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Tuesday, February 1, 2011


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  1. Gary,

    For every mistake that we make that has already been made I can give you 2 things that we have changed and improved upon.

    Humans have definitely changed over the past 200,000 years. It is a slow progress, but a progress nonetheless.

  2. Gary

    i remember you said the fact that USD is making new lows, and yet the gold and silver market aren't really budging too much to the upside, suggests there is more downside in gold and silver remaining. Do you still believe it is the case?

  3. Just my preference ... Please do not go to a video format ... sometimes I like to print it and take it to go.
    I much rather prefer reading over watching ... it's so much easier to re-read something you may not have understood then it is to rewind and listen/watch again.

  4. SPX on course to 1500 this year.

    And BIDU blows away the numbers.

    The information revolution continues.

  5. I also prefer to read our reports rather than video.

  6. I've contemplated doing a video occasionally but scrapped it. Unless I'm actually talking face to face with someone I find it even harder to narrate the report unless I write it down. So I would have to write the report anyway.

    The new website has actually made my life immensely easier. I wish I had done this a year ago.

  7. David,
    200,000 years ago Cro Magnon man was just emerging in Europe. Certainly we differ considerably from our first ancestor who's main goal in life was to find food.

    Once global bond markets evolved and debt became freely trade-able we've seen a steady stream of credit bubbles and busts over the last 500 or so years.

    We just did it again, repeating the same mistakes of the late 20's and Japan in the late 80's so yes history repeats because humans continue to be driven by our basic emotions of greed and fear.

    No it doesn't repeat exactly, but the big picture is always the same.

  8. Where exactly is the trend line today?


  9. Actually, attaining food is still the main goal even after 200,000 years. Ask the Tunisians and Egyptians (and soon the Jordanians, Chinese, etc).

  10. All the various monetary theories are interesting to a point but can quickly become very boring when explained by fools.

    The debates could all be fairly decided by simply allowing the free markets to work their magic with money as they have with everything else subjected to competition.

    My problem with MMT, or any other theory that places the state in charge of creating and maintaining a money monopoly, is that monopolies don't work nearly as well as competitive markets.

    Anyone requiring an explanation for why this is true can contemplate whether or not this world wide web could/would have been created by government agencies.

    Capitalism should at the very least allow CAPITAL itself to be subject to the competitive and innovative forces of free markets. After all, capital is the fruit of our labor and control of it by any central authority is basically slavery. So shove your MMT where there's no light because I'm quite confident it would fail if required to compete.

  11. Tim and Jeanene and Gary,

    I'm trying to wrap my head around Tim's theory. I have a question. I'm interested in the end game. My understanding is Bernanke wishes the dollar lower, much lower in part to attempt to pair down our debt. Pay it down with cheaper dollars. China has an interest in seeing their dollar as the new reserve currency. We hear nations refusing to pay for commodities with their own currencies because of our huge debt. I ask sincerely what happens if we lose our status as the reserve currency? What happens to the MMT theory?

  12. Redwine,

    It is foolish to believe that without state intervention there would be perfect competition.

  13. Gary

    What's the number you need for silver to close above, $28.10?

  14. Kafrick

    I'm not asking for perfect competition, only absence of monopoly.

  15. Tim,

    I layed it out for you on the previous blog.

    What will the Fed do?


  16. Ny boys closing the gap on gold.

  17. I don´t want monopoly as well. But I think you are judging MMT on something it doesn´t claim. From what I understand, MMT simply tries to explain the consequences of monetary policies in a world of fiat currencies. It does not claim (I could be wrong) that having fiat currencies is good or that the State having monopoly on the currency is good. It is simply a model.

  18. Here's a suggestion ... for anyone wanting to continue this MMT discussion ... why don't you use the previous day's post.

  19. Personally

    I just hope this blog morphs back into a blog for traders and investors , not so much HEATED theory and economics debates. friendly exchanges areless distracting, but yesterday got distracting...I.M.O.

    To T&J...you said , "I just want to share this info and answer questions..."..WHY NOT START YOUR OWN BLOG AND INVITE INTERESTED ONES OVER?

    For traders...FYI

    DNN broke out with volume yesterday, up almost 10%. URG did the same. A trader MAY buy the breakout for a quick trade, a cautious trader may put it on a watchlist and see if it retests the break out soon on lighter volume then turns back up.

    ALSO some OIL/Energy stocks are still breaking out.

  20. FWIW, I am very happy to see the MMT discussion and I am a trader/investor. Considering that the outcome of the current mess will hugely affect every asset class it seems like a relevant discussion to me. And T & J: sorry for the classless "shove it" comment from some troll earlier. You just have to ignore the the posters with limited emotional control. This blog is actually way better than most and sticks to debate rather than personal attacks (most of the time).

  21. Redwine,

    I think Gary said the trendline AS OF TODAY is at $28.25 so I suppose that is the number.

  22. Kafrick

    MMT is a theory about how the state should control money. I believe the free market should control money.

  23. HUI has broken it's trend line last week and held, 500 support held, 144MA on gold held, MACD on these miners & silver curling UP on the daily, MACD histogram about to go green on the daily. I think the silver trend line break is inevitable in the next day or so, especially this late in the cycle and in light of the dollar.

    We may have a situation where a several day pop is followed up by a quick scare down, but the prior support should hold up. That could be a day to add some leverage.

    I'm thinking add some here and some later today?

  24. Could be gap and go!

  25. Gary: stockcharts shows silver closing at $28.04 yesterday. Kitco shows silver (right now) at $28.33 + 14 cents, so an implied close of $28.19. Which ought I to use? Your chart is stockcharts, but kitco is the current price...?

  26. DG,
    One really doesn't have to wait for a close above the trendline as long as they aren't leveraged. But I'm going to use stockcharts and a close above $28.25 as confirming the break above the trendline.

  27. Bought AZC after open, this is a good breakout...volume for today is ALREADY almost the daily avg volume . LARGE consolidation.

  28. Redwine,

    Whether you like it or not, whether you tell MMT to go where the sun don't shine, it is what we have.

    You don't like it, don't want to deal with it, then stop using US currency. As long as you continue to use US currency, you are a slave to MMT, a slave to the US government because they have a monopoly on that currency. That's the reality. If you want to change that reality, chuck the buck and use barter. Or move to a country that uses currency that is backed by gold. (Are there any such countries today?)

  29. Poly--
    Lets get this market down!!

  30. PC

    MMT is a theory the same as keynesianism or monetarism, so I don't agree with your "it's what we have".

    Just because I argue that free market money would be ideal doesn't mean I can't deal with reality. I'm dealing with it fine.

    So what's your point?

  31. Tim and Jeanene,

    Thanks for answering the questions I asked as well as other questions, even though you had to fend off a hailstorm of verbal daggers to do it. Shoot the messenger seems to be something that humans have a hard time giving up.

    I agree with you that both political parties have it wrong.

    That is flaw with MMT: In order for it to work well, in order for our country to stay near full capactiy, there has to be an understanding of HOW it works by those in charge. The problem is the US government has a monopoly on the currency, but they haven't a clue as to how to make that monopoly work for the benefit of all the people.

    They do seem to have a clue to making it work for the benefit of the wealthy though. If you have a stock portfolio, QE has been good for you.

    Trouble is, only 1 US household in 3 has a stock portfolio worth 10 grand or more. So 1 household in 3 may have a chance at keeping up with inflation, while 2 out of 3 fall further and further behind.

  32. Redwine,

    The State DOES control our money. They have a monopoly on the currency. That's not theory, that's a fact. That's reality. If you don't like it, you can give up using US currency. That's my point.

  33. Yikes, hope this is just a typical shakeout move prior to re-conquering that trendline. Just gotta love the volatility in the PMs, eh?

  34. Hi Alex,

    what's you plan for AZC...hold it through the C-Wave? or do you have a sell target?

  35. PC

    You're only restating what I just stated. Except for the part about choosing not to use US currency. Because it's a monopoly I can't choose to stop using it. Hello?

  36. Redwine,

    But why would you dismiss MMT just because you prefer the government to not have a monopoly on money? If MMT is the best model to describe monetary policies GIVEN that money is a monopoly of the government, you should judge its usefulness based on how it describes the way the world is, rather than how you want it to be.

  37. Very impressive relative strength in the miners on that move down. Hard to put too much faith on such a short term move, but it could be very telling. Bouncing back quite strongly too.

  38. anyone concerned that SLW has been crawling under the 100 day MA - unable to push over it?

  39. Another day of gold's consolidation inside the NY Market daily gap, 1333-42, with yesterday's stab out and the slaughter of all directional traders.

    This is day 4, in fact.

    IMO failure to respect the NY Market's power, the real trading, will repeatedly prove costly (dropping my sign saying "the world is doomed, repent now."

    If yesterday was an inside day to the day prior, again on the NY Market measure (see Trader Dan's normally daily chart), then I may have something to talk about.

    I somewhat concernedly see more of these choppy waters for the rest of today (even not now looking at what's been happening as choppy waters, false breakouts, is what happens after major price moves which smack the players on the sides of their heads). For tomorrow as of now, I see nothing.
    My pt is if I see something or see nothing, I respect my view. Lots here are bullish. I'm agnostic at the moment, with the last and only trend down off the 1432 high.

  40. Others are pointing this out, but an inverse H&S on gold & SLW, etc. A target is 1388. Break out over the neck line gets us over the trend line issue too.


  41. yes Onlooker, miners don't seem to be buying the move down in gold or silver.

  42. Instead of concocting a theory for why this time will be different it's usually safer to understand that it's never different.

  43. yes Onlooker, miners don't seem to be buying the move down in gold or silver.

  44. NIKE BOY

    I.M.O. -This stock has AT LEAST a $6.00 target IF volume on the way up stays strong. Today is a breakout with great volume. I even sold another stock to add more :)



    Gold selling off and miners closing opening gaps this morning , but not really selling off (volume is light so far).

    FEELS LIKE a lot of sellers are out, accumulators are coming in...again...SO FAR.

  45. Seems like months since I've gotten a signal to be short equities overnight.

  46. Never heard of AZC. Where did you dig that one up Alex?

  47. Some selling in GDX, SLW, NEM. Maybe more downside to go.

  48. NikeBoy

    Generally a MA crawl is a continuation move, so it's actually a bullish sign. It should break out to the upside, which is, of course, in line with overall expectations.

    Gary can correct me if I'm wrong here.

  49. Kafrick

    I dismiss it because it's a theory about how to make the current system function correctly. The current system can't function correctly, due to the fact that it is a state monopoly, and is in the process of imploding.

    It's like trying to figure out how to fuel a two stroke engine with straight gasoline and keep it from seizing up. I'd rather focus on adding some 2 stroke oil to the fuel.

    To the extent I can operate outside the current system and protect my wealth I am. MMT is a waste of time because it misses the point that all fiat currencies collapse and this fiat currency is long in the tooth.

  50. Quick shoutout to Jayhawk. I'm pretty certain it was him who posted about Gary over on the Kitco forum, which led me here. I'm now firmly ensconced on the PM bull and hanging on for a great ride.

    Thanks, Jay! If you're ever in Northeast Ohio, give me a shout. I'll buy the burritos AND the beers.

    ohio dot tudorman at g mail

  51. Jayhawks

    It was on my watch list from this fall when it ran from $1.50 to $4.Look on a 6 month wkly!! I saw large volume in Sept and waited for a 50% retrace or something, but it just went sideways till now.
    So I put it on my watchlist .Today is what I was hoping for...expecting $6+


    Also DNN and thanks for the reverse H&S chart

  53. What makes me scratch my head is the dollar is back to November levels, yet gold and silver is still struggling.

    If the U.S. was really rebounding, why the dollar weakness?

  54. Because gold is trying to break out of an intermediate down trend while at the same time everyone is enamored with riding the stock market wave.

    Eventually smart money will start to leak out of the over extended stock market and find its way into undervalued assets. Now that the entire sector has regressed to the mean that would be precious metals.

    The 100 Blees rating is proof its already starting to happen. Big money is starting to accumulate.

    I never ignore a 100 Blees rating.

  55. Tudor-

    My pleasure...I see a lot of confusion over there attempting to trade the miners and after watching Gary & Doc for a few years, I've seen how the cycles work. I'm still learning, but feeling more confident in buying these intermediate bottoms.

    One of these days, we all need to get together for a major Mexican fiesta. All this talk of burritos over the years is increasing my appetite for Mexican food 10-fold. :)

  56. Bob, from everything I'm reading, the US recovery is just media BS.

  57. Yeah the dollar sucks..Thought that we were going to se a short rally in the dollar, but its going lower and lower and lower..

    If the problem in Egypt wont lift the dollar..What will?

    I think we will se some kind of parabolic moves in silver and gold..Dont know whats holding them down now?

  58. I went to my fav Mexican cantina last night with a sub who was in town.

    I'll give you three guesses what we had for dinner.

  59. Thanks all, I was tongue in check on the recovery, and I have been buying a little silver, uranium and gold miners every day since last Wednesday.

    I a just bothered that this can be held down like this.

  60. Pretty amazing times...I was on the camp of Gary and Poly seeing a market selloff on Monday, but NO, people are still piling on the stock market!!! Gold and Silver reaction is even more troublesome, as if everybody is buying that idea that all is good in America and therefore selling USTreasuries and precious metals....very weird indeed when Oil is at 101$

  61. Chicken Burritos
    Pork Burritos
    Shreaded Beef Burritos

    Those are my three guesses

  62. A meetup in Nevada would be cool, in conjunction with a tour of one of the historic gold/silver mines from the 19th century.

  63. Alex-

    Pls share ideas before they go up 10%

    Thoughts on VGZ? Big volume over the past 2 years-looks to be in a huge cup & handle.

  64. I bought some AGQ this morning at 128.08. My first long PM since about $1380. I have a lot more to buy and am feeling nervous about it taking off without me.

  65. Jayhawks

    I did , I said DNN and URZ days ago :)

    I DO try to post as I buy, since DG requested that a month ago. I Bought AZC this morning and posted at $9.59 (See above) , it was only at $4.14 cents...gotta be quick Bro :)

  66. Sophia,
    The metals aren't being held down. They are being accumulated. (100 Blees rating)

    Usually what happens is they wiggle around just long enough to frustrate everyone. Then just when you give up and exit they take off like a rocket.

    Then you are forced to chase into overbought conditions or risk being left behind.

  67. Thanks, Alex. keep the posts coming. I will let you know when/if I join you (buy first, post immediately after, and maybe i can goose it for you!)

  68. thanks Gary, I think that it is time indeed to buy some...If, as I think, the events in the Middle East start to unfold, Gold and Silver should rocket higher...

  69. oh , and vgz...looks good, this may be its bottom area...but not yet for me until it does something.


    I do like AG, AXU , and EXK ...but today they are retesting an area where I need to see more volume on a 5 day chart. they look like they may pull back a bit if someone was thinking of buying more?

    I may even sell half and TRY TO rebuy lower,since I got in last Tuesday

  70. Jayhawks

    Meant to say I posted at 9.59 a.m. , in case that puzzled you :)

  71. Actually, the line "all fiat currencies collapse" is itself a "theory". Why? Because there are many examples in the world today of fiat currencies that have not collapsed. In fact, are there any currencies in the world today that are NOT fiat? They haven't all collapsed because they are still out there doing their thing.

    In the past, currency collapse has usually been due to government collapse. Because a fiat currency is something that's usually created by a government, when that government collapses, the currency may go with it.

    So to say "all fiat currencies collapse" is just not true. There are many fiat currencies that are alive and well. And until ALL of those collapse (which means ALL currencies being used in today's world collapse!), then the statement "all fiat currencies collapse" is a prediction, not a statement of fact.

  72. Sophia, Daniel,

    I'm still holding firm and the retrace back to the high's was on cards. Closing at new high's would not be good and I would like the next few days to "show me the money".

  73. vuvvy asked me: "Why do most families these days have to have both spouses working, when that was not the norm in the 1950's?"

    You bring up a lot of points in which I could take another article to counter, but I will stick to this one. My response?

    Very true, but today that has more to do with materialism than necessity. Most dual income families don't need 2400 square feet either with granite counter tops. We bought our first home from a lady who built it in 1947, and it was 1047 square feet with no closet space, linoleum and formica in the kitchen, single pane windows, and no insulation. I was easily able to afford the home in that condition in the San Francisco Bay Area when I was 21 years old on my salary alone, as well as make many improvements to bring up the quality of the home. If I wanted the McMansion off the bat, then you are probably right that I would not have been able to afford it unless my wife worked. Two income are needed because everyone wants their own bedroom and car now too, which wasn't the norm back during the time you choose to compare with.

  74. DG, are you still in that short Euro trade? Are you short stocks?

    So far double top on SPX, but Euro at new high.

    Also, OEX options traders are buying the calls today, two to one calls over puts.

  75. I tried google but couldn't find it. Whats a blees rating?

  76. GARY

    You are right , I have seen that a lot in the past....they wiggle around and get accumulated, and put people to sleep, then rocket off. I better not get too cute ...theres a time to trade and a time to accumulate.

    Can you tell me what Exactly the blees rating is...how it is derived?? Thanks

  77. This comment has been removed by the author.

  78. I put MGH up last night, but it may have been lost in space. Best perspective is 5 year chart.

  79. Alex-

    I know, you did mention the uraniums. This new one was out of the blue but you bought the break out, I got it.

    I just meant keep the ideas flowing-we all appreciate it.

    I added some AG today-I have a 10% position in this one. In AXU-it's been pretty mild, but when it gets going it gets going. Added some SVM too.

  80. sorry Gary to use your blog for that, but I re-read some comment of Doc and I am confused...Doc, are you for a 5-6 weeks correction on the stock market even if you say that the dollar will collapse??

  81. Pima: OUr of short euro now. If that one day dollar rally was all she wrote, I am not interested.

  82. vuvvy you mentioned: "but the real implications to our society as we know it today will be if the USD loses it's standing as the world's reserve currency."

    We are a long way away from that. We are a $14 trillion economy and the next closes is China at less than half that. If China grows by 10% a year and we grow by 3% a year, it will take China 44 years to match our GDP.

    The world's largest customer will get to dictate what they want to pay the world with, and until we lose that, this will continue to be the case. Wal-Mart does not get told by their suppliers how they will pay.

  83. Avann asked me: "Please tell me you do not actually believe that economic policy, MMT or otherwise, had anything to do with our standard of living."

    No - money is just the grease in the system, but productivity and innovation create wealth. I try not to use these types of blogs to "market" my articles, but I have a new one coming out that describes this point exactly which is a better way to answer rather than start a new hijacking of Gary's hard work for this blog.

  84. Tim,
    Most lower and regular middle class does not live in a mcmansion,nor has granite counters, and needs 2 cars to get to work for both spouses.

  85. Brian

    I was in MGH before, and I do tend to rotate stocks in my portfolio as some get over-extended and others look like they are starting to move. I like this one a lot, but as its climbing the right side of this possible cup..I wish it had stronger volume (demand), but I am watching this one too. It may get to the top and go sideways (cup w/handle) Thx 4 mentioning it

  86. PC

    No fiat in history has lasted longer than 40 years, yet. So you're right that one could last longer, and probably will, in the future.

    But seeing how no government can last forever I'd say it's close to guaranteed that no fiat will survive. The evidence is clear the US Dollar is staggering and weezing.

    My point is that odds are, historically/empirically, the USD is on its last legs and wasting time on MMT isn't my cup of tea. You feel free to waste your time however you see fit.

  87. TZ attacks saying: "The T&J and DXB stuff is garbage as I've said before. I again caution anybody into falling for it."

    Can you shower us with your knowledge? The guys on the Mises, who eat and breathe this stuff are failing miserably to understand let alone disprove that MMT is current reality:


  88. thanks, DG.

    Euro may go to 1.382 before heading south. 'course, it may not head south at all, and certainly won't if the dollar keeps tanking.

  89. T & J ... please go read my earlier post ... previous day.

    Please don't tell me that salaries today can buy as much as they could 30 years ago ... that's just rubbish.

    And please do not compare us to 1950 ... it's only been the last 30 years or so that inflation has truly hurt us.

    My parents, making $3k a year were able to afford their first house in 1966 ... 5 years after migrating to Canada earning less then minimum wage. This is just not possible anymore ...
    This is getting very tiresome ... sorry all I will not post about this BS anymore.

  90. Question for people:

    How do you intrepret SPY showing on SOS page with -25 under "Total Money Flow" and +19 under "Block Trades"?

  91. Redwine: "My problem with MMT, or any other theory that places the state in charge of creating and maintaining a money monopoly, is that monopolies don't work nearly as well as competitive markets."

    BINGO! I am not saying to like MMT - just saying it is the current reality. When you understand better the framework you live in, you know why things are happening the way they are. MMT should be renamed Modern Monetary Reality. Whether we like it or not is another story.

  92. Sorry ... I meant please do not skew your results by including the 50's ... start from 1980 and see what happens to the numbers ...

  93. Gary,

    You said that the blees rating is a measure of accumulation, if I have that right. Could you give us a little more explanAtion of what the blees rating is, please.


  94. Jayhawks

    Yup, I knew what you were saying--sometimes in these posts the reply can be read as firm or sharp, when one tries to explain themselves...but I wasnt upset or anything close to that.It actually takes A LOT to upset me, nothing on here would,I think/

    I usually put the :) in there so people will know I am not upset. I was just replying :) :)

  95. why do you suppose the dollar is collapsing, and yet gold and silver doesn't seem to have any upside at this moment in time?

  96. Anyone ready for Tim to leave? Tim, start your own blog and drop by with a link so those interested can follow you there?

    Or if those here want to debate, go to his thread on SA and join in.

  97. Jayhawks

    I love the look of AG for the long run...since its so hard to buy ,Because it goes down $3 and up $3 in a week or two...you worry you'll get in and it'll drop $3...SO THERFORE -it feels like its going to rocket later!

  98. Give Jeanene the boot please!

  99. T&J,

    >Wal-Mart does not get told by their suppliers how they will pay.

    The suppliers will negotiate and accept, in current valuations, anything acceptable to both parties.

    Approximately half a SECOND after the money (dollars as you assert) hits the suppliers account they are free to convert it to any other currency or security in the world.

    The argument that the money people choose to MOMENTARILY transfer in order to conduct a transaction is the same as whether the receiving party RETAINS that money 1 second after receipt is not correct.

    The dollar is a "share" (stock certificate) of the corporation called the US of A. This corporation:
    a) is completely BK
    b) doesn't keep any promises to pay
    c) is run by some of worst and deceitful management in the world
    d) has employees (citizens) who have no savings, are spoiled, and ignorant.
    e) has customers which increasingly recognize that they get little to no value by 'shopping' with the corporation.

    Hold all the shares you want. But I warn others they are making a mistake.

  100. Damn,

    This place is starting to look like an elliott wave blog. Where is Bob Prechter?

  101. TZ - that doesn't even come close to disproving the current reality of the monetary system.

    It was actually kind of hard to even follow.

  102. Some of you don't like the "other" conversation, some as DG have said find it useful.

    I am just answering questions folks are posing to me now. If I don't - then you will just say "it must be bunk because he won't answer, therefore we can move on."

    I can't win.... :)

  103. /SI 4 hour chart-looks good, break above the TL-we should get a daily close here.


  104. I also came here because I read about the impending collapse of the stock market. Why can I not bring in MMT and the POMO taking place to give the other side as to why the crash won't happen until POMO is done?

    If you understand MMT, you will understand the math behind QE and why stocks will be mysteriously bid until late Spring, so drawing charts and using Gary's posts for the coming crash will be made mute for the short while as QE provides that BS bid.

  105. Thumbs down for this MMT talk.

    Supply and demand no longer matters?

    Too much supply of US dollars will cause a rise in prices. Only a decline via interest rate hikes or and end to deficit spending (surpluses and paying down the debt) can stop that.

    The US dollar system has only lasted this long for a few reasons:

    -large, stable government with strong military.
    -the ability to essentially export inflation (China, Egypt..)
    -the game has been going on for a couple decades and no one wants to stop the music.

    Declaring something as being able to pay taxes obviously makes that thing valuable, but even tally sticks would be worthless if you could find them everywhere on the ground.

    MMT = nonsensical propoganda.

  106. Poly, 8.25AM,

    I agree with you... this market is really resilient and I am really starting to scratch my head about this relentless rally...Is everybody short?

  107. Poly, 8.25AM,

    I agree with you... this market is really resilient and I am really starting to scratch my head about this relentless rally...Is everybody short?

  108. For the sake of looking ridiculous, I think the S&P is going to 1350 before any meaningful correction.

  109. OK T ... please respond to my examples ...

  110. Gary,

    When you say "close" over the trendline are you referring to the pit close at 1:30EST or some other close?

  111. Tim, why didn't you tell us upfront you work for the Fed? :)

  112. What would you guys do about this? My inlaws have been in these 2 positions since 2009ish. I'm trying to help them out on this part of their porfolio (80% of their money is in bond fund). SH down 38%, TBT down 25%---their broker kept them in it for some reason.


  113. My equity program suggests we could see strength in the S&P through Wed. morning. Unbelievable, but it's been dead on lately.

  114. +1 for humor Bernanke....... I kind of wish I did. Then I could be rich and do nothing for getting there.

    Instead I am a slave to their monster.

  115. Pullbacks will be bought until then.

  116. any opinion on SMF gold stock...i've been eyeing it for a year now and finally has a pullback...any thoughts on that stock?

  117. weekly swing low on the HUI 516?

  118. Avann go back and look at the graphs in the SA article.

    Since 1980 the CRB is up about 90-100% just eyeballing it. Disposable income is up over 100%. So the theory stands, increased wages has more than compensated for the rise in prices since the time frame you choose to compare.

  119. I really don't understand why people are so disturbed about someone sharing an alternate view of how the monetary system works. Tim has been respectful and patient. Just don't read it if you don't like it. Gary himself has said many times he likes a healthy debate on the blog. I personally draw the line at childish insults and ethnic slurs, but someone espousing something other than the Austrian school ought to be fine. We may even learn something or, God forbid, change our minds! Isn't that what trading/investing is about? Inflexibility will ultimately ruin your trading (and your life). And all we're talking about is exploring it. It's not like his comments are crowding out what to do about the PM's or other trading issues.

  120. In DeMark land, generic crude oil futures will be recording a DAILY sell signal today, good for the next 12 sessions. OSX Oil Service sector index has recorded a WEEKLY sequential sell this week, so good for the next 3 months! Same with the IYE Energy Sector ETF.
    Looks like we have a bit more to go with the SPX reaching new highs today. I did say the strength looked like it could continue into February, but I didn't believe it myself! Dollar will be emerging from its 4 week sell setup this week. It's been quite a reaction, leaving us just a little under 6% to go to the 72.5 dollar index target level for a MONTHLY buy to record. Given how gold futures and various gold issues have qualified downside breaks, it may be hard for the dollar to get down that far right now, but we shall see...

  121. DAVID

    Blogger David Kafrick said...

    For the sake of looking ridiculous, I think the S&P is going to 1350 before any meaningful correction.

    Me too..I drew this chart in early dec, then updated it early January...THIS IS WHY I kept trading stocks when others told me of imminent crash and stop. UNTIL this changes, I see SPX 1367...it MAY change , b ut this is what I saw.


  122. Shalom,

    Wednesday tomorrow? And then, we have a turning point?

  123. I give up ... if you truly believe that a single young adult can manage a home and a car on today's salaries you truly have your head in the clouds ... charts and numbers are great but I live in the real world where my kids will never be able to afford a home without my help.
    Sure they have more disposable income then I did ... BECAUSE THEY STILL LIVE AT HOME!!!

  124. Sorry but it is nonsense.

    MMT has no place/validity in a debt based system. Maybe in a credit money system with no central bank, gobbling up interest. (A credit based system is described in Money as Debt I believe.)

  125. Seems to me Tim agrees with most of us here re the effects of QE. That doesn't necessarily mean he's happy about it or thinks it's a good thing (maybe he does, maybe not, I don't know). He just sees it as the reality we're living with and is trying to make the best of it. Makes sense to me that stocks are not going to tank any time soon.

    Just because you use MMT to try to understand how our fiat currency system works does not necessarily mean that you think the fiat currency is a good idea. But like it or not, we seem to be stuck with it.

    DavidK, 1350 looks very reasonable to me, especially considering the fact that the dollar just keeps dropping.

  126. Gary,

    Where is the next support level for the dollar? I think the dollar would have to find support then trade higher before the stock market could correct right?

  127. DG,

    Good points. This is exactly the kind of psychology that you see in the investment crowds that make up a bubble. They just want to reinforce their beliefs about their investments and automatically dismiss any information that might go against their current beliefs.

    The most important thing that I´ve larned about trading, is that you should never ever take your opponent´s point of view for granted. You should never think that the person taking the other side of your trade is obviously wrong. There is always a good chance that you are wrong. Always keep that in mind.

    By the way, I believe gold will be in an uptrend for quite some time, but I never underestimate the other side, nor do I dismiss their views as stupid, silly and obviously wrong.

  128. BY THE WAY

    that is a cup/handle for techs-


    just keep a flexible plan, and this is also why I wouldnt be shorting this mkt, until something changes (The uptrend breaks down)

  129. Tim,

    When you say "income is up", what are you including as income? CEO salaries and compensation, along with the $8 an hour WalMart employee?

    Overall, income may be up. But the disparity between the very upper end of the income curve and the lower 50 percent has certainly widened over the past 30 years. If you would look at the bottom 50 percent of wage earners and compare where they were in 1950 versus where they are today, I believe you'd see a very different picture. Even the bottom 2/3's I believe would paint a different picture.

    So I'd go back to your stats and graphs and try leaving out the top 10 percent or 20 percent and see what kind of picture you get for the working American or Canadian today (who's not in the elite upper income level) versus 1950, 1970, and 1980. For those folks (which means most of us), there's been a loss of purchasing power.

  130. Pima,
    Historically all fiat currencies eventually collapse. That doesn't mean that the US dollar is going to collapse tomorrow but eventually it will return to it's true value (0). We've already had three currencies collapse here in the US (or was it 4?).

  131. Alex-how about 1440 SPX?


  132. Gary,

    Please explain why the true value of a dollar is 0? or why the true value of something is whatever it is?

    I would argue that there is no such thing as true value, if by true value you mean something like the notion of intrinsic value or absolute value.

  133. Tim,

    I have answered your question as to why I think interest rates will rise 6, 7, 8% (see prior log).

    Now answer mine.

    What will the Fed do?


  134. A quick point Avann in relation to your personal examples of how inflation is hurting you.

    You have to be careful of taking your own situation and extrapolating it to the rest of the country. I often hear bloggers state, "the CPI is crap, I just need to look at my own budget to know that inflation is here."

    Bill Gates could say inflation has not been a problem. I could say my income is up 300% compared to 10 years ago, but we would both be wrong to assume that was the case for everyone, which is why we need to look at the country as a whole, and not just our own circumstances when making conclusions that may affect the way we invest.

  135. David,
    A dollar is just a piece of paper. They only reason you can trade it for anything is because the government has made it legal tender.

    I guarantee if, heaven forbid, society broke down, you would find out really quick how much real value those little pieces of paper really have.

  136. Thanks for the props DG - i was a little surprised at the anger I induced. I am not trying to sell MMT and then pitch them on why it is good for them.

    I am just trying to educate people to the reality of the system we are in. I do not know how it will end. Contrary to popular belief, we have never seen a world wide system like we have now. It may end indeed. Understanding MMT though will help one realize that it won't occur because China decides to stop buying our debt, or hyper-inflation. It may end from a revolution instead. I hate being forced to accept MMT as well, but understanding it allows me to not invest assuming the collapse will happen due to the examples given above.

  137. David

    your welcome, it matched what you were saying, and you said "for the sake of looking ridiculous'...and that's exactly why I didnt post that in DEC :)


    As Gary says..."Anything is possible'

    and actually , my chart was a 1 to 1 projection ( a minimum target under the right conditions). I also do extension projections of a 1 to 1.382 and a 1 to 1.500 and a super 1 to 1.618...puts it way up there.

    so if you take the 192 point move x 1.382 = 265 points added on...
    add 265 to 'c' (1175)= 1440!! COOL

    the a-b-c projection on my chart for a 1 to 1.382 IS your 1440.


  138. Some people were talking about the micro gold contract MGC a few days ago.I've been messing around with stop and limit orders and comparing them to how the large contract trades. Even though the micro has little volume CME has been arbitraging (or paying someone to)trade almost exactly as the large contract.The Liffe product YG doesn't even come close to tracking GC as well.

  139. BEDE,
    The blees rating is a measure of how bullish or bearish the commercial traders are compared to the last 18 months.

  140. Tim: The CPI does seem to be absurdly off the mark. I can name LOTS of things that are up 5% over the past year. For the CPI to be at 2% it would mean an equal number of things would need to be down 1% so that the average is 2% (sloppily stated, I know, but you get the idea). Virtually nothing except housing is down. Oil, food, medical, movie tickets, dinner out...everything is up, and most much more than the stated CPI. How is this possible?

  141. The value of anything is related to our perception of its function. Dollar is just a paper, corn is just food. We perceive that corn has a function in satisfying our needs, we attribute a value to that. Same with the dollar. If we discovered that corn is bad for health, what would happen to its "true" value?

    I doubt society will ever break down. We are pathetic little creatures who can´t run very fast, don´t have sharp teeth, are not physically strong (maybe you are :)) and we have no chance of surviving on our own. What we have to our advantage is that we are highly social creatures and quite smart. So for better or for worse I believe we are stuck with each other.

  142. Actually QE can keep the markets levitated only to the point at which inflation overwhelms the economy. We saw it happen in 08. With oil approaching $100 we probably aren't all that far from it again.

    I've said all along that the catalyst for the next recession would come from spiking inflation and that the dollar's collapse into the three year cycle low would be the driver for that spike.

  143. To underscore Gary's comment of paper currency being worthless, I have garbage bags full of Hungarian Pengos from my grandfather who was a large landowner in Hungary when the Pengo became worthless.

  144. pima -

    I love where you are going with all your questions. You are asking all the logical questions in the right order that shows you are grasping MMT reality.

    While incomes are being skewed to the upside a bit by the robber baron leeches in finance, it is not nearly as bad as we would assume:


  145. Tim ... absolutely ... this is why I tried to use average incomes and average home prices and average car prices in all my examples. I only use my personal situation to prove a point.
    This is a fact ...
    Home prices used to be about 2x average salaries.
    When I was a young adult they were 3-4x average salaries.
    Today they are 6-10x times.

    This is from the US census bureau.
    Home prices ADJUSTED for inflation in year 2000 dollars.

    Your just not on track with this nonsense ...

  146. Tim,
    You conveniently forget to mention that commodities were in a bear market from 1980 to 2000.

    A more appropriate measure is the CRB from 99 to the present. At it's peak in 08 it was up almost 200%.

    But that doesn't tell the whole story. Oil was up 1500% copper roughly the same.

    Supply and demand fundamentals will concentrate inflationary forces in specific sectors.

  147. To David, been to Somalia lately?

    :-) Having fun, I get your point.

  148. Because James - the government is not revenue constrained. They do not have to collect taxes (Federal level only) in order to pay debt. You need to do more work on understanding the role of debt in MMT. Wray does a great job in his book I have recommended.

    The true value of interest on fiat is 0%. Since we went to full fiat - the world rates have trended lower. They will continue to do so over time, just look at Japan who has a 20 years head start on this game. We will get strong spikes and they are volatile, but the trend should remain down across the globe.

  149. Well, I need to complain more often, nice moves in the miners I own.

  150. Gary,

    Fiat currencies have collapsed because the government who created the currency collapsed, not because the currency was fiat.

    If you insist on saying "all fiat currencies have collapsed", then why not say "all governments have collapsed"?

    Neither of these statements is true. Why? Because there are many fiat currencies in use today and they have not collapsed. And, there are many governments in power today and they have not collapsed.

    It is the nature of governments and currencies both to come into being, exist for a while, and then "collapse".

    What does any of that have to do with the present other than the fact that we know that SOMEDAY our government and our currency may no longer be in existence.

    Species collapse, but saying "all species collapse" does what? It's an irrelevant statement.

  151. Gary-Did you add to your positions yet.

    I am in a dilemma on whether to add immediately or wait for a pullback.

  152. And BTW ... MMT or not ... that's not the issue. I just have difficulty swallowing your "Salaries have kept up with inflation" BS ... and if I have a problem with that then I have a problem with most/all of it.

  153. Gary said: "A dollar is just a piece of paper. They only reason you can trade it for anything is because the government has made it legal tender.

    I guarantee if, heaven forbid, society broke down, you would find out really quick how much real value those little pieces of paper really have."

    This is getting much closer to reality. The collapse of the current monetary reality will likely be because citizens say screw you the government and refuse to pay taxes and are willing to go to jail and be killed, while at the same time killing those in charge unfortunately. Revolution has a much better chance than a bond or currency crisis. I wish it would be as easy as the Chinese deciding to sell. Unfortunately, a lot of unnecessary bloodshed will probably have to take place.

  154. Regarding CPI (and unemployment figures), take a look at shadow stats.

    I'll see if I can post a link.

  155. I'll add in the last five minutes if silver holds on to gains.

  156. Gary, assuming C wave starts today, when are we expecting the 3 yr low in the dollar? Next daily cycle end? End of March?


  157. Pima,
    Not exactly true. The US hasn't collapsed yet we've managed to destroy 3 or 4 (I can't remember which)currencies.

  158. Bob,
    The C-wave has been ongoing since $860.

  159. T & J

    Many believe certain theories are reality and I don't excuse myself. I just don't believe MMT is reality.

    Those who believe in MMT, in my experience, believe that deflation is the enemy to fear and dismiss hyperinflation scenarios as impossible. Monetary history appears to prove otherwise.

    The US has experienced it already. Take the continental fiat for example. George Washington said something like "it takes a wagon load of continentals to buy a wagon load of goods." History is littered with collapsed paper currencies and the USD will definitely suffer the same fate. The only uncertainty is timing.

    This doesn't mean I'm a doom and gloomer. To the contrary, I think it may be the best and most exciting time in US history, even world history. The possibility that humans might free themselves, worldwide, from statist monetary enslavement gives me a tingling sensation all over.

    The only thing depressing is to see so many people being mislead into believing that the very cause of present economic turmoil (central monopolistic monetary control) is also the answer. That creating more money out of thin air (borrowing) will solve the problem of creating too much money out of thin air (borrowing).

    The free market will have its way in the end. The longer deflation is put off the worse it will be and the more likely hyperinflation will occur in the interim.

  160. DG - I used to think the same thing and was a huge believer of Shadowstats as reality.

    But then I found this and this helped be understand my biases:


    It's a long read - but well worth it.

    One quick way to answer is that healthcare prices have WAY outpaced incomes. But - the advancment in healthcare demands it. I would rather pay $8 for today's heart care than $1 for 1970 - if they even had it. I could choose not to pay it because my income can only afford $4 worth. But back in 1970, they didn't have it and I would have died. Today, I pay up to stay alive.

    (I do not have a heart issue, and this is a simple answer, but helps to get your head around the answer.)

    Take a look at that link nonetheless and you will understand better CPI is not a bunch of propaganda like even I used to tell my clients.

  161. The value of any currency is based on the net present value of future productivity of its citizens per unit of currency (cash and debt).

    When people lose faith in the ability of the citizenry to produce the required output per unit, the currency suffers or collapses.

    Debt is an exponential agent, and is growing at a rate faster than productivity per citizen and in aggregate productivity, and once you fall behind an exponential curve you are dead.

    So unless they declare debt juilees the dollar is in deep weeds.

    It is simple math and supply and demand.

  162. Gary, any advice for accounts that are restricted to buying/selling the stock market? (no pm's).

  163. Follow-on, that is why a debt to 100% of GDP is important, that is the debt exceeds the collateral of the nation, if it had to sell itself to pay the debt.

  164. Poly,

    You going to hang on to your sh0rtz for a few more days? This is sure painful...

  165. "In the end the Chartalists and MMT guys both favor fiscal stimulus for any problems. So their main conclusion is the same as the Keynesians. The difference is that Chartalists and MMT guys both favor fiscal stimulus even when there are no problems while Keynes thought the government needed to run a surplus in good times. So in some sense they are even more in favor of printing money than Keynesians, and I will lump them in with other Keynesians from here on."

    "The place where the Chartalists go wrong is not understanding how a government that prints money goes bankrupt. They say things like, " The overriding point, however, is that a sovereign government can always fund its liabilities as long as they are denominated in the currency that it issues under monopoly conditions". It is true that unlike a corporation or a household it does not run out of money. However, when the market rejects the money that a government prints, that government is bankrupt. Imagine the government payments are supporting 40% of the population, either as employees or welfare/foodstamps. Further imagine that half of that money the government spends is newly printed money. Then if the money they print becomes worthless they can not support that 40% of the population in the lifestyle to which they have become accustomed. The "liabilities" of a government are not just amounts of currency. We call this type of bankruptcy hyperinflation. This happens to governments all the time. Once this starts with the dollar it is probably less than 2 years till the end of the dollar."

    Vincent Cate


  166. Gary - oil is up because the world is getting richer as a whole in the face of fiat printing, and they become more productive with technology, thus demand comes from more places. Oil has less to do with printing and more to do with the fact that more money is creating more demand for goods and services as those countries become richer as they chase those paper dollars in order to exchange them for better lives.

    Its a charade, but its far far far from being over.

  167. I've been adding all day-AXU,SVM,SSRI,SLW,HL,AG,AGQ...Now about 50% plus in.

  168. T&J,

    Could you give the website where POMO and it's relation to the current stock market are discussed. I guess I missed it yesterday.

    Anyone that still thinks POMO is not having an effect on things is denying reality.

    To those who just know that the US is destroying the dollar, I'll point out that the money supply is growing at an almost ideal rate. This is just fact. Go look it up.

  169. Gary how low do you think the dollar can go? 68-72? Or even lower?

  170. Gary, terminology failure, I am referring to this next impulse.

  171. Bob: "Follow-on, that is why a debt to 100% of GDP is important, that is the debt exceeds the collateral of the nation, if it had to sell itself to pay the debt."

    Why has Japan - whose debt to GDP stands in the 250% range, not had the outcome you say will happen?

  172. http://www.shadowstats.com/

    According to them, real unemployment rate in the US is running above 20 percent, while government BS says it's only 9 percent.

    Real CPI is running above 4 percent while government BS says under 2 percent.

  173. Redwine: "However, when the market rejects the money that a government prints, that government is bankrupt."

    There is the point. The market will not reject it anytime soon, because they will be put in jail if they don't get their hands on it to extinguish the tax liability.

    The only way the market will be able to reject it is with blood shed and revolution. It won't just happen because some day the local grocery store decides to not take it.

  174. Low Tax,
    That's a tough one. I would definitely be out of all stocks by some time this spring.

  175. Be Merry and buy, for the biggest and the most awesome bull market the world has ever seen is now upon us!

  176. Beanie wins! The stock market will never, ever have a real correction for the rest of the year, and we're headed straight to 1500, and 1600 after that. Just hold you nose and buy every dip, and don't allow yourself to be shaken out. The Fed can do no wrong!

    Full Disclosure: Long Reverse Psychology.

  177. Redwine, exactly my point. Just asked the Soviets.

    They are not stimulating the people they are creating more debt through government, this debt simply overwhelms the populaces ability to pay it.

    It is a system designed for the government to eventually own all of the assets in the country. Once this happens productivity collapses.

    This is socialism wrapped in a different cloth.

  178. Tim

    > more money is creating more demand for goods

    That is inflation. Prices cannot continue to go up without more money in the system.

    Do you believe this is good and it is better for money to lose value over time? To me, this is a warped view of money's ideal function in the economy.

  179. JReality,

    In that case, I'm shorting your long reverse psychology. :)

    The market was supposed to have topped like a few days ago.

    Gary is now extending it to spring. And then he'll extend it to year end. And then the next year.

    But the fact is, the market and economy is improving dramatically. ISM manufacturing numbers up the zoo.

  180. Wes - you can start here:


  181. Tim,

    That link you posted that is supposed to answer questions about the CPI and debunk the shadowstats folks--it's a government link! Isn't that a bit like asking the fox what the hell happened to all the chickens?

    I will read it, but I don't trust those *%&$^#'s! I'll read it and as much as I am able try to keep an open mind about what they're saying.

  182. Money doesn't create demand. Money is "supposed" to be a store of value. A method of transforming productivity into purchasing power.

    When a government expands the money supply beyond productivity you end up with inflation. If you couple that with supply and demand imbalances then you end up with a commodity bull market driven much higher than the normal market forces would take it by the inflationary forces unleashed by too loose monetary policy.

    It's how you get to $147 oil despite the fact that we had plenty of oil.

  183. Have you been to Japan? I know people there, their lifestyles are increasingly spare.

    This novelty you promote is a lifestyle destroyer.

  184. Robert, against my better judgment, I'm going to ride into tomorrow, but this is will be the ceiling.
    Mainly because I was prepared for a retrace back to the high's from last Friday so I want to give it the benefit of the doubt. Also, the leaders, NDX, RUT, TRAN's are nowhere near their highs and have failed to come back. Could this be a blowoff top here?

  185. Wes,
    Whose fact?

    Ideally I would rather not be paying over $3.00 for a gallon of gas. or almost $5 for a loaf of bread.

  186. Pat,
    Since the current three year cycle is left translated it should go below the 08 bottom.

  187. Tim,

    And the other question would be: Do you believe the shadow stats guys are doing it wrong?

    Here's one example of the governments lying lies: It's obvious, and most folks know this, that the government figures on unemployment are grossly understated because they do not include those whose benefits have run out but are not working. Even the government tells us that there are several groups that are not counted in their "unemployment" rate.

  188. Thanks Gary. It is a tough one - my wife and sister are both in that camp.

  189. Lowtax ... are you restricted from ETF's also?

  190. Beanie,
    I've pointed out several possible daily cycle tops but I've adamantly advised everyone not to bother shorting the market... at least until the dollar puts in the three year cycle low later this spring.

  191. Gary -

    I would argue that it does eventually flow to wealth creation, just not efficiently:

    The example I like to give is that the Soverieng US Government can start a totally useless agency (and they have plenty) print money to pay for it, and the money will eventually flow to those who create wealth, the producers. Therefore, printing will eventually lead to wealth, because money is demanded by capitalists in order to pay taxes and buy goods and services and get ahead from hard work. Sounds absurd, I know. Keep reading.

    Let's pretend we start a useless government agency that hires 10,000 people to do nothing more than pick their ear and report on their experience. This in fact is useless and non-productive, a seeming waste of money. The government pays these people $20,000 a year to do this. It is not a great wage, but it sure beats pumping gas for $10,000 a year.

    Is that money wasted and gone forever, and wealth never to be created?

    If the government puts a 100% income tax on ear pickers, then nothing really happens. Money was printed but taken right back out of the monetary system by taxes. Assuming the government lets their new ear pickers keep some of what they are paid, whether or not wealth will be created depends on what these employees do with it. It they stick it in the mattress, then sure, it might be gone "forever" or until they spend it into the economy. Maybe some will use the cash to buy goods to start a new productive side business. If they go into their communities and spend it at local businesses, then this printed money that "does not create wealth" gets out of the hands of the unproductive agency workers, and into the hands of the hard working businesses. Unfortunately the current system allows the ear pickers more spending and a better quality of life than the hard workers, because after taxes, the money spent at the hard working businesses is less. The hard working businesses will have to pay taxes and have even less money to spend with the true wealth creators. By true wealth creators, I am talking about the modern day alchemists ( seekingalpha.com/article/247944-covanta-s-modern-day-alchemy-turning-trash-into-profits ) who turn something worthless like oil, into something valuable like gasoline. So yes, printed and useless money eventually flows into wealth creation, but because of taxes and mis-allocation, it is not very efficient in it journey there.

  192. Ty Gary!

    Wonder how far the dollar needs to fall until people on the streets are talking about a currency crisis..Maybe they already do that when they are tanking the car?

    If the dollar probably will fall further than 08 then we maybe will go under 70..wonder how high the gasprice will be then..:-)


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