent's and my accts. This gold game is getting ridiculous. And, its just getting started. : )
    Oh well, I'm not adding on a day like today. We should have more chances. or not.

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  132. Gary, looks like we will have an outside day on the Gold charts today. Would that constitute a swing low ? or would we need a little follow thru tomorrow ?

    this is going to get interesting isnt it.

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  133. RSI for silver is 83; RSI for gold is 82. In years of history those readings are rare and the results within a few days later are universally down.

    Yeah...I'm aware this is broken record talk from me at this point. Just giving out the numbers.

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  134. Who wants to bet PM stocks will be 3% lower then EOD today by the latest, next Wednesday?????????? Essentially that would mean the HUI would be around 496.

    I've got 5 Vegas burritos on it...

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  135. So far, the SoS numbers on SPY look healthy.

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  136. Gary, today might lend some credence to the runaway move idea, eh?

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  137. THEDOCUMENT guy....what say you?

    You were having different readings and opinions from Gary earlier.

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  138. ROBERT,
    3% lower on a PM stock is like a sneeze or afterthought. A real correction here after 2 months of gains would be 10-15% on some of these stocks like SLW.

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  139. I nominate Shalom Bernanke as site monitor. He will do a good job just like his twin brother does with the money supply.

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  140. This comment has been removed by the author.

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  141. This comment has been removed by the author.

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  142. Anyone have the gold/silver sentiment numbers?

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  143. Thanks Frank, and to show my appreciation I'm going to have a talk with him about getting you a sweetheart loan at 0%.

    How's $25 billion sound? Don't worry, it's not real anyway and we print it as fast as we can 24/7!

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  144. Shalom--
    Go ahead and make that loan available to all of us.
    Thanks for the extra paper towels-- (oops money)

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  145. Doc,
    I think I'm going to be buying the burritos :)

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  146. It appears blogger is having trouble with some comments.

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  147. I should have reacted faster, I shorted silver and slw and was up over 2.5% an hour within open today, now obviously that 2.5% is gone.

    Anyways, I'm holding my urge to chase right now, and will test my patience and see my buy prices within 6 trading days.

    I don't think this is the week for silver going parabolic, and the odds are in a shorts favor right now I'd have to argue...

    Where you at Gary??????

    Robert

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  148. Robert,
    I reposted your comment for you. Blogger dropped it for some reason.

    Let me tell you something I learned a long time ago.

    Never, never, never, never, never short a bull market.

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  149. I know you'll answer this in tonight's report, but, Gary, when do you actually think there will be the next retracement/correction?

    It is tempting to short bulls because the retracements are usually heavy, but I do agree with you, and I guess I kind of got egotistical after playing that last run-up so well- similar to what you had said you were feeling, "playing the wiggles like a fiddle".

    I do remember the underlying message, Old Turkey, is basically 100% certain of making more in the long run than trading a bull, buy I couldn't resist my urge- I like making big sums, daily!

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  150. Gary,

    Now I just have to buy a $399 ticket to Las Vegas to get my free burritos ;-)

    Doc

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  151. Doc,
    I was counting on that to save me form having to pay up.

    Of course I guess it would work the other way around too. :0

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  152. Gary, call HSBC and Morgan and ask where the price on PMs is going tomorrow.

    Call Hong Kong, and London, too if need be. Then ask them about the hour by hour breakdown for the next consecutive 5 trading days.

    Show us your clout G-Man!

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  153. FOR ALL THOSE WAITING FOR A CORRECTION IN PMs:

    I did you a favor.

    After much debate on whether or not to put more money to work lest this be a much-dreaded "runaway" move, I bought a half-position of AGQ, increasing my AGQ stake while still keeping plenty of powder dry. This was not easy. Silver has not pulled back at all in forever.

    With my order being final, no doubt the PM gods will smile on us with a nice correction of 10% or so in the next week.

    You're welcome! Don't ever accuse me of not being a team player.

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  154. Pretty unlikely we see a 10% correction in gold. Maybe to $1265 but I doubt its' going lower than that. And the breakout above $1300 is suggesting gold is ready to make a move to $1400.

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  155. If we hit 1400 in Oct. (like i think we will), Ill be in Vegas sometime in Nov. Ill be calling you up Gary, for some Mexican food... my treat!

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  156. Gary,

    When you repost another's comment, please make it clear by saying so. "Repost of Robert's message" or some such heading would be very helpful.

    Thanks

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  157. Gary wrote:
    "Pretty unlikely we see a 10% correction in gold. Maybe to $1265 but I doubt its' going lower than that. And the breakout above $1300 is suggesting gold is ready to make a move to $1400."

    -------------

    Right, odds are gold doesn't correct that much. My money is in silver though.

    I figure if gold corrects ~ 4-5% here silver could correct closer to 10%, and AGQ, my vehicle of choice, would thus get considerably cheaper.

    Thus I only bought another half-position today at the close.

    What I want more than anything is a meaningful correction so I can put the rest of my money to work in AGQ and SIL. I want to make my buys and then go Old Turkey and not even log into my brokerage account until a D-wave rears its head.

    I hate mentally agonizing with the endless "ooh, do I add more money now or not?" quandaries.

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  158. Aaron,
    I have a strict rule that I never violate.

    Whenever someone offers to buy me a Mexican dinner...I let em. ;)

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  159. Gary-- Next time I am in Vegas-- Mexican Food on me-- (Pretty soon aftyer all these free meals you will be too heavy to climb rocks)

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  160. LOL my decision to start lifting weights again has already damaged my climbing ability immensely, so I might as well be happy gobbling up some burrito's :)

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  161. Whoa, ease up everybody. I don't want you buying tangible items, especially PM's, with the free paper I make non-stop.

    Can't you just keep dollars, or buy stocks and bonds to help me out?

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  162. And whatever you do, don't buy guns and ammo to arrest the criminals, as permitted by the Constitution!

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  163. Nice big picture report tonight Gary. Something I need to hear from time to time too. The community is much better on the blog too I find since the change. More proactive instead of constantly saying bonds are bad (which who cares anyways) and constantly defending attacks.

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  164. Gary, I think that after this C-wave, you will NEVER EVER have to buy your own Mexican meal again. Your subs will be more than glad to foot the bill for the rest of your life. :)

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  165. Hey Gary,

    Do you see the USD due for some sort of bounce based on cycle dates?

    Seems to be getting a little too crowded on the short-side.

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  166. I discussed the dollar in last night's report.

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  167. Sorry Gary. Not yet a subscriber, only just referred to your blog, so just familiarising myself with your analysis and measuring accuracy before committing funds.

    Burned before, but understand some comments saved only for subscribers.

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  168. Gary - are you becoming concerned about gold sentiment? It's at 71; up from under 60 recently without much pull back during its rise. Maybe we are in the crazy phase of the rise and sentiment can go up to the 90's before spelling trouble.

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  169. If this is a runaway move, and it's looking more and more like it is, then cycles and sentiment can just be thrown out the window.

    The fundamentals driving this move (Ben's printing press) will just roll over all of our timing tools.

    Don't expect this move to end until the dollar puts in an intermediate bottom. That isn't due for another 9-14 weeks.

    My best guess is the dollar tests 71 before this intermediate cycle bottoms later this winter.

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  170. Gary,
    Ar you concerned that most GDX or GDXJ companies either has high PE or NO PE at all???

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  171. Most of the Nasdaq companies had high or no P/E in 96 also. Did it stop the Nasdaq bubble.

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  172. Good morning folks. Sorry about your USD, but I have another long day of printing "mad chedda" ahead!

    Please quit buying PM's, and all commodities for that matter. You're supposed to be patriotic and hold paper to support the illusion of stability and prosperity.

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  173. Ride the bull.

    Don't play the wiggles.

    Buy the dips.

    Exit before D-waves.

    Get it. Got it. Good. :)

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  174. Gary, is it silver most likely above $30, possibly all the way to $37, by end of Spring?

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  176. Gary,

    With Silver being stretched 20 % above 200 dma and sentiment for PMs at fairly high levels, would you not expect some kind of regression to the mean soon before the rally can continue.

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  177. For what ever its worth, Silver is extremely volatile, and one should never use 50/200 DMA's for analysis.

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  178. In theory yes. But if the miners can break out to new highs all bets are off.

    At that point we could see the HUI stretched 40-60% before a significant correction.

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  179. ATM's for gold coming soon:

    http://www.cnbc.com/id/39381947/

    And so it begins!!!

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  180. This is one of the strangest half-cycle low i've seen. It is lasting too much. It starts looking like distribution.

    There's something wrong with it, it should have already bounced, and higher than this.

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  181. Don't make the mistake of shorting based on nothing more than what you think should be happeing.

    Just wait till you see large selling on strength numbers pop up.

    It's as simple as that. Until the big boys start selling you don't want to be on the trackes in front of the train.

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  182. Especially on the tracks in front of a G-Train!

    American peasants, please sell your gold and support your country. Not only do I want to buy it, but we cannot have real value finding a home in hard assets. Support your local paper!

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  183. You are right. I sold my long positions last week and have been waiting. I planned to go long again today or tomorrow but now i'm not sure anymore.

    Maybe i will miss this train, it does not matter, there will be a fast short train coming at the end of the daily cycle.

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  184. Repeat after me:

    "Everything is OK, and getting better all the time!"

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  185. I have to ask. Why would you forego big gains on the long side following the trend to try and catch a small trade on the short side against the trend which you will have a tough time trying to time the bottom of and likely just lose money?

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  186. Gary,

    Perhaps you can do this in one of the reports but would you explain if your targets are the same assuming this is a runaway move instead of the two-part move you were earlier expecting and perhaps any idea of how you think this will play out in the interim (which I think you alluded to in the report last night).

    Thanks!

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  187. It's grea to expect the miners to break free from the broader market but they really don't seem to be doing so. Just looking at GDX or GDXJ and they appear to be influenced by the market and not acting independently.

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  188. Hardly. The miners are on the verge of breaking out to new all time highs. The stock market is still down 26% from all time highs.

    Don't get distracted by the day to day wiggles to the point where you lose sight of the big picture.

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  189. @Gary: i was thinking "intermediate", i wrote "daily".
    I do not short dily close on an upgoing intermediate. Usually i just go flat and buy again lower.

    But i have bad "feeling" from the cycle indicators and moving averages, and i like to go possibly "low risk". So this time i stand out and watch.

    Markets will not close tomorrow (or maybe they will).

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  190. Guys,

    I was placing an order for AGQ in my retirement account at Ameritrade. It mentioned special margin requirements.

    I have never bought 2 X funds like AGQ or options before, hence not familiar with margin requirements. Can you please explain.

    Will I be ok buying AGQ for the full cash available in my account or do I need to leave some spare cash for margin.

    Thanks.

    ReplyDelete

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