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Friday, March 4, 2011

WHAT'S AHEAD

From the March 2nd nightly report.

"Folks I want to start preparing you  for what’s ahead. Once we get into the final daily cycle up in gold I think we are going to see a parabolic move unlike anything we’ve seen yet. And on the flip side as the dollar starts to drop, or maybe crash is a more appropriate term, into it’s final three year cycle low we are going to see an absolute horror show unfold. That combination is going to drive gains unlike anything any of us have likely ever made before.

The world will be in an utter panic to get rid of dollars. And the stock market is not going to provide protection from this kind of inflationary storm so a lot of those dollars are going to end up in the commodity markets, and especially in the precious metals. When that kind of money hits a thin market like gold, and especially silver, it will drive gigantic gains.

There is going to be extreme temptation to jump off early simply because one can’t believe they could possibly make that much money that fast. Let me warn you now don’t give in to that temptation. We know what to look for at a three year cycle low and we know what to look for at a C-wave top. Until we see those signs sit tight. Trust me it’s going to be one of the hardest things you’ll do all year.

Folks, fortunes are going to be made in the next two months."

465 comments:

  1. Thanks for the encouragement

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  2. look what Trichets' hawkish view / implied fight against inflation by raising rates - has done to the (completely screwed) EUR?

    Who's to say a suggestion of change in policy or implications of rates to be raised wont do the same thing for the U.S dollar Gary/?

    I am having trouble seeing the U.S buck go much lower....ever.

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  3. SB,

    Physical isn't my largest holding. Don't forget all my paper silver that I can easily get in and out of with my 200:1 margin!

    $50 is just a point of reference. When Gary says the D wave is beginning (he is usually early by 2 days), at whatever price, i'd be tempted to unload just to load up in more physical a few months later.

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  4. ecemry,
    I have to ask has there been any indication at all that Ben is going to raise rates?

    Of course not. The Fed is busy insisting there is no inflation so they can continue to print, print, print.

    The dollar has much much lower to go before we get any kind of meaningful bottom. Sentiment is still dead neutral. We need to reach panic levels before the three year cycle bottoms.

    If you are incapable of visualizing a dollar crisis there is very little chance you will be able to profit from one.

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  5. I'm in the UK, and instead of options (which I don't understand fully) I use spread betting for leverage.

    Is there anyone else using spreadbetting here? It would be interesting to compare notes.

    What I did initilly was to have a bet size equivalent to money I cannot easily invest in gold/silver e.g. pension, cash isa, short term savings etc...

    I'm now starting to add a little leverage there too.

    I also have money in a Stocks ISA, which is in PHAU, PHAG & more recently LSIL (UK equivalents of GLD,SLV,AGQ)

    I'm now wondering what the point is in maintaining a separate stocks ISA when I can get tax free profits from spreadbetting alone, and its by far the easiest way to trade.

    I also have an Interactive Brokers account which I opened to gain access to international stocks, and to reduce commission cost (which is huge in UK). I have some GDXJ & SIL there

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  6. Gary,

    I think Poly asked a question about the number of daily cycles left in gold's C-wave. I think he said will this next daily be right translated and then the daily cycle after that be left translated. I was also wondering if you could answer that in the nightly reports.

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  7. Gary,
    I like the plan a lot. Will you post when you initiate your move?

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  8. Also interested in GBPUSD views. I've started to hedge out my dollar exposure as I expect GBP to outperform in this final C leg

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  9. I hear you Gary..and well noted - thanks - I do appreciate your blog and views... big time.

    Food for thought though:

    Who'd of considered EUR rate raise suggestions only a short "6 weeks ago" amidst potencial defaults/banking failure/ in the E.U?..and now look?

    Just to keep an eye open...things can happen rather fast.

    And no....I don't have it im my immediate plans to make money from a U.S dollar crash no.

    Thanks Gary....go go go

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  10. In taking a look at any Commod vs JPY charts such as AUD/JPY and CAD/JPY...

    The large 'ascending triangles' on verge of upside breakouts - tell a tale of the carry trade beginning to take hold , as the big money begins to move away from the U.S dollar as the current funding currency - and begins selling Yen.

    USD/JPY bottoms - and the upswing will have massive dollar buying as the carry moves on to Yen as funding currency.

    Perhaps the timing will also coinside with your views...this part I cannot say for sure....but...could you question this line of thought?

    I hope not! - and I hope so! - I've got some serious money at play in this area.

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  11. China has been doing direct currency swap with it trading partners. The trend will only increase over time.

    China "Attacks The Dollar" - Moves To Further Cement Renminbi Reserve Currency Status
    by Tyler Durden

    http://www.zerohedge.com/article/china-moves-making-renminbi-reserve-currency

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  12. ecemery,

    I didn´t quite understand your view on USDJPY...

    I have been following the USDJPY very closely, and I am very confident that when this leg down in the dollar ends (what Gary calls the 3 year cycle low), the USDJPY will put in the bottom of all bottoms.

    I am betting on the USDJPY going to 150 in 5 years or so.

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  13. Well I don´t understand too much about economics and politics. But what is the game plan of the Fed and the politicans and their advisors (also from the scientific community)? I think there should be at least a minimum portion of intelligence to govern the society and financial safeness. So they should know about the consequences of their irresponsible decisions (printing money). Gary what is the point I miss. If your forecast for the goldmarket the next couple of years is true, when do such people come to their senses? Or is this all a repeating game ripping societies or are the consequences of non-printing are much worse for us?

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  14. David,

    I am surprised that you haven't noticed the huge candle in USD and EUR

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  15. ooops...we've started a currency debate at Gary's blog!

    In following the USD/JPY - you are right on the money....in fact recent volume spikes (some days 3 times the norm) also indicate to me that this move is currently "on the move".

    Long USD/JPY will be one of the greatest trades of the coming year in my view....but the exact "when" is something I cannot say...perhaps it works into Gary's timing....but in my view and from a currency/money flow perspective (i do this for a living) its already happening now....as huuuuuuuge money is changing hands in preparation for this shift.

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  16. At the present bid/ask NGD is going to make that breakout today.

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  17. I posted yesterday that I bought more AGQ during the sharpest part of the dip, and someone asked why I would do that ahead of the payroll report and Op Ex. Well, heres' why.

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  18. I did the same DG. Timing and price may be off, but these daily cycles are tricky sometimes.

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  19. Not even close yet. Gold has to go above $1340.

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  20. 1 more. AXU is completing a cup w/ handle or inverted H&S pattern. Call it what you like.

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  21. silver on a tear this morning!

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  22. DG,

    You're right, although this could still easily turn sharply lower. Either way it's all going to be chump change looking back in 2-3 weeks time.
    The Aug rally and subsequent shut out action is still so vivid that I wouldn't dare being anything short of 100% invested here. Like you, Gary etc, only positions left to add now should be any extra leverage.

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  23. Gary, I thought it was 1436?

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  24. Brian and others who asked about vuvvy's signal:

    The way I understand it is that he has a system. Support and resistance seems to be part of its parameters. The system gives a short signal when significant support is broken.

    However, what vuvvy has noticed is that even though the system gives a short signal, if at the time gold is in a C wave and is not anywhere near an IT low timing wise, then that short signal marks the bottom of a daily cycle low.

    So in this case his system if were traded by itself would generate a small loss. But combined with Gary's cycle analysis and ABCD waves, the short signal from his system has been great at timing daily cycle bottoms. So why not use it that way!

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  25. Now would be a good time for mlmt to peek in and tell us he covered his gold short yesterday in the afterhours session.

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  26. Welcome to the $200 club Sir AGQ.

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  27. jeez, here we go again, are we at the beginning of a runaway move in PM's?

    I was hoping to add today. I did nibble a bit yesterday, so I will stand pat with what I have, waiting for either another move down into a more clearly defined daily cycle low OR a break above the recent all time high in gold of 1441 (and then wait for a pullback?)

    One thing that would suggest waiting is that --IF-- yesterday's move down was an A wave of an ABC correction (not to be confused with Gary's ABCD terminology), then the move up last night and this morning could be wave B, and this should be followed by a sharp/fast move down to a low that is lower than yesterday's low. The trouble with ABC corrections is that if the move up is strong--and this one appears to be--then sometimes the B wave of the ABC can actually exceed the high that was made at the top before the correction started (in this case 1441). If that were to happen, we'd have lots of folks buying the breakout, only to see gold crash back down to yesterday's low or even lower.

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  28. If Gary didn't think we had so much left in the C-wave, this is they type of action I'd love to sell into.

    What a day!

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  29. Thanks for the explanation Pima

    For those that missed it AXU will have a secondary breakout point at 9.

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  30. Wow, AGQ flirting with $200.

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  31. SLW up only 2.3% on these monster moves, pretty weak.
    I would suspect any sudden reversal in Silver would send SLW plunging into deep red numbers.

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  32. Smart move by DG and others to add to AGQ later yesterday. I wish I had....

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  33. Impressive as it is, I wouldn't be chasing it now.

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  34. I am in awe of SLV/AGQ over the last year. Hard to believe there is more to come...

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  35. this move caught me with my pants down! I had reduced my leverage yesterday hoping to get a better price today

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  36. Uatatoka,

    I purchased my first AGQ lot for $54 last summer and probably sold and re-purchased it 10 times in the 9 months since.
    Every time I sold, I said the same thing! :)

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  37. Wouldn't $200 be a nice round figure to take some profit on AGQ? Surely this cannot breached so easily?

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  38. Fung,
    The market isn't watching AGQ its watching silver. AGQ just moves based on what silver is doing.

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  39. IF we have started the rocket ride now,I believe it will be very important to follow Gary's counsel about not selling anything. There will be prices that make one drool, but the biggest gains will come at the end when the public goes nuts. You really want to be there for that! As SB said, he'd be selling into something like today under normal circumstances, but if we are going to go parabolic, the best thing too do is smile and walk away.

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  40. MLMT'S silver short position is so underwater only oil giant BP can get to the bottom of it

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  41. Pima, your explanation was better than mine:)I would actually like to see gold make a higher high here before my system sells and than the fractals would match last fall's rally better.My sell signal came 32 days into the cycle and marked the exact low to the day.

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  42. I thought that for a swing-low to occur price has to rise above yesterday's high. What am I missing here? :)

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  43. S&P action during the past 2 weeks is very similar to what happened in November. I still think we need to test the lower end of this range (1295-1290) in order to move up.

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  44. i dont see any serious resistance on the silver chart until low 39. Anybody else watching any other level?

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  45. Raz, I looked and looked for silver resistance and all I could see was clear blue sky:):)

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  46. The only way I can see a daily continuing lower is if the dollar finds a bid here. But looking at the recent price action (and in light of Trichet's comments), there's none of the panic sell-off like at the November low - so if there is a bounce, I think it will be weak and gold/silver will simply trade wideways for a few days before taking off again.

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  47. lol i hear you, if i do anything there is to play the fib extension at 39.10 by offloading half my position.

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  48. Sending a kiss and a hug to everybody!
    ...which is usually a contrarian indicator :)

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  49. Very happy with SBR.to, which until three days ago was my only silver stock (small investment). Then I added another total loser stock, which is SQI.V at 0.5 (also small investment). I was lucky, because it exploded the next day. Now it's forming a nice bull flag. There is a lot more to come in both, I'd think; just look at the long term charts. I think it's these type of laggard stocks that will do best now among the silver stocks in this current phase.

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  50. I have been in things like this before. (I was short gold after the Hunt Crisis top---now that was fun!) The tricky thing is that stuff that usually works won't. Look at SPX. A million "overdone to the upside" indications over the past few months has not stopped it. Look at SPX in 2008/9. Overdone to the downside meant nothing. I for one am counting on Gary's analysis that we are going to have a spike up here. Makes sense to me to end this leg. If that is so, trading out to try to save 2% and then missing 35% is a negative expectation unless you are 95% sure you are going to be right on getting that 2% dip---and you cannot be that sure.

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  51. I thought the swing low as 1436.10.


    Also, the 4 hour /GC chart looking flag like here.

    http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/4e4f2e20-28de-4353-8e9f-a618d2996078

    EXK looking good today.

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  52. Hi Gary, Really love your work. Has taken a long time to make myself to stick with Old Turkey, but I'm glad I do now. You have made a believer out of me.

    An idle question in view of the incredible relative strength being shown by silver, & based on Gold projected to hit $1650 region, do you think $50 might be starting to look like a conservative target for silver?
    Maybe one for the nightly report some time! But many thanks for keeping us on the straight & narrow.

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  53. EXK's trun today, and up 22% in four days.

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  54. Poly,

    I too am disappointed with the performance of SLW and especially after the earnings which I thought looked really good. I guess the street disagrees. Maybe that's what's holding it back today even with such a big day with silver. I am also a bit concerned with the high PE, anybody care to comment about that?

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  55. Does anyone know what happened to ZSL (double silver short)? Did they do a reverse split? It was $8-$9 and then all of a sudden it is around $30 while silver has gone up.

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  56. Ryan,
    many tech stocks had PE's in the hundreds during the tech bubble. SLW price has nothing to do with PE's. It's all about expectations for the future price of silver.

    There is a gap on today's chart that probably needs to fill. That probably explains SLW sluggish performance. But now that $44 has been breached I suspect it won't be long before it hits $45.

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  57. Brian,

    Nice calls on NGD and AXU. Unfortunately I was in meetings all morning and missed them both
    :(.

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  58. What price would gold need to surpass in in order to form a swing low today?

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  59. as hard as i try it is impossible to catch one of these short term tops and i have to take a drawdown. I am worried this will happen when we get to the top of the C wave and we end up getting creamed. I want to hear what is Garys plan to get us out at the top without getting caught in a huge spike.

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  60. My bad. $1436.10 is the number we're looking for to be breached. That would form the swing low.

    I mistakenly said $1440 earlier.

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  61. Gary,

    When you discuss swing lows or highs are you looking at spot or the futures price?

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  62. Nike: I'll sell my TBT if TLT hits 91. I'd like to hold it as I want to be short bonds for distance at some point, but if this isn't it yet, well, so be it. It'll have been a profitable few-days-long trade instead of the start of something bigger.

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  63. Gary (or others),

    Got some dry powder to put to work in next week or so. Wait for a pullback or pile in on top of this run? Insights much appreciated! Best of luck everyone.

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  64. Likewise with PE's, many financial stocks had very low PE's (under 10)just before the collapse started in late '08, and that didn't stop them from getting vaporized.

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  65. Thanks for explaining Gary. I did put some more in Slw yesterday and held off adding to agq hoping for lower prices today but going to hold off for now and sticking to Gary's plan.

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  66. Congrats to all those who has been long and strong. The G train still humming along

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  67. The old Josh would be selling into this gap this morning. The new Josh is holding on, though the temptation is strong.

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  68. Silver Bugs,

    How much above price of silver should one expect to pay for silver eagles?

    I paid 2.55 above yesterday. Is that normal pricing for coin dealer profit?? TIA

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  69. Gary, a naive comment. Why we should have also SIL instead of putting all money in AGQ, if we can stand the drawdowns?

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  70. Vish, I am in UK as well.

    The thing about spreadbetting is that long-term you will lose out by repeatedly paying the spread as the contract rolls over. So if you are planning on investing for long-term, far better to use an ISA.

    Also, spreadbetting isn't always tax free. It is considered to be gambling, and tax free as long as it is not your main source of income.

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  71. I'm from europe and check gold/silver prices valued in euros perhaps a bit more than us traders.

    Lots of times it makes much more sense looking at PM chart in eur than usd. Today with 'new high at 35' silver bumped right into 25.150 eur mark it touched 2 times before.

    And in fact it's 6th time breaching the 25eur/ounce level in top of a spike before falling back down.

    Maybe worth looking at.

    As a side note, i dont really have all that much trading experience, so my comments are more about what i find interesting and perhaps some of you with years of trading can either spot something new or explain me, that i just invented the wheel for n-th time ;) just sharin...

    Cheers from europe,
    Sasha

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  72. As eager as we all are to see PMs keep trucking higher, I doubt yesterday's dip by gold constituted a daily cycle low. Gold has yet to break the cycle's trend line, and the dollar is still due to bounce out of its own daily cycle low. I suspect the next few sessions will see one more dip lower... not that it matters since I'm not trading around daily cycles, but it helps to be mentally prepared.

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  73. I'm showing a nice little pennant on the 15 minute gold and silver charts. If those break up, we will easily get our swing low.

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  74. aries,
    If one can stand the draw downs then it's an option. Of course it's easy to say one won't have trouble with a draw when everything is going up, but another thing altogether when it actually happens.

    I remember everyone saying back in Dec. how they would back up the truck if silver corrected. But then when it did very few actually did load up at the bottom.

    In real time corrections are scary.

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  75. Tommy-

    I'd say that's a good price. Check out AMPEX, the are going for 3-4 bucks over spot!

    http://www.apmex.com/Category/160/Silver_Eagles___Uncirculated_2011__Prior.aspx

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  76. Doc,

    When you say the next few sessions will likely see one more dip lower are you talking about the dollar or gold/silver?

    Thx

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  77. Gary,

    The plan from last night. Will you let us know when you action it?

    Paul2

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  78. good question, aries, and not really that naive (at least to me).

    Today SLV is up 3 percent, but SIL up only 2.65. AGQ is up 6 percent!!

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  79. Sounds like things are heating up again in Libya and it's getting ugly in the capital which was still one of his strongholds.

    http://www.reuters.com/article/2011/03/04/libya-idUSLDE72300M20110304

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  80. Tommyd

    Tulving and Bullion Direct are both higher. You can get them for $2 over if you use the nucleo exchange at Bullion Direct with patience.

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  81. Sasa, Welcome aboard. As TZ would say, this is the internet, so don't worry about speaking up.

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  82. AGQ 200 - nice round number - hey, it worked for SKF and SRS back in the day. The Demark exhaustion MONTHLY for DXY 72.5 is only 5% away - we already have the QUARTERLY exhaustion - how high can gold/silver go if the dollar is limited down to 5%??? Be very careful here and don't get too greedy!!!

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  83. Tommy D-

    I paid 3.10 over yesterday, but it was at a local coin dealer.

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  84. @Strellsy

    Thanks for that. The way i see it...

    Spreadbets:
    - rolling contract costs
    - higher spread

    ISA:
    - trade costs (10GBP per trade for me, but no ISA mgmt fee)
    - spread can be high too i've noticed
    - dollar exposure

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  85. Coolkevs, A 5% move in a currency is huge to say the least.

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  86. It's official, the protests are now in Saudi Arabia.

    http://latimesblogs.latimes.com/babylonbeyond/2011/03/saudi-arabia-shiite-protest-sunni-sheikh-east-imprisonment-jail-politics-king-reform.html

    And apparently there is a large potest set for tomorrow and then 3 more in the month of March.

    Iran is also expecting more protests early next week. It seems as if the entire Arab world will e engulfed in attempted revolutions over the coming weeks and months.

    Gary - Could this be the thing that propels gold/silver higher (or at least the excuse people use when we know it is actually the 3 year decline in the dollar).

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  87. CoolKev,
    I've said this before. Three year cycle lows aren't about technical indicators. They are about fundamentals and panic sentiment readings.

    I think you can probably throw your Demark indicator in the trash can for the next several months. It isn't going to work any better than any other technical tool right now.

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  88. Gary,
    For those of us who are retired, but with substantial portfolios, it isn’t prudent to put all the money into PM. However if the dollar collapses and the general market goes substantially south as you project… can you suggest other additional areas to hold that would gain or at least hold value as the dollar and market goes south? Even better, could you address this in the nightly update?

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  89. Vish,

    Absolutely, which is why spreadbetting is better for trading short-term and ISA is better for investing long-term.

    I use both, and very often siphon off profits from my trading accounts into my ISA or SIPP.

    That way I am building core assets which I plan to hopefully pass on to my children.

    Putting your trading profits into a SIPP is a great way of getting 20% or 40% tax relief from the government (depending on what income bracket your are in).

    So not only are you not paying tax on your spreadbetting profits, you are then offsetting them against your income and getting the tax back!

    There is nothing better than taking £800 from my trading account and turning into a grand overnight by paying it into my SIPP.

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  90. Karl,
    I only want to be invested in a secular bull market. PM is the only one left with the possible exception of agriculture. Diversifying your portfolio into other areas that are not in a bull market isn't spreading risk it is creating it.

    The Fed is making it very tough to find a safe place to put your money. I want mine in the bull.

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  91. Karl

    I'm on pins and needles waiting for your answer

    I love these answers!!!

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  92. Gary, So DBA may be a safe bet with
    food prices rising?

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  93. Hey DG,

    Safe travels next week.

    Hopefully you'll be taking a laptop and will check in on us from time to time.

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  94. Tlady,
    Ag probably is a good investment I just don't know how to do a cycle count on it. So I can't tell when to get in and get out. It's also driven by weather to some extent and I really have no idea how to predict that.

    I can on gold and silver so I want to stay in the area where I know what I'm doing.

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  95. No posts from Beanie. How will we ever continue to know that PM's are not in a bull market?

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  96. Gary, I certain understand. I am new to large metals positions and I can
    clearly see you know them. Thanks.

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  97. I was wondering what happened to Beanie myself.

    Gold and oil was supposed to fall and the stock market soar if I remember right.

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  98. Gary,
    2 days before gold made a new high Beanie said he was leaving the blog for the next 2 years.
    We also found out he has a blog
    Beanie's blog and he has a newsletter that he sells for $100/month

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  99. This is DBA (commodities/aggriculture) against CEF (half gold/half silver):

    http://stockcharts.com/h-sc/ui?s=DBA:CEF&p=D&yr=3&mn=0&dy=0&id=p32883144985

    Why in the heck do you want to invest in that over precious metals?
    Are you even aware of how they are performing vs each other? Or are you just looking at random headlines about "limit ups" and food shortages?

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  100. In 3 years you have only lost HALF of your investment against gold and silver. What a great deal.

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  101. Pima: Thanks for the good wishes. I am about as likely to go without my laptop as without a leg, so no worries there. I will just be on flights and leading training classes so off line a lot. I wouldn't miss everyone's comments, however. I'm very impressed with how many savvy people there are on this blog. I won't be posting any of my short-term trades while I am traveling, though.

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  102. Doc,

    Granting that we didn't break gold's trendline, is that some additional requirement for a cycle low ? I've been reading Gary for nearly a year and I don't remember that requirement being discussed.

    Please elaborate.

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  103. Looks like we got the immediate swing low today in gold.

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  104. TZ, I am just retired too early and want to not spread risk into just one area but it sounds like metals is the only bull.

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  105. Gold has not had a swing low yet ... I'm still hoping to buy more.

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  106. Looks like SLW is starting to make a move.

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  107. Please explain, Avvan. I thought breaking the intraday high on the candle of the previous intraday low constituted a swing low.

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  108. By the way gold definitely show strength this morning by not dipping below 1416.

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  109. gary,
    Is there reason not buying GDXJ?

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  110. Kitco shows gold's high today at 1433.40 and the high yesterday was 1436.10 - still a few dollars short of a swing low...

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  111. "Now would be a good time for mlmt to peek in and tell us he covered his gold short yesterday in the afterhours session."

    For -1 dollar lost.

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  112. It has to break yesterday intraday high ... 1436

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  113. TRADERLADY,

    My comment was general since a *few* people have been discussing commodities lately.

    Oh, and others say I'm too direct, "smart", and "superior" when I post, so you have to factor that into my reply. (Seems people often view my comments as attacks when I simply don't react well to things I think are pretty clearly documentable as wrong.)

    Regardless, I'm just calling it as I see it. The chart doesn't lie.

    There is risk in ANYTHING.

    There are people who think concentration in metals LOWERS risk. Other say it RAISES.

    There are a hundred calculations YOU have to make about YOUR situation. (And if you can't answer some of them or there are blind spots then clearly keep reading, asking questions, and preparing. The only person who will look out for you is YOU. And none of my posts are investment advice - they are just opinions of mine. Buyer beware.)

    Yes, I guess having DBA spreads your money into another investment. But you would also have lost 1/2 over metals in last 3 years and there shows no clear sign of a change - although it might be flat lately).

    Keep working on it and do as you see fit. I'm in metals, not ag.

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  114. Dumb,


    I believe we need to break yesterday's high to produce a swing low.

    Someone can correct me.

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  115. OA92,

    Most of gary's investments are in silver.

    This is a chart of GDXJ against silver (SLV)

    http://stockcharts.com/h-sc/ui?s=GDXJ:SLV&p=D&yr=1&mn=0&dy=0&id=p11799298233

    Would that be a pretty clear reason to not be in it? (Of course all kinds of arguments can be made about "in the future" or whatever. But for *ME* I focus on what is happening *now* and say "If/when X or Y changes, THEN I'll re-evaluate". I see no change for now.)

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  116. TZ,
    "This is a chart of GDXJ against silver (SLV)"

    is that a typo SLV for SIL?

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  117. traderlady,

    You are smart to consider not putting all your eggs in one basket. I would not be doing that either EXCEPT for the fact that Gary has studied this market extensively and so far has been excellent at getting in and out at appropriate times.

    I certainly would not be as heavily invested in PM's as I currently am if I did not have access to Gary's knowledge.

    It's a tough time to be an investor, stocks in a very long term bear and very large trading range, and "safe" investments like muni's and treasuries subject to volatility and even possible default (on the muni's). Even though PM's can have crazy scary volatility, it seems like (with Gary's help) they are one of the least risky places to be right now.

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  118. The funniest thing on Beanie´s blog is that he calls Jim Simons an investor :)

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  119. I've got my fingers crossed for a nice down draft at 1:30 ... scare the Sh^& outta anyone who bought today.

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  120. I am sitting on some march 180 calls in AGQ.
    Sell into this strength or hang on? Been lucky so far since i really am not an experienced option guy. any thoughts would be appreciated.

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  121. jamesr,

    I believe you are correct. However, the question is: "the high for what instrument?"

    gold futures has not broken its high of yesterday. GLD has. Gold spot, I don't know because I don't have access to a chart of gold spot and I don't know when it begins and ends its trading day.

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  122. If you want exposure to agriculture and other soft commodities you have to go with the futures contracts. ETFs like DBA, DAG and so forth suck big time. If you can´t trade futures, than forget about soft commodities, there is just no other efficient way to do this.

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  123. OA92,

    SLV is the silver etf trust (essentially silver).
    SIL is the silver mining stock ETF.

    My chart was intentionally using SLV to show the performance of GDXJ against silver - since silver is the basis of most of gary's investments.

    SIL, the silver miners, is FLAT against silver itself. You get no added advantage to having the miners (at THIS TIME), but you likely have the added risk of company/general-stock exposure.

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  124. Pima, Thanks. I have been following
    Gary for a long time and just started to subscribe. It was hard to commit
    the money but with this blog and your confidence in Gary it helps. I shall add at the next daily low.

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  125. Dan,

    If I had your AGQ calls, I would not sell. I would, however, think about rolling them over into April or May or even June calls.

    You could also exercise the calls--that is, convert to AGQ, but you would have to have the money in your account to buy at the 180 strike price, and also you'd probably get a better price to go ahead an sell the call and then buying AGQ with the proceeds if you do want to exercise (because there is probably a small amount of premium left in the option price).

    Bottom line is that you need to think about getting out of them before option expiration. Rolling to another month is probably the best option (ahem) at this point. that way, you stay invested. But you would want to sell the calls and buy the May or June calls at pretty much the same time so you don't risk the market moving up while you are out of your position.

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  126. "..Diversification is something that stock brokers came up with to protect themselves, so they wouldn't get sued. Henry Ford never diversified, Bill Gates didn't diversify. The way to get rich is to put your eggs in one basket, but watch that basket very carefully. And make sure you have the right basket.

    You can go broke diversifying...."

    -Jim Rogers


    To those who haven't gathered, I believe in concentrating investments and then focusing on them intently. My experience with 'spreading money around' is that I don't make much of anything that matters.

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  127. Pima, Thank you I appreciate it!

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  128. TZ, It sounds like this has worked for all of you. Nice comment.

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  129. traderlady, before I found Gary I was investing in gold ... about 10-15% of my account. Gary and this blog have convinced me to put it all in ... I have made more money in the last 18 months then I had in the previous 10 years.

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  130. I think you start with Gary investing in some gold. The you get interested in some silver, then the miners, then 100% silver miners with AGQ, next silver futures. After that? We all pool out money together and start a junior silver miner. :)

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  131. TZ,

    The number 1 reason that people go broke is lack of diversification. It is the number 1 reason why people drop out of the Forbes 400 list. They have 95% of their net worth in their own companies, and then something goes wrong and they lose almost everything.

    Bill Gates does diversify, just look at Microsoft today and compare it with 15 years ago.

    And by the way, Jim Rogers is diversified in several commodities.

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  132. Jay,
    We could be like the reality show "goldrush" where a bunch of guys leased a claim up in Alaska.
    So far I think Gary's way is more profitable But, mining looks kinda fun lol

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  133. When I'm as rich as they are maybe I will think about diversification again ... until then hi ho silver!

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  134. Av/Jay, I was just looking into canceling Vestorvest. I know you are laughing.

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  135. Dan,

    I agree with Pima. I would roll to April. There are no May's out there and to buy June you are paying the premium for the extra time, but that isn't time you will need as this C wave be over by June expiration.
    I am holding April 180's and depending where we are at in the C wave will either sell roll into May (which they should add after March expires).

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  136. Put it this way, diversification guarantees you won't go broke ALMOST EXACTLY PROPORTIONAL to the SAME EXTENT that it guarantees you won't get *RICH* either!

    Professional entities are concerned that you don't got BROKE. They are NOT concerned that you get rich (but they do want you to make enough to pay their bills.)

    Since YOU are concerned about getting rich (I assume), YOU are the one who has to take charge and try to pull it off.

    There are clear issues with concentrating investments. Danger. Danger.

    Concentration risk involves SKILLS.
    It involves DISCIPLINE.
    It involves VIGILANCE

    (And of course there is never a guarantee of success in the end anyway.)

    The theory of many here on this blog is that Gary makes up for whatever experience, vigilence, discipline, or otherwise that they may be lacking on their own and thus allows a concentration of investment even for novices.

    It's a valid view I would say, but of course, again, nothing is guaranteed.

    We live in VERY unusual times financially and the risks are all over the place. Do the best you can and don't stop looking for ways things can go wrong.

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  137. I have heard the expression to get rich, concentrate your assets. To stay rich, diversify.

    Mark Cuban is a great example. Sold his company to Yahoo for a few billion in stock during the dot com craziness. But he sold out of a good chunk of his Yahoo stock not at the peak, but for a billion or so +. Thus when the dot com bust came, he had plenty of money in the bank.

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  138. David K: Sugar just showed up on my short screen. You mentioned a big move up soon...? Mine is short term so maybe dip first, but what makes you think it will rally?

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  139. TZ said:

    "Put it this way, diversification guarantees you won't go broke ALMOST EXACTLY PROPORTIONAL to the SAME EXTENT that it guarantees you won't get *RICH* either!"

    Up to a certain point, diversification diminishes risk more than it diminishes returns. So by diversifying the right ammount (which is not too much) you actually increase your risk-adjusted return.

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  140. Regarding diversification:

    "Diversification is a protection against ignorance. It makes very little sense for those who know what they are doing."
    - Warren Buffet

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  141. Well, this bull continues to find ways to keep riders off its back. Yesterday, it looked like we were beginning into an actionable correction, and today it takes off again, leaving prospective positions on the sidelines.

    My trade journal has buys at the next swing low and following break out, but a one day drop doesn't constitute a swing low signal for me.

    Of course, I am over 85% invested and have been for the past few weeks, but for my parents' portfolios, I'm much more conservative, and would have loved an orderly correction from yesterday's sell off to add to currnet holdings. I should know by now, the gold bull is not going to give hand outs. :)

    Ride em cowboy!

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  142. Diversification presupposes ignorance. If you don't know how a coin flip will wind up, you play the "odds." But if you were able to exactly measure the force of the launch, where the flipping pressure is placed, the wind in the room, etc. you would know whether it would come up heads or tails. It is work to measure all that stuff, of course, and if you don't want to do the work, bet 1/2 your money on heads and 1/2 on tails and you are well diversified. But if you do do the work and know something it's crazy not to increase your expectancy by concentrating. And then you have a stop in case you are wrong (remember the old stop at HUI 518?), so your risk is not "Oh my God" but,say, 10%. But to risk 10% to make 100% seems pretty good to me and leads to a much easier retirement.

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  143. Here is an excellent article by Robert Kiyosaki, entitled "To Diversify or not to Diversify"

    http://finance.yahoo.com/expert/article/richricher/1649

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  144. Thanks wingman,
    would you guys roll into 180's again or something higher but still ITM?

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  145. DG,

    My sugar call was made based on my analysis of its price action, I don´t know how else to put it :)

    It´s probably based on a larger time frame than your trade´s time frame. Even though I didn´t take this trade, my stop would be somewhere around $28 (May contract)with a target of $35-$36

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  146. I might as well throw my comments in on diversification. BG (before Gary) I was diversified by being in only the spx & ndx indices. I'm still in those (all the time, long or short) but now I hold Gary's recommendations, also. I might add that I'm making a lot more in PMs (when they go up.)

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  147. DG,

    Our stop is still 518 in theory isn't it, or did I miss something in one of the reports?

    J

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  148. David K: "Price action" works for me. If it breaks for a few days and I get a buy setup I may take it. Let's see what happens.

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  149. When Warren Buffett and these other guys talk about diversification they are being critical of the insane level of "diversification" of the mutual funds. Buying 100 different stocks make no sense and serve no diversification purpose. There are studies that show that 10 to 15 stocks is the best diversification level, anything above that and you are not diversifying your risk anymore.

    Does Warren Buffett´s portfolio consist of only 1 stock?

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  150. Well,
    I just took a look at the charts, and have to say that I think the move into the daily low is still in play.

    The dollar is hitting its Novemebr low, and likely a small break below it will allow money to shift hands and take the dollar a little higher for a few days, with the commodities complex correcting. At least I hope that's the case.

    Looking at the long term chart of the dollar, it seems like it wants to go to 69 and change. A nice cleansing counter trend move would be just what the doctor ordered to set things up. Too bad this is all tied to the demise of our society.

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  151. Jennifer: I honestly don't know where the stop is at this point! As a trader I believe I'd be able to tell something was amiss long before 518. It's usually the previous bottom (we shouldn't make a lower low) so that'd be gold at $1307! Anything else is possible without ruining the higher high-higher low pattern.

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  152. Sadly the stop is still HUI 518 or 1307 Gold ... until we get a complete daily cycle that hasn't changed.

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  153. Jayhawk, Redwine and Rand,

    thank you for your responses.

    I wonder the higher silver goes,, basic demand may drive the 'above spot' up even more.

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  154. read from twitter, someone suggesting shorting AGQ now???

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  155. Pima,

    Good explanation on how to manage the ITM AGQ calls. Helpful.

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  156. All time weekly close for gold could happen. Looks like around 1423 or above needs to hold

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  157. I took a look at Beanie's blog. He has a list of his most popular posts. Most have "0" comments. Quite a following he has there. In addition, he hedges most of his statements (especially his "PMs will crash soon" ones) 6 ways to Sunday. I'm tempted to post a link to SMT there.

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  158. Anyone who know the answer please ... assuming we do not break over 1436 today ... will that still be the target for a swing low on Monday or will it reset to today's high?
    The terminology document mentions something about some swings taking multiple days to complete ... wondering if this is one of those situations?

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  159. Dan,

    If most of your PM positions are these AGQ calls, I would roll into options that are further in the money. Gary likes a delta of .80 or greater. Right now that would have you buying 155 or lower strike price for June, 170 or lower for April.

    The problem with these AGQ calls that are that deep in the money is the bid/ask spread--it's very wide.

    Note that you will pay less premium on the Aprils, but you might have to roll them again if the C wave is still cranking in mid-April. Each time you roll, you eat some or most of the spread.

    You might consider SLV deep in the money calls as an alternative. You don't get the leverage (although you ARE getting leverage by using calls instead of buying shares outright), but the spread is better.

    It would help you to decide if you had a screen that shows delta, bid/ask, volume, and open interest.

    Another thing you could consider is doing most of your funds deep in the money and a very small percentage out of the money (OOM), or even at the money. The OOM calls are more of a lotto play--more volatile, but potentially more profitable. Also, the spread is usually very tight on OOM options. And OOM options start to lose value quickly as expiration date gets one month or sooner. If you have OOM calls and for some reason we get a longer than expected move sideways/down for the daily cycle low, those OOM calls will lose money.

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  160. A move above $1436.10 will form a swing low.

    Let me warn everyone that a swing low in no way confirms a cycle low. On the contrary a swing this quickly virtually guarantees the cycle low is still ahead.

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  161. It gets better.

    The requirements for joining Beanie's site are:

    "1) You must have a copy of my manual. You can't really understand and trade my system unless you know what it is."

    His manual is $400!!! Amazing!

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  162. "virtually guarantees the cycle low is still ahead."

    Unless you go back and mark that previous dip as 'the cycle". That would suck from a planning/expectation stand point, but the next cycle being the last one in this C-Wave (2nd last?), is that too much to believe?

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  163. Manual to understand his trading..?

    Maybe the manual is some kind of a bible?

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  164. It turned out to be a good buy at 1415 yday. Moving stop to b/e now.

    Poly/Pima.. The idea then was this daily cycle could strech another week or so. Dollar's gotta test the Nov lows leaves more upside for gold. Given those, 5 pt stop's not gonna hurt you.

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  165. Please do not provoke Beanie into coming back here.

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  166. Pima,

    Can you say more about volume and open interest? I never know how to use this information in deciding which call to buy.

    Thanks.

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  167. Thanks Gary. I thought there was some sort of a two or more days "rule." Even a daily cyle should be a minimum of half a month, 14 days, or around 10 trading days.

    I get confused becasue the cycle starts from the trough low. So, the cycle is half over already as it starts heading downward. It just has to finish up a half cycle. That is why there may be only 7 days remaining before the swing low.

    I simplify a normal cycle by looking for about 4 trading days up followed by about 4 days down.

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  168. Arun,

    I don't know, my gut read is telling me that's all we're going to get, contrary to what cycles should do. We see similar action in equities too!

    If we're coming to witness the climax of this massive c-wave, it fits this thinking.

    Also when we rocketed higher first thing this morning, I was thinking this was going to be a big sucker and a big drop into that cycle low. But looking at the size, strength and sustained buying of today's move, it just feels like the type of lock out move you see just after new cycles begin.

    Of course the dollar not forming a bottom yet dampens this theory, but then yet again it itself is heading into a 3 yr crises low, don't expect too much there.

    No shortage of fun.

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  169. Gary,

    I'm a bit confused. Do you think we saw the cycle low in gold now or still ahead? Apologies if this is something only for the premium newsletter.

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  170. I'll go over it this weekend.

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  171. silverman,

    I believe the bid/ask spread gets tighter as the volume and open interest go higher. If something is very thinly traded, spread will be wider. I believe that's why the spread is so wide on AGQ compared to SLV options because the volume and OI are so much lower on the AGQ's.

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  172. for example: look at SLV April 25 calls. OI of 12,442, bid ask spread of 10 cents.

    look at AGQ April 160 calls. OI of 20, bid/ask spread $2.40 !

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  173. yeah, the more I look at AGQ options versus SLV, the less I like the AGQ's. For me, SLV is the way to go.

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  174. this is the biggest divergence … metals – G&S stocks I have ever seen in last 10 years … metals bigtime up, silver even more … XAU red and HUI barely in the green.

    Normally this would mean to take profits in metals – 100% sure.

    But this divergence is different in my opinion … just have no clue what it could mean?

    Anybody ????

    War it is NOT – because defence stocks are red … what else???

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  175. Wouldn't we get the same bang for the buck if we would use the same money spent on a $40 ITM AGQ option and spent it on $5 ITM SLV options instead?

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  176. That must be some manual Beanie is selling, with no strategy other than to hold until Dow 36,000.

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  177. Beanie only has one subscriber/ apprentice .. the well known MLMT. They've kept out of sight today, i think they went to do a fundraiser, carwash or something like that, so they raise enough money to cover their silver shorts.

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  178. The volatility on AGQ is WAY higher because of the leverage, so naturally they will be priced accordingly.

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  179. decided buy gdxj today..over 39.7...

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  180. I think the divergence can be explained by the supply shortages of physical metals. It is a multivariate shortage ranging from investment demand and industrial demand exceeding supply. The markets are thin and gaining traction, and the price of silver is shooting up, while miners may be more tentative in the day to day due to costs of high oil.

    Just my two cents.

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  181. Sure wouldn't want to be short metals over the weekend like mlmt, especially with large unrealized losses. Recipe for disaster.

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  182. Neil,

    Use an option price calculator, give you an idea on which is going to perform best, based on your expected outcome or strategy.

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  183. A goldhamster: XAU and HUI are both green (neither is red). They do not need to outperform every day and are stocks, with the Dow down 150.

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  184. DG thanks --- yes $XAU turned green in the meantime ... still this is pretty strange.

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  185. AGhamster,

    Not seeing the divergence.

    GLD up .9 percent
    GDXJ up 2.0 percent
    GDX up .89 percent
    SLV up 3.8 percent
    SIL up 2.98 percent

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  186. SB,

    Silver right up on high's ALL DAY long suggests many want to be as long as possible going into the weekend.

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  187. I recalculated and with targets of $50 slv and $400 AGQ I would probably need about 13 SLV options to equal an AGQ option. To do this with April SLV I would need to buy lower delta options.

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  188. I suggest we no longer refer to the two trolls who will not be named here. By doing so, we only encourage their reappearance. It would be very nice for all of us they don't return here for at least two years!

    ReplyDelete

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