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Thursday, July 26, 2012

Portfolio Change

A portfolio change has been posted to the website.


  1. ovaGold drops after Barrick declines investment in Donlin Gold
    Barrick Gold (ABX) said earlier this morning that the Cerro Casale and Donlin Gold projects do not currently meet its investment criteria and that it would not make a decision to construct them "at this time." Barrick said both projects require large initial capital investments. However, the company added, "They contain large, long life mineral resources in stable jurisdictions, have significant leverage to the price of gold, and therefore represent valuable long-term opportunities for the company. We will maintain and enhance the option value of these projects by advancing permitting activities at reasonable costs which, in the case of Donlin Gold, will take a number of years." NovaGold (NG) owns 50% of the Donlin Gold project. The stock is down 27%, or $1.47, to $3.91 in

  2. The Euro pump this morning was orchestrated by all leaders. Obama does not want the need for QE3 to disrupt the markets heading into reelection. Stocks to keep climbing, PMs and miners choppy at best.

  3. My Personal thanks to Draghi.
    I was able to buy Feb 45 Puts on HD for 30 cents cheaper than yesterday when I was contemplating it!
    Isn't he awesome?

  4. Like I keep saying the powers that be are not going to allow this to continue as a debt crisis. They are going to print and turn it into a currency crisis.

    Between Bernanke and the EU they keep telling everyone this. Today Draghi made it crystal clear that they will do whatever it takes.

    This is going to drive the CRB's move over the next two years.

    Granted it isn't going to fix the economy, in fact it will make it worse at an accelerated pace as surging commodity prices start to deflate the economy even faster.

    One can always depend on politicians to make the wrong long term choice in order to avoid short term pain.

  5. This comment has been removed by the author.

  6. Gary your ignorance is astounding.
    If the debt crisis in Greece which is 1/10th of Spain, could not be resolved with all the "printing", how do you expect Spain and Italy to be resolved?
    ECB started buying Greek Bonds in 2010. Trichet famously remarked, "Whoever is betting against Greece is going to lose money".
    Rip roaring rally on that day if I remember right.
    95% loss on Greek bonds since then.
    You might get a CRB rally.
    You might even get nomnial highs in the S and P 500, if Benny Shoots his wad early.
    Your 3 year Cycle low in CRB will be raped in 6 months max.

  7. I doubt it. In a purely fiat monetary system there is no amount of debt that can't be wiped out with the printing press. Let's use Greece as an example. We've known for two years they were bankrupt and going to default.

    Then one has to ask oneself why it hasn't happened. It hasn't happened because the EU keeps printing whatever is needed to keep it from happening.

    Draghi made it clear today that they will do the same for Spain and Italy and every other country.

    This isn't going to be allowed to stay in the debt markets. This has always been a problem that was going to end up in the currency markets as the cancer moves up the food chain.

  8. BTW just because your HD position isn't working out there's no need to be rude.

    So far other than a marginal move to new highs by the dollar index everything I've been expecting is playing out pretty close form.

    I think we probably have the daily cycle low today instead of next week. Draghi aborted the rest of the move.

    If this is a daily cycle low then one doesn't want to be short, at least for the next 10-20 days.

  9. I shorted HD yesterday at $51.75
    I bought puts today at $1.53 for Feb 45 strike.
    Hope it is amply clear.
    "Let's use Greece as an example. We've known for two years they were bankrupt and going to default.

    Then one has to ask oneself why it hasn't happened."

    Uh what part of Greece bankruptcy has not happened? Every person in that country knows Greece is bankrupt. The Stock market is down 92% from its highs. The bonds have lost 95% of their value (1st haircut and loss on 2nd bonds issued). Which retarded world are u living in ?

  10. Saif and HoHo-TiHo sound like the same person.

    Gary is ignorant...I know X but I'll bet Gary has never heard of X...Gary you were wrong about Y....blah blah...

    These alter egos are becoming parodies of themselves.

  11. Catbird,
    I can Assure u that we are not. TIHO and I disagree on a lot. Although as far as Gary is concerned, we do, like Great minds, think alike.

  12. GDX is quite impressive today especially given that its largest holding ABX is down big.

  13. Wanna see a rocket stock? Look at NSU. Up some 40% in six trading days. 30% since I mentioned it three days ago I think.

  14. saif,

    Then why do you hang out so much on his blog? Shouldn't you be putting your superior brain to work making money?

    Or do you just get your jollies being a troll?

  15. Troll?
    Too much spare time.
    one does not need to be trading 24/7 to make money.
    I thought u would appreciate me more, given as I was the only 1 who called direction and magnitude of the USD move correctly.
    Appreciated or not, it is till fun.
    Also it will be learning experience to put up my trades in real time for others to see.
    Cannot hide from my mistakes.

  16. hmm you still haven't won the dollar bet yet. Since your call the dollar has dropped 2.8%, then gained it back and made a marginal new high and now appears to be on its way back down again.

    You are still a long way from winning the bet.

  17. Gary, the $ is 1.3% away from its high, so how can I be down on any Dollar bullish call is beyond my math. perhaps you can explain. I remember calling for a $ rally sometime near the 80 mark and then again near the 78 mark. The comments on your site will prove that.
    yes I have not won the bet yet.

  18. reverse triangle combo with diamond formation

  19. "In a purely fiat monetary system there is no amount of debt that can't be wiped out with the printing press"

    Gary, do you realize money parked at bank through government bond buying is DIFFERENT from printing money and hand it to every citizen?!

    As long as money or credit does not go into the citizen pocket, there will be no inflation. CPI would remain low.

    Your monetary knowledge is so elementary.

  20. "In a purely fiat monetary system there is no amount of debt that can't be wiped out with the printing press"

    Gary, the proof is right in front of your eyes -- Japan for 2 DECADES!! and COUNTING.

    And Fed did QE 1 and QE 2 for 3 years running.

    So where is all your high and hyper inflation?

    If Ben did another QE3 or Dragi QE1, will it matter ? Explain to me in laymen terms, why QE1 and QE2 has yet to generate the hyper inflation that you have been promising in your promised land??

    Doing the exact same thing and expect a different outcome is an insane.

    But in this case i don't think you are insane. You just SUPER bias to sell subscriptions.

  21. Shawn I've said it a hundred times if I've said it once. Hyperinflation isn't a lock, we can still avoid it if the hard decisions are made. Also hyperinflation doesn't occur overnight and the earliest it could occur would be at the next 3 year cycle low in 2014.

    Even then I think the one after that in in 2017 is a more likely candidate.

    Since the bottom in 09 we most certainly have seen inflation. Oil has gone from $35 to almost $115 and gold from $860 to $1900 so anyone claiming no inflation is willfully being blind just like our government, or you believe the nonsense inflation numbers generated by the government.

    Yes a lot of the liquidity ends up on deposit at the Fed but clearly big chunks of it have found its way into asset markets.

  22. Shawn:

    Don't you know that everything can be explained using Gary's cycles?

    If cycles do not work must be because they are right or left translated!! or maybe because Ben failed to act!!

    Gary is always right, he never makes a mistake!


  23. Pibe,
    Ridiculous. We bought TVIX earlier. That was a mistake. We entered miners too early. That was a mistake. Mistakes are an unavoidable part of this business. No one is immune to them.

    But the combination of cycles, sentiment, COT and money flows & a secular bull market does give me an edge. In the long run the system makes money. In my experience it makes more long term money than any other system I've ever seen.

    That doesn't mean that someone else doesn't have a better system, and certainly there are times when other systems work better, but over the long haul I've never seen anything that outperforms.

  24. One can always depend on politicians..

    One can always depend on politicians to lie. But they cannot lie themselves out of this situation. And the situation is that of total, comprehensive bankruptcy.

  25. Yes but it's not going to be allowed to happen. We are going to print to pay our bills and the bankruptcy will be inflated away at the expense of the currency.

  26. I don't think so, Gary. The Euro will simply collapse as more and more players opt out of that currency. Banks holding Euros will simply blow up as no one will want anything to do with them.

  27. Gary & Saif,
    It was always about the currency(s). Currency crisis is already here and being played out as we speak.

    The DCL was never going to happen next week...the markets always sniff out the play...look at gold and what it has done for the better part of this week. The leaks from the FED to the wsj shills did the job.
    Gary, I dont want to c u arguing against manipulation again after this "you believe the nonsense inflation numbers generated by the government". You cannot use this argument in isolation...so please stop with the contradictions (GOLD).
    Saif/Tiho...how are you guys doing with all those shorts....its a bitch isnt it ?
    Shawn..."As long as money or credit does not go into the citizen pocket, there will be no inflation. CPI would remain low".
    Hmmmmmmm....and what does the government do with the money when the Treasury sells bonds to raise funds to support the deficits. Half the country is either employed by the govt/on welfare. You are showing your ignorance.

    If anyone has not yet had the opportunity to read the book "Currency Wars (the making of next financial crisis) - James Rickards... I would highly recommend. Draw your attention to the last chapter " Four Horseman of the Apocalypse" where Rickards plays out the four most likely scenarios for our monetary system. His last prediction is the one I favor as coming to fruition. If you want a very good appreciation of the monetary system, debt, Gold and the games governments play via currencies, go ahead & spend a few days reading this book. This is a MUST read for anyone who is serious about protecting their wealth. Recently Sprott mentioned his greatest fear...Collapse of the financial system. Ultimately this is what Rickards says is the most likely outcome.

    Gary, yes the governments will attempt to inflate away the debts, but inevitably the markets will reject this.
    For those who keep bringing up Hyper INflation...suggest you actually understand this event before you comment about it.

    Saif..what seems black and white...is but shades of grey. Default is evident, but has not been allowed to be recognised as such, notwithstanding the haircuts.
    FDIC which rules on cds, has not recognised a default event.

    In a world where infinite digits exists, the game will continue until it cannot. What happened with Greece...will happen with Spain..then Italy...then France...Then the UK...then the US.
    Haircut ...anyone ??

  28. Gary is conditioned by Bernanke and other central bankers into thinking that money printing can save us from a recession, unemployment from rising, exports from falling, manufacturing from tanking and Greece from defaulting.

    Gary is what a psychologist would call a Pavlov's dog.

  29. On the contrary, I've said many times that printing money will only briefly pump up asset prices but will do nothing to help the economy. In fact it will accelerate the economic decline as surging commodity prices depress discretionary spending.

    The same thing will happen this time as it did in 2008. The Fed aggressively debased the currency in the attempt to stop the sub prime implosion and the government mailed out free money in the form of rebate checks.

    It had no effect on the mortgage markets, but instead spiked the price of energy which collapsed the economy.

    The Fed is following the same game plan and they are going to get the same result.

    In order to really fix the problem we need a new industry. Something like the personal computer and internet in the 80's and 90's. Something to drive true productivity and real sustainable job growth.

    As long as we keep printing money and bailing out the insolvent banking sector the money that needs to go into biotech, nanotech and robotics is going to keep getting wasted, and this process will be extended for years until we either reverse course and make the hard decision, or we break the currency markets.

  30. Hey Tiho...

    Since you obviously don't respect Gary, why don't you stick to building your own little blog? If you're right about Gary, you're gettin' yourself all worked up over an ignoramus.

    Oh, I get it...because half your readers wouldn't know you existed were it not for your appearances over here.

  31. Hey catbird...

    why don't you stick to commenting on financial markets instead constantly putting forward remarks you don't even know about?

    Oh, I get it...because you don't have clue on what you are doing, so you pay other people to lose money for you.

  32. Gary,

    If I'm not mistaken, productivity essentially boils down to efficiency. In that sense any new industry being developed creates the very thing that we are witnessing in the economy...higher unemployment. Robotics is itself replacing human labour...!!!
    Granted...Building/ maintaining, supporting that industry will require a newly skilled workforce.
    Just as computers /technology have over the last two decades, so too will biotech,nanotech and robotics. Sure they will produce benefits and meaningful employment, but ultimately it will be the productivity/efficiency that creates a new set of problems in the ever increasing unskilled and obsolete employee.

    The solution is not with new industry...it gets back to the fundamental problem with the way the monetary system functions. Debt and leverage over decades, have created false growth and wealth. Sustainable economies do not borrow from the future (credit) and they do not create paper wealth without incurring a cost.
    The unfortunate demise of the financial system is but the only solution. Few people understand this.

  33. LM,
    It is not a bitch.
    I am short AMZN,NUE,HD and I am ok with the positions.
    I will discuss them in 6 months or when I close them.

  34. Tiho,

    Easy there, sport. I can see how chippy it makes you to watch a man you view as a dunce enjoy more success than you.

    I feel your pain, brother.

  35. LM,
    Actually growth is built on creative destruction.

    Oil put the whaling industry out of business but in the long run produced much more growth than would have been possible using wood and whales for energy.

    Same with the car and mass production. Both destroyed many jobs but created more efficient and productive new ones.

    We need to allow creative destruction to occur. Old bankrupt financial systems need to go under and make way for new ones.

    We need to pursue biotech advances that will cure many of today's ills and at the same time eliminate our medicare liability.

    However to do so will put a lot of doctors out of business. If one can get a stem cell shot and fix an arthritic knee there won't be any need for surgeons.

    Understandably the medical field is going to fight this advance tooth and nail and delay the process but ultimately this is what will drive the next bull market and simultaneously eliminate a big chunk of our debt burden.

  36. In order to really fix the problem we need a new industry. Something like the personal computer and internet in the 80's and 90's. Something to drive true productivity and real sustainable job growth.

    That's idiotic nonsense. What WE need is LESS "productivity", and a massive increase in real earning power. WE need to put the shadow puppet masters (The Vatican), their gov mafia, their banks and corporations and their imperialist global slave plantation out of business.

    We need to break their paradigm. YOU need to wake up.

  37. Every bull market is driven by a new technological advance. In the 20's it was the automobile and mass production.

    In the 50's and 60's it was plastics and electronics.

    The 80's and 90's was the personal computer and internet.

  38. Tim Wood On divergences between DJIA and DJTA:

    "The movement of both the railroad and industrial stock averages should always be considered together. The movement of one price average must be confirmed by the other before reliable inferences may be drawn. Conclusions based upon the movement of one average, unconfirmed by the other, are almost certain to prove misleading."
    July 25th, 2012

    "When one breaks through an old low level without the other, or when one establishes a new high for the short swing, unsupported, the inference is almost invariably deceptive.”
    June 18th, 2008

    Tim Wood was able to call several DJIA major corrections and he is warning for another one.

    Tim Wood also uses cycles. It’s interesting how two different cycles theories are able to come with two totally different predictions.

    Ref: http://www.gold-eagle.com/editorials_12/wood072512.html

  39. What do you consider "different"?

    We have a daily cycle low. I suspect Tim is probably in agreement on that.

    No intermediate lows have been violated so no Dow theory sell signal has been given yet.

    Neither the industrials nor transports have broken to new highs so there can't be a nonconfimation until one does.

  40. I'm short Dow Transport stocks. They are breaking down and have not confirmed new highs in 2012 by Dow Industrial stocks. UPS and Fedex charts look awful and their recent earnings are a shocker. Recession is coming.

  41. mika zman said...

    "What WE need is LESS 'productivity', and a massive increase in real earning power."

    THAT is the stupidest thing I have EVER seen on this blog (and I have seen some doozies over the years). Living standards only go up with increases in productivity (and so does "real earning power").

    Tiho said...

    "Recession is coming."

    Not exactly. It's already here. :) When the NBER dates this recession in a couple of years, they will say that it started either last month (June) or this month (July).

  42. I have the impression that Gary dismisses comments that do not agree with his predictions with statements such as "What do you consider different?"

    Tim Wood on CRB:

    “As the commodity complex moves into cyclical low points, they will find a low and a rally will follow. The danger is that most will view the cyclical low points and the advance that follows as an indication that the decline is over. Well, the decline will be over, but based on the structural developments that have occurred, it should be temporary.”

    Gary on CRB:

    “The CRB will begin the next leg up in the three year cycle and gold will start the next C-wave in earnest.”

    I am just quoting here, not making anything up.

    As I stated: It’s interesting how two different cycles theories are able to come with two totally different predictions.

  43. From what you quoted Tim has a different outlook than me on where the cycles are going. That is in the future. None of us can see the future.

    We are in agreement with what is progressing right now.

    It appears that Tim thinks the commodity bull is over. I think that the fundamentals are still intact and that they will improve as countries try to print their way out of their debt problems.

    I think this leg will end with the dollar's move down into it's next 3 year cycle low just like it did last year when the dollar bottomed.

  44. Living standards only go up with increases in productivity..

    Right. And yet, despite all your freagging bull markets and increases in productivity, living standards have drastically gone down in the last 50 years. We have more youth living at home, more unemployment, more debt slavery, and global epidemics previously unheard of in cancer and depression. How do you explain this?

  45. "Since the bottom in 09 we most certainly have seen inflation. Oil has gone from $35 to almost $115 and gold from $860 to $1900 so anyone claiming no inflation is willfully being blind just like our government"

    Oh Gary, I know so well you want to go down this path again about your inflation thesis and selling subscriptions.

    But please, you PROMISED HIGH/HYPER inflation since QE1 and QE2, since 2008.

    The inflation you mention is just Commodity or more precisely ASSET class bull run. Yea, oil went from $30 to $150. But did my restaurant or McDonal meal went from $10 to $50? Did rent go from $1000 to $5000? Did Honda Accord went from $20K per car to $100K ?????

    Gary, again, you are mixing asset class bull run with your imagination of High/Hyper Inflation. You are twisting the facts to sell subscription again and again.

    This is not even compatible to 1970s 20% of CPI a year.

    The inflation we had in the last 3 years is similar to what we experienced from 2000s to 2008 before QE1 and QE2.

    Again, you are just imagine things up to sell stuff. It's o.k to admit mistake once a while, since you are not a God or Saint.

    Esp you said your luxury lifestyle does not depend of selling subscriptions!

  46. My goodness over the last 50 years standards of living have risen dramatically all over the world. We just happen to be in a secular bear market since 2000.

    Nothing unusual about that. A bear market always follows a bull. It's when the excesses of the bull are cleaned out.

    We are in the cleansing process, unfortunately we are fighting it so it's going to be prolonged.

    Despite the occasional bear market living standards have continually gone up for the entire course of human history.

  47. We just happen to be in a secular bear market since 2000.

    Fifty years ago it took just one person to provide for a family. And when I say provide for a family, I mean food, education, a house, appliances, a car, vacations, and all the rest. Today it takes 2.5 persons to provide for the same. People who are working are overworked and overtaxed. Everybody is up to their ears in debt because they can not keep up with living expenses. 40 million in the US are on food stamps. Young adults are stuck at home because they can not afford to move out. Young adults are postponing marriage, a family, because they cannot afford to get married and have a family. People are malnourished and obese from garbage food because they can not afford real nutritious food. And on and on and on.

    This didn't start in 2000. This was already evident in the 70's.

  48. Gary,

    Living standards have not gone up... if anything they have gone down.. get real.

  49. Newmont (NEM) is way oversold. Fwd P/E of about 8. Pays a dividend 3.25%. Looks like another "Value" play IMO.

  50. ILovePMS... living standards are not higher now than 50 years ago? That's 1962.

    They may go BACK to that era, and probably will. But they are significantly higher now on just about every possible metric -- overall wealth, size of homes, number of cars, incomes, infant mortality, longevity.

    We've lost a LOT (the bottom 95% or so anyway) since 2007, and will lose much more. And if an energy poor future arrives, and I think it will, the declines in standard of living will be staggering.

    But it hasn't happened yet.

  51. Ben,
    I don't think U.S. will have an energy poor future. In fact cheap energy is a very bright spot in our future. Apache (APA) recently discovered a HUGE nat. gas discovery that is estimated to be 20% percent of all U.S. reserves, and we already had a lot. Its estimated that we'll have so much that we will become an energy exporter. Buy APA for a good long term energy play IMO.

  52. Wow! What lit the fuze under gold and silver? Sweet.

  53. Saif, Tiho,
    It's not looking very good for the bear market scenario.

    If one was at least aware of cycle theory they would have known it's way too late in the cycle to hold or especially establish new short positions.

    Just give it a one month trial. I think you will be happy you did. And if nothing else you will have another tool to add to your arsenal.

  54. Gary,
    What is your opinion on the "Audit The FED" bill?

  55. I'm all for getting rid of the Fed.

  56. Where would we get our QE? JUST KIDDING - lol -No, I agree 100%

  57. lots of pain in aem, nem 10 years chart

  58. Buy low, sell high? If people don't buy when things are a screaming value play, they'll chase them later, or jump on the band wagon at the top.

  59. Mining shares are the second most oversold in 100 years.

  60. GL, that would be great if it doesn't work out that way. The commodity inflation wave headed to our shores will push commodity prices up considerably. There will be nary a dent in gasoline usage from NG powered cars for obvious reasons. Home usage of NG will likely increase, which will help since there's currently a glut out there. Anyway, we shall see. If we don't see $8/gal gas by 2020, I will be surprised.

  61. Why is it that I'm always here through thick and thin, but the trolls disappear into their cave as soon as the market goes against them?

    Instead of just spreading negativity maybe we could use the blog as a learning tool. Hint hint!

    If one was paying attention they could have learned from cycle theory and avoided getting caught short into this explosive rally.

    36 days into a daily cycle isn't the time to be holding shorts.

  62. Gary,

    If/when we go through a severe inflationary cycle, do you have any thoughts on how real estate would fare during that?

    Thanks, RickH

  63. This would be so much more fun if I was long absolutely anything, but hey what you gonna do?
    That is why I use long term puts as you have a defined risk/reward.
    By my estimate we are entering the highest risk, where fundamentals are deteriorating rapidly while Central banker faith is reaching stratospheric heights.

    Marginal new highs are possible in the S and P and would confirm the kind of top we have always seen, with fewer stocks making 52 week highs than before.

  64. That is exactly what I've been calling for. A move to marginal new highs and a final top sometime in 2013 after a very extended topping process.

  65. GL...its literally screaming "BUY".
    The consolidation is not over just yet though. Still needs to work through the 1640 level and then the 1680 resistance...but promising nonetheless. I would be concerned with this current move until confirmation from the next FOMC (next week). Watch for the shorts to come back in early next week and try and push it back down....just before the fed meets.
    Jawboning (ECB)does move markets, but they have to follow it up by walking the walk. Front running will again be evident..just watch.
    Would like to believe that its going to be as easy as this...but it never is. Either way GOLD still looks very good for the rest of the year even if it does have another drop from here. Bought more physical in any event week prior....was too good to be true.

  66. Rather than the materialistic metrics/views on what "Standard of Living" is what about some of these:
    -Poverty rates
    -affordable healthcare
    -income disparity
    -life expectancy
    -comfort and access to affordable housing
    -quality of education.
    -number of hrs of work required to acquire needs/necessities.
    -prevalence of disease.
    It is a subjective measure and can be distorted using normal indicators particularly across the diverse socioeconomic classes.
    What is of primary concern in that sense is the distribution of income and how that disguises actual living standards.
    If one were to use a heavier weighting of some of the above measures, then it would be clearly evident that standards are not improving across the breadth of low and middle classes. The upper class should not be included in any measure of SOL without an appropriate % of population adjustment. That class does severely distort means/averages.

  67. Gary @ 2:19 pm

    Spreading negativity gets so much more attention than putting forth your opinions and having debates like grown ups should.

    Especially when you have no respect for the blog and are exploiting it just to promote yourself.

    Hmm...who does that bring to mind...

  68. Gary said:

    Saif, Tiho,
    It's not looking very good for the bear market scenario.

    My view is different. Here are some points for those interested in real market discussions with facts:

    1.) The bear market already started in May 2011, you just might not see it yet. After all, you do suffer from US-centric views and fail to follow globe asset markets from the evidence I've seen. (chart here)

    2.) US equities are barley holding on. Index gains are being masked by massive underlying breadth weakness and huge outperformance of defensive sectors. Cyclical sectors, that are economically sensitive, should be rising strongly, if this was a real bull market. (chart here)

    3.) According to the most followed sentiment survey in the modern history of equities, Investor Intelligence Survey, which tracks dumb money newsletter writers (think Gary) - there is no fear right now. Where are the bears to create a wall of worry so prices can climb? (chart here)

    4.) We remain in a period of high volatility, as can bee seen with huge Dow Jones point swings. During periods of high volatility, whenever VIX comes close to 16, it is a huge danger zone and a sell signal. We are currently in the danger zone - get out of equities! (chart here)

    5.) Speaking of VIX, if this was a real Euro currency bottom / US Dollar top, why didn't we see a capitulation and Volatility spike? Dollar top in early 09 and June 10 so large VIX spikes. (chart here

    6.) Finally, the Gary indicator is flashing bullish sentiment again. Didn't you establish short Nasdaq position at the recent trough several days ago and admitted that a bear market could be starting? And now that the market rallied for only 3 days, you are telling us the bear market is not coming? It seems to me flip flop more than Brazilian Havaianas, just like a true sentiment indicator!

    Once again I will disclose what I am doing: I am long Commodities because they are in a secular, especially a large Silver position, as well as minor Agriculture positions. As a hedge to my longs, for several weeks I have been short with minor positions Junk Bonds, and recently Dow Transports and Tech stocks in the US, as I expect disorderly EU default is coming up... and so is a VIX SPIKE!

    Remember guys... when VIX goes above 40/50 and Gary starts yelling the end of the world, like August 2011, its time to cover shorts / hedges and remain PMs long. here is a quote from that post:

    "Stocks on the other hand, after what should be a very convincing bear market rally, will roll over and continue down into a final four year cycle low, probably in the late summer or early fall of 2012.

    Depending on whether or not the Fed tries to fight the cleansing process stocks should either test the March 09 lows, or if Bernanke tries to stop the bear market with another round of quantitative easing, we could see the March 09 lows breached.

    Either way I expect that 2012 will go down as one of the worst years in human history. Certainly in the same category as 1932 if not worse."

    Now that is a buy signal!

  69. Furthermore, for those who are interested to see what type of an opinion I held in August, September and October of 2011 - please refer to these two in-depth articles, which portrayed my thinking process at the time to see why stocks were at the bottom. (Part I & Part II)

  70. I don't trade the European markets or Asia. My call for new highs has never had anything to do with any other market than the US market. I don't have a cycle count on foreign markets so I don't trade them.

    Next the short trade was purely a trade on a move down into a DCL. I exited the very same day as I got the feeling stocks weren't ready to move down yet.

    You and I both know that there is a lot more to sentiment than just the II survey. Actual stock market sentiment is neutral at best with many conflicting surveys.

    The AAII survey is showing extreme bearish sentiment(bullish for the market). Even the II report is only modestly bullish. At present not even vaguely close to the kind of sentiment extremes we saw at the 07 top or even the 2010 and 2011 tops.

    Yes the VIX is low but then the VIX remained extremely low for most of the bull market from 2002 to 2007. It stayed mostly below 20 from 2004-mid 2007. A reading of 16 on the VIX is certainly not any indication of a bull market top.

    The fact is that so far the market is doing exactly what I've been expecting it to do, and that is for the dollar to move down into an intermediate cycle low. Which will drive the CRB out of it's three year cycle low and stocks back to at least marginal new highs with a final top expected sometime in 2013. Followed by a grinding bear market into a final low in late 2014 or early 2015 as the dollar rallies out of it's next three year cycle low.

    If you weren't such an ass all the time I probably wouldn't even bother to remind you about the burrito bet if I win.

    But since rude behavior seems like a habit with you I'm going to find it very hard not to rub it in when the S&P moves back to new highs and you have to pay up.

  71. BTW here is the actual returns of one sub who has followed the SMT since April 2011.

    "Accounts +37.44% since April 2011"

    'At ease'

    Stocks are up less than 5% during that period and gold 11%. Silver and miners are down.

    If the SMT is dumb money how can we have beaten the market by such a huge margin?

  72. Tiho,

    Very good article. What is your take on miners right now?

  73. Sorry but I like to quote.

    Quoting Gary on August 2011 report:

    "Most breakouts fail, so I wouldn't put a lot of faith on a breakout leading to a sustainable rally"

    Gold just broke out the $ 1620 "barrier". I am wondering if this is another fake breakout like the one gold did in 2008 before bottoming.

  74. Two points:

    1. My call regarding any burrito bets is that Gold has NOT YET bottomed. Correct me if I am wrong, but the bet I took with you is that Gold will break $1530 support and thats all. Nothing to do with stocks, bonds, currencies, housing prices, Chinese economy, Euro default and whatever else. So a new high in Gold in 2012 and you win. A break below support, which is my view, and I win. Simple. To refresh your memory, you stated Gold will NEVER see lower prices than $1530 in this secular bull market, just recently in middle of June. No flip flopping please!

    Also you never won any bets previously either, coz you FLIP FLOPPED when you said higher Dollar ages ago, than lower Dollar just recently. Flip flop calls do not count buddy. Here is a link to if you do not remember - a major Dollar sell off on 01st of May. And I quote:

    "It may not seem like much happened yesterday, but a very important event occurred. Yesterday the dollar index breached 78.65. The reason that is significant is because 78.65 marked the intraday low of the prior daily cycle.

    A penetration of that level indicates that the current daily cycle has now topped in a left translated manner and a new pattern of lower lows and lower highs has begun."

    Lower lows? Just the opposite happened. Quote continues:

    "In this case it would indicate that the intermediate dollar cycle topped on week two and should now move generally lower for the next 10-12 weeks, bottoming sometime in late June or early July, about the time Operation Twist ends."

    The Dollar was much much higher during the end of OT. Than Bernanke extended OT and it still went slightly higher again. As a matter of fact, the Dollar posted one of its greatest rallies ever witnessed in the history starting on 01st of May - a record 14 up days in the row. If someone just pressed buy button instead of sell button when you said so, they would have killed it. See... you are a contrarian indicator!

    2. And I think you are an ass, coz you call people who disagree with your calls trolls. Nothing crap about my posts. They are just various tools, facts, opinions, technical points, fundamental outlook etc etc etc, that disagree / challenge your viewpoint. And even though it might not be right or some people dislike it, its freedom of speech. I hope that is allowed.

    No one is putting a gun to your head and pushing you to follow what I'm saying / doing. Same way I do not follow what you are doing - as a matter of fact, it has become obvious to many that trying to do the opposite of you in the short to medium term creates gains. I understand we are both betting on a long term PMs spike, but that is a long term trend - just buy and hold!

  75. Pibe said...

    Very good article. What is your take on miners right now?

    Thank you. Well, I was interviewed by a Gold site on 26th of May - interview is on my blog for those interested. I stated that Gold miners have not completely bottomed on 15th of May and that it was totally absurd to think that Gold Miners were going to bottom on a V trough alone. I called for a retest of lows in coming months. Here we are down the track and Gold Miners recently have retested that low. All well and good.

    A buy signal has been given technically in recent days of this support level - GDX at $40. Furthermore, sentiment has been so negative on the Euro, on Gold, on Silver, that is makes sense to see a rally from these levels. A short squeeze for example. Consider that COT positions on Silver (my biggest holding) is at 6.6% of Open Interest. There are only 6% net longs on the futures market and the average of the last 5 years has been closer to 24%. Hate is present in the PMs market.

    Let us also remember that typically, since 1969, Gold tends to do very very well in August and September. It also tends to do very well in November and December. So one can conclude that a current PMs seasonal period from August until new year is favourable for bulls. That is another strong reason to buy.

    Having said that, I am not convinced this is a final low - just an intermediate low, as much as I am not convinced that Gold has bottomed either. So for those buying, don't bet a farm on it. It is possible to see Gold fall hard if a EU country defaults. Let us remember that Gold is up 11 years in the row and that is not normal. Gold has not yet even experienced a 20% pullback on closing basis from August 2011 peak - and a 20% is typical bear market.

  76. Tiho,
    Though I don't always agree, I do enjoy reading your opinions. You do express your self very well. Let me ask you this: why will PMs fall if a EU country fails? Wouldn't the be a fear event? Help me understand.

  77. GL,

    During a credit event assets are sold to redeem credit. As the banks and national governments in Europe and elsewhere blow up, they will be forced into liquidating their assets against credit owed. Gold is one such asset.

  78. First off I was prepared to agree with you on the dollar when it made the slightly lower low, but it turns out I was right after all and the dollar did make a higher high.

    You are going to lose the gold bet also. Gold has completed the B-wave bottom and we aren't going to see sub $1523 for the rest of this bull market.

    I don't mind a civilized debate but you are clearly here to just be rude. So here is a taste of your own medicine.

    Only a dumb money trader would even think of being short this late in a daily cycle.

    Next the big money or at least quick money isn't going to come in the precious metals sector right now. Especially silver. It's a broken parabola for goodness sake. Those take a long time to recover from.

    The metals at best have one more daily cycle higher and gold will probably only reach $1700 during this intermediate cycle unless Ben gives us QE next week. If that happens maybe $1800.

    Gold is going to be moving down into Sept. Why? Because that's when the next daily cycle low is due.

    The fast money and quick gains are going to come in the energy sector and probably biotech.

    The time to press the precious metal sector is during the next intermediate cycle as that will unfold during the high demand holiday season.

    The powers that be have stated over and over that they aren't going to allow a debt crisis to happen. They aren't going to allow defaults. How many times must they tell you this before it finally sinks in?

    Draghi told you again on Thursday. Apparently you are hard of hearing because you ignored the warning again and got caught in a sharp rally out of the daily cycle low.

    Even you yourself expect the dollar to fall because sentiment is to extreme yet you continue to hold shorts. What are you thinking?

    You appear to be a smart guy but for the most part you seem to have trouble putting two and two together and have almost no clue as to how human emotions drive markets.

    In case you haven't noticed fundamentals are completely meaningless most of the time because emotions are much stronger.

    Cycles are basically just a way to quantify the extremes of human emotions.

  79. Mike,
    Apparently you haven't heard of this new invention called a printing press.

    Countries will not liquidate assets, they will print money. Have you not been paying attention for the last three years?

  80. I would be very cautious here with any consideration that we are out of the woods yet.

    I see the dollar cycle as day "28" and that Friday's action actually saw it go positive - if for only a brief minute....that tail / wick is ugly for dollar bears if u ask me.

    Its just as easy to consider an additional daily cycle before seeking the ICL...as this would also explain lackluster move in Gold...not to mention CRB now at monthly "upper resistance trenline".

    In my view - the GDP number will not allow Ben to make a move here this week - which also lines up well with large scale disapointment/selling - and Elliot Wise....why not the beginning of P3 type action with Fridays highs (or perhaps small bump Monday/Tues) being Wave 2 high?

    Risk related currencies are all at long term lines of resistance as well...and frankly (NZD) in particular has already rolled over on 4H.

    Ive caught up / learned this cycle bit - now coupled with currency view - looking like a pretty powerful combination, coupled with solid fundamentals.

    All looking like (and unfortunatley so) we hang on the words of the Benster this coming week - with a larger bias towards downward price action - and general market disapointment.

    Your thoughts /consideration of this scenario would be greatly appreciated Gary....cant be out of the realm of possibility?

  81. Hi Tiho and all those posting negative comments:

    Why is it that you target Gary, is there no other service that is wrong.. I dont think Elliot Wave International has ever been right for the past few years.

    It seems almost that you guys seem to take your frustrations here on this blog.

    Please if you can make your comments a little less aggressive and stop finding fault with gary's analysis every day.

    you made the point about Gary's analysis, once,twice and numerous time and we get it.. can you please add anything new.. this is getting really boring and annoying.



  82. I'm not after fast money or power trades or cycle entries. I'll leave that to awesome timing professionals like you, judging by your awesome cycle entries and timing, I could not even come close to our amazing skills. Therefore, personally I invest regardless of what you think I should do for the next couple of weeks and I do not trade in and out of my entries, nor flip flop once I make my decision.

    I'm long Silver and Agriculture not for a quick buck or a next cycle, but for years to come. It does not even worry me what you think of Silver over the coming few months, because I know it will go so high in years to come that I will be very very very very happy with a fortune I make. It will go much higher than $50, much much higher into triple digits.

    Furthermore, I'm short Junk Bonds, Tech and Transport stocks, not for the next cycle or whatever you count in days or weeks, but for a whole up and coming bear market. Yes, I still believe we are in a secular bear market and in coming quarters or years S&P 500 will move towards or even below 1000 again. VIX will spike again. That is when I will cover, regardless of your short term genius calls.

    You obviously haven't heard of investing, that is why you jump in and out of trades. Fine, that is your style. But I invest and your short term cycle counts are meaningless to mean. Totally meaningless. I'll repeat... your wisdom regarding weekly cycles is about as important to markets as Draghis comment about printing more money - the economic activity is going into a recession regardless!

    I'm looking at the record earnings, record profit margins, amazingly low cash levels in mutual funds, money market funds and even Rydex cash funds. I'm looking at very low default rates in junk bond markets and very low credit spreads. All of these signal a top is here, or close or in not too distant future. GDP below 2% has always... and I repeat... HAS ALWAYS stalled the economy into a recession over the last 60 years.

    Will this time be different?

    Finally, I am looking at 5 out of the major 10 sectors failing to advance to new highs in 2012. Have you noticed half of S&P 500 sectors have not made new highs since May 2011? These include Energy, Materials, Financials, Industrials and another major index itself - Dow Transports.

    Recessions tend to occur every 3.5 years during secular bear markets. We are probably approaching or already in a recession. I am short stocks for quarters if not a year or two from now. Who gives a you know what about your cycles counts for the next few minutes, few days or few weeks. Totally meaningless in my opinion and in couple days, couple of weeks or couple of months from now you will realize that we are once again in an EQUITY bear market.

  83. anyone surprised? other than Gary


  84. I agree with Tiho here with respect to topping process and the longer term view of U.S recession /global for that matter.....as well looking to get very very short here at long term top (via currencies)

    The long term vs short term trading is an age old argument / personal choice - and each to their own in that respect.

    I make a living doing this so....as required in my trade plan - I extract profits weekly..and often jump around like a rabbit. I dont have the luxury of sitting on longer term trades....as much as I wish!

    Keep in mind... I already live on a beach on the Mayan Riviera, have no children or wife.

  85. Blog,
    That is a possibility but I'm leaning more heavily toward the cycle low occurring on July 19th as that is right in the middle of the timing band for a low. The dollar should now be in a failed and left translated cycle which should market the move down into an intermediate low.

    Another consideration is the obvious cycle low that has formed in the stock market. It's way too early for a new cycle to roll over which also concurs with a continued move down by the dollar index.

    All in all everything is lining up to follow my expectation for a nominal new high in stocks and a final high and extended topping process sometime in 2013.

    I actually think Ben is going to pass on QE at this meeting but that won't prevent stocks from continuing higher. He will probably freakout and crank up the presses in Sept or Oct. as the market moves down into it's next intermediate low.

  86. Sounds more than fair enough Gary....as the interpretation of these things can always be viewed from the "other side".

    Near term I just have trouble wrapping my head around much further upside in equities here - and even less... as Ben is set to disapoint.

    Dolla does appear to be in left translated downward cycle by breaking previous DCL....but...Fridays action was concerning to say the least.....

    I stay nimble at times like this...and will go with the flow in either direction on the turn of a dime.

  87. You are a very lucky and forunate man to be living in Mayan Riviera. I work and live between Australia (mining related) and also in HK (financially related). One day, when I plan to retire I will chose something similar, but I am in my mid 20s and still too young to be thinking about that living in such beautiful places. More hard work and sacrifice is nesseccery, otherwise those amazing beaches would spoil me too much haha.

  88. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/07-2/Stock%20vs%20PB.jpg

    Excellent chart showing how isolated
    The US market is.

  89. Mid 30's here Tiho...and been around the world n back since leaving Canada some 12 years ago.

    I got involved / intersted in search engine algo's long before search engines where...well... really anything more than directories..so......

    Interesting how bold /strong your opinions/views are for such a relatively young guy.

    Considering your age - I find it difficult to imagine youve amassed sufficient capital to really put much of it to use - even moreso considering you are a "long term" investor.

    How / when do you expect to make any money if none of the cycles/dailies are of any interest to you?

    In any case...not to plug up Gary's blog with personal back n fourths...perhaps we can make contact otherwise.

  90. A very important point which should not be overlooked regarding gold is that the two daily cycles which formed within the triangle consolidation both carry a LT nature. Left-translated daily cycles are an indication of an intermediate decline. In other words, gold likely just printed an intermediate low, not just a daily low.

    Of course, this labeling gives us a 10-week intermediate cycle, but triangle consolidations almost always truncate cycle counts. So I will not be looking for an ICL from the yellow metal in early autumn. Rather, I believe the stage is set for gold to test its ATH as price spends the next 3-4 daily cycles playing out an intermediate cycle ascent.

  91. I'll be willing to make a burrito bet that this is not a truncated cycle, but a normal cycle that just had the first half of it taken up by the triangle consolidation.

    I expect gold to put in one more daily cycle higher as the dollar moves down into an intermediate low, followed by a move down into the normal timing band in Sept as the dollar rallies out of it's intermediate bottom.

    I think that dollar rally will be left translated and drive the next leg up in commodities and the breakout move in gold next year.

    It will also confirm that the dollar's three year cycle has topped.

  92. Gary, I'm well aware of your position regards the "printing press". My position is that creditors will not accept this, and will force liquidation of assets. In this case, it is the US who is the ultimate creditor, and the US has the means to force its will on Europe, lip flapping by some European primadona notwithstanding.

  93. Now we know why you have such poor behavior. Your still very young, with a young mans high testosterone levels.

    Ah testosterone, the root of all evil in the world. Unfortunately also necessary for the propagation of the species.

  94. The Document,

    Remember the gold triangle from Dec 2007 to Jun 2008? It also initially falsely broke to the upside (on low volume -same as today-) to reach the bottom three months later (I would not trust the so called cycles theory to find the gold bottom.)

    I agree with Tiho that gold has not reached the bottom yet but it is also true that the current set up for miners, silver (or even gold) seems to be attractive for somebody willing to take long term positions -that does not mean that the HUI cannot lose an additional 30-40% from today's price.

    Buy and hold seems to be a winner at today's prices (specially for silver). It's easy to buy and hold bullion and you do not have to put up with the financial Guru's nonsense of trying to guess bottoms.

    Jesse Livermore:

    “I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, “Well, you know this is a bull market!” he really meant to tell them that the big money was not in the individual fluctuations but in the main movements – that is, not in reading the tape but in sizing up the entire market and its trend.”

    “And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying and selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine – that is, they made no real money out of it. Men who can both be right and sit tight are uncommon."

  95. Gary,

    Triangles end cycles. They don't begin them. So I'll take the burrito bet. If we see a RT daily cycle followed by a LT cycle, you win. If we see several successive RT cycles, I win.

  96. Pibe,

    Gold was set to head into its multi-year cycle low in 2008, so a strong move to the downside made sense. Today's situation is very different. Gold is merely consolidating last year's massive rally, and the next multi-year cycle low is not due until 2016/17. So I expect a very different result here.

  97. The Document,

    You might be right. This time might be really different. All I can say is that I am glad that I had bullion during that time, otherwise I would had sell at the bottom (when everybody panicked).

  98. I have never seen anyone claim that they are better than 95% of the worlds hedge funds. So it's not testosterone, it's your outlandish claims.I think you are a contrarian indicator at best. If you don't believe me just read previous posts of your blog over the last 12 months. It's just hilarious to think you are better than even 5% of the worst hedge funds in the world.

  99. And for the sake of the debate, I subscribe and post on other forums / websites / blogs and I am polite. I have never seen any other service claim they are better than 95% of hedge funds.

  100. The fact is that over the last couple of years we have massively outperformed almost every hedge fund in the world.

    Maybe that will change over the next two years, but I doubt it. Why? Because my system gives me a very good edge in the market. Combine that with a secular bull market and it's a combo that's pretty hard to beat.

    I already posted subscriber 'at ease' 37% return since April 2011 and that doesn't even include the huge gains we achieved by riding the silver breakout.

    But we'll see how it goes from here. So far over the last year we are only up a little over 9%. Not spectacular by any means but considerably better than the stock market or gold during that period.

    I believe my system will continue to beat the S&P and the vast majority of fund managers for the duration of the gold bull.

    And I think I will easily outperform your buy and hold strategy, especially if you continue to short stocks at daily cycle bottoms.

  101. I am constantly amazed at your comments and lack of ability to think things through, and yet you claim you are better than 95% of hedge funds. Despite many cycle bottoms which you count in the stock market, the market has actually gone nowhere in the last 2 years. (chart here)

    Majority of the gains always occur during the initial recovery, which was upto April 2010. That part was a natural rebound in economic activity, strong earnings recovery and manufacturing expansion. Since than, market is barley up 10% as of this Friday despite QE2, Opertation Twist, LTRO and now OT 2, various rate cuts by global central banks. MSCI World Index is actually down since April 2010.

    This is not a self sustained recovery. Are you honestly blind or just a short term trader?

    If I shorted the S&P 500 market at the April 2010 peak, I would only be down 10%.If I shorted the MSCI World Stock Index I would be up a few percent since 2010 despite all of your cycle counts, all of the QEs and LTROs and all of the comments by Bernanke which make you flip flop every second week.

    So why would I be scared shorting it here at even better entry points, just coz someone believes more stimulus is coming? Besides if they print money again, my Commodity longs in both PMs and Food will go through the roof.

  102. In case you were wondering I'm playing those same commodity longs. I'm just not losing money with any shorts.

    In case you haven't noticed over the last 12 years, stocks and commodities are going up together. Why? Because they are both being driven higher by currency debasement. When stocks go down commodities go down harder because they are more volatile.

    It makes no sense to be long commodities and short stocks other than during the very ending stage where commodity prices are ramping higher on pure momentum and the economy and stock market are tanking from inflationary pressures.

    This is what happened in early 2008 as oil was moving into its final parabola. The economy and stock market had already started to tank. It wasn't long before the energy markets came to their senses and oil ended up dropping much harder as it caught up to reality.

    Like I said you seem like a smart guy but I have to wonder how you can make money when you don't comprehend the big picture or even what the major driver of the commodity bull is at this stage of the game.

  103. If something doesn't make sense to you, do not automatically assume that it doesn't make sense to others. Than, all of a sudden you now pretend to be smart because some of us have apparently missed something that you see. You really should think things clearly through... here is an example of what I am doing:

    Since you run a newsletter service, you probably do not understand what it is like to be constantly invested in a fund. So I understand you deploy your cash into the next "best trading movement". Fair enough for you and your cycle strategy. Most funds have to be invested and with those investments you need to also have hedges to protect yourself.

    So this is how I have experienced my strategy, similar to chess:

    I have opened commodity longs at times where I think they are down sufficiently enough from the recent peaks and are forming bases or bottoms. I was correct to believe Grains were at a base or a bottom and recently they have exploded upwards. Softs are also basing now. I remain bullish on Agriculture.

    At the same time, I believe I am entering equity shorts near rounding tops with limited upside left as we are in a secular bear market trading range. I believe with CAPE10 of 21 (not sure if you actually know what that is) S&P is way overvalued and not yet ready to start a secular bull. Therefore, we most likely will not break above 1,550 for the S&P for years to come.

    Therefore, when commodities spike in a final mania, I will than sell them for a handsome profit much much higher from here. When stocks collapse for one more final bear market of say anywhere between 30% to 40% or even 50% (common in secular bears), I will sell them for a handsome profit too.

    You see, if commodities spike tomorrow, stocks won't go up a lot with them. If commodities do not go up tomorrow and both go down, I will profit with my hedges that protect me, than I will reinvest all my profits into buying more commodities as the recovery will be huge when they print money at cyclical bear market lows and the drawdowns I hold will be cost averaged as a long term investor in a secular commodity bull keeps adding low and selling high.

    It all makes a lot of sense without trading in and out positions as a very good long term strategy. It makes a lot of sense for those who understand it.

  104. Tiho, could you tell me what commodity ETFs you are invested in and are bullish about long term? I would like to diversify out of PMs.
    Jim Rogers is nuts bullish about agriculture but I think his time frame may be in the decades...


  105. smart bullion - I own RJA for Agriculture. I believe in Rogers way of investing and his ETF is diversified into all Grains and Softs with a great balance unlike other ETFs.

    I was personally recommending Agriculture in late May of this year and specifically Wheat. (chart here) I have wrote about it many times on this blog, despite many bears saying Wheat will crash due to constant media pessmesism of oversupplies (article here). Even Gary dismissed it, and he is better than 95% of all other gurus. My favourite agricultural commodity for the long run is Sugar and my favourite commodity of all is Silver. Both of those will create fortunes for the long term buy and hold investors, who do not get shaken out, just like Old Man Turkey wouldn't.

    Would I buy or add to Agriculture now? Maybe... mainly Softs but only maybe, but not Grains as of today. Corn, Wheat and Soybean sentiment is very high and so are COT positioning. They had a big run up already and DSI on Corn, Wheat and Soybeans is all above 90% bulls as recently written on my blog. I do not like buying anything at 52 week highs or record highs as an investor. Soybeans and Corn made all time record highs recently.

    Having said that, I am not selling either, as I believe next year and year and year after that, higher prices are once again in store.

  106. Tiho,
    Sounds like "Strategies of a big fund player" with all those plays. How has all of that played out for you to date...given most fund players are doing poorly not demonstrating a successful record over recent years. Even with all their sophistication and fees, they haven't delivered.
    Hedging is a good strategy I would agree...but the ultimate hedging strategy is in Physical Gold. Trust you have your fair share for when your strategies dont go according to plan.

  107. Tiho,
    Just out of curiosity...do any of those ETF's take physical possession (grains and soft commod.) or is it all paper owned?

  108. Tiho,
    Thank you very much for your assistance.
    You appear to have a large brain.
    When you say "both of those will create fortunes for the long term buy and hold investors, who do not get shaken out, just like Old Man Turkey wouldn't", have you any idea what time-frame you are talking about (ballpark)?

  109. Liquid Motion - I own various ETFs for commodity investments and those strategies are exercises through long term view via those vehicles. Regarding my performance, we do not need to hide anything - they are as follows for this year:

    - On the long side Silver is flat, Agriculture and mainly Grains are through the roof as you well know yourself if you read papers or watch Bloomberg. There is panic due to weather, but that is only masking the real problem - huge shortages and low inventories.

    - On the short side I just opened stock shorts. I actually opened XLK short on Friday, and IYT short previous a week or so ago. Dunno what they will do, ask me in a few quarters or a year. I know all of them have more than doubled since March 2009 lows, and this is a secular bear market with the PMI about to go below 50 again and US GDP at stall speed below 2% with EU and China in a huge slowdown, which always sends the globe into a recession. I assume this time won't be any different and the next major move will most likely be down. When? I dunno in 5 days or 5 weeks or in 5 months maybe...

    - Finally, shorting Junk Bonds is flat too (don't look at stockcharts.com for total return of junk bonds, look at actual nominal price of JNK or HYG - chart here)

    I have not closed any position.

  110. smartbullion - I am not very smart. That is very much so the truth and I am not just saying that. I do not think I am better than 95% of hedge fund managers nor smarter than them. When I read investment letters from Ray Dalio or David Einhorn or even the old ones from Michael Steinhardt, Julian Robertson or read Soros's trading dairy out of Alchemy of Finance, I think to myself - these guys are awesome, I'm not even remotely close.

    But, one do not need to be on that level either, because in all reality it is quite simple and basic. Just look it all up throughout history, it all has all happened before. However, as Warren Buffet always says: stocks do not beat people, people beat people. And as Livermore always said: trading is very damaging to ones capital and it took him until he reached his mid 20s to realise that.

    As for timing I do not know the answer exactly. I do know however that most secular bull markets in commodities have lasted from 18 to 20 years. Just look up history once again. I do not think this time will be different and should follow similarities like before. Here we are soon to be in our 14th year of the commodity boom by 2013, as we started from a 1999 low. So maybe in the next several years commodities will be much higher than today.

    At the same time, during the next several years, at some point I imagine S&P 500 will retest that 1000 low (at least) as it is now once again approaching the higher end of its trading range and those who do not have hedges should think about putting them on. (chart here)

  111. Tiho, thanks.
    Much appreciated :o)

  112. Very interesting article from somebody with a very good record (you can check out his past newsletters from 2005 -he was most of the time right!-)


    Very good and surprising article indeed.

  113. I will say one more thing before I get back to work:

    Pibe, your link is great. Puru Saxena is a great fund manager. I have attended his speeches before in Asia and have watched him many times in various interviews.

    He is very young and a total genius! I hope I can be as smart as him one, regardless of if I agree or disagree with his views on the markets. His thinking process is of a master chess player!

  114. Tiho,

    What do you think about Puru Saxena?

    His record seems to be very good (according to his past newsletters from 2005) and nobody in this board seem to even imagine what he is predicting.

    If he is right your whole strategy (and Garys, part of mine and most of us in the PM sector) would be doomed.

    Any thoughts?

  115. I read Barry Banister too and receive his newsletters on regular basis thanks to a trader mate of mine in Sydney, so I have seen the 10 year rolling annualised return charts before in many of his newsletters. Barry thinks commodities have now peaked and he called their low in 1998 too.

    If Barry and Puru are right, and Gary Shilling as well mind you, than you yourself should have some hedges to protect yourself if commodities decline further.

    In case economy goes into a recession and risk assets fall - CRB could fall towards 2008 lows. However, if that happens than earnings in the US will collapse too and I can tell you that if CRB falls to 08 lows, than S&P 500 or Nasdaq will crash and most likely half from here!

    You will make more money shorting stocks here than commodities. On the other hand, if they are all wrong, stocks do not have great upside as they are in a trading range and S&P 500 is close to the upside major resistance from 2000 and 2007. Therefore, on the long side you will make more money in commodities than buying stocks.

    Let us assume economy crashes globally thanks to China and EU default, and you make money in shorting stocks and lose money in long commodities, you can use profits to buy more commodities by closing stock shorts, because politicians from EU to US and UK to Japan will PANIC like in 08 and they will print money. Than Gold / Silver will go vertical and you can make a killing!

    Therefore it makes sense to protect yourself by being long PMs and Agriculture and keep adding on major sell offs; while being short stocks, especially bubbles like Nasdaq with Apple in particular, that has a market cap bigger than Utilities, Materials or Telecom.

  116. Speaking of Apple and bubbles and why I am short US Tech as a hedge to my commodity longs, Alan Newman who has a Crosscurrents newsletter that I read regularly, recently stated that from March 2012 to the end of May 2012 -

    (in my own summary form his long newsletter)

    "Apple accounted for $1 for every $16 traded over the NYSE and Nasdaq exchanges. He went onto say that this could be the MOST CONCENTRATED volume activity ever witnessed in a single US stock and his research went back to the early 1900s.

    Mr Newman went onto say that apparently the dollar traded volume relative to GDP for Apple in just this period of three months equated to all business transacted for the entire country during the three months period of GDP.”

  117. Tiho,
    Is that what you took away from my statement, that I think I'm smarter than most hedge fund managers?

    Smart has nothing to do with success in the stock market. One can be a Nobel price winner and still go broke. Oh yeah that's right LTCM already proved that.

    I don't have an IQ of 160 and I'm certain I'm only a little above average in intelligence.

    The reason I've outperformed most fund managers is because I have a better system, I'm more disciplined and my father ingrained in me limitless persistence to stick with something until I achieve my goal.

    At age 14 I had already won my first nationals in Judo. At sixteen my first national powerlifting title. At 27 my first olympic lifting national championship. At 36 I set two world records in the masters division in weightlifting. The last two years I've won the national masters and was best lifter. Every business I've ever owned has been successful.

    I've never succeeded because I was smarter than the other guy. I've succeeded because I keep trying till I reach my goals and there has never been one that I didn't eventually achieve.

    I brought those same qualities to bear on investing. I lost money just like everyone when I started and for several years. But instead of quitting I kept trying until I found what worked and I keep trying to perfect the system everyday, and I have the discipline to follow it.

  118. Credit to you for all your success and I wish you much more of it in the future.

  119. Thank you. I like the polite Tiho much better.

    Him I could share a burrito with, no matter which one of us ends up having to pay for it :)

  120. Pibe/Tiho,
    That's interesting (saxena and bannister) comments about commodities over the next decade.
    If indeed they are correct it would imply a lot of people are wrong.
    Also I would add that it would be counterintuitive to assume that inflation will not continue to be present over the years ahead. Money suppy increases are by definition inflationary. I suspect that time lags and mis-reporting do not give true inflation indicators. What is evident although is cost push inflation and this is being felt across the globe. This will only exacerbate the issue relating to commodities and their trend in prices because when it becomes too cost prohibitive to mine them (profitability drops),supply falls to compensate/ prices of commodities actually increase.
    I also suspect that China reported slowdowns may be exagerated and that any slowdown will be a blip on the scale of China's surge.
    This Q3 may in fact be the low or turning point before the pace picks up again. (yes I understand the threat that is EUR/US).
    Keep in mind that they are bringing 500MLN people from poverty to middle class. That is something the world has never witnessed. It will put undue pressure on supply of all commodities and food items. Scarcity of arable farming land is a major threat to their goals (Rogers call on agriculture - his call is not specifically AG...but moreover FOOD SCARCITY).
    China is not the only country trying to achieve this monumental feat or to protect its citizens where the real crises will be in food supply.

    I am interested in whether either of you know how successful these gentlemen have been/are in terms of their own personal wealth/trading success.

    Being out of mining stocks in a climate of a secular bull market would not be the correct call. Stocks are the supercharged returns for commodities... they are the leverage to the sector that have the potential to provide 5-10X. I would be interested in knowing whether anyone here who actually shorted the mining stocks last year and who has now or will soon cover their positions.

    Late last week I heard of a large fund player buying a very large stock position in a leading world mining company. That to me is a contrarian bet. AND tends to oppose the view of the gentlemen you mention in very strong terms.

    As this blog is about trying to ascertain where the smart money is moving, then isnt it wise to give some credence to that fact, rather than hearsay of two wise men.

  121. Oh Tiho...Tiho Tiho Tiho.....again I must say...for such a young fellow - good for you man.....you really have things going for you.

    You've really got things figured out...Commods / Ag going up ? No!...No way!..seriously...no?..long term?...really? no!.what a tip!..

    Clearly you are a genius.....and have set yourself apart as few other human beings are able to dicern that...hmm....more people on earth ...less stuff....hmmm....supply...demand...hmmm...more people...less stuff...hmmm.iwow!

    A true revalation!

    (scuse the sarcasm but really)

    Some of us enjoy making money doing this (as opposed to working for the man...as you've mentioned you do....mining / finance / whatever) and are able to - due to our interest in cycles/waves/hi/lows/etc...

    Some of us have large enough brains (too funny) to do both!

    What?..you don't think Im long as f%$&K all the same s$#t as you?..( along with the rest of the investment world) not to mention about a thousand other things you've likely not yet considered. (astro mining, space tourism, quantum computing , algae fuel...and the list goes on)...check out cone snails....spider farms.nano...blah blah...getting bored.

    Your strategy..is as rudimentry as it gets (if not entirely nieve) and to boot you are long commods and short stocks?...really!..get ready
    for some account liquidation/draw down one way or another...unless of course you can afford to do both over the long term...and if that is the case (trust fund baby?) why bother with the debate?....jump on your yaught...ignore these silly blogs and there you go!

  122. China's model is about 45% exports, 20% construction, and 35% consumption.
    When their export markets are down by 5-10%, their property bubble is bursting, it is mathematically impossible for their Consumption to make up the difference.
    More importantly even if China's GDP declines to a sub 6-7% rate (think it will probably be negative -6% at some point), base metals could take a big hit as their consumption moves almost at the square of the GDP level.
    I.e at 10% GDP consumption is 10X10 or 100, whereas at 6% it is 6X6 or 36, i.e 64% lower.
    Grains, Precious metals and Energy could significantly outperform Base metals, specially Steel.
    I think this is one of the few risk free bets out there.

  123. This phase of the commodity bull has never been predicated on demand. That part of the equation became impaired during 08/09 and only made a minor recovery since then.

    This stage of the commodity bull will be driven by currency debasement. This is why precious metals have outperformed so dramatically compared to energy and base metals (the leaders of the first stage in the commodity bull from 2002-07).

    During this phase sovereigns will debase at a faster and faster pace to try and abort the coming recession. It will temporarily inflate asset prices but won't do anything to stop the recession, other than maybe very briefly lengthen the beginning phase.

    Ultimately it will make the next recession much much worse than it would be if we quit trying to alter the natural order.

    It will probably also put in place the conditions for the next war as politicians usually start looking for someone to blame when they finally figure out they can't cure the problem and satisfy their constituents.

    This has played out over and over throughout history. Human nature never changes.

  124. Gary,
    those who say supply and demand do not matter only need to see what happened to NG.

  125. Supply and demand most definitely do matter.

    What I'm saying is that this phase of the commodity bull isn't going to be driven by supply and demand for commodities. We all know demand is impaired.

    This phase of the bull will be drive by supply of currencies.

  126. About Apple, yes it looks extended from a long term prospective, but why do a LOT of the best money and hedge fund managers continue to own it. Maybe it has to do with the little know fact that Apple has over 10B in a "held for taxes" fund that they may never have to pay taxes on. They're lobbying Washington to be allowed return it to the U.S. It is money made by overseas sales. I'll have to check, but I think even Dalio owns APPL.

  127. Actually if you check the 70's period, we had decreasing supply of a lot of commodities.
    The cause was years of low capital spending.
    You can argue that PM's can go up because of that. But base metals are extremely cumbersome to store.
    They would at least radically under perform.

  128. China are not the only ones who have an agenda to acquire supply either directly through imports or via taking interests in mining resources/mining operators. They have an enormous pool of funds with which to achieve that. Their investment in that sector is not only on acquiring mineral resources but also on infrastructure where they have /are spending billions around the globe. IN 6 year period they have spent >$200 BLN in external investment in the mining space.
    If you were China and you had the option of holding worthless fiat or stockpiling (never mind the cumbersome nature of such a feat) base metals/energy, knowing that debasement is ever present and the cost of acquiring/holding is much less than the debasement of its foreign currency reserves...which way would you go. China's ferocious appetite is not diminishing(may have slowed temporarily)...I see it more as a race to get out of its paper positions as quickly and economically as possible. The one issue that China exhibits is that it is a poor investor based on normal metrics. Thats a result of the regime under which it operates.
    Commodity supply/demand equation and Currency debasement will work hand in hand not in isolation. You put the pieces of the puzzle together and this cycle probably is only half way through its ascent. Expect a pick up in the latter part of Q3. Playing the contrarian card now may pay off handsomely.

  129. I have seen the data and I belong in the Hugh Hendry Camp. I think a minus 7% to -10 % GDP rate in possible and likely. That will scare the hell out of all the depreciating fiat crowd.
    Still think that PMs, Grains and ENergy will outperform base metals by a huge margin.

  130. Saif,

    You might be right. The hyperinflation trade (QE3) seems to be too crowded.

  131. Without naming names, if you bought PSLV right before the last offering, and lost money in the short term due to very poor timing, then you're not doing any better than anyone else.

  132. Hyperinflation is still way down the road. Probably 2017 at the earliest and that is assuming that politicians don't at some point come to their senses and stop this.

  133. Gary, you will have at least 2 major hyperinflations before that. Just will not be the US.

  134. Mark,
    Remember me telling you that miners were forming a 1-2-3 reversal last week, and that it was a powerful bottoming pattern?

    Your lack of patience and inability to see anything but the very short term is going to prevent you from making any money during this bull market.

    By the end of this next C-wave we will have made so much money that one minor timing error in 2012 will be completely forgotten.

    We're already well on the way to erasing that draw down.

  135. $spx forms a second order bearish triangle combo with red diamond formation.
    this is the same pattern as the third order of the triangle combo with brown diamond formation, which topped on May 1.

  136. $spx forms a second order triangle combo with red diamond formation.

  137. MARKETS


  138. GLD up 4 days , is it over??

  139. I'd give it another week or so

  140. Gold should continue generally higher as the dollar moves down into it's daily cycle low.

    Assuming a normal duration cycle that would extrapolate generally higher gold prices for the next 10-15 days.

  141. call it a dclor half cycle low, wouldn't a backtest of the 'breakout' point be expected/normal? especially with the GLD gap to be filled?

    You said yourself you don't think there will be any QE on wednesday, so considering the amount of hype going into it and the expectation of something we should get a sell off no?

  142. Same set up as Jun 2008.

    Triangle breaks up and then down to lower lows.

  143. Hi,

    anyone here know the ticker symbol for the junior mining index for canada or can suggest an etf for the mining,gold, silver and commodity sectors?

  144. Symbol ZJG


    Also CMP.UN
    Closed End Junior Trust trading at a 32% discount.


  145. 2008 was an 8 year cycle low. This is nothing like that. We won't see those conditions again until 2016.

    The fact is that gold has been so strong that the D-wave correction was only able to correct 38% of the preceding C-wave advance.

    This is an amazing development considering that all other D-waves corrected 50-62% of the preceding C-wave.

    I think gold still needs to consolidate for the rest of the year (although I'm about 99% convinced the low is in) and it's unlikely to move back above $1900, but once the consolidation is finished it should drive an incredible move into the next C-wave high in 2014. My best guess is $3500-$4000.

  146. MikeS,
    The market is going higher no matter what the Fed does on Wed. It's still too early for the daily cycle to roll over.

    Trend followers are going to push this up to test the April highs and maybe a marginal break to new highs before the next spate of profit taking begins.

    Plus we have the dollar in a left translated daily cycle which should be good for generally lower prices (on the dollar index) for the next 12-20 days.

  147. "99% convinced the low is in"

    mmmmm.....so you are not sure.


    You might have some talent with the markets but making bold predictions like this one really takes the credibility out of you.

    Of course if anything happens you can always blame the 1% right?

  148. kudos to you Gary for being very level headed even with some really obnoxious folks around.. very, very annoying!

  149. Pibe, How about you make a call real time , see how good you are?

  150. I am sorry guys for offending the master.

    I am 99% sorry about it.

  151. whatever Pibe.. glad you got the message!

  152. "Gary said...
    First off I was prepared to agree with you on the dollar when it made the slightly lower low, but it turns out I was right after all and the dollar did make a higher high. "

    LOL!! LOL!!

    Gary has been predicting and saying it out-loud in public that $USD going into Toilet because of his 1-simple logic, that the BurnMonkey will print and here comes "another hyperinflation" -- supposedly.

    But now gary said he was right after all that $USD had made another new high?

    This is called Flip-Flopping as Tiho call him out precisely.



    What happend to the claims "I don't need to sell subscription for a living", but then keep promoting people to buy subscriptions??

    Flip flopping hypocrites.

  153. Pibe and Shawn,

    I eagerly await seeing both of you stick your necks out and make market calls on the record, in writing.

    Rest assured I'll be copying and saving them.

  154. Catbird,

    Sure...buy silver today and sell it in 5 years (or after you make 200% profit whatever comes first).

    I am 99% sure that you will make money.

    Please copy and save this message so we can discuss it after you make 200% profit or in 5 years. (whatever comes first)


  155. Shawn,
    Show me one time I have ever predicted hyperinflation before 2014 at the earliest. Just one.

    Let me give you a hint. You aren't going to be able to find it.

    The fact is the market is playing out exactly as I expected.

    The only single thing that has deviated slightly was the marginal breakdown of the dollar's daily cycle on May 1. Usually that leads to a continuation of lower lows. In this particular instance it reversed immediately and resumed in the direction I had called for.

    A curve ball yes, but a curve ball that ended up going in the direction I had expected. Completely opposite of what Tiho was calling for. Of course you conveniently forget about that his blown call.

    As I've said before I give away a big chunk of the money I get from subscriptions to friends and charities. The less subscriptions I get the less gets donated. If it's all the same to you I would prefer to keep helping others. Whether it be through giving or helping investors ride the bull.

    For what ever reason you appear to be a rather bitter negative person. Please do us all a favor and take it somewhere else, or better still figure out what's eating you and fix it.

    We all have but one life. Don't let negativity poison it for you.

  156. Catbird,

    There are many things here that you need to put into a perspective before taking a side.

    1) Making a financial prediction.

    2) Admiting mistakes or claim credit to point (1) later, in all Honesty and integrity

    3) Doing (1) regularly without charges.

    4) Doing (1) regularly charging a subscriptionns

    5) Making claims to world beating hedge-fund records when times are goods, but hiding the facts later when things go against record.

    I would be much more polite and forgiving, and so do many here if Gary is doing just (1) and (2).

    But problem is, gary did (1), (4) and (5), and not doing any of the (2).

    This seems to me Gary is just a very dishonest sales person selling his subscriptions.

    When wrong, just twist what he said to make his records sound right. Read all those quotes from Tiho. He really squeeze garys balls to shame.

    I don't have much time to pull up Gary quotes in the past, but if you did, you will see Gary in different light.

    Latest case being Gary claims he is right AGAIN with $USD call to new high??!?!?! This is every bit against Honesty and Integrity.

  157. Shawn,
    As soon has the trade closed I changed the portfolio returns to 9.4%. I haven't hid anything.

  158. the return % hasn't been shown on the right side of this blog since it was in the 20's a few weeks ago

  159. Gary,

    When I said I wasn't mentioning the name of the person who bought PSLV right before the new offering, I wasn't talking about you. I was talking about someone else. Did you buy PSLV too?

    On the other hand, you have been wrong more than ONCE about GDX. There was the "A wave of a lifetime". There was the recent "C wave", and maybe even a third, not sure.

  160. “If it's all the same to you I would prefer to keep helping others. Whether it be through giving or helping investors ride the bull.”

    Gary you are so generous. Just to help you in your mission to help other people here is an idea:
    How about charging for subscriptions whenever your calls are right and people actually make money (instead of losing it) following your trades? It’s a win-win situation and it will give you more credibility; after all you are 99% sure we hit the bottom right?

    Just my 2 cents.

  161. All of you complaining about Gary and subscriptions on here are straight up LOSERS. If you have a different opinion offer it. I choose to subscribe or not subscribe, no one else. Grow up and get over it.

  162. Granted I don't have to managed entries and exits with millions or billions of dollars. But the SMT is big enough that we move the market with our entries and exits.

    All that being said We are still doing way over 20% per year over the last two years. And any fund that can do that on a consistent basis is in the very top percentage.

    I believe my system is good enough to at least return that over a 5-10 year period, or however long the bull market lasts.

  163. SMT is big enough to move the markets?
    Ok Gary that sounds like a stretch unless you guys playing Penny stocks.

  164. No we clearly move GDX, GDXJ and SIL when we enter and exit.

  165. Pibe, that is just plain ridiculous. If you don't like the service, don't pay for it -- that's how you vote in a free market.

    You think you can get your investment dollars back from e.g. Apple if their stock goes down after they issued a positive forecast and you buy their stock?

    Be accountable for your own actions. Only noobs and soon to be broke investors think any one person has all the answers all the time. I often disagree with Warren Buffet, and he's a billionaire.

  166. Ben,

    Subscription is a service (like any other product) and when that service is not up to your expectations you complain (it is as simple as that).

    I have tried Gary's service and did not work out –I already listed all the reasons why- so I complain and state my discontent.

    I am sorry that my complaint bothers you.

  167. You made your decision too hastily and based on only a few months or maybe it was only one month. The SMT is going to make subs huge amounts of money in the coming years, just like we did during silvers run.

    You happen to have tried the service during a period where the markets had no trend. It's very hard to make money in that kind of market. Even so we still managed to gain over 9%.

    I'm going to make you regret your decision ;-)

  168. Pibe, you are a whiny little b*tch.

  169. Aljiowa,

    Wow!! That's what I call cyberbullying.

  170. Gary, I am a minnow, financially, but trying to get ahead. But, I say you a a good and well intentioned person who has made it in this world through determination and never giving up. For that alone, you have my respect. Please ignore the trolls

  171. So much negativity on this blog...
    nothing changed...except the prevalence of bashing has gone up three degrees. All without any meaningful offerings. One thing I have noticed is that people with different/opposing views tend to move on after being exhausted/frustrated/mauled. Others persist for nusance value.

    Anyone here..shorted US Bonds ? ...How have you done that.

    I find it really surprising that there is not more chatter about Gold. Sure I agree that consolidation is at play, but isnt now the ideal time to wade in ?
    Too early according to Gary's cycle theory..wait for the dollar to bottom in around 15 days. Hmmm !
    August could be the month that sets the spark under PM's...with the backdrop of EUR/ECB US/FED China/PBOC all ready to re-ignite the flame. Sentiment, base building and Short positions all all going to work in favour of PM's ...exploding to the upside. Trying to catch it will be difficult especially on short coverings.

  172. LM,
    We are already back into PM positions.

  173. and...btw...I never left mine...in fact I took more phys a few weeks back when the so called soothsayers were yelling "fire" and I was saying great buying opportunity. I did exactly what I was talking about. Glad to see u have actioned the same. Try to stay with it this time and dont let any drawdown change your direction. This thing is going to the moon...have always believed that. The primary driver will/has not changed. In fact as days progress it seems there are even more conditions working in its favor.
    If I can offer one piece of advice for those who may not have considered it....be very wary of PM ETF's. U need to make absolutely sure that the Fund holds physical gold /silver bars that are audited. Any fund that cannot provide this evidence, is worthless...and by default, so is ur money invested.

  174. Liquid Motion,

    I feel the same way about gold ETFs (I would rather hold physical bullion).

    The same goes for miners ETFs (I would rather have 9 to 10 well capitalized miner companies instead).

    Owning the real thing (instead of ETFs) makes me sleep better at night. Not to mention leveraged ETFs.

  175. Phib/LM,
    I agree on ETFs. They just don't trade with the feel a stock does. I've seen days when the top 20 stocks in an ETF were up, but the ETF is down. WTF is that.

    On another subject I agree with Gary that SMT does move the market. But I still fade Gary if my indicators don't agree. I am a good short term trader 70% of the time :)

  176. I wouldn't go long bonds persay, but the potential for the need for the bond market to break itself is there too. I think going short will hurt, especially if US bonds manage to recover from the recent puke out. With a duration of 17.5 funds like TLT can pop up to the 140-150 level if the 10 starts banging around the 1% mark....insane, sure but so is 1.5%...and what's the difference between 2% stupid, 1.5% stupid, and 1% still stupid. Except even these small percentage changes have the effect of moving the long bond up 10%...of course the opposite is true, and if you have a story for why rates are set to rise(right now set to rise that is) I would be all ears..:)

  177. Lots of flip floping around here.
    Gary , i am dissapointed with you changing positions every week when it's only obvious where this train is going.
    People, just hold on to your physical PM's and forget about Bernanke, dollar, cycles, technical analysis and you will be rich in 3 years time.
    Trying to time the market will only make you poorer

  178. Well we did manage to exit GDX at $45 and re-enter at $42.80. So we saved ourselves a 5% drawdown.

    And since most people aren't able to weather drawdowns and end up selling at the bottom it seems like that was a pretty good trade to me.

    We were protecting ourselves in case the triangle broke to the downside. Now that the B-wave bottom appears to be confirmed we only need to try and avoid intermediate degree corrections.

  179. BTW in case you haven't figured it out flip flopping is the only way to make money in a range bound market.

  180. Is that what your broker told you?

  181. LOL if I weather a draw down half complain. If I don't weather a draw down the other half complain.

    I think I'll just ignore everyone and trade how I deem best for the conditions at the time.

  182. "U.S. consumer confidence rose in July" I don't think QE3 is coming during this Fed Meeting.

  183. It is my belief that flip floping and constantly changing positions in range bound market is only way to lose money, but hey, what do i know

  184. Well so far it's given us a much better entry.

    I also think commodities are ready to generate a strong trend. This should allow us to hold for longer durations.

  185. Personally, I do not think so and I am long commodities. These are four basic reasons why I think commodities won't break out... yet:

    1. The recent CRB / CCI rally has been a technical V-reversal and rarely do markets bottom on V troughs, especially if this is going to be some kind of major bottom, like you have talked about. Bottoms in 1998, 2001, 2006 and 2008 all showed base bottoming phases which lasted months. Technically they also showed divergences on weekly charts. We don't have that right now, only a V trough.

    2. Breadth within the overall commodity index is mainly rising because of Agriculture, and specifically Grains due to demand and supply plus weather conditions. A healthy bull market is when Mteal and Energy also join an uptrend, which brings me to the next point...

    3. Industrial commodities like Crude Oil and Copper look very weak. I am not sure if you know this, but commodities need a strong economic activity to rise. Overlap Indsutrial Metals with Global Industrial Production and you'll find almost perfect correlation. Commodities don't just rally, coz some cycle said so. You need strong economy and I'm pretty sure the globe is turning recessionary. Commdoties could also rise if CBs do money printing, which brings me to the final point....

    4. Money printers on both sides will most likely disappoint. I don't think Bernanke will do anything major, which means no final a dollar top..... yet.

  186. Saif,
    Just curious. Do you sell short based on financial statements/problems with individual companies, or are you trying to sell short based on chart patterns?

    And if so what in the pattern of AMZN, NUE, etc. made you think they would go down.

    Personally I've always found it very difficult to make money on the short side. Eventually I had to admit to myself that it was costing me more than I was making so I just quit doing it.

  187. Tiho,
    I'll point out that the CRB did test the bottom. It made a double bottom. Also the three year cycle low in 2001, 2007 and 2009 were all V-bottoms.

    I think it probably just comes down to the fundamentals. If the Fed goes on a printing spree then commodities don't wait around, they just get busy going up.

  188. No sorry I don't think so. We must be looking at different charts, because bottoms in 1998, 2001, 2006 and 2008/09 tools months and months of sideways basing. Recent V reversal took less than a month.

  189. tools = took

    Apple iPad autocorrect is annoying.

  190. For anyone wanting to see the way commodities bottomed in previous major bear markets, as opposed to the massive sharp V reversal we saw this time, click here for the chart.

    Massive V reversals smell like bear market rallies, aka short squeezes aka dead cat bounces. There is a major difference between previous bottoms and the current sharp reversal, just talking technicals.

    Furthermore, you got massively weak economy and no printing ... yet. Don't be surprised if CRB stops at the 200 MA.

  191. In 2009 the CRB bounced around for 2 weeks and then took off on a 10% rally and after a very minor profit taking event just continued to chug higher.

    In 2007 the CRB bottomed and never looked back.

    In 2001 a 6% rally and minor retest and off to the races.

  192. This is not about dollar or economy or economic crises.
    Presumption that commodity prices will be dictated by economic up or downturns is so 1990's.
    People don't give a flying f*** about dollar or corporate earnings.
    It's about people needing stuff.
    What people need is is food, water,copper, wood.And they need more and more of it.
    That's why we will never see drop in commodity prices again on yearly basis.
    There are just too many people in the world and limited amount of resources like wood, copper, corn or water and that amount is getting smaller and smaller every year.
    Why would then anybody bet on dollar or AMZN is beyond me.

  193. FWIW the daily dollar cycle appears to be in a left translated formation and should still have a couple more weeks to drop.

    I do expect the next bottom to be of an intermediate degree and the rally out of that bottom would presumably force the CRB to test the lows again and drive the stock market down into it's intermediate cycle low in Sept or Oct.

    However all this can change if the Fed and ECB embark on another stimulus plan. In that scenario stocks have shown an inclination for intermediate cycles to stretch. If we get more money printing this week then the next intermediate low in stocks could be delayed even into next year.

    The phasing of the dollar cycle would probably change and instead of this being an ending move into an intermediate bottom it would be a beginning move with 2-3 months of lower price in the dollar index ahead of us.

    All in all I think the next two days are going to be big in determining whether we just get a marginal breakout in stocks or a significant one.

  194. Eri,
    All bull markets end. Just read a history book.


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