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Tuesday, July 5, 2011

PORTFOLIO CHANGE

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460 comments:

  1. If gold closes above the 60sma either today or tomorrow, that is confirmation for me that this Intermediate decline is over.

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  2. This flip flopping is insane, what ever happened to all those cycles that said this correction isn't over??

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  3. I agree with Gary and will add increase my positions by 50% before the close. Not that I expect a rocket ride higher from here, I'm just adding to winners and hope for a drift sideways over the next few weeks to get heavy.

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  4. Gary,

    I would really enjoy a post today or tonight as to why you have decided to change your views on Gold hitting it's lows in late July or early August. Your post today have me a little confused as to what you are seeing in the cycle right now.

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  5. One thing for sure, action like this portends higher prices eventually. I'm not sure when, or if we drift lower some beforehand, but it's obvious to me the metals are still a long and very soon to being "in play" again.

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  6. Dan,
    What flip-flopping? We've been waiting patiently for the intermediate cycle low. Usually that low is easier to discern, but the fact that gold surged back above $1500 and has given nothing back today, and completed a weekly swing is a strong suggestion that we have a bottom and today is day one of a new intermediate cycle.

    Folks let me say this again. If that was the bottom all you've missed is one day.

    ONE DAY!

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  7. Wow that's quite the reversal from 0 to 50% exposure. I added and did some trades during the June weakness on the margins and always believe in keeping a core position. Now you know why.

    But this could easily be whipsawed.

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  8. I agree with Gary. This is not a trading site. If you expect to get the exact low and never have a 3% drawdown you are in the wrong place. A few of us fool around and try to get it just right, but missing 2-3% off the bottom is, well, just 2-3%. If you buy and we go back down buy more as we are close regardless. I may try for a better entry point but that's just me and I am prepared to deal with whatever happens.

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  9. My big worry is that the dollar has started popping all of a sudden. Grr.

    Good trading to all,
    Le Fou

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  10. Well, NGD is up 20% since its June low, and it's not down 50% from the peak like some miner.

    SLW was down around 30 and now close to 35.

    Sure, one didn't miss much in gold but if one is targeting miners it was quite a lot to leave on the table.

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  11. Yesterday we were bearish and today based off one days action were are 50% in. Ya this can definitely get whipsawed. Summer doldrums last all of July and august so I don't see any reason to panic into positions here. /Jmho.

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  12. Hardly, if gold is going to make an average leg up up 24% then missing 5% in miners is insignificant.

    By the time gold hits its intermediate top the minor should be 15 to 20 maybe even 30% above the prior highs. That's still a huge gain from where we are right now.

    If you are not willing to play the game unless every trade is timed perfectly then you probably better get out of this business, because I have news for you, you will almost never time any trade perfectly.

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  13. have been following this blog for the last few months now. it appears that recently new bloggers want to know why gary "flip flops" .people if gary had a crystal ball , we all would be rich by now. and he wouldnt have to blog at all. he has said many times in the past to flip on the dime, if thats what the market demands.

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  14. Dan,
    I'm still leaving dry powder in the model portfolio in case gold does reverse and make a lower low.

    But it is deep enough in the intermediate cycle that I think at this point we're close enough. At least to begin building positions.

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  15. And that's exactly why I ease out of positions and ease into them. I am not a trader.

    I made the mistake of not selling much of anything(easing out) earlier this year because of how gold miners behaved and the subsequent silver bubble. Got a bit over-exuberant about the future.

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  16. Ben,
    Well if you knew the bottom was in then why didn't you buy?

    For me I need the bottom to also be in on gold before I buy. There was no sign of that until today. So regardless of what the miners had done, until I got some sign that gold bottomed there's no way I'm going to buy anything in the precious metals sector.

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  17. Gary,
    After reading all the posts on the blog, that would lead me to believe that you don't think silver will fall nearly as precipitously as you once thought, since gold's intermediate cycle low is in. Is that correct?

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  18. T,
    Correct. If gold has bottomed then it is going to drag silver higher, although I don't think it will be moving above $50 any time soon.

    I will be focusing on gold and miners during this leg.

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  19. Let's take advantage of the 3-6 month rally ahead, ease into positions now and over the next 2-3 weeks as the opportunity presents. After the move, we'll look back and see Gary made the right call.

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  20. I'm keeping eveything as is, I can't commit to buy stuff today and hold to the end of the year based of one days action. I like to phase into and out of my positions unless there are clear reversal days. Fortunately my silver short positions are still in green as I bought very early on and the PMs appear to be selling off into the close somewhat. I'll live with the consequences either way.

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  21. Gary,

    Haven't you said the Gold Bull will do everything it can to get the buyer in before it dumps. Could this be a part of everything? I am still looking for the 150dma yet think it is now being pushed down the road a little. I still think your intitial estimate of late July early Aug would still be accurate. This rally today really blows though for the downside. We will see how this week plays out.

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  22. What happened to $21 Silver, Gary?

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  23. SPY BOW with it trading completely above its bollinger?....

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  24. Gary,
    I'm new to learning about cycles. Can you tell me what indicators you used, to define this bottom.
    Thanks
    Harry

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  25. Ben - QE2 is over. All we are seeing now is reinvesting the interest and runoff on the mortgage-backed securities and Treasury paper.Look at the dates:
    http://www.newyorkfed.org/markets/tot_operation_schedule.html

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  26. I added as planned to my miners, and started to accumulate PHYS as well.

    We might not rip higher from right here, but the bottom prices are likely already behind us. I can live with that, and will take advantage of weakness if it occurs to do some more buying.

    I don't like sitting in Benny's funny money anyway.

    Good luck fellow traders!

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  27. Gary,
    I'm new to learning about cycles. Can you tell me what indicators you used, to define this bottom.
    Thanks
    Harry

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  28. Basil,
    That went right out the window if gold has bottomed.

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  29. Marty,
    If this is the bottom it's unlike any bottom I have ever seen. However the move back above $1500 was powerful and gave back nothing.

    Since it is late in the intermediate cycle we have to consider that the bottom may very well be in.

    Let me say this. If you are going to wait hoping on further declines be prepared to chase the move just in case gold doesn't give us a lower entry.

    I started to build a position in the model portfolio today. I do still have some dry powder just in case there is another dip down.

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  30. Hook,

    Block trades were zip. Could mean big money is not touching this.

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  31. Huge move on low volume, makes me worry that it is a head fake.

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  32. Gary -
    I'm sure you will cover this in tonights report, but how does the dollar play into your gold cycle? We are looking for a new daily cycle starting any day (probably today was day 1) so I guess you are expecting this dollar rally to fail and take out May lows? I guess we could also have rising dollar and gold as well.

    Thanks

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  33. That doesn't mean anything. That means big money might be forced to chase it. If they want to cover their tracks with program trading/internal crossing/options trading/whatever they can.

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  34. MBS,
    If the market is convinced that the dollar is going lower than it will probably get a jump on the move even if the dollar rallies for a bit.

    Since most terms have come unemployment report we could see the dollar drifted lower into Friday followed by possibly a weak rally and failure.

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  35. The dollar rallied today and gold rallied right along with it, anyone trying to gauge gold's moves by watching the dollar is in for a ride. Gold could care less what the dollar is doing, today, as many times before, I watched gold trade up right beside the S&P, while the dollar was rallying.

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  36. I don't think I would make the mistake of thinking that the dollar is meaningless to gold. Not at this stage of the bull market.

    Yes gold can fight a rising dollar from time to time but we have never had a major C wave leg up along with a rising dollar.

    Last summer gold did manage to make marginal new highs in the face of a rising dollar, but the really big moves have always come during a major leg down in the dollar.

    The action in stocks, oil and gold is all suggesting that the dollar still has another leg down.

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  37. Gary,

    I agree, but like you said yourself "we are living in uncertain times" and everything is not as it should or would be at this point.

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  38. Just like the action in the miners was suggesting a massive D-wave?

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  39. Gary,

    Every intermediate correction of this C-wave was over 25 weeks. We are still early in this cycle.

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  40. what happened to the end of QE and a deflationary period coming? Commodities and the stock market going lower?

    I am confused.

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  41. This comment has been removed by the author.

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  42. i've followed gary for years and he's very good at what he does

    for the past year, EVERYTIME Gary makes a stock market bear post, the market ZOOMS HIGHER

    it's like his stock market doom post is the perfect entry to go long...

    I found this very funny

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  43. Gary

    brave call, i've criticised you in the past, but hope and suspect your interpretation here is correct. No one can seriously expect you to pinpoint the exact bottom, but if a bottom in gold forms around here i will be impressed

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  44. From Fleck's post this evening:
    "With so many people now fearing weakness in gold, the stage is set for all of those who prepared for gold to take a hit to now find themselves chasing prices higher. Whether that starts in July, August, or September I don't know, but I feel strongly that it will happen, and the earlier it begins, the more people will have to scramble."
    You're going to be proved correct again Gary over the next few weeks.

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  45. Gary,

    Missed your twitter realtime at 3:28 est, implement tomorrow morning ok?

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  46. When I look at a weekly chart of the previous IT cycles gold always back tests the 10sma before moving lower. Gold is there now.

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  47. This comment has been removed by the author.

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  48. Gary,

    I take it if GLD closes red for the week that your late July/early August bottom call is still in tact?

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  49. Poly, makes good sense. I'm inclined to think it's a head fake. 30% gold bullion, 70% cash.

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  50. I'm with you William. I can't help but believe gold hasn't put in it's intermediate cycle low yet. I know cycles aren't absolute, but it just doesn't seem reasonable otherwise.

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  51. I've been seeing a few comments with concern about the upward gap gold left today.

    Rosabarba posted the observation on another blog I follow about a bullish abandoned baby possibly developing on slw. Incidentally, it also shows similar chart formations on gld and slv...this a chart of slv:

    Silver Bullish Abandoned Baby

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  52. Here are the two scenarios:
    1. PM's rally into a new intermediate cycle, and the complainers on the blog whine that we missed the bottom, or we did not commit a larger position size.
    2. We are not at the Intermediate low yet, and the complainers whine that they are losing money on the position they took, completely losing focus that they own a long position in a much larger bull market.

    All this second guessing is a drag to read. If there were a mute button on comments, I would be using it.

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  53. Cool Loser,

    Dont get me wrong, I am not saying it is not possible that we have seen a gold bottom (anything is possible in this train wreck of a world economy we are in the midst of), im just throwing out there exactly what I see in all the previous intermediate corrections.

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  54. I'm not at all surprised to see Gary going long here. I'm going to wait for a little weakness, mainly because I got killed chasing a trend day higher at the IT low in January.

    What does surprise me is to see Shalom buying into the tail end of a stretched trend day up. You're usually one of the most disciplined buyers around here. Maybe got the happies with those 12% daily receipts on EXK and SVM today, eh? What's up, friend?

    Best of luck to all the new longs!

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  55. An interesting observation I just made, $HUI, GDX and GDXJ (I'm sure many others too didn't check) all very recently formed a cross on the 50 and 200, the first time since the 8yr low.

    Miners are so undervalued relative the metal, they are trading at levels where gold was below $1,000.

    So bullion may not have corrected a hell of a lot recently, but in light of gold's rise and the equities rally this past 2 years, the miners sure have been beaten down.

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  56. R2R, for it to be a bullish abandoned baby, it needs to be at the bottom of a down trend. I really don't think this qualifies.

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  57. Poly,

    The 50 crossing the 200 is a bear cross, it's not bullish action. Your other points however are true and have been true for many months.

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  58. A bear cross it is.

    In the depths of a big secular bull market like gold, I read it as being a sign of severely undervalued and beaten down.

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  59. It might not be at the exact bottom of the downtrend, though it is in the lower edge of the IT range.

    More important, imo, is the baby/island/whatever action: a gap down day reversed the next day on a big unfilled gap up. Shorts are stuck inside, prospective longs are are stuck outside, or both have to bite the bullet and accept worse terms than they had the day before. The implication seems bullish enough, esp. if we get follow-through and a close above the 200dsma.

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  60. Dude,

    I think the BAB chart patterns mark trend changes more than marking an exact bottom.

    You could certainly argue that we haven't exactly been in a downtrend over the last couple months, more of a sideways consolidation, but when you take into consideration the market action last week, and the big moves in commodities today, I'm forced to take notice that our previous expectation for deflationary markets needs to be re-considered.

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  61. Is it not possible that, contrary to CNBS' reality, at this point your average marketeer is just as aware as we are that QE cannot end? I mean, I knew it before I found this site, and I'm absolutely nobody as market and finance go. Why should the various markets act otherwise?

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  62. ahhhh...
    This action is a little bit emotional don't you think???

    If this is all still keying off of the dollar and the 3 year cycle then the dollar did nothing to justify this add today.

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  63. I would again suggest that I think it is a misnomer to say that that QE2 has "ended." What has happened is the Fed has met its programmed target for monetary/balance sheet expansion with its $600B program. With the statement that it plans to roll $300B in maturing securities rather than run them off, it seems to me the current program is one of continued (though not expanding, for now) ease in monetary policy.

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  64. The question is whether QE extra-lite is enough to counteract the deflationary tendency.

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  65. Gart,

    Good observation, as I typically buy the dips. Keep in mind when I add 50%, it's not 50% of capital, but rather 50% of my current position.

    I intend to own much more in the future, but bet size is everything in trading. I try to keep the size of each bet to where I always have strong hand status, in that I can see clearly.

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  66. So Gary, for weeks you said to keep an eye on the dollar. So with this add, is it time to ignore the dollar now?

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  67. Even if a trade goes sharply against me initially, proper sizing lets me view the position without too much emotional interference. This is how I was able to stay in miners when most here had conviction they were going lower.

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  68. Gary,

    I'm just trying out new information the past six months, and it hasn't been working out nearly as well as what I did before. Signs that I was looking at which weren't part of your posts in the past two weeks: the gold/xau reaching well above normal; the bull sentiment reaching just 26.67 last week, well below the prior IM lows; miners which had appeared to base to me (charting doesn't work...). There was the anemic lower high in the dollar a couple weeks ago, and I posted a query on the blog asking if that made the dollar cycle left translated -- that would have been an omen, right? I still don't understand why the dollar would be key yet that was not considered. I chalked it up to my own misinterpretation of the cycles. That would be June 24th, which was a lower high than June 16th.

    Just giving these cycles a chance, but the thrashing and mistiming since late December is pretty high. Missing 10% up or 20% retraction adds up to quite a chunk. Last year it was easy, even I was nearly all in by the end of July (without using cycles).

    I became a subscriber in order to do better, miss debacles like '08. So far, it's quite a mixed bag. It's too late for the jury to be out, yet it has not seemed particularly helpful so far.

    My failing this time was in being too patient, largely thanks to cycle analysis. If gold heads down to 1425 next week, this week will simply have been more thrashing. With my retirement account where I have restrictions on switching in and out of funds, just missing the D wave would have been worth the price of admission. Yet the fido fund is higher today than when I sold in early May. That's kind of crazy...

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  69. I misspoke -- the jury is still out on cycles, imho, that is, I'm not writing them off. It does appear to be quite a bit less useful overall -- just one more thing to consider but not necessarily even the best tool in the bag. Another six months and I'll have a more solid opinion.

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  70. Most people here, myself included have been looking at past IT cycle behavior to gauge current expectations. One main thesis has been the near perfect touching of the 30wma of Gold when forming bottoms. This thinking seems to be shaping our current thought process more than it should be, as we all know, banking on past correlations is a good way to get it really wrong.
    Anyway, I'm not trying to say otherwise with the chart below, but just a head's up that there are other possibilities, if one is looking for past IT cycle low behavior to shape current expectations. It also potentially fits the behavior right before a major C-wave top.

    Past-Gold-IT-Lows

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  71. I read a few comments and see quetions re the dollar. In my mind the dollar and pms can both rally out of the dollars dcl as the forces that drive the dollar higher in the short term would also support pms..sov debt, and money printing.

    Also, as Gary suggests, the markets may just be forecasting more of he same, which puts the c wave in play.

    f

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  72. Along those lines. It looks like the market is forecasting a weak move out of the dcl.

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  73. "In the depths of a big secular bull market like gold, I read it as being a sign of severely undervalued and beaten down."

    Hogwash.
    It means nothing in the bigger picture. Have a look at S&P over the past decade. I could see a few death crosses. 2 lead to big declines (2000 & 20007). The others was correction in an overall uptrend.

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  74. The funny thing is that everybody here is waiting to buy metals in the very near future, either next week or next month, even if they are sold short for an expected brief decline.

    That's what bull markets are made of, so one knows we'll see higher prices whether we nail the bottom or not on our entry. I like the odds, and with proper sizing to my risk tolerance, I can ride out any volatility.

    No worries here. They go lower I will add, and if they rip, I've got a piece of it.

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  75. In my opinion USD will start rising and Gold will go back down to make a bottom bellow 1462.So far problems are in Europe.Today Portugal rating was downgraded to Junk.I dont see how Euro can jump in such situation.
    Thursday we expect interest rates in Europe to stay the same.That will most likely pressing the Euro.

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  76. Poly, it isn't just that chart, but the repeated discussions about the massive D wave coming up.

    If gold goes up from here, then clearly there's a bigger picture at work that is rendering the cycle analysis fairly flawed. Foreign CB buying? That's the driving factor over the next few years that one person I know thinks means it would be reckless to punt your holdings.

    So far, cycling in and out has only served to lower my return, not raise it. It's starting to feel like options, where maybe one time you save 40% (or gain) but in between you are whipsawed several times for 10-20% (much worse in silver last time).

    It's all a moving target of course -- nothing repeats exactly. That's the rub with cycles, charts, fundamentals, black swans, etc.

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  77. Anyone realize we have reached 30+ months and not test the 200 dma yet on gold.

    30+ MONTHS!!!

    When was the last time you seen a market that haven't tested the 200 dma in over 2.5 years?????

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  78. As Gary said many times before, in a D wave 'the action' will do everything to keep you in.

    Yet, here we are.......

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  79. Eric,

    You have an opinion, and could be justified in standing aside. Perhaps Gary did get lured into a D-wave trap. He was quite clear that it might go against him, thus his 50% invested. If he knew positively, he'd go 125% in.

    Trading is probabilities, not certainties, and a trader should accept this in all decisions.

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  80. If today was the low then it has been by far the weakest IT decline I have ever experienced since I started playing this game many years ago. Gold is literally just two days like today away from being at all time highs! If you bring up a chart of gold we are at the same level as April and have just been consolidating since then, it would be a stretch to even call golds action the past couple months a "correction." If this is over then we will be making new highs within a week or two max.

    At the same time, the USD's 8 month correction is going to continue and the base we have been building the past 2 months will just break down. If so then this has been by far the weakest bounce after hitting lows relative to the 200dmva.

    I personally believe there are three options here, we are going to (1) continue down (2) go nowhere for the next couple months until all the averages catch up or (3) we are starting the mania phase because if we start making highs in the middle of summer then where are we going to be by the new year?

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  81. I agree with Duuuuuude's observation. On top of that, he's from Kentucky, one of the best places in the US. :)

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  82. Poly,

    According to that chart you are betting on 1/10 odds that the correction has ended before hitting the dmva? Furthermore, I personally distinguish between corrections that happen in the summer after parabolic moves and corrections that happen during the winter IN THE MIDDLE of a uptrend.

    Considering the parabola is broken, I think the odds are we are not in middle of a uptrend but rather in a real correction.

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  83. SB,

    Do you remember that when G changed the model portfolio policy after we rode out the Great May Day Silver Massacre, he said that it would probably never read 100% invested ever again, let alone any leverage like previously? But perhaps it's good to let on there may be a "code" to work out based on prior portfolios, however vigorously denied! LOL

    - Proud Recipient of the Silver Heart Medal

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  84. Dan,

    No offense intended, but: "I personally believe there are three options here, we are going to (1) continue down (2) go nowhere for the next couple months until all the averages catch up or (3) we are starting the mania phase because if we start making highs in the middle of summer then where are we going to be by the new year?"

    So, we're either going down, hanging steady, or headed higher?

    I can guarantee you'll be correct! :)

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  85. I remember that time Felix, but fortunately the silver miners were telling me to exit at the time, so I sold them and waited for a signal to get long silver, which never came so I stayed in cash.

    I do know that staying all in on AGQ was too risky for me, so was not in it for the ride lower. Gary has a much greater risk-tolerance than me, and will enjoy much bigger gains when he's correct.

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  86. Shalom Bernanke, you think the 3 year low in the US Dollar index is in? What's your read on all that?

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  87. Just stepping back a bit, it looks like Gold broke down from a triangle consolidation and then went right back up. It will very soon hit the mid point of that triangle and that is where the real challenge lies (1530-1540). From what I have heard the news about hidden debt in China seems to have sparked some safe-haven buying.

    Clearly there is a risk bid in Gold. However if the Dollar is going to rally, then in dollar terms it will be hard for Gold to continue charging up. If that repatriation of foreign profits tax break is for real, then the dollar is likely to see a serious bid; last time it happened the dollar moved up 15%.

    FWIW these are very tricky times so trade small. There is a lot of reallocation going on and a lot of macro uncertainty.

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  88. Eamonn,

    If your're trading metals, don't worry about the dollar. Trade the vehicle you're betting on. Who knows, gold screaming higher could drive the dollar lower, in that order.

    I have no opinion on the dollar and, other than that I'd never go long it. Even though being parked in cash is same as long dollar, I don't like it. Look for any opportunity to own metal vs. paper. The dollar will fall into place eventually, but metals are going higher regardless, and if not tomorrow it will be soon enough for me.

    Investors and savers alike will realize that miners are second only to owning physical, as miners still own physical (in the ground).

    It's the best way to ride out the crisis, should it occur. For years to come, buy metals when they've been hurt, knowing you won't get the timing perfectly.

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  89. Gary,

    The positions you took today were they options and if so can you provide any details?

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  90. Shalom Bernanke, thanks. love your soothing words of wisdom

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  91. Shalom, when you wrote:

    "The funny thing is that everybody here is waiting to buy metals in the very near future, either next week or next month, even if they are sold short for an expected brief decline.

    That's what bull markets are made of, so one knows we'll see higher prices whether we nail the bottom or not on our entry. I like the odds, and with proper sizing to my risk tolerance, I can ride out any volatility."

    ....were you saying that a secular bull like PMs is, by definition, a market that everybody wants to buy, with the only question being, WHEN exactly do they summon the nerve to buy?

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  92. SB,

    If we go down or go nowhere, then there is no point in buying and if we head into a mania phase, which I think it unlikely, then yes it is the right time to be buying gold/silver. Considering were in the weakest period seasonally and criteria that was met at previous IT lows has not been this time, I believe its either point 1 or 2. That is all I was trying to say.

    If you choose to read it at face value then yes its either up down or nowhere but your not considering time value, which I factor into my portfolio, as most mortals do.

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  93. All,

    As I was saying last week, forget the cycles for gold just buy it if you think its going higher. The downside was $1400, upside? Today is now the time to buy? Why not last week? Anyway - Now for the bad news, if DXY continues to rally you are going to get a pullback, perhaps to $1300. If DXY breaks 73.50 then its off to races. DXY is the lagging piece of risk on/risk off. All just opinion....of course.

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  94. catbird,

    Yes, but even within the secular bull many have jumped on and off at suspected intermediate turns.

    All of us want to eventually buy for the big move higher we're anticipating. A few here are short metals, and even they want to get long in for the "A-wave". It's all potential buyers, albeit with different criteria for entry.

    I'll stay long, and get more long at every opportunity, unless I get stopped out. It's the same trade every time, but I do keep very wide stops (smaller % of capital at risk)compared to most here.

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  95. White,
    Obviously the reason to use cycles is that most people would not be able to hold on to their positions if they bought gold at 1490-1500 and it dropped to 1400.

    what cycles do is tell us when to step on the gas and when the coast.

    Yes the daily cycle is still a bit early for a bottom. But the intermediate cycle is right smack dab in the middle of the timing band for a major cycle low.

    That being the case, and today's action in gold looking like a potential bottom, the intermediate cycle would suggest taking at least initial positions. The daily cycle is saying that we might want to save a little dry powder just in case.

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  96. Dan,

    I'm not getting on you for your views, my point is simply that one cannot think themselves out of uncertainty, it exists. Don't think too hard, similar to what I suggested to Eamonn about getting confirmation from analysis of the dollar. I don't care where the dollar goes, as long as metals work higher. In time, I'm sure we'll see the dollar lost vs. metal, but for entry/exit, it's not where I focus.

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  97. this is a very poor entry compared to previous bottoms where we had clear targets ahead of time. Now we are not even using cycles to enter...we just go long because we had one strong move following a big holiday... brings back memories of new years eve when we flip flopped out position straight into the abyss.
    Personally i am staying out until we have a clear direction.

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  98. I find it hilarious that one shortened daily cycle has people questioning the validity of the tool.

    Let me remind everyone that it was mostly cycles that have kept us long, kept draw downs mostly to a minimum, and have allowed us to ride the gold bull since April of 09.

    If you had followed the model portfolio you made money on the short and you potentially are in on day one of a new intermediate gold cycle.

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  99. Gary two thoughts.
    1. Perhaps Silver took the brunt of the precious metal correction leaving gold largely untouched
    2. Gold priced in Euro bounced perfectly off the 200 DMA. Not sure if USD should be used but it is interesting but if I was European I would say gold corrected.
    http://stockcharts.com/h-sc/ui?s=$GOLD:$XEU&p=D&b=5&g=0&id=p56057131900

    That said, I still believe the dollar will rally and gold will drop after rising to the 50dma and than retest lows.

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  100. me thinks the natives are restless....

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  101. Hmm..

    Portugal was downgraded..

    Maybe Italy is next..?

    http://www.bloomberg.com/news/2011-07-05/could-italy-be-next-european-domino-to-fall-commentary-by-simon-johnson.html

    This is not good for the Euro..

    The big question is what the dollar might do?

    This bad news from the Euro zone might drive gold higher..A lot higher..I can see that happen..

    But its such a mess right now..Its amazing that the stockmarket is heading higher..For me that is the real miracle here..

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  102. Great post Jeff,
    I often think we make errors when we look at gold only thru the eyes of our currency. Seems like the Euro price of gold or Chinese currency and relation to gold might have a huge impact on gold's moves.

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  103. i have three puts and not sure what the heck to do
    1 aug 1525 put
    1 oct 1500 put
    and 1 sept 1500 put

    i just went long one futures contract so as to be delta nutral

    by the time the next daily cycle comes the aug will expire.
    but when the next daily cycle comes and all looks like we are heading up i guess that would be the time to add.

    i have been around for a while and has heard gary say the suprises are on the upside. Well i guess this is one of those suprises and that is why he does not short the bull.
    i just dont want a flea bath

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  104. A trap as in you have to time the exact bottom or you won't take the trade?

    We are close enough to an intermediate bottom that one can take this at face value and do just fine.

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  105. Everybody focuses on the dollar, which is particularly useless in recent hindsight. The dollar is a floating target measured only by other worthless paper. I don't give a rat's ass where the confetti goes, but my guess is down over time.

    That said, I'm usually a little early. :)

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  106. Gary, do you have a new rationale to replace the one that got kicked to the curb, the one where without QE and with the economy going into recession deflation would take over?

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  107. Dan,

    I'm not betting on anything from that chart, just pointing out that many using past occurrences to frame this current setup. I'm showing an alternate example using the same analysis.
    I'm always open to any framework, I just place probabilities to each. I'm not married to either, which explains my mainly cash position.

    @Eric,

    Call it hogwash if you like, but your example of S&P and it's various death crosses is a poor one in arguing against my point. Equities have been in a secular bear market since 2000, you should expect many of them. Gold is in a secular bull, my argument is that in a bull market, bear/death crosses are a sign oversold and lagging.

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  108. FSR,
    Did you not read the weekend report?

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  109. That seems kind of ex post facto. Since the risk markets are going up, QE2 didn't end.

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  110. "Equities have been in a secular bear market since 2000, you should expect many of them"

    Poly,
    In 2000, the market was still in a bull market. In 2007 the both the Dow & S&P made new highs. I won't call it both of those points a secular bear market.

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  111. Eric,
    In inflation adjusted terms both the Dow and the S&P were way below their 2000 highs in 2007.

    In real purchasing power people lost a ton of money from 2000 2007.

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  112. Tonight's report is up.

    Le Fou

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  113. My gold futures system will go long at 1518 through tonight/tomorrow.

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  114. > Thursday we expect interest
    > rates in Europe to stay the
    > same.

    What planet are you on? JCT has already telegraphed an increase (which fifty-five out of fifty-five economists are also predicting).

    If you find anyone foolish enough to wager on the ECB main refinancing rate not rising on Thursday, take the other side.

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  115. Thanks for the update Veronica.

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  116. Great report, Gary. So far you've made me money. keep up the great work!

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  117. Well surfing other blogs and forums people are already predicting $40+ silver by the end of next week and up to the three digits by the end of the year. This sure doesnt feel like any other summer doldrums or bottom of an intermediate correction I have been through before.

    But either way, if silver breaks out of its downtrend channel, I will sell my shorts and consider buying in slowly but until then, the trend continues to be down. After today, we're hitting our head on the top of that trend line so were risking very little while the upside remains quite large - 200dmva.

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  118. Gary

    Maybe I should have used the term knuckle ball.
    Many were waiting for a tag of the 150ma like most others in the past and that gets tossed out because of a one day move.

    I didn't answer your question but I'm just more patient. I've been following you since last august and am very happy, but luckily dodging the silver collapse opened my eyes to surprises.

    My point was it (the one day big move) smells fishy.

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  119. Just have a plan in place in case you have to chase.

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  120. Gary,
    Good point in regards to inflation adjusted numbers but on price along 2000 was still a bull market and 2007 too. Both the 50 and 200 DMA are derived from those price points.

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  121. Gary,

    As of now, what action/reaction do you expect to the upcoming jobs report?

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  122. I will. Worst case is first daily cycle low. Best case next week...

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  123. wmp,
    If the dollar continues lower for the rest of the week in the jobs report would be the most likely spot for the daily cycle low to form.

    If the rally in gold continues for the rest of the week the rally in the dollar might force a retest of the $1500 level.

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  124. How much would S&P and NASDAQ continuing up affect gold prices?
    After all, market going up insinuates better economy and less need to go to safe haven PMs, in public minds.
    In other words, if PMs keep going up to near 1800$ or so, will equities revert?

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  125. Let me ask a question. Has anyone here ever bought gold because they thought it was a safe haven?

    I know I never have. I buy gold because I think the Fed is going to continue to debase the dollar and inflation will eat away at my purchasing power. I also buy gold because I think it's going higher.

    Since most humans are motivated by the same things I suspect 99% of the people that buy gold buy it for the same two reasons that I do.

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  126. Oh heck Gary, I only want to make money, that's my haven, having money.
    I am talking in terms of perception.

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  127. The only people that perceive gold as a safe haven are the media, and that's only because they need some reason to explain why gold is going up.

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  128. Well the media and Beanie :)

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  129. I'm splitting the difference.

    I have a limit order on GLD which should fill at the open unless it gaps up.

    I want the PMs to show me more before I buy DGP and GDX. If the A wave just began I won't lose much. If not, my partial position in GLD won't drive me to drinking.

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  130. This isn't an A-wave. This will still be a continuing C-wave.

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  131. jobs and payroll data could be a downer

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  132. gary,
    what's your guesstimate for gold and silver for this C wave.
    thanks

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  133. Gary

    I strongly disagree with your analysis...i am very much disappointed to see one of three persons who taught me cycles, doing it wrong way. :-(

    How can friday be the intermediate low? It can be at best a daily cycle low. If gold moves up from here then IT low will be marked at week of May 02

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  134. the current scenario is an excellent example that cycle is no different than EW (which gary keeps critisizing a lot)...

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  135. This comment has been removed by the author.

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  136. Poly,
    nice graph of Gold's IT cycle lows. Coupled together with Gary's earlier predictions that this might not be the D-wave (yes, he has said it before) and that we have gold's parabolic C-wave finish ahead of us it seems to have some validity. We'll see soon enough.

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  137. Gary,
    Gold still hasn't regained the trendline. Silver is still in a down trend. Are you concerned about this?

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  138. This comment has been removed by the author.

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  139. SF Giants Fan,
    Here's oil's chart

    http://stockcharts.com/h-sc/ui?s=$WTIC&p=W&yr=20&mn=11&dy=30&id=p57519484283&a=227189890&listNum=79

    and

    http://stockcharts.com/h-sc/ui?s=$WTIC&p=W&yr=5&mn=0&dy=0&id=p87960476023&a=232849444&listNum=79

    Here's Silver

    http://stockcharts.com/h-sc/ui?s=SLV&p=D&yr=1&mn=6&dy=0&id=p18429684236&a=213309994&listNum=79

    These are charts by Rambus.

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  140. wav
    i think that is why its not a full position and keeping some dry powder

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  141. SFGF,
    much easier to copy and paste from here

    http://smartmoneytracker.blogspot.com/2011/07/portfolio-change.html?showComment=1309936248602

    Jeff,
    I understand its building a position but it doesn't feel right to me, yet. Maybe I'll chase and if thats the case I'll buy immediately and then hope for a gap fill. But I'm not chasing until gold regains the trend line.

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  142. wave

    i have 3 puts. i through one on just to be delta neutral.
    the next daily cycle, if all is well, ill buy in. futures are impossible to take the drawdown that might be comeing

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  143. in fact i might put a stop at 1500, but im not sure where i want to put it. im looking for a spot

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  144. Looks like the USD Index has also put in a swing low. I'm not convinced on gold - I think a bearish diamond could be forming. I'm still willing to bet the USD will get bullish from here, esp when banks like Morgan Stanley are pumping out 'buy USD recs' in their weekly FXPulse to commercial players?? The trend in equities has also changed and I'm willing to bet this is a suckers move drawing the last bulls into the market prior to a crappy NFP.

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  145. This is day 2 of the new dollar cycle. I have no idea why everyone stopped using the USD as a clue as to where we are in the move for gold.
    I think the dollar has legs to run, how far is the real question.

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  146. Gary:

    Since we are not using stops now, we still have a plan (as you mentioned a couple of weeks back) in place to exit if this does turn out to be a D wave, correct?

    Or is the D-wave scenario now a very low probability given the action yesterday?

    Thanks!

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  147. unknown,
    I went over that in last night's report.

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  148. Don,
    I think we have to take into consideration that none of the cycles, stock market, oil, or gold are conforming to the norms at this particular time.

    Gold did violate a daily cycle low which typically happens as it moves down into an intermediate bottom. Yes there still is the possibility of one more move down but the power of yesterday's surge would suggest the odds are not high of that happening.

    Considering that we are right in the middle of an intermediate timing band and that sentiment has reached bearish levels that usually sparks an intermediate rally I think the odds are good that we did put in an intermediate bottom yesterday.

    I'm confident enough in it that I'm willing to at least take initial positions and even if there is one move down it's so late in the intermediate cycle that should be very brief.

    Let's face it gold it's daily cycle was only four days short. Four days isn't that big a deal.

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  149. Wav,
    you do realize that every intermediate bottom happens while gold is still in a down trend. The key is to pick the spot where the trend has changed, not necessarily wait until the trend channel has been broken as you will miss some of the rally.

    If you don't mind missing that part of the rally then by all means wait for the trend channel to break but understand you will be buying into overbought conditions once it does.

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  150. sammpa,

    I hope the dollar rallies hard and can push metals lower. That is, assuming the typical inverse relationship holds.

    I'm just glad everybody is looking to buy in the next month or so.

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  151. NJ,
    I think the D wave is a low probability at this point. And at 22 weeks with sentiment at the levels it's at we should have, or are very close to, an intermediate bottom.

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  152. I still have a big pile of worthless paper to buy more metals with. :)

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  153. Gary or others,
    In cycles, is the day or week that forms the swing counted as the first day of the cycle?
    Example: If I am understanding this correctly yesterday formed a swing low in the dollar. So is today day 1 or 2 of the new daily cycle? TIA

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  154. The intraday low is counted as the last day of the cycle. The swing marks of the bottom but it may not come on day one.

    As an example, the first day of the cycle may not be large enough to form the swing but it still holds above the intraday low.

    It appears that today is day two of a new dollar cycle.

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  155. If gold can hold above the 10 day moving average despite the dollar rally that would be a very positive sign.

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  156. I realize I`ll probably be shot for treason for saying this but what if; take Fridays print on gld and slv out of the mix. It leaves a pretty perfect crawl on the 75 for the gld and a pretty nice bear flag too. In the face of a rising dollar. And the euro is going down Fast. I sure wouldn`t bet long on that. I`m going to get last rights now.

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  157. Euro confidence is shot - with Moody's downgrade for Portugal yesterday and ongoing Greece - this plays into the hands of USD as people consider switching Euro reserves into USD. I visted the Chilean Central Bank two weeks ago where we had a lecture. They have 50% USD and 40% Euro in their reserves and 10% Yen. They said they were worried about the ongoing crisis in both USD and Euro and were looking at other reserves - if they are thinking this then you can bet that other Cent Banks are too! I think the Euro has the biggest issues - once the market has trashed that then focus will switch back to the USD. Short Euro and Long USD for me - which means bearish Equities and PMs! Sorry ;-0

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  158. My gold futures system did go to a buy overnight; today's action will be interesting.Will there be follow through to the upside, or a short term top like last July?

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  159. 86,
    Let me ask you this. With gold on the 23rd week of its intermediate cycle and sentiment in the basement, and the bullish percent chart at long-term bottom levels, how much downside do you think there can be from here?

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  160. I would also point out that yesterday's move not only close back above the 10 day moving average but it broke the down trend line.

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  161. Gary,

    Your call makes a lot of sense. Whatever downside remains, if any, will be swallowed back up on the swing within a few days, at most!

    Most other confirming TA indicators are at basement IT low levels.

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  162. I think the surge in the last couple minutes answered the question.

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  163. This comment has been removed by the author.

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  164. Dollar up, metals up again. How long before traders realize they don't need to predict the dollar's future to know the direction of metals?

    It amazes me that they want to add an extra step, and an unreliable one at that! Of course I'd generally prefer a weakening currency if I have my choice, but I'm content to trade the trade I'm in. I haven't seen anybody here gain an edge from their dollar prognostications, and that's over a few years.

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  165. Wow. Pop!

    I smell panic buying.

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  166. That's not exactly true. Debasement of the currency is obviously the fundamental driver behind the gold bull market.

    The vast majority of the time gold will trade inversely to the dollar. There are times though where gold can resist movements in the dollar. Those tend to be centered around intermediate turning points.

    If gold is due for an intermediate bottom, extremely oversold, with sentiment skewed extremely bearish it can and often will rally in the face of a rising dollar.

    On the flip side if gold is overbought, due for an intermediate decline, and sentiment has reached extreme bullish levels it will decline even as the dollar falls.

    But generally speaking the gold bull will continue for as long as the Fed continues to try and prop up the financial system and economy by printing money. At some point we will get another Volker and put a stop to this madness. That will end the bull market just like it did in 1980.

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  167. Wow! Gold is steamrolling the shorts!

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  168. of course gold rises when it's priced in depreciating dollars over the long haul, my point is simply that nobody here has made any money by predicting the USD direction to trade gold. It's unnecessary at best, and more likely a distraction.

    For example, grimweasel gives all the reasons why people and even central banks would want commodities (Chile fears the USD, but the EUR is even worse, etc), but then draws the conclusion that he should buy dollars and short metals. His preoccupation with the dollar has blinded him, IMO. His conclusion should be that ALL paper currencies are flawed, and that could drive a smallish metals market through the roof, regardless of where each fiat goes vs. other fiat paper.

    Btw, I like grimweasel and most others here, so my comments are not meant to hurt feelings but rather share my observations. I hope we all make (take) lots of money from the markets!

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  169. poly

    panic buying? good or bad?

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  170. XAUUSD 30min http://bit.ly/nO4AMN

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  171. Gold now running into resistance at the 9 day displaced MA, the same spot that halted last July's buy temporarily.

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  172. On a very positive note, my gold system in weekly format will go to a buy with some more strength the next couple weeks.Other than 2008, every long trade has been a winner since the gold bull started, and I don't expect another 2008 type of year here.

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  173. gold is a beast, quite wild :-)

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  174. If I get the weekly buy on my system, it is 84.62% winners:) It's getting exciting!

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  175. Long dollar and long gold..Feels nice! lol

    The thing is..If we get a left translated daily cycle here in the dollar..How many days can we rally before we roll over? Today is day 2..If you look at gold, silver and oil it looks like this dollar rally will fail.

    But we must wait and see..More mess in Europe is on its way..

    The thing is..We still dont know if the dollar can make a new high..This will be very interesting to follow..

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  176. Is there any site which reveals the geographical breakdown of who is buying gold or do most buyers use the US markets? My question is based on the fact that if I lived in Euro land, I would want gold to protect my capital. I'm looking to see why PMs rise when US$ goes up.

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  177. see some technical resistance at 1540 level in gold.

    see if it can punch through that with authority in the next few weeks will be the true test.

    gold price has gotten a little exhuberant going up so fast in 2 days. like to see it retrace to 1515 before buying anymore.

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  178. GDX daily http://bit.ly/oS7eZq

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  179. ... poor baby...abandoned and lonely...

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  180. LOL @ Shalmon - I like you too man!! ;-)

    I do hear you on the Fiat currencies and I would prefer hard tangible assets such as land and gold but I'm a FOREX type of guy so I try and trade each currency based on its chart and not the news and what I think I know - because most of the time I don't know squat and the market has already priced in my thoughts and analysis.

    I'm actually on the side lines bar some Eur shorts. The Equities are too skitty and there is nothing concrete to get me long PMs yet. I don't mind keeping my powder dry and coming out to play once we have some confirmation such as a higher low, or break of last high of downtrend and test. I'm happy to miss a few pips for confirmation rather than get rinsed by a skitty market.

    I must say the US session always trades the best. It seems that whatever Europe does the US session comes in and does the opposite most of the time!!

    Good luck and trading to all those already long!

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  181. Quite often a powerful surge above the 10 day moving average is a sign of an intermediate bottom. Once the move stretches considerably above that average it will either retrace to tag it before continuing higher or consolidate while the average catches up.

    The fact that gold is following through with another powerful up day right on the heels of yesterday's strong surge is a pretty good sign that we do indeed have an intermediate cycle low.

    Let me say this again. This is potentially only day two of a brand-new intermediate cycle. If you couldn't make yourself buy yesterday you need to make a plan for how you are going to chase the move if need be.

    Yesterday the move had just exited from oversold conditions. The longer one waits the more overbought this is going to become. If you are the kind of person that can't by into overbought conditions you may run the risk of locking yourself out of the move.

    I will be updating the stops and trade triggers link here in a minute as I think we clearly have at least a daily cycle low.

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  182. PS @ Shalmon - I never suggested shorting PMs - I'm just bearish still short term. I would only short on a decent technical set up off a TL and below the 10 and 20 MA generally! ;-)

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  183. I really don't understand the folks who are upset. We've been waiting on our hands for weeks. We've been expecting the A-wave. We are now fairly certain that the C-wave is back on and folks are upset? Hell, this means more profits!

    Thanks Gary. This is fun!

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  184. gary,
    i believe that the COT reports for silver are extraordinarily bullish. quite a few commentators are predicting a major breakout in silver. i know u have stated many times that u dont want to touch silver for the next 2-3 years. even if silver peaks at 43$ an ounce( conservative estimate), this would mean 22% gain , roughly to what gold prices gain u have predicted in last night's report. if it goes up more, gains will be exponentially higher.
    does the COT report change your stance on silver. u have said before that the COT reports are helpfull at bottoms rather than at tops.

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  185. Went long. You're one of the best at finding bottoms Gary. Thanks for the signal Veronica.

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  186. The COT report for silver hasn't been very reliable. It became extremely bullish right at the top.

    Generally speaking I don't invest in broken parabola's. Silver has already had its run. It may rally back to 40 or even above but from here on out I will be playing gold and miners.

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  187. GDX..the baby started to cry now...

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  188. grimweasel,

    gotcha, I misinterpreted your comment.

    I'll wait for a pullback or sideways move for a couple days before adding. I'm confident the next larger move will be higher after watching the last few days, even if not immediately. We've already seen the lows in miners, IMO.

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  189. In 2008 the dollar was in a narrow trading range for five months (early March until late July) before moving higher. That might very well be what it's going to do now. It's already doing it for the past two months; add another three and we are in late September. At that time the dollar might either move up strongly or, and that is what I am leaning towards, put in a rapid 15% collapse (coinciding with a high in PMs, stocks, etc.- possibly after a summer trading range), followed by a strong move up (coinciding with a steeper correction in PMs and stocks).
    There is absolutely no reason why the dollar has to decide here and now to either drop and make new lows or bounce. I think it might be likely that it will test everybody's patience and play cat and mouse for a while.

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  190. I bought some Sandstorm Gold CVE:SSL. Anybody else invested in this one? Similar business to Silver Wheaton, same people running.
    I'm glad we're not touching silver anymore, it sucked my capital on the long side and now managed to make a loss on the short side as well... Damnit, it's so easy to lose money.

    ReplyDelete

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