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Saturday, May 28, 2011


There is quite a bit of speculation lately as to where the impending intermediate cycle decline will take gold down to. Today I'm going to throw my guess into the fire.

Some people expect gold to drop to  $1400. Some $1300. Some even doubt that gold will ever go down again. However after watching gold for years and studying its history I think I can safely say that gold never misses an intermediate decline. Next week will be the 18th week of the current intermediate cycle. That means gold is now in the timing band for a bottom. If gold is in the timing band for a bottom a top can't be far off.

In the weekend report I discussed the impending stock market yearly cycle low and three year cycle low in the CRB that are both coming due together this summer. A yearly cycle low in stocks is the second most severe selling event ever seen in the stock market, only exceeded by a four year cycle low, which by the way is due in 2012. The three year cycle low in the CRB is the single most severe selling event for commodities.

By a twist of fate these two major selling events should happen simultaneously this summer. The combination of of these two major cycles bottoming together will almost certainly intensify selling pressure into the stratosphere. In an environment like that fundamentals will go right out the window.

In theory gold put in it's yearly cycle low last January at $1308. Barring something extraordinary I would not expect that low to be violated. However we could very well see something extraordinary. 

While the pattern isn't "clean" there is an ongoing T-1 pattern in play on the gold chart that suggests that $1575 probably was the top of the current C-wave and if that is so and the T-1 pattern plays out as expected we should see a test of the the mid-point consolidation during the summer sell off.

That consolidation zone for gold's T-1 pattern comes in at roughly $1225- $1250.

Of course I have no idea if this will play out as we move into the summer but if in July gold touches the $1250 level I think it will be the last great bargain we will get in the secular gold bull market.


  1. Gilbert,

    You can make money on the short side with RWM, PSQ, shorting the Euro with EUO, going long the dollar with UUP, and shorting oil with DUG.

    Or you can sit in cash. Either way, the real money is going to be made a month from now.

  2. Hkc,

    Grand supercycle has been calling a top in the market with his rising wedge for over a year and a half. It's gotten old for me and I rarely follow him anymore. He posts his trades but I have not really followed. I'm sure at some point he'll be right an he'll surely pat himself on the back (again).

  3. Pima and Hot Rod:

    Thanks. That's good to know. Both the caution and the disregard...

    I am sure Gary will get us out early with his much more conservative play now.

  4. David,

    Thanks for the advise

    Im just a new in this, any other advice it will be well received.

    Thank You, from NJ

  5. Interesting article on the Comex Silver Problem:


  6. Gilbert,

    Since you're new to this, don't go too crazy shorting. It's very hard (and scary) to short, even if you're right. Your timing has to be spot on. If you feel you want to do it, risk only a portion of your portfolio -- maybe 10 to 20%.

    Avoid the ultrashorts, because you pay a high price for timing errors. Something like UUP should be a pretty easy trade.

    There will be much more money made by going long at the end of this decline.

  7. Which of the following could have the best return, if shorted, during the impending down-leg: Oil, banks or S&P?

  8. HOLY BUCKETS! Who is this guy?

    A FASCINATING Big Picture analysis by Gordon T. Long, "The Economic Death Spiral Has Been Triggered":


  9. jhnewman, that article is here too:


    I have zerohedge in my browser bookmarks. keeps me in the know and I would recommend it

  10. The other option, so to speak, is buying puts on the ultra long funds. This way time decay works to your advantage. So even if the index it is based on doesnt go up much, it should still decline over time.

  11. Thanks, Eamonn.

    And may God bless the Irish!!! ;^)

  12. I will add to the what if stuff. Since we are talking belief in probability, and not actual events. Most experienced guys I talk to understand the difference between being right and wrong and probabilities. BTW the guys that follow right and wrong usually lose most everything.
    In any long winded event...I think the USD is done as a reserve currency. I expect an IMF currency of some sort to replace the USD as a world store of value. This event I will expect to be the bottom for the US economy, as Ben the F'ing moron, can no longer print without recourse..of course he can print now, but it steals from worldwide investors in USD first..so it softens the blow....I expect only one more C-wave type event....I also expect this D-wave, or decline to be a good spot to go old turkey and lock in. I expect a US reset, and look forward to buying dividend paying stocks again...I hate gold, but to invest in stocks as an investment is crazy....I may be nuts, but crazy is something else. I differ from Gary on silver, as a polite difference, I think an opportunity will develop to buy silver shortly time wise...however the opportunity cost to owning miners, if this plays out, may outweigh that opportunity. The money made 3-5 years from now will be made by investments made this summer/fall. Get ready

  13. jhnewman, and may God continue to bless the United States of America ;o)

  14. Keys, very interesting comment

  15. PM performance since the daily cycle low.


  16. The T-1 patterns seem to be changing. What happened to 200-200-200?

  17. 200-200-200 is still a possibility, although it's fading. We would need to see gold rally almost $100 in probably less than a week. The odds of that are pretty small as short term traders almost always take profits into any large one day moves.

  18. It's pretty tough to drive any asset class too far above the 10 day moving average. Regression to the mean always drags it back down before it can stretch very far. For gold to reach $1625 in the next week it would have to stretch massively far above the 10 DMA. Much farther than it ever has before.

  19. What is 200-200-200? Couldn't find it.

  20. The original target zone for this C-wave. Three legs up of $200 each. The first leg broke out above $1025 and rallied to $1225. The second leg rallied to $1425 and the third target was $1625.

    I think it's going to be almost impossible to get there now that the current daily cycle is running out of time. We needed gold to continue to grind higher day after day to reach that goal.

    Gold threw away two of those days on Wednesday & Thursday. That made my decision that I didn't want to stay in the sector any longer.

  21. Gary,



    Ok, here is the link again I put in from the last post. Still, I am amazed at the quality of this guy's chart book. I'm like a kid in a candy store here.


    The above link is his chart on the gold forecast.

    One interesting thing I noticed....

    Gold has consistently over the past 2 years touched the 34 week moving average about every 6 months. Jan 2011, Jul 2010, Feb 2010, Aug 2009.

    Guess what?.... The next one is "due" in July 2011. Projected target at the 34 week MA is around 140 on the GLD a 10% move from the top, which looks to be the "minimum" correction.

    Another observation is that from the prior peak to when it hits the 34 week MA, it is "approximately" 3 months, give or take. This coincides with the 1575 peak so far in early May.

    "IF" this thesis plays out, we will not make a new high here and will get at least to 140 on the GLD by the end of July.

    Also, look at the Accum/Dist stat. It looks pretty close to a double top. The Full STO looks like it is bouncing solidly off the 50 range, but it still could be a bearish bounce. For a bullish one, I would rather see a solid bounce from a deep oversold level under 20, something like this:


    Which just happened in equities (SPX).

    Hmmmm. Maybe our Oracle from the SIn City (Gary) is on to something.


  22. Bob Loves Hawaii,

    Thanks for your great put strategy info exchange with Blake on the last post. Would you be able to help me out with something similar for GLD?

    Let's say I want to buy the GLD Sept. 140 PUT (trading at $2 right now). What strike would I want to sell? Something like the Sept. 143 (trading at $2.87).

    This would net me 87 cents a contract.

    Your info was very valuable in terms of "exit points" (35.80 and 38.40 for SLV). What exit points would we have for this trade? How do you determine the exit points? Is it based on TA or based on the option's pricing?

    Certainly, I would want to wait a bit until gold get's higher, right?

    Thanks in advance for your help.

  23. Really disappointed in the HUI's performance especially if this turns out to be the D wave.

    I mean it is basically where it was 3 years ago, and solidly broke above the 2008 highs fairly recently.

    Looking back on the HUI's performance over the last 11 years, I've noticed that with the exception of the 2008 crash, it has always held above the yearly spikes on the weekly chart. If it manages to close below the 490-500 level it will basically invalidate this prior behavior.

    I've been long the metals mostly through the miners over the last 10 years and am about to throw in the towel and just play the futures. Maybe this is a sign they will finally outperform the metals. On a risk adjusted basis the miners have been tremendous losers relative to the metals over the last few years.

  24. Gary, In the last post you said it is time to step on the gas in stocks. Previously you said get out of everything equity related, and for sure you would never get tangled up in the stock market. Reality is that the mantra since I have been here has always been to not get tangled up in the market.

    Has the market become undervalued? Are you becoming a market scalper? We really seem to have a sea change in thinking here.

    Sign Me Concerned

  25. Often times we read about the HUI not breaking out due to rising energy & labor costs, which often times rise when gold rises.

    I'm starting to wonder though if the real reason might be that we're running out of high grade deposits. I heard this on King World news this weekend.

  26. Bill,

    Another thoeory I have had is that the miners are discounting hyperinflation--total loss of faith in the currency. In that situation, dollar denominated paper is going to suffer no matter what relative to the metal itself. Add in all the event and politcal risks miners are subject to and the metal vs mining stock question is easy to answer.

  27. Greenspan, wow good point.

    I'm now really hoping for Gary's D wave scenario, so that I can buy bullion in hand this summer. As insurance. At least 25% of our wealth.

  28. With the other 75% I'll buy Gary a chicken burrito.

  29. Gary, SB, DG, Bill from Japan,

    You seem to follow in the back of your eyes the US treasuries for a view on the economy. Personally, I think that inflation is here and I really don't understand why people are buying Treasuries unless we believe in QE3.
    But it is difficult to short them as if Gary is right and the summer brings us a stovk market selloff, the Treasuries are going to cruise higher...
    What is your view?? Thanks

  30. Hi Sophia,

    I agree w/you on inflation, but I don't trade treasuries - I think that Gary recently said they move too slowly and that's right. I do however watch rates a bit just to make sure gold doesn't get blindsided.

    Am sure the others have better comments though. I think Gary gets up soon, so shouldn't be long.

    - Bill (from Colorado but now stuck) in Japan

  31. Chartists, w/Gary's T1 Gold Pattern article in mind, I was looking at (2 months) long 60 min charts of ABX, GG, NEM and SLW - and I'm not sure but the last 2 weeks of each chart looks like a bear flag.

    How does it look to you?

  32. Bill, what's the deal on the Fukushima reactors? Is everything out in the open now?

  33. Brian,
    I said a month ago when silver crashed that the market had changed and trades would be much shorter now. We will have to make money where we can and not just by holding long term to the PM market.

    With that view I weighed the risk reward and decided it was probably safer to buy into the beginning of a daily cycle in stocks (for a trade only) as opposed to continuing to hold on to PM positions that are not only late in their daily cycle but also very late in their intermediate cycle.

    There is too much risk of getting caught in a severe intermediate decline in the metals at this point. Plus they have shown a tendency to gap down in the morning trapping longs into losses or seriously cutting into profits.

    I just have no desire to risk getting caught in that at this time. I would rather wait for an intermediate bottom that I can buy and hold onto for a while.

  34. Thanks Gary. There was a lot of meat with that report. I am going to have to read it 3-4 times to re-train my thinking.

  35. Gary,
    would that imply a low in silver at the bottom of this d wave, then perhaps an upward drift back to $50 or so over the next 1.5 years or so and then the final C wave that might give us perhaps a 7 x $50 rally to get us to $350? Or what's your view there?

  36. PS: That would be about 700% between 2012 and 2014 with '14 being the final top...

  37. Basil,
    That's just about exactly what I would expect.

  38. BTW I corrected the final chart in the weekend report and drew in the major cycle lows correctly with expected lows in the correct timing bands for anyone interested.

  39. Gary, would you have any thoughts on buying ATM Puts expiring in August on ProShares UltraPro Russell 2000 (URTY) near the upcoming stock market peak? Last summer, they lost ~50% in the correction

  40. There's no volume in those. If your going to do puts on the Russell go with IWM, much more volume and thus liquidity when you need to get out.

  41. E,
    You better give yourself more time than August. Where would you be if the cycle runs really long or if in August you get a violent counter trend bounce before another leg down.

    Folks in theory it sounds easy to make money on the downside but in practice, in real time it's actually pretty damn tough to make money on the short side.

    To be honest the only time I'm ever confident on the down side is when I'm playing a broken parabola. Those are the only instances where it's relatively easy to hold shorts or puts.

  42. Hi Gary, regarding basil's notes on silver and its potential run up to the bull market high, has your views changed on not touching silver for the 3-4 years?

    Do you recommend buying AGQ at the bottom of the D-wave and go Old Turkey until the bull finishes (based on your shortened scenario in the weekend report) ?


  43. Let's take last years yearly cycle low for instance.

    The vast majority of the move occurred in just a few minutes during the flash crash. The market was moving so fast that you had no possibility of exiting even remotely close to the bottom.

    Immediately after the market experienced a violent counter trend reaction that rallied almost 10%.

    In order to make any money you would have had to time the top of the counter trend bounce correctly and then exit during the marginal break to new lows.

    Then we were treated to two violent counter trend rallies. The second of which made a higher high, in theory signaling the correction was over.

    One would have had to some how guess that the bounce was a fakeout and sell the top and then again exit into the marginal break to new lows to make any money.

    I've been at this quite a long time and I can tell you that I had no chance of timing that mess correctly.

    Do you really think you are going to successfully navigate something like that? I can assure you the move down into the yearly cycle low this year will probably be every bit as complicated.

    99% of you will fare much better in the long run if you just sit on your cash during this process and then use it to buy gold or miners when they are being given away for pennies on the dollar.

  44. Ollie,
    You can't buy AGQ unless silver is in a strong trending move up. We won't see anything like that in silver again for a couple of years.

    If you want to buy silver at the bottom of the D-wave then do so by buying physical silver and putting it in a vault.

  45. Valuable report Gary, It's greatly appreciated.

    IMO, I think 2014 is a bit early to expect the dollar to lose its reserve currency status. Especially with with my expectation that the Euro will go belly up first. I think that'll probably boost the dollar for some time.

    Austrian economists foretold most of what is currently transpiring, except their timing was always off, so I learned to never underestimate the power of the FED to kick the can a bit longer.

    As long as oil is priced in dollars, I believe the dollar will remain the reserve currency, but with the middle east constituents getting restless with their US propped up leaders, a case can be made that it's about to end.

    Some even say that DSK made to much noise about the dollar's reserve status and he was setup. I don't know the facts, but the US is the biggest bully after all.

  46. The three ETF's with high volume, that are stretched the most; AGQ, ERX, TNA.

    ERX puts is my choice, as I want to be on the same side of Obama/Bernanke as they force down the price of oil in this D wave.

    This latest rise needs to roll over first though.

    ERX is making lower highs, and is under the 65 EMA, a failure there is very bearish.

  47. Gary, thanks for your answer. You too, eric!

  48. Gary, at the bottom will we just buy SIL and GLD to hold until 2014?

    Thank you.


  49. Elaine,
    I'm guessing you meant SLV & GLD.

    I don't think so. I will need to see what happens during the move down. For one thing the leader of the last move almost never leads during the next run. Silver was clearly the big winner during this last run so we probably don't want anything to do with silver.

    Miners were the big disappointment during this C-wave. More than likely they will be the big winners of the next one. Especially if they get taken out to the woodshed and beaten to a pulp during the D-wave.

    So until I see how this unfolds I can't say for sure where we will invest at the D-wave bottom.

    It's possible that metals may not even be a big part of our portfolio during the next rally. Biotech has been performing exceptionally well. We may end up taking a large stake in biotech at the bottom of the yearly cycle low.

  50. Just tyring to understand timeline, are we saying that D-wave should be done by July or August, and then A-wave starts? can someone correct me, if I am off?

  51. That is my current thinking

  52. Any particular reason why Biotech is performing so well? Anyone have a clue?

  53. Probably because it will be the driver of the next secular bull market. Discoveries are being made now that will ultimately change our world. The market is starting to sniff that out.

  54. Gary, in the weekend report the very topmost SPX chart and bottomost chart show very different expectations for the coming Late summer cycle low. The top vpchart back to last summers lows. The bottom chart only a margin break of this past March lows before a heafty bounce. Was this intentional to show the possible complex nature?

  55. RB,
    My charts are almost always drawn just to show trajectories not actual targets.

  56. I put a disclaimer under the first chart so this is clear. I will try to remember to do this from now on.

  57. Gary, thank you RE biotech info.
    IBB up 42% since the bottom of the correction last July. nice

  58. GOLD Cycle Chart ,Seems to Point to Early June as a Possible Meaningful Pivot in Time and Price, We shall see:


    GLD Observation Chart

  59. Gary,
    If reading correctly, and all goes as planned, then it would seem buying GLD move at the bottom this summer, we would be holding long until 2014 or possibly longer?
    And trades would be on 2x metals and or miners?

  60. There is no time like the present.

  61. At ease,
    Again this depends on what happens during the D-wave. We want to be in what ever sector will give us the best percentage gains. I kind of doubt that will be gold.

    More likely it will be miners or even something like biotech. I don't care where I make money I just want to be profitable and have a reasonable chance of outperforming. There's nothing that says we have to only make money in gold or that gold will outperform other assets.

  62. Thanks Bill for your comment.
    Good luck in Japan

  63. Gary,

    Thank you. If you expect that Silver might reach $300 in 2014 wouldn't it be easiest to buy it at $30 and just hold? Since I do not trade options, or "trade" much, do you think something else might happen in between now and then?


  64. Gary - in your weekend report you say that miners could take a 40% haircut. Is that from the current price or the high, say in GDX?

  65. Elaine,

    Why would you want to sit on dead money for years when you can earn a better return elsewhere in the interim?

  66. Dollar chart worth looking at:


    False breakdown out of pennant or are we going to repeat the 70s with full broken down pennant formation?

  67. Gary, thanks for your response re AGQ

    Previously you've mentioned: "To be honest the only time I'm ever confident on the down side is when I'm playing a broken parabola. Those are the only instances where it's relatively easy to hold shorts or puts."

    Does that mean mean in your view that buying ZSL (ultrashort silver ETF) for the D-Wave has a good risk/reward ratio as silver is in a collapsiong parabola so there's still downside pressure left for the D-wave?


  68. Ollie,
    I think there is probably better ways to play the broken parabola in silver but I guess a small position in ZSL might work if you time the entry correctly.

  69. You're probably better off with just a straight short on SLV except shorts have unlimited risk, small profit potential, and it is a bull market after all.

    Folks there are times when the safest & best strategy is just to sit in cash. For most of you that will be the correct way to play the D-wave decline and move down into the stock market yearly cycle low.

  70. Gary, I agree, I don't think I have ever successfully shorted anything...it's just that the charts in the weekend report make it look so easy! :)

    If say the SnP500 will be appx 20% lower in 2 months time, and this is the probably the last daily cycle it sounds very easy to say I'll buy QID somewhere near the top and hold for 2 months and buy GDX at at the bottom of the D-wave!

    The key word is it SOUNDS easy! :)

  71. Thanks Gary, My thought was that if GLD was the cheapest it will ever be going forward, for those who want the longer term investment, GLD would be it for the long profits.

  72. David,
    I'm inclined to agree with Elaine's thinking and that a 700% gain over 3 years wouldn't exactly be sitting on dead money.

  73. Gary,

    There are a lot of Miners that have already shown a 40% 'haircut'.

    Would that indicate that we had the D wave or should we consider that the Miners could actually take a much larger 'haircut' if the D is still in front of us ?

  74. Gold hasn't even corrected yet. Gold needs to suffer a 10-15% correction before this will be over.

    By 40% haircut I was referring to the HUI dropping 40% from its highs.

  75. Elaine,

    I tend to agree.


    easier said than done. Trading in and out of various markets to increase % gains sounds like a good idea in theory, but it usually never is. If PMs were to top in 2014 and you buy at a D wave low in 2011, that's hardly a bad investment. If say there is a 700% gain in the price of silver, as Gary is expecting, it doesn't matter much whether that gain is stretched out over three years, two years, or just one year. If you're in the boat you're in the boat and don't risk jumping on board too late or missing it all together. Once silver takes off from the D wave low, it will be hard for you to guess how many times the price will still return to that low, if at all. You would be risking buying not the low because you might be uncertain whether silver is already taking off or not. So buying at a D wave low, I think, is about the best idea anybody can have.

  76. Little Siver Cycle Hit on Friday:

    21 Trading Day Cycle


  77. I think 350$ dollar an ounce Silver is preposterous... But who knows.... If the worlds currencies fall apart i would think the best thing to own would be a garden and a small orchard. Also maybe a few cases of whiskey and some bullets for your rifle.

  78. Gann360, Hot Rod, others too...
    You guys are putting a lot of work into your research and charts. I appreciate it.

    You too Gary...

  79. aklaunch,

    When silver was 8$/oz, a lot of people thought 40$/oz would be insane.

    In other news, I got to start reading about fibonacci, it looks quite interesting.

  80. I am in the middle of chart school. Haven't learned about fibonacci just yet. Looking forward to it though!

  81. Gary, one more question, with the decline in PMs, are you also thinking that equities will go down too? I might have to move my 401k into money market if its true.

  82. This comment has been removed by the author.

  83. Basil,

    Yes, that was my thinking. I am no longer able to actively monitor the market. I don't think going from $30-$50 in 18 months and then going to $300 in another 24 months is dead money.

  84. aklaunch,

    there was a time when 14K in the Dow seemed preposterous. The price of anything at a final bull market top, regardless the market, seem not preposterous only in hindsight.

  85. Gary has always spoken about 2016-17 as a target for the bull market top. 2014 I presume is the top of this next cycle. He may have changed his thinking, for all I know.

    I don't see any reason to argue. You should own whatever you want. I will avoid silver while it's consolidating and wait to buy the breakout.

  86. Elaine,

    and even if silver will 'only' go to $100, which I feel should be a given after the printing spree, that would then still be north of 300% in three years. To top that with any other investment we would need an awful lot of good luck. I'd be very happy with 300% in three years let alone 700%.

  87. David,

    yes, he seems to have changed his view on timing regarding the final top, so what we're discussing here is relevant only if he is right about 2014.

  88. Troy,
    Thew answer is in the weekend report.

    2014 is just a guess. I said if the Fed continues to print then this could run til the next 3 year cycle low in 2017.

    It all depends on how long the Fed continues to try and make a failed strategy work. It's been 11 years so far and they haven't been able to figure out that they are the cause of all our problems.

  89. David,

    and having contemplated the chart you posted the other day, I understand that you may have a very different view of the time frame for the spike in silver.


    David posted a chart of silver in the 70s the other day. After the spike of 1974 it took silver five, six years to launch another spike. What made you change your view from 2017 to 2014? I just read something about a 120 year super cycle low in 2014, is it that?
    Haven't wrapped my head around all this cycle stuff; to me it still sounds a little like mumbo-jumbo. No offense intended at all, I simply haven't looked much into the whole relevance of cycles yet and haven't found the right literature to do so. I read some of Tim Wood's work and used to listen to him on financial sense news hour. I also heard a few interviews with Nenner. Then Prechter talks about cycles too, and some other people out there in cyber sphere. Looking back I didn't find any of their predictions, which were based on their cycle work, particularly relevant. Also there seems to be such a vast amount of cycles of all kind that I find my eyes glaze over some times.

    Again, anyone with a recommendation for literature on cycles, I'd highly appreciate any thoughts.

  90. Basil,

    I agree. I had many, many years of virtually no success and sideways trading until I found Gary. I would rather be patient, if it will be profitable.

  91. I really have no idea when the gold bull will end. It could be 2014, 2017 or 2020.

    I do know what to look for. A Dow:gold ratio of 1 or less and everyone and their cousin buying gold.

    When we see those things happening it will be time to sell our gold.

  92. Gary,

    shouldn't all of the cycle analysts come to somewhat similar conclusions? If they don't, why not? How does your cycle work differ from say Nenner's, Wood's, or anybody else's? What sources have you been using to get to your understanding of cycles and how proven you think is your approach to cycle theory? Thanks.
    Btw, I do realize that your analysis of the PM cycles seems to work so far when it comes to mid to long term moves, and that is where I find it most helpful.

  93. Basil,

    There are cycles and then there are cycles. Too many analysts are using the same term to describe their own version of cycles.

    Gary's cycles are very different from Nenner's and Prechter's. Those two looks for a time interval (calendar time) that is repeated in the markets. Gary's cycles are not tied to time in the same way (note that he uses trading days or weeks, not calendar, and that the cycle length has a normal range that is quite wide). IMO Gary's version (and Doc's) are the only version of cycle analysis that actually gives a trader an edge in the markets. I've looked at Nenner's work and it's very hit or miss. Prechter's is mostly miss (because of his fixation on ONE high level EW count out of many that could be possible).

  94. "I do know what to look for. A Dow:gold ratio of 1 or less and everyone and their cousin buying gold.

    When we see those things happening it will be time to sell our gold."


    I think that's already so standardized in people's view that it will for sure not coincide with a top. I read that in so many variations already that I am sure 'this time it will be different'.

  95. Basil,
    That is kind of the definition of a bubble. They all pretty much end the same way no matter how many bubbles humanity creates.

    So unless human nature has changed I don't see any reason to expect the gold bubble to top any different than any other bubble in history, other than it might be more extreme than most because of the thin nature of the precious metals markets.

  96. Gold Miners - Possible Trigger

    The Chinese have made it very plain they want more gold and fewer dollars. The Chinese are buying all their mines output(300 tons/year) or so it is rumored. They are the world leader in gold production. Physical gold is hard buy especially when you want
    1,000s' of tons.

    The Chinese have reported gold holdings three times in ten years.

    2001 - 394 to 500 tons
    2003 - 500 to 600 tons
    2009 - 600 to 1,054 tons

    Follow this logic. Newmont has 90 million oz in reserves. That's 2,800 tons. Market Value is $28 billion.

    What would you do if you were China and wanted to get rid of some dollars and increase your gold position? I know what I would do as China's central bank president.

    There's your trigger.

  97. Basil and Elaine,

    Gary's four year cycle low due next year may be the reason that you may not want to hold cold turkey.

  98. The jobs report on Friday is expected to again to be heavily influenced by hiring at McDonalds. Wonder if you can get gold dust on your fries.

  99. Jin,

    Currently I am all in cash, as per Gary's recommendation a few weeks ago. I will purchase at the start of the A wave when Gary gives the signal.

  100. Elaine,
    Same here. I work full time too, so try not to play wiggles, but holding out for better odds bet. I am thinking of going after Agriculture, and tech too after the yearly cycle low. I will play etf on energy bets.

  101. Good report Gary, quite thorough.

    I can see everything that you are looking at, but I was Bullish Metals the whole way...thinking maybe into mid June, but just taking it 1 step at a time.

    I had conflict the way I look at GDX and GDXJ also...I thought they looked so similar NOW and at the Jan i.t. low, EXCEPT for the MACD got weak on the re test of the previous highs.


    so cautious is prudent.

  102. Alex, you think this gold run could continue into mid June????

  103. The one thing you can count on in manias is that they run much longer than anyone expects.

    In 2001 the Wall Street Journal was talking about a housing bubble. In 1996 Alan Greenspan was worrying about "Irrational Exuberance". You could have sold at any point along the way and watched the markets explode for years without you.

  104. Éamonn, re: the Fukushima plant in Japan, I really don't know. I pretty much distrust companies and governments, because it's human nature to lie when under stress, so that's my assumption, is that it's much worse than they are saying. When the reactor is cool, that will be the green light. Fortunately for us, we're 150 miles upwind, so it's the distance and the weather reports that I trust, not the plant itself.

  105. Bill, thanks for that update. I imagine things were a LOT worse than what has been admitted.
    Hair-raising predictions for the summer: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/5/27_Gerald_Celente.html

  106. Has anyone some experience or insight into GGGG or GLDX?

  107. Just stick with the liquid ETF's.

  108. would a EU country debt default likely increase or decrease the spot price of gold?

  109. It's irrelevant. Gold is going to find a way to move down into an intermediate cycle low no matter what happens.

    If it was at the beginning of an intermediate cycle then gold would use an EU default as an excuse to rally. Now that it is very late in the cycle gold will use it as an excuse to sell off.

  110. Gary, thanks for your reply. However, I was speaking in general terms, and not just around now. Maybe they get one more year out of the EU before a default, but it seems inevitable. It seems likely there will be a double dip recession this summer in Europe. Just wondering how it would affect gold spot. I know equities tumble when there is EU debt tumble in the news.

  111. It also occurs to me that the riots of the "Arab Spring" could spread to some EU countries during the summer.

  112. EAMONN

    I was bullish metals and have been long P.M. stocks as of a week ago ( re-entered AG @ $17, and EXK @ $8.50 area and a few others .

    I sold EXK and AG Friday..volume was lower each day up the last 4 days up.I sell stocks that "float up on less interest".

    I WAS expecting $1600 gold and I have seen gold go up $40/day, so not impossible in the "time' Area, but now I am seeing weakness. I was 100% in for the last week. I am now 30%.

    Long story short, my last post chart was showing similarities that I thought appeared between the Jan I.T. LOW and this May's low. I was as bullish as Garys WED report.

    Now on a wkly chart of GLD...Macd didnt confirm the last high (weakness) and I will look at this "bounce/" for clues. I expect a pullback...looking at the 20sma/gap fill/ and light volume.

    Time does seem to be running out , I have a flexible plan.I still can see a minor IT LOW and the Dollar 3 yr low in the fall, and P.M.'s run hard in the fall ( but 1 day at a time :)

  113. ALEX, thanks for clarifying. My plan is to buy silver Puts when gold hits $1560, so I was concerned that you saw more strength ahead in gold. As far as I am aware, $1560 should be bettered, but maybe not by much.

  114. EAMONN

    GLD COULD pull back to the 20sma on light volume and bounce into June 1st week- Or it could plunge through the 20sma and drop. ( I am still SLIGHTLY bullish for a small pullback and another bounce)

    But I am only in NAK, HMY, XTXI (energy), and 1 ag stock. I am ready to sell or add at anytime :)

  115. GGGG would be perfect for the A-wave.

    But it only traded 1,300 shares on Friday!

  116. Thanks David, so perhaps a smaller amount in GGGG, since the Miners are expected to do well for the A wave.

  117. Alex,

    What sector, other than PM, do you think could have the biggest drop before the A-wave?

  118. ROB L

    I am kind of looking into that now.
    It would likely be the ones that have run up a lot, and just drop.

    I was going to look at all the ETF's and see which have run up .


    DG shared that with me a few days ago.

    Goodnight (eastcoast time)

    P.S. GBG was catching my eye Friday. And I am still 50% bullish :)

  119. What about the affects of 1 billion more people in China buying Gold and that affect on the market?

  120. "That means gold is now in the timing band for a bottom. If gold is in the timing band for a bottom a top can't be far off."

    Am I the only one confused by this? WTF. Gary drank a bit too much kool-aid this weekend.

  121. Gary, I am with you... I too want to be in the sector and stock that we can count on making us all money!

  122. Gary: Thanks for the heads up on Biotech. If you decide to play it, are you going to base timing decisions off of SPX cycles or develop new cycles for Biotech?

    I know you have mentioned that coming up with cycles for Agriculture is difficult due to weather – so wanted to know timing tools for Biotech.

    Also, are you thinking of ETF’s like the gold sector or individual stocks within Biotech?

    Thanks for all your work! Looking forward to old Turkey again at the end the big D!

  123. Rick,
    Think about it. If gold still hasn't corrected but it's in the timing band for a bottom it means we are very very close to a top.

    The timing band for a bottom is from 18 to 25 weeks. Next week will be week 18. An intermediate decline almost always lasts at least 5-8 weeks.

    Since we have to allow enough time for the correction to run it's course it means the upside from here is very limited.

    Actually I'm pretty sure the intermediate correction began on week 14. I doubt gold will be able to make a new high and will probably start back down in earnest again next week or the week after.

  124. One bit of chart supporting evidence for what Gary is saying is that, in addition to the apparent bear flags formed over the last 2 weeks, the 60 min charts for both GLD and SLV also show clear and strong negative divergence in both the RSI(14) and in the PPO (MACD).

    We all know divergence doesn't always pan out, but that said it often times does, and when it does it marks the end of the move.

    I'm now expecting GLD & SLV to fall next week, but how far I have no idea. But if GLD breaks below the pivot of 2 weeks back at 143.42, then I'd bet we are doing an ABC correction w/C going down to the 150d or 200d EMA, or further.

  125. Sang, thx for the comparison charts between the dollar-index 1970's and today. Very amazing resemblance! Maybe we are about to do the same retest of the broken support-line now as then.

  126. Gary

    I also think that the move up in gold is limited. But I think that we can se prices close to 1575-1600.

    You wrote that the timing band for a bottom is from 18 to 25 weeks. Next week will be week 18. An intermediate decline almost always lasts at least 5-8 weeks

    So we could se 2-3 weeks of higher prices in gold and still be in the right timing band?

  127. fwiw, Gold is consolidating just above the 38.2% retrace of its recent corrective move. Fib theory gives a 70% chance of touching the 23.6% retrace line at 1553, which equates to about 151.30 GLD.

  128. SANG

    I meanst to thank you for that chart too...It was thought provoking, but cycle wise -its hard to know where in cycle timing the dollar was then compared to where it is now ( But , in my opinion, it could follow that other one exactly if we were still going to get that 3 yr low.).


    Just an F.W.I.W....I honestly traded Bio tech off and on in the past-maybe 4 or 5 yrs ago . I lost money on companies that would lose an approval ,or the company was doing great, then had a major set back and gap down 20%-40% or more(maybe the bio-etfs would be safer).

    It was frustrating. That sector alone has me gun-shy, I was NEVER successful for long.

  129. So much for the 50 DMA on UUP? Are you still expecting the $USD consolidation to be over with in a week or so?

  130. Richard Russell - Subscribers Should Buy Silver Once Again

    Link http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/30_Richard_Russell_-_Subscribers_Should_Buy_Silver_Once_Again.html

    Also according to Charles Nenner (May 27, 2011) "Gold continues on a buy signal given at 1503. Silver continues on a buy signal given at 36.60.A good close above 1530 could see Gold reach as high as 1606."

  131. What are the new drugs & developments which should trigger such a rise in valuation? Some reseachers are saying that it might take 100 more years to cure cancer. Additionally all discoveries which are made now will take at least 10 years to lauch a drug.

    I would be more interested in an index tracking green energy. Any idea? The Germans might quit nuclear power in the next years. Recently I talked to some physicist working on solar & wind energy. In conclusion they believe a complete change in the power grid is practicable and will come.

  132. Moneyman,
    The problem is the daily cycle. It will be 17 days old today. The average duration on the daily cycle is 20-28 days. Don't forget you have to allow 5-8 days for the cycle to move down into the cycle low. That means gold has just about run out of time here.

    This is one of those times where the cycles are giving us a very loud warning that it's time to tap on the brakes or park the car.

    The recent tendency to gap down is making it even more dangerous.

  133. Alex,
    As long as one sticks with the ETF's biotech is perfectly safe.

    You may have to break your habit of trying to pick individual stocks to play this sector though.

  134. Gary, Richard Russell is buying silver again. Is he insane?

  135. No way would I buy silver in front of what will almost certainly be a hard intermediate correction.

    Look folks at the top the media was full of stories about house wives dumping their silverware onto the silver market.

    Now supposedly there is a run on silver except when I look at the dealers I don't see any shortages. If there was a run on the COMEX wouldn't you think that silver would be flying out of every available outlet?

    YES the COT is bullish on silver. It's semi bullish on gold. But the fact is if gold corrects 10-15% sellers are going to continue to sell the broken parabola in silver and they are going to sell it hard. I have no doubt we will see panic selling in silver if gold corrects 15%.

    Like I said yesterday there is only one time where I feel comfortable on the bear side when it isn't actually a bear market. And that is when a parabola has broken.

  136. I know ...I will NOT be buying individual stocks in that sector -
    I wasnt as good at it as they were at pulling the rug out from under me :)

    As for Rich Russell- He still said he expects the summer doldrums and a run in the fall, so he may just not care about timing ( he's in his 80's right?) He just wants to buy now and hold through winter.

  137. Unfortunately Richard knows nothing about cycles. I think we can probably time a little bit better entry than to buy in front of an intermediate correction. But I'm pretty sure we will be holding the sector as we move into the fall.

  138. There are a couple of problems here. First, unless gold is ready to decline into an 8-year cycle low, we should not see a previous intermediate low violated. So, a drop below $1310 for gold seems unlikely, and the the fact that sentiment never really became exuberant supports the notion of a less severe decline.

    Second, the commodity and equity cycle are NOT due to bottom together. They will most likely begin declining together, but the intermediate equity cycle is due for a low sometime between mid-July through the end of August. The 2.5-year commodity cycle is due to bottom in September at the earliest. However, considering that the last commodity cycle ran short at only 2 years, we are likely to see the current cycle run long and probably find a low in early 2012.

    That said, I do expect the next intermediate equity cycle to fail, so it is possible that stocks and commodities continue falling together into simultaneous lows next spring, but we can leave that conjecture for another time.

  139. Actually the S&P and CRB bottomed almost perfectly together at the last 3 year cycle low in March of 09.

    The oil cycle is due to bottom around the second week of August and the CRB is mostly driven by oil. Stocks are due to bottom in the second week of August also.

    They probably won't occur exactly on the same day but I expect it will be within a week or two of each other.

    Gold will probably bottom first and bottom several weeks ahead of the CRB and stocks. However the kind of selling pressure that is going to be generated at a yearly and three year cycle low will probably keep gains in the sector muted until it passes.

  140. Pepper, I am in the Green Energy industry, and I can tell you that margins are being compressed and the industry is totally dependent on government subsidies.

    Europe is trying to figure out how to get out of the subsidy commitments they have made, and China is driving margins at the wholesale level to the floor.

    End user customers are broke or reluctant to commit to a ten year payback project.

    Almost every manufacturer uses the same technology, no differentiation.

    Otherwise a great business. :-)

  141. Hi Gary,

    In weekly report you mentioned dollar should bottom early next week around the employment report and expecting SnP to test 1400 in coming weeks? I'm a little confused, will the stocks rally with rallying dollar?


  142. Yes I think they probably will.

  143. I think any move below $1380 would be in the "buy zone". $1340-$1320 would be in the strong buy zone.

  144. Hi Gary

    Thanks for the answer.

    You said that the average daily cycle last about 20-28 days. We are now on day 17. It seems that the time is running out. We have maybe a few days left for gold to go higher..

    But if the cycle last longer..Like 30-35 days then we still have time. Like 2 weeks.

    I dont remember if the last cycle in gold was long or short?

    Im invested in gold. Not the stockmarket.

    The feeling is that its such a mess everywhere in the world.
    I cant understand that the market is rising in this mess..

  145. Money,
    The last gold cycle ran exceptionally long, which would argue against another long cycle.

    The reason that stocks are rising is obvious...liquidity.

    In 07 stocks continued to rise and double top even after it was obvious the financial system was in trouble.

    QE2 doesn't stop till the end of June. In theory we could continue to see stocks rise even past June as momentum could push it higher for a while.

    That's what happened last year when QE1 ended. But ultimately the economy is headed back into recession. I don't think the stock market has ever been able to resist that no matter how much money is printed. Recessions are deflationary. Capital is destroyed at a massive rate.

  146. Why cant the market become self-sustaining? Why are the recessions always coming back?

  147. E,
    Because the world is in a secular bear market. In order for the global economy to recover into a sustainable uptrend we have to do two things. First we have to cleanse the massive debt that has built up over the last 40 years from the system.

    It's impossible to build a sustainable recovery on debt. We tried from 2002 to 2007 and look what it got us.

    Second we need a new industry to come online. Something to drive a massive surge in productivity and create millions of jobs.

    In the 1920's it was the automobile and mass production. In the 50's & 60's it was plastics and electronics. In the 80's and 90's it was the personal computer and internet.

    Every one of these forced a paradigm shift in the way the world operated. They created huge surges in productivity and job creation. Until that happens again we will be stuck in this on again off again recession. And unfortunately we are making it worse by trying to stop it with money printing.

    All money printing does is create massive mis-allocations of capital ... as we saw during the housing bubble.

    It also causes inflation, especially commodity inflation and that opens a whole new can of worms. Commodity inflation causes severe hardship in economically stressed countries. When people can't afford to eat they go to war.

    This is why all the great wars happen during periods of economic stagnation while the world waits for the next "big thing" to come along.

    Idiot politicians exacerbate this process by trying short term fixes which almost always just spike inflation further.

  148. Gary, thank you for your answer. I cant say I know much about economics, so I find it hard to see the "big picture" with any sort of authoritative sense. I think people have become used to easy credit over the last decade. Socially, I think the world is in a dangerous position. I believe that there will have to be a crisis before the political will becomes sufficient to solve the problem.

  149. Here is a short idea.


  150. Also, I find it ominous that the US Government seems to be saying that current inflation is at 2%, but from other sources, inflation is in reality for the ordinary person at a rate of 10% (www.shadowstats.com, and Marc Faber)

  151. If London and US markets are closed, who's market is up for metals?

  152. Guys, why don't you sleep in one day of the week?

  153. Believe me I try. I made it to 5am today which is a miracle.

  154. Haha. I hear you. :)

  155. Ahh.. comex never sleeps....?

  156. Today people from Greece withdrawall 1.5 bilion Euro from the banks,scared that Greece is on the verge of colapse any moment.In my country Bulgaria we have 7 Greek banks and people start doing the same thing from Greek branches.Situation here may soon get out of control and that would colapse the Euro I think.

  157. Doc,
    I did a quick look back and the only stretched CRB cycle I see is the early 93 to late 96 cycle. For the CRB cycle to stretch into next spring would require a full three years.

    Base on the data of that only occurring once in the last 30 years I'm willing to be a burrito on the next bottom also marking the 2.5 year cycle low in commodities.

    What say you? :)

  158. http://www.topusnewstoday.com/panic-capital-flight-in-greece-depositors-yank-1-5-billion-euros-in-2-dayseu-wants-severe-bail-out-conditions-including-international-tax-collection.html

  159. Ivan - wow, another Bulgarian! Didn't think I would ever see one here!

    I am too trying to correlate the deep trouble the EU and Euro are in with a potential plunge of the price of gold - hardly imaginable (especially when thinking about the Euro crisis in May 2010), but as we know, everything is possible on the markets, including the opposite of what everyone expects. Let us see how things will turn out in the following weeks.

  160. Vodni,
    I think is going to get really bad in Europe.I use to work with Greek people.Most of them are very dificult and very rarely they are happy with anything.Now with those restriction they got really angry.
    I've been this summer in Greece.It's really a diferent story and everyone can tell the diference.
    The main indicator is that they use to go out and eat and drink every night.Now I saw only empty restorants,just few tables with people.

  161. http://www.10sigma.com/files/The%20End%20of%20Time-Part%20I%2005-22-2011.pdf

    Martin A.

  162. We all know the situation in southern Europe is getting worse every day. Greece is small compared to Spain (and yes, they already have revolts too) - if the latter or another country would also need to be bailed out, we could see some very dramatic developments over a short period of time. I personally think there could be still a couple of months before it gets that far.

  163. Souvlaki depends of the restorant 12-20 $

  164. Gary is actualy right .The next big bad news will come from Europe.
    Even my country is in European union I dont believe in such unions.Its 28 diferent cultures,languages and people.It will never work out.

  165. Last time I was in Greece was 1979. I was a kid back then but I still remember how the plakas smelled of grilled souvlaki.. oh man I'm drooling...

  166. I was wondering too if crisis in Europe would force the price of gold up, or would it drive it down?*scratching head*

  167. Gary,

    Is Zermatt in the cards?

    Need confirmation to book the hotel.

  168. Pepper2009/Bob loves Hawaii,

    regarding sustainable 'green' energy:

    I understand that our energy problems can be solved by tapping the heat trapped deep in the interior of the planet. Gigantic thermal power plants would need to be constructed and operated, by means of which all energy requirements on our planet could be met.

    No dangerous waste products of any kind would arise and there would be no worst-possible-case-scenarios or super worst-possible-case-scenarios, as there will always be with atomic/nuclear power plants.

  169. A fall in the Euro would lead to a spike in the dollar, which should theoretically cause gold to fall.

    But that fall would presumably be offset by Europeans buying gold, so the drop would be short-lived.

  170. Eamonn,

    You are correct on the CPI. It is understated. The U.S. is not th eonly country palying games. So is China.

    It also means that the Fed's and China's reported "real" interest rates are also understated.

  171. Isn't there a big difference between where the people of Europe will put their money for safe haven and where the institutions/Wealthy will put it?

    The people likely wouldn't be buying physical, USD or US treasuries. Their money would go under mattress, real estate.

    The wealthy would invest in other countries or markets or commodities (China, US, gold).

    What is different today than it was back in 2009? The stock market is a lot higher. A high stock market provides people with paper profits and an appearance of wealth.

    Maybe I, as middle class, don't have the best perspective but nothing really changed for me and my wife from 2007 to 2009 other than our 401K going way down and then back up (we were not invested in the markets outside of 401k). The key was we both kept our jobs (essentially our long term insurance policy).

    It appears as though it may happen again, wash, rinse and repeat. However, there is a huge difference this time around. Lot's of people are expecting a top or a crash is imminent. It seems to me the popular opinion isn't the one that happens.

  172. Gary wrote: "QE2 doesn't stop till the end of June. In theory we could continue to see stocks rise even past June as momentum could push it higher for a while.

    That's what happened last year when QE1 ended."

    Didn't the market start to roll over in April last year - one month before QE1 ended and fall thru July - a total of 17%.

    QE2 was announced by Bernank in Aug, but big money probably had knowledge of it sooner (july?).

    Enjoy your blog - both the technical and fundamental comments.

  173. Gary,

    That was a great summary of the Austrian economists position in your reply to Eamonn. Saves me reading a few volumes of Van Hayek.

    Governments will always tend to misallocate resources (I think Milton Friendman once said that if the government was put in charge of the Sahara Desert, the sand would run out in 25 years).

    But if we get a hyperinflation, stocks and gold could be the best investments; cash and bonds the worst.

  174. My Thoughts On Europe - The domino affect should carry this around the globe to China, Russia, USA and a reshuffling of nations will be needed.

    Consider world war 2.36 as an option to rebuild the peoples trust in banks?

    Watch for UN troops to take control of Greece, Spain, EURO-zone and maybe the USA before it's over.

    NWO imposition is not out of the question. Who do you side with is my real dilemma .. China, Iran Brazil and Russia -- they do not like UN inter-planetary control, imho, nor do I.

    RFID money and chipping people do not sound like the CHRISTian way of life. Does it to anyone here?


  175. The problem I think is that its political suicide for a US President to preside over call for the required recession/depression to cleanse the system. Reagan with Volcker somehow did it in the early 1980s to get rid of inflation and yet Reagan got re-elected. I'm not sure how that was pulled off.

  176. "Watch for UN troops to take control of Greece, Spain, EURO-zone and maybe the USA before it's over."

    The lunatic fringe apparently is alive and well.

  177. Ham,
    Maybe I did not present in a way that you comprehend, Let me rephrase it --

    The winners will dump their debts on the losers in this war that's a-commin!


    Happy Memorial Day Everyone.


  178. SLV SILVER Daily Observation Chart ,Finding Resistance @ 50% Retrace Level:


  179. In utah silver dollar is now law.

  180. Does that mean that if it fails, it would go down to the level below it (34$ range)?

  181. Gary, when you have a moment, it would be interesting to see how the last ABCD wave played out. Would you be able to either share the dates of the various cycles starts/stops, or perhaps include a chart in your next report.

    Thanks in advance.

  182. Observation Chart on Silver.Using Degree's up in Price from Jan,2011 Low:


  183. Gary,

    Does today's lower low in the USD and positive close count towards a possible swing low or is this "off hours" action ignored?


  184. Here come the margin hikes again...

  185. Cory,

    Where is the evidence for new margin hikes?

    Le Fou

  186. Just Zero Hedge as usual, in Shanghai this time. Might be nothing, but they always seem to come when nobody can trade it.


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