Gary-- Thanks for the update. If Gold holds above 1315 today but trades below it overnight and then holds above it again Thursday does that still indicate a failed cycle? I know that is hypothetical but seems possible at the moment!
I think that's good strategy Gary. If it is a failed daily, and thus an intermediate decline, we're very likely to trade back above that level before dropping into the final intermediate low. That's what I see from historical cycles.
Is that the way you see it Gary? If nothing else it's good risk management while using leverage.
Gary- I know you will rely on the number (1315)for your actions. Is your gut telling you it will hold or might we be in trouble. I understand your gut (or anyone else's) will not cause the line in the sand to hold or fail-- but I know your gut is telling you something! Maybe it is saying you are already hungry for a lunch time burrito. What say you Guru Gary.
So another strategy may be to not sell at break of 1315 but to wait for a bounce out of that low that would quite likely exceed 1315 before dropping again into the intermediate low.
And you'd have to have the discipline to sell at that point, which isn't easy as the emotions are back up and you're hoping for further advance. But at that point you'd have to trust the cycle work that tells you that you're likely to get another daily cycle (or two) that makes a lower low.
Of course then you're taking a bit of a gamble that the drop doesn't go a lot deeper before bouncing, and possible not get back to 1315. So you'd have to have another sell point in mind, unless you just decide to hold through the whole correction at that point.
It's never easy, eh?
That's all assuming you're not just "old turkey", of course.
Onlooker, Yes, a plan always works best because my emotions do not get in my way. If target get hit we should live to try to survive for another day and never go for broke.
1315 also coincides with a possible neckline point for a H&S on a 60 min chart that gives a measured move to the 1240-50ish area, depending on how you look at it. You could also call 1330ish a neckline with a higher measured move low of about 1265, which would be a test of the break out.
So this seems like a good line in the sand from two different techniques. And a failed H&S move will often yield a very bullish move, as we've seen in the equity market of late.
Has anyone looked at the Treasury 10 year note rate lately. It's been climbing up sharply. If QE2 was going to be unleashed shortly you'd think it would be declining. Maybe QE2 won't happen or not at the level originally expected.
leaked reports confirm QE2 is going to happen, just not as big as QE1 and staggered over months as opposed to one shot. When investors wake up and realize QE2 is adding more grease to the USD's slide, precious metals will rise more.
I like this negative action, market is now pricing in a QE-Lite, few hundred billion announcement. That almost takes the "sell on the news" option off the table next week and leaves the door open for a possible upside "shock" announcement.
Gary's big old triangle break out is still holding firm! I like how the miners are hold this area for now...I'd love to see a sideways chop during a potential short term intermediate bottom forming vs. what we had take place back in Feb. I like the 100 day MA also coming right up around 480.
@bede, @rosabarba: thank you for the quick orientation. Which only brings on more questions, hopefully someone will be willing to address them: 1. is there any method of picking up the SPY components (other than comparing the lists of money flow leaders from WSJ versus components of SP500)? 2. What precisely, from the SoS money flow list, makes up "the signal"? 3. Is there any relation between this method and the Money Flow Index, available on some system (ex. freestockcharts.com, moneycentral.msn.com, etc.)?
Gary, I as you, and most wise investors, know that in the long run manipulation of the financial markets (at this time) is not possible. In the short run (a definition of a short run is subjective, but realistically a short run could last 10 years+ IMO) prices are manipulative (definitely day to day, but depending on the market, its size, this differs).
IMO and others JPM and HSBC have acted as a manipulative force of silver through holding 85% of the negative bets against this commodity. The amount of their short positions were so large that they were actually years of global mine supply! You can shrug off manipulation as if it acts minimally, but how do you begin to argue against a negative bet so large that it totally dwarfs the amount of that item produced throughout multiple years?
Some questions to come to mind that you can argue:
Why would they short something that has gone up on avg. around 20% annually? Then how do they make money off this? (i think the answer to that is timing, its all comex options as you know).
Aren't they heavily heavily losing right now? Yes, but what does it matter they are the Fed (the fed is private and two of its biggest owners are jp and hsbc). They have nothing to lose, they have (or are neighbors to) the machines that make what they are losing, "dollars".
What is the point? Possibly to limit the interest is sound money? To limit the increase in the usage/investment/interest in non-debt-based money?
Well interestingly two comex traders just filed suit against JPM and HSBC over their silver manipulation. Obviously they got burned bad on their bets and are hasty because of that, but their points are seemingly more and more valid.
Gary, am I misstating facts, misunderstanding them, or is "significant" price control in silver by these two majors to be overlooked?
Robert, Ask yourself a few questions. First what possible reason could the Fed have for trying to supress the price of silver?
IMO they have no logical reason to supress gold since no currency is backed by it anymore. So it's even less likely that the government has any need to supress silver. Currency has never been backed by silver.
Next if JPM is trying to supress silver then why are they acting like any normal hedger? By that I mean as the price of silver gets stretched above the mean they add to shorts (they are betting on regression to the mean. It's how most commercial players operate)
When a correction occurs they cover shorts when they think price has fallen far enough.
If they were really trying to seriously depress price they wouldn't cover, they would press down harder on shorts as the correction intensified.
That never happens, aka they aren't really trying to depress price. What they are doing is taking advantage of silver's volatile nature by playing a regression to the mean strategy.
I guess in the short run, the only ones to lose from this (if it is happening and as forceful as the media likes to make it out to be) is the option traders (and I guess, more or less, buyers at the intermediate and/or c-wave tops).
The question remains, what would the price of silver be if JPM and HSBC covered ALL their shorts???
This has tried to be determined, I think Ted Butler was the pioneer in this (I could be wrong), but I believe it was estimated the price would be somewhere between $35-$70 (large range I know).
If you've been paying attention COMEX position limits have been the big discussion in the commodities arena in the last 6 months. Investors are too savvy nowadays, and the information flow to fast. Position limits are a must for investments to continue. Once this happens the big commercials will be covering large amounts of shorts (this is already happening for the most part as we speak, the big boys know what is coming and they are getting out of the way, in theory of course)...
If you had a monopoly you'd try and protect it. The FED is a corporation, in the manufacturing business, their product is a "Dollar".
It's competitors are other currencies, of which gold and silver are. Companies use strategies against their competitors in order to maximize gains. The Fed's product, again, dollars, is only created when someone agrees to take it and then pay back to the fed the dollars plus more dollars (interest). They only can get more dollars to pay for the interest from someone else taking out debt from FED Inc. This is very basic, but commonly overlooked, as you know all the money in the system can't pay the debt off (P < P + I). You might think this is getting off topic, but it is just getting to the heart of it- the FED's product is not actually about "profits" it is simply about power and control. Everyday due to interest, every second they have more assets, while most others have increasing liabilities (to the Fed).
Supposedly, the majors have always held a "core" of a MASSIVE short position in silver. This "core" is so large that it is totally against market fundamentals, in that, its size exceeds that's marker's current production limitations significantly. The hedging as you say is only with a very small position of their overall shorts. Have you looked into the COMEX numbers, if so can you refute me by using the numbers, and translating the contracts into USD and then comparing that to global silver production annually?
For anyone who wants to know about the magic of the Fed, this guy is the best (he's a big climber too Gary!),
I have been told to, especially by Mr. Bernanke on this message board, to not talk about these things, so I'll steer clear from this for now, but if you want to talk numbers about this subject that makes things much swifter!
I'm just trying to open your eyes Gary to the more criminal forces at work, not for the sake of exposing them, but for the sake of increasing (potentially, I guess it could act opposingly) your awareness of the overall market forces.
Gold and silver haven't been currency since 1972. The Fed can print as many dollars as they want. You need to come up with something besides that. It just isn't a logical reason for why gold should be manipulated.
You will notice I didn't say anything about the size of positions, contrary to what the conspiracy crowd would like to believe its irrelavant.
The banks are just using a leveraged strategy to make money off silver's volatile nature.
There really isn't anything sinister about that. They've just found a very dependable way to play a regression to the mean strategy in an asset that is prone to big volatile moves.
What's really funny is Bob Chapman, who was the biggest gold/silver broker for the last 50 years (he's now retired but has the newsletter the International Forecaster), and owned his own brokerage firm, has been talking about this lawsuit coming out for months and it just came to the light of day today.
He also brought up QEII a long time ago, long long time ago, and has been covering it for awhile now. Interestingly QEII has already been implemented and has been active in the markets, according to Bob, by hiding it in the REPO markets.
His next forecasts are the default from the COMEX in gold and silver, as well as default in GLD and SLV (being that their metals are leased and the leasee can at any time get their metals back from the ETF while everyone else holding the paper certificates would be left with just that, paper, OR the small amount of metal the ETFs hold that is not leased from major banks like the Bank of London will be divided up into the O/S. So overall, once things are finalized they'd receive pennies on the dollar for their shares).
Gary how many burritos you wanna bet we see some type of closure on GLD and SLV in the next 5 years. How about a flat 100 burritos (gift certificates for the price of 100 burritos at market price in 10/15 work too). And this is a nice restaurant burrito gift certificate not Walmart packages of burritos! We got a deal???? Actually to make this more realistic, and I will not forget, I promise, how about the value to 27 burritos, today's date (at 8 bucks a burrito that's about 216 dollars right now). So expiring 10/27/15 27 authentic burritos?
Alright, your last response attacked all my points, and I actually do side with you, I just hadn't heard your succinct answer to those points.
Anyone wanting to invest in Gold and Silver not through miners, or physical, it is wisely suggested to do so through the Sprott Physical Gold ETF (PHYS), or the Central Fund of Canada Limited (CEF).
Bob is literally right 98% of the time or thereabouts, I really have no doubt GLD and SLV will have trouble eventually as will the COMEX as this bull rages on.
For last few days the media has been flashing the news of QE2 and more or less every analyst on TV is convinced that QE2 will happen and the fed will create 1-2 trillion in new money. The fall of dollar and fed support of asset prices also looks like a done deal.
Is it possible that next week fed throws a curve ball by saying something that the market is not expecting and dollar starts rising taking everything down with it for a correction before the actual QE2 happens.
V, I think it's a given the Fed is going to do some kind of QE. Ultimately that along with the orginal QE will be the fundamental driver to send the dollar down into the three year cycle low.
But we can certainly have a counter trend move before it happens. The stock market is overdue for a move down into a daily cycle low. The threat of QE round two is making it very tough for the market to correct though.
I do expect something significant to happen next week. Either it will be the bottom of the daily cycle if we can finally get a correction over the next five days or it will be the start of a correction if everything continues to hold together for another week.
One way or another next Wednesday has high odds of being a reversal day, we just don't know which way the reversal will be yet.
Thanks for your posts. Just wanted to know that if GLD and SLV are in trouble, what would it mean for gold and silver futures? And for ETFs based on these futures like AGQ? Will they become worthless also?
Good question. According to Bob, eventually, now he believes this is not imminent but further down the road (we should have good warning of this as well, especially through him, and other such as Adrian Douglas (ex-JPM trader), Harvey Organ, etc.), if the COMEX were to default then futures would also have to be settled for pennies on the dollar, and derivatives such as AGQ as well.
Now I'm currently invested in AGQ but do plan on exiting at the end of this C-wave and then getting back on and then exiting eventually when the signal flags come up that the COMEX storm is brewing. If I had to guess this wouldn't be until Gold is steadily over $2000, and silver $50 or so.
Now if I were you I would ask this directly to Bob (bob@intforecaster.com), and he'll reply to you most likely within 24 hours. If you could post his response on this board that would be great. He'll also most likely just attach (he always done this) his latest edition of his forecaster, and this one he goes very deep into the foreclosure fraud FYI.
I wouldn't worry about it now, and I was actually thinking about just going all in on AGQ for this c-wave (I didn't but it would have worked out nice already), but down the road keep your head up.
Read and analyze the prospectus or have your attorney do so if you are in significantly.
"The Trust may not have adequate sources of recovery if its gold is lost, damaged, stolen or destroyed and recovery may be limited, even in the event of fraud, to the market value of the gold at the time the fraud is discovered. Shareholders’ recourse against the Trust, the Trustee and the Sponsor, under New York law, the Custodian, under English law, and any subcustodians under the law governing their custody operations is limited. The Trust does NOT insure its gold."
Doesn't seem like a very comfortable place for me to be in long term, no insurance, at all, are you f'in kidding me?
I honestly think over time the gold bull will also be bucking people off through mal-investment. Those that hold slv, and gld primarily. If one were to google investing in gold, of course all the first search results point you to gld, same holds true for silver.
What's Cramer's number 1 gold stock? Of course GLD. It will end in fraud, no doubt at all. The mining shares are the place to be. I haven't read the prospectus on SIL etc, but it is a very good idea...
I was thinking of going physical with the metals because there could be a problem with paper gold and silver down the road. But we have the usual problem of paying a premium (sales tax), insurance and storage costs, possibly theft. It is also not as liquid as paper.
Miners on the other hand may not have the same problems as paper gold and silver. Of course the US government can nationalize some of these miners or tax the hell out of them. But I think GDXJ and SIL are diversified across countries.
At some point however, I suspect for me it will be a comnbination of physical metals and mining stocks.
I understand that PHYS could also run into problems, not regarding ownership or insurance, but taxes.
It's really a trust, not an etf. If a large PHYS holder decides to redeem for gold, it's a taxable event to the trust, thus all the shareholders. I don't see any reason why someone needs to redeem as it's real and already stored/insured, but it's something to be aware of.
Concerning manipulation of gold/silver, sure I KNOW people conspire in anything they can to make money, however it's no really necessary with metals any longer. First, it's harder and way more risky trying to short the only bull mkt around, and second, I'm far more likely to just "revalue" the USD slowly lower so people don't hang me. If necessary, we can always do an Argentina style overnight dollar mush to get where we're headed, but pm's are nothing more than an indicator these days, like any other commodity.
P.S. Keep your head down and do not question the matrix, just do as you're told and I will promise to make everything is OK. TV is your friend, and please surrender your weapons no matter what the Constitution says, it's just an old piece of paper with no significance.
Rosabarba said: "Keeping in mind this is a technique Gary came up with and back-tested, so he would probably speak to it best"
Thank you, Rosabarba, for the additional explanation.
I guess you're right, so here comes your three-part question regarding SoS, Garry:
will you, please, _describe_ what are you actually doing when looking at the WSJ SoS list, trying to determine the money flow?
1. For one thing, why strictly SPY components, and how do you extricate the SPY components from the WSJ list? 2. Then what are you looking at, in order to get the "signal" and what conditions are sufficient to declare yourself satisfied? 3. Finally, what is the relationship between this technique and the Money Flow Index available on some platforms, for example, freestockcharts.com?
Professionals measure themselves against the S&P. If they think the market is due for a correction they will start selling the SPYDER's into up days. Sometimes it's just one day and sometimes it's multiple.
It rarely happens on the exact top so it's not a perfect timing tool. What it is is a serious warning sign that either a daily or intermediate cycle correction is imminent.
It doesn't always appear before a daily cycle correction but it almost always appears prior to an intermediate cycle top. It's actually one of the most dependable signs that an intermeidate cycle is topping.
I like to see some kind of significant negative money flow. -200 million or greater.
This has nothing to do with the money flow indicator. It is more of a sentiment indicator. It's a sign that people much smarter and with much better information than me are starting to step aside.
What's interesting is that this form of silver is typically the type that "doomsday" people buy because it's already in coin form (small amounts silver), ideal for making small purchases.
Usually if a daily cycle is going to fail it will top within 10 days. So far this cycle has topped in 2 days unless we break above 78.40 in the next week.
However I wouldn't count on these rules right now. Everything is being whipsawed to death by next weeks fed meeting.
@ Garry: Thank you for addressing so precisely my questions regarding SoS, and for the additional explanations. The logic behind such an analysis makes full sense to me, and I believe this is an instrument worth adopting.
The only problem is that I do not find a way to obtain the aggregate money outflow figure for the entire SPY: do you know by heart all the companies in the S&P500 so well that you can pick them out from the WSJ list and add mentally the total money flow affecting the index? For example, today, October 28, we have at the top of the list Commscope and ProLogis with a total combined money flow of -250 mil: but none is in the S&P500. I would really appreciate to get this clarified.
To clear one thing up you may have misunderstood: It's not the SPY components but the actual SPY ETF, and only that ETF, that Gary looks for on that table.
@Rosabarba, @Garry: Sorry for the redundant last posting. I identified the source of the confusion: it is a shortcoming of the WSJ website. While googling for "SPY money flow leaders selling on strength", etc., I got correct WSJ hits. But the links from the actual articles were displaying _the most recent_ list of SoSs where, of course, there was no SPY entry. Since I did not notice the mis-direction, I inferred that SPY is not listed as such and the only way to gauge the money flow in the ETF would be to add the money flows in the companies of the index underlying it (S&P500). It takes another step, namely to use the button "find historical data" in order to get the listing of the _actual_ date to which the original googled article referred. And there, indeed, SPY appears as clear, separate entry. Well, let this remain here for future reference. Thank you both, see next comment :)
I didn't like that comeback rally yesterday, it was setting up very nicely for a few strong, sharp down-days leading into the FOMC meeting where expectations on a significant QE2 would be very low.
A republican sweep, low expectations on QE2 and 4 previous days of sharp selling leading into the FOMC would set up perfectly for a "buy on the news" Q4 monster rally.
>Professionals measure themselves against the S&P. If they think the market is due for a correction they will start selling the SPYDER's into up days. -GARY
I would argue that real professionals sell the ES S&P futures instead of SPY. A moneyflow indicator on ES would be preferable, but I understand it is better than nothing. (I'm sure such an measure already exists, but it's probably in a blackbox at goldman. It's hard to calculate for a regular person.)
Sure does look like the dollar is back in break down mode. Still too soon to tell for sure, but the relentless drop from yesterday's midday high is looking ugly.
I bet a lot of folks got shaken out of gold and GDX yesterday as they flirted with their lows of last week. Especially GDX looked like a classic stops run at just under 54. Might have been just enough to ignite another run up.
Speaking of money flows, and as a corollary of the SoS signal: I believe to be of some usefulness looking at money/gold flows in/out various gold funds (redemptions, holdings). But I did not find any systematic source of (preferably) charted, historical movements of gold/money in and out of funds. Reuters publishes periodical holdings in GLD, the Gold Seeker daily closing report gives the numbers for a number of funds & warehouses on a daily basis, and this site www.exchangetradedgold.com provides a current summary of assets. What is your experience with the analysis of gold/money flows in funds? Anyone can indicate a centralized source for such? Garry, any thoughts?
Gary: Do you have any thoughts about an eventual blow up of SLV and GLD? I have wondered about this myself. I am long mostly miners, but some SLV. I know Paulson, et al are long it, but they may even have special terms protecting them (?) like Buffett gets when he lends money. I may need to switch to physical at some point buy, geez, that's a lot of loot to have to put somewhere. Thoughts, please.
The fed is now so constrained with 'expectations' (cause that is all this is...is a ponzi of worthless paper and assets) that they are now having to actively POLL finance entities in order to figure out how to react to things and not topple the whole mess over. (It really is that simple.)
I suspect everything that happens from now till Wednesday will be meaningless. The danger to gold is if the Fed announcement intitiates a short term trend reversal in the stock market and drives the dollar up to 80. The stock market is overdue for a daily cycle correction.
In that scenario I would expect gold to throw the curveball and make another dip below $1315 and then bottom along with stocks.
I do think there is a very high probablity of a significant shift after the Fed meeting.
Just to play it safe one could book some profits on Tuesday and then wait to see what happens.
By book profits I mean go back to a core position.
There's more to it than that, but I will save that for tonight's report.
DG, I'm not terribly worried about it. For one as long as the gold:XAU ratio is so undervalued I would never waste my time with GLD.
As a matter of fact I doubt I will buy another oz of gold, either GLD or physical for the duration of this bull. There just isn't the profit potential in gold that there is in miners and silver.
RA- I asked Bob about the risks of GDXJ, and SIL, basically there aren't any similar risks to GLD and SLV, BUT, according to him they're not a very good PM investment because obviously they will underperform the best miners (significantly!). This is just common sense.
The question is then, who are the best miners? I think for silver they are SLW, SVM, PAAS, HL, FRMSF, SSRI, EXK, GPRLF, and USSIF. (I only but a small percentage in the last two, and they are basically plays of the inflation.us pump). I didn't put anything in CDE for not too much of a reason, I just didn't like how they were performing relative to the others. CZICF.ob is also of interest and I'll pick a small amount up here soon. Pick up some AGQ too if you like silver.
I thought hard about SIL but I didn't want my trophies to get dragged down buy the weak ones. I bought enough miners so that risk is very low that I can be wiped out by one, two, or even three companies doing poorly.
I'm actually avoiding gold in this bull- I used to own a lot of physical but I'm young and am taking more of the gambler's bet with silver (plus all of these silver miners produce some gold so I'm not totally out of gold).
Physical is not where the real money is made in PM bulls. In the 80s miners on average went up 20-40x that of the actual metal price! It is just noise to hear that miners are paper, blah blah blah blah, we will forever have paper currencies, unbacked or partially backed (there's not enough physical to go around)...
Bob for some reason takes the ultimate conservative approach (basically 3/4 gold miners, 1/4 silver miners with small percents on the juniors). He is also 30% physical, so the miners are 70%, but he only buys graded physical (they appreciate much more than ungraded bullion) He only recommends the following for the miners:
GG AEM SSRI MFN HLLXF.PK ABIZF-OTC
He's up 1000s of percent on all these except the juniors. He was mostly touting them in 01 (ssri was like a dollar or so back then!) All the others have about 1000% gains since then.
Man I wish I was throwing a few hundoK back on those then. The party is still early but patience in such a velocity orientated world is at sometimes challenging.
Said the former Fed chairman: “If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.”
Even though gold is no longer tied to any currency it still has a very important role in "investor perception". Robert explained it quite well and in much detail. I also agree with Robert that your loyal subscriber's just prefer to not see you stubbornly blinded in a set opinion.
Personally, I don't know if the FED and central banks are manipulating gold up or down, and don't really care. However, it is plain as day to me that they have a vested interest in the price of gold. I just try to watch technicals, sentiment, cycles, etc. and therefore follow your analysis. Rarely have I had success with investing trying to interpret the noise that is propogated in the media.
I never heard that graded bullion outperforms ungraded. Seems to me that bullion is bullion, but that with graded you might have a harder time finding somebody that appreciates the extra cost, if the SHTF, so to speak.
Yes, Gary, I am not long GLD. I am long some SLV and have recommended GLD to some friends who would not be comfortable with the miners' volatility. So the question still stands: Do you have an opinion about GLD or SLV blowing up, whether or not you'd recommend them? I am no conspiracy guy, but stranger things have happened. Thoughts?
I saw that article by Bob Hoye earlier and thought of you. Good to see you back, I missed all your comments that got deleted the other day while I was at work and was wondering what happened. Those Hoye charts look compelling. Cheers!
At 10.40 a.m. NG (nova Gold) was at $9.78 with 400,000 in volume. Then large volume shot in and it went up .50 from that low and is currently up .40 on about 1.5 miliion in volume 20 minutes later.... No news yet, but maybe someone knows something.
DG, I wish I had saved the article but I read a report that showed GLD does actually own the gold. It's one of the big reasons supply gets taken off the market.
Perhaps a google search might be able to turn it up. So no I really doubt either one will blowup.
looks like some of that QE2 money is all ready leaking into commodities in the last 20 min, lol.
Bernanke, graded coins are fool-proof, eventually you'll probably see normal bullion be counterfeited more and more as the PM prices increase. Those that are graded should receive a higher price at those times b/c of their security... Supply/Demand how many people have normal bullion eagles, maples etc, how many have graded ones?
We are over the gc triangle. Top line was at 1340. (Although you could make a case for a flat top triangle and then you are back to the 1350 point as resistance to clear.) Regardless we are looking good so far.
If we convincingly continue up it will become obvious to those waiting that there will be no further dip and the chasing (or Hoye "Springboard") will resume.
(Of course this could always be a fakeout or temporary. I've got stops in and a controlled exit)
Don't own GLD or SLV (unless you short them to hedge long positions during expected declines). I promise you the fineprint wont give you what you expect when the smoke clears. Those who really want the truth can read through the prospectus CLOSELY and also examine the exact details of the "audit" that was taken of the gold (including all caveats and possible things missed.)
The prospectus is in english (although legalise much) and means EXACTLY WHAT IT SAYS word for word. Nuff said.
Thanks, Gary. I'd feel pretty lousy recommending GLD to some people and then having it collapse in fraud. Too, these collapses tend to happen at the end of a move, which we are not near. Hopefully if something weird is brewing it will start acting odd relative to the metal as someone will know the jig is up. And I agree, probably nothing will happen anyway.
Many thanks for your detailed inputs. Only 10% of my PM portfolio is in gold. The rest in AGQ,GDXJ and SIL. If we have to liquidate at the next intermediate top and buy back at the intermediate low, I will avoid buying gold and put the money in silver or miners instead. But you have certainly given me food for thought about going for selected miners rather than a basket like SIL. But I am a lousy stock picker - that's my problem. I will look at the list you posted in more detail. Also I need to think about graded bullion. But maybe that is a bit premature at this stage of the bull market. Cheers!
TZ: Usually the "smoke clears" very late in the game and not halfway into a bull. Do you think it'll be different this time with GLD and SLV? As Buffett says, "It's when the tide goes out that you see who's been swimming without clothes." We are a long way from the tide going out in the PM bull and even if there is fraud, it won't show up until a down market creates pressure, no?---like housing loans, Enron, and everything else throughout history.
Jesse, If you think about it you will realize how ridiculous that statement is. No one is going to fool any semi sentinent investor that the Fed isn't printing. Hell they announce it. What good would it do to supress gold but not oil, copper, tin, cotton, corn, wheat and sugar?
Trust me the Fed isn't fooling anyone and the price of gold is the least of their worries.
Not to put a damper on the bullishness but the HUI is forming a potential crawl along the 50 DMA and the stock market a potential coil that I would expect to break lower into a daily cycle low.
The snp is weak despite the beating in the dollar, while gold is taking full advantage of it. Perhaps, in the next beating that the snp takes, gold will ignore it and hold or rally.
Does anyone else think that the snp weakens into the fed meeting, while gold holds, then they both rally on the QEII which should be larger than expected?
And the blanket smearing of anything "GATA" as though that is the end all be all source of gold comments (instead of historical fact and rational thought based on evidence) doesn't help.
Gary's responses smack of somethign i'd expect from an outlet endeavoring to further confuse and mislead people. Not from somebody otherwise smart and respectable.
I don't know how he got all the other accomplishments and yet missed what gold is and how the fiat system works. I mean, JEEZ, we are all long and buying gold! Doesn't anybody ask themselves why (and not accept the default answers...most of which are wrong)?
No I just don't buy into the whole conspiracy nonsense when there is no logical reason for it and when it can't possibly effect the price anyway other than to accelerate the trend.
Every bull makret has it's share of conspiracy theories and gold is certainly not immune. The extremely emotional nature of PM probably makes it more likely actually.
Any thoughts on what the response is likely to be of earnings reports coming out shortly for miners? It seems to me that earnings will significantly increase here and through the next couple of quarters. This alone should goose the producers share prices.
Lets face it the Fed can print as much money as they want. If they trully wanted to drive gold lower they could pile on shorts into infinity, meeting every margin call until the massive weight of all those shorts collapsed the price of gold.
TZ: Are we feuding? You rarely answer my questions after you have made a claim. You don't seem to mind people questioning your claims, so...? The most recent unanswered one was:
"Usually the "smoke clears" very late in the game and not halfway into a bull. Do you think it'll be different this time with GLD and SLV? As Buffett says, "It's when the tide goes out that you see who's been swimming without clothes." We are a long way from the tide going out in the PM bull and even if there is fraud, it won't show up until a down market creates pressure, no?---like housing loans, Enron, and everything else throughout history." Where is my thinking wrong here?
By the way, Gary is not discounting the value of gold. I can't imagine where you get that./ He has written often about fiat currency, Fed idiocies, etc. He (and I) just don't buy the conspiracy and manipulation stuff. It cannot be successfully done over time and doesn't make sense to either of us. But answer my first question anyway even though we disagree about boogeymen.
We all KNOW why demand for OTHER stuff rises. Why does demand for a useless metal that the govt doesn't care about and which the fed doesn't have stored in very very large quantities under it's NY headquarters rise?
Decreasing supply and increasing demand because of central banks debasing currencies. As currencies lose value it takes more dollars, punds, euros to buy an oz. of gold that is getting harder and harder to produce in increasing quantities.
Boogeymen? You mean there is more than one. NOOOO!!!
Gold is going up because demand is flying, and they can't get supply caught up fast enough. Now demand is going up b/c people don't trust me with paper and an inkjet.
Let's face it, if the dollar was appreciating there would be no supply/demand imbalance in the PM markets as gold pays no interest and can't compete against an appreciating currency.
Gold is only a commodity when people are fooled into believing that fiat money is safe.
Commodities supplies are increased and demand is reduced with price increases (generally speaking) whereas with gold it's supply is reduced and demand is increased with price increases (when people begin to lose faith in fiat...such as now).
The FED does manipulate the price of gold because they understand that a price run in gold can lose control and quickly cause the fiat systems to collapse. All paper money seeking the true money will cause all paper to burn. It's just historical fact irregardless of anyones knee jerk reaction to thoughts of 'conspiracy theories'.
You seem pessimistic regarding your cycles holding up. The dollar is more than 1% and the cycle low occurred 9 days ago. You predicted a quick rally "of the dead cat bounce type" and turning lower within 10 days. Isn't that scenario still holding up well? Although you preferred gold dropped to $1,300 and lower, it still responded to the cycle low.
Is the concern then that equities didn't follow suit and does that need to affect gold's correlation to the dollar, which is still on track to move lower? At least equities moved a little lower over the past 10 days and they are lower in conjunction with the dollar today, does that matter?
Just seems like reading only your posts from last week and then looking at the charts since, we are on track.
Alex, I don't expect any volatility next week to effect the normal intermediate cycle timing in the dollar. I'm still expecting a bottom in late November or early December.
there is a lot of volatility in the foreign exchange market. EUR/USD went up close to 160 pips in a few hours without any big news events. I suspect alot of dead bodies in the wake of this action
I got an education yesterday so I'm going to share it here.
I've been Old Turkey for appx 18 months. Its been a great ride. But yesterday showed me that greed had got the best of me and led me to increase my position sizing to a point in which I panicked at the prospect of a drawdown.
I was driving East through the mountians yesterday when I pulled into a town with a wireless signal and got Gary's cautionary email. I had a gut rxn the likes of which i haven't had for several years, and proceeded to grab a table at a local coffee house, and sell sell sell. WTF??
I was at appx 98% invested in PMs. While I was doing it my mind was saying...wait for confirmation, but my gut was too strong. It said get out and think later. So I brought myself down to appx 30% invested. Of course this all happened at the low of the day as only a really bad trade should.
Anyway, watched the market rally last night, and this morning, and felt that nauseating pit in my stomach of being left behind.
So, what is the lesson here.
1) 98% invested is too high for my nerves.
2) Stick to my rules of adding my most substantial positins at intermediate lows which will give me the space to not panic at the onset of a drawdown after a rally. I had added a significant piece in the past couple weeks, and for me this appears to have taken away my strong hand status.
3) Never go below my core position size. In a C-Wave this is 50%. For a D-Wave 25%. I believe the bull will eventually correct timing errors so there is no reason to jettison below my core.
I want my C-Wave max to be 78%. I had no qualms at that size during draw downs. It was adding the last 20% that freaked me out as it went under water.
Anyway, hope this is helpful to someone.
I did bring my position back up to 50%. If we have a drawdown or rally I'll ride it out at this level. If we sink into a decent correction I can add more. I feel much more settled and am actually hoping for a drawdown so I can get back to full strength on a correction.
I really have to consider what to do if the dollar breaks below the 76.15 level. At that point I will probably bring myself up to a 65% position, and leave it there till the end of the C-Wave. Being less than full strength will bring home the lesson so that I'm less likely to repeat it.
Great post. Seems like you are very clear now on what your position sizes should be in the different market conditions that PM's go thru. Great reminder for me to not get greedy and over extend. Thanks!
Fubsy: Yep, been there. I have taken a few major hits over the years and they always turn out to be worth the tuition. One suggestion: open a separate account at your broker. Call one "Core" and the other "Trading." Helps make it clear what you are doing and why. Simply decide not to access the core account except to add at intermediate bottoms. This "firewall" may prove to take the emotional pressure off. good story---thanks for posting it.
Fubsy, if youre not trading with leverage i dont see the point of going out of a position in a bull market especially when we are close to a bottom. If its not 1317 then its 1300 or 1265 not too far away to be worth risking being out of position. If you were going to take money off the table should have been at 1370-1387.
I think the intraday alert yesterday (negative on gold direction) and the whole "draw the line in the sand" posts the day before that(positive on gold direction) freaked everyone out. I got shaken out of 40 ounces of gold yesterday just to reduce leverage. I think it would have been good if Gary would have went on his hike and not have posted the alert. :)
Just to let you know if GLD were ever to fall apart it would be not when gold moves down drastically, but what will really hurt the GLD is when everyone is demanding physical. When the physical demand for gold and silver are at all time highs, when people will not roll over their options for cash premiums and instead demand physical is when the subcustodians will be doing the same. This will occur during the mania phase, but as we know it is in all likihood you could see this mania phase next Spring, but more times than not it will happen years down the road during a different mania move. When there are just as good of alternatives why risk it though?
GLD and SLV are what have been killing the HUI imo. That is what is so great about them, the HUI is at a big discount now, but many think that over the next few weeks after the miners earnings are released is when people will really start to see the value in the miners due to their now accelerating marginal profits.
fuck everyone and fuck all the noise, I'm all in PM miners and nothing can stop me. I know how high the prices in silver and gold are going, we are so far away from that now that the most important thing is obviously having a position that seems big enough for you but not too big that corrections will get you marginal calls.
I always have cash on the side, if there were to be a vast correction I'll add.
No one can take my shares, its that simple, its not possible until silver is at $300 or at the very top spike of a C-wave or of course a 1:1 dow/gold ratio.
I was like mitch, leveraged up day before so as the price moved down, I lighten up on leveraged positions and kept core holdings. Loss a bit but it won't kill me.
Yes I am severely greedy- I used to hoard physical PMs like I was an Egyptian king, now I'm doing the same for the miners. Time will tell, but I know these shares are going to the moon and you can't do anything about it, this is the trend my friend, say all you want, just sit tight babies.
Thanks Robert. I agree it's possible that someday those ETF's may fall apart, but I agree that that day is far away and I will be selling on the way up once the mania stage hits. Physical has a lot of problems that are obvious, so what "just as good alternative" are you talking about? A different ETF? Which is best, in your opinion?
I know holding physical have some problems but I don't think they are big enough for a person to not hoard physical if you can versus holding paper gold/silver. Whats stopping you from holding 50K or 100K in XAU or XAG?
Nat, I'm talking about graded through the PCGS and NGC, then the coins have individual, verifiable serial numbers. It costs money per coin to do this, but go on ebay or go to your local coin store and you'll find graded coins (ebay the premiums for these seem a little too high, I'd suggest locally looking first).
Gary, TZ, DG, Martin Armstrong states that gold has nothing to do with inflation, it is simply a HEDGE AGAINST GOVERNMENT.
That is a very important point, hedging against government. Wars, obscene laws, amount of prisoners we have, crazy welfare programs, a crazed mortgage crisis, excessive greed, 80 to 1 leveraged banks, cop corruption, etc etc etc. Liabilities.
I "GET IT", been there. Sometimes its not your 'positions' or exactly the price of gold that jitters your nerves-its watching the 'total account value' drop,right?
what I mean by that is...I can watch my stock (say SLW go down $2.00 from $24 to $22... knowing its going $6 higher to $30.00 in a month and be fine... BUT if you have 5000 shares and you watch the account value drop $2/share or $10,000.00 - it changes your plan and instead of RIDING THE BULL , we think sell , and reinvest at $22,but its an intraday shakeout.
Thats when you need to ignore "total account value" if you know where you are in a trend/cycle and your plan is to ride a core position.
DG, I mentioned them before in this thread, these are what I've been recommended, and these are what are becoming more and more popular in the "not-so-easy-feeling" goldbug circles:
Sprott Physical Gold Trust ETV (NYSEArca: PHYS)(up 1.81% as I type)
and
Central Fund of Canada Limited (AMEX: CEF) (up 1.64% as I type)
Maybe I'm paranoid, but I feel a lot safer owning $200k worth of PM's as an electronic entry rather than bricks in my house (fire, theft, earthquake---hell, I live in CA!---!etc.) I believe that if a fraud is brewing it will show up in the market's footprint. SLV stops tracking silver, we're in a mania, something. If things get weird enough I may have to move to physical, but fear that the ETF's will collapse has not driven me there yet. (Besides, I own no GLD and some SLV and am mostly in SIL and GDXJ) Thanks for the thoughts though. This really bears thinking about. I am also concerned that my broker (E*Trade) may go under at some point. Way to go SB---there's no place to hide from you!
alex, that's a great point, and I use the same strategy.
I try not to look at my account too often instead I do the same as you just look as the PPS movements, with the only intention of looking at my account is if I'm going to add (I noticed the PPS go low enough for me to add) or it gets so severely stretched that I want to sell some (this I'm doing less and less of now that I found out about the A-D waves, and more of the timing is based on that).
Gary is right though too, the BIG money is ALWAYS made old turkey. I guess we can argue about a million reasons why gold and silver are going higher, but do the reasons necessarily matter, I think we can all agree on some similar reasons for them rising and that's why were here.
If you know the planet Earth is going to go around the sun this year, and if you know Gold is going to be priced at $5000 USD per ounce in the coming years, what to do? whatever you feel like until that time comes around... just chill out, live pretty conservatively, spend most of your money on mining shares, and then down the road sell them all, buy cheap stocks, and use the excess for all your 25 wives out in Utah IMO :)
I don't know where people get their facts from and then freely spew them out as if they're fact. GLD's entire NAV is derived from Bullion they own held by custodian in London vaults. The Bullion is never leased or traded and no derivatives make up any part of the ETF NAV. Sub-custodians holding it's Bullion would be purely for the initial purchase, holding and delivery of the physical bullion to London.
ROBERT!! How'd you know I was mormon! Just kidding, they dont drink coffee and I cant do this without CAFFEINE!!
Its true, I have a core position and one I trade...and I miss alot of moves when I trade. heavy selling and I get out only to see a reversal intraday. On C-waves, I just keep my positions were I can be sane with daily flux ( the feverish flux!) and listen to Garys OLD TURKEY call (method). Even Jesse Livermore agreed and said he made his millions when he knew he was right, he just sat tight!
Funny I used Etrade and switched years ago due to fear. I guess this is unsubstantiated, and what I'm guessing your now insured for only $250k unless you buy more? $250k in mining shares years from now isn't a whole lot IMO.
I mean I'm always about the best of the best. Sure there is probably no concern with Etrade but if there is even a topic about this, then why use them?! I switched to Charles Schwab and I'm as comfortable as possible with them (if my shares go to the moon I will increase my insurance into the millions as anyone reasonable would).
I feel the same way on physical too, getting robbed is very easy if you think about it nowadays. What's to worry about with electronic investments (even if the power grid went out for 3 months, if you can survive that, then once everything is back up the data is going to be all there). Not too hard to maneuver around, all in all.
Ohhh, the extremes life leads you to thinking about, gotta love them. I'm really not worried at all about the world. As long as you protect yourself from devalued currencies you're fine.
Robert, I almost switched from E*trade during the'09 meltdown. I do a lot of trading and appreciate the $5/trade I pay with them. I have checked their insurance and it has been raised and is now, if i remember, 1 $mil (they bought supplemental). I have a lot more than $250 k with them, but not 1 $mil so I feel o.k. I may switch if things get too weird, but well, inertia is part of it. Another financial spasm'll probably get me off my butt, though!
The two ETF's you quoted are trading at a PREMIUM to their NAV of 2.7% and 5.8%. So people are paying a premium on the spot price(above the trusts fees for holding) That explains the daily premium you're quoting.
Securities held via eTrade would be covered by SIPC @ $500k and not FDIC @ $250k.
Yeah, I don't hold either but have been "warned" by many to use them over GLD and SLV. If they cost more, that is obviously a deterrent, but choose as you will...
isn't that crazy, leading one minute that bam, vanished completely!
TZ, good article,
that would put us at silver hitting $30 by either Monday or Tuesday November 22nd or 23rd depending on if you count today (I'm assuming you would, then it'd be Monday).
$24 to $30 is ironically, basically, an exact $25% increase. AGQ of course that would be an exact 50% increase in ones month time and right before Turkey day. Salivating both this prognostication and Turkey day... :)
In the last hour (through 3:30 EDT)SPY drop off the list. Very volatile. As someone mentioned you have to use EOD numbers on SOS. Some buyers must have moved to cause SPY drop off the list.
I know you guys think GATA is crazy... But this should be very bullish for Silver... http://www.gata.org/files/SilverManipulationLawsuit-10-27-2010.pdf
I left Etrade during the melt down because of their risk exposure to the derivitive problem. I called and asked about my account being insured and they said...insured, yes, but it would probably be frozen until litigation.
HUH?? FROZEN? I called again and someone said...well, it could be in courts for months, I dont know how that would work. That Scared me a bit. Whether that was accurate or not, they were saying my $$'s were insured as of that day, but I couldnt get in or out of my positions.
I went to scottrade and get $7 trades, but liked Etrades platform better for a while, but scottrade is good.
For those that care and/or are interested. SLV now has weekly options. Careful, options can HURT and as Gary has said, a great way to blow up your account.
I live in Canada so earthquake and robbery isn't that big of a concern. In case of fire, fire would have to be pretty hot to melt the bars and even if it did, you still have a solid puddle of silver on the floor when you get back. Or just have a evacuation plan in case of fire...1 bar carried out by each member of the family...its only about 270 pounds of weight :P I don't know about ETFs but holding my electronic silver in my forex account costs me about $7/500 ounces a day! thats $2500 a year!
Remember, TURK runs goldmoney.com with a BILLION dollars of REAL gold and silver in REAL vaults. He might know something about actual supply and demand situation right now.
Poly: E*Trade has bought suplemental insurance over and above the SIPC limits. From their website: "E*TRADE Clearing LLC maintains insurance with an aggregate limit of $600 million to pay amounts in addition to those returned in a SIPC liquidation." $600 million in aggregate.
And the court delay is standard for all SIPC liquidations and has nothing too do with E*Trade specifically. SIPC settlements can take up to 90 days as they establish whet exactly you had in your account. I have other money and accounts and can just short against the box anything I want to get out of. Not great, but not a disaster either. Besides I may have physical by then...
I have lots of coins. I have been buying gold coins since 1999. Mostly Maple leafs, Eagles, and some British sovereigns and Austrian lately. Silver too. These are all government mint produced so I am not worried about them. And I buy from only reputable dealers. I would never buy coins on Ebay.
I also have been buying CEF. Well its my son's money. Instead of saving in the bank he saves in CEF. also a couple other junior stocks and GDXJ. All my kids money is in those type of things. As soon as they save over 100.00 it goes into the PM market. Myself personally, I am 100% in PM's. I have no 401 k, Ira or RRSP. Got rid of them 8 years ago. 1000 ounce bar of silver is like 80 lbs...makes a great door stop. Get yours today...haha
Listening to WABC radio over the net (wabc is biggest AM station in USA) they played an ad for a gold penny stock!! (Fire river gold FAU.V)Anybody else hear ads like this? Its a first for me! If these ads become common- very bullish for the juniors I'd say!
Careful holding PHYS, GTU or CEF in a taxable account if you are a US citizen. These are trusts that have some very complicated tax reports that need to be filled the first year you own them and then every year after that one. I found this out after owning both PHYS and CEF this year. Goldmoney.com is another way to hold allocated, physical metals. I have an account there, but have not funded it yet. I heard you have to file paper work since it's a "foreign bank account" technically.
Are you the guy on Kitco who recommended I email Bob Chapman? He's a good guy and I enjoy hearing his analysis.
I just methodically adding some miners, trying to build up my core. I like SSRI, SLW, SVM, EXK and a few juniors on the silver side. Golds I've bought recently are ANV, EGO, NGD, UXG, RBY.
My deleted comment above was a shout that you were wrong and that there was nothing legal in GLD documents proving that the gold on deposit was not leased or encumbered somehow.
I deleted that post, but it was *BOTH* right and wrong. Let me explain...
Unlike most, I don't trust heresay, CNBC, or beliefs. I actually read the fine print. (The world of power runs by sneaky laws and very detailed fine print. Force is only used by the guys running the show when the fine print fails.)
The reason I was both right and wrong is that I HAVE read the GLD prospectus...*multiple* times. So after I made my post I went and downloaded it again just for giggles:
----------------- PAGE 2 "An allocated account is an account with a bullion dealer, which may also be a bank, to which individually identified gold bars owned by the account holder are credited. The gold bars in an allocated gold account are specific to that account and are identified by a list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight. Gold held in the Trust’s allocated account is the property of the Trust and is not traded, leased or loaned under any circumstances" -----------------
This blew me away because I was *damn* sure this wasn't there before. So I went to Edgar and pulled up the original S/1 Prospectus from 2004. http://www.sec.gov/Archives/edgar/data/1222333/000095013604004007/0000950136-04-004007-index.htm
----------------- PAGE 45: "An allocated account is an account with a bullion dealer, which may also be a bank, to which individually identified gold bars owned by the account holder are credited. The gold bars in an allocated gold account are specific to that account and are identified by a list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight. The account holder will have full ownership of the gold bars and, except as instructed by the account holder, the bullion dealer may not trade, lease or lend the bars." -----------------
So now I'm sure you can spot the difference. The current one clearly says nothing is leased. The ORIGINAL one ALLOWS LEASING AS INSTRUCTED BY THE CUSTODIAN!!!
So, they have changed the language and you are now correct and I was correct based on the original structure of GLD.
I would add still, however, that GLD is a danger for someone who thinks they are owning (and will KEEP) bullion through this instrument. It is already one of the largest bullion stores on earth and I will give a kudos to anybody reading who works out what they do in the future when the people running the dollar fiat power system need gold.
No Feud. Yes, GLD and SLV will work as trading vehicles almost up to the end. But they will like fail at the 'end game' maneuver.
If you think you can spot it, avoid it, and get into an alternative quick enough, then more power too you. It's a game of chicken, but probably clear for a while yet.
In the meantime, as I've said before however, you are still better with gold and silver futures instead for various reasons like 24hr, taxes, spread, etc. My opinion.
It's interesting that you think the market will first tank and then go up as a way of exiting the coil.
I'm leaning the other way (with my mind, not my money) because of the exceptionally bullish seasonal tendencies leading to midterm elections and November Fed meetings.
I'm thinking we go up into Tuesday and then reverse, probably making both a daily cycle low as well as an intermediate cycle low. Barring another mini-crash, I just don't see any short term way to reverse sentiment quickly. I think this will take some time.
PS: If you know how to think like the people running the game then you know why the original prospectus allowed leasing and why the current one does not. They had to adjust and adapt as A)the whole 'leasing' of gold issue became more known in the industry and B)as competitor funds with better structure were created.
They ultimately didn't want to lose ownership and control of the main gold holding fund because it will be useful in the future.
Plus we still have that pesky dollar yearly cycle low hanging over the market. A declining dollar would mean sentiment would have to reach even higher extremes than normal as a lot of volume would be run by computers simply playing against the dollar.
If your account is large enough to where you can handle the leverage then yes you could probably buy one or two contracts or whatever amount would represent no more than 100% of your porfolio. If however you are planning on loading up on silver futures to the tune of 20:1 leverage then I would say you are well on your way to blowing out your account.
Marky, A daily cycle has to be an obvious correction in my book. I know some people will rationalize any tiny pullback as a cycle correction in order to make it fit in the normal timing band.
I don't do that. If it's not obvious then I consider the cycle to be stretched until it is obvious. Invariably the next cycle always proves that the stretched interpretation was the correct one.
Gary--
ReplyDeleteThanks for the update.
If Gold holds above 1315 today but trades below it overnight and then holds above it again Thursday does that still indicate a failed cycle?
I know that is hypothetical but seems possible at the moment!
That's a tough one. I think I would treat it as a failed cycle and initiate my line in the sand strategy. And then see what happens.
ReplyDeleteI think that's good strategy Gary. If it is a failed daily, and thus an intermediate decline, we're very likely to trade back above that level before dropping into the final intermediate low. That's what I see from historical cycles.
ReplyDeleteIs that the way you see it Gary? If nothing else it's good risk management while using leverage.
I hope we are retesting the bottom from Friday.
ReplyDeleteGary-
ReplyDeleteI know you will rely on the number (1315)for your actions. Is your gut telling you it will hold or might we be in trouble. I understand your gut (or anyone else's) will not cause the line in the sand to hold or fail-- but I know your gut is telling you something! Maybe it is saying you are already hungry for a lunch time burrito.
What say you Guru Gary.
Dan,
ReplyDeleteI don't trust my gut and you shouldn't either :)
If $1315 is broken then consider taking positions back down to your basic core position and waiting to see what unfolds.
I'm off to climb some rocks. Talk amongst yourselves today.
ReplyDeleteI hear ya Tommy, but I hate that word "hope", as in the slope of hope.
ReplyDeleteSo hope, but have a plan and stick to the discipline, whatever that may be for the individual.
So another strategy may be to not sell at break of 1315 but to wait for a bounce out of that low that would quite likely exceed 1315 before dropping again into the intermediate low.
ReplyDeleteAnd you'd have to have the discipline to sell at that point, which isn't easy as the emotions are back up and you're hoping for further advance. But at that point you'd have to trust the cycle work that tells you that you're likely to get another daily cycle (or two) that makes a lower low.
Of course then you're taking a bit of a gamble that the drop doesn't go a lot deeper before bouncing, and possible not get back to 1315. So you'd have to have another sell point in mind, unless you just decide to hold through the whole correction at that point.
It's never easy, eh?
That's all assuming you're not just "old turkey", of course.
Onlooker,
ReplyDeleteYes, a plan always works best because my emotions do not get in my way.
If target get hit we should live to try to survive for another day and never go for broke.
My view on silver, as it relates to today's action.
ReplyDeletehttp://arum-geld-gold.blogspot.com/2010/10/silver-is-not-tarnished-yet.html
1315 also coincides with a possible neckline point for a H&S on a 60 min chart that gives a measured move to the 1240-50ish area, depending on how you look at it. You could also call 1330ish a neckline with a higher measured move low of about 1265, which would be a test of the break out.
ReplyDeleteSo this seems like a good line in the sand from two different techniques. And a failed H&S move will often yield a very bullish move, as we've seen in the equity market of late.
Gold proxy GLD is currently filling the second [and last of two] gaps since the recent peak.
ReplyDeleteIt's pretty well there, really - perhaps a touch more...
Man, Gary, you sure gave Timmay a whipping and you know what? You are absolutely right.
ReplyDeleteIf Tim actually looked at the chart he posted, he would see a lot of missed dollar signs on the long side.
Cheers
Can Someone post the comment Gary made on the Slope of Hope! I cannot find it?
ReplyDeleteWould love to read.
thanks
It's in this thread.
ReplyDeletehttp://slopeofhope.com/2010/10/coping.html#comments
Just search for "Garys"
Does any one have a thought about what tomorrow may bring?
ReplyDeleteElk2go,
ReplyDeleteI am looking forward to what Gary will advise in tonight's premium report.
Should be interesting. Volume seams to be low the last 2 days...
Has anyone looked at the Treasury 10 year note rate lately. It's been climbing up sharply. If QE2 was going to be unleashed shortly you'd think it would be declining. Maybe QE2 won't happen or not at the level originally expected.
ReplyDeleteleaked reports confirm QE2 is going to happen, just not as big as QE1 and staggered over months as opposed to one shot. When investors wake up and realize QE2 is adding more grease to the USD's slide, precious metals will rise more.
ReplyDeleteIt looks like "Buy in the morning, sell at the close" is the new mantra for PMs.
ReplyDeleteI like this negative action, market is now pricing in a QE-Lite, few hundred billion announcement. That almost takes the "sell on the news" option off the table next week and leaves the door open for a possible upside "shock" announcement.
ReplyDeleteI second trond56 (last comment on previous posting): what does the abbreviation SoS stand for, and what is a SoS signal? Thanks.
ReplyDeleteSoS = selling on strength
ReplyDeleteBoW = buying on weakness
SoS = Selling on Strength. It's a table published by the Wall Street Journal online and updated every 15 min (I believe).
ReplyDeletehttp://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html
Gary scans it for large sales of SPY (and only SPY) during periods where one expects to see a top in the market.
Gary's big old triangle break out is still holding firm! I like how the miners are hold this area for now...I'd love to see a sideways chop during a potential short term intermediate bottom forming vs. what we had take place back in Feb. I like the 100 day MA also coming right up around 480.
ReplyDeletehere
@bede, @rosabarba: thank you for the quick orientation. Which only brings on more questions, hopefully someone will be willing to address them:
ReplyDelete1. is there any method of picking up the SPY components (other than comparing the lists of money flow leaders from WSJ versus components of SP500)? 2. What precisely, from the SoS money flow list, makes up "the signal"? 3. Is there any relation between this method and the Money Flow Index, available on some system (ex. freestockcharts.com, moneycentral.msn.com, etc.)?
Thanks in advance to the eventual responders.
@ contulmmiv
ReplyDeleteKeeping in mind this is a technique Gary came up with and back-tested, so he would probably speak to it best:
1) I don't believe so.
2) a) size ($200M-$700M, often on multiple days) and b) timing
3) I don't believe so, though both are used to try to spot tops and (along with BoW for SPY) bottoms
Gary, I as you, and most wise investors, know that in the long run manipulation of the financial markets (at this time) is not possible. In the short run (a definition of a short run is subjective, but realistically a short run could last 10 years+ IMO) prices are manipulative (definitely day to day, but depending on the market, its size, this differs).
ReplyDeleteIMO and others JPM and HSBC have acted as a manipulative force of silver through holding 85% of the negative bets against this commodity. The amount of their short positions were so large that they were actually years of global mine supply! You can shrug off manipulation as if it acts minimally, but how do you begin to argue against a negative bet so large that it totally dwarfs the amount of that item produced throughout multiple years?
Some questions to come to mind that you can argue:
Why would they short something that has gone up on avg. around 20% annually? Then how do they make money off this? (i think the answer to that is timing, its all comex options as you know).
Aren't they heavily heavily losing right now? Yes, but what does it matter they are the Fed (the fed is private and two of its biggest owners are jp and hsbc). They have nothing to lose, they have (or are neighbors to) the machines that make what they are losing, "dollars".
What is the point? Possibly to limit the interest is sound money? To limit the increase in the usage/investment/interest in non-debt-based money?
Well interestingly two comex traders just filed suit against JPM and HSBC over their silver manipulation. Obviously they got burned bad on their bets and are hasty because of that, but their points are seemingly more and more valid.
Gary, am I misstating facts, misunderstanding them, or is "significant" price control in silver by these two majors to be overlooked?
http://www.theaustralian.com.au/business/markets/jp-morgan-hsbc-accused-of-manipulating-silver-price/story-e6frg91o-1225944590036?from=public_rss
Robert,
ReplyDeleteAsk yourself a few questions. First what possible reason could the Fed have for trying to supress the price of silver?
IMO they have no logical reason to supress gold since no currency is backed by it anymore. So it's even less likely that the government has any need to supress silver. Currency has never been backed by silver.
Next if JPM is trying to supress silver then why are they acting like any normal hedger? By that I mean as the price of silver gets stretched above the mean they add to shorts (they are betting on regression to the mean. It's how most commercial players operate)
When a correction occurs they cover shorts when they think price has fallen far enough.
If they were really trying to seriously depress price they wouldn't cover, they would press down harder on shorts as the correction intensified.
That never happens, aka they aren't really trying to depress price. What they are doing is taking advantage of silver's volatile nature by playing a regression to the mean strategy.
That's all that is happening.
I guess in the short run, the only ones to lose from this (if it is happening and as forceful as the media likes to make it out to be) is the option traders (and I guess, more or less, buyers at the intermediate and/or c-wave tops).
ReplyDeleteThe question remains, what would the price of silver be if JPM and HSBC covered ALL their shorts???
This has tried to be determined, I think Ted Butler was the pioneer in this (I could be wrong), but I believe it was estimated the price would be somewhere between $35-$70 (large range I know).
If you've been paying attention COMEX position limits have been the big discussion in the commodities arena in the last 6 months. Investors are too savvy nowadays, and the information flow to fast. Position limits are a must for investments to continue. Once this happens the big commercials will be covering large amounts of shorts (this is already happening for the most part as we speak, the big boys know what is coming and they are getting out of the way, in theory of course)...
http://www.thetradingreport.com/2010/08/02/butler-jp-morgan-covering-its-silver-shorts-like-crazy/
http://www.gold-eagle.com/editorials_08/butler041410.html
Gary,
ReplyDeleteIf you had a monopoly you'd try and protect it. The FED is a corporation, in the manufacturing business, their product is a "Dollar".
It's competitors are other currencies, of which gold and silver are. Companies use strategies against their competitors in order to maximize gains. The Fed's product, again, dollars, is only created when someone agrees to take it and then pay back to the fed the dollars plus more dollars (interest). They only can get more dollars to pay for the interest from someone else taking out debt from FED Inc. This is very basic, but commonly overlooked, as you know all the money in the system can't pay the debt off (P < P + I). You might think this is getting off topic, but it is just getting to the heart of it- the FED's product is not actually about "profits" it is simply about power and control. Everyday due to interest, every second they have more assets, while most others have increasing liabilities (to the Fed).
Supposedly, the majors have always held a "core" of a MASSIVE short position in silver. This "core" is so large that it is totally against market fundamentals, in that, its size exceeds that's marker's current production limitations significantly. The hedging as you say is only with a very small position of their overall shorts. Have you looked into the COMEX numbers, if so can you refute me by using the numbers, and translating the contracts into USD and then comparing that to global silver production annually?
For anyone who wants to know about the magic of the Fed, this guy is the best (he's a big climber too Gary!),
http://www.csper.org/renaissance-20.html
I have been told to, especially by Mr. Bernanke on this message board, to not talk about these things, so I'll steer clear from this for now, but if you want to talk numbers about this subject that makes things much swifter!
ReplyDeleteI'm just trying to open your eyes Gary to the more criminal forces at work, not for the sake of exposing them, but for the sake of increasing (potentially, I guess it could act opposingly) your awareness of the overall market forces.
Gold and silver haven't been currency since 1972. The Fed can print as many dollars as they want. You need to come up with something besides that. It just isn't a logical reason for why gold should be manipulated.
ReplyDeleteYou will notice I didn't say anything about the size of positions, contrary to what the conspiracy crowd would like to believe its irrelavant.
The banks are just using a leveraged strategy to make money off silver's volatile nature.
There really isn't anything sinister about that. They've just found a very dependable way to play a regression to the mean strategy in an asset that is prone to big volatile moves.
Seriously folks you've got to stop reading this GATA nonsense.
ReplyDeleteWhat's really funny is Bob Chapman, who was the biggest gold/silver broker for the last 50 years (he's now retired but has the newsletter the International Forecaster), and owned his own brokerage firm, has been talking about this lawsuit coming out for months and it just came to the light of day today.
ReplyDeleteHe also brought up QEII a long time ago, long long time ago, and has been covering it for awhile now. Interestingly QEII has already been implemented and has been active in the markets, according to Bob, by hiding it in the REPO markets.
His next forecasts are the default from the COMEX in gold and silver, as well as default in GLD and SLV (being that their metals are leased and the leasee can at any time get their metals back from the ETF while everyone else holding the paper certificates would be left with just that, paper, OR the small amount of metal the ETFs hold that is not leased from major banks like the Bank of London will be divided up into the O/S. So overall, once things are finalized they'd receive pennies on the dollar for their shares).
Gary how many burritos you wanna bet we see some type of closure on GLD and SLV in the next 5 years. How about a flat 100 burritos (gift certificates for the price of 100 burritos at market price in 10/15 work too). And this is a nice restaurant burrito gift certificate not Walmart packages of burritos! We got a deal???? Actually to make this more realistic, and I will not forget, I promise, how about the value to 27 burritos, today's date (at 8 bucks a burrito that's about 216 dollars right now). So expiring 10/27/15 27 authentic burritos?
Alright, your last response attacked all my points, and I actually do side with you, I just hadn't heard your succinct answer to those points.
ReplyDeleteAnyone wanting to invest in Gold and Silver not through miners, or physical, it is wisely suggested to do so through the Sprott Physical Gold ETF (PHYS), or the Central Fund of Canada Limited (CEF).
Bob is literally right 98% of the time or thereabouts, I really have no doubt GLD and SLV will have trouble eventually as will the COMEX as this bull rages on.
Hi Gary,
ReplyDeleteFor last few days the media has been flashing the news of QE2 and more or less every analyst on TV is convinced that QE2 will happen and the fed will create 1-2 trillion in new money. The fall of dollar and fed support of asset prices also looks like a done deal.
Is it possible that next week fed throws a curve ball by saying something that the market is not expecting and dollar starts rising taking everything down with it for a correction before the actual QE2 happens.
V
V,
ReplyDeleteI think it's a given the Fed is going to do some kind of QE. Ultimately that along with the orginal QE will be the fundamental driver to send the dollar down into the three year cycle low.
But we can certainly have a counter trend move before it happens. The stock market is overdue for a move down into a daily cycle low. The threat of QE round two is making it very tough for the market to correct though.
I do expect something significant to happen next week. Either it will be the bottom of the daily cycle if we can finally get a correction over the next five days or it will be the start of a correction if everything continues to hold together for another week.
One way or another next Wednesday has high odds of being a reversal day, we just don't know which way the reversal will be yet.
Robert,
ReplyDeleteThanks for your posts. Just wanted to know that if GLD and SLV are in trouble, what would it mean for gold and silver futures? And for ETFs based on these futures like AGQ? Will they become worthless also?
RA,
ReplyDeleteGood question. According to Bob, eventually, now he believes this is not imminent but further down the road (we should have good warning of this as well, especially through him, and other such as Adrian Douglas (ex-JPM trader), Harvey Organ, etc.), if the COMEX were to default then futures would also have to be settled for pennies on the dollar, and derivatives such as AGQ as well.
Now I'm currently invested in AGQ but do plan on exiting at the end of this C-wave and then getting back on and then exiting eventually when the signal flags come up that the COMEX storm is brewing. If I had to guess this wouldn't be until Gold is steadily over $2000, and silver $50 or so.
Now if I were you I would ask this directly to Bob (bob@intforecaster.com), and he'll reply to you most likely within 24 hours. If you could post his response on this board that would be great. He'll also most likely just attach (he always done this) his latest edition of his forecaster, and this one he goes very deep into the foreclosure fraud FYI.
I wouldn't worry about it now, and I was actually thinking about just going all in on AGQ for this c-wave (I didn't but it would have worked out nice already), but down the road keep your head up.
GL RA.
Read and analyze the prospectus or have your attorney do so if you are in significantly.
ReplyDelete"The Trust may not have adequate sources of recovery if its gold is lost, damaged, stolen or destroyed and recovery may be limited, even in the event of fraud, to the market value of the gold at the time the fraud is discovered.
Shareholders’ recourse against the Trust, the Trustee and the Sponsor, under New York law, the Custodian, under English law, and any subcustodians under the law governing their custody operations is limited. The Trust does NOT insure its gold."
Doesn't seem like a very comfortable place for me to be in long term, no insurance, at all, are you f'in kidding me?
I just did a google search on "GLD not insured",
ReplyDeletethis guy wrote a pretty gold article evaluating its prospectus:
http://insideinformationdaily.com/why-you-need-to-avoid-the-precious-metals-etfs.htm
I honestly think over time the gold bull will also be bucking people off through mal-investment. Those that hold slv, and gld primarily. If one were to google investing in gold, of course all the first search results point you to gld, same holds true for silver.
What's Cramer's number 1 gold stock? Of course GLD. It will end in fraud, no doubt at all. The mining shares are the place to be. I haven't read the prospectus on SIL etc, but it is a very good idea...
am I the only one accumulating physical silver as the days goes on? I see both viewpoints but don't know how it will play out so physical for me.
ReplyDeleteI was thinking of going physical with the metals because there could be a problem with paper gold and silver down the road. But we have the usual problem of paying a premium (sales tax), insurance and storage costs, possibly theft. It is also not as liquid as paper.
ReplyDeleteMiners on the other hand may not have the same problems as paper gold and silver. Of course the US government can nationalize some of these miners or tax the hell out of them. But I think GDXJ and SIL are diversified across countries.
At some point however, I suspect for me it will be a comnbination of physical metals and mining stocks.
I understand that PHYS could also run into problems, not regarding ownership or insurance, but taxes.
ReplyDeleteIt's really a trust, not an etf. If a large PHYS holder decides to redeem for gold, it's a taxable event to the trust, thus all the shareholders. I don't see any reason why someone needs to redeem as it's real and already stored/insured, but it's something to be aware of.
Concerning manipulation of gold/silver, sure I KNOW people conspire in anything they can to make money, however it's no really necessary with metals any longer. First, it's harder and way more risky trying to short the only bull mkt around, and second, I'm far more likely to just "revalue" the USD slowly lower so people don't hang me. If necessary, we can always do an Argentina style overnight dollar mush to get where we're headed, but pm's are nothing more than an indicator these days, like any other commodity.
P.S. Keep your head down and do not question the matrix, just do as you're told and I will promise to make everything is OK. TV is your friend, and please surrender your weapons no matter what the Constitution says, it's just an old piece of paper with no significance.
Rosabarba said:
ReplyDelete"Keeping in mind this is a technique Gary came up with and back-tested, so he would probably speak to it best"
Thank you, Rosabarba, for the additional explanation.
I guess you're right, so here comes your three-part question regarding SoS, Garry:
will you, please, _describe_ what are you actually doing when looking at the WSJ SoS list, trying to determine the money flow?
1. For one thing, why strictly SPY components, and how do you extricate the SPY components from the WSJ list?
2. Then what are you looking at, in order to get the "signal" and what conditions are sufficient to declare yourself satisfied?
3. Finally, what is the relationship between this technique and the Money Flow Index available on some platforms, for example, freestockcharts.com?
Thank you in advance.
Robert,
ReplyDeleteThanks for the inputs. Will post if I get anything useful.
Professionals measure themselves against the S&P. If they think the market is due for a correction they will start selling the SPYDER's into up days. Sometimes it's just one day and sometimes it's multiple.
ReplyDeleteIt rarely happens on the exact top so it's not a perfect timing tool. What it is is a serious warning sign that either a daily or intermediate cycle correction is imminent.
It doesn't always appear before a daily cycle correction but it almost always appears prior to an intermediate cycle top. It's actually one of the most dependable signs that an intermeidate cycle is topping.
I like to see some kind of significant negative money flow. -200 million or greater.
This has nothing to do with the money flow indicator. It is more of a sentiment indicator. It's a sign that people much smarter and with much better information than me are starting to step aside.
Has anyone noticed how the 30yr bond has broken down? What do you think it will mean for USD and PMs?
ReplyDeleteHoly smokes! APMEX is out of bags of 90% silver coinage, all sizes:
ReplyDeletehttp://www.apmex.com/Category/982/90_Silver_Specific_Coins_By_The_Bag.aspx
What's interesting is that this form of silver is typically the type that "doomsday" people buy because it's already in coin form (small amounts silver), ideal for making small purchases.
hmmmmm....
Gary--
ReplyDeleteLooks like we are on day 9 of the dollar cycle. Typically how long do daily dollar cycles and intermediate cycles run?
Thanks
Usually if a daily cycle is going to fail it will top within 10 days. So far this cycle has topped in 2 days unless we break above 78.40 in the next week.
ReplyDeleteHowever I wouldn't count on these rules right now. Everything is being whipsawed to death by next weeks fed meeting.
@ Garry: Thank you for addressing so precisely my questions regarding SoS, and for the additional explanations. The logic behind such an analysis makes full sense to me, and I believe this is an instrument worth adopting.
ReplyDeleteThe only problem is that I do not find a way to obtain the aggregate money outflow figure for the entire SPY: do you know by heart all the companies in the S&P500 so well that you can pick them out from the WSJ list and add mentally the total money flow affecting the index? For example, today, October 28, we have at the top of the list Commscope and ProLogis with a total combined money flow of -250 mil: but none is in the S&P500.
I would really appreciate to get this clarified.
@ contulmmiv
ReplyDeleteTo clear one thing up you may have misunderstood: It's not the SPY components but the actual SPY ETF, and only that ETF, that Gary looks for on that table.
That is correct. Smart money just sells the SPY ETF in lew of trying to sell correctly weighted amounts of 500 individual stocks.
ReplyDeleteIf I'm not mistaken, the SoS "signal" is just a small, secondary confirming indicator anyway. The bigger pic should be our focus.
ReplyDelete@Rosabarba, @Garry: Sorry for the redundant last posting. I identified the source of the confusion: it is a shortcoming of the WSJ website. While googling for "SPY money flow leaders selling on strength", etc., I got correct WSJ hits. But the links from the actual articles were displaying _the most recent_ list of SoSs where, of course, there was no SPY entry. Since I did not notice the mis-direction, I inferred that SPY is not listed as such and the only way to gauge the money flow in the ETF would be to add the money flows in the companies of the index underlying it (S&P500).
ReplyDeleteIt takes another step, namely to use the button "find historical data" in order to get the listing of the _actual_ date to which the original googled article referred. And there, indeed, SPY appears as clear, separate entry.
Well, let this remain here for future reference. Thank you both, see next comment :)
I didn't like that comeback rally yesterday, it was setting up very nicely for a few strong, sharp down-days leading into the FOMC meeting where expectations on a significant QE2 would be very low.
ReplyDeleteA republican sweep, low expectations on QE2 and 4 previous days of sharp selling leading into the FOMC would set up perfectly for a "buy on the news" Q4 monster rally.
weak dollar today...gold barely UP
ReplyDelete>Professionals measure themselves against the S&P. If they think the market is due for a correction they will start selling the SPYDER's into up days. -GARY
ReplyDeleteI would argue that real professionals sell the ES S&P futures instead of SPY. A moneyflow indicator on ES would be preferable, but I understand it is better than nothing. (I'm sure such an measure already exists, but it's probably in a blackbox at goldman. It's hard to calculate for a regular person.)
Hoye called the recent pullback in gold after misfiring (like many) the last two months.
ReplyDeleteHe's alerting of a "Springboard" in gold and a sharp resumptionn of the rally imminently.
http://www.321gold.com/editorials/hoye/hoye102710.pdf
Sure does look like the dollar is back in break down mode. Still too soon to tell for sure, but the relentless drop from yesterday's midday high is looking ugly.
ReplyDeleteI bet a lot of folks got shaken out of gold and GDX yesterday as they flirted with their lows of last week. Especially GDX looked like a classic stops run at just under 54. Might have been just enough to ignite another run up.
Speaking of money flows, and as a corollary of the SoS signal: I believe to be of some usefulness looking at money/gold flows in/out various gold funds (redemptions, holdings). But I did not find any systematic source of (preferably) charted, historical movements of gold/money in and out of funds. Reuters publishes periodical holdings in GLD, the Gold Seeker daily closing report gives the numbers for a number of funds & warehouses on a daily basis, and this site www.exchangetradedgold.com provides a current summary of assets.
ReplyDeleteWhat is your experience with the analysis of gold/money flows in funds? Anyone can indicate a centralized source for such? Garry, any thoughts?
Triangle now on gold. Break to the downside gives us the 1290-1300 target. Break to the upside gives us the runaway that people start chasing.
ReplyDeleteGary: Do you have any thoughts about an eventual blow up of SLV and GLD? I have wondered about this myself. I am long mostly miners, but some SLV. I know Paulson, et al are long it, but they may even have special terms protecting them (?) like Buffett gets when he lends money. I may need to switch to physical at some point buy, geez, that's a lot of loot to have to put somewhere. Thoughts, please.
ReplyDeleteImportant if you missed:
ReplyDeletehttp://www.bloomberg.com/news/2010-10-28/fed-asks-dealers-to-estimate-size-impact-of-debt-purchases.html
http://www.zerohedge.com/article/paralyzed-fed-defers-decision-monetary-policy-primary-dealers
The fed is now so constrained with 'expectations' (cause that is all this is...is a ponzi of worthless paper and assets) that they are now having to actively POLL finance entities in order to figure out how to react to things and not topple the whole mess over. (It really is that simple.)
I suspect everything that happens from now till Wednesday will be meaningless. The danger to gold is if the Fed announcement intitiates a short term trend reversal in the stock market and drives the dollar up to 80. The stock market is overdue for a daily cycle correction.
ReplyDeleteIn that scenario I would expect gold to throw the curveball and make another dip below $1315 and then bottom along with stocks.
I do think there is a very high probablity of a significant shift after the Fed meeting.
Just to play it safe one could book some profits on Tuesday and then wait to see what happens.
By book profits I mean go back to a core position.
There's more to it than that, but I will save that for tonight's report.
DG,
ReplyDeleteI'm not terribly worried about it. For one as long as the gold:XAU ratio is so undervalued I would never waste my time with GLD.
As a matter of fact I doubt I will buy another oz of gold, either GLD or physical for the duration of this bull. There just isn't the profit potential in gold that there is in miners and silver.
This comment has been removed by the author.
ReplyDeleteRA- I asked Bob about the risks of GDXJ, and SIL, basically there aren't any similar risks to GLD and SLV, BUT,
ReplyDeleteaccording to him they're not a very good PM investment because obviously they will underperform the best miners (significantly!). This is just common sense.
The question is then, who are the best miners? I think for silver they are SLW, SVM, PAAS, HL, FRMSF, SSRI, EXK, GPRLF, and USSIF. (I only but a small percentage in the last two, and they are basically plays of the inflation.us pump). I didn't put anything in CDE for not too much of a reason, I just didn't like how they were performing relative to the others. CZICF.ob is also of interest and I'll pick a small amount up here soon. Pick up some AGQ too if you like silver.
I thought hard about SIL but I didn't want my trophies to get dragged down buy the weak ones. I bought enough miners so that risk is very low that I can be wiped out by one, two, or even three companies doing poorly.
I'm actually avoiding gold in this bull- I used to own a lot of physical but I'm young and am taking more of the gambler's bet with silver (plus all of these silver miners produce some gold so I'm not totally out of gold).
Physical is not where the real money is made in PM bulls. In the 80s miners on average went up 20-40x that of the actual metal price! It is just noise to hear that miners are paper, blah blah blah blah, we will forever have paper currencies, unbacked or partially backed (there's not enough physical to go around)...
GLTA
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ReplyDeleteBob for some reason takes the ultimate conservative approach (basically 3/4 gold miners, 1/4 silver miners with small percents on the juniors). He is also 30% physical, so the miners are 70%, but he only buys graded physical (they appreciate much more than ungraded bullion) He only recommends the following for the miners:
ReplyDeleteGG
AEM
SSRI
MFN
HLLXF.PK
ABIZF-OTC
He's up 1000s of percent on all these except the juniors. He was mostly touting them in 01 (ssri was like a dollar or so back then!) All the others have about 1000% gains since then.
Man I wish I was throwing a few hundoK back on those then. The party is still early but patience in such a velocity orientated world is at sometimes challenging.
-RT
I'm scooping a little more ANV in here, even though it seems to want to go lower. Don't mind getting in front of the Fed (me) with the size I'm doing.
ReplyDeleteGary,
ReplyDeleteThe other night I posted a few links in reply to Peter who asked why the FED cares about gold. Here it is again.
http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/
A quote from the link...
Said the former Fed chairman: “If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.”
Even though gold is no longer tied to any currency it still has a very important role in "investor perception". Robert explained it quite well and in much detail. I also agree with Robert that your loyal subscriber's just prefer to not see you stubbornly blinded in a set opinion.
Personally, I don't know if the FED and central banks are manipulating gold up or down, and don't really care. However, it is plain as day to me that they have a vested interest in the price of gold. I just try to watch technicals, sentiment, cycles, etc. and therefore follow your analysis. Rarely have I had success with investing trying to interpret the noise that is propogated in the media.
I never heard that graded bullion outperforms ungraded. Seems to me that bullion is bullion, but that with graded you might have a harder time finding somebody that appreciates the extra cost, if the SHTF, so to speak.
ReplyDeleteYes, Gary, I am not long GLD. I am long some SLV and have recommended GLD to some friends who would not be comfortable with the miners' volatility. So the question still stands: Do you have an opinion about GLD or SLV blowing up, whether or not you'd recommend them? I am no conspiracy guy, but stranger things have happened. Thoughts?
ReplyDeleteTZ,
ReplyDeleteI saw that article by Bob Hoye earlier and thought of you. Good to see you back, I missed all your comments that got deleted the other day while I was at work and was wondering what happened. Those Hoye charts look compelling. Cheers!
This comment has been removed by the author.
ReplyDeleteSorry, let me repost that-
ReplyDeleteAt 10.40 a.m. NG (nova Gold) was at $9.78 with 400,000 in volume.
Then large volume shot in and it went up .50 from that low and is currently up .40 on about 1.5 miliion in volume 20 minutes later.... No news yet, but maybe someone knows something.
DG,
ReplyDeleteI wish I had saved the article but I read a report that showed GLD does actually own the gold. It's one of the big reasons supply gets taken off the market.
Perhaps a google search might be able to turn it up. So no I really doubt either one will blowup.
This looks legit, i'm long and increasing.
ReplyDeletelooks like some of that QE2 money is all ready leaking into commodities in the last 20 min, lol.
ReplyDeleteBernanke, graded coins are fool-proof, eventually you'll probably see normal bullion be counterfeited more and more as the PM prices increase. Those that are graded should receive a higher price at those times b/c of their security... Supply/Demand how many people have normal bullion eagles, maples etc, how many have graded ones?
and now GOLD just shot up $20.00 silver up $.40 and HUI $13too...come on HUI!
ReplyDeleteBOing!
ReplyDeleteGary,
ReplyDeletegold soar to 1345 in few minutes, what level do you think gold is rally enough to confirm gold finished daily cycle bottom? 1350?
something is happening...gold up to$1345
ReplyDeletewow, and i was just thinking about exiting my positions
ReplyDeleteWe are over the gc triangle. Top line was at 1340. (Although you could make a case for a flat top triangle and then you are back to the 1350 point as resistance to clear.) Regardless we are looking good so far.
ReplyDeleteIf we convincingly continue up it will become obvious to those waiting that there will be no further dip and the chasing (or Hoye "Springboard") will resume.
(Of course this could always be a fakeout or temporary. I've got stops in and a controlled exit)
DG:
ReplyDeleteDon't own GLD or SLV (unless you short them to hedge long positions during expected declines). I promise you the fineprint wont give you what you expect when the smoke clears. Those who really want the truth can read through the prospectus CLOSELY and also examine the exact details of the "audit" that was taken of the gold (including all caveats and possible things missed.)
The prospectus is in english (although legalise much) and means EXACTLY WHAT IT SAYS word for word. Nuff said.
GARY:
ReplyDeleteWhy is gold in a bull market?
Thanks, Gary. I'd feel pretty lousy recommending GLD to some people and then having it collapse in fraud. Too, these collapses tend to happen at the end of a move, which we are not near. Hopefully if something weird is brewing it will start acting odd relative to the metal as someone will know the jig is up. And I agree, probably nothing will happen anyway.
ReplyDeleteTZ,
ReplyDeleteIsn't it amazing that GLD is worth 55,000,000,000! Imagine if that money went into the miners.
I just can't believe how much that pos is worth.
Robert,
ReplyDeleteMany thanks for your detailed inputs. Only 10% of my PM portfolio is in gold. The rest in AGQ,GDXJ and SIL.
If we have to liquidate at the next intermediate top and buy back at the intermediate low, I will avoid buying gold and put the money in silver or miners instead.
But you have certainly given me food for thought about going for selected miners rather than a basket like SIL. But I am a lousy stock picker - that's my problem. I will look at the list you posted in more detail.
Also I need to think about graded bullion. But maybe that is a bit premature at this stage of the bull market.
Cheers!
TZ: Usually the "smoke clears" very late in the game and not halfway into a bull. Do you think it'll be different this time with GLD and SLV? As Buffett says, "It's when the tide goes out that you see who's been swimming without clothes." We are a long way from the tide going out in the PM bull and even if there is fraud, it won't show up until a down market creates pressure, no?---like housing loans, Enron, and everything else throughout history.
ReplyDeleteJesse,
ReplyDeleteIf you think about it you will realize how ridiculous that statement is. No one is going to fool any semi sentinent investor that the Fed isn't printing. Hell they announce it. What good would it do to supress gold but not oil, copper, tin, cotton, corn, wheat and sugar?
Trust me the Fed isn't fooling anyone and the price of gold is the least of their worries.
Not to put a damper on the bullishness but the HUI is forming a potential crawl along the 50 DMA and the stock market a potential coil that I would expect to break lower into a daily cycle low.
ReplyDeleteGary,
ReplyDeleteSilver seems to be doing a crawl also but on the 20DMA. Does that mean anything?
Just like any tool the crawl could fail. If the HUI really starts to rally and break away from the 50 then the crawl would be negated.
ReplyDeleteTrying to guess what will happen prior to the Fed meeting is probably a fruitless effort.
My suggestion is to go to a core position by Tuesday, especially if the crawl is still in effect and then see what happens.
The snp is weak despite the beating in the dollar, while gold is taking full advantage of it. Perhaps, in the next beating that the snp takes, gold will ignore it and hold or rally.
ReplyDeleteDoes anyone else think that the snp weakens into the fed meeting, while gold holds, then they both rally on the QEII which should be larger than expected?
ReplyDeleteTZ could only be mad for 1 day. Welcome back.
ReplyDeleteGary is so completely and utterly wrong in his understanding of the value of gold.
ReplyDeleteIt is clearly ingrained deep and not worth the trouble to argue.
Those who believe gary's view that gold doesn't hold much meaning or power are left to their own results.
I note ironically, however, that everybody seems to be scrambling to buy (and talk down on major media channels) something so worthless.
Gary may or may not be wrong on the reasons gold goes higher, but he's on the train to riches, and that's all that matters. :)
ReplyDeleteAnd the blanket smearing of anything "GATA" as though that is the end all be all source of gold comments (instead of historical fact and rational thought based on evidence) doesn't help.
ReplyDeleteGary's responses smack of somethign i'd expect from an outlet endeavoring to further confuse and mislead people. Not from somebody otherwise smart and respectable.
I don't know how he got all the other accomplishments and yet missed what gold is and how the fiat system works. I mean, JEEZ, we are all long and buying gold! Doesn't anybody ask themselves why (and not accept the default answers...most of which are wrong)?
No I just don't buy into the whole conspiracy nonsense when there is no logical reason for it and when it can't possibly effect the price anyway other than to accelerate the trend.
ReplyDeleteEvery bull makret has it's share of conspiracy theories and gold is certainly not immune. The extremely emotional nature of PM probably makes it more likely actually.
TZ,
ReplyDeleteIs it because I'm printing confetti non-stop?
Any thoughts on what the response is likely to be of earnings reports coming out shortly for miners? It seems to me that earnings will significantly increase here and through the next couple of quarters. This alone should goose the producers share prices.
ReplyDeleteLets face it the Fed can print as much money as they want. If they trully wanted to drive gold lower they could pile on shorts into infinity, meeting every margin call until the massive weight of all those shorts collapsed the price of gold.
ReplyDeleteIt never happens does it?
GARY,
ReplyDeleteWhy is gold in a bull market?
Just use a little more common sense and a little less emotional guessing and it's pretty easy to see through the conspiracy theories.
ReplyDeleteTZ: Are we feuding? You rarely answer my questions after you have made a claim. You don't seem to mind people questioning your claims, so...? The most recent unanswered one was:
ReplyDelete"Usually the "smoke clears" very late in the game and not halfway into a bull. Do you think it'll be different this time with GLD and SLV? As Buffett says, "It's when the tide goes out that you see who's been swimming without clothes." We are a long way from the tide going out in the PM bull and even if there is fraud, it won't show up until a down market creates pressure, no?---like housing loans, Enron, and everything else throughout history." Where is my thinking wrong here?
By the way, Gary is not discounting the value of gold. I can't imagine where you get that./ He has written often about fiat currency, Fed idiocies, etc. He (and I) just don't buy the conspiracy and manipulation stuff. It cannot be successfully done over time and doesn't make sense to either of us. But answer my first question anyway even though we disagree about boogeymen.
Simple. Supply and demand imbalance.
ReplyDeleteThe same reason that fundamentally drives all bull markets.
GARY,
ReplyDeleteDodged the question.
Why is the demand for gold rising?
We all KNOW why demand for OTHER stuff rises. Why does demand for a useless metal that the govt doesn't care about and which the fed doesn't have stored in very very large quantities under it's NY headquarters rise?
ReplyDeleteDecreasing supply and increasing demand because of central banks debasing currencies. As currencies lose value it takes more dollars, punds, euros to buy an oz. of gold that is getting harder and harder to produce in increasing quantities.
ReplyDeleteBoogeymen? You mean there is more than one. NOOOO!!!
ReplyDeleteGold is going up because demand is flying, and they can't get supply caught up fast enough. Now demand is going up b/c people don't trust me with paper and an inkjet.
They know I'm off to Tel Aviv once the jig is up.
Let's face it, if the dollar was appreciating there would be no supply/demand imbalance in the PM markets as gold pays no interest and can't compete against an appreciating currency.
ReplyDeleteGold is only a commodity when people are fooled into believing that fiat money is safe.
ReplyDeleteCommodities supplies are increased and demand is reduced with price increases (generally speaking) whereas with gold it's supply is reduced and demand is increased with price increases (when people begin to lose faith in fiat...such as now).
The FED does manipulate the price of gold because they understand that a price run in gold can lose control and quickly cause the fiat systems to collapse. All paper money seeking the true money will cause all paper to burn. It's just historical fact irregardless of anyones knee jerk reaction to thoughts of 'conspiracy theories'.
Gary,
ReplyDeletedo you have sell stop for $GOLD?
Did the parabolic run in 1980 cause the dollar to collapse?
ReplyDelete92000,
ReplyDeleteNot on my core position.
You seem pessimistic regarding your cycles holding up. The dollar is more than 1% and the cycle low occurred 9 days ago. You predicted a quick rally "of the dead cat bounce type" and turning lower within 10 days. Isn't that scenario still holding up well?
ReplyDeleteAlthough you preferred gold dropped to $1,300 and lower, it still responded to the cycle low.
Is the concern then that equities didn't follow suit and does that need to affect gold's correlation to the dollar, which is still on track to move lower? At least equities moved a little lower over the past 10 days and they are lower in conjunction with the dollar today, does that matter?
Just seems like reading only your posts from last week and then looking at the charts since, we are on track.
Poly,
ReplyDeleteI am concerned that the stock market hasn't moved into an obvious cycle low. Cycles never fail but they do stretch from time to time.
So sooner or later the market will move down into a daily cycle low. When it does I think it's probably a given that the dollar will rally.
So far the dollar has rallied mildly and gold has contracted mildly.
If stocks finally decide to correct and the dollar rally intensifies I would expect gold to put in another leg down.
At the moment the pending Fed meeting next week is stretching everything so we can probably throw out "normal" stats.
This may be one of those times where the dollar rally lasts longer than 10 days but yet still produces a failed cycle.
JD,
ReplyDeleteI love futures and options (rarely buy/sell stocks).
You can use SI for leverage but you really need to understand what 1 contract is equal to in terms on leverage.
Other than that they are great (24 hour markets, SI has decent liquidity)
Keep in mind that they can go limit up and limit down (that locks you in to the trade)
@Robert
ReplyDeleteI am with you on Gold/Silver managed prices in London and Comex. Of course that is coming to an end as expected.
What do you mean by graded eagle vs regular eagles? unless you mean limited edition type coins that have never been touched etc?
Gary
ReplyDeletewith regard to your reply to poly-that would change your timing thoughts for the end of november -early december?
Change your outlook for springs low for the dollar?
and will you be able to still go to Hawii AND RELAX in early Dec??!!.. if Nov-Dec changes :)
Alex,
ReplyDeleteI don't expect any volatility next week to effect the normal intermediate cycle timing in the dollar. I'm still expecting a bottom in late November or early December.
Gary,
ReplyDeleteCan Swing high and low apply to stock market?
Gold era,
ReplyDeleteSwings are really only significant when we are late in a daily cycle as they may or may not spot a top or bottom.
The current cycle is being stretched by the threat of QEII and the upcoming Fed meeting so swings at this point aren't worth much.
there is a lot of volatility in the foreign exchange market. EUR/USD went up close to 160 pips in a few hours without any big news events. I suspect alot of dead bodies in the wake of this action
ReplyDeleteOk Folks..
ReplyDeleteI got an education yesterday so I'm going to share it here.
I've been Old Turkey for appx 18 months. Its been a great ride. But yesterday showed me that greed had got the best of me and led me to increase my position sizing to a point in which I panicked at the prospect of a drawdown.
I was driving East through the mountians yesterday when I pulled into a town with a wireless signal and got Gary's cautionary email. I had a gut rxn the likes of which i haven't had for several years, and proceeded to grab a table at a local coffee house, and sell sell sell. WTF??
I was at appx 98% invested in PMs. While I was doing it my mind was saying...wait for confirmation, but my gut was too strong. It said get out and think later. So I brought myself down to appx 30% invested. Of course this all happened at the low of the day as only a really bad trade should.
Anyway, watched the market rally last night, and this morning, and felt that nauseating pit in my stomach of being left behind.
So, what is the lesson here.
1) 98% invested is too high for my nerves.
2) Stick to my rules of adding my most substantial positins at intermediate lows which will give me the space to not panic at the onset of a drawdown after a rally. I had added a significant piece in the past couple weeks, and for me this appears to have taken away my strong hand status.
3) Never go below my core position size. In a C-Wave this is 50%. For a D-Wave 25%. I believe the bull will eventually correct timing errors so there is no reason to jettison below my core.
I want my C-Wave max to be 78%. I had no qualms at that size during draw downs. It was adding the last 20% that freaked me out as it went under water.
Anyway, hope this is helpful to someone.
I did bring my position back up to 50%. If we have a drawdown or rally I'll ride it out at this level. If we sink into a decent correction I can add more. I feel much more settled and am actually hoping for a drawdown so I can get back to full strength on a correction.
I really have to consider what to do if the dollar breaks below the 76.15 level. At that point I will probably bring myself up to a 65% position, and leave it there till the end of the C-Wave. Being less than full strength will bring home the lesson so that I'm less likely to repeat it.
Mitch
JD,
ReplyDeleteIf you choose to go with futures then I would recommend you look into market profile and volume composites.
It has helped me become a much better trader/investor.
It is somewhat complicated at first but I truly believe it is the best way to understand markets (buyers/sellers).
I use gary's sentiment and cycles to help with tops and bottoms. My entries and exits are tied to volume composites on futures.
fubsy,
ReplyDeleteGreat post. Seems like you are very clear now on what your position sizes should be in the different market conditions that PM's go thru. Great reminder for me to not get greedy and over extend. Thanks!
Fubsy: Yep, been there. I have taken a few major hits over the years and they always turn out to be worth the tuition. One suggestion: open a separate account at your broker. Call one "Core" and the other "Trading." Helps make it clear what you are doing and why. Simply decide not to access the core account except to add at intermediate bottoms. This "firewall" may prove to take the emotional pressure off. good story---thanks for posting it.
ReplyDeleteJerred,
ReplyDeleteWhat is your source for volume composite data? Also, do you have a book or website that you'd recommend as a place to start learning about this?
Thanks!
Fubsy,
ReplyDeleteif youre not trading with leverage i dont see the point of going out of a position in a bull market especially when we are close to a bottom. If its not 1317 then its 1300 or 1265 not too far away to be worth risking being out of position. If you were going to take money off the table should have been at 1370-1387.
I think the intraday alert yesterday (negative on gold direction) and the whole "draw the line in the sand" posts the day before that(positive on gold direction) freaked everyone out. I got shaken out of 40 ounces of gold yesterday just to reduce leverage. I think it would have been good if Gary would have went on his hike and not have posted the alert. :)
ReplyDeletePC,
ReplyDeleteDTN is great www.iqfeed.com
www.linnsoft.com (incredible software).
Books - buy them from amazon (used)
Markets in Profile (Dalton)
Mind Over Markets (dalton)
Unless the line was crossed why would you get shaken out?
ReplyDeleteIf one is going to interpret my posts differently than how I write them then they might as well not read them :)
DG,
ReplyDeleteJust to let you know if GLD were ever to fall apart it would be not when gold moves down drastically, but what will really hurt the GLD is when everyone is demanding physical. When the physical demand for gold and silver are at all time highs, when people will not roll over their options for cash premiums and instead demand physical is when the subcustodians will be doing the same. This will occur during the mania phase, but as we know it is in all likihood you could see this mania phase next Spring, but more times than not it will happen years down the road during a different mania move. When there are just as good of alternatives why risk it though?
GLD and SLV are what have been killing the HUI imo. That is what is so great about them, the HUI is at a big discount now, but many think that over the next few weeks after the miners earnings are released is when people will really start to see the value in the miners due to their now accelerating marginal profits.
My theory is simple:
ReplyDeletefuck everyone and fuck all the noise, I'm all in PM miners and nothing can stop me. I know how high the prices in silver and gold are going, we are so far away from that now that the most important thing is obviously having a position that seems big enough for you but not too big that corrections will get you marginal calls.
I always have cash on the side, if there were to be a vast correction I'll add.
No one can take my shares, its that simple, its not possible until silver is at $300 or at the very top spike of a C-wave or of course a 1:1 dow/gold ratio.
What the hell else is there to talk about? lolol
I was like mitch, leveraged up day before so as the price moved down, I lighten up on leveraged positions and kept core holdings. Loss a bit but it won't kill me.
ReplyDeleteYes I am severely greedy- I used to hoard physical PMs like I was an Egyptian king, now I'm doing the same for the miners. Time will tell, but I know these shares are going to the moon and you can't do anything about it, this is the trend my friend, say all you want, just sit tight babies.
ReplyDeleteThanks Robert. I agree it's possible that someday those ETF's may fall apart, but I agree that that day is far away and I will be selling on the way up once the mania stage hits. Physical has a lot of problems that are obvious, so what "just as good alternative" are you talking about? A different ETF? Which is best, in your opinion?
ReplyDeleteDG,
ReplyDeleteI know holding physical have some problems but I don't think they are big enough for a person to not hoard physical if you can versus holding paper gold/silver. Whats stopping you from holding 50K or 100K in XAU or XAG?
Nat, I'm talking about graded through the PCGS and NGC, then the coins have individual, verifiable serial numbers. It costs money per coin to do this, but go on ebay or go to your local coin store and you'll find graded coins (ebay the premiums for these seem a little too high, I'd suggest locally looking first).
ReplyDeleteGary, TZ, DG, Martin Armstrong states that gold has nothing to do with inflation, it is simply a HEDGE AGAINST GOVERNMENT.
That is a very important point, hedging against government. Wars, obscene laws, amount of prisoners we have, crazy welfare programs, a crazed mortgage crisis, excessive greed, 80 to 1 leveraged banks, cop corruption, etc etc etc. Liabilities.
1000 oz silver brick is $25K for sake of simplicity. You can't hide 4 bricks somewhere in the house and wait till silver hits $200 an ounce?
ReplyDeleteto Fubsy...
ReplyDeleteI "GET IT", been there. Sometimes its not your 'positions' or exactly the price of gold that jitters your nerves-its watching the 'total account value' drop,right?
what I mean by that is...I can watch my stock (say SLW go down $2.00 from $24 to $22... knowing its going $6 higher to $30.00 in a month and be fine...
BUT if you have 5000 shares and you watch the account value drop $2/share or $10,000.00 - it changes your plan and instead of RIDING THE BULL , we think sell , and reinvest at $22,but its an intraday shakeout.
Thats when you need to ignore "total account value" if you know where you are in a trend/cycle and your plan is to ride a core position.
Been there , done that , thx for the reminder.
DG, I mentioned them before in this thread, these are what I've been recommended, and these are what are becoming more and more popular in the "not-so-easy-feeling" goldbug circles:
ReplyDeleteSprott Physical Gold Trust ETV
(NYSEArca: PHYS)(up 1.81% as I type)
and
Central Fund of Canada Limited
(AMEX: CEF) (up 1.64% as I type)
Maybe I'm paranoid, but I feel a lot safer owning $200k worth of PM's as an electronic entry rather than bricks in my house (fire, theft, earthquake---hell, I live in CA!---!etc.) I believe that if a fraud is brewing it will show up in the market's footprint. SLV stops tracking silver, we're in a mania, something. If things get weird enough I may have to move to physical, but fear that the ETF's will collapse has not driven me there yet. (Besides, I own no GLD and some SLV and am mostly in SIL and GDXJ) Thanks for the thoughts though. This really bears thinking about. I am also concerned that my broker (E*Trade) may go under at some point. Way to go SB---there's no place to hide from you!
ReplyDeleteRobert,
ReplyDeleteSprott's Silver trust comes out today...symbol PSLV
Thanks for those two ETF's Robert. I will look into them.
ReplyDeletealex, that's a great point, and I use the same strategy.
ReplyDeleteI try not to look at my account too often instead I do the same as you just look as the PPS movements, with the only intention of looking at my account is if I'm going to add (I noticed the PPS go low enough for me to add) or it gets so severely stretched that I want to sell some (this I'm doing less and less of now that I found out about the A-D waves, and more of the timing is based on that).
Gary is right though too, the BIG money is ALWAYS made old turkey. I guess we can argue about a million reasons why gold and silver are going higher, but do the reasons necessarily matter, I think we can all agree on some similar reasons for them rising and that's why were here.
If you know the planet Earth is going to go around the sun this year, and if you know Gold is going to be priced at $5000 USD per ounce in the coming years, what to do? whatever you feel like until that time comes around... just chill out, live pretty conservatively, spend most of your money on mining shares, and then down the road sell them all, buy cheap stocks, and use the excess for all your 25 wives out in Utah IMO :)
I don't know where people get their facts from and then freely spew them out as if they're fact.
ReplyDeleteGLD's entire NAV is derived from Bullion they own held by custodian in London vaults. The Bullion is never leased or traded and no derivatives make up any part of the ETF NAV. Sub-custodians holding it's Bullion would be purely for the initial purchase, holding and delivery of the physical bullion to London.
Gary - Money flow is showing SPY at negative $150 million. Should I be concerned? I've got a long position in the stockmarket.
ReplyDeleteROBERT!! How'd you know I was mormon! Just kidding, they dont drink coffee and I cant do this without CAFFEINE!!
ReplyDeleteIts true, I have a core position and one I trade...and I miss alot of moves when I trade. heavy selling and I get out only to see a reversal intraday. On C-waves, I just keep my positions were I can be sane with daily flux ( the feverish flux!) and listen to Garys OLD TURKEY call (method).
Even Jesse Livermore agreed and said he made his millions when he knew he was right, he just sat tight!
Hey DG,
ReplyDeleteFunny I used Etrade and switched years ago due to fear. I guess this is unsubstantiated, and what I'm guessing your now insured for only $250k unless you buy more? $250k in mining shares years from now isn't a whole lot IMO.
I mean I'm always about the best of the best. Sure there is probably no concern with Etrade but if there is even a topic about this, then why use them?! I switched to Charles Schwab and I'm as comfortable as possible with them (if my shares go to the moon I will increase my insurance into the millions as anyone reasonable would).
I feel the same way on physical too, getting robbed is very easy if you think about it nowadays. What's to worry about with electronic investments (even if the power grid went out for 3 months, if you can survive that, then once everything is back up the data is going to be all there). Not too hard to maneuver around, all in all.
Ohhh, the extremes life leads you to thinking about, gotta love them. I'm really not worried at all about the world. As long as you protect yourself from devalued currencies you're fine.
LOL, I can think of a lot better things to spend a fortune on than 25 wives.
ReplyDeleteGary,
ReplyDeleteThat's a big neg. money flow in SPY today that Chris just pointed out.
What you think about taking some lev off about now?
I mean geez, we've been waiting for this SPY SoS for how long now? It seems like its been close to 4 months!
Wait till the close on the Sos guys. It could disappear by the end of the day. Remember, it's not a day trading tool!
ReplyDeleteRobert,
ReplyDeleteI almost switched from E*trade during the'09 meltdown. I do a lot of trading and appreciate the $5/trade I pay with them. I have checked their insurance and it has been raised and is now, if i remember, 1 $mil (they bought supplemental). I have a lot more than $250 k with them, but not 1 $mil so I feel o.k. I may switch if things get too weird, but well, inertia is part of it. Another financial spasm'll probably get me off my butt, though!
Robert,
ReplyDeleteThe two ETF's you quoted are trading at a PREMIUM to their NAV of 2.7% and 5.8%. So people are paying a premium on the spot price(above the trusts fees for holding) That explains the daily premium you're quoting.
Securities held via eTrade would be covered by SIPC @ $500k and not FDIC @ $250k.
This comment has been removed by the author.
ReplyDeleteTurk expect $30 silver in 18 days:
ReplyDeletehttp://bit.ly/djUTTv
he's been pretty good at stuff lately too.
SoS in the SPY: not even on this list.
ReplyDeletePoly,
ReplyDeleteThanks for the clarification.
Yeah, I don't hold either but have been "warned" by many to use them over GLD and SLV. If they cost more, that is obviously a deterrent, but choose as you will...
SoS can come and go in the blink of an eye. Might show up again at the final revision but for now, we're golden. Gary's SPX coil is forming though...
ReplyDeletedriver1,
ReplyDeleteisn't that crazy, leading one minute that bam, vanished completely!
TZ, good article,
that would put us at silver hitting $30 by either Monday or Tuesday November 22nd or 23rd depending on if you count today (I'm assuming you would, then it'd be Monday).
$24 to $30 is ironically, basically, an exact $25% increase. AGQ of course that would be an exact 50% increase in ones month time and right before Turkey day. Salivating both this prognostication and Turkey day... :)
In the last hour (through 3:30 EDT)SPY drop off the list. Very volatile. As someone mentioned you have to use EOD numbers on SOS. Some buyers must have moved to cause SPY drop off the list.
ReplyDeleteI know you guys think GATA is crazy...
ReplyDeleteBut this should be very bullish for Silver...
http://www.gata.org/files/SilverManipulationLawsuit-10-27-2010.pdf
Robert and DG
ReplyDeleteI left Etrade during the melt down because of their risk exposure to the derivitive problem. I called and asked about my account being insured and they said...insured, yes, but it would probably be frozen until litigation.
HUH?? FROZEN? I called again and someone said...well, it could be in courts for months, I dont know how that would work. That Scared me a bit.
Whether that was accurate or not, they were saying my $$'s were insured as of that day, but I couldnt get in or out of my positions.
I went to scottrade and get $7 trades, but liked Etrades platform better for a while, but scottrade is good.
just an f.y.i.
For those that care and/or are interested. SLV now has weekly options. Careful, options can HURT and as Gary has said, a great way to blow up your account.
ReplyDeleteI live in Canada so earthquake and robbery isn't that big of a concern. In case of fire, fire would have to be pretty hot to melt the bars and even if it did, you still have a solid puddle of silver on the floor when you get back. Or just have a evacuation plan in case of fire...1 bar carried out by each member of the family...its only about 270 pounds of weight :P I don't know about ETFs but holding my electronic silver in my forex account costs me about $7/500 ounces a day! thats $2500 a year!
ReplyDeleteSLV has a SoS of 10.5M..i've never seen a SoS for SLV before
ReplyDeleteSPY Sos is back again ... -$151M
ReplyDeleteRemember, TURK runs goldmoney.com with a BILLION dollars of REAL gold and silver in REAL vaults. He might know something about actual supply and demand situation right now.
ReplyDeleteThe SoS has been on and off because the market has been fluctuating between positive and negative all day.
ReplyDeletePoly: E*Trade has bought suplemental insurance over and above the SIPC limits. From their website:
ReplyDelete"E*TRADE Clearing LLC maintains insurance with an aggregate limit of $600 million to pay amounts in addition to those returned in a SIPC liquidation." $600 million in aggregate.
And the court delay is standard for all SIPC liquidations and has nothing too do with E*Trade specifically. SIPC settlements can take up to 90 days as they establish whet exactly you had in your account. I have other money and accounts and can just short against the box anything I want to get out of. Not great, but not a disaster either. Besides I may have physical by then...
Robert;
ReplyDeleteI have lots of coins. I have been buying gold coins since 1999. Mostly Maple leafs, Eagles, and some British sovereigns and Austrian lately. Silver too. These are all government mint produced so I am not worried about them. And I buy from only reputable dealers. I would never buy coins on Ebay.
I also have been buying CEF. Well its my son's money. Instead of saving in the bank he saves in CEF. also a couple other junior stocks and GDXJ. All my kids money is in those type of things. As soon as they save over 100.00 it goes into the PM market. Myself personally, I am 100% in PM's. I have no 401 k, Ira or RRSP. Got rid of them 8 years ago. 1000 ounce bar of silver is like 80 lbs...makes a great door stop. Get yours today...haha
Listening to WABC radio over the net (wabc is biggest AM station in USA) they played an ad for a gold penny stock!! (Fire river gold FAU.V)Anybody else hear ads like this? Its a first for me! If these ads become common- very bullish for the juniors I'd say!
ReplyDeleteif we hit 30 on silver by November 23 I am buying all of you a turkey.
ReplyDeleteCareful holding PHYS, GTU or CEF in a taxable account if you are a US citizen. These are trusts that have some very complicated tax reports that need to be filled the first year you own them and then every year after that one. I found this out after owning both PHYS and CEF this year. Goldmoney.com is another way to hold allocated, physical metals. I have an account there, but have not funded it yet. I heard you have to file paper work since it's a "foreign bank account" technically.
ReplyDeleteRobert-
ReplyDeleteAre you the guy on Kitco who recommended I email Bob Chapman? He's a good guy and I enjoy hearing his analysis.
I just methodically adding some miners, trying to build up my core. I like SSRI, SLW, SVM, EXK and a few juniors on the silver side. Golds I've bought recently are ANV, EGO, NGD, UXG, RBY.
Great discussion guys and GO TURKEYS. :)
This comment has been removed by the author.
ReplyDeletePOLY,
ReplyDeleteMy deleted comment above was a shout that you were wrong and that there was nothing legal in GLD documents proving that the gold on deposit was not leased or encumbered somehow.
I deleted that post, but it was *BOTH* right and wrong. Let me explain...
Unlike most, I don't trust heresay, CNBC, or beliefs. I actually read the fine print. (The world of power runs by sneaky laws and very detailed fine print. Force is only used by the guys running the show when the fine print fails.)
The reason I was both right and wrong is that I HAVE read the GLD prospectus...*multiple* times. So after I made my post I went and downloaded it again just for giggles:
-----------------
PAGE 2
"An allocated account is an account with a bullion dealer, which may also be a bank, to which individually identified gold bars owned by the account holder are credited. The gold bars in an allocated gold account are specific to that account and are identified by a list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight. Gold held in the Trust’s allocated account is the property of
the Trust and is not traded, leased or loaned under any circumstances"
-----------------
This blew me away because I was *damn* sure this wasn't there before. So I went to Edgar and pulled up the original S/1 Prospectus from 2004.
http://www.sec.gov/Archives/edgar/data/1222333/000095013604004007/0000950136-04-004007-index.htm
-----------------
PAGE 45:
"An allocated account is an account with a bullion dealer, which may also be a bank, to which individually identified gold bars owned by the account holder are credited. The gold bars in an allocated gold account are specific to that account and are identified by a list which shows, for each gold bar, the refiner, assay or fineness, serial number and gross and fine weight. The account holder will have full ownership of the gold bars and, except as instructed by the account holder, the bullion dealer may not trade, lease or lend the bars."
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So now I'm sure you can spot the difference. The current one clearly says nothing is leased. The ORIGINAL one ALLOWS LEASING AS INSTRUCTED BY THE CUSTODIAN!!!
So, they have changed the language and you are now correct and I was correct based on the original structure of GLD.
I would add still, however, that GLD is a danger for someone who thinks they are owning (and will KEEP) bullion through this instrument. It is already one of the largest bullion stores on earth and I will give a kudos to anybody reading who works out what they do in the future when the people running the dollar fiat power system need gold.
DG,
ReplyDeleteNo Feud.
Yes, GLD and SLV will work as trading vehicles almost up to the end. But they will like fail at the 'end game' maneuver.
If you think you can spot it, avoid it, and get into an alternative quick enough, then more power too you. It's a game of chicken, but probably clear for a while yet.
In the meantime, as I've said before however, you are still better with gold and silver futures instead for various reasons like 24hr, taxes, spread, etc. My opinion.
Gary,
ReplyDeleteIt's interesting that you think the market will first tank and then go up as a way of exiting the coil.
I'm leaning the other way (with my mind, not my money) because of the exceptionally bullish seasonal tendencies leading to midterm elections and November Fed meetings.
I'm thinking we go up into Tuesday and then reverse, probably making both a daily cycle low as well as an intermediate cycle low. Barring another mini-crash, I just don't see any short term way to reverse sentiment quickly. I think this will take some time.
We'll see.
PS: If you know how to think like the people running the game then you know why the original prospectus allowed leasing and why the current one does not. They had to adjust and adapt as A)the whole 'leasing' of gold issue became more known in the industry and B)as competitor funds with better structure were created.
ReplyDeleteThey ultimately didn't want to lose ownership and control of the main gold holding fund because it will be useful in the future.
Wes,
ReplyDeleteSentiment hasn't actually reached the levels where intermediate cycles are likely to top yet.
All I'm expecting is to cool sentiment a bit and that can easily be accomplished with a 3-5% dip.
Usually in bull markets we have to make new highs before sentiment reaches the kind of extremes that will turn an intermediate rally.
Plus we still have that pesky dollar yearly cycle low hanging over the market. A declining dollar would mean sentiment would have to reach even higher extremes than normal as a lot of volume would be run by computers simply playing against the dollar.
ReplyDeleteNew post
ReplyDeleteIf your account is large enough to where you can handle the leverage then yes you could probably buy one or two contracts or whatever amount would represent no more than 100% of your porfolio. If however you are planning on loading up on silver futures to the tune of 20:1 leverage then I would say you are well on your way to blowing out your account.
ReplyDeleteOnly you know what you are planning.
DG,
ReplyDeleteNo $1315 should still be a level that if breached one should consider taking down leverage.
We might get the opportunity to take leverage off into strength instead of weakness if gold holds up into the Fed meeting.
Of course if one thinks a stock market dip into a cycle low will have no effect on gold or miners then they can just leave their full position on.
My experience though is that a daily cycle low in stocks will driver ht edolalr higher and that will likely drive gold down.
Marky,
ReplyDeleteA daily cycle has to be an obvious correction in my book. I know some people will rationalize any tiny pullback as a cycle correction in order to make it fit in the normal timing band.
I don't do that. If it's not obvious then I consider the cycle to be stretched until it is obvious. Invariably the next cycle always proves that the stretched interpretation was the correct one.
One good thing is that gold has now made a higher high. That's suggests it will likely hold above $1315 even if the stock market corrects.
ReplyDeleteNo coil in gold. Actually gold move today is significant.
ReplyDeleteI will have an intraday alert out in a few minutes.