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Thursday, June 21, 2012

OIL AND THE CRB APPROACHING A FINAL BOTTOM

June has been the month of major bottoms. Stocks and gold have already formed major yearly cycle lows. Now it's the CRB's turn to put in a major three year cycle bottom. This bottom will almost certainly form well above the 2009 low, establishing a pattern of higher lows and setting up for what I believe will be an extreme inflationary scenario over the next two years, culminating in a parabolic spike much higher than the one in 2008.


Sentiment has reached levels similar to the last three year cycle low in 2009.

 Chart courtesy of sentimentrader.com
At this point we are just waiting for the oil cycle to bottom. Today is the 51st day of oils intermediate cycle, which generally runs 50-70 days on average. I think oil is going to bottom in the next 3 to 5 days. The reason being; oil is in a waterfall decline that has just formed a midpoint consolidation. Once the midpoint consolidation gives way the final plunge usually lasts 3-5 days. This should correspond with a dead cat bounce in the dollar index before it rolls over and heads down into an intermediate bottom sometime in the next 4-8 weeks.


During this final plunge it appears gold will move down into a daily cycle low. That low should hold above $1526 as I think gold has already formed its yearly cycle low back in May, slightly ahead of the stock market and the CRB.



Sometime in the next few days investors will get the single best buying opportunity to position in commodity markets for the coming inflationary period. I prefer the precious metals (more specifically mining stocks) as they have already indicated they are going to lead this next leg in the commodity bull, but I think investors will generate tremendous returns in almost any area of the commodity sector. 

One to watch is natural gas. It may be the largest percentage gainer during the next two years as it has gotten beaten up more severely than almost any other commodity.

218 comments:

  1. You already know my view so I won't repeat it like a broken record. By the way, very nice post. If the above was to take hold in coming weeks and the rally starts for years, all of us will become amazingly rich without a doubt. Don't get me wrong, I would love for this to occur myself.

    So I just got a question. Are you all into commodities right now? 0% cash, 100% in Gold / Miners etc. All I want to know is how much of your capital have you allocated into this view?

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  2. The model portfolio is 75% in the three mining ETFs and 10% in SLV.

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  3. CRUDE



    http://traderjoed.blogspot.com/

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  4. Other than NG, which could definitely rise here, Gary has has got most things backward.

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  5. Gary

    i think you should update the portfolio performance section on your homepage. Your portfolio is clearly not up 22.3% since July and it deeply misleading to continue to report this figure

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  6. I'm willing to bet a burrito that I have them right :)

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  7. lodmund,
    The trades are still open. How can I update the performance until the trade closes?

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  8. That is a very large bear flag in $CRB. Whether it will experience a downward breakout I guess we'll have to wait and see.

    http://scharts.co/L7T1u8

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  9. This comment has been removed by the author.

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  10. leave them open forever and you will never have to report a loss?..i'm sure we could all "generate" a stellar performance by doing that, i was hoping for something slightly more honest from you

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  11. lodmund,
    I've made no secret that the
    latest positions have incurred a draw down. I don't see the need to constantly mark the positions to market every day though.

    When I close the trades I will update the performance. I'm certainly not going to close the trades with commodities moving into a final three year cycle low and gold on the 24th day of a daily cycle.

    lodmund these are the times that millionaires and billionaires are made. If one can control their emotions and seize the opportunity the reward will be a small or large fortune (depending on your initial stake and ability to ride the bull) during the next two years.

    I've explained exactly what's happening. Now it's up to you whether you want to jump on the opportunity or just be another one of those people that lose money in the markets.

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  12. Lodmund,
    His portfolio is up that much as Subscription fees get added to it.

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  13. Saif,
    Instead of the incessant rude comments, just take the bet.

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  14. This comment has been removed by the author.

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  15. Gary,

    OIl has broken its head and shoulders pattern to the down side, price objective could be a capitulation to 40.. watch out.

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  16. Saif,

    don't forget to turn east and pray :)

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  17. Gary, ill bet you a burrito, that we fall and not rally?

    deal??

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  18. For a Burrito? Exactly how hard pressed do you think I am?
    I have made public comments on your site, that should be suffice.
    I tell you what, the USD will go over 90 on the index. That should give you plenty of breathing room and try all combinations of your mumbo jumbo.
    If it does, you will be wrong and I will be right. If it goes below 75 you will be right and I will be wrong.
    I bet you this. Whoever loses addresses the other person as "Sir Saif/Gary" on this blog for all time to come. Work for you?

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  19. Gary

    I will bet you 100 burritos you are wrong (again).

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  20. these are times to be in cash and not to get cute with stocks

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  21. Saif,
    The bet is that the CRB is going to put in a final three year cycle low sometime in the next 3-5 days. In order to do this the dollar has to have made a final intermediate and three year cycle high.

    That means the dollar should roll over and make a lower low before exceeding the recent highs.

    That's the bet.

    However if you want to add a serious handicap to your position and require the dollar to move above 90 I'm more than willing to accept :)

    I prefer a chicken burrito as I am particularly fond of them but I accept your terms. If the CRB doesn't put in a final bottom in the next 1-2 weeks then I will address you as Sir Saif from now on.

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  22. Pepe Cantero,
    One is sufficient.

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  23. Perfect Gary. But the handicap extends to you to. A move to 78 on the index which I think is remote but possible does not make me wrong, hence I am giving us both our views a wide berth.

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  24. Gary and Saif,

    This is getting interesting!

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  25. My money is on G-Money being right on his call of a 3-YR Cycle Top in the USD being already in and the 3-YR Cycle Low in the CRB Index getting put in over the next couple of days. Go Gary! 8)

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  26. Gary,

    what is the best place for Mexican food in Vegas?

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  27. There is a local place Frank & Fina's that I'm partial to.

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  28. thanks,

    I will definitely try Frank & Fina

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  29. So, is the stop for the GDX position still at 45?

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  30. Eric,
    I just covered that in today's report.

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  31. Just want to be clear where you stand Gary. You indicated everyone need to decide for themselves if 45 is the magic number. Is that your stop or is there no stop for you at this stage still? This trade has been in the worst for over 6-8 weeks.

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  32. Gary, i saw. Just want absolute clarity. My english is poor, just want to make sure. I assume the term "i'm going to sit on it" means no sell no matter what.

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  33. Eric,
    I don't sell into a three year cycle low. But if you feel you can't ride out the bottoming process then either sell and buy back later, or hedge.

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  34. http://www.zerohedge.com/news/what-oliver-wyman-really-said-about-spains-banks
    An awesome summation of why i think the Euro is doomed.

    From the article
    "And just so the message is not lost, we repeat it: the insolvent Spanish banking system is expected to generate up to €65 billion in profits! Yet according to MSCI, the market cap of the entire Spanish banking system is.... €91.82 billion."

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  35. Not that I ever bother to read zero hedge but the powers that be have already told the market they are prepared to backstop the system.

    With all currencies now completely fiat. They can, with the click of a mouse, print however many trillion it takes to stop any debt implosion.

    This was the crisis of 2008 it's not going to be allowed to repeat. The cancer will be moved into the currency markets because that will cause the least short term pain.

    I expect some time in the next week or two we will get another multi trillion LTRO and the will initiate the bottom in the CRB and the next stage in this mess will begin.

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  36. So your logic is that Saint Bernank is going to print more than the Euro zone?
    Damn I wish I had something more than just a title.

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  37. yep Ben will match the EU to prevent the dollar from rising.

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  38. There are 2 flaws in your theory.
    1) Lowering interest rates further will increase asset prices. Since I am sure u know zero economics I will explain.
    When you lower interest rates from 4.00% to 1.5% you drive everyone out of the bond market. Those buyers are forced into another asset. However with each basis point at this abysmally low levels the marginal impact is less and less.
    The last set of holders are in there now for safety and not yield. They are not moving into stocks no matter what. Although the reason you will be wrong is if Bernanke pushes too hard and the bond buyers leave en masse causing 4% interest rates, benny can kiss the recovery goodbye.
    2) Rising inflation rates increase the discount rate of money and that LOWERS all asset prices. Look at what happened in the 70's.

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  39. Wow....and how unfortunate.

    I have peaked in here over the past few years and have commented on occasion.

    What a shame Gary.....and as I see it a real surprise.....getting this so absolutely wrong..when so many things where so straight forward.

    The market needed QE and didnt get it (and wont get it ...as it is politically impossible until at least Nov)...EU Zone is a sham and its obvious that it is coming apart....and even the simplest chart of the UUP (I trade currencies for a living) would clearly keep one on the bullish dollas side no?

    It would take weeks..if not months to make the turn..and see the dollar tank..and equities/inflation on the move upward.

    Im kinda shocked really.

    In any case...all the best moving forward.

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  40. Here's another possibility; Ben may not do anything to keep the dollar from rising until people scream for him to save them. Ben has taken a lot of heat for printing. He could just sit back for a while and say, "See. This is what you wanted. Get on your knees and beg."

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  41. As well Gary....and please forgive me but....what "cancer" do you reference that will soon enter the currency markets?...perhaps other readers would value your input here as well.

    Currencies all move "relative" to one another (obviously) and the peaks n valleys /highs n lows are what makes a market!

    As one moves up/down - others (obviously) move opposite and the balances are kept in motion - as its always been I assume.

    Are you only suggesting that the ol U.S buck continues to lose value?..ok then.....against what?...and in turn....there will just be another currency that rises....until (perhaps) we get a reserve change to the ol YUAN!

    I would love to know/hear your take on it all.....the cancer...and all!

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  42. Blog,
    I'm not sure what you mean by wrong. Did you even read the post?

    The CRB is in the process of putting in a major three year cycle low. I expect that to take at least another 2-4 days as oil completes the final plunge out of the midpoint consolidation.

    I'll be happy to make the burrito bet with you also if you are so inclined.

    This started when the tech bubble burst. Instead of allowing the economy to enter a severe recession and cleanse Greenspan cut rates and printed dollars.

    This inflated a real estate and credit bubble. When these burst the cancer that began as a tech bubble moved into the financial system.

    Again instead of allowing the cleansing process to run its course Bernanke printed and governments moved the toxic assets onto the public balance sheets. Thus moving the cancer into the sovereign debt markets where it is at right now.

    However I don't expect the powers that be to make the right decision and let sovereign defaults run their course. Instead they will print money in order to abort a sovereign debt implosion.

    That will move the cancer into the currency markets ultimately ending in a currency crisis and spiking commodity prices as all fiat currencies become suspect.

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  43. Gary,

    Ill bet you a large pizza ( 7.99$ in Toronto at Pizza Pizza) that we crash this summer... you inclined!?

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  44. Sure I'll take that bet. The stock market has already put in a intermediate cycle low so this move into the half cycle low shouldn't even drop below the recent low.

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  45. Well Gary....as always...and even moreso now...youve certainly peaked my interests - and I value/appreciate your views and tireless work.

    And wow..at this point....it will be very interesting to see how everything plays out.

    From a currency perspective (readers could pull up a simple daily of the NZD/USD for example) and plot a simple 200 SMA....the commod currencies only now (on yet another touch /retest from below) see the downside (and obvious downtrending line) look to see the downside to acelerate....as well againt YEN...ie the safe havens..so.....

    Perhaps your CRB bottom (which looks like it could easily go weeks not days before finding a bottom) will coincide with a dollar top and commods turn.......but man......I could see 1000 pips in NZD and AUD easy so....maybe just a lil early?

    Actually I believe you have been a touch early with some of your projections in the past..early....not incorrect!

    I live in Mexico so....no burrito bets for me! Lets see how she goes!

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  46. Blog,
    I have no expertise in the currency markets other than cycle analysis on the dollar index. So I haven't a clue on what to expect out of the NZD, AUD or the Yen.

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  47. Gary....I would have just assumed you track currencies as well....thank you for responding to me personally.

    Perhaps you can add a couple more tools to your box!

    Since the $DXY is composed of several currencies (57% EUR, 13% Yen, 11$ Sterling, 9 % Canadian, thren Krona and Franc) I find it to be of little use - short of a general U.S vs EUR type thing.

    If we look forward and consider an "inflationary" scenario and the dollar getting weaker (as I believe you forsee) - weaker against what?

    It makes little sense looking forward (long term/med or even short) to consider the EUR as outperforming the Buck no?....I mean seriously....as U.S is now posting better data (even as sad as it still is) the EU zone troubles are only now starting!

    Ok...so now we consider the commod/risk related currencies (AUD,NZD and CAD) - where coutries are (Australia for example) cutting rates (suggestion of needed stimulus/slowing growth etc..)and siting slowing trade with China....We can't really imagine these currencies gaining ground on the Buck in times of slowing trade/growth.

    Ok....whats left?

    Even weekly charts of commods vs usd (usd vs cad looking to enter "3 of 3 up" if you elliot wave at all) all look to either be rolling over or already showing considerable dollar strength.

    So...EU zone lookin rough moving forward...and "risk on currencies" already showing their hands.

    The U.S buck looks to be in a position to gain considerabley - QE n all.

    In fact Im of the view that the next proposed round of QE will be shrugged off/ignored anyway.

    Does anyone else think that China and Japan will tolerate seeing their U.S Dollars holdings to continue losing value? Or at least to a point?

    Interesting debate - and great fun.

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  48. My gold futures system will go to a sell at 1560. I think I will stop posting system trades until the profit curve goes to new highs. It had previously never had more than 2 consecutive losses, and if it sells here that will make it 4.

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  49. Veronica thanks for the update. My view on the losses for your trading system is that we are in new environment for Gold. Over the last 11 years, Gold has been posting annual gains. This year, there is an above average chance that Gold will finally have a down year in this secular bull market. I continue to expect prices to break below $1,530 and for Silver below $26, despite being long. I think it's time to hedge some positions. :-)

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  50. Perhaps it is nothing at all, but I find it interesting that with all the hype about the dollar rising today, and all the markets dumping . . .

    The dollar STILL closed below yesterday's high.

    I would have thought the dollar would have significantly turned up if this was the "end of commodities."

    Of course when one forgets about the temporal "sentiment" of today, and considers that the U.S. government alone has unfunded obligations of over $80 trillion due in the next five years (yes - trillion), and there is no way to meet these obligations other than to print money . . . being long on commodities is probably not all that bad an idea.

    Good stuff Gary.

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  51. Oh yeah . . .

    If I hit is big with the miners Gary, I'll buy you all the burritos you can eat!!!

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  52. "Rising inflation rates increase the discount rate of money and that LOWERS all asset prices. Look at what happened in the 70's."


    Really? How about Germany or Argentina?

    Gary might be wrong but what you are saying does not make much sense

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  53. Pibe,
    There is a difference between Hyperinflation, very high inflation and moderate inflation.
    Where we are now, we will obviously first have to go to moderate inflation.
    If you get 5% inflation and let's say the bond holders require a 1% real return, you are talking 6% interest rates. What will that do to the housing market?
    Asset goes lower.
    What will that do to existing 10 year bonds. A loss of 40-60% depending on how long it takes?
    Asset goes lower.
    In case of higher inflation, corporate borrowing costs go up.
    Earnings go down. Asset (stocks) goes lower.
    Still higher inflation reduces earnings multiple of stocks as the discount rate is increased. That is what I was alluding to. During 1970's the earnings increased approx 1.5 times on the DOW and yet it went nowhere from 1970 -1980 in spite of very high inflation, or rather because of it.

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  54. "If you get 5% inflation and let's say the bond holders require a 1% real return, you are talking 6% interest rates."

    Some very big assumptions here my man. First off -- Is this gov't EVER reporting 5% inflation? No. Not even if real inflation is 10%. You'll report what you're told.

    Second -- You assume bond holders are RATIONAL in requiring an actual return. Bond holders have been losing to inflation for a LONG damn time. They don't care.

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  55. Some interesting comments. nasty at times but not out of the ordinary over the years at SMT. I am an SMT sub, but I don't trade/invest in the same instruments as the model portfolio or buy/sell at the same time. But most of time within 1-3 weeks. My current positions are flat to very slightly negative as of today. Personally, for me, I don;t care. I am in this for the long haul. I don't sweat the daily wiggles. I trust Gary's work and have been well rewarded for 4 years. past performance doesn't mean Blah blah blah..and yes Gary could be wrong here..he is only human. G man has said for at least 5 years I have known him.." I am often early getting in and usually out early before the top." But I think he has this call right, even if the last 6 weeks for some have been tough. With Gold,its been clear for the last few years, Large buyers have been accumulating. For the last year at least these large buyers step in at levels between 1475 and 1600. The buyers I am speaking about are Central Banks of the world.

    I'll continue in next post on why this is important.

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  56. Many of you continuously post comments, articles, opinion from zerohedge and other sources, about the demise of the Euro and the EU. Frankly most of this is daily noise and political propaganda. Straight shooter was exactly right about the situation in the USA. But back to Europe. Its important to under stand the history behind it EU/EURO so you might see where it intends to go. Start with the Congress of Vienna. Replace the Holy Roman Empire and Monarchy with political Governments. This way the king won't cut off the heads of the bankers as they initiate the fiat/Debt system of wealth transfer and control. So the czar through a kink in the plan and they were rewarded with extreme Statism for 70 years. Next institute central banking world wide as a solution to the problem already created by FED/Bank of England. Everyone on board by late 30's. Requires confiscation of gold and 40% reduction in American people's wealth overnight. 1947 Treaty of Rome, lays the foundation of political union started 150 years earlier. Why the EU even celebrated all over the capitals their 50 years together back in '07. http://europa.eu/50/index_en.htm

    It didn't matter the the people of Europe mostly ignored this the celebration wasn't really for them. Next spend some time understanding the creation of the Euro currency. it wasn't just dreamed up overnight, It was planned since the US went 100% fiat back in '71. It was also created with the knowledge that the currency is ultimate backed by CB gold holdings of its members. trust me its more than the USA has in reserve. And the Euro is not sitting on the balance sheets of foreign central banks in amounts anywhere near that of the US dollar

    its obvious that the central banks of the world know this and is why they are accumulating. Or in the case of European, not selling.

    Lastly, you need to look into the role of the Bank of International Settlements, The Central bankers bank. pay no attention to the politicans. Watch/Listen to the BIS, IMF and Central Banks of the world. My bet is by 2020 currencies will be repriced to gold, not that their will be a gold standard.

    On confiscation of gold...will not happen in western country's or even in China. But what I think will happen to prevent the collapse at least in the USA is that the people will be forced into Gov't securities as they get devalued and the final wealth transfer from the many to very very few begins the reset.
    Unless people are prepared to rid themselves of this horrible debt slavery system with a revolution, peaceful or otherwise. Better to start thinking outside the box because the future is NOT taught in economics class for sure. Just be patient. Got Gold?

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  57. I should clarify two things..the price of gold will be north of 3000.00 within 2-3 years, and maybe double that 5 -8 years from now in todays US dollars

    2, Europe is NOT breaking up anytime soon.

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  58. @ Blog Posts - RNM
    "as U.S is now posting better data (even as sad as it still is) the EU zone troubles are only now starting"!
    "Better" using what metrics ?
    Everything I LOOK at has a -ve print or is distorted....so tell us where its getting better !!

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  59. Even if gold is destined for $3000+ that doesn't mean it can't take a dump to $1345 first. All that is required is fear.

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  62. @ Natanarchist
    Tks for the history lesson......
    I think you missed 1 tiny detail...
    ....the use of fractional banking under a debt based monetary system.
    That about sums up the point.

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  64. Natanarchist,
    Because bond holders have not cared does not mean that will always not care.
    You know back in the 70's and 80's where CPIwas actually real, the headline inflation printed at 4.0% in 1982 and that month the 10 year bond yield was at 12%, People were demanding a real return of 8%.
    I just mentioned 1%.
    LM,
    In Italy and Spain Deflation is running at 3-5% and thus the real return on their bonds are over 10%.
    I assume they go their neighboring Austrian school of economics?
    Yeah I know Bernanke has better Ink than the Eurozone.

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  65. This comment has been removed by the author.

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  66. It [EUR] was also created with the knowledge that the currency is ultimate backed by CB gold holdings of its members..
    ==

    That's a good one. A fiat currency backed by gold. LOL!

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  67. Gary, you still didn't answer my question. When GLD breaks below $148, what then?

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  68. Liquid motion...good points. Yes should have mentioned the role of fractional reserve banking that preceded fiat.

    Saif. I have no opinion on bond holders. Only when and if they abandon the us dollar it wil be the American public who will be forced to buy those bonds in their IRA,s and 401k,s etc. Stroke of the Pen from whatever crooked puppet is President/King/Emperor of the USA at that time.

    Mika...think outside the box. When currency crisis hit, what will you exchange your worthless fiat dollars or Euro's for? More fiat? Most probably it will be gold. That is the simple explanation why CB keep gold is it not? If not I would love to hear what the alternative would be? The fiat ponzi scheme will run it's course and then what?

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  69. Gary and others,

    I thought you might want to see this. Its from bill downey of gold trends.net. Im not pumping an article or a website but his analysis seems to suggest that a low is possible in the next two weeks. It corresponds with your low made last month i guess.
    It seems that when you get a cycle inversion it could signal a major correction being over.

    anyways heres the link.

    http://goldtrends.net/FreeDailyBlog?mode=PostView&bmi=979566

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  70. 1-3 days left for the CRB bottom. SLV getting clobbered, gold and miners so far holding above the May/June lows. Also oil stocks holding above the early June lows while crude gets clobbered below. Tension rising...

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  71. Mika...think outside the box.
    ==

    Right. Coming from an idiot joker.. LOL!

    I said earlier, youz best familiarize yourself with term "full spectrum dominance". Gold, (as is silver), is going back where it came from: its previous low. ($400 for gold, $8 for Silver).

    As to the EUR currency, it was devised to fleece the arabs, chinese, etc., who will not even get paper for their resources, etc., to wipe their ass with.

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  72. Good luck with your thesis mika. Just let us know when you are shorting gold on it's trip back to 400.00

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  73. I'll tell you what, you can have that burrito that Gary owes me.

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  74. Mika,

    you're acting way to arrogant... its pretty funny how you think gold is going to 400 dollars... take a hike .

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  75. Sorry if I come across that way. I'm just angry. People are completely emotionally blinded by propaganda. Anyway, I believe Gary still has enough of an analytical mind to see through this crap.

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  76. Mika. I had burrito's with Gary couples weeks back. Well he had the burrito but I went for the Fajita's. I have no idea what your bet was with Gary, but you can collect your own winnings.

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  77. Yeah, they know us very well.

    Risk is our Business: http://youtu.be/toG6aSQFF7Y

    Good luck to you all.

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  78. Gary what does it mean for your cycle view if the May yearly low in gold is violated?

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  79. All I know is that there are going to be some mighty surprised and embarrassed folks if the CRB bottoms and starts moving up.

    Mighty embarrassed.

    That and Gary is going to get fat on burritos!

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  80. If gold were to break below $1526 then we would have to re-phase the yearly cycle low.

    That is possible since the last intermediate cycle was very short at 13 weeks.

    Often a short cycle is followed by a long cycle.

    If oil drops hard enough next week it could drag gold down to a lower low.

    Either way we still have to have a multi week rally (a true intermediate degree rally) and the dollar has to drop down into an intermediate cycle low.

    We also have to put in a final three year cycle low in the CRB.

    Usually gold will bottom slightly ahead of that as gold investors anticipate that major bottom. This is what occurred in the fall of 08.

    However there is nothing that says gold, oil and the CRB can't all bottom together.

    Unfortunately many traders are getting lost in the chart patterns right now, which always happens at these major turning points.

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  81. ILUVPMS
    Interesting..tks for that...does support what Gary says.
    Timing is indeed critical nothwithstanding the continuation of the secular trend. Better to be too early than too late ?? :-)

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  82. Hey ..did anyone catch the news today about Merkel.....
    She was in Rome for the Euro leaders meeting...but she got stopped at immigration.....
    The officer pulled her up and asked her if she was there for ...
    "occupation" or holiday....!!
    ....no comment .

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  83. Gary,

    I don't know how you can say many traders are getting lost in the chart patterns.

    1) look at oil: it broke a three year head and shoulders pattern and po is 40ish.

    2) Look at the TSX and thecanadian small cape Same thing. 700 for ventures... and 8000 for TSX,

    3) look at silver broke down from a bearish flag, if it breaches 26 its going lower..

    These bearish chart patterns are also saying something.

    If the EURO doesn't do something then its deflation across the board. Also, we all know how fucking stupid europeans are with policy and beaurocratic BS so i expect their LTRO of a few trillion dollars to be reactive to market forces.

    I really hope I'm wrong cuz I'm 100 percent invested.

    Then again, the july time frame could be a bottom according to downey.

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  84. I think cycles trump chart patterns... maybe with the exception of break outs from very large, very well defined patterns that everyone sees and everyone will trade regardless of other factors.

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  85. @liquid motion

    Don't know if you are an SMT sub, but this link was posted on the sub blog by someone earlier today and I thought you might enjoy reading the article. Some interesting points to ponder anyway.

    http://mises.org/daily/6069/An-Austrian-Defense-of-the-Euro

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  86. Just for a dose of long term reality...how far could gold fall and still be in an uptrend?

    http://screencast.com/t/mHpD9wZKOp1

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  87. "Keep in mind that the total debt to GDP of US Govt. is > 100% while the EZ debt to GDP <100% (way less)."

    Liquid Motion, you are completely clueless.

    The U.S. is in better shape than most European countries (ESPECIALLY when you consider the demographics) as far as total debt goes (which is what matters as far as economic performance):

    http://images.johnmauldin.com/uploads/charts/110711-03.jpg

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  88. I prefer to use chart patterns that line up with cycles lows or highs. But let me say I have found cycles, patterns, support/resistance lines, sentiment, Fib levels or moving average all to fail at some time or other.

    ReplyDelete
  89. smt troll....
    historical information is not really useful....for comparative purposes (2010 ???)
    besides that, the information only supports what I said....combine the "govt" debt of each of the EZ17 members and then work the averages. Dont look at them in isolation as ost do. You will find what I said is true.
    An enormous black cloud over USA is still the unfunded debt liabilities (not included in your posted graphic)...(which I have serious doubts about the govts intention to honour)...but nevertheless is still a debt.
    Regardless of which has the better /worse Debt situation and who can present the stronger case to prove otherwise, Debt is only one issue. The acceptance of government presented economic data by mainstream is propaganda of the highest order. The US is in a depression and has been since 2007. Whilst this may leave a bad taste in the mouths of patriotic americans it is reality.
    Aside the economic issues, we have amongst the 4 largest US banks, OTC derivative exposures in the order of $250TLN....these are in simple terms "debt bets". These are unfunded and operate in an opaque unregulated market. These things caused the GFC ....they remain as a threat to the financial system. They are housed on American shores. The Govt of the US via the FED stand behind these BANKS. That implies the public will carry this burden.

    Far from being clueless my friend.

    This might give you some "real" insight....
    http://usawatchdog.com/one-on-one-with-paul-craig-roberts/

    Your comment is insulting...to your intelligence....which stands next to that of the neanderthal.

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  90. @ natanarchist
    no not a sub.
    interesting read...ty.

    Euro was a project to supposedly compete with the USD as a reserve currency. Its survival going forward is highly dependent on discipline, fiscal and political union, austerity and avoidance of credit expansion. The crux of saving the financial system actually depends more on the survival of the EURO. Failing that we enter a possible quasi gold standard. Mises had it right IMHO.

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  91. ILUVPMS,

    RE your comment to Saif at 8.21am on June 21st, you are pretty rude and stupid to make such a comment...The blog is meant to bring different opinions and Saif seems to have his own opinion and he is not insulting Gary, and vice versa....Your type of comment has nothing to do on this blog...

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  92. I would wait for a close beyond one of the trendlines of this huge symmetrical triangle in $Gold before I would dream of taking a position. Now is not the time to be brave.

    http://scharts.co/MJnP74

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  93. $Silver chart agrees that now is not the time to be brave.

    http://scharts.co/IYMYro

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  94. A fair question for Gary is, did you not sell after the Fed announced a twist only, just because you didn't want to take a paper loss? The reason for the question is you are advertising a 23% gain for your Premium Portfolio, which is based on Realized gains, but excludes Unrealized Losses, according to you.

    A second question would then be, when AGQ tanked, you posted you sold your personal shares, just before boarding a plane, so the losses all your subscibers took, was not the loss you personally experienced. Did you sell your personal mining portfolio when GDX was in the 47s, the day of the last Fed meeting?

    For the record, it seems that posting a gain for your track record, when unfortunately you have substantial unrealized losses in the portfolio which negate the gains, is misleading and leaves future decisions on when to sell subject to scrutiny of motive. In other words, if you're down a little for the moment, fess up and count on subscribers to realize they could be doing much worse out on their own, and that gains will follow if they have patience.

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  95. I'm not sure what makes me more ill... kicking a guy when he is down... or treating him like a god when he is up. They both make me sick.

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  96. Mark,
    I've made no secret that the model portfolio is taking a draw down during this bottoming process. It happens to everyone occasionally.

    I will sell the position once I think the dollar has put in an intermediate cycle low. When I sell then I will update the performance.

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  97. BTW I told subs before the close Thursday that everyone should decide whether they want to stop out, hedge or hold through this move down into the daily cycle low, which I think will also be a final three year cycle low in the CRB.

    So everyone should be positioned how they want at this time.

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  98. Danno,
    Tks for the charts.
    Interesting with both that their apex is achieved at almost same time....assuming they both play out that long. While both have not been violated could be wise to take the necessary course and wait the break/close outside.
    Nice quote from JL...on the Silver( I posted the same on smt some months ago).
    Salient reminder that knowing that the secular bull is still in place (which it would be even if $1100 was achieved) taking a position and sitting would ultimately pay off. Easy gains have been made...now is time for nerves of steel and patience. Using charts, cycles, sentiment and market knowledge of money flows could give one the best buying opportunity of their lifetime over the next few months.

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  99. Sophia,
    Thanks for that.

    ILUVPMS thinks that joke is funny and keeps repeating it. This is not the first time he/she has said it.
    We have had our banter before. Does not bother me.

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  100. Liquid Motion, These triangles are very large and very near the point at which triangles break out. The odds that price will move sideways is very low. The breakout could also be very large. Hopefully for PM holders the breakout will be up, but if it's down...

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  101. Gary,
    Thank you for your response. I hope you were right when you were saying the bottom was in. Marc Faber had said the same thing. Now I read you both have doubts.

    JPM has 16,000 more silver contracts to cover. That tells me the bottoms will be violated, in a big way. I guess then you'll say that was the end of the D wave, and you should be right.

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  102. Gary,
    With your recommendation of "stop out,hedge, hold" are you implying to short (hedge) this bull market?
    I know what you have said previously abt that (which I too believe to be a sure way to lose capital)....just wanted clarification...is all.

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  103. Bottom in gold happens every year between 20th of June and 20th of July.
    Lika a clockwork.
    I didn't realize people are still unaware of this phenomena.
    Especially ones theat follow blogs about gold and silver

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  104. Eri,
    We do tend to get an intermediate bottom in the summer. I think this one occurred just a bit early in May this year.

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  105. SPY 50% Fibonacci Retracement

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  106. SILVER



    http://traderjoed.blogspot.com/

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  107. Let's see if we get the big CRB bottom in the next two days. Positive divergences in the oscillators are in place unless it swoons down too much.

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  108. So far again PMs seem to be ahead of the stocks and CRB bunch. It might really happen this time!

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  109. I would really resist getting too excited. Stochastics are shifting from extremes (overbought/oversold) causing prices to move a bit. Once those conditions bleed off the trends could continue.

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  110. GARY,

    Please change your posts (on the main article title pages) from yellow on blue to something humanly readable.

    Telling people to go to the other "comment" page has a worse bug whereby everytime you refresh it scrolls to the top.

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  111. If you click on comments from the home page you should get a white page that's easily viewed.

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  112. I'll ask Gurvir if it's possible to change though.

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  113. I'm aware of the other 'comments' page. I mentioned it in my post. It has a bug that scrolls a person to the top on each refresh (then the have to scroll back down to read new posts.) That's why it is preferable to read on the 'article title' page.

    As for fixing the prob, of course it is fixable. It is a single line change of the ".mbt-comment-body" CSS attribute. Gurvir can do it in under a minute.

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  114. Gary,

    is it possible that April 10 low was the intermediate low for S&P and index is working for its next intermediate low to come late and June 4 low was only a trading cycle low

    That would make the phasing of the cycle s quite normal as per statistical norms

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  115. TZ,

    Long time no see. How heavy are you?

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  116. Piazzi,
    I like to be able to pull up a long term weekly chart and clearly see an intermediate cycle bottom from across the room.

    The April low doesn't qualify using that filter.

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  117. Well all these positions are heavily underwater again... just as I predicted a week or so back.

    Folks, I keep saying it and I'll say it again - these are counter-trend trades. The bottom has still to be reached.

    Good luck, you're all gonna need it.

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  119. This comment has been removed by the author.

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  120. Gary,
    According to your article, the "3 to 5" days is up now. So oil should have bottomed at 78. I hope so, because if gold breaks $1525, everyone is talking $1350.

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  121. gary, today is the day for $CRB low?

    It looks like you are right again.

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  122. Like Natanarchist, i also find it humorous of all the talking heads out there about the demise of the Euro. The crisis have been running for 3 years now. Name me another asset that is in a crisis that took 3 years to collapse. Euro currently trading 1.27 to the USD. The more weak links (Greece, etc.) that gets removed from the EURO, the better it is for the long term picture.

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  123. Mark,
    Oil is not generating any downside follow through like I was expecting. That could very well mean that the bottom occurred on Thursday.

    It is starting to look like the CRB has put in a double bottom, and so far gold is holding well above $1526.

    We'll see how the next few days play out and that should tell us whether oil has bottomed. Like I said in the article once the oil cycle bottoms it should signal the final three year cycle low in the CRB and a top in the dollar.

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  124. Rich,
    The miners have just put in a low volume 50% retracement. Not unusual after a 24% rally.

    Keep in mind these crazy price targets are the same thing we heard at the Sept. & Dec bottom. Both times the COT hit a max Blees rating and gold generated an intermediate bottom.

    Like I've said before during this entire bull market there has never been any significant downside risk after the COT hits a 95+ Blees rating. We just got four 100's in a row.

    I think it's going to be pretty tough to push gold down to $1375 when it's taken 4 months to push it from $1790 to $1572.

    When you step back and look at the big picture it becomes obvious that this is one of the milder D-wave corrections so far and one of the weakest rallies for the dollar out of a three year cycle low.

    I would urge you to stay focused on the big picture rather than listen to the crowd, especially at what should be a major turning point as the CRB's three year cycle should bottom soon if it hasn't already.

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  125. EricH,
    You are assuming Germany and France and Netherlands will not leave the Euro first.

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  126. Saif,
    IMO Germany has MORE to lose from leaving the EZ17, than any or all of the others.
    Aside from that the resulting collapse of OTC Derivatives would push the losses into the realms of the US Financial Institutions and CB. NOT GOING TO HAPPEN.
    Central Planners are not willing/ready to give up their power and control.

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  127. LM,
    I disagree. They have more to lose in bailing out the weaker members.
    Look up the history of monetary unions. All 26 of them which came into existence in the 20th century went out. Euro is no different. ECB with all its firepower and constant bond buying since 2010 could not prevent Greece from defaulting. Spain is 10 times that size and Italy is 3 times that of Spain.

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  129. SO what you are saying that this is different than those other 26 times? That in those cases there were no bankers who wanted to remain in power and no Stronger countries being subsidized by weaker countries?
    Like I said if all the incessant bond buying only resulted in a two tier bond structure in Greece and perhaps accelerated the default,Spain and Italy are too big to save. You make it sound that bankers can defy the laws of physics, they cannot. Yes hyperinflation is a choice, which by the way ends the union, the currency and their careers.

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  130. Yes, the same assumption that the US won't abandon the dollar.

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  131. EricH was that a response?
    As I said the track record for monetary unions is zero. Zilch. 0/26.
    So as they would say in the Hunger Games, the Odds are so ever in my favor.

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  132. My 2 cents: I would be amazed if there are any subscribers of this blog left after the next downdraft in PMs and miners which may come soon. The bubble has popped and there will be no repeat. Lots of parabolic mountain tops in charts to evidence. QE was studied by Bernanke and he is the first to implement it. It is designed to avoid asset bubbles and massive inflation. Quite frankly, the numbers suggest that Ben is not printing enough money and I think it is prudent to expect 5 to 10 years of mild deflation or stagnation. I think anyone in stocks, bonds, real estate, metals, the dollar, or even oil stand to make no money at all the next 10 years at a minimum. There might be some money to be made in speculative tech and biotech names. But the only true money to be made will come from dividends. I'm thinking of starting a blog and subscription service of my own and I'll let you all know when I do. It will be focused on working your butt off the next ten years, saving as much as possible and investing in the large dividend payors. Follow me to success.

    Tom

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  133. the next turning date for gold is july 3rd give or take a few days.

    If we get a low instead of a high in this channel it will be a cycle inversion which tends to have important bottoms for gold.

    as stated this falls in line with garys thoughts that a bottom may be at hand.

    Gary your thoughts on the dollar, it seems to want to make higher highs, does this not change your cycle count for it.

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  134. Tom,
    I can afford another burrito bet if you care to take the wager :)

    The ag's are already leading commodities out of this major bottom. Oil looks like it has bottomed and despite the dollar rally today gold is a long way from moving below it's previous cycle low.

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  135. ILUV,
    The dollar is just rallying out of it's DCL. I think it's probably telling that most sectors are ignoring the dollar today. That probably means the rally won't last into next week.

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  136. Gary,

    If thats the case, then it lines up well with an important low for gold next week and a top for the dollar... if this doesn't happen then I'm guessing more pain due to a liquidity crisis... Central banks are usually reactive when a crisis happens... lets hope they learned how to be proactive since Lehman days,

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  138. an interesting chart that i got from gold seek.com

    We may be embarking on our next move up that should last a few more years, a good idea that that should be the top if the MACD forms a negative divergence at that point.

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  139. http://1.bp.blogspot.com/-OedHYwKCfsk/T-rjbWAZkMI/AAAAAAAAJzY/ZwdCv983x6U/s1600/au.wk.png

    sorry forgot to post the link

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  140. This comment has been removed by the author.

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  141. ILUVPMS,
    Nice post."On the verge" is the critical point. I had a closer look at the chart ..it seems that Oct. is the month of completion of the correction in the last 3 circumstances ('05, '06, '08). For those who want to attempt to time the next rise....Oct. may be the point....obviously we could go lower from here just as we could levitate/consolidate around the 1550-1640 area.
    Tks for the insight.

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  142. "THE CRB APPROACHING A FINAL BOTTOM".

    yes, but the final bottom coule 2009 bottom at 200 as CRB broke down its Long Term BLUE Diamond Formation:

    http://humblestudent777.blogspot.com/2012/06/long-term-blue-diamond-formation.html

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  143. LM,
    Again you are making it sound that there is something unique here which will allow the Euro to survive where all other monetary unions have failed.
    Actually there is but it is a very strong negative.
    One of the deepest analysis of monetary unions done found the ones that did best/lasted longest did so because of labor mobility. This neutralizes the productivity disadvantage of some areas versus others. Unfortunately the Eurozone is extremely fractured in this regard. Nobody other than the Dutch, Greeks or Finnish people speak their own languages. French and English are partially shared but nowhere enough to help anyone in this regard. I guess Spanish and Portuguese are close enough but it would help if one actually had a good economy. Without labor mobility the ability of a monetary union to survive a crisis falls very rapidly.

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  144. Actually dividend stocks are in a bit of a bubble. Look at the P/E of the retail investor favorites AT&T and Verizon. Your capital would have been safe by buying dividend stocks (and Tips and high yielding corporate bonds) in 2009. I did some of that, but not too much. I would have sold these stocks in early 2012 if I had large holdings and cashed in the capital gains.

    A possible bet on yield but also on commodities is to buy something like PWE, which is probably yielding around 8% now. But oil has to hold for this one to work, and the market can't crash.

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  146. Frank, you do that if you can hold your breath without passing out...!

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  148. From
    http://globaleconomicanalysis.blogspot.ca/2012/06/its-just-impossible.html
    The Bundesbank said there should be no banking union until there is a fiscal union.
    Angela Merkel said that there should be no fiscal union until there is political union.
    Fran├žois Hollande said that there should be no political union until there is a banking union.
    The German supreme court will not allow a political union nor a fiscal union, nor a banking union without a German referendum

    But I am sure it will all work out LM.

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  149. $SPX bearish head and shoulders pattern is playing out.

    http://humblestudent777.blogspot.com/

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  150. an alternative view to garys... a comprehensive view on silver by rambus

    http://www.gold-eagle.com/editorials_12/rambus062612.html

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  151. Gary I was under the impression that oil has bottomed? are you still under that assumption. With the dollar making new highs I'm not sure about that anymore... smell a dollar breakout if it breached 83.

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  153. Bernank can't be the hero anymore. All his bullets have been shot. So glad I went flat at the opening with the last small percent I had in mining stocks. Deflation.. not Inflation.

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  154. The miners etc "may" bottom here, and maybe these positions will move back to breakeven. Then again, the market may tank when it becomes clear that Germany won't bail the Eurozone, and take out all your positions regardless of any cycle bottom or indicator reading.

    Folks this is why we have stops.

    I have a horrible feeling this could be worse than last years silver trade... we could see carnage in coming weeks.

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  155. Hi Gary.....just wondering if you or perhaps any of the avid readers here have considered further analysis of the currency market as we discussed last week.

    NZD/USD and AUD/USD now registering "weekly swing highs"....as USD/CAD prints "weekly swing low" with vigor to say the least.

    Again....perhaps this still fits into your ideal of the CRB bottoming (well ...duh eh!) but...as stated prior.....certainly not in days!

    these currency pairs take weeks to roll over at times...and certainly as of now...are suggestive of larger "risk off" moves.

    Look at the flows into the YEN for additional validation.

    Otherwise....I see in your analysis reference to "D-wave....C wave etc..."

    How can you not see this as the beginning of 3 of 3 DOWN in /ES and equities...and in turn further lows in gold?

    good luck all.

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  156. Great News for Gary's subscribers. This move officially puts the COT Bless Rating at 108.

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  157. The commodity carnage acceleartes. I'm concerned the miners accelerate down, so there is no chance of a +div to the metal itself. No sign of any turn whatsoever.

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  158. Yes I am starting to get concerned that we may be in a bear market like Tiho said.

    As soon as gold makes a cycle low I will move stops up. It's 30 days into the cycle so we should get a short term bottom soon.

    Oil still hasn't confirmed a cycle low yet. Very frustrating. It didn't break down like a normal waterfall decline, instead it formed a bear flag. The same thing app;lies for oil. Once a cycle low forms we will place stops. If they get violated then the odds are high a bear market has begun and we will have to revert to bear market strategies.

    I hope not because it is pretty darn hard to make money in a bear market especially with the Fed fighting you the whole way.

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  159. Wow, that confience went out the window pretty quick. That sucks

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  160. Technically gold and miners haven't done anything wrong yet. They are both holding above the May low.

    What is starting to concern me is the weekly dollar chart. It looks like it has put in an intermediate low.

    Like I said once we have a daily cycle low I will raise stops so we don't ride anymore of the bear market if that turns out to be what is happening.

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  161. Oh Gary I have been drawing your attention to the weekly USD chart for so long now.
    Glad you finally seeing the light.

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  162. what, kinda like the way it looked out of the 2008 bottom? what exactly did the PM's look like back then?

    You guys think that it is remotely possible that both of you are right? why could they move up together then and not now?

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  163. Mike S,
    Though I have given Gary good Grief over Gold (wow a natural Alliteration), and I think it will probably bottom below $1250, I am less confident in that outlook compared to that for the USD. I think that there is a 90% chance that USD will move more than 20% higher from here eventually. But I am less confident on Gold moving lower. I would say in my opinion there is a 60% probability that Gold moves lower. In other words I think there is a 36% chance that Gold and the USD move higher together.

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  165. ...free beer tomorrow.... This blogger is a consistent loser....

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  166. LM,
    you are going to be so wrong on your call, you will approach right from the other side. The only way we see anything under 75 is if Spain, Italy, Portugal and Greece leave the EURO. Even then the complexities are too many, but in that case u have a chance.

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  168. Posted this weeks ago

    http://changeintrend.files.wordpress.com/2012/06/gld.png

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  169. good one. I always enjoy a good cliche as a true sign of intellect.

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  170. Lets keep it civil and mind our manners please.

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  171. You don't surprise me. You used the same neanderthal comment earlier in the blog. Your obviously a genius. If i decide to offer any other opinions I'll post them here for ye.

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  172. Dullandslow

    Did you get kicked off the yahoo message boards again?

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  173. it's too easy. I do my best to not argue with children. Your obviously just a blow hard. look at your posts just on THIS blog:


    @ SS ....
    Unfunded doesnt mean obligated.
    The Govt does wonderful things...and in the case of the often quoted "unfunded" liability issue....they can do an about face with all of it. Its off the balance sheet for a reason....not the obvious one. AND it is btw pretty clear that they cannot pay it when its due. Some very unhappy people are to bare the brunt of that fact.

    June 22, 2012 2:03 AM
    Liquid Motion said...
    @ Natanarchist
    Tks for the history lesson......
    I think you missed 1 tiny detail...
    ....the use of fractional banking under a debt based monetary system.
    That about sums up the point.

    June 22, 2012 2:11 AM
    Liquid Motion said...
    Just to be sure everyone is on the same page....
    The situation in EUR with their "sovereign" debt crisis is actually better (for want of a more suitable word) than the position in the USA.


    Take a look in the mirror...I'm almost certain you see Superman. But i would strongly argue that you are actually looking at a sad sack of humanity that must lash out and prove what he perceives as correctness in order to validate himself. This is a blog site you idiot...your opinions are no better or worse than the next guy.

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  174. With the European summit's results Gary may very well be proven correct with his 3-year commodity low and US$ high. If that's really true we should acknowledge that. That would be some awesome timing in the face of much critique and ridicule here.

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  175. ahh, SF, another lemming...touching.

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  176. ...I am impressed with the authors ability to maintain steadiness in the face of antagonism...yep, I am impressed with that. And now, I have better things to do...

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  177. "This is a blog site you idiot...your opinions are no better or worse than the next guy"......and with that I rest my case! Go grind ur axe somewhere else.

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  178. Looks like it's time for a comment cleaner...

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  179. MARKETS


    http://traderjoed.blogspot.com/

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  180. the Operation X on $spx, $indu, $compq:

    http://humblestudent777.blogspot.com/

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  181. at 6/29 close, Phase 3 of Operation X is working fine.
    and Phase 4, and 5 huge swings to come.
    i am confident you will like what i have presented on Operation X roadmap, all very clear picture on both huge up and down.

    http://humblestudent777.blogspot.com/2012/06/operation-x-phase-3-rally-is-proceeding.html

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  182. One thing that really jumped out at me on Friday was the miners inability to rally above the 50 dma.
    It really needs to get going soon or else down we go to test the lows at 39.

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  183. people saying $NYAD is indicating a "summer rally".

    but i have a little different view on $NYAD than most people discussing.

    "$NYAD, cumulative NYSE Advance-Decline issues, made a new historical high today.
    last year Jul 7, 2011 $NYAD also made a new historical high with $spx at 1356. that was the high prior to the later black swan crash into Aug 8, 2011."

    http://humblestudent777.blogspot.com/2012/07/nyad-july-madness.html

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  184. Different fundamentals last year. QE2 was coming to an end. The Fed threw about 100 billion at the market in the month of July to try and generate a sustainable momentum move as QE was ending. It failed to work and we rolled over into the summer correction.

    This year quite the opposite. Central banks all over the world are priming the pumps for huge liquidity injections to counter the global economic slowdown. It will almost certainly have the same effect as the last two years and temporarily reflate the stock market and probably a very mild recovery in the economy, at least until commodity prices rise enough to collapse discretionary spending again.

    We'll probably survive into mid 2013 but from that point on the markets will be fighting surging commodity prices and I expect an extended rounded top in equities with a bear market bottom sometime in early to mid 2015 and a much worse recession than what we experienced in 2008/09.

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  185. 2008 crash pattern - Strong sell.

    http://humblestudent777.blogspot.com/

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  186. 1375 MT upside target reached.
    http://humblestudent777.blogspot.com/

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  187. after the Central banks fireworks, and US Independent Day firework
    buy the rumors, sell the news - on central banks actions.
    Global rates cut.
    ECB cuts rates to record low, China rates cut, Bank of England QE...
    Denmark sets a negative rate for first time.
    i think this could be an indication of central banks monetary policy cliff with stagnant economy that takes toll on the global stock market.

    http://humblestudent777.blogspot.com/

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  188. $spx is at the mid blue pitch fork support, after coming down from the upper blue pitch fork resistance.
    http://humblestudent777.blogspot.com/

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  189. ready for a late day rally? target the lower black pitch fork. could worth a weekend buffet.

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  190. $spx and Greece has the same pattern formation.
    http://humblestudent777.blogspot.com/

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  191. by using pitch fork and volume indicator, i was expecting a market down day on Friday, also expect a market down day today.
    http://humblestudent777.blogspot.com/

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