We have moved!


Please visit our new blog at: http://blog.smartmoneytrackerpremium.com to read the latest posts and to comment.

Thursday, February 10, 2011


While I don't think gold is likely to head back down and make a lower low I'm going to lay out a simple strategy to protect against getting caught in case it does.

It appears likely that we may see our first reaction against the new uptrend. This is the #2 test of the lows in a 1-2-3 reversal.

If gold then reverses and breaks through the pivot it will complete the 1-2-3 reversal and it will have begun a pattern of higher highs and higher lows.

That would be the signal that the down trend has been broken and one could add in full positions or leverage (don't get carried away) as they see fit.

The downside is of course one will lose some profit potential waiting for confirmation and if gold reverses the early morning weakness you will just have to immediately buy back.

The action would be to lock in some profits this morning and then wait for the pattern of higher highs and higher lows to complete before putting positions back on.


  1. Thanks Gary ... I think most will appreciate that plan. I already lightened up yesterday and will lighten up more today.

  2. I never get too bothered about buying back higher ... that;s the price of insurance.

  3. Good morning. I didn't see where lightening up was the plan.

    I'm not selling anything, and only looking for opportunities to add into these declines. Trying to get to fully invested before the next up leg, and have 40% of funds (then margin) to use.

  4. Money never sleeps...and apparently you don't either, Gary. Thanks for the early morning guidance.

    All of the fundamentals - from QE2, to increasing physical shortages, to the Bernacks denial of inflation, to China's inflation vs. the Chinese propensity to hold gold, to even the Wynter Benton intrigue - still lined up for Silver/Gold to scream higher over the next few weeks. But the calls for lower prices and fear of losing $ are tap dancing on my emotions.

    I'll probably lighten up on AGQ - I'm not certain what will happen to derivatives-based ETFs (I assume AGQ is this - I have not dived into the prospectus) as physical and paper PMs decouple. My assumption is that premiums will simply increase, but I have not yet worked through the implications if the COMEX were to default in the coming months.

  5. SB ... did I misunderstand Gary's lock-in-profits?

  6. I had $132 on GLD as my 10 DMA, which looks like it'd close the gap. This looks like an opportunity to load up IMO.

  7. The 10 dma on the actual metal seems to be around 1348.

  8. For silver it's around 29.10 ... that would be a nice re-entry ... wishful thinking?

  9. avann,

    No, it's early and I didn't word that too well. I'm referring to how how Gary is going to trade it. I don't think he'll take any off, just that is one option. I'm sticking with mine as I absolutely hate selling strong groups into weakness unless they hit stops which are always very wide.

    If I booked profits, then I'll just buy back the same size I exited. It feels good to book profits, but then I won't get 100% like I want into a decline, instead maybe only back to 60%, thus limiting my upside whenever the bull continues.

  10. Yup, that's about right and we're almost there. I'm still sitting on a very green position and have no interest in giving up a strong hand. I'll leave that to those of you that are over leveraged scalpers.

  11. I was already at 100% and since I don't use leverage I'm taking this opportunity to try to play the 10 dma re-entry. For those who are not at 100% probably easy enough to just wait and add more.

  12. Having said all that ... it's still early.
    It could actually open at the 10 DMA.
    In which case I'm not sure what I would do.

  13. I'll probably do the same as SB - looking to add on weakness.

  14. Yep, but I'll let things shake out a bit first. See if we can get SLV down to the $28-28.25 level before adding big chunks of capital.

    I hope it gets scary. :)

  15. PAAS halted, not sure why and I don't own it, just pointing it out.

  16. F.W.I.W.

    I agree with Shalom and Fergie-

    I went over some 'charts' and 'thoughts' last night , and now I really feel the downside is minimal on GDX...($55.50ish)could even be an intra day reversal.

    Last August off the bottom , the GDX pullbacks never closed below the 20sma, but often bounced off of it.I would imagine that This leg up should be stronger-and hold up better. Last FEB low , the leg up was sloppy and looked less convincing...The Aug low was tight and strong...I imagine this one will be stronger-more buying the dips/ I.M.H.O.

    Since I think THE bottom has been put in place ,I will watch the 20sma on GDX for now.


    Close below the 20sma/trendline= MAY change my opinion

  17. You lost me at 'reversal'. We are coming out of an intermediate low, and you expect a reversal already? and you think the top to the daily cycle is in too? You dont think that its too soon? Thats more bearish than Teddy!
    I shall disagree with that call, since you are moving the goal posts from the 10DMA (which I agreed with), to a test of 1340!
    I think we blow through 1370 before we test 1340(if ever).

  18. FWIW (and don't know whether anyone else agrees) I see parallels with the gold action from early Feb. last year, a solid low at $1045 followed by a strong move up of $100. But then there was sideways to down action until late March.

    If it follows the same pattern (of course it won't exactly), we could see a move to just over $1400 to bring in a lot of retail buyers, then a sharp move down to the mid-$1300's. Then it could be off to the races until mid-June. So I wonder if two A-B-C corrections could be a possibility like last year, not just one as Gary suggests.

    Looking at gold in euros, it looks like a solid bottom was put in place recently; also gold vs crude oil, a chart Gary showed the other day. If gold gets to 17x a barrel of crude, with crude at $90, gold "ought" to be $1530 or so (maybe that will be a selling point sometime this spring coinciding with the dollar low Gary has mentioned).

    Also, don't forget the $BPGDM which is rallying from oversold levels and on a buy signal.

    All in all, I think sitting on one's positions and doing nothing until June is the best policy; otherwise, there's a big risk of getting whipsawed. When I trade, I either come in too late on the buy side and miss the initial move, or sell too late, so I'm happy to just to sit with what I have (this includes AGQ, CEF, ANV, AZK, HL, PAAS, PAL, SIL, SLW, UXG and two stinkers--GSS and JAG).

    Fortunately, my juniors picked up in 2005 have done well, so there's merit in being in Old Turkey mode. These include GPR.TO, FR.TO, EXK and SBB.TO.

    Thanks for reading and wondering if anyone else see it the way I do. Plus any advice on GSS or JAG appreciated; I am really getting fed up with these, but that might be a good reason to do nothing!

  19. I've given everyone a simple plan to protect profits on the small chance that gold does have another leg down (and the stock market is finally ready to correct).

    The upside is you won't ride that correction if it happens. The downside is you will miss a small amount of profit potential waiting for the confirmation. (looks like about .70 if silver where to open here.)

    If silver is going to $50 like I think it will, does .70 really make all that much difference? No of course not.

    If you are confident this will only be a #2 test and the #3 confirmation will happen then use the pullback to add to positions.

  20. Aaron,
    Those lines are in no way a target. You should know by now I rarely post targets. I'm just drawing in the general trajectory of a 1-2-3 reversal pattern.

    A 1-2-3 reversal is a reversal of the down trend BTW not the fledgling uptrend.

    Pay attention to what I write people.

  21. Thinking out loud

    I was thinking if the gold market is going to reach our target say 1600-1800 do you think it would make sense for the market to correct well below 1300 (say 1260-1240) to shake off the loose hands and any bullish sentiment?

    I believe this type of correction would give us the added strength to reach our goal as oppose to a weaker correction above 1300.

    If you look at other bull runs like the nasdaq in 1998 it had a deep correction before it may its final run to the top in 2000. I'm sure there are other examples.

    Just trying to make some sense on the direction and timing of the market...

  22. I should have mentioned the first correction commenced 10 trading days after the Feb. 5, 2010 low of $1044.80at $1130.90; the the next bottom was 3days later at $1088.70.

    After that, we had a top of $1144.80 on 3 March and a final low of $1085.50on March 24, so two corrections in Feb. and March.

    We could be nearing the end of the first correction by this Friday from somewhat lower levels.

  23. James,
    It's probably getting too late for another big move down. That would probably decrease the odds of a move to 1800 at this point.

    I expect we will just see a normal 1-2-3 reversal play out and then it will be off to the races.

  24. When I first read Garys plan option..I viewed it as a good 'option' for those that are nervous. It gives them piece of mind if this goes down ( and probably answers 100 questions that would have shown up here today ,if we start down.


    I ,at first ,compared last Feb low to this Feb low...Last Feb's a bit sloppier and less impressive to me than Aug low...

    but I would imagine (maybe not) that this leg up should be the blast upward to a peak...stronger basically, so I compare to Aug low (but keep in mind Feb low)

    As for gss and Jag. Jag has problems , and my money is safer in EXK or AXU at that price. Jag does occasionally rocket up...and SHOULD close the gap at $6, because downside volume looks exhausted..it can now bounce ..but I.M.O..SAFER in EXK or AXU.

    GSS puzzles me, I expected more. I dumped mine in Oct and started looking at CGR , CDY , CXZ for potential Junior rockets.


  25. I think that the stock market is finally ripe for a small correction...The Jobless Claims numbers were great and last week, it would have triggered a large move up, but today, NSQ feels pretty heavy....

  26. Are you planning on taking off your leverage or lightening your positions Gary?

  27. Perfect tag of the 13 MA just now.

  28. Yes I will. .70 is a small price to pay for confirmation that the pattern of lower lows and lower highs has been broken.

    Once we have that confirmation I will then re-enter with my full margin position for the full ride up.

  29. James R

    I like your comparisons and way of thinking things through...but what about this?

    I think it can make 1600 -1800 ..(lets say 30% from here )easily from here too.

    as for the Nasdaq comparison...I agree and look at those things, but I dont think we are where Nasdaq was in 1998...yet.

    But This blow off kind of C-wave top could be more like Aug 07 to march 08


    or 2005 to 2006 , look at that minor Jan to Feb correction sideways, then a blast off up 30%.

    we are looking for 30% too , and it only went sideways that yr.

    $1350 + 30% = $1755

  30. Gary,

    Is your plan to take off the margin in the morning, or wait until near the close as usual?

  31. USD is strong this AM.

  32. Gold should go down some as Gary is saying and then go back up...

    Rubber meets the road next week when gold is in 1390+ area... One day, we will have a big gap from 1390 area... 30 point or so (not on futures.. but on NYSE hours-only charts).... it could be to 1420+ or sub-1360... So far charts are telling me it will be to the downside.... But I will keep watching Ms Market to see what she unfolds...

  33. Not snark, just a little confused. This seems contrary to your own advice from 2 days ago.:

    "If you are lucky enough to get in close to an intermediate bottom (and I think we probably did), stay in. "

  34. Hi Alex,

    Thanks very much for your comments.

    Yes, the parallel with last August's low is possible. If so, gold should move up soon with hardly any correction at all until April.

    Some talk of the principle of alternation, i.e. markets follow patterns not of the immediate previous move, but the one before that, but who knows?

    I have one worry, though. Is it possible gold is sniffing out an end to QE2, hence the corrective action? Maybe Gary might chime in on this. It is a possibility, especially if the (largely fudged) unemployment numbers come down in future.

    Thanks also for your comments on GSS and JAG. Will probably sell these next time the RSI gets to 70 (seems to happen once or twice a year).

    AXU looks good; CXZ seems to be coming out of a long sleep judging by the weekly chart. One to keep an eye on.

  35. Hi Gary & Alex,

    Appreciate your comments.


  36. If the stock market corrects here and takes gold for a ride, as well as taking the dollar up in the face of QE2...wow...
    I think we would need to push this C-wave out to next fall....but what do I know?!? (Like really) And I have stopped caring…you get wiped around enough, you learn to simply take a stand and ignore the wiggles and the big wiggles too. Some Gaps are being filled so to speak…SLW for one should fill.
    Anyways having cereal this morning and going out for the day...I figure the blog will be filled with panic in's or outs...

    And if Gary is early about the C-wave, I will expect a lot more "entertainment" and a bunch of interesting comments. Then we get the never $1400 again crowd in....sounds about right for a gold bull. All I can say is that the mountain top, despite being far away, keeps getting prettier the more Ben speaks. T.J listed some key observations already.

    QE will not end, Ben knows he needs to keep it going...He has pretty much said so...but I am reading betweent the lines here(no guarantees!!) Actually, hate to say it, but having the USD rise now and into say April is the perfect set-up for Ben to say QE will continue. Alot easier for Ben to say QE has no effect when the buck is going up....Anyways, I don't like how the markets are acting...I am keeping to my guns, and riding this bull.

    The ideal situation for BEN would be for the market to stabilize or continue up, and for the dollar to rise.

    We are on the verge of another housing crash, and a new round of despair, so the market needs to stay up in order for the curtain to not be pulled.

    Good luck!

  37. P,
    Everyone will have to decide for themselves what they want to do. If we get a reaction here and the low holds and then make a higher high. that would be confirmation of a pattern reversal to higher highs and higher lows.

    If gold continues higher and rises at least 12 days that would signal a right translated cycle and the odds would go up considerably that 1307 was the intermediate low and would not be violated.

    If stocks decide to finally correct and gold decides to follow then taking profits and re-entering at the next cycle low would be the right plan.

    Unfortunately I can't see the future so I'm going to make a judgment call that the swing high today in gold is going to mark a #2 reaction that should hold above the lows and once I have confirmation of the pattern reversal I will enter with my full margin position.

    I'm willing to sacrifice a little profit potential in return for confirmation the trend has reversed. I will make up for that little bit of missed profit by using a bit of leverage.

    Until we at least had a swing high it didn't make sense to sell positions yesterday or the day before. There was no sign at the time gold had even begun a reactive move. So there was no logical reason to sell anything at that point.

    I am still holding my core position BTW.

  38. I don't know Gary, you can do what you want but this seems very "un-Gary"-like to me. It just seems like an opportunity to sell into expected weakness and loose profit potential. This is "trader thinking", IMHO.

    Right now all we've got going is an EXPECTED test of the 10 DMA. So why sell now?

    I understand you laying out this plan for the nervous nellies, but I'm surprised you're taking this option yourself.

    I suppose you've already made enough money that you've got the "luxury" of taking this insurance plan. That makes sense, I suppose. It's just so counter to all your normal guidance and strategy (including just yesterday; i.e. test of 10 DMA) that I had to check again to see if this was the same blog. ;-)

    And anybody who takes this option shouldn't come back later and whine about missed profits. Of course those of us who don't sell any positions here shouldn't rub it in if it goes our way either.

    Good luck to all.

  39. Gary, you are saying you will reduce your position from 115% to 50/30% today ? (you said you maintain your core position).

  40. I was just waiting for a pullback day to add in (only about 50% now) which sounded smart until this morning where we are getting a pullback day and everyone is saying sell sell instead.

  41. Gary

    Are you reducing down to core today then?

  42. Sophia, I think you're right. With fear of sounding like a broken record, it's taken a slaughter to flush out all short interest, but the tape now appears to want to ignore any news and print some red.

    If it drops from these levels, it will be a say day, but I at least kept about 30% of that put trade, thanks to suggestions DG made to somebody else.

    Looks like the dollar still wants to rally a little after all and maybe tag 79 or 50dma. For us Gold bulls, it should server a s a wonderful shakeout after this explosive move off the bottom.

  43. The dollar is perched at a key pivot point right now; at about 79.50

    What it does here will be very telling for the short-intermediate term. Of course it could pull back a little from here (as it has started to do) before blasting up through it. So the verdict may be out for a day or so.

  44. Keys,

    Where is that gap in SLW that you see will be filled. I would like ot put a buy at that point.

  45. Even if I thought something had changed (I don't), I would not sell weakness in a bull market. If anything, I'd ride lower and sell into the next bounce. Surely it'll bounce to where we are now, maybe more, and I have the benefit of extra time to reassess.

  46. I want to add in at least 130 to 150%. I can't do that until I have confirmation of a trend change so I'm willing to lose a little profit potential while i wait for that confirmation.

    Like I said if silver goes to $50 and I can get leveraged 130-150% what difference does .70 make?

    But if one is confident the reaction will be brief and doesn't want to miss that .70 then use the pullback to the 10 DMA to add to positions.


    I always play out the 'what ifs...' too.I hate looking at GLD on a 5 yr wkly , because when I look at the trendlines from May 06 to March 08 to know...theres a strong channel that looks like we topped...and are headed to 120 GLD.

    Even the 2 yr channel shows a pattern A-B-C from top

    A) 139ish down to
    B) 129ishup to
    C) 134ish down to
    D) 124ish next

    but sshhh, we're not going to mention that here :)

  48. SB,
    We would actually be selling into strength as gold has bounced from $1307 to $1365.

  49. Gary

    Roughly how long do 1-2-3 reversals normally take to play out? Day's or weeks?

  50. gary,

    I'm still unclear. What are you reducing your position to?

  51. "until this morning where we are getting a pullback day and everyone is saying sell sell instead."- pseudopersona

    Not everybody is saying sell.


    I suppose it depends on how far back we want to look. I might also say I would be selling into strength if we looked at very long term charts where we have huge unrealized profits. What I meant is I'd only sell into a strong day (unless stopped out- that's different), thus giving me the added benefit of seeing just how strong it is, too. Strong enough, and I might even decide to stay in. :)

  52. V,
    My core position.

    Remember you don't have to copy what I'm doing. If you think this will bottom and reverse quickly and you don't want to give up that .70 cents then use the weakness to add to positions when the 10 DMA is tested.

  53. So far, besides EXk, my stocks are not even down that much, like NGD and SVM. That could change, but I was hoping for some more pain before I decide to add.

  54. I didn't add any silver this morning. It dropped to my first tentative buy point, but I have enough all ready and don't want to lose my existing position by overdoing things at high levels and causing significant profit loss if we go lower.

    This simply isn't a drop that I would consider a 'deal' at this point base on how far we have rallied.

  55. If we get a red candle today we may have an 'evening doji star' on silver and gold.

    That's a confirmation of a sell signal. Buy back until the trend reverses.

  56. Gary, sorry, you're ALL over the place this morning, I can't follow what you moved to.

    If you made a portfolio change, could you please post a twitter/blog update with exact movements?

  57. Gary,

    What is the core position that you are going back to. Are you doing it right now or will do it later in the day.

    I assume you see fair downside if gold makes a low at this point in time, since you are going against your prophecy of Old Turkey and trying to trade around it. Can you share what kind of lows do you think can happen at this stage.


  58. Either way, at this particular moment it does not warrant adding, IMO.

    I need to see panic and the washout that comes with it.

  59. Everybody's core is different depending on their risk tolerance. DG had no core during the correction, I held 35%. Some didn't reduce at all.

    I'm trying to enter a leveraged (130-150% position) but before I do that I want confirmation the trend has reversed. I'm willing to lose a little profit potential while I wait for that confirmation.

    If by some small chance the stock market does correct and takes gold back down to new lows then I will look to re-enter full margin positions at the next daily cycle low.

    I doubt that will happen but if it does I will be ready to take advantage.

  60. This comment has been removed by the author.

  61. SB

    That's exactly the way I see this too. I've worked hard to get my psychology to this point - moving away from the stereotypical "retail investor" thought process - and I'm not going to back track now.

    I understand, in a way, what Gary is doing here; given the angst displayed and the reaction to MLMT's prognostications. He wanted to give some salve to those who might just sell out here in fear, with no re-entry plan.

    I'm just surprised he's taking the option himself. He's also set up a bit of confusion since it's quite contrary to prior guidance and also has a trader mentality to it. Although I suppose that's prudent for the leverage part of a portfolio. Time will tell!

  62. I'd appreciate a comment from someone: My stockcharts has the MA filled in a 10 days and shows different numbers from what people have said here.

    GLD: 131.53
    SLV: 28.40
    $GOLD: $1343.82

  63. GDX, HUI, GDXJ are passing over the 10DMA as I type...

  64. David Einhorn buys ethanol penny stock BIOF. Get it while it's hot!

  65. Onlooker,

    I agree entirely, and also see why Gary is making the move to get off margin. I'm in a different position as he was fully invested+margin, while I am still looking to get 100% invested. On the way up, my strategy would not perform as well, and on the way lower, I'm more comfortable. We can't have it both ways! :)

    The most important idea we can all come away with is that this is a secular bull and we should be long. The specifics of how to trade it will be up to the individual.

  66. In fact, if I were on margin I'd do the same as G.

  67. Those match what I've got DG; also from StockCharts.

    The 10 DMA for the gold futures is 1349.2 right now.

  68. TJ Rand. I show the 10 DMA on GDXJ at 36>40. Where do you show it? Seems like we show the same spot. I hate that we have different numbers floating around. Can anyone answer my previous post?

  69. Onlooker,
    I'm just making a judgment call. Gold formed a swing high and the HUI has lost the 530 support. I think a 1-2-3 reversal is probably now in progress.

    I'm willing to wait to see if gold reverses the pattern of lower lows and lower highs. If I'm right and silver is going to $50 then losing .70 of profit potential is kind of meaningless, to me anyway.

    If that .70 is important to you, or anyone else, then just hang on. Even if gold does make a lower low it should be the final low and then we will be off to the races.

  70. "Men who can both be right and sit tight are uncommon. Do not try to sell and buy back (core positions) on reactions in a bull market." ~ Jesse Livermore (the legend)

  71. The 10 DMA for GLD is 131.52.

  72. Excellent quote, Alice.

    The $HUI has now retraced 50% of the recent move higher.

  73. Gary: That's exactly what I show. I wonder where everyone else is getting their numbers? Thanks!

  74. The bigger pic is not that Gary is exiting, but that he is still 100% invested long metals and miners.

  75. I don't like the fact that the HUI lost the 530 support that it worked so hard to recover. We clearly have a pivot at 542. If the HUI can take that out we will break the pattern of lower lows and lower highs.

    That would be the signal to enter heavily.

  76. DG-

    I show the 10 DMA on GDXJ at 36.39.

  77. Days like today make me appreciate a mechanical system. Up,down,sideways? Everyone has a different opinion, except my system:)

  78. TJ: Thanks, that's just what I show. Gary, you, and I all agree. That's good enough for me.

  79. Folks, Gold is the driver of the sector. You need to watch GLD.

    The miners will just follow gold (although a severe stock market correction could also influence miners).

    Use GLD as your trigger not GDXJ or SLV.

  80. DG

    I have the exact same numbers as you for 10sma

  81. The indices are just pausing so that the transports can catch up. As long as the Transports are in the green, ist's all good.

    I won't lighten up any silver positions here; makes no sense to me to try and trade around a small pull back here.

  82. The indices are just pausing so that the transports can catch up. As long as the Transports are in the green, ist's all good.

    I won't lighten up any silver positions here; makes no sense to me to try and trade around a small pull back here.

  83. Vuvvy: And you are on a sell now if i remember...?

  84. Also, 131.53 for GLD, 521.34 for HUI,

    Only the miners appear to have breached...SIL below(23.44 10dMA) slw above (33.34 10DMA)

  85. I understand what you're saying Gary. I stand by what I've said though.

    At least nobody can accuse me of being an unquestioning worshiper! :-)

  86. As per the current discussion, I'm not adjusting my position in any way this morning. I'm heavy long and my stops lower will get me out with a small loss if things don't hold. I'm pretty sure they will.

    I'm only looking for a place to add more silver and havent found it yet.

  87. I believe the 10 dma will be taken out. Today was a key reversal day.



  88. GDX tagged the 20sma and bounced nicely off it...GREAT if that holds today...


  89. MLMT: NIce call. Just the kind of call I try to make and I saw nothing indicating a break today in gold and SPX (I did get the short term sell in SLV yesterday which I posted, but no comment on today specifically). You mentioned gold going to 1396 before any real break would get started. Still think that?

  90. I think the dollar has a 1-2-3 reversal can anyone confirm that?

  91. DG and Gary,

    What is DMA?

    I have choices of
    simple, smoothed, Geometric and Exponential.

    I mostly use SMA and have added today based on that.


  92. All my miners are getting some support on their 10 DMA. Wait and see how the day ends on these 10 DMA and then see if the lows of today are violated on Friday before making a decision on whether or not the 10D failed.

    On the silver futures (SI-this level on the 4 hour was resistance now support for now. I'd like to see a 4 hour close above 30.35 for the bullish scenario. Also looks a bit like a flag there.


  93. DG,

    how is this a break? One day with -8.70 ind gold and -0.25 in silver is a break?

  94. Then there's the perfect tag on the lower channel on /SI


  95. Related topic.

    Article that outlines amount of global derivatives ($600 Trillion) as the reason Bernanke can't stop the presses. Good food for thought related to QE3+.


  96. GARY,

    >I don't like the fact that the HUI lost the 530 support that it worked so hard to recover. We clearly have a pivot at 542. If the HUI can take that out we will break the pattern of lower lows and lower highs.

    Since 2008 the returns and behavior of mining stocks to pure metal has been garbarge. There has been little to no outperformance against metal "in your hand". The investment in the stocks is not good especially considering all the downside issues vs metal.

    Post 2008 the world recognized that they wanted something in a vault instead of something that can flood, go on strike, go broke from inflating expenses, be higher taxed or nationalized, etc.

    For over 3 years now mining stocks have NOT shown themselves to be a better deal than straight metal. That that is continuing now doesn't worry me as much as it does you.

    If (when) the stocks clearly outperform the metal I will consider them more strongly.


    Down and flat. No value added.

  97. Basil: He just said " a sharp move down" and this is the sharpest down move we have had since the bottom. Calling it yesterday has me impressed. The definition of "break" is besides the point. I sure didn't know we'd be down today. He also mentioned stocks being down, which hasn't happened very much. Calling an SLV top at 29.64 a week ahead of time also was a good call. These things catcs my attention.

  98. Tommy: 10 D-ay M-oving A-verage (Same as SMA)

  99. SB-

    I'm pretty sure Gary is down to "core" not 100% like you said. I don't know if core is 30% or 50% as his core interpretation varies.

  100. Transports up 0.70%. Looks like the leader might want to show the way.

  101. Very low volume at Comex so far on gold. That's a positive, but the miners seem to be in a coma.

  102. Tommy D said...

    I mostly use SMA and have added today based on that.


    NICE!!! Buying the dip! ( I use sma too , by the way)

    Jayhawk...nice charts , thx as usual

  103. DG ... I too have been impressed with MLMT's calls ... hence my disappointment yesterday at his call regarding $1400 gold.
    Happily he retracted that :)

  104. TZ-

    Interesting Chart...makes me want to do the analysis myself (and I will later). Does the same relationship hold for Jrs?

  105. TZ,
    I'm just using the pivot at 542 as my confirmation the trend has reversed. It has nothing to do with performance compared to gold.

    It's just a reversal of the pattern of lower lows and lower highs.

  106. Hi MLMT...

    nice call today...

    up next:
    1390 to 1420 gap up..
    or 1390 to 1360 gap down..

    will be looking for that

  107. I would wait to start adding only until the general market stops correcting.

  108. No DG, my gold futures system is on a buy, just not with final confirmation from the pivot system which I don't trade by.

  109. Thanks for clarifying gary's position, Jay.

  110. Gary

    Can you clarify exactly what your "core position" is?

  111. Gold is down .8% so the HUI is in response is down 2%.

    But, the HUI is up almost 10% in 11 trading days!

    GDXJ was up 16% in 11 days.

    This HUI reaction is well within was should be expected in light of its short run and still within the plan of many past days.

    IMO, a trade out this morning (already down 3% from the HUI highs yesterday anyway) is an over-reaction or not warranted yet. Time will tell, but I think it's at least out of character.

  112. I don't like my online broker (Sharebuilder) Thinking today might be a good day to close that account and open a fresh one at a new site. What do you guys recommend? I don't need anything too heavy duty.

  113. http://mises.org/daily/5038/Investors-Finally-Fear-the-Inflation-Precipice

  114. USD has not made a higher high as of yet...watching it closely.

  115. Vuvvy:Thanks. If memory serves, though, you said your buys are not as good as the sells, so you're being on a buy is of less interest. Do I have that right? (It's funny because my SPX system does much better with the buys. We ought to get together!)

  116. Geez,
    I'm just waiting for confirmation before I go fully leveraged. There's really no need for everyone to get their feathers ruffled.

    If you are confident this is just a minor pullback then use the opportunity to buy.

    .70 cents is meaningless to me especially considering I've been slightly leveraged already.

    If this is ready to run then 70 cents is nothing compared to the run from $30 to $50.

    I don't mind waiting for confirmation.

    Everyone is acting like 70 cents is the end of the world.

    Now if I didn't have a plan to re-enter that would be a different story but I do have. Once the HUI breaks above 543 I will re-enter with full margin.

  117. It's fascinating to see everyone freaking out over PMs today when silver has only given up 40c of a $3.50 bounce out of its low. Gold is down less than 1%.

    I've warned my subscribers that this ride would be much more volatile than the relatively smooth sailing between July and December. Think of this trade as being on stormy seas. There is a big prize at the end of the boat ride, and the trick is to not get so sickened by all the ups and downs that you jump ship. To do that, you have to keep your eyes on the horizon, not on the waves. The horizon is made up of signals within cycle analysis that would tell us our ship won't reach its destination. We are not even close to any of those signals with today's action. Go take a nap, folks.

  118. TZ and TJ Rand

    NO OFFENSE MEANT , but...

    Its really about choosing the right miners.

    That was a 2 or 3 yr chart posted. If you bought NG 2 yrs ago , its up 18x that price ( maybe you would have waited till it showed strength , so even buying in summer of 09 , you'd have been up 5x your money.

    SLW was under $3 , it hit over $40 this year!

    IAG = 10 x

    PAAS= 4x

    EXK= 7x

    so you said "Since 2008 the returns and behavior of mining stocks to pure metal has been garbarge. There has been little to no outperformance against metal "in your hand".

    If (when) the stocks clearly outperform the metal I will consider them more strongly'

    I say it may be time to consider them :)


  119. No freakout over here, thedocument. :)

  120. My opinion about today:

    The drop in gold had to come, I posted yesterday that the move in gold has been very uninspiring and we needed a spike down to attract the longer term buyers and shake out weak longs. So I am not worried about this move in gold so far.

    What I do not like about today, and what I did not expect, was for the Euro to drop this hard. This is a very weird move if the Euro is to maintain its uptrend against the dollar. So what makes me a little worried, is the move in the euro, not necessarily the move in gold, which needed to happen.

  121. HUI at the bottom of it's new channel. (4 Hour chart)


    Support holding for now. If you back it out to the daily view, certainly could look like a bear flag.

  122. Gary,

    I'm confused, you went from 115% to 35% on this move and you're saying we're freaking out?

    Tell me I'm reading these posts incorrectly?

  123. Gary thanks for your great input.
    This morning I added slw at $33.60 Holding tight.

  124. TZ,

    I think you aren't interpreting your chart correctly when you say GDX is flat to down relative to gold. The chart is saying that the GDX:GLD ratio went from 0.02 to 0.04, which means GDX outperformed by a factor of 2. From the low in Nov. 2008 GDX went from 17 to a recent high about 65. For GLD it went from 70 to 140. I would say the miners are outperforming the metal.

  125. I'm with you on this one Doc, all part of the expectation, at this point at least.

  126. I think I mentioned Jim Rogers is now short tech.

    FWIW one could short the Q's right now and put a stop at $58.14.

    We have a 4 day corollary on all indexes and a swing high and it now 58 days into the daily cycle.

    Risk is minimal and if the market is ready to move down into a daily cycle low there should be at least 4-5% of downside potential.

  127. DG, the buys are much better than the shorts; I won't short gold until I get a signal after a parabolic move up.

  128. Okay Alex and The Shalom Bernank... almost everyone!

  129. Poly,
    Read the post again. I have a clear plan to give me the signal to to full positions with leverage. Once the 1-2-3 reversal is complete that is the signal to enter heavy.

    Again you aren't looking at full plan. I'm not selling because I think gold is going to come crashing down. I'm just waiting for a completion of the pattern reversal.

    Once we have a clear pattern of higher highs and higher lows we will have a confirmed uptrend. I'm just waiting for that confirmation before going all in (so to speak).

    If someone else is confident the pattern will reverse then use the weakness to buy. The risk is of course that you might be wrong. The stock market starts to correct violently and takes gold down one more time to a slightly lower low. If one is heavily leveraged in that case they will get a margin call and get knocked out of positions.

    I seriously doubt that will happen but I don't mind losing 70 cents off a $20 move to have confirmation before a take on full margin.

  130. RAND,

    Juniors are slightly better (GDXJ), but have limited history. And you are much more open to risk in a general market downturn.

    Again...nothing in aggregate is beating straight metal and it has been that way for years.

    If you want to pull out individual stocks to compare to gold/silver then just remember that you have now concentrated company risk. The only one I would do that with is SLW.

  131. Alex-

    Point taken...I've not done the work to buy specific miners, so tend to veer toward the broader indices to keep company specific risk at bay.

  132. DG, even though the sells are not as good % wise, it does a hell of a job getting out near the top on parabolic moves up.

  133. MLMT,

    Yesterday you said gold has topped and will never see 1400 again.

    Today you're saying once gold hits 1390, there's a good chance we'll see a $30 gap on the hourly charts AND you're saying that gap could be up or down.

    If gold has topped as you said yesterday, then how can it possibly gap to over 1400 which you said it would never see again???

  134. Gary I did read your plan, thanks Gary and please no offense intended.

    What I tried to say is that the reversal, as you state, is well expected and in your plans outlined many times.

    I guess it seems you just took the bearish approach of selling and waiting for confirmation on the upside as opposed to bullish approach of holding and waiting for confirmation on the downside to sell, considering we're in the trend.

    Being it's a Bull market and that you already held a 115% position, in my opionion I would have expected you to hold your position.

  135. Gary

    What's your problem? Why won't you answer the simple question of where you are concerning core? Are you down to 35%, 50%, 100%?

    What are you smoking this morning?

  136. "Since 2008 the returns and behavior of mining stocks to pure metal has been garbarge. There has been little to no outperformance against metal "in your hand". The investment in the stocks is not good especially considering all the downside issues vs metal."

    Yep, GDX & HUI components have sucked.

    The action has been in the juniors and more specifically junior silvers...Now try again with SLW or any of the favorite junior miners thrown around here.

    5 years SLW 397% to SLV 112%. EXK up 145%, etc. I know the bigger companies have not done well. SSRI, AUY, et all so I will grant you that. :)


  137. ALEX/JESSE,

    You guys are reading my comments wrong and also using data I'm not.

    The use of the 2008 LOW to measure something is USELESS. That's like those people who keep using the 1980 high in gold to argue how little it has returned.

    The overall trend of stocks vs gold and silver BYPASSING THE 2008 CRASH is DOWN and FLAT.

    Please don't start trying to justify something from the crash low like you are. You won't get that again and it was probably a once in a 10-20 year event.

    The crash low prices bounced back up (as you would expect from an unnatural event) and have since BEEN FLAT. Just like I said.

    My comment and chart are based on the BEGINNING of 2008 on the very left (I can't go back further than 3yrs without paying). You will see that (as I said) stocks have been down to flat, in general, for years. I know how to read a chart.

  138. Red,
    sorry I didn't see your question.

  139. TZ-

    I'm holding a fair amount of metals as well, and am wrestling with physically backed paper(CEF, PSLV, etc.) vs derivative based paper (GLD, SLV and ultras - I'm likely a minority, but I do not believe that SLV and GLD are more than metals shush funds to allow their custodian, JPM, to trade/raid physical stores as needed).

    The 2 questions I keep turning over are what value the derivative-based ETFs will have if a) the COMEX fails or b) the derivative complex (God help us all) implodes. I just don't know who all the counterparties are.

    To date, I've diversified across physically backed paper and miners, with some AGQ thrown in for juice. I see the miners as having physical assets that the derivative-based ETFs won't have.

  140. Poly,
    I just made a judgment call this morning. We have a swing high on gold, stocks are way overdue for a correction. It seemed like a the swing probably has good odds of forming a 1-2-3 reversal.

    Since I've already made good money off the bottom I'm content to wait for the 1-2-3 reversal to complete before going all in so to speak.

  141. Gary,

    the enter position, lighting up on position, re-enter position... that's all trading. So this is a trading blog for gold. Got it.

  142. Doc-

    No freak out here either, put me on the list.

  143. day-trading blog for gold, is what I should say.

  144. JAYHAWK,


    silver vs. silver miners is FLAT.

    You are still NOT getting outperformance vs getting a lump of silver in a guarded, insured vault somewhere which is SIGNIFICANTLY safer.

    I already addressed the issue of penny stocks or explorers. Yes, in SOME cases they outperform, but you have to PICK them and then you have to risk a press release that slices you in half. So you then have to diversify and you are back to having an index.

    As I said, I consider SLW to be the only other possible investment besides the straight metal at this point. It DOES outperform without nearly as muchh company risk.

  145. basil,
    I'm waiting for confirmation before moving to a leveraged 130-150% position.

    You can certainly just hold positions as is. Like I said even if it turns out gold has one more leg down (which I doubt) as long as you aren't leveraged you could just ride it out.

  146. TZ,

    How about the entire bull run? $HUI from Nov. 2000 to recent highs, 35 to 600. Gold on the other hand, 250 to 1425. Miners still look better to me.

  147. I have not used margin before, but contemplating to use it this time.

    What kind of interest rates do your brokers charge for margin. Schwab mentions 8 % at their website. Will appreciate your feedback if this seems good.

  148. The true battle for gold is for 1000 Euro, and they have been fighting that for the past 2 days. If you look at the fixes you will see how ridiculous these levels are. Its almost forced!
    And you want to tell me that its not manipulated? Silly Goose!
    This is why TA on gold is almost useless, and stops will be run so easily, and why people get swayed one way or the other so easily.
    Sit tight.


    Please create and post a link of $hui:$gold and $hui:$silver from 2001 to present.

    I have some points to make, but need that chart. Thanks

    (imageshack.us will allow free image uploading if you need)

  150. Sandy,
    If you have a fairly large account you can probably talk them down to 4-5%. Even if you don't it wouldn't hurt to try and negotiate a better rate.

  151. The irony here, Gary, is that you're seeing all the things you've taught us coming back at you after this move. That's what's reflected in Poly's, mine, and others comments.

    We're just perplexed at the cognitive dissonance we're feeling. :-)

  152. I actually agree with you for the most part TZ. So many of these miners have been garbage.

    I have most of my $ in SLW & AGQ, but then tried to pick the juniors with the best fundamentals & with the best price action. SVM, AG, NG, HL, AXU are my bigger holdings. I think these all will outperform SLV on this leg up...and I believe with do better than SIL. We will see.

  153. JESSE,

    >How about the entire bull run? $HUI from Nov. 2000 to recent highs, 35 to 600. Gold on the other hand, 250 to 1425. Miners still look better to me.

    Pausing my response to get those two charts i need. Suffice to say your comment chooses to ignore clear evidence that "something broke" in 2008, as we all clearly know.

    PS SOMEBODY: may I ask one more chart of $HUI:CEF since 2001

  154. Gary, I have to say that for you to cut back to 30% or so really does surprise me. I am not at all second guessing you, but as a "student" of your methods here I always try to figure out the rationale so I can learn. I'm surprised you'd sell 70% of your holdings bought lower. You must think it is a pretty reasonable chance that we'd go a fair bit lower from here. Your risk of missing an up move is not just 70 cents on silver due to gap risk. Since you cannot possibly get a margin call at only 100% invested, and your risk is to gold $1300,...? Seems very un-Old Turkey like. Please explain further, perhaps, here or this evening. What are the odds, in your opinion, we will see sub $1307?

  155. Gary,

    I understand that, but what indicates to you that it might possibly go down here? To me it looks like it's gone fast the last ten days, and now it's a second day in the red, to a very minor degree. Why would that tell me anything but the fact that gold needs to take a mini breather? What indicators am I missing that gold might drop here big time, to justify getting out of positions temporarily? For all I know, gold could go up, you miss out on 0.70 cents, as you say, then you get back in, only for gold to drop the day after.

  156. SB,

    Why do you like SVM? Seems to be your top miner pick (ahem... :)

  157. Gary: Lastly, you have said "The only reason to sell is to buy back lower" and "It's so late in the cycle one can't be at all sure of that, and even if you can it'll only be for a day or two." Please understand I am not at all trying too push you, and you are entitled to do whatever you think is best, butt if there is something I am missing I'd love to know what it is.

  158. Gary,

    I think this blog is morphing into a day-trade blog and gets carried away by too much talk as all popular blogs do. That shouldn't change your original demeanor of old turkey. I think talking all day long about a trade makes everybody a day trader ultimately, it's just the nature of the beast. Don't you think?

  159. Onlooker,
    I think you are perplexed because you don't want to change your plan.

    And I've said at least a half dozen times already that there's nothing wrong with that. If you are confident the pullback will be brief and recovered quickly then use the correction to buy.

    I've already made good money on this move already. I'm at the point where I want to put on much heavier leverage.

    I'm not going to do that until I see the pattern of lower lows and lower highs broken.

    So for now I'm going to set a trade trigger to buy with full margin as soon as the HUI or gold make a higher high.

  160. DG that's what i can not understand. The type of trade made today would be warranted if one believed we had around a 70% of breaking lower.

  161. TZ: Does this work for you?

  162. TZ

    Relax bro...

    It was a 3 yrs chart.

    You were specifically saying

    "For over 3 years now mining stocks have NOT shown themselves to be a better deal than straight metal.'

    and again...

    "If (when) the stocks clearly outperform the metal I will consider them more strongly."

    Welcome... late to the party!

    I was trying to help you see that INDIVIDUAL STOCKS have outperformd LATELY , because you said..."UNTIL I SEE THEM OUTPERFORM..."

    They have moved 100%, 500% 800%

    Learn when to buy...learn when to sell. You said "I know how to read a chart!"

    My account is up more than 10x in the last 3 yrs, and it didnt get their buying an index and holding. Buy a basket of well researched juniors , and if one takes a bath...sell it. the others may return 200%,300%,500% etc

    but your statement that 'MINERS ' have underperformed and that hasnt changed since 2008 ...is dogmatic and incorrect.

    T.J. Rand

    That makes sense (your reply). If you havent had time to do the research necessary , playing it safe is best for you.

  163. TZ-

    Try this. I'm new to stock Charts (Been using Q-Charts), so may not have done it right.


  164. Don't think you guys who lightened up are gonna be very happy today.

    7x and hanging tough

  165. RAND,

    To get a chart going back more than 3yrs you have to have a subscription to SC. But you simply can't link the chart cause when we click we don't have subscriptions.

    A person would have to right-click the chart, save it as an image, and upload it to a site on the net.

  166. man. i had totally planned on buying that dip this morning but got freaked out by the post and missed a good entry. le sigh.

  167. Pima,

    SVM the lowest cost producer among it's peers and earnings are behind us. It even pays a small dividend.

    I try not to be in love with any company or idea, and same applies here, so I own only a little more SVM than my other names. I do like how it trades and it typically makes big % swings both directions, offering great fills on both sides if you've been watching it. I've also gotten the bottom and top ticks when entering (with limit orders), while with many other miners my pre-placed order that should have been filled does not.

    Just my observations, but there are many good names out there as well.

  168. Wanted to write:

    Silver down 4 cents, gosh! Time to pull the plug???

    But he, silver is up 7 cents! We are in the green!!!
    Let's get back in!

  169. Sandy,

    8 percent for margin is robbery when the Fed rate is near zero.

    However, I just checked with my broker (TOS) and they charge 7.45%.

    I don't use margin because my funds are in an IRA account with TOS and margin is not allowed in an IRA.

  170. TZ I can help, and i have the chart, but dont wanna use imageshack, lemme know if you want me to email it to you.

  171. TZ

    I reread my post , and it sounds like I am going off as I read it.

    I was actually smiling while writing it...kind of laughing.

    no offense meant...really was just trying to point out that lately...stocks have been pretty on fire.

    peace out

  172. P,
    you are freaking out over nothing. If silver is going to $50 like I think it will then just buy once the HUI makes a higher high you still have $20 worth of upside profit.

    My plan is to just wait for confirmation the trend has reversed before putting on heavy (for me) leverage.

  173. You know whats funny? When Gary mentioned the pull back to the 10DMA, he said that it would be intraday and strong enough to make people think that the move has reversed.
    Golden words!

  174. Alex/Jay,

    You may have done it before, but as our resident junior's experts :) could you post your top 5 juniors each?

    I'm thinking of basket of real juniors (none of these $1b juniors!) might be in order.

    Do you mind posting your top 5 each? Cheers.

  175. TZ: Did what I post work for you?

  176. aaronpalang: Imageshack used to let you post charts without registering. Now (as of this week) you have to register which I have hesitated to do. Why do you not want to use them?

  177. The biggest risk in a bull market is losing one's position as Gary says, so I could not bring myself to sell into weakness this morning. I also was looking to buy the dip but did nothing substantial, other than a token NUGT position just so I'll be forced to keep an eye on it and see how it acts for possible future trading.

    NUGT added just less than 2% of my portfolio. Not enough volume in that one yet.

  178. I had stops in on some of my SVM shares and on a small SLW position. Stops were just below their lower channel lines and were hit this morning.

    Very small part of my position. I also placed new buy orders down around 50 percent retracement of recent move up.

    SLW move way below the lower channel line and has now recovered all the way back to the channel. We'll see whether this is a kiss goodbye for that channel line or whether it just gets back into the channel and continues higher.

  179. Aaronpalang, along with selling at the peak morning highs!

  180. By the way, I am a member at stockcharts. If anyone needs anything let me know.

  181. Well Gary, you're not gonna see this for what it is. You're getting this feedback from folks for a reason.

    The last couple of days you were advising people to add the last of their positions on a retest of the 10 DMA. We get that today, but now you're telling SOME folks to sell into this weakness instead.

    If you won't admit that there are mixed signals here, then I don't know what to say.

    I'm fine, as I have my plan and am following it. I learned from you and have the conviction to follow it and not trade like this.

    I won't comment on this anymore. I just felt compelled to tell like I see it, for those who are confused here.

  182. Gary,

    If gold continues higher today and tomorrow, then the anticipated 123 reversal has not occurred, right?

    That is the #2 point didn't actually happen because we didn't go low enough, right?

    Or did it? We DID make a lower low today (compared to yesterday). But do we need to have follow-thru on the downside for more than just one day in order to define the #2 point on the 123 reversal?

  183. TZ, you are right, its the registering that pisses me off. Just a personal thing. I hate to register!

  184. Looking like the 13 ma was the right place to add today, just like this summer. Intraday charts from then also indicate we may have a retracement of sorts after this initial pop with today's lows holding.I expect some volatility tomorrow.I also have my system optimized to a 90 min chart and in the latest downtrend it had the shorts as winners 9 out of 10 times since the bottom at 1300plus and now has just had it's 4th straight losing short since then indicating the clear trend change. I just hope USERX can now put in an up day if the pit session closes up.

  185. Thanks DG,

    Ok, here people:

    This is a chart of the hui (mining stocks) vs CEF (PURE 50% gold and 50% silver, AUDITED and INSURED, sitting in vaults outside the US in canada).

    Since 2004 !!! it has been better to own the straight metal vs owning stocks. And the trend shows NO SIGNS of changing at this time.


  186. POLY

    I have researched SLW and AG and EXK...they are fundamentally solid. Check EXK's last post of their earnings...they have increased quarter over quarter and look great.

    here is recent info on AG-they have solid growth , lots of cash , and plan a dividend soon


  187. SB,

    Thanks for your thoughts on SVM.

  188. For those who think using $HUI to show my point vs GDX makes a difference, be aware that they track almost exactly the same. The use if $HUI is necessary to make point cause GDX doesn't go back to 2001


    they track the same

  189. Onlooker,
    I just decided that I was willing to wait and see where this reaction takes us. Like I said it's only going to cost about 70 cents to get confirmation before I enter heavily.

    If that 70 cents is important to you then by all means hold or add.

    It's not important to me because I'm going to add some margin once I have confirmation. That will more than make up for missing that 70 cents.

    And if by some small chance the reaction takes gold to new lows then I will enter full positions at the next cycle bottom.

  190. imageshack requires no registration.

    Bold letters on home page say:

    "Welcome to ImageShack.
    No registration required. Free to use and enjoy."

  191. My positions were down 5K on that sell off but are now almost green.


Please see the link below to comment on the new blog.

Note: Only a member of this blog may post a comment.