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Monday, August 1, 2011

TIME FOR A MUCH DESERVED REST

Let's face it, gold bulls have had it pretty easy the last 2 1/2 years. During that time QE1 and QE2 drove a gigantic rally out of the 2008 eight year cycle low.

Folks, at some point a move like that has to enter a lengthy consolidation.

With quantitative easing coming to an end (and QE3 not politically feasible at the moment), the economy likely rolling over into recession, and the dollar possibly setting up for a powerful rally out of the three year cycle low, I think the next deflationary period is now upon us.

 
The last two deflationary episodes forced a severe (2008) and a moderate (2010) correction in gold.

I do think demand is strong enough in the gold market that gold should hold most of its gains. However, I suspect it's going to be a lot harder to make money during the next year and a half as I expect that gold will be locked in a volatile trading range as it consolidates that gargantuan rally.

580 comments:

  1. Gary,

    What do you anticipate of silver?

    Move up to 50 again for the gold/silver ratio?

    Test 150 or 200 DMA?

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  2. If gold were to correct back to the 200 day moving average (1450ish), I expect the silver parabola will finish collapsing.

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  3. Not sure about the soft landing for gold...just throwing it out there of course....but the demand from gold if from buy and hold, replace the USD investors, are true buy and holders that are so big that they will not sell even during a massive drawdown, then this gold is like being removed from existence...
    If then the only ones willing to buy or sell are traders, that same support you see now, may not exist once the trade is dead...big hands won't come back in until their well-timed patience comes in. Once traders turn the trade, then all rules are off, broken gold bubble...blah blah...and gold is taken to the wood chipper.
    That being said down is down...so the above, even if too extreme, is just another thought to why I don't want to venture back into pm's until we get a real correction. Corrections are important in bull markets, they test and provide support....right now I have no earthly clue to what that support will be. If gold were surging here it would be one thing, but it seems to be toying with its prey…marginal new highs, teasing recoveries.

    I can't imagine gold falling like in 08. The only reason gold fell in 08 was due to hedge funds gone wild, being forced to sell the metal due to margin requirements and redemptions. I don't see that happening now...but a good couple 100 bucks off the metal could be called for.

    These are just thoughts...no predictive power here.

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  4. Gary,

    The demand for physical gold is exploding in Asia--if they keep on buying and they are not letting up at all,the gold price might just surprise you--

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  5. The miners may be able to be bought this fall.

    That would entail not having to twiddle thumbs for 18 months! Yippee!

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  6. Gary... could you expand on your 7:39 comment regarding the silver parabola. not sure I understand what you are saying.

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  7. Asian gov's are not stupid...if they know they are the reason that gold is going up, they will stop buying to allow it to go down, so they can buy it cheaper...the only way that support continues is if there is a rival for demand...ie someone else buying it up a la masse that is not willing to trade for it later.

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  8. Robert,
    Wouldn't it be nice if gold would just keep going straight up forever?

    Unfortunately that would mean the bull would soon be over.

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  9. This rally out of the july bottom really made it hard for people to realize that gold does and will correct...I see it in the way futures trade.

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  10. Aw, shucks, never mind. Thanks though.

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  11. So am I out of my gourd thinking there is a bear flag forming on the dollar starting on the 25th? Don`t sugar coat it now.....

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  12. Market futures were in the green after the house vote...all in the red now, market may be dropping tomorrow, dollar rallying, gold all over the place.

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  13. Felix,
    That's no surprise to anyone. Gold has been discounting that for months.

    The government has never failed to raise the debt ceiling when it threatened to cut off their spending. Once we hit this debt ceiling it will be raised again.

    Gold already knows all this. I'm just saying that sentiment is too bullish. Now it's time to sit and wait patiently for that sentiment to clear or the dollar to break the May low.

    Either way gold is now in the timing band for a daily cycle correction. Now isn't the time to step on the gas no matter how hard gold tries to sucker you in. That's why we use cycles, to tell us when to take our foot off the throttle.

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  14. So Gary,
    Not entirely clear for me on tonight's report, are we done with gold? The rise to 1700-1800$ for some other year?

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  15. Gold is fractionally reserved, from the bullion banks, just like fiat is fractionalized from conventional banks.

    That's the problem with saying gold is a commodity since commodities are consumed and aren't subject to fractional reserve banking.

    There is a whole shitload of paper gold floating around with no entity to backstop it in a bank run. Bank runs normally happen in deflationary periods. As soon as a big player can't get their physical delivery all hell will break loose.

    Good luck buying physical gold after a major non delivery. Also, paper gold like GLD and DGP will become worthless overnight because only the big players have a right to the actual physical. You need 100,000 shares before you can receive delivery through an Approved Participant with GLD.

    The reason BB are shorting gold? Because no central banks will backstop them in a run and they are super fractionalized on gold. They're just trying to keep the whole shebang from imploding.

    Anyone who doesn't have a good supply of physical will probably regret it. And I'm not a gold bug. I don't believe in a gold standard any more than I do fiat since both are totally controlled by governments.

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  16. Mr M,
    I've gone over the requirements for a continued rally numerous times. Nothing has changed.

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  17. Gary,

    "Now isn't the time to step on the gas no matter how hard gold tries to sucker you in."

    Do you say this before every correction? I have only been with you since May, im not sure but if I remember correctly I think you were calling for a C-wave parabolic leg up right before the May correction, but I know you were saying the saying it right before this last intermediate correction...thanks it helped me sit tight in my short position (although I know you dont recommend shorting) I wanted to thank you anyway :)

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  18. off to bed for me so I can get up early and go climbing.

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  19. High 5,

    What do you think of PHYS if I don't want to build my own bullion bunker?

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  20. nice call. you seem to hit the nail on the head more so than others. Thanks.

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  21. Swiss allocated vault for core "old turkey" position, for me. I think PHYS is far better than GLD.

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  22. Is there a Swiss dealer you recommend? Thanks!

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  23. I"ve been premium subscriber for about month. Interested in cylces as follow Martin Armstong, love your stuff. But follow another poster on another site that has traded gold for last 25yrs.

    His analysis is simple buy the dips but keep good bit in cash for inevietable 10-20% dips. one reason looking for cycles to avoid dips. He thinks as you thst gold follows QE (nice chart that on stockcharts that shows exactly) and usd sort-of. Also, with this new debt ceiling bill just more of same so eventually QE3.

    So, Gold will conslidate for a few days or weeks until gold miners catch up. His reasoning is miners follow market partially due to general selling and buying but eventually fundementals of producing co"s win out. Producers only, AUY,GG,AEM.

    Not trying to argue as like your style and I sold my futures and can sit on sideline until market proves itself. Still long miners but bought long ago. Just that maybe Price of Gold will stagnate above 1600 until miners catch up.
    First time posted and will keep to minimum from now on. like site Riley

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  24. High 5 like to say that there is a fractional reserve but commodities exchange can at any time if short of physical give cash as exchange. now sounds ominous but not enough gold players now to make dent in cash exchange if everyone took delivery. Non-event until masses understood fiat vs gold/silver/oil/palladium/platinum/diamond/copper---any commodity exchange

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  25. A correction back to S&P 1250 would be healthy right now in preparation for a bounce in Sept. If we break that then nothing will survive, not even gold...

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  26. Gary, does your gold sentiment indicator cover WW? Or is it just the US/Europe? Here thinking about China, India, Australia, Japan?

    From the bit I read, Chinese save approx. 20-30% of their incomes, and much of that goes into gold. Based on this my own sense is that China's sentiment about gold is growing, like an opened ended parabola. The Chinese govm't is also encouraging people to buy gold. We don't see this in the US.

    China's (and India's) demand for gold could eclipse US sentiment, in both size and velocity. There are 1.3 billion people in China. 1.21 billion in India. Almost 1/2 the world live in these 2 countries, and these 2 countries are creating new and increasing demand for gold.

    I also wonder what Europe is doing - when they sell the Euro, do they buy Swiss Francs? Gold? Not dollars, right? Would love to hear from folks in Europe on this. Esp. what are the Germans doing? Thanks!

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  27. Hi all, for those of you who wonder why you get a lot of NL hits when googling GLD it's the abbreviation for the Dutch Guilden, their old currency.

    Peace

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  28. fyi Japan's finance minister will soon intervene to weaken the JPY:

    http://finance.yahoo.com/news/Japan-primes-markets-for-FX-rb-470133280.html?x=0&.v=3

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  29. Visual of difference between 1 billion and 1 trillion.

    WOW

    http://timiacono.com/wp-content/uploads/11-07-27_billion_trillion.jpg

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  30. Gold doesn't look like it's stopping.

    Still looks like it wants to make a run for it and that the recent action has accomplished the legendary bullish trait of leaving people at the station expecting an pullback and that 'things are too high'.

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  31. If it breaks higher I might try to chase it (with a 1% stop) thinking:

    a) we had a very sharp and short daily cycle low on 7/28

    b) and that the last int low was 7/1

    c) and that we are still heading for a blowoff before things cool down (based on EU still falling apart and the new US recognition that we are a basket case too and in the process of passing a "hard fought" budget/debt-limit which essentially doesn't even START to do something for 1.5 YEARS and then counts 'savings' as spending less than you were going to.)

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  32. I'm simply taking the angle of "what if I'm wrong" (about selling earlier today) and what the effect or my response to that will be.

    Just good investing. Always try to look both ways even when you don't think it can happen.

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  33. TZ,
    Looks that way. Public opinion is definitely bullish based on sentimentrader.com data, but there is limited participation by investors in the rydex PM assets, also courtesy of Jason Goepfert's service. A daily cycle correction may be around the corner, but we are moving into seasonal strength here for gold, corrections so far have been mild and as you say, the gold bull has shaken quite a few off its back. Bullish and long above $1,600.

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  34. Remind me why PHYS is better than GLD. Is it tax advantages? It certainly trades in a more volatile way.

    http://screencast.com/t/8l8JGThB

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  35. Demand for gold is now worldwide. One thing I wont forget from the tech bull (bubble) is that very mature (11 years) bulls don't sit idle for a long time. I take the standpoint of wanting to be invested and letting my stops get me out as opposed to getting out and hoping we get better entries.

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  36. Gary-
    Are you using the Transport June or March lows to determine a failed intermediate cycle?

    Thanks

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  37. Poly,
    If that was the case then why did you exit silver before your stops took you out?

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  38. Mike,
    I think we have to use the March low as the last true intermediate bottom.

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  39. Gary what's the plan with the remaining 10%, would it be a bad idea selling into today's pop ?

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  40. Silver is a very volatile and speculative asset, we all know that. I knew any drop would be sudden and massive. When it blew through $42 is was no longer a sustainable path so I got out, that's why.
    I know what you're saying and I respect it, but I just don't think you can compare golds run here with that Silver run. Gold is running on massive soverign fears right here, Silver ran on extreme specualtion, gold right here is not and is still within sustatinable parameters, IMO.

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  41. Since we are all up way too early..:)

    Gary,

    In terms of your cycle tools, is there a time frame for clarity on this gold issue?

    In terms of targets, I believe you mentioned 1600 for gold, that I would agree for on the bottom end. On the top end, do we have any targets to change our minds again.

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  42. Generally I don't feel any different about the PM market right now. The bull seems to be teasing again...interesting to see if theses gains hold, and if miners confirm the move....either way I believe there we be some nice gaps in miners...

    In terms of getting out, I didn't like to, but there are still too many unresolved issues before I would like to re-enter....don't care about being right or wrong...peacock feathers where shaved off last time I got burnt! :) I do know that only looking at price action can be very deceptive, and it would seem that this is the only thing positive for gold right now....worse we are not talking parabolic behaviour, we are talking a slow grind in a stretched market...don't like that either...

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  43. Clark,
    The stop for GLD is a close back below $1600.

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  44. Keys,
    No target. I just no that it's starting to get late in the daily cycle. Sentiment is too bullish. Gold is stretched and miners and silver are diverging.

    So I want to see how the next daily cycle correction unfolds before I decide whether I think we are at the beginning of a new intermediate cycle or at the end of a stretched one.

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  45. Gary,

    Would it be fair to say you're calling for a B wave here, in absence of a C,D waves, primarily because the 3yr dollar cycle has printed which you require to fuel the C?

    Thanks.

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  46. CHASED; went back long at 1639 with a 1% (of my money) stop loss. Risky. Looks like the wedge has broken higher after repeated attempts (and getting knocked down).

    Does it hold and continue? I'm betting yes for now.

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  47. Gary,

    Dollar up, gold up big--could see $1700 by the end of the week--cycles or no cycles

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  48. Pleasant surprise this morning. I'm staying long the same things and looking forward to earnings reports in a few of my names tomorrow.

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  49. The higher this goes without a correction the more nervous I get. Everyone is convinced that gold can only go up. When everyone is thinking the same thing then no one is thinking.

    I'll let the 10% position do it's job but I'm getting more and more nervous as this moves deeper and deeper into the timing band for a correction.

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  50. QE 3 already being talked about.

    http://www.resourceinvestor.com/News/2011/8/Pages/Gold--the-QE3-Ship--Are-Both-About-to-Sail.aspx

    Sorry if someone already posted

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  51. TZ" Posted yesterday and never heard back from you, so re=posting on the off chance you didn't see it...

    TZ: I know what you mean about not selling 1/2. I have always been that way myself (to my detriment, I believe) and have been weaning myself off that attitude. Perhaps it works better for you than it has for me. A question, then:

    Do you have a mechanical system for deciding how much to do. That is, if you find yourself at 6 X. If you decide by "feel" then you might as well have decided to do 3 X if the mkt looks iffy as 6 X and, voila, you are at 1/2. If you were looking at something fresh and would do 3 X, and the market haas morphed into a 3 X one from a 6 X one, cutting back just fits the current reality. "Cutting back" is just relative to an arbitrary starting point in the recent past. What am I missing?

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  52. Gary

    Just a thought-

    Is it possible that a 'correction' will look different in a parabolic move/ run away move? Perhaps more sideways and not necessarily holding to "STANDARD" rules , like breaking below a trendline or dropping a certain %?

    In T/A, Gold is just now breaking above a sideways correction from May to July (see a 6 month chart), and has a minimum target of $1750, I wont even mention my top target.

    I ask because GOLD is really only about 13% above the 200ma...we used to worry when it was 100%.

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  53. DG,
    Got your question cued up for answer. I haven't slept since yesterday for various reasons. Will get to it.

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  54. Copper, oil and the SnP off thier highs, is a deflationary sign to me. If this continues, gold and silver will correct too, they are lagging because they have the strongest fundamentals. This Dollar rally is just getting started.

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  55. Alex,
    I haven't been able to find any instances where the daily cycle correction just drifted sideways.

    Like I said they all close below the 10 DMA and they all break the cycle trend line.

    This is why we use cycles so we can keep a level of sanity during periods when the technicals are telling us "it's going to the moon" or "it's the end of the world".

    Gold is trading inversely to the stock market at the moment. As long as stocks continue down then money is going to flee into the only thing going up. But as I pointed out stocks are getting terribly oversold and are due a bounce soon, even if it's only a bear flag.

    It's a pretty rare gold cycle that hasn't topped by at least day 25. Today is day 21. I expect we are going to get a key reversal some time soon.

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  56. First thought
    Playing Devil's advocate

    Is there a possible dcl on july 20th?

    Second thought
    This MAY shape up to being an interesting day...that last surge in metals looks rather sharp...I don't know, but perhaps we get some real info on this market today if that things decides to reverse...miners will be forced to rally with a big gap up, and gold needs to rally stretched even further.

    Mark my words.....I really have no words.....:) Just observing.

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  57. If there was going to be a top in gold, today would be the day. Also most likely this would occur BEFORE the noon debt ceiling vote.

    We'll see. :)

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  58. Gold is now rising at a 77% clip 17 out of 21 days. It's stretched 52% above the 75 week moving average.

    That is never sustainable. Folks it's time to control emotions and think logically. This is not the time to chase.

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  59. Lots of posts around here hey ...

    Miners are down in Europe against backdrop of 1640 today. Not a good sign.

    Miners historic underperformance is due to high starting valuations (EV/EBITDA, P/NAV etc) last few years ... that is being worked off now at $1600s vs historic averages. Long thorny discussion getting into valuation, but the rubber band is stretching toward undervaluation ... a takeover or two will come eventually and you will have limited window to get into small/mid caps in the sector. Risk:reward mathematics look good - if you're very roughly right on the eventual magnitude and direction of gold then there will be stocks that do GMCR-type stuff - either long or wrong in risk-controlled fashion.

    Sentiment in spots getting excessive here - e.g. Citi was neutral gold and came out with "Gold - A Spike to $3,800/oz or $5,000/oz"?" Friday. Analysts all behind the curve.

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  60. Aaron,

    Gold does well in deflation, contrary to what most think. 2008 was a unique situation, and more the exception than the rule.

    Silver is an industrial metal as well as real money, so could face some headwinds in deflation, although I'd bet it trades more like gold than copper. We'll see.

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  61. It appears there's a lot of publicized fear about the markets, as well as a lot of publicized over-exuberance about gold.

    Gold way overbought, markets oversold. I bet we get a bounce in the markets and a decline in gold, and then they both start going down hard together in the coming weeks.

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  62. For me...I am not chasing! Testing my arguements and my thought process...looking for different signs for the next time.

    Massive gap open like this, I won't chase into..sell if I had, but not buy!

    Gary you answered my first thought about July 20th being a DCL in your previous comment...so thanks for the cyrstal ball approach.

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  63. Increased and moved up stop; now 6x gold futures with a very tight 1% stop loss (on net worth).

    If this doens't hold I have one more trade anticipated at a slightly lower level.

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  64. SB, I have seen gold perform well in deflation, so that is true. If the deflationary pressure is mild, gold holds or at times goes up, its when it becomes somewhat vicious that it get dragged down due to margin selling, as everything starts tanking. Silver is a lot weaker than gold due to its industrial uses/trading. Should be interesting times ahead...

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  65. Silver is still close to 4% off it's highs of last week (that's from it's current price of $40.27). This should be telling you something loud and clear!

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  66. O.K. Thanks Gary

    Just mentioned it because I have only been with cycles since Aug 2010 ,and wasnt sure if anyone looked back at the 9 month run 2005 to 2006 ESPECIALLY MARCH TO MAY( one can see that it did visually have brief pullbacks, just wasnt sure if they were different (sideways)in cycle analysis ).thx

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  67. Robert Thrane,

    What is it telling us? Help me out. :)

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  68. SB,

    It's telling you to sell the farm, and leverage it to the hilt on August 11' call options for $60.

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  69. This is your only chance to be a billionaire SB, better capitalize.

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  70. What's a ultra short copper etf....can't find one. TIA

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  71. Robert Thrane,

    Could be, but I don't trade options. Suckers bet that most who trade them don't understand, just as they're intended.

    I'll have to do it the old fashioned way. :)

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  72. SB,

    I was being facetious. I smell blood in the water.

    I was trying to communicate the divergence silver is showing from gold. The miners also speak volumes to this.

    Be careful.

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  73. Robert,

    I hear ya, was just having some fun.

    I'll just see how much this rally has in it for another day or two, and might even take some profits then if miners don't gain much ground.

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  74. Someone just hacked kitco, and it now redirects to marketwatch.com

    try Kitco, I'm not kidding...

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  75. Robert Thrane,

    drinking gin before noon again, eh?

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  76. Tangueray and Corn Pops are the breakfast of champions my friend.

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  77. This comment has been removed by the author.

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  78. Gold now 10% off its high of the day

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  79. SB,

    so far you have been right on the money with your calls on the miners... I'm with you, still in with stops and watching... my sense is miners are due to outperform ..

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  80. Will gold ever go down...what a rally

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  81. I just picked up my first gold of the bull market, wish me luck

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  82. Michael,

    One catalyst we have to see them outperform is earnings. That's not why I bought them, but I do like having a potential trigger.

    I still have gold too, but my miners are doing much better since purchase.
    We'll have some answers over the next 24-48 hours.

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  83. If anyone wanted to retire early, they could begin shorting First Majestic Silver

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  84. One of my explorers. Grande Portege

    In June 2010, Grande Portage (GPTRF:$0.3863,$0.1112,40.42%) entered into an agreement with Quaterra Resources Inc. (QMM:$1.4100,$0.0800,6.01%) to explore the Herbert Glacier gold property. GPG has now fully earned its 65% interest in the property. Grande Portage (GPTRF:$0.3863,$0.1112,40.42%) and Quaterra will form a joint venture for the further exploration and development of the project, with each party bearing their proportionate share of costs. Hit the pay zone!

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  85. gold---1630 was important---could it now be support?

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  86. Robert, you seem to have quite strong views on the precious metals sector for someone who has just picked up his first gold of the bull market. Seasoned traders are off climbing rocks and not getting too caught up in the recent surge higher. Be careful.

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  87. I'll check in later, as I don't see any changes to be made other than cancelling my open buy orders a few % below the lows the other day.

    At this point, if prices went low enough to get filled I would no longer be interested in adding.

    Good luck today.

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  88. SB,

    we now have a swing low in HUI and the individual miners I follow- GG, AUY, NEM and AEM.. picked up more AEM on the puke a few days ago... time will tell... it is good to have a your voice of reason when things get rough..

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  89. Thanks, Michael.

    I also see that GDX has reclaimed the 200 MA.

    Now, I'm going to do something else and let these positions work. :)

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  90. Dear Haggerty,

    HKD on the TSX is double short copper.

    Sorry not to have any other info.

    With kindest regards, Rose

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  91. Some of these miners are really popping today. Look at GPL...just sold that yesterday...ugh!

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  92. I made three attempts to get in large with small stops as gold dropped.

    Two got stopped out for about 1% loss on each. The third got in around 1638 (dec futures pricing) and looks good.

    I'm holding and now expecting a panic buying scramble higher as the wedge breaks upwards and as people who sold start to realize they need to be long and we aren't stopping yet. (My opinion, of course. Maybe this rally doesn't hold like the previous days and we collapse back down again.)

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  93. Rose: I looked at that yesterday but I noticed the trading volume is VERY low. Is that a problem if you need to get out quickly? Did you find anything else on the TSX? I couldn't.

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  94. F.W.I.W.

    I have been seeing that the Miners bottomed in Mid June and ran ( some even 40 - 60%), then they had a healthy correction while gold went up.

    Miners retraced ROUGHLY 50% of that run up and found support on their 50ma...some were stronger.

    Yesterday the MKTS fell, Metals fell , Miners were up...
    now they look to be putting in another leg UP. I used this simple chart to show a possibility

    http://www.screencast.com/t/qwvNCJWUZr

    I Own my own basket of AG, SVM, BAA, UXG, NAK, REE for miners.

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  95. Bought GLL, ZSL, SLV Sept 40 puts...GLTA

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  96. Alex,

    Well done in holding... you stuck to your plan and are to be commended...

    DTX just broke June low...

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  97. Impressive work Alex...you seem to have a good grasp on the price action in the miners. And looking at GDX, the 50% retracement you mention does appear to happen frequently on these legs up. Now I'm considering entering a small GDX position with a stop at the 200dma...

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  98. "..A DESERVED REST"

    I understand where it is coming from (sentiment, cycles, etc) and that part makes sense, but sometimes pure demand can take over. There is pure demand for more debt. No sentiment indicators are going to change that demand. Unless the leaders are willing to let deflation take hold, they are going to keep paying off the bankers debts with printed money, as well as their own government's debt. This process seems to be increasingly parabolic, already at the point of no return, not something that can consolidate. POG should continue to reflect that fact. Sharp corrections in gold are and will be the norm, but I don't think there is much significant downside risk, at least until the mania phase takes hold (maybe starting now) and then the corrections, though maybe scary should be over very quickly.

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  99. rob thane

    how does one short FMS Corp. without options? are you being facetious again? :)

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  100. Speaking of stretched beyond its 200 DMA... how about five and ten year bond yields? They're stretched further below their 200DMA than Gold is stretched above its 200DMA. Given the oversold nature of the market, the stretched McClellan oscillator, being toward the end of a daily cycle (day 32) - it would seem to me to be a low risk play to get into stocks. It seems everyone is bearish on the economy; why not start thinking contrarian?

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  101. Dear deshy and Hagagerty too,

    Further to HKD, the average daily volume of its sister fund HKU (double copper bull) is even lower - in the 13 or 14 thousand range, I think. Well somebody IS buying/selling both, but it would be hard to recommend either with such low traffic, especially in double leveraged funds, which deteriorate like crazy anyway. I do hope this helps.

    With very kindest regards,

    Rose

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  102. BOM is a 2x bear base metal ETF that includes copper.

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  103. Exellent action in the miners. I may sell into strength here if my triggers are met: EXK at $11 and SLW at $40....

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  104. Just bought CSCO 15 Calls September, waiting for that bounce...still holding the BAC calls waiting for the bounce.

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  105. From Kevin Depew at Minyanville:
    S&P Daily has recorded a Sequential 13 BUY yesterday. This means look for a 12 day counter rally starting today (ha ha!) to a couple weeks from now. But we are in a 4 month window until the end of September of a MONTHLY SELL setup, so something else to think about.
    Jason Goepfert of sentimentrader also had an interesting stat today:
    This morning was the 2nd time in h istory the S&P futures gapped down at the open after 7 lower closes. The other was 10/10/08, which saw a short-lived 140 point S&P rally - be careful here if you are short!

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  106. Just loaded up on SLV and EXK puts. 20% of the account. Looking for a correction.

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  107. My broker told about this guy yesterday. He trades on pivot points. http://www.jesse-livermore.com/trading-rules.html

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  108. SOS list as a few minutes ago

    GLD
    SLV
    DGP
    AG
    SVM
    EXK
    HL

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  109. Congratulations to Jim Sinclair, the greatest predictor of price within a reasonable time range I have ever witnessed.

    His call, 1650, will be reached within hours.

    Again, congratulations.

    And to those who believed and believe as he does, to you who have been Old Turkey, you too, congratulations!

    Next price? The Great Doubling.
    IMO, 2000 is in the bag.

    Sinclair says that a price above about 1760 means the next price will be 3000 6000 12000 and beyond anything he himself will claim as a price target.

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  110. Europeans are piling into gold....banks have serious
    problems in Europe and people are converting to gold and silver. This could be the start of the parabolic move? Time will tell.

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  111. Gary, there are cycles and there are cycles.

    The reality is that the minds of the rich have finally begun to be tweaked towards the PM's.

    I just experienced an encounter with one of my average rich friends, worth about $3-6 million USD, as in 4 Yuan...joke, and he for the first time, after my years of beating on him unsuccessfully, in a casual conversation asked me what price gold will be at in the near future. Imagine that!! The man who is all in cash says to me, after being so very critical to me about my PM positions, "so, how much?"

    That's from a guy who turned down at $1000 an offer from me for him to buy 1MM in gold physical, hold it and me guarantee its price by up front partial cash down and a split of the profit from the rise. I figured that would get him into gold; but even that didn't work for him. Now? He's asking.

    The cycle in the mind of the rich has turned to discomfort, ill-ease, and soon enough, panic.

    Your backside of the parabola position I continue to believe is incorrect. I've stated so repeatedly. You've said the circumstances now are not the same as 1980-81. You state the cycles don't support that.

    Gold at a new high supports my position and at 2000, The Great Doubling, will have confirmed that your view is not big enough.

    It's not that the dollar is dead. It's that panic is normal human behavior, and we haven't had a good panic for a long while.

    We also have Obama the spineless and a Cabinet full of financial men who want to save the banks, the ones that are primary dealers, the financing facilities of the Feds. So, other nations call us parasites and risky, and still the boys in DC go about doing what they're doing. There's no choice but to step out of that irrational game. PM's. Thus 2000 and unfortunately, Weimar thereafter.

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  112. NFP could be a huge reversal day for the markets. Who knows.

    I went against Gary's recommendation to exit miners and instead set a stop just the 50dma for the HUI. I absolutely did not want to get whipsawed again on what could be an epic run in the HUI.

    Unless we see an major collapse in gold, I expect that 50 dma to hold.

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  113. gold and miners unstoppable...yeaaaaa...$$$$$$

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  114. Poly,
    You have been right about this gold run and it's relation to the euro problems. The move does not seem to care about the USdx. Keep posting and if you ever start a blog, please sign me up.

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  115. Whether gold continues higher or takes a rest, I expect it to far outperform the SPX in coming months. And if gold continues to rally along with the dollar, we will likely see a crash in the SPX in terms of gold.

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  116. Hi Doc,

    Nice to see you post here... I am a sub of yours too... that pair call was terrific... I missed the initial entry and now am waiting... thanks for your input..

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  117. SF Giants Fan, Not near an internet to google, can you tell me what the SOS list is that GLD etc appear on and what that indicates? Thank you

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  118. Russel: "Poly...if you ever start a blog, please sign me up."

    I've been asking the very same thing by e-mailing Poly. Still waiting for that Polyblog to pop up :)

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  119. At ease

    Not sure what u need but it's #1 on the list.

    Here is the link

    http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=mdc_uss_mnyflo

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  120. This is the second time in a row Gary has sold right before a big move up in Miners. Looks like that C-wave parabolic blow off top is coming just as Gary predicted, but without him. And me.

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  121. " Poly said...
    Demand for gold is now worldwide. "

    who is buying gold besides GLD ETF???

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  122. Wow really, thanks for the vote.

    OK you got it, send me $497 via Paypal, I will email you just as soon as the site is up. :)

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  123. Gary, your short term approach is conservative and responsible. Were I not long, I'd be watching this irrational excess.

    The tag of 1650 will be amazing, simply to vindicate the thinking of Jim Sinclair.

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  124. 86, gold up, but GGN is down ...?

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  125. Slumdog,

    Why do any of us have any stake in vindicating the thinking of Jim Sinclair?

    Best,
    Le Fou

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  126. Gary,

    This is the second time in a row you've sold the miners into weakness, not strength. The last move up was about 20% I think. I'm confused as to why this might not be the parabolic C-wave move you described. I am a subscriber.

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  127. Are there any seasoned cycle people on this blog here/now who can explain why gold is going up? Thanks.

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  128. Thanks SF Giant fan. Just wanted to know what SOS was/meant.

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  129. Sinclair will sell at 1650. He honors his "angels", points of profit taking.

    There's a daily NY Pit gap back down to 1635. Today is the breakaway gap. Expect this to be filled within 3 to 5 days.

    My guess? We'll see 1700 and then a fall back to 1635.

    SI's performance is disappointing, even though the G/S ratio has improved from 43 to 40.5

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  130. Gary is right about caution here, being in the timing band to move to a low and considering how far we've come. I just don't want to lose positions though. Caution especially with leverage.

    We should be coming to earth soon you would expect and we should (hopefully) experience some form of a DCL. There is a fear based trade (Doc's Gold/SPY liking it) on, but they can reverse rather quickly.

    The other scenario is the runaway scenario, which I've held a strong probability on since soon after the July 1st move. I have positions to reflect this.

    But a DCL would make me feel so much more comfortable, I think we're fast approaching that fork in the road on these two scenarios.

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  131. "Wav_ridah said...
    Bought GLL, ZSL, SLV Sept 40 puts...GLTA"


    so you are bearish on PM??

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  132. Poly: That said would you take a small 'feeler' position here or just wait for the DCL? I'll make my own decision but I am just curious as to your risk/reward outlook--it seems to be firing on all cylinders. :-)

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  133. me too... I am pretty sure that Gary will be right sooner than most think..

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  134. Bill said...

    "Are there any seasoned cycle people on this blog here/now who can explain why gold is going up?"

    I am not seasoned in the cycle theory but as a newbie I can say this(!), I came into the silver run late because my good friend has been a sub here for a while. I bought Silver high and it went higher, then crashed crashed crashed. I bought at the top without having done the research...

    That is what I think is happening here, word of mouth "gold is unstopable".

    Gold bull sucking people in at the top only to shake them off real soon and hard.

    Ive only just recouped my principle investment from the may silver crash.

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  135. Obama just spoke and said we need to raise taxes, which means recession. I may buy a position in gold before close...

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  136. Bill

    Not a seasoned cycle person here but I mentioned this a couple of days back. Pull up a gold chart. If you draw a trendline under the current daily cycle then compare it to the trendline for every other daily cycle going back to the last D wave. There are only two other daily cycles that were this steep. The Feb '09 top and the Dec '09 top. Both were long and topped on day 24/25 of their cycles. Both were blowoff intermediate tops. If we continue to run long here we could be in a similar situation.

    Just my take.

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  137. That's a difficult call Deshy, it's a very personal call, so I won't say either way. At these heights and in the timing band, you would have some significant probability (over 50% I would say) of a $40 draw-down into a DCL. If you enter now, you need to work with that expectation.

    On the positive side, it provides a stake if we do runaway and it gives you a foundation to add from without having to chase the move to hard.

    If you do enter now and get drawn down into a DCL, you could add the 2nd lot at the DCL and you should be in strong status by day 5-8 of the next daily cycle. If that new daily cycle was to fail as Gary believe is possible, you would exit both lots at the DCL pivot, losing $40 on the first and breaking even on the 2nd.

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  138. Thanks Mark.

    You/Gary/atease are right that the best time to buy is at a cycle bottom.

    Right now I have no position.

    The 1 thing that get's me about the current 4-5 stated strikes against gold is that, w/my novice eyes, the cycle chart Gary posted still looks like July 1 was an important low.

    I myself don't get cycles yet. Ugh.

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  139. Poly said...
    "Wow really, thanks for the vote.

    OK you got it, send me $497 via Paypal, I will email you just as soon as the site is up. :)"

    Okay Poly. What's your email? ;-)

    Joking aside, I concur with selling out of PM positions early. I was selling the miners even before Gary did. The gold trade seems "frothy" to me right now.

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  140. Sorry...$8.25...on the Ric purchase :)

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  141. Thanks Silverhound. Yup, I get that. Thanks for the reminder. Rubber-band theory. It does work.

    Well I missed this, so the best thing is to do something else and wait for the next wave, eh?

    ReplyDelete
  142. ..and good to see you slumming Doc! Thank you for weighing in as well.

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  143. Bill,
    Gary normally calls tops early.
    Patience and timing of cycle bottoms will get you the best profits in quick run ups.
    It is hard to hold your trigger finger, when you see these kind of runups, however these can also fake you out and take you out.

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  144. "coolkevs said...
    From Kevin Depew at Minyanville:"

    where I can subscribe this??

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  145. Thx Poly--Good advice. I'm not completely out now so wouldn't chase too hard, but maybe try to boost returns (or start the DCL with my buying)

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  146. I understand Gary's position on the miners, but selling into weakness with the MA's so close-by was not something I could get myself to do.

    Anyone investing in the miners should take a look at the historical HUI chart. It looks like an EXG pattern. The volatility in an index like this is insane, even when it is trending up. Your timing has to be pretty much perfect to not suffer a draw down, even if you are right about the longer term trend.

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  147. Trading-wise, I'm not unhappy because gold is overbought.

    But core-position-wise, I'm very unhappy to not have a core position in this bull market. Will fix at the next cycle low.

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  148. Bill, most of us are out in cash waiting to get the core position on the cycle down. So you are not alone. Once we are at the cycle down, we will be all in again.

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  149. Bill

    Not sure when Gary had called his sell, but I was all crash when the markets opened. Put in a ridiculous high sell order and 75% of my position was gone in 1 second, 7 seconds later the other 25% at an even high price...

    All cash right now waiting on a DCL

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  150. I frankly have no earthly clue to what will happen in gold....but for us gold bulls we had better hope a severe correction takes place soon...a minor dip won't do it anymore imo...
    CNBC, BLOGS, etc...all seem to be pointing to gold, even suggesting 20% or more of a person's portfolio...
    Either we fall now or fall later...we hits levels that should be returned to...the last time I heard about gold this much was when we broke 1000...or when oil was ready to hit 150...or the nasdaq was ready to hit 5000....needless to say these are my concerns....
    So I for those reasons have put old turkey out for a bit...already made quite a bit until April, where I was able to get out in time...this time seems like a bonus. If this buy gold message gets any further drawn, this gold bull is dead...there we be no rescue from the bull.

    That is the type of fire I like to avoid...and happy to be early. Maybe enjoy the rest of the summer, instead of being on edge since April. If we correct, will need to reassess…but everything right now is a pure trade in my eyes…nothing long-term can be looked at.

    In any regard, new highs here is not positive for the gold bull, however positive it is for individual portfolios. Either we correct soon, or even Ben starts buying, and this bull dies..

    Just a scenario of course, and one opinion...Good luck to all! I wish I would have sold today, instead of before, but that’s what happens when you have a paranoid personality. :)

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  151. Deshy,

    The cycles are calling for a decent drop into a DCL, they have been very good indicators in the past.
    So I would not be adding here if you already have a position (I worked on the premise above of no position) and want to just goose returns, now is not the time to goose returns and excessive positions could be trimmed here. I'm just saying don't lose your position in this bull, let it take us where it once to go.

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  152. I couldn't really say that many (or even any) of the calls were right since April of 2011.

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  153. Greens...con...science, RE: "Anyone investing in the miners should take a look at the historical HUI chart. It looks like an EXG pattern."

    Someone please explain to me what an EXG pattern is.

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  154. Bill

    the best core has always been the physical gold and silver. It is like insurance and NOT FOR SAIL. But buried. Like a time capsule 4 now.

    Also a separate account for miners.

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  155. I see of lot of should be and will be and very little of what IS.

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  156. This comment has been removed by the author.

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  157. sail = sale either works I guess.

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  158. What has always been the best way to store gold? Silver tarnishes easy.

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  159. Burton

    Maybe you need to get some glasses.

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  160. burtoncarrier, so what do you see what IS. I see prices that keep changing. What IS it you see?

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  161. This comment has been removed by the author.

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  162. Watched Bloomberg for a bit and couldn't believe the time being spent on gold. Good indicator of a DCT.

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  163. burtoncarrier,

    that is because as long as one talks about should and could and will, one always remains right. Welcome to the world of forecasting. It could go up or might go down...
    ;)

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  164. SPY setting up for a BB crash day if it closes 126.60$-ish or lower.
    At this point, may not mean much and Obama signing the papers may or may not do anything.

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  165. I agree/understand of course that no one can see the future. HOWEVER, there are varying OPINIONS and of course, we wish to be allied with the right opinions/forecasts, that is when we make money. When we GUESS properly with the tools at our disposal. Answer to what do i see NOW: Missed opportunity.

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  166. Bill, Another way to think about it, is yes, there is a run up right now, and you are not enjoying those gains, however.... what if you were in and then overnight the markets changed and opened drastically lower and then continued. That was the scenario that we encountered in May with Silver run. So most of us are satisfied with the meat of the fish and not worried about getting the head. Once you buy cycle low, you will then be in on those highs on the way back up. So yes, we all have the same worries, it's about keeping our heads and emotions in check and follow the trade plan with proper risk/reward ratio controls.

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  167. Bill, Another way to think about it, is yes, there is a run up right now, and you are not enjoying those gains, however.... what if you were in and then overnight the markets changed and opened drastically lower and then continued. That was the scenario that we encountered in May with Silver run. So most of us are satisfied with the meat of the fish and not worried about getting the head. Once you buy cycle low, you will then be in on those highs on the way back up. So yes, we all have the same worries, it's about keeping our heads and emotions in check and follow the trade plan with proper risk/reward ratio controls.

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  168. High 5. I have glasses and i do see. The opinion of the blog was consolidation. That didn't happen. I am not blaming. I make my own trades. just stating the obvious. A good opportunity has been missed.

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  169. Burtoncarrier, Missed Opportunities... are simply regrets. No worries, the market will correct and we will once again be back at these prices going higher.

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  170. Burton

    You're missing millions of opportunities both to make and lose money. It doesn't pay to spend too much time looking in the rear view mirror while driving.

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  171. Thanks wolf and at east.

    High 5, you should come out here to Japan and run one of the Zen temples. ;-)

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  172. Miyagi,

    Unloaded those GLD puts at the open, gave back your "inheritence"..lol

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  173. High 5. I respectfully disagree. Too not "look in the rearview mirror" is just a cliche. We DO look. we correct based on the past and on experience. When we get chinked at financially because of missed opportunity, it makes a difference in how we live. You can choose to look straight ahead, i don't.

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  174. Bill

    LOL. How much does it pay and could I play the markets too?

    ReplyDelete
  175. New subscriber here.

    Enjoy reading the blog and Gary's SMT letter. Is this only Gold/Silver/mining stock discussion/letter/portfolio???
    It would be great if the SMT discusses stock/ETF picks. FWIW

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  176. High 5, pay is 1 bowl of rice per day, and Kyoto temples don't have internet. Not sure the upside. ;-)

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  177. Does not Matter about BO now. Payroll bad and Katy Bar the Door.

    Funds will be funneled to Big Banks to try and stop carnage!

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  178. Burton

    There is nothing to correct unless you went short.

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  179. WW,
    Damn you!
    They don't always work out, I was apprehensive about this one if you recall but I'm glad you're out now.

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  180. Miyagi,

    Yeah no biggy...we will try another when things are a bit clearer :)

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  181. I have no personal gripe with you. I think the call was missed. I based my play on the opinion of blog. LET ME BE CLEAR, I am not blaming anyone! I am not pleased, of course, by the gain since i am short. I missed the call. I will use my gut more than i have in past. Listening to others has not played well for me. I was clobbered by silver. And this feels like a loss though it is no where near what happened in May. Allow me my temporary whine, I'll give you the same gift.

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  182. Entry was perfect. Timing on the exit was all jacked up. Looking forward to the next opportunity.

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  183. Bill

    Don't eat rice and didn't like "The Art of Zen and Motorcycle Maintenance" ;)

    ReplyDelete

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