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Tuesday, May 3, 2011

GREATEST PROFIT POTENTIAL OF THE LAST DECADE

After what should be a brief pause this week commodity markets will move into the greatest rally of the last decade. As usual I will stay focused on the precious metal markets. They have been the leaders during this entire move out of the `08 bottom and they will see the largest parabolic move of all commodities during the final leg up.

I've noted in the past that consolidation size is usually a good leading indicator of how large the following rally will be. Gold just consolidated for 5 months. That is going to produce a massive rally. It's already produced a large move and it's just started.




Gold and especially silver have already come much further than I originally expected at this stage of the game. I was looking for gold around $1650 and silver at $50 by the top of this C-wave. Silver has already reached that level and gold tagged $1575 yesterday. This has unfolded in only the first two daily cycles. The third daily cycle is where the real parabolic gains are going to occur.




The third and last daily cycle higher during the semi parabolic move in `09 added 200 points in a little over a month.



The coming parabolic move will be significantly more powerful than what happened in `09 as this will be a final C-wave move. We should easily see a 300- 350 point move in gold and it's anyone's guess as to how far silver rallies during the final parabolic finish. $65 or even $70 isn't out of the question.

Now for the downside. The final dollar collapse is also going to drive the rest of the commodity markets wildly higher. That will include the energy markets. Oil is due for a brief move down into its cycle low this week too. Once that has run it's course we will see oil soar higher, possibly even reaching the `07 high of $150.



$150 oil collapsed the global economy in `07 and the economy was in much better shape with much lower unemployment than it is now. In an environment of already high unemployment $150 oil and soaring food prices are going to drive the global economy into a recession even worse than what we suffered in `08. 

Social conflict in the middle east and many emerging economies is going to intensify. People in depressed countries already can't buy food to feed their families, what do you think will be the response if food prices double again?

The world is about to pay the price for Bernanke's attempt to print prosperity and it is going to be a very steep price and cost many lives.

674 comments:

  1. What? The dollar is getting a sustained bounce? Did I get abducted by aliens and transported to another planet? This can't be earth.

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  2. Gary,
    Good piece. Bad for the economy but good for us if it plays out as you expect.
    Would you recommend adding to positions on the way down over the next week in the event that it turns suddenly or doesn't play out as you expect? Or would you suggest waiting until at least Thursday or Friday around the jobs report or for a swing low to form? I know I won't time this perfectly, but feeling as though I should wait for more downside first. Thanks.

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  3. This is a smart man like Gary:

    http://seekingalpha.com/article/267074-the-silver-correction-is-over-next-stop-62?source=email_the_daily_dispatch

    ReplyDelete
  4. Just wait for a swing or if you want to take a shot at picking the bottom wait for the 5 day RSI to close in oversold territory.

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  5. If my model is correct we have bottomed in gold and silver (the lows earlier today/tonight) and now proceed up progressively.

    (I'm not as confident saying that about silver as gold, but I'll say it anyway. Silver remains a razor blade whipping around the room.)

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  6. Clearly I could be wrong so don't blame me if you go broke. But you guys already know that, right?

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  7. I don't think there has ever been a one day daily cycle correction.

    Instead of multiple attempts to call a bottom and whittling away at your cash with these tight stops you could just wait for a swing or at some point take a position and hold on to it.

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  8. Gary

    Not going to hold you to it, what is your guess as to how long this final C wave could last?

    One long extended daily cycle?

    End of June?

    Also If we have dry powder and got in this morning we are still getting things on sale in our view right?

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  9. what I know is that call prices are higher than yesterday. At Gold 6 dollars lower, call 1500 Jun11 are unch...People are buying ....

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  10. TZ you're overtrading man..
    been there and done that. :)

    I have forecasted 2 weeks of downside on this pause but not acting on it until I see the signal to go in.

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  11. H,
    You know how long a typical daily cycle lasts in gold so you can easily figure that one out without me.

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  12. I have not used any of my margin but am considering doing so when we get our daily cycle low. If this were you, what would you put the money in, gold or silver? And what fund or stock would you choose and why?

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  13. Right now I am in AGQ, SIL & SLW

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  14. Thanks Veronica. No problem. My questions/comment still stand though I think. 1. How accurate has this been the past few years 2. how much further would we need to drop to fulfill the signal 3. I believe you said you would no longer say "got a sell" as this sometimes means "sell" and sometimes mean "buy." So you previous post should have read, "My system says gold is going down now" right? How much further at a minimum? How accurate has this call been?

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  15. funmike,

    I know your question was directed to Gary, but I'll throw in my two cents: Since you're all silver at this point, if you buy more, I'd buy deep in the money GLD calls. That will give you some exposure to gold (gold might outperform silver in this last leg, who knows?) AND by buying calls you can get the leverage you want without spending as much of your margin. (In other words, you can spend a lot less on GLD calls to get the equivalent exposure to buying DGP shares.)

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  16. Gary,

    If you are so smart what is your explanation for the extreme lagging of the miners?

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  17. hey Veronica,

    I've missed your posts, glad you're back!

    ReplyDelete
  18. Rick: Gary has answered that twelve times already. Also, starting a redundant request with "If you're so smart" is possibly not the best way to get someone to answer you. Just a thought. I could answer but will pass (because I, after all, am not at all smart).

    ReplyDelete
  19. Thanks Pima,
    Although I would like to have Gary's opinion I also appreciate viewpoints such as yours as well. Thanks for the reply. I have been giving some serious consideration to going to gold since I am all silver now. Don't know yet what I will do. I may opt to do nothing.

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  20. less liquidity in silver now that margins are hiked. IT's going to get even wilder....

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  21. Gary

    It just amazes me we can get that type of a move in such a short period of time.

    ReplyDelete
  22. I find it hard to believe silver will crash like Ben Davies:

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/2_Ben_Davies_-_Silver_Criticality,_Why_Silver_Might_Crash.html

    ReplyDelete
  23. I expected a little more volatility this morning with the Brits back from the party...must still have Pippa on the mind

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  24. Following on from the Sprott/PSLV question in the previous post...

    SB/Flaunt, yes the reason Sprott sold PSLV shares last month, though Eric Sprott won't admit it, is that PSLV was trading at a ridiculously high premium to NAV of 25%!

    I bailed on my PSLV for the same reason, as that premium is just crazy. Took profits, moved into other silver & gold vehicles, and will probably get back into PSLV at the next A wave if the premium is low enough.

    The trick with closed-end funds like PSLV, CEF, etc, is to get in right after a new share issuance, which almost inevitably dramatically lowers the premium, at least for a short while.

    Had a big laugh reading an interview with Eric Sprott about why they sold and he was asked about future issuances. He said they'd do them only in such a way as to not take a hit to the premium. That's absolute nonsense.

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  25. SB

    That Davies guy uses some big words that I just don't understand.

    ReplyDelete
  26. Just watched an episode of the Amazing Race from 24 April (S18E09) and thought of Gary's trip this summer.

    The teams are racing around Zermatt trying to deliver luggage to various hotels. The one where Gary suggested folks stay, Hotel Christiana, is one of them. It appears at the 35-minute mark and probably elsewhere in the episode.

    Just thought I'd mention it in case anyone's curious to go back and watch it to get an idea of Zermatt and the hotel.

    Found one link where you can stream it:

    http://www.watch-the-amazing-race-online.com/Watch_The_Amazing_Race_Online_Season_18_Episode_9_Were_Good_American_People_Leg_9_Vienna_Austria___TBA.html

    ReplyDelete
  27. jabalong,

    Sprott has managed to make himself into a brand within the precious metals market. The PSLV premium is like buying anything name brand - You're paying for the name. I never took a position in it but I would have sold and bought something else as well.

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  28. DG,

    I will give you 1 warning. Answer the question or I will shoot you where you stand.

    a. Rise in PM's is fake due to leverage; miners reflect true prices.

    b. Price of oil is hurting the miners

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  29. finally market correction starts -

    starting to accumulate SPY now

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  30. Yup Flaunt, Sprott's certainly done a great job at branding and building big interest in his PHYS and PSLV funds in a relatively short time.

    It's funny talking about branding, as Central Fund of Canada's been at this since the early 1960s and is equally solid, yet hasn't quite caught the imagination of investors to the same extent (the names a bit odd and clunky I think).

    Personally, I like both companies funds and usually will go where the premium is lowest. But as CEF has yet to do a US AMEX listing for its Silver Bullion Trust fund (and really illiquid on pinksheets), PSLV really leads the way there.

    But when you start getting into mid-to-high double-digit premiums, let alone into the 20%-plus range, that's crazy. With that kind of interest, Sprott needs to do more frequent follow-up premiums to let some air out of the tires.

    I like these funds for part of my money as they offer a more solid vehicle for physical metals, but I'm not in them to play a game of premium speculation, which to me PSLV had become at 25% and fortunately I was able to get out at just the right time!

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  31. Has anyone seen the movie "127 Hours"? After watching it over the past weekend, I think Gary should change sport... perhaps Golf, less dangerous.

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  32. Gary,
    I am going to be on my honeymoon 5/5-5/17. I'm going to try to add positions this week with this daily cycle low. Do you recommend putting in a trailing stop while I am away to ride the final daily cycle advance?

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  33. Put another 2% of total capital at risk. Bought NUGT.

    Brings total portfolio risk to 4%. Still have lots of dry powder and looking forward to putting it to work.

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  34. I will add a stop to the stops and trade trigger link once it becomes appropriate.

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  35. Ouch, holding AGQ really hurts. Hope we hurry up and get on with this.

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  36. I am not standing. Does that mean I am safe?

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  37. On the daily chart for SLV we have nearly reached the levels of the last daily cycle low on the fast stochastics and we have already fallen lower on the RSI. I'm not adding yet but I am looking at these indicators for timing tools as we reach levels that we reached at the bottom of the mid-March daily cycle low.

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  38. ah ah, you are very funny DG! you should nap the whole day to avoid Rick and AGQs....

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  39. Fair enough, I am subscribed to the premium site I just don't know if I'll be able to check anything on the honeymoon. A bit concerned of being away for that long without a safety net.

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  40. Bought some silver futures. 40 cent stop.

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  41. Rick: I'll answer , but just because you are so warm and fuzzy: I believe the 3rd option is correct. The miners are just consolidating huge runs and any sector is entitled to underperform for a while. I bet they now outperform once the daily cycle low is in.

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  42. If this daily cycle in gold is running extremely long shouldn't the next cycle run short?

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  43. Silver approaching over sold territory. Only 11% over the 50dma. RSI at levels only beaten by the IT cycle low.

    Gold still has some room and is stretched high above. One quick drop in gold should be more than enough to reset this puppy.

    This might be a short lived event.

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  44. I see a possible down wedge pattern in silver showing selling exhaustion. The double bottom in the last 2hrs looked reasonable so I'm trying a buy here with a small stop.

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  45. Rick,

    I hope you were just kidding around with DG, like he and Alex kid around. If not, what the hell is your problem?

    Assuming you were kidding and to answer your question: yes, mining is a fuel intensive business but I'd encourage you to compare the price of oil in June 2008 with the price of CNX, BTU, ACI, and PCX. Parabolic moves in spite of record fuel prices. All rose and the same time and all came tumbling down at the same time.

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  46. @William, yes seeing the same thing on Silver, you beat me to the punch.

    I've always thought that April 11th high was where the cycle could have topped, that's where I got out. If we can drop to the $42-$42.50, that will be enough for me to add a position.

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  47. What did bernank just say on cnbc? was that today or old?

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  48. aljiowa,

    If I were in your shoes, I would first of all figure out a way to check the markets daily or at least every other day. We're at a critical time, I would not want to miss this opportunity.

    You could instead put in limit sell orders at potential price targets so you could take profits piecemeal. The risk there is that your targets get met, you position gets sold, but the market keeps going higher, so you end up leaving money on the table. But if your limit orders have too high a price, they might not get filled, the market could peak while you're away and you'd miss out on getting out near the top.

    Tough position your are in. But congratulations on your marriage!

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  49. We're certainly going to print a cycle low, possibly today.

    Gary, what number on Gold would provide confirmation for you?

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  50. Closed silver. Wow...WAY too volatile. No way I'm doing that.

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  51. There we go! point it towards the basement and step on the gas!! With Poly as engineer.

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  52. HEY ALEX,

    AG = 17 coming up!

    It's a gift! Maybe if it gets there by my birthday (5/5), Ill buy some.

    Best,
    Le Fou

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  53. Jabalong,

    I've been reading your comments about PSLV. Could you explain what NAV is? Also, does each share represent a certain amount of silver or something like that. I'm pretty new to this
    so any thoughts would be helpful. I'm under the impression PSLV may be safer than other ETF's meaning they really have physical silver backing them.
    Thanks
    Greg

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  54. TZ(8155),

    Are you also TZ(4404)?

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  55. Thanks Pima, I appreciate your feedback. I'll figure out a strategy here. It's going to be a pretty low tech excursion so I'll be unplugged.

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  56. Poly,
    I also exited positions back on April 11th and have been patiently waiting for this cycle low. I guess my question to you would be why jump back in today and not let this thing play out over the next few days? As Gary has stated before, this typically takes 3-5 days to play out, which would put us at the back half of this week. Also, we have yet to see any real bounce in the dollar yet which, if it happens, should initiate another leg down in the metals. Why the urgency to move?

    ReplyDelete
  57. PIMA,

    Thanks for your response to aljiowa. I have a similar dilemma, since I'll be in France on vacation from 5/8 to 5/24. Judging from Gary's post today, it looks like the C-wave will still be working then. As painful as this correction is, if we get a swing low Friday(I hope)/Monday(a little more nerve wracking), I'll add and check back as often as I can.

    I hate having to take my laptop, though.

    Best,
    Le Fou

    ReplyDelete
  58. ROB,

    Google keeps locking my account thinking I'm spam so I open a new account. The digits are just the last 4 of the profile ID to distinguish. I can't get into any of the old ones.

    No idea how their 'spam' detectors work or why.

    ReplyDelete
  59. TZ,

    Why don't you change it to TZed or something that's not so much trouble?

    You know the definition of insanity? Doing the same thing over and over expecting different results.

    Best,
    Le Fou

    ReplyDelete
  60. Some silver miners are starting to fight the down trend.

    GPL and FVITF have gone green, up ~1% each.

    ReplyDelete
  61. TZ,
    Don`t sweat it Bro. We know your the real thing! :)

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  62. Gary,

    If the dollar doesn't begin to roll in the next few days or by Friday does that change the outlook for where this whole parabolic wave is going? If that is the case do you have any recommendations to protect our positions in case of any possible event?

    ReplyDelete
  63. PST,

    I'm not jumping to buy, just on guard in case we drop suddenly. We've waited long enough, our patience will hopefully be rewarding.

    But I like being ahead of the move, as long as i feel I'm close to the bottom I will start taking small positions, more of the very DITM positions, these wont hurt too much if we keep dropping.

    If a parabolic move lies ahead of us, I would have something to profit with, even if I miss a couple of points on the cycle low.

    There is also the other "runaway" scenario still potentially on the table, so I want some exposure to that scenario.

    Lastly, I want to buy some OTM's here soon, I like to get these as close to the bottom, but as it's dipping, not rising. The premiums on these get crazy fast once a rally is sniffed.

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  64. Unless one hits a wide, predetermined stop-out I can't believe people are selling miners into this move. Some of the old favorites are getting cheap enough I'm tempted to load up then turn off the computer for 3-4 years.

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  65. I am all in bought SLW calls at 40 June. Going to light a candle now!!!

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  66. I just popped in for a nosy to my local bullion dealer, chards In Blackpool, and the premium for a kilo of silver is 30% over the spot rate. £26 versus £34.!!!!!!!!!

    My basic interpretation is that that is the real price of silver

    £34 an ounce uk, $56

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  67. Thanks Poly.

    Just to clarify, the reason that I was asking is that I'm also contemplating when and how to jump back in, so just wanted to understand your thought process.

    Your comments are helpful as usual. Good luck and hopefully this patience is rewarded.

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  68. Come to daddy. 20 pt flush on AGQ from here (fingers crossed).

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  69. I just popped in for a nosy to my local bullion dealer, chards In Blackpool, and the premium for a kilo of silver is 30% over the spot rate. £26 versus £34.!!!!!!!!!

    My basic interpretation is that that is the real price of silver

    £34 an ounce uk, $56

    ReplyDelete
  70. I nibbled some more on this dip. Half as much as my earlier purchase.

    Don't mind being a little early with this size. Total risk at 5% of capital now.

    ReplyDelete
  71. SB,

    What do you mean by total risk.

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  72. Sandy101,

    That's the amount of capital I'm willing to lose. For example, on a $1 million account I'll stop out at down 50K.

    Most here talk of % of capital invested, but that is not as important to me as the total loss potential, which takes into account the volatility of the instrument traded.

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  73. Shalom

    What % of your portfolio is in cash?

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  74. There is no way I'll be able to stop myself from getting very heavily long if we get a puke out tomorrow morning.

    I'd like to be more patient, but this is getting ridiculous with the miners in particular.

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  75. SB, I hear you. I'm trying to be patient, but can't stop myself from taking little bites here and there.

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  76. Haggerty,

    I just checked, and after today's purchases I have roughly 2/3 of total left in cash.

    Remember that I was mostly silver miners and sold all a couple weeks ago when they acted like crap vs. silver busting new highs every day with 2-3% gains. I was pissed not to be in metal (AGQ), but am pleased I sidestepped the miner debacle.

    ReplyDelete
  77. Wow

    Shalom for you that's a lot of paper. Do you unload a certain % after a daily cycle low is in place?

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  78. aljiowa,
    Gold won't top before late May and the middle of June is a more realistic timing band.

    Go enjoy your honeymoon and leave the smart phone at home.

    ReplyDelete
  79. The HUI has the trendline off the Jan move to catch it now. 547 or so. That would still keep a pattern of higher lows in place. Sigh...

    Still, the miners blow. I hate them with the white hot intensity of a 1000 suns.

    Maybe they will just go to zero now. We should have got leveraged UUP three weeks ago. We'd be better off.

    ReplyDelete
  80. the only reservation I have about adding to miners (heavily) is that I'm getting close to stop on the first batch of NUGT.

    I very rarely (if ever, these days) get heavy into a trade that has already stopped me out unless a week or two passes. Let's see if I get stopped out. If so, I suspect we might be broken for awhile.

    I'll share the results here.

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  81. damn..miners still not diverging

    guess more downside to come

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  82. We may be near the bottom if so many of you are tempted to buy back in right now. I'm sure other investors are thinking the same thing.

    I'm already 100% invested, so all I can do is sit and watch.

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  83. "Do you unload a certain % after a daily cycle low is in place?"- Haggerty

    I think you're referring to using the cash to buy? Absolutely, I just hope I can stay patient for now! :)

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  84. The bottom line is that miners will be a great hold for years to come.

    And for shorter term traders like most here, the bull will let us out favorably.

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  85. I'm not buying it yet, but somebody pointed out GPL's strength and I agree that it looks tired of going down.

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  86. Jayhawk,
    Thanks for the humor! It helps cut the tension. One good blast on the dollar and we can get this damn thing over with!!

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  87. SB, how many years did it take you to learn be successful as a trader?

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  88. Last thought. Even if we have more pain ahead, which looks like a solid possibility, I'll venture to say the worst of the move is done.

    I doesn't mean we rocket tomorrow or even in the next few days, just that we've seen the worst of it.

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  89. Look GDX, SLW, and other stocks.

    LARGE volume; look on intraday charts and compare to previous days.

    People are cracking and selling here.

    More downside? I don't know but certainly pain/panic selling.

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  90. HEY Y'ALL!

    I just stopped by to say I'll be droppin by wit a web page that gives you a chance to make the kind of money my wife and I have made trading the HUI miners!

    We've just upgraded our single to a double wide by doing it. It's GUARUUNTEED cash money!

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  91. This comment has been removed by the author.

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  92. Eamonn,

    I was able to consistently make money, though not a lot of it, after my first year.

    Around the third year I found my own discipline and starting making a big difference.

    Gary's time horizon in trading is something I've worked on the last couple years and see the benefits of that as well.

    Once this C-wave completes, we'll be back to my favorite type of markets to trade...sideways to slightly trending vs. this parabola stuff. :)

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  93. HUI investor,

    LMAO! That's a handsome wife!

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  94. No panic or blood on the street yet, doubt this is anywhere near done, might have to wait until tomorrow. Only possible move higher is our still valid runaway option.

    Miners are doing a great job of stinking, again, just as metals get their best legs for the day, the miners collapse.

    ReplyDelete
  95. SB,

    I don't do chop markets very well. Want to give a (suitably vague) description of your approach to trading them? Oscillators? Scaling in/out? ???

    ReplyDelete
  96. This comment has been removed by the author.

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  97. SB, what do you mean when you say "I found my own discipline"?
    And, if you don't mind me asking, what is your strategy for making money in "sideways to slightly trending" markets?
    Thanks :o)

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  98. Greggy_M,

    To answer your question about PSLV and other such funds...

    NAV is Net Asset Value, so the value of all the assets a fund owns - in the case of PSLV and the like, that would the value of the bullion it holds plus probably a relatively small amount of cash.

    Dividing that NAV by the total amount of shares of that fund gives us the NAV per share, which tells us how much of the fund's assets each share is worth.

    http://www.investopedia.com/terms/n/navpershare.asp

    So then the question is whether the fund is trading at a price higher than its NAV per share (ie, at a premium) or lower (ie, at a discount).

    Since closed-end funds like PSLV or CEF only issue shares maybe once or twice a year, when buying interest is high and more investors are vying for that relatively static number of shares, people are willing to pay more than the underlying value of the metals held by the funds and the premiums can run well into the single digits and even double digits.

    Why are investors willing to pay a premium for these funds? Well because in the spectrum of paper silver/gold vehicles, some are perceived to be safer, like Sprott or Central Fund of Canada's products. Why are they perceived to be safer? It comes down to details about what their underlying holdings are (actual physical metals vs paper contracts for example), how the physical metals are held, where, under what terms, etc.

    This is it in a nutshell or at least my take on it. The way I look at it is you have a range of options from holding physical metal in your hand at one end to derivative products at the other end. In this spectrum, funds like PSLV and CEF are closest to the physical end of the spectrum as far as "paper" products go.

    The way I look at it is I'll go with funds like Sprott or CEF for money that I'm parking for the longer term, while I'll use things like AGQ for trading money (though a larger share since I've found Gary's blog). I'll also base my decision based on the premium to NAV, refusing to pay too high like PSLV recently, or going for the lower if say looking at PHYS vs GTU for instance.

    If you want to know more about different bullion investment vehicles, read some of the thread (particularly the ones titled Paper plays, CEF, PSLV, PHYS) here in this other board where I'm active:

    http://marketwatching.freeforums.org/investment-vehicles-f13.html

    Lots of opinions out there on different bullion vehicles, but that's my two cents for what it's worth.

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  99. look at the dollar lol not cooperating yet

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  100. Stochastics and MACD primarily. As far as scaling in/out, that is well suited to my personality and something I've always found easy when focusing NOT on percent of capital invested but rather percent of capital I'm willing to lose.

    So the size of subsequent trades almost always varies as prices move, but the amount of capital I risk per trade rarely changes.

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  101. Why thank ya Mr Bernackie. Aint she a beaut! I was able to impress her with the 1980 Ford Pinto I got with my HUI winnings over the past year. Was she saw my toothless grin rolling in that stud machine, she was all mine.


    Happy HUI trading boys and girls!

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  102. Hey Aviat,

    About your OTM options post, really helpful. How do you figure out which strike to buy and how many months out to get?

    Thnx,

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  103. Sideways markets will trade from overbought to oversold more often than a strong trend like we're seeing in metals this C-wave.

    Just look at the beating silver and miners have taken the last several days, and still the stochastics cannot yet push into oversold territory.

    The best lesson I learned (after a couple years) was to avoid information/indicator overload. Keep it very simple because in the end, successful trading depends on discipline more than anything else, and it is difficult to stay disciplined and level headed with too many moving parts.

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  104. Doh! Greg, forgot to mention a key bit, which is that funds will list their premium/discount to NAV on their websites, once a day or even intraday.

    Here are the links to the various NAV pages for Sprott and Central Fund of Canada's funds:

    http://www.centralfund.com/Nav%20Form.htm
    http://www.gold-trust.com/asset_value.htm
    http://www.silverbulliontrust.com/net_asset_value.htm
    http://www.sprottphysicalgoldtrust.com/Net-Asset-Value/default.aspx
    http://www.sprottphysicalsilvertrust.com/NetAssetValue.aspx

    You can also input their stock codes in this site, which gives more info on each fund's historical premium/discount to NAV.

    In the end of the day, it still comes down to trying to buy low and sell high. But as an added wrinkle with these funds, if you can buy at a low premium and sell at a higher one, then so much the better.

    The main concern though for me with these funds when they premiums get too high is when will there be another share issuance (never announced ahead of time) that suddenly deflates the premium. But even then it's not such a big deal in a bull market and if holding these funds over the longer term I don't think.

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  105. The premium on PHYS is coming in quite nicely. If gold can just get a quick drop out of the way I'll begin to buy.

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  106. Doh again, Greg forgot that link with more information on closed-end funds' historical premium/discounts to NAV:

    http://www.cefconnect.com/

    Sorry, I'm in Asia and it's late in this part of the world - getting tired and time to hit the sack. Cheers.

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  107. The level of miner hate on this board is a definite tell.

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  108. SB,

    How do you calculate your % risk per trade? Do you use stop loss orders?

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  109. David,

    I think you might be correct.

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  110. Yup SB, PHYS is trading at a low for it under 2% premium and is also on my radar.

    Greg, PHYS has often traded in double-digit, mid-teen premiums so this is pretty good for it. It just did a share issuance last month, which has taken some of the air out, which is good.

    Not only is it lower than Central Fund of Canada's all-gold GTU, which is at about 4% now, but historically GTU's premium doesn't go beyond single digits.

    So PHYS is attractive now on both counts - in terms of its premium at the moment and where it's liable to rise back to.

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  111. Kevin Depew at Minyanville pretty much sums the next few months up in DeMark:

    MONTHLY SELL Setups (June-September) in SPX, NDX, INDU, RTY, DAX, UKX, CRB Index, Corn, Wheat, Soybeans, Sugar, WTI crude, Brent Crude, RBOB Gasoline, Gold, Silver, HYG, IEF, SHY

    The one MONTHLY BUY Setup over the same time frame ???? US Dollar Index, although that pesky 72.50 still has not been breached...

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  112. David,

    You're right, but with good cause. Seriously, they suck. To be banking on them for the last cycle is a real risk of under-performance. I'm pulling up 6 month charts of SLW, SIL and GDXJ, they look sick to me, in relation to their underlying metal.

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  113. Thank you, SB. Very interesting.

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  114. This comment has been removed by the author.

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  115. Gottahaveit,

    First determine what amount of money you could lose and still be happy, say 5% of your portfolio.

    If you have $1 million total, you can lose 50k and have no worries. Look at the average true range on what you're trading, that is what is a typical amount of volatility you can expect. You can find the range in most charting software, often called ATR. I typically use this number (rounded off) for my stop as well.

    Then you can calculate how many shares you should be taking in each trade. For example, I see SLV has an average range over the last 20 weeks of $2.30 per week. If I were looking to buy it, I'd give myself that much to risk, so on that $1 million account with 50k (5% at risk), I should buy roughly 22,000 shares of SLV per trade.

    I try no to focus on amount of portfolio invested as it is misleading. The risk has to do with the volatility of the vehcile, and risk is my concern. In this case, however, the account would be almost fully invested. If something moves a lot less, once can buy a lot more.

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  116. This comment has been removed by the author.

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  117. Yes, I use stop orders. Especially since I often step away from the 'puter.

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  118. DG

    This is a FUNNY conversation w/you and Rick. I'm not sure if anyone was 'getting it' at the time, but funny. I am only up to where he gave you 2 choices...and you replied

    Blogger DG said...

    "Rick: I'll answer , but just because you are so warm and fuzzy: I believe the 3rd option is correct. The miners are just consolidating huge runs and any sector is entitled to underperform for a while. I bet they now outperform once the daily cycle low is in.

    May 3, 2011 7:03 AM

    3rd option..haha :)

    I will be leaving when I catch up on this blog (only at 7:03 am) but just gonna say I bought Ag at $17.7799999 . i believe it could go lower, there are gaps below that I would LOVE to buy, but at this point, a good bounce now or later woulld be a good trade .

    cya all! p.s. dollar bounce anyone?? Talk about WEAK!!

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  119. Traderlady! Is that you reaching out for a handshake? :) Hello

    P.S. I'm not reading this 'live' yet,I am catching up from 7 a.m., then I have to leave - just wanted to say hello before I forget

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  120. Poly,

    I remember going on a rant against the miners in this board, talking about how they had gone nowhere for years. I hated them with a passion.

    That was August of last year.

    Gary said something once that was very apt. If you want to know the emotions of others, just check your own. If you hate the miners, chances are everyone else does too. Right now they are being shorted like crazy. When they break, they should break big.

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  121. yep...unfortunately no bottom today, but we're very close...

    but a good day to start accumulating though

    until the miners diverge, we're headed south

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  122. this dollar is so pathetic...

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  123. David,

    You are right, of course.

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  124. ADP tomorrow should help put a push in the dollar (up) temporarily.

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  125. Could we still theoretically get a swing in the dollar today if we stay above a low of 72.72, even if we have a down day?

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  126. Gold/silver down even with dollar down hard....what will happen to the PMs when the dollar finally bottoms?!?

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  127. Here's my take using my emotional radar. If I'm itchy on the trigger finger and wanting to buy, its likely everyone else is too, thus its too early. If I'm wanting to puke up shares, everyone else is too, thus the time is getting ripe to buy.

    Right now, I'm eerily patient, thus neutral. With this reading, I wait for price to dictate with a swing low. Hopefully around Gary's stated range of 1500-1510.

    Just think, in appx one month people will be on here all giddy about the money to be made by buying AGQ, DGP, and high risk options. That's going to be the time to unload, and pick up a few puts on the SLV.
    Cheers!

    f

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  128. Fubsy,

    I am calm too, but that is only because of Gary's guidance.

    I would be totally freaking out on my own and would have probably sold my AGQ position yesterday.

    We have guys here at SMT have a huge competitive advantage which most folks outside don't have.

    Hope this does not skew our perceptions:)

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  129. Gary,

    I know that in the past cycle lows have all broken trend lines.

    Are you going to call this cycle low if it does not break a trend line, and are trend line breaks a part of cycle analysis ?

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  130. Fubs,
    Thanks for the reality check.

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  131. SLW outperforming SLV for the first time in sooooooooooooooooooooo long...

    maybe I just jinxed it here - do we have any ray of hope?

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  132. LE FOU

    Didnt you read my mind last time too?
    I think I've talked to you 2 or 3 x on here , and every time it was because you mentioned something I was thinking of.

    I will tell you why I bought AG here...
    1) it looks quite oversold-
    2)I was in it and I'm not 'old turkey' or 'buy and hold' when I expect a pullback, but if I was, I would still be in it here,just hoping for a retest of $26...so I buy some here hoping for a retest of $26, yet also hoping it fills the gaps $16 and this area too to buy more. Now I'm in a position to be happy either way :)

    -by the way AVL looks really good to me here.

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  133. David,

    Maybe this will bring the bottom:

    I HATE THE FREAKING MINERS! WHAT A PIECE OF JUNK THEY ALL ARE! I WOULDN'T TOUCH 'EM WITH A 10 FOOT GOLD POLE, IN FACT I'M GONNA SHORT THEM ALL, SEND THEM ALL TO ZERO WHERE THEY BELONG!

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  134. Blogger Gary said...

    aljiowa,
    Gold won't top before late May and the middle of June is a more realistic timing band.

    Go enjoy your honeymoon and leave the smart phone at home.

    May 3, 2011 7:56 AM

    GREAT ADVICE-

    I agree...you dont want your honeymoon to be so closely followed by a divorce. This is time for YOU and HER together...she will always remember it!! If you bring a laptop ,smart phone, etc..you will be tempted to check it whenever you want/anytime/everytime. She will ALWAYS remember that :(

    IF you feel the need to...May I suggest you ask your future wife NOW-if she would mind you spending a SMALL amt of time in the 'business' room that most hotels have (10 minutes). sometimes free or small fee, you can check your KITCO and a few stocks on 'stockcharts' after close ( it's like mini-market-rehab) you slowly cut the addiction :) My wife and I read by the pool before lunch, and she doesnt mind me checking it while she's reading.

    Gotta go for the day!Cya

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  135. I used to use Jay as my primary sentiment indicator on miners and PM's in general, but he is becoming a little unreliable!! Ryan is pretty good, but kind of an outlier.

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  136. Looks like Gold, Silver and Dollar are playing their own separate tunes without any conductor guiding them.

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  137. Just because there is a world outside of PM's (there is?)... If the Dow closes up today I will get a sell on SPX. Remember the sells are not as good as the buys (the buys you can take to the bank). I am short some Q's already and will just hold rather than add 1. to keep dry powder for PM's and 2. I will be heavily short when $USD bottoms
    Just thought to mention it if the sell is of interest to anyone.

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  138. I should add in Miners there as well.

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  139. DGP is flat and Gold is down 15 bucks

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  140. Wes,

    Any particular number on Silver fancy you? Or you playing it off the gold cycle?

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  141. Wow. AGQ close to 100 point drop from last Thursday's intra-day high of 382.

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  142. Captain has turned on the fasten seat belt sign.

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  143. Please, lets just get this over with!

    Dollar rise to 73.50 breaking the overhead resistance, silver drop dramatically to 40, gold drop steadily to 1510. Then all of us SMTers jump in at that time, gobble up etfs, calls, futures in metals and miners, thereby stop the decline and get others to chase it up wildly, get rich and retire.

    But alas, wishes, horses....looks like more pain is ahead of us for the next day or two. At this point, I'd be happy just getting back to the old highs before destroying a significant percentage of my account.

    Don't panic sell!

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  144. wow, just left my seat for 2 minutes and wouf....

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  145. And there she goes. Weeee!

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  146. Silver breaking 40 might be in the works for this week.

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  147. AAron,

    I hope that 40 is the stop and picnic area before going back to 49.80

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  148. For once, SLW & SIL doing better than SLV.

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  149. Market testing that 42.50 level, that might have been it.

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  150. Does the airline have barf bags?

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  151. Haggerty: You are looking at different time frames and closes. On the NYSE GLD is down 37¢ and GDP is down 22¢

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  152. Sophia, Im seeing a double bottom on the USd here, if it holds and rallies to the mid 74s, that can pressure gold and silver lower. A great buying opportunity. The break of 40 would do the most damage, and I think thats what we will get before it reverses higher.
    I dont trade silver, so Im not the best at predicting its moves :)

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  153. I doubt that's it.

    But we're getting so close, just $0.50 more and I'm taking a bite.

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  154. Damn Gold does not want to confirm this move.

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  155. DG

    I don't think I follow what you are saying.

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  156. i feel like puking UP..

    there goes my AGQ

    i might have to squeeze into Gary's basement by the foosball table

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  157. Dg

    I think I got it now. But should't GLD and DGP be down a lot more.

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  158. Forgot to mention my bias!
    Im short Euro here (a short term trade).

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  159. Jabalong,

    Thanks for the insight, it really helps. On my TD Ameritrade ticker quote it says PSLV has 835M in assets and it's Premium/Discount is 13.52%. I assume the 13.52% is the premium over NAV. By the way PSLV is really getting hit hard today much harder than slv, is that normal?
    Thanks again it's really appreciated;-)
    Greg

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  160. /SI may be headed for $39 if it can't turn around overnight

    http://i54.tinypic.com/f39yy0.png

    if it does get down there, the last time it was at such a low sentiment level was january of this year before the whole rally even began. if that doesn't shake out every last 'speculator' i don't know what will. here's hoping.

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  161. whitebear, are you buying agq today?

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  162. Haggerty: You wrote "DGP is flat and Gold is down 15 bucks. "Down" means vs. the previous close, but you are using one time for the gold close and a different time for the DGP close. There was price movement in between. On the NYSE (same open and closing for DGP and GLD) they are tracking exactly correctly.

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  163. Gary has spelled out pretty clearly what it will take for the bottom to be in: 1. GLD touching lower BB 2. RSI below 30 3. Breaking a trendline to induce shares being puked out. He can of course be wrong, but unless you are experienced and have a pretty good reason for disregarding these instructions, you are probably better off waiting for at least one of these.

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  164. Aaron,

    Short Eur too...fast a furious in-and-out...Playing a nice ADP report...

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  165. Brian,

    Thanks for the shout out so I'm going to add to the sentiment indicator. I don't know if I can take much more of this. I already threw up in my mouth and if silver goes to $40 who knows if I'm going to do something irrational. I'm pretty worried about silver right now because it's tanking so hard yet no real bounce on the USD and gold is holding up.

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  166. Whitebear: What did you base your "AGQ at 279 today" call on? And why "today"?

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  167. wow i was away for an hour and i missed this last drop.....my trigger finger is getting itchy

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  168. Nice Sophia!
    In that case, may Lady Fortuna smile upon our portfolios!

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  169. If silver gets down to $39, AGQ should be around $243 or so. Still higher than where it was a month ago.

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  170. Just a friendly reminder to base trades off of the silver price itself and NOT the price of AGQ, no matter how "cheap" it may seem.

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  171. Must be getting close to a bottom. Sell silver / miners and buy bank of america ??

    http://seekingalpha.com/article/267253-why-it-s-time-to-sell-silver-stocks-and-buy-bank-of-america?source=yahoo

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  172. I can assure you Brian, I'm still very much a head case.

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  173. Saw it in the tea leaves. And, no I won't buy till tomorrow morning unless they hit my number today.

    Love,
    WB

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  174. DG, BTW, do you know if Gary uses common/standard inputs for MA/Deviation for BB? Close,0,20,-2,2 and RSI_EMA of 14 MA?

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  175. Shalom, I see you nibbled on NUGT this morning. What is your game plan for taking a bite out of silver?

    I did my nibbling there last week--glad I could push it down for you. : )

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  176. BTW, I haven't done anything this week despite the tasty prices in silver.

    As usual, I'm following Gary, and that means I want to see a bigger drop in gold.

    I think the Big Boyz want to push silver down to $40 to turn up the pain dial to max.

    Think about it guys: the thought of silver printing $39.99 is going to make weak hands cry for mommy.

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  177. just a reminder, gold and silver dont have to bottom at the same time. We have seen this before!

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  178. I don't think the bulls will let it drop that far, that's just me. This is a bull market after all.

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  179. i think this is bottoming today..i am going in at around 41

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  180. Garys silver chart on this post shows a draw line slightly below 40. Looks like we might get to that point.

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  181. T: I believe Gary uses a 5 period RSI and BB of (10,1,9) Someone else can chime in if I am wrong. If your eyes are good enough, look at a chart of his and it should be on there.

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  182. I have EXCLUSIVE video footage of the HUI's intermediate cycle!


    HUI!

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  183. Careful Razvan--silver is a very manic-depressive market. It could hit $40 in a flash.

    Keep your eye on gold and the dollar like Gary does.

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  184. catbird,

    It depends on how we work lower, but I'd prefer a lower open tomorrow and will have to start buying some of these silver names into any additional weakness.

    The fact the dollar can't rally or gold decline is messing with our perfect entry setups, not to mention I might get stopped out of NUGT if this keeps up. I originally gave the trade a $4 stop...that didn't take long. :)

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  185. Picked up a small chunk of SLV DITM right here at a dip on $41.80.

    First target from last weeks high easily met.

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  186. Don't look at your accounts now.

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