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Wednesday, June 6, 2012

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185 comments:

  1. See, here I gotta be wondering what Gary is thinking. Gary, can former subs make use of the $10 free trial? I think this cycle stuff is worth re-visiting.

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  2. Notice how the end of the day is now friendly to miners, even after an intraday beat down? All of a sudden it's like trying to hold a beachball under water.

    BB tomorrow seems like the last major hurdle. Many declines have started while he was speaking.

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  3. I don't believe the system will let former subs take the trial.

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  4. sharpnquickly, you're right, it's worth $25/mo. I just became a sub.

    Something may be really big happening here w/GDX. If Gary's right about a yearly cycle low, this is important, so I became a sub to study his thinking.

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  5. I've been on his premium site now just 10 mins, and have already learned a ton - things I didn't see - it's already worth the $25 for me. Trading for me is about learning from those smarter than me, and applying.

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  6. Gray,
    You are the man....and have shown what a true and prudent investor can accomplish with rational thought. Marketcycles79


    http://humblestudent777.blogspot.com/

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  7. Tiho, this correction has all the hallmarks of a wear 'em out correction and not a scare 'em out one.My weekly silver system went to a buy today, and it has been performing very well with the trending and volatility we've had the last couple of years.

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  8. V,
    I would definitely agree with that. This is shaping up to be a very trying and frustrating time for gold bugs but unlikely that we will see anything even vaguely like the 8 year cycle low in 2008.

    The fundamentals just aren't even close to the same.

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  9. Hi Veronica,

    Market environment is so great, we all get similar information and come up with different conclusions. I'm looking for a bank default within EU, to trigger a global recession with a meaningful slowdown in Asia and a major sell off in Emerging Market assets (equities, bonds and currencies suffering), widening in global corporate bond spreads and a major VIX spike.

    I'm also looking for US earnings to drop about 25% (that is the average over all last post WW2 recessions) towards $70 or so and S&P 500 to trade at about 10 to 12 times, which means somewhere below a 1,000.

    If I am right about the Asian slowdown, especially Chinese economy, than all mining stocks will be decimated. So will Australian property market and it's currency. I also think Japan will be in total mess as it is very reliant on Chinese trade,

    Finally, from a contrarian point of view, I understand and have wrote about Treasury and Dollar high sentiment and overbought levels for weeks now. Therefore, I would not blindly just short something today. I would wait for tis rebound to run its course first.

    As a disclosure, as can be seen on my blog, I'm still holding my Silver position from late December 2011, plus I bought more options in recent times. I also own calls on S&P 500 and some Agricultrual longs. I have not yet engaged into short activities, but I will do a real time update when I engage.

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  10. I doubt we get a major bank failure anytime soon. 08 was yesterday, all CBs know how to solve that one at this point.

    I for one am not buying the repeat of 08 again argruement. The difference being that the solution to 08 was to print the shyte out of things; if in that situation again, I have no doubt that method will be given again. Not saying its the right choice, but if CB's are willing to protect bank failures at all costs, a bank will not fail.

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  11. FWIW
    The dollar is very deep into it's daily cycle (day 24. Usually bottoms between day 18-28) and the trend followers should try to take it higher any day now.

    When that happens gold should move down into it's daily cycle low (usually bottoms between day 18-28) today was day 14. Perhaps resistance at $1640 was the level that will trigger that correction.

    That being said gold has formed a right translated daily cycle, so it should hold above the prior cycle low at $1523 and initiate a new pattern of higher highs and higher lows as this intermediate cycle starts to ascend.

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  12. Tiho, love your blog and your views but I think TPTB saw how close our system came to failing in 2008 and will print with reckless abandon way before things get as bad. Plus this metals correction is just not acting as it did back then, but seems more similar to 1)2005's and 2)2006's, just bouncing back and forth between weekly bollinger bands.If it closes below the band all bets are off.

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  13. Hi Veronica,

    I completely agree with a lot of the things you have said, but we differ in the way we get there. Let me explain...

    You see, we have precious metals bulls and I am one of them, when it comes to a long term secular view which should end up in a mania sometime this decade. We can all agree on that. All I am after is to buy THE LOW and I do not think the current $1,530 level was THE LOW, just a low.

    But what all of us PMs bulls disagree with is the way we get there. The consensus outlook is certain that any bank will NEVER EVER be allowed to go bust again (just see Keys post above) and the consensus is also certain that printing will constantly be done to backstop any slowdown. Consensus was also certain that Bernankes rate cuts in 2008 will backstop the crisis, so Ben cut the rates from 5.25% all the way to 0.25% but it did nothing, until the market itself capitulated.

    Personally,. I think that current stimulus measures are not enough to do anything major to risk assets. Markets have become immune to Twists and LTROs. My view therefore is that a major deflationary event needs to occur before Bernanke, Draghi and others are forced to print, not just billions, but multi trillions. It is only than, after a huge correction in all risk assets, that bonds / dollar will top properly and PMs will start its mania.

    Financial investment bank strategists are super bullish on Gold. Bank of America said Europe’s debt crisis would send prices to a record $2,000 an ounce. Goldman Sachs, Morgan Stanley and Barclays are all urging investors to buy Gold. Let me remind you that these guys NEVER get anything right.

    My view is that Gold will rebound here, as it has already started doing so, since I warned two weeks ago that we had a 4 standard deviation oversold move I only 6% bulls according to DSI sent,ent survey. COT and public opinion also signal a rebound, as short term sentiment measures got very bearish.

    But that is only short term...as the chaos restarts later in the year and in 2013, I see Gold breaking below $1,530, plus many other risk assets getting hammered!

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  14. I agree about 2013 & 14 but I think markets are going to rebound out of an intermediate bottom and at least test the recent highs. Plus the CRB is due to bounce out of a major cycle bottom soon. I think it's just waiting for the oil cycle to bottom.

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  15. Tiho, as long as the weekly bands hold, both crowds will be wrong, the ones that expect a bounce to 1900 and the ones that expect new lows. I'll just keep trading my system and it should keep me out of harms way.

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  16. Put half my E-mini shorts back on which I covered at 1282.
    Gonna start layering in the rest.
    Amazon looks ripe for big fall too.
    I think when this bear market (which is beginning or close to beginning) is over AMZN could be in the teens or single digits.

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  17. The consensus outlook is certain that any bank will NEVER EVER be allowed to go bust again (just see Keys post above)
    I didn't say that....NEVER EVER was not implied...nor was any bank. Banks in the US fail all the time, so what.
    MY point is that the global effect of the most recent bank failures, which was yesterday, has all CBs scared as they know what happened yesterday. They are fully prepared to do whatever they have to in order to make sure major banks don't fail.
    All they have to do is buy the bad paper, buy in with preferreds again, buy all the common. Unlike lowering interest rates, which does not have a direct link to economic activity, a CB can as long as they are willing protect any bank it wants with a printing press.
    Of course this causes other problems, but my point is if a deflationary event were to take place due to bank failures, it would imply that the CBs just let the bank fail....I don't believe that.
    Now if we get to the point of an outright currency collapse this will be a different story, since the power of the press will go away. But bank failures in this regard would be a symptom and not a cause.

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  18. Shorted some Amazon at 221. Either going to be a lot of fun or extremely painful. NO middle ground.

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  19. MARKETS

    http://traderjoed.blogspot.com/

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  20. Bill,

    See posts.

    http://www.blogger.com/comment.g?blogID=7130708113832839690&postID=452626981640107998

    "Blogger EricH said...

    There's our 40.99...time to buy buy buy!

    May 14, 2012 6:54 AM
    Delete"

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  21. EricH, so did you actually buy GDX at 40.99 then? Good on you if you did.

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  22. If he did then he got the crap scared out of him the very next day :-)

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  23. Not pile on Gary, but just point out something for clarity. Why you no say congrats Eric for good entry and good trade. You always make cheap comment and point out why no one else able to do better than you. Eric post in real time and show you pfoof of good entry. Your competitive nature don't allow you to acknowledge anyone ever better than you. This is why people troll you because others competitive as well. Perhaps you need to look inside you to understand why you polarize and get trolled.

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  24. JC,
    People make better trades than me all the time. That is the nature of markets, no one specific strategy will ever work 100% of the time.

    I found a strategy that works for me and one that I am emotionally capable of following through good times and bad. That system works pretty good most of the time. It has allowed me to make a ton of money over the years. That's good enough for me.

    What I take offense to is people trying to tell me how I should trade my system or how their system is better. Whether or not I should have stops, and where they should be. Especially after the fact.

    That is of course ridiculous. Every system has periods where it performs well and performs poorly. I think most people recognize that the goal of these people isn't to share information but to agitate.

    I'm not really sure what it is about the stock market and a blog where everyone is basically anonymous, that generates these urges in people, but I accept the fact that it happens.

    The good news is that usually when troll infestation starts to become intense we are almost always very close to a turning point.

    I call it the troll meter :)

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  25. Many people make better trades than Gary - especially those of us trading short-term moves in the direction of the trend.

    This is why Gary has huge draw-downs.

    Often he will make back the money (over many months), until the day the draw-down becomes too severe or he has a few loosing trades in a row. Then he will lose all his capital.

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  26. It is impossible for me to lose all of my capital. For one I don't trade individual stocks and ETF's can't go to 0.

    Second: I generally only trade bull markets and only from the long side. So it is very hard for me to lose money over the long term because the bull market eventually rescues any missed timed trades.

    Rich here is a prime example of someone who's real intent is only to agitate.

    If you want to be constructive, quit worrying about my system, and tell people how you construct your short-term trades or how your short-term strategy works. Then other traders with a similar time frame as you can have a congenial discourse on trading tactics.

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  27. BTW I rarely have huge drawdowns. Any subscriber that has been with me for a couple of years can attest that the latest trade was by far the exception rather than the rule.

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  28. Gary,

    After today's smack-down I'm certainly no longer "99% positive of a new C Wave," to borrow your words from the weekend.

    What is it, like 40 trading days since you first called a bottom?

    Suppose the FED DOES NOTHING, June 19-20?

    Actually I think the rescue will come from the Europeans, but what if I'm wrong, too?

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  29. Heads up,
    The right translated nature of the current daily cycle still suggests that the bottom is in, but either way even if gold were to make another lower low and force a re-phasing of the intermediate cycle there is still going to be a multi-week rally once the bottom has formed.

    One doesn't have to time the bottom perfectly as long as they have the patience to just wait for the rally.

    That's what I'm doing with the model portfolio. I've taken positions and I'm just sitting still till the rally unfolds.

    I think it has probably started. The heavy volume in miners would suggest that they have made a final low. But if not then every day brings us closer to that bottom and the reward that lies on the other side.

    Like I said in the comments today. Just like everyone else I would like the rally to start tomorrow, or maybe I should have said continue tomorrow, but if that isn't in the cards and I have to wait another couple of weeks it's no big deal.

    As far as I know I'm not going anywhere and profits next month are just as good as profits today. They just require a little more patience before we can book them.

    That's the way cycles work. They don't always time perfect entries but they do give us timing bands for when to expect a turn. It's so late in the intermediate cycle that if the bottom hasn't already arrived then it's very very close.

    Knowing that I can wait patiently and twiddle my thumbs knowing that it won't be long before we're making money again.

    To me that is much easier than frantically trying to time every wiggle in this crazy market. I know that I have no tools that will allow me to do that successfully so I don't try.

    Now if someone else can make sense of these crazy gyrations and make money trading the short term swings or they have a system that can pick an exact bottom in real time then by all means use it and if you're so inclined tell us how the system works.

    So far I don't recall anyone laying out a useable system. My system is pretty well defined in the terminology document.

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  30. Gary thank you for the explenation. Your system now makes more sense and I now see where you come from better. That congenial discourse much better for exchange you must agree. Also agree Rich is just agitater who needs to go away now.

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  31. Bob Chapman of the International Forecaster died.

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  32. Tell me who out there could see the smackdown in Gold coming ?
    Ben must have been salivating at the thought that the bb's were about to short the hell out of it (did he let them in on his comments before the fact...so that they could front run..????). His negative comments (playing the pyschology card) about further QE is just a mind%$#k. He throws it back to the politicians as if to say its ur problem now...deal with it. Yeah RIGHT on BENNY...maybe the sheeple believe that one.
    Then the HFT's algo's get triggered and off to the races we go ...look out below.
    What we really need to see ( agree with TIHO on this) is a bank or maybe a sovereign default/failure..out of EUR...
    Be sure to know that the ECB..."stands ready"....and so too for that matter the FED....new swap lines coming up....to infinity and beyond.
    Whether all of this action neatly ties into the next FOMC or not and the action expected on the markets over the course of the next few weeks....only time will tell..right Gary !!!
    We should all know by now that it is "time in the market"...not "timing the market".
    When the bull is still raging...its best to follow his path...not get in his way.

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  33. USD is still in the midst of a correction in the beginning stages of a massive bull market.
    This correction will last at most the whole of June and then the real fireworks will begin.

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  34. "So far I don't recall anyone laying out a useable system. My system is pretty well defined in the terminology document."

    You are right, because you beat 99% of global hedge funds!

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  35. Based on cycles the dollar made a swing tonight on the 25th day of the current cycle. Odds are now high that the trend will resume but I expect it to top probably on or around the next Fed meeting as that will put oil right in the timing band for a major intermediate cycle low. This should also mark the bottom of the CRB's three year cycle.

    Since the current three year cycle has already stretched slightly long I think we will get a final bottom just as soon as the oil cycle bottoms.

    I also believe that the bottom of the three year cycle in the CRB will coincide with the top of the dollar's three year cycle.

    The only other alternative would suggest that the commodity bull has topped and I just don't believe it has. As a matter of fact I don't think this whole mess we've gotten into since March 2000 can end until the cancer spreads fully into the currency markets with a final collapse of the top rung currency (the US dollar).

    That will signal the end of fiat currencies as we currently know them and probably a return to a gold backed currency, possibly the renminbi or Euro. And certainly a new reserve currency.

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  36. Tiho,
    Still only interested in agitating I see.

    How about we start over and you just explain your system for those that are interested and we make this constructive instead of destructive.

    I just explained what I expect based on how the cycles in oil, the dollar and the CRB are unfolding. If you disagree then lay out the rules of your system.

    If you don't really have any rules and you just trade by your instincts that's fine but it's going to be hard to teach someone to follow your instincts.

    My system is transferable and others can learn how to apply the principles so I'm not just trading for them. As a matter of fact several people have learned and started their own newsletter based to some extent on the rules that I taught them.

    I'm not saying that my system of cycles, sentiment, COT and money flows is better than yours but the fact is that over the last several years we have grossly outperformed the general stock market and probably 95% of all the hedge funds in the world.

    That's not perfect but it's good enough for me and it's a system that I am emotional capable of following.

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  37. Gary's had it right about the possibility of more softness in gold as the US$ rallies.

    It just occurred to me that we may see a 50% correction in the latest GDX rise, so down to 44 or so.

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  38. Ben was never going to declare easing yesterday. Everyone knew that. The market had not fallen enough. He won't declare easing on the 19th-20th either, unless the market tanks between now and then. So gold did not power higher based on expectations that Ben would ease or strongly hint at easing because everyone and their dog knew he wouldn't. So why did gold power higher? That's the real question.

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  39. ^It could be that Wednesday's rally was the real deal, and Thursday was merely gap filling.

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  40. Hi Gary,
    Is there any point that you will buy, trade or hold physical gold? What is your view on this?
    Thanks

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  41. Physical is a great way for emotional traders to play the bull. One never gets an itchy trigger finger with physical so it's easy to weather draw downs.

    The downside is the spreads are huge compared to GLD or SLV and there is no transportation costs or storage costs.

    Also I expect at some point congress will slap a windfall profits tax on physical that will erase a big chunk of peoples gains from the bull so you want to be out before that happens or even before the rumor starts.

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  42. Gold held it's lower weekly Bollinger band again, and bounced strongly on the touch of it's 9 day displaced average.The 9 day will be bottoming Tuesday and move up strongly there after.

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  43. No disrepect to Gary, but Doc Barter is one of the best "real time traders" I've seen. His posts are few and far between but his calls have been dead nuts on!

    http://www.objectivetrader.com/2012/06/hui-long-term-monthly-view.html

    P.S. As of yesterday 6/8 Barter has made a call for buying market dips as he expects new 52 week highs later this year.

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  44. LOL I made the same call but on 6/5 when the swing formed. Although I would prefer to play the miners because the upside potential is many times that of the stock market.

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  45. You and Barty should open up a hedge fund together and call it "G&B Money"

    Looking forward to all the golden nuggets in this weekends premium report! :-)

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  46. I have more than enough headaches just writing the SMT newsletter.

    If I ever consider starting a hedge fund, somebody please shoot me in the head.

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  47. Thanks Veronica for the update on silver. Been waiting for that one to join the party. :)

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  48. Gary, I thought last year, I learned a lot on cycle timing entries and exits while I made a load of money following you faithfully. Then you moved to a different strategy that was not what we wanted to hear, but was what was to play out. You continually warned everyone the trading tactics would change as the cycles moved on past the D and B waves. We patiently waited for entry and now patiently waiting for our entries to prove profitable once this new choppy C wave takes off. The lesson this year has truly been one of learning patience while getting back to living life and allow the bull to take us where we know it's headed. I have to say learning patience on making more money has been harder than last years tactics. I still find it truly amazing how much learning we obtain hands on from following your cycle trading and daily updates and reports. I am thankful you are not a hedge fund manager, as we would not have access to a great cycles mentor as you if you were. Thanks for your efforts, much appreciated.

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  49. JPM made SILVER the new GOLD standard. Thanks Jamie! :-)

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  50. Just added some shorts on E-minis!

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  51. Gary, Can you tell us how the bailout of the banks in Spain is a plus for the precious metals? If they give the banks money then how does that money go from the banks into stocks and metals. Can you give us details on how this whole process works.

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  52. Peter,
    I don't know that the Spanish bailout is going to mean that particular money is going into the PM market.

    I do think gold is in the process of forming a B wave bottom. This is usually an erratic process but it should mean gold will head generally higher in fits and starts.

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  53. Thanks Gary. Do you know why the Euro is not responding positively and why the metals can't catch a bid here?

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  54. I would guess because the dollar is due to bounce out of a daily cycle low and gold is due to drop down into a DCL.

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  55. Because the market is over and done with can kicking and bailout bullshit. First bailout was done in early 2010 on Greece and since than we've seen 2nd and 3rd agrees bailouts, Irish bailout, Portugals bailout and now Spanish bailout. In between we have also seen many small banking cover up bailouts. As early as bad seasonality starts in September, we will have a crash most likely, because the market is over it!

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  56. If to this year.... 2013 will be a total disaster in the making!

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  57. I would say this is normal for gold....kicking as many people off as possible. Old correlations not working anymore, doing stuff that doesn't make sense up of down....even gold bulls don't want to own gold...traders get kicked around in and out.
    If we are talking fundies, why are people running into US t-bills? Basically people follow the trend, and justify things with whatever angle the want after the fact. Stocks can run alot higher than their fundy value for an extended period....the actual value investor would value the general market a buy about 1/3 of today's value if we look at cash and dividends as the basis instead nonsense earnings.
    All that being said the market has been irrational for a long time. Money is not made on value, unless one gets a buying opportunity...rather money has been following the money flow, despite fundie support. So when the trend changes, we will get a bunch of Europe hope stories, and US fiscal cliff stories....and that will reverse again too. In this market I think Gary's approach is dead on....if countries decided to do the right thing and allow banks and countries go bankrupt and reset, this would be a whole new world.
    The question I believe people need to ask is whether you believe CB's will continue to print, in whatever form, or do you believe the economy will be allowed to purge itself.
    Also we must be reminded of our energy problems. We can't see oil at $35 again, without severe long term supply problems. Inflation is already embedded in our system with zero productive gains in about a decade.

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  58. Keys - the question you recommend investors to ask themselves is easily answered. Central banks WILL continue to print. They have shown that time and time again. The more important question, as Kyle Bass stated many times, is:

    Do you think central banks will print before default / crisis of some type or after the default / crisis?

    Everyone has a different view here. My view is that they will print after the default / crisis of some type. The crisis will push central bankers over the edge to increase dosage of QE towards trillions, because the current programs have not worked. In the mean time, all risk assets, both equities and commodities, could suffer further - come under pressure.

    Would I short anything right now? No. In the very short term, few weeks or months out, we should see some type of a risk rally rebound, due to oversold readings and very bearish sentiment. However, despite of rebound potential, I think new highs for many risk assets are out of the question.

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  59. Do you think central banks will print before default / crisis of some type or after the default / crisis?

    Fair enough.....your situation, if true, would probably make QE, of whatever name, higher than if done before. If done after the fact, a couple billion dollars here and there will not be enough to swing the market.

    Thanks for the view point.

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  60. Everybody talks about " CB print" on internet, what does that mean exactly??

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  61. rough view

    a central bank increasing the current money supply in some manner.

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  62. Tiho,
    I hear what you are saying on sentiment but a) dont crashes happen from oversold over bearish levels

    and b)
    http://cftc.gov/dea/futures/deacmesf.htm

    Net small speculators have been piling on at an amazing pace. While everyone may be scared, they are ACTING Bullish.

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  63. The commercial traders have now gone net long. Traders in the Nasdaq 100 (the contract with the best predictive value over the last several years) has reached net short levels similar to the Oct. bottom of last year.

    If you are looking for the COT to confirm a crash it is not doing so. On the other hand there have been multiple selling on strength days leading up to today.

    All in all most of the signs would suggest that the big money is just as confused with this market as everyone else.

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  64. You having difficulty reading, Gary?
    Commercial traders are short the nasdaq 100.
    http://cftc.gov/dea/futures/deacmesf.htm

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  65. Saif,

    Aren't the commercial traders, though slightly short the Nasdag, reducing their short positions and adding a greater amount of long ones?

    Thats what the data seem to suggest

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  66. The fact that they are net short doesn't tell one anything. They have been net short for the vast majority of the time since the March 09 bottom.

    What is significant is the relative change in positions. In march they were net short 8.3 billion. That has declined to 1.5 billion which is just about the same level as the Oct. & Dec. bottoms.

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  67. Markets move on fundamentals in the long term, and on emotions in the short term. No one confused in the long term, as Gary claimed, because all one has to do is look at the way fundamentals are deteriorating for global economy. Every Western country has experienced DEBT increase, not decrease. We have solved nothing and the next crisis is going to be much worse than the last one. But yes, maybe they are confused in the short term, due to media, volatility and noise.

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  68. I think where we differ is that you think the crisis will be another debt problem, whereas I think the next real crisis will be in the currency markets.

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  69. Well with debt levels rising in all Western government balance sheets, yes I think there will be defaults of some type, with Greece at first and than even some other smaller countries will follow.

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  70. The difference is that I think the defaults will be papered over with the printing press thus moving the cancer out of the debt markets and into the currency markets.

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  71. Yeah well I understand, as you think printing will occur before the crisis intensifies. if that happens and they announce it, I will be buying all the Precious Metals and Agricultrue I can buy.

    But what if they dont print first? I hope your subscribes understand that, because if Bernanke doesn't print and lets you down, it might get worse before it gets better. An extension of Twist or another LTRO might not be enough this time around.

    All I want to see is a Greek default, a final spike in the Dollar and a break below in risk assets for one final major capitulation sell off. When that happens they will print money. Than I also want to buy fundamentally good assets like commodities, especially Gold, Slver, Grains and Softs.

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  72. Good discussion Tiho and Gary.

    Question from a newbie: What is the difference between crisis in Debt vs. crisis in currency?

    What happens in either scenario? And more importantantly, how do we get out of it and what happens after the crisis?

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  73. NJ,
    It is the difference between a deflationary depression and a hyperinflationary one.

    I don't think we are going to make the same mistake we did in the thirties. This time around we'll do the exact opposite and we'll get the opposite outcome.

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  74. Gary, Tiho, NJ...
    A Debt crisis becomes a solvency crisis then becomes a liquidity crisis followed by the currency crisis. They are not events that are created in isolation. Currency crisis of course assumes that the CB's will continue to debase. So far that rule still applies. Tiho ..in the event that the FED stops creating further debt...that would imply a desire to crash the whole financial system. I dont think they or the world are ready for that just yet. You are correct in that the Debt crisis is still unresolved. Years after GFC..debt has in fact grown exponentially.

    What we now have is all of these crises occuring simultaneously in different parts of the world.
    Make no mistake the currency crisis is right here and now...along with its buddies...Debt, Solvency and Liquidity.

    CB's really only have two choices....I favour them taking the course of one with the least amount of pain short term.

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  75. GS..."Go Long Commodities"...hmmm!!
    (Goldman Sachs ...not Gary Savage)

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  76. Liquid Motion,
    You said...
    ".in the event that the FED stops creating further debt...that would imply a desire to crash the whole financial system."
    That also implies the borrower can service more debt. They can't. Gary argues inflation. Um, no, deflation.

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  77. NJ - my answer to your question is not like Gary's. I don't believe in hyperinflation, like certain Gold bugs. I also do not believe in a total deflationary crash either, like certain perma bears (Robert Prechter says Dow Jones at 1,000).

    I personally think that an event similar to Lehman will repea, butt in the sovereign debt market. Greece or even some other country will actually default and not be "papered" over. Can kicking is just about over right now. Markets have had enough. That will cause a crash in the Euro and risk assets, but nothing like mega deflation guys like Robert Prechter think..

    When that happens , it will show to everyone else in the Eurozone that they need to shape up, take things seriously or they will be next. I believe that will be a great buying event, at which point, the Euro will be at a major bottom (so will commodities).

    The attention will than turn to Japan and the US next, at which point in time, those countries will actually devalue their currencies on a major scale unlike the Europeans. They will take the inflationary mode, instead of austerity. That is when the debt crisis turns into the currency crisis and that is when the Gold mania will occur. It will also signal the end of the eat bond bull market, which has been moving up since September 1981 when rates were above 15%.

    So basically, I see Gold repeating a major correction and having a down year after 11 up years, similar to 1974-76 correction. Even a 50% correction is possible from $1920 towards $1,000, but not very probable to be honest. Most likely one more major leg down and a break below $1530 for Gold, and also all other risk assets.

    The quicker they let Greece and some other banks go bust, the quicker this cyclical bear market for commodities will end, and the quicker the secular bull market will restart.

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  78. The government can service more debt with the printing press. This can and probably will continue until they break the currency.

    Haven't you been paying attention to what's been going on the last 12 years? This is how hyperinflations are created.

    It doesn't have anything to do with the private sector leveraging up this is about government borrowing.

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  79. Tiho,
    I sort of agree but I don't think the EU is going to let any of the dominoes start to fall. It's too hard to stop once it starts.

    On the other hand I think the inflationary stage is going to start sooner than you expect. Oil is now 43 days into an intermediate cycle that lasts 50-70 days on average. Once the oil cycle bottoms that should also form the three year cycle low in the CRB and that should mark the beginning of the inflationary phase.

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  80. Tiho,
    A Q for you.
    How in the case of a default of a Sovereign (like Greece for eg.) do you avoid contagion ?
    Letting Lehman fail was a big mistake because they (FED and Treasury) underestimated the consequence of the market taking care of itself ( wealth destruction in the order of $20TLN). They only realised that AIG and Merill Lynch were in fact too big to let fail immediately after Lehman filed. So please no more talk of a Lehman like event. Besides they are a little better prep'd for it nowadays.

    Knowing that the E17 are all littered with enormous interconnected debt with those nasty little things called CDS hanging on the back of everything financial or otherwise would be cause for concern.
    It would be nice to think that it could be contained to Greece but they (EZ)have a lot more ring fencing, re-capitalising, toxic debt purchases to make before that can possibly happen. All that implies that the ECB will have an enormous injection at some point in the very near future.
    I know its not the correct solution but the game is not about saving sovereigns...its all about currency(s)....and the power of fiat. They will keep playing the game until the monetary system caves in.

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  81. Gary - in recent times you been telling us that the inflation trade will start on 1st of May because of your cycle counts. That was the top, not the bottom. You also told us the Dollar topped in early May, and that was the bottom and not the top. You have been awfully wrong in cycles, so why should I believe you that Oil will bottom here at $81 and not at major support around $75?

    Cycles do not change my opinion on anything, but a proper default will. Once we see some of the PIGS go bust, I'll be interested in calling commodities at a bottom, but not until than. I dont use cycles, but with cycles you might get a low, but maybe not THE LOW. The low will occur on a major fundamental trigger, like a default capitulation.

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  82. Liquid Motion - letting Lehman go bust was not a mistake. More defaults are nesseccery. Capitalistic system needs to write off bad debts. You cannot solve a debt problem with more debt, because LTRO is just a loan of more debt. So it's a Spanish bailout. We are not solving anything by "papering over" things.

    Markets use to rally for months on bailout news. Greek and Irish bailouts create a multi quarter rallies. LTRO created a multi month rally. We are now getting to the point where a bailout rally lasts one day. Markets have had enough of solving debt problem with more debt. A default is coming!

    As for the wealth distraction, that was not real wealth in the first place. That was phoney wealth in a property bubble and overvalued stock market. since it was never real, it went as quickly as it came. As a wise man once said.... easy come easy go!

    So yes, we should talk a lot more about Lehman type event, because those types of events are nesseccery to occur for the stock secular bear market to finish. The quicker it occurs, the quicker the world can start growing again. More defaults and write offs are necessary, at least from minor countries, while the bigger ones will print and devalue.

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  83. The CRB topped in May of last year at the same time the dollar formed its three year cycle low, so I'm not sure what you mean by topped in May, unless you meant May of last year.

    Oil still has at least another week before it moves into the timing band for a bottom so a move down to $75 is likely.

    My best guess is that the Fed will extend twist at the next Fed meeting and that will mark the top of the dollar cycle and the final three year cycle low in the CRB. If not that then another trillion in LTRO. One way or another something is going to happen soon to force a bottom in the CRB.

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  84. Tiho,

    Won't disagree on the need for "more defaults" point whether it is in the same fashion of Lehman or "managed" still implies the same thing...destruction of debt/deflation.
    As for your explanation of wealth destruction...dont agree it was phony. In fact I know of a few people who lost millions of personal "tangible" wealth. I'm sure there's a few others out there too who took a beating. Not solely because of the bubble in real estate either. As far as I can remember all we could see was RED across the board on all exchanges. That's not phony..thats called reality. You seem to forget that 401k's /pension funds/wealth funds/private funds/HF's are part of that whole market. They all suffered as did the investors at retail level.

    BUT you still havent answered my Q yet!

    How do you stop contagion ?

    Easy to just say let "them" default, its what the system needs.
    People need to be taught a lesson (read the Banks)....blah blah blah. You are just repeating the same rhetoric.

    I know how the capitalist system is supposed to work...but the last time they attempted to let it work its magic ...it didnt go according to plan. We averted a Depression within a whisker only because the very same printed money. Hardly the point anyway....the capitalist system is not working...

    So kindly explain to all and sundry how your take on "the default" will unfold.

    "markets used to rally" comment...maybe the markets have already wisened up to the fact that EUR100BLN is not enough for Spain. I recall reading that one of the US big banks has estimated they will require EUR350BLN. That, also noises being made by Ireland, Portugal and now Italy about better or more deals for their required funding....leads to one heck of a problem.

    Oh btw ..."letting Lehman go bust was not a mistake" try telling that to Hank Paulson (secretary of the Treasury)or Timothy Geitner (then Head of the FED Reserve) or Ben Bernanke(now Chairman of FED). Yeah Hank and Tim really taught them a valuable lesson didnt they !!! The same wasnt true for AIG, Merill and dozens of Banks and financial institutions around the globe. WHY ???

    The lesson from Lehman is that you cannot underestimate the market reaction. In fact not one individual is gifted with the talent to predict the consequences...no matter their IQ.

    Yes deflation is one argument and money printing (inflation) is another.

    If you care to follow history (which mankind tends to do a lot of..repeat..) then patterns/actions are repeated. Whilst we still have a fiat monetary system...we will have monetary expansion. The alternative is a depression the likes of which the world has never seen.

    I love your comment that "the quicker it occurs, the quicker the world can start growing again". You are extremely optimistic. An event as you describe would push us all back to the dark ages. From there ...we dont start growing very quickly at all. A depression akin to the the 30's is not the correct analogy.

    So you say let the defaults happen...and we move on......

    Would love to hear your idea of how that is going to be managed.

    The Greek threat (default) is not to be taken lightly (I think the Germans/French/UK/US are very concerned). If they pull out of the EZ and repudiate all debt, then kiss the financial markets goodbye. Not solely because of their action but because a few larger members will follow suit very quickly.

    But waiting to hear your take on how this mess plays out.

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  85. The CRB topped in May of last year at the same time the dollar formed its three year cycle low, so I'm not sure what you mean by topped in May, unless you meant May of last year.

    I'll explain what I mean Gary.

    Crude Oil and Brent Crude were officially in an uptrend until say April 2012. That is fair to say. Brent barley exceeded its May 2011 high, while WTI Crude did not exceed its highs since May 2011. Either way, both were very close as bulls were still in control until late April 2012.

    If one looks at the chart of both Oils, they started their downtrend decline on 01st of May 2012, the day you told us all that the "inflation trade" is starting (posted on your blog). My view is totally opposite, where WTI Crude Oil has now made a first major lower high since March 2009, by failing to exceed May 2011 peak.

    Many asset classes have not made new highs in April 2012, apart from S&P 500. Be it emerging market stocks, european stocks, australian dollar, korean won, gold, copper, canadian dollar, euro etc etc - a lot of risk assets have not confirmed new highs in this major "inflation trade" since March 2009.

    While you are convinced that the inflation trade is re-starting, or even has started on 01st of May according to your blog post, I think that the huge run up in assets since March 2009 has now ended, with many assets not confirming new highs in the S&P 500. In other words, Copper, Oil, Gold, Junk Bonds, Global Equities, Risk Currencies have all peaked for now. Some have corrected more than others, like Gold Miners for example.

    Therefore I think a global bear market is in progress, which I guess is completely opposite to your view. And it doesn't really matter what cycle counts say or how many days out this and that will happen. If the global economy enters a recession, Brent Crude Oil could easily drop from $98 at present towards $70. If global recession starts, S&P 500 earnings could drop 25% and S&P 500 could than be trading below a 1,000 and finally Gold could crack $1,530 without a doubt (doesn't have to but it could).

    I am not predicting targets, I'll leave that to others much better than me, but what I am saying is that the March 2009 inflation bull market has ended. It is my opinion that only a major dollar spike and a EU default in Greece will create a capitulation bottom from which the new "inflation trade" will re-start on the back of new money printing.

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  86. OK now we have something we can bet on. I think the CRB is going to bottom in the next week or two and rise steadily for the next couple of years. Stocks will recover and at least test the old highs but won't make much traction above that as profit margins will start to get compressed as steadily higher input costs start to take their toll.

    The bear market in stocks may begin later this year but I expect it will be more of a grinding affair as more and more liquidity retards the decline but spurs the cause.

    We wil know once oil puts in it's cycle low. If that low gets violated quickly then it will be the deflationary scenario first. If not and oil moves back up to make higher highs first then the inflation.

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  87. Gary,

    Pretty tough to identify the last cycle low on oil, no? In any case, we are due for one unless 6/4 ends up being the low. Do you view this as a stretched cycle?

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  88. I don't use cycles so I don't time things in weeks or months or whatever. I will buy commodities, once we have a capitulation low, hopefully with a Greek default, a spike n the Dollar and new money printing event by the Fed to stop the Dollar rise. That might be in two weeks, two months, two quarters or two years from now.

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  89. This comment has been removed by the author.

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  90. Tiho- Sounds like you will miss a lot of good trades along the way if you are willing to sit in cash for that long.

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  91. Wiseguy,
    Looks like TIHO is waiting for the fat pitch. You dont need many good trades if you catch one of those.

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  92. Tiho, "I don't use cycles"

    Okay, this was really the LAST THING I ever thought anybody would post on a cycle trader's forum, especially from a guy who posts here incessantly. Very amusing... a missionary then?

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  93. This comment has been removed by the author.

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  94. saif- I have done that in the past as well. The problem is, sometimes you don't realize that you just got your pitch until after you have already swung at it. I have missed out on many good trades while waiting for the "good one" to come along, only to realize that it already passed and I didn't recognize it. IMO, better to use a system and take every signal. One of them will turn out to be the homerun, and the others should be basehits for the most part. I use automated trading systems and keep the short term trades for long term holding when the stars align. Gary uses cycles and gets basehits and an occasional homerun. Point is, using a system like that, Gary will never pass on the homerun hit, nor will I. So why pass on a money making trade set up just because you think one may come along that will make more? Forget about the extra profits you may realize, more importantly you hit the "fat pitch" and hit a homerun regardless of whether you knew it would be a homerun when you swung at it.

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  95. Jun 12 market close update
    with today's market strong rally, i see the $spx roadmap is progressing

    http://humblestudent777.blogspot.com/

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  96. Nothing wrong with Tiho's opinion in my view. When contrary opinions are generated in the proper fashion, it helps adapt one's knowledge or it helps test one's theory. Nothing wrong with poking at theories.....of course the, “you are full of shit" comments are not very helpful from people. But a discussion forum should be used to take advantage of other people’s views. Group think is not a good thing, even if you are right. I found the recent dialogue between Tiho and Gary & gang to be beneficial.

    I hope Tiho takes the burrito bet; it takes away the pride element while adding a little friendly fun.

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  97. This comment has been removed by the author.

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  98. "Liquid Motion said...
    GS..."Go Long Commodities"...hmmm!!
    (Goldman Sachs ...not Gary Savage)

    "

    Is Goldman a nice guy??

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  99. Keys, sure, there's nothing 'wrong' with Tiho's opinion -- I am just amused that he's like an athiest going to church or something like that. If I didn't find cycles useful, I wouldn't come here to tell anybody -- I'd spend my time where it made rational sense to me. Otherwise, it's the same as missionary work, trying to get believers in one thing to believe in what I believe in. I know some people are compelled to do so, but they are meeting their own needs, not mine.

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  100. MARKETS



    http://traderjoed.blogspot.com/

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  101. Gary,
    In the last year:
    Wheat down 15%
    Corn down 23%
    Sugar down 30%
    Oil down 20%

    Is that because of inflation or deflation?

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  102. Dollar coiuld be heading higher and gold going very low based on This wednesday Report.

    http://rambus1.com/

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  103. More...

    And to quote Felix Zulauf in Barron's round Table:

    There is too much debt in the industrialized world and the financial system is virtually bust. Rea/ disposable personal income is stagnating or declining. Employment participation keeps heading south. This produces a chain reaction: Weaker consumer demand in the West weakens manufacturing in places like Asia, which weakens natural-resource producers such as Australia or Brazil.



    As for the euro, it is a misconstruction. As I said in January, I expect the disintegration to begin in the second half of this year. That should lead the world into financial and economic chaos. My two major themes into 2013 are euro disintegration and China weakness, due to the bursting of a real- estate boom.



    The global economy is weakening cyclically on top of a highly fragile credit system. It is an explosive cocktail. The tower of debt is compounded by the gigantic over-the-counter derivatives market. In the past 10 years the notional value of derivatives worldwide has grown from $100 trillion to almost $800 trillion. The numbers are mind-boggling. if something goes wrong in the real economy, it could shake the whole credit system dramatically. It is a dangerous situation.



    The euro is not the real problem but a trigger and compounder of the structural problems. It could only work if the euro zone entered a fiscal and political union, which won't happen, as Europeans aren't prepared to give up national sovereignty. Politicians therefore will go from one compromise and quick fix to the next, with the crisis deepening until some nations at the periphery won't be able to stand the economic pain anymore. They will want their old national currency back, and devalue to adjust the external accounts.



    China won't be able to save us, as it did in 2009. The Chinese will lower interest rates but their actions will be reactive and lag. If my thesis is right, we must assume things will go awfully wrong in the next 12 months and the system will be at risk of collapsing. Most U.S.-focused investors might not understand it as they see corporations doing well.



    The potential exists for a broad-based nationalization of the credit system, capital controls and dramatic restrictions on financial markets. Some might even be closed for some time.



    We are witnessing the biggest financial-market manipulation of all time. The authorities have intervened more and more, and thereby created this monster. They might change the rules when the game goes against their own interests.



    We are in a severe credit crunch. It starts when the weakest links in the system can't finance their activities. Then you have a flight to safety into Treasuries and German bunds, compounded by a quasi-shortage of good collateral. That's why bond yields have fallen so low. This isn't an inflationary environment but a deflationary one.

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  104. Gold Lion,
    It's because the CRB is in the process of putting in a major three year cycle low. We are just waiting for the oil cycle to bottom.

    This is why I use cycles, so I don't get caught at these major turning points.

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  105. Further I think traders need to understand this isn't going to end because of defaults. Pay attention to what's been happening since 2009. Every time we get to the precipice, politicians opt for the path of least short term pain and print.

    Once started down this path there is no turning back. They aren't going to print a trillion and then all of a sudden decide to stop printing when it turns out that didn't fix anything. They will just print another trillion, and another, and another.

    This isn't going to end in deflation like the thirties. We are going to go 180 degrees in the opposite direction. This will only end when we break the currency markets.

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  106. I used to think the game could continue and that the Fed could print its way out of this, that this wasn't a 1930 style depression until I read chapter 2 in Jack Schwager's new book "Hedge Fund Market Wizards", an interview with Hedge Fund founder and manager Ray Dalio of the world's largest Hedge Fund. Dalio explains economic cycle better than I've ever understood it. He flatly says this isn't like ANY cycle we have had since WW2. This IS a 1930 style depression that will end around 2016 (but could go much longer (2030)with the markets 80-90 percent lower. People need to try to make it until then with their capital in tack then they can buy at a fraction of what things cost now. Deflation, not inflation. Convinced me to get short a lot of things, and I have never shorted anything before now.

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  107. And right on que, here is the next round of printing being readied for release.

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  108. It's impossible to have deflation in a purely fiat monetary system. Any amount of debt can be inflated away with the click of a mouse.

    The only way to have a deflation in the modern world is through choice. As long as money supply isn't restrained it's just not possible to see deflation.

    Just look at the last tow years as a perfect example. We got two whiffs of deflation and both were stopped in their tracks once Bernanke turned on the presses.

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  109. 1914 was never paid for....we have continued down this path since WW1...I have done my studies into this...as soon as we think beyond today, the obvious becomes obvious. If you think 5 years is alot, one would be wrong...even 10 years is not enough. Thinking beyond today and looking into our history is SO helpful! But most won't do it...so I pause.....

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  110. All the deflationists got half of it right

    yes there is and has been and will be deflation -- that part they got right

    No, the deflation will not be against any currency but against gold -- that part they got wrong


    this is a macro move that has been ongoing since the last bottom of gold and many are still looking for deflation against dollar or pound or whatever

    as The Bard said:

    "There is a tide in the affairs of men.
    Which, taken at the flood, leads on to fortune;
    Omitted, all the voyage of their life
    Is bound in shallows and in miseries.
    On such a full sea are we now afloat,
    And we must take the current when it serves,
    Or lose our ventures."

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  111. oa92000
    "Is Goldman a nice guy" ?
    Cant compare the two...

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  112. Tiho,

    I'm still waiting for your explanation of how you stop contagion in the event of default ?
    Pretty clear what is happening now with Italy...its pure and unadulterated contagion....and the show hasn't even started !!!

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  113. Gary,
    you said
    "It's impossible to have deflation in a purely fiat monetary system".

    Excuse my ignorance but didnt Greek Govt. issued bond holders get a haircut recently on the o/s greek debt. Isnt that deflation ?

    Seems we can have both (INF & DEF)in this wonderful world of money printing. Out with one hand and in with the other. Only thing is the recipients aren't the same as the losers. Moral hazard is front and centre. Bail them out....regardless...and repeat it ...regardless. Debt is just debt...as you say it can be created/destroyed with just a key stroke.

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  114. Gary,

    "Once started down this path there is no turning back. They aren't going to print a trillion and then all of a sudden decide to stop printing when it turns out that didn't fix anything. They will just print another trillion, and another, and another".
    Although I tend to concur with this summation, I do however believe all is not said and done as it were (baked in). It seems money printing is the only solution to inflate away debt that cannot possibly be paid for through GDP growth....UNTIL one considers that an intentional system failure/bust is put on the table. If the governments and CB's have allowed us to get to this point (more debt is only solution)...dont ya think they already know the end game ? What if..(the same mo-fos) ..they.. pre-empt all of that (end game bs)with a system crash.
    Then when where are we ?..hmmmmm !!
    Thoughts....anyone ???

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  115. Liquid motion:

    "Excuse my ignorance but didnt Greek Govt. issued bond holders get a haircut recently on the o/s greek debt. Isnt that deflation ?"


    can Greece print any money?

    The answer is no! simply, NO!

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  116. Oanda (Trading Platform) have put out an alert saying they are suspending trading over the weekend due to a possible very large market moving event?! Must mean a big macro announcment from Europe or the Feds

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  117. The battle for 1620 gold rages on!

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  118. Liquid Motion - you don't. You just guarantee peoples deposits and let everyone else who is bust, go bust. Than we can start over again.

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  119. Liquid,
    Piazzi is correct. Greece is stuck in the EU, they can't print. They are at the mercy of Germany and that's why they are facing deflation.

    Germany can stop deflation at any time they choice by turning on the presses again, which I think they will do when we get to the edge again and look into the abyss.

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  120. The lowering of housing prices is considered to be housing deflation by most but in actuality is housing inflation. The quantity of housing has been increased past the point of demand, as in the USD, and has resulted in a decrease in value, as with the USD.

    Asset deflation is actually asset inflaton (quantity increased).

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  121. This comment has been removed by the author.

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  122. Looks like more churning until the Fed mtg ...

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  123. The battle for 1620 gold still raging on. Back to sleep for me, up at market close.

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  124. Gary,
    you said
    "It's impossible to have deflation in a purely fiat monetary system".
    Because Japanese Yen is Gold backed?

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  125. Japan never really had deflation. They had stagnation because they were financing their bailouts with internal savings.

    In a fiat monetary system it's possible for the government to mail money to every citizen. In that scenario it's impossible to get deflation.

    Not possible you say?

    Then what were those $300 and $600 checks we all got in 2008? And what happened too the price of oil and gas right after those checks went out?

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  126. Shawn,
    When you're ready to grow up and debate without name calling I'll let your posts stay.

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  127. if Greek leave EU, market will go up??

    if Greek stay , Market will go up??

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  128. I know that patterns aren't always reliable, but an article on Kitco by David Nichols (fractal Yale guru) pointed out a descending triangle on $GOLD's monthly/weekly chart. He saw this as bullish, but StockCharts chartschool paints this as bearish.

    Is anyone else looking at this? Thanks.

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  129. Bil,
    Might I suggest you throw away all these chart patterns. Most are only going to cause you to lose money.

    If you want a chart pattern that is reliable just use higher highs and higher lows for uptrends, and vice versa for down trends.

    Gold has made a higher low. Now it just needs to get above $1642 to complete the pattern with a higher high.

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  130. Thanks for reeling me in Gary!

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  131. Gary..Piazzi,
    Thats exactly my point...you CAN have deflation in this inflationary world....(destruction/shrinking of debt/credit) leading to economic recession/depression. This is notwithstanding the Inflation via fiat debasement.
    So in this INflationary world..we still have debt liquidation, slowing credit growth,slowing velocity, reduced productive output, loss of confidence, falls in asset prices, increased bankruptcies and unemployment and distorted interest rates.
    This is what the CB's are dealing with aside the intended effects of real INflation.
    Black and white are but shades of grey.

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  132. Tiho,
    Yes sure...most western governments are insolvent/bankrupt. EZ is a farce...the governments are supposed to ring fence their respective banks (& guarantee deposits)....not one of them (except GER) are capable of doing that. Ludwig von Mises would be proud of you espousing his mantra...just let them fail.
    UNfortunate fact is that most CB's around the globe are full of academia who have Keynesian theory as their bible.
    So we gotta go with the theory that more liquidity is the "solution" ..more fiat..more credit/debt.....
    Gary's spot on...we will have a turn in the CRB, Stocks, GOLD and USD....massive money printing will be sure to assist.

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  133. "Gold has made a higher low."
    ==

    It has not. Gold has made an equal low. And a lower high. Seems to me that's a wedge waiting to be broken: price target of about $1130.

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  134. More chance of Gold hitting $2000 than $1100....wedge pattern will not predict where gold is headed.
    The coil is about to spring into action.

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  135. Take a look at the action in Gold around 9.30 am this day....then look at what happened thereafter.
    Some powerful plays on both sides.

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  136. Gold has actually made a higher low and a higher high which is the definition of an uptrend.

    It certainly looks like gold has formed an intermediate cycle bottom, just like I said it would. With four 100 Blees ratings in a row it would be pretty risky betting against gold at this time not to mention one would be breaking rule #1.

    Never, never, never short a bull market.

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  137. "Never, never, never short a bull market."
    ==

    I'm just curious, at what price level does it stop being a bull market?

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  138. I just placed all my cash into weekly put options on gld that expire tomorrow. Any thoughts? :)

    Tides seems to be turning....would be nice, even for an old turkey approach, to see some move in the upward direction.

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  139. Mike,
    It will cease to be a bull market when the fundamentals driving it cease.

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  140. Mika, not sure what chart you're looking at but Gary's right that gold is making higher lows. I'm looking at $GOLD daily, seeing 1526.70 on 5/16, then 1532.10 on 5/30, and lastly 1556.40 on last Fri.

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  141. "It will cease to be a bull market when the fundamentals driving it cease."
    ==

    There are no fundamentals. There is only manipulation.

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  142. Sure there are fundamentals. All bull markets are born and ultimately driven by a fundamental underlying cause.

    This gold bull is being driven by the Keynesian belief that we can avoid another 30's style deflationary depression by simply debasing the global money supply.

    And yes we will avoid it, but we will get something much worse; An inflationary depression and maybe even a hyperinflation is governments don't come to their senses in time.

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  143. "All bull markets are born and ultimately driven by a fundamental underlying cause."
    ==

    Yeah, and that underlying cause is called propaganda. Youz best learn the term 'full spectrum dominance'. Because them are the only "fundamentals" in this matrix of lies.

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  144. Maybe they can try to dominate the Gold paper market....but that will all crash with the other paper. Physical Gold is the place to be.
    U gotta give them cred dont ya for trying...physical buyers will rule.

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  145. Gary,

    "All bull markets are born and ultimately driven by a fundamental underlying cause".

    Not trying to be picky here...but that right there is a classic example of an Oxymoron.
    The fact that Gold is appreciating is not on the back of market fundamentals....but moreover from the "lack" of fundamentals in the markets.....which bring to the fore/highlight the real properties of Gold in order to bring about its position....and create the bullish trend. Fundamentals will need to be established in all markets, for Gold to cease its trend. Propaganda and Lies will ensure Gold's ascent not counter it.

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  146. LM, you are connecting two unnecessarily related markets.

    The fundamental driver of the gold market is the debasement of the US dollar (for those of us in the US anyway) via an expansion of the money supply. And at some point (historically speaking) a loss of faith in a local currency can dramatically escalate the value of various things, like gold, silver, oil, refrigerators, other currency...

    Hidden under this fundamental (monetary expansion) is a symptom -- retail inflation, running at about 10% according to Shadowstats (19% according to Walt Disney Inc). That magnitude of retail inflation often delivers a fatal blow to corporations and hence the lag effect to when the S&P craters.

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  147. 1 am update 4th wave still in play and late stage of rally ending here.. 5th wave down to come?

    http://mproe.blogspot.ca/

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  148. Ben,
    This may be semantics..but here goes anyway.
    So "USD fundamentals are driving GOLD" ?
    That being the case ( which I dont personally entirely agree with), then you assume the "fundamentals" for the USD are to be relied upon ?
    Ipso facto...Logical so far....
    Are the USD fundamentals telling us the real story....or are its fundamentals being distorted (via cause/effect).
    My point is that there is a lack of believable "fundamentals" which in and of itself creates distortions and uncertainty and RISK and FEAR. eg. Inflation rates are not "fundamentally" correct because interest rates are distorted.
    Thats where GOLD comes in and rescues everything.
    Gold is our protector, our saviour.
    It is the only real money that can be relied on as a gauge on everything else and it brings equilibrium.
    The term "fundamental" implies a central or core principle.
    Gold's real value is not tied to a fundamental. It is has a unique intrinsic, universal value. Granted certain conditions exist where Gold has prevailed and appreciated, but those conditions are a representation of a class of metrics. Throughout the last decade (and historically) those metrics have worked to golds advantage.
    In summary..there is nothing fundamental about Gold whatsoever.
    In fact the earlier point I was making to Gary was that his comment was an Oxymoron....because he stated that the "fundamental" root cause of the Gold bull was Keynesian styled debasement. You require a sound footing and framework upon which to measure something else. How do you measure fundamentals when everything is broken.
    Again I state that Gold does that job for us.

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  149. I see what looks like a high, tight Flag in $USD. Not the greatest bear signal.

    http://scharts.co/MMe6jn

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  150. Gary,

    What do you think of the idea that the US Dollar put in a daily cycle low on June 10th and just failed today?

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  151. I have an automated system with a high level of accuracy that will likely short gold today. Gary, maybe this coincides with a daily cycle high for your cycle analysis? The system doesn't stay short for longer than a few days max...

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  152. WOLF33... If you are out there, we are trying to locate you?

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  153. LM, the dollar 'fundamentals' are not easy to read. The dollar index relates to other (mostly) debasing currencies, so it masks monetary expansion. I'd look at the money supply growth (at shadowstats) for a view at what's going on under the hood.

    The big fundamental driver, however, is that there is no way to pay off the debt, nor even have a prayer of servicing the debt, *without* QE. If QE ends (and other monetary frauds) then the market will set the treasury interest rates, and since we would go bust, the rates would dramatically escalate and blow out the budget (already hugely in the red with high unemployment and no growth driver). And to keep the budget from blowing out, QE will be employed in one form or another in order to keep the Tbill rates low and the money supply will grow even faster. There is no way out of this rabbit hole other than currency debasement followed by a severe contraction or else collapse now.

    Considering that the elite have had real gains in the past three years while the middle class has lost 40%, it's very clear to me that their game plan will be continued. When the middle class has lost 100%, then the game might change.

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  154. Wiseguy, good to see another system person here.What % accuracy do you have with your system, and how far back in time is it backtested?

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  155. Veronica,

    I have 2 systems for gold. One trades only the long side, has about 61% accuracy, and is in the market about 50% of the time. It places about 1 trade per week.

    The other system has 82% winners on the long side and 73% winners on the short side. It only trades about once every 3 weeks. hen I combine the two (meaning that I allow each systems signals to act as exits for the other system, as well as doubling a position, the results are fantastic. In catches about 165% of golds up moves. Best part is that it is stress free since the rules are programmed.

    I also have a system for oil, one for the Russell 2000, 4 for S&P, and one for silver. Currently working on a couple of others that will be done in a month or so. My trading is completely automated, even daytrading, accept for cycle turning points that I try to catch manually. I haven't found a great way to program cycles yet.

    Are you automated, or do you just follow strict rules?

    Thanks for the message!

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  156. sorry for incomplete post: Gold system is backtested 12 years. S&P, oil, and russell 200 systems backtested 20 years. I have tested S&P since inception of /es, but I don't usually work with all of the data that far back anymore when developing new ones.

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  157. Veronica, whats your stop for the gold longs? and if any add is coming up as well?

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  158. In the very long-term chart for silver (if you are reading this essay on sunshineprofits.com, you may click the above chart to enlarge), we see that the recent breakdown is being verified. Prices are below the rising support line and a noticeable change is seen this week in the upper part of the chart. The RSI level has moved close to the red horizontal line which indicated the confirmation of a breakdown in 2008.

    Also, please take a look at the shape of the recent bottom and compare it to the major 2011 bottoms. Previous lows were immediately and sharply reversed, but this has not been the case this time. The breakdown is well-confirmed and along with the change in RSI level this week creates a situation which is quite similar to the period in 2008 which preceded the bigger part of the decline in prices. The technical picture for the white metal is worse than that of gold from a long-term technical perspective.

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  159. I "troll" this site because i believe it is a source of misinformation touted as expert advice. Many subscribers from just one year ago are not posting here because they are GONE. It took them a while to figure out that Gary's "system" does not work. He missed the most critical calls os the silver and gold markets last year,,,he rebutted with arguments of waiting until he could catch the main part of the rally...no worries, right? Well, that waiting was nothing more than plain ole missing the action. . the proper calls at the proper times are and were and will be missed! This is no leader. As he called for silver to rally through 50 (and at the time this was all he talked about) It went directly and quickly the other way. As he stood still on Gold it rose from 1620 to almost 1800. the major gains were missed in both cases.

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  160. sharpnquickly
    Many people that used to post here got fed up with trolls and arguments and big babies whining all the time with no constructive input.
    If Gary shut down this blog and kept his SMT service, it would suit me just fine, sometimes I wonder why he puts up with the bunch of morons that parade through here.
    Not everyone is cut out to participate in the stock market and certainly not everyone has something interesting to say contrary what I used to think.

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  161. Mr Myagi, Couldn't have said it better. Thanks!

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  162. Wiseguy, your system seems to perform better than mine:)I'm completely automated also, and use Gary and DOC to increase exposure at certain cycle inflection points.Rishi, everything I have now is long gold and is not set up for any additional gold buys until we get a correction.

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  163. MrMiyagi said...
    sharpnquickly
    Many people that used to post here got fed up with trolls and arguments and big babies whining all the time with no constructive input. ( I assume they stopped for a different reason but i don'r know)
    If Gary shut down this blog and kept his SMT service, it would suit me just fine, sometimes I wonder why he puts up with the bunch of morons that parade through here. (I don't wonder, it's good marketing)
    Not everyone is cut out to participate in the stock market and certainly not everyone has something interesting to say contrary what I used to think. (definitely true).
    ---Your response is appreciated---

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  164. Veronica,
    You can check out my blog if you are interested. From the after hours action, looks like this last short signal on gold was another good one. I post all my trades from my systems and twitter them, all free, just started it a couple f weeks ago for friends and family to follow along. I have been trading for a long time, but I found that I am too emotional and made too many mistakes that I always regretted later. The automation takes the emotion out of it, and more importantly, takes out all of the stress for me. Let me know if you ever want to discuss systems, I am always up for ways to improve my returns.

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  165. TY Wiseguy. Those have been my exact words on this blog too. My trading is very emotional and stressful unless I have a proven system to follow. I will definitely check out your blog.

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  166. Wiseguy, do you do all the Easylanguage yourself?

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  167. V- I do most of it myself. I am not really that great at programming, so if it gets complicated I will pay a programmer to help out with the coding. I want to get to about 12-15 systems. I have had some free time lately that has helped, but will start getting really busy agin in a couple of months, so trying to get the rest of my ideas programmed before then. Good luck!

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  168. Wiseguy, I have been following Veronica's posts here since I joined Gary's blog site. You mentioned you had a blog site, however I don't see it listed. Can you share the blog site with us? Thank you

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  169. Sharp, that isn't why they vanished. They blew out their accounts with leverage, by and large. Some boasted of huge leverage, 12 to 1 and higher. And many were investing contrary to Gary.

    I'd guess you are young, too. That was a brief flash back to the 1999 mania (as I observed on Silicon Investor back then).

    And if you think that was crazy last year, just wait a while. You ain't seen nothin' yet.

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  170. Thanks SF Giants Fan, Always got my back on questions and I appreciate that. I keep forgetting we can do that here. ;)

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  171. Sharp, that isn't why they vanished. They blew out their accounts with leverage, by and large. (I cant speak to why, but that is probably true and WHY? Because they were listening to comments like "it will go through 50 like a hot knife through butter" perhaps? Some boasted of huge leverage, 12 to 1 and higher. (they believed in the sysytem, incorrectly). And many were investing contrary to Gary. (I cant know this, either).

    I'd guess you are young, too. (irrelevant, passive aggression, and incorrect) That was a brief flash back to the 1999 mania (as I observed on Silicon Investor back then).

    And if you think that was crazy last year, just wait a while. You ain't seen nothin' yet. (I agree!)

    ---Your comment is appreciated---

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  172. Surprises come to the upside in bull markets.

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  173. MARKETS

    http://traderjoed.blogspot.com/

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  174. On Breakout they made a really good point about Jamie Dimon schooling the inquisitors about the difference between hedging to protect a position and hedging to make money. They trades could not be more different. In might help to look at the practice of hedging to make money as more akin to 'strangle' or 'straddle' trade than a hedge trade. But hedging to make money does not necessarily qualify as a strangle or straddle either because you don't need to use options in order to hedge to make money. The losing 'hedge' trade Jamie Dimon is being grilled about was a hedge to protect a position and it failed. It was not a hedge to make money. That part of their business is still going strong.

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  175. today's high at 1334.4 is 100% gain from 666.8 bottom on Mar 6, 2009.

    some European indexes are below their 2009 bottom while $spx still at 100% gain from 2009 bottom.

    is U.S. so much better or just postponing the inevitable draw down? are FED and banks not learning the lesson?

    http://humblestudent777.blogspot.com/2012/06/phase-2-still-is-proceeding-13336.html

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