The current intermediate cycle has rolled over and is making lower lows and lower highs. The current daily cycle has formed a swing high and is in jeopardy of rolling over into a left translated cycle. If the dollar breaks below the November intermediate bottom of 75.63 it will be an incredibly bearish sign as not only will the current intermediate cycle have topped in only 4 weeks but the larger yearly cycle will also have topped in only 4 weeks.
If that happens there is little chance the dollar will be able to hold above the March 08 lows as the crash down into the three year cycle low begins in earnest.
This will not only drive the final leg up in gold's huge C-wave it will also drive a huge spike in inflation in all other commodities. Food riots world wide will intensify. The rest of the world will be in an uproar over the collapsing dollar. Spiking commodity prices will collapse discretionary spending just like it did in 08 and 09.
The phony economy driven by Ben's printing press will roll over when he's forced to turn off the presses to halt the dollar collapse. (Just like it started to do last summer when QE ended and the stock market started to collapse.)
The dollar's rally out of the three year cycle low should correspond with stocks beginning the next leg down in the secular bear market and the next brief deflationary period just like the bounce out of the 08 three year cycle low drove the second leg down in the secular bear market.
The rally out of a three year cycle low usually lasts about a year to a year and a half. The next 4 year cycle low in the stock market is due in 2012. I expect that year long rally out of the coming three year cycle bottom to drive stocks down into the next major 4 year cycle trough and drive the CRB into it's next major cycle bottom.
A lot is riding on the next 2/3 weeks. If the swing high in the dollar yesterday does signal the top of the dollar's daily cycle then the November low will almost surely be broken and the chain of events I laid out will be set in motion.
What's in store for Silver next week? Further break out or within channel!!
ReplyDeleteSilver Chart
mylifemytrade: I am not able to understand your call.
ReplyDeleteCan you please explain what you are expecting and why.
@ Pima Canyon
ReplyDeleteThanks for reminding me about the deep in the money options, yesterday. That was actually what I used years ago to build my account.
I bought some SLV Apr $24's at the open today, and will probably add a few more on a pullback.
Fubsy: Great post. These big exposures are real money to people and it's hard to gauge how you will react emotionally to different market scenarios until they actually occur. Experience is very useful in this game. Have a good long weekend.
ReplyDeleteYou're welcome, Wes.
ReplyDeleteI'm just keeping the idea going--I forget who reminded me that I could do that, maybe Poly?
One of the things I did with that was dump 100 shares of GLD that I had and bought 4 deep in the money GLD calls. Freed up a bunch of cash AND those 4 calls are generating more profit that 100 lousy shares of GLD. I plan to add more to that group of calls.
I did nibble on a few more deep in the money SLV calls today, continuing to build my position.
MLMT had posted that if Gold closes under $1388 he retracts his prediction...then he deleted that post...? I guess by tuesday he'll hid in shame, or crow. Should be interesting.
ReplyDeleteGold and Silver futures as well as several related etf's are all bumping up against upper channel lines today (small channels drawn off recent low. There are much bigger channels drawn from lows from way back...)
ReplyDeleteProbably as good a place as any for a pullback.
However, the pullback may be only sideways consolidation. Or price may hug the upper channel line as it continues to rise. Or price could just blow past the upper channel line. So a pullback is certainly not a lock here. And, as Gary has said, the dollar is likely to have another 7 days or more of downside action which can only put more upward pressure on PM's.
DG,
ReplyDeleteWhat was the prediction that he was withdrawing?
Ok.. so my thought is if Gold ends the day (4pm ET) anywhere in the range of 1388-1396, monday should bring a big down day to gold... That is my final comment.. I know I ended up confusing a lot of people.
ReplyDeleteI think there will be one more upleg to tag 1396 in NYSE hours some time later, but in near future.
Gary: YOu mentioned you expect the daily cycle low in a week or so But if this turns into a runaway move that'd would be off the table I suspect. Wouldn't you think the final C-wave leg would turn into a runaway?
ReplyDeleteAnyone know why the rare earth metals have been tanking lately?
ReplyDeleteJames
Looks like gold closed at exactly 1388. Does that count?
ReplyDeleteMLMT, how do you arrive at this conclusion? Care to elaborate. TIA.
ReplyDeleteArun,
ReplyDeleteinteresting chart. You should ask Gary that question. I'd be interested to read what he is going to say to that.
Great post, Fub.
ReplyDeleteContinuing to add in small increments is a comfortable way to play it. That's what I'm doing. That way I keep some powder dry just in case we do get a big down day or worse, a drop all the way back to the 1308 low.
Markets are closed on Monday.
ReplyDeleteHave a great long weekend everyone!
Anyone know how many daily cycles Gary is expecting this C-wave up to be. I am guessing 2 daily cycles up and the third one will be left translated?
ReplyDeleteBasil, Gary would say "shut down your computer, don't worry about intra-day wiggles" :)
ReplyDeleteI'm thinking.. along the same lines as pima's
Also.. if the pullback comes, pbly a good place to add more.
ReplyDelete$GOLD closed below 1388. I guess we're safe for now.
ReplyDeletePima I've got about 80% of my "Gary Trade" in SLW calls.
ReplyDeleteThe "big chunk" are July $25 SLW, I believe April are way too soon and don't afford protection and easy exit. Got a smaller chunk in ATM July $30's and a big lottery of 100 contracts of $34 "March", bought at $0.14, posted last week.
Not afraid to swing here and any draw-down will not bother me. I would exist at around SLW $29 for a small loss.
Sorry, all of those should read SLV not SLW calls.
ReplyDeleteThanks, Poly. I hadn't considered SLW options, but I should look into it.
ReplyDeleteSophia, I hope you are kidding about CNBC and the Gary trade! Seems like once something hits the national news, it's all over.
Just read your correction post, Poly.
ReplyDeleteYes, I'm building a position in SLV calls.
My thinking on using April is that the premium is lower than July and I should be able to dump them in late March and buy July's then. Don't know whether that's a better plan that going with July's now--because there is a bid/ask issue with options--it's about 10 cents on SLV April calls, deep in the money.
Maybe I'll take a look over the weekend and compare premium on April versus July and consider that I'll have to fork over 20 cents PER OPTION when I roll them because of the bid/ask spread (plus commissions, but commissions are down in the noise--$1.50 per option)
Pima,
ReplyDeleteIf you're only playing deep ITM I guess it does not matter, next to know time premium down there to worry about.
I just like knowing that longer options don't get destroyed by time and draw-downs (as much). Again not a real concern with deep ITM's.
Poly,
ReplyDeleteMy software allows me to overlay charts by varying times, amplitudes, etc.
By plotting GLD and NASDQ, both on log scales, both weekly, and shifting the GLD chart anywhere in the 1990's. I cannot make them look at all like each other at any relative starting point.
Maybe you misremember this.
Wes, more like somebody presented a compelling overlay that had me fooled.
ReplyDeleteWES, GLD was not around in the 80's, my reference was to the first 10 years of the bull market. Maybe you could use futures?
ReplyDeleteanyone care to elaborate on why AGQ is the choice leveraged vehicle of most investors here.
ReplyDeleteTheres a lot written about avoiding leveraged products, leveraged etfs particularly, so why is AGQ different?
thanks in advance
OK, now this is fun. Congrats everyone! (Except MLMT, he's short gold and miners, correct?)
ReplyDeleteSilver bullet has left the station, everyone enjoy the ride.
Pima,
ReplyDeleteIf I may, I would say SLW options are the way to go. Good moves, good liquidity, tight spreads.
I picked up half my March $35 calls on 2/9 and the other half on 2/16 and as of now they're up 113.33%.
I picked up June $36 calls on 2/8 and they're up 61.38%.
I will hold them until the next daily cycle correction. I will unload them when Gary says we are moving into it.
Once we start to move out of the daily cycle low I will then look to pick up April and May calls just out of the money (assuming they are added), otherwise I will continue to add into June as I really believe Gary's timetable here and want to max out this opportunity.
One more thing. If you can get a tight spread on AGQ calls grab it as that offers the most juice. I picked up the March 160's at $7.50 on Wednesday when the spread tightened up to .50, today it closed at $19.50.
Good luck. This appears to be the move we've been waiting for and we need to cease the opportunity.
Jayhawk.. you had a IHS with neck at 1350, head at 1310 on a 60-min GC. The target is achieved today. What's next? I know you carry more Silver, but still got thoughts?
ReplyDeleteWingman-
ReplyDeleteI'd like to add some options positions on the next daily cycle too. I'm interested in SLW for the reasons you gave. I have some in my IRA and they are up nicely, wish I loaded up more. SLV is very liquid with tight spreads and weekly options as well. Does anyone trade the weeklies?
Clarkatroid,
ReplyDeleteLeveraged ETF's are quite dangerous if you're not riding with the trend or if it's basically just moving sideways. You will lose out from the daily rebalancing. It's an investment tool not a long term hold. I've been burned really badly playing with HNU.to (double leveraged natural gas) because I kept on trying to catch a falling knife and instead of having a stop loss, I put more in when clearly the trend was down. I had to basically suck it up and take a HUGE loss.
AJ,
ReplyDeleteIsn't there a gap in the SLW chart? Do you think this needs to be filled before moving onto new highs? They just almost always seem to get them filled.
Jayhawk, Wingman is a friend of mine, and he is the junior miner king. All of my junior ideas come from him.
ReplyDeleteHe is scary good on entries.
I was just looking at the USD Index monthly chart, going back to the 70´s, and there is a lot of similarities between what happened after the 3 year cycle low of 1973 and what has happened so far after the 3 year cycle low of 2008. The action that followed the 3 year cycle low of 1991 also resembles both of these situations.
ReplyDeleteNew all time lows were made after the 3 year cycle lows of 73 and 91, but in both cases the dollar then started a rally that lasted at least 6 years.
Could this happen again? Meaning that the next 3 year cycle low, probably coming this spring, will be the start of a multi-year rally lasting at least 6 years?
thanks ryan.
ReplyDeleteWhat are the actual mechanics behind how AGQ operates?
How does it offer 2x return on the silver price?
Why does it return sometimes more than 2x target?
cheers again
Majic, I am killing it with the miners, probably a wrong term to use "jacked"
ReplyDeleteThanks anyway, and enjoy Maui.
Clarkatroid,
ReplyDeleteFrom what I understand, 2x leverage etf's achieve this via forward contracts and derivatives.
Here's a link that'll explain why you can get more than 2x and the effects of rebalancing:
http://www.investopedia.com/articles/exchangetradedfunds/07/leveraged-etf.asp
Arun-
ReplyDeleteI saw that pattern on the 60 & 4 Hour charts and it tagged it's target perfectly. By no means do I see that being the extent of this move. Perhaps some sideways consolidation and a launch higher? I like to step back and look at the momentum on the weekly and daily charts. Silver looks outstanding, gold looks steady and solid. I noticed a daily close above this level and rising trend line support as well.
http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/6b18c2a2-7242-444e-ad46-149aa58b575f
Bob-Great to know about Wingman. Wingman, please share more here we appreciate your thoughts.
DG,
ReplyDeleteI couldn't find a way to edit that comment.. So I deleted that and posted another comment.
I have no reason to be ashamed of anything or hide. Those who are afraid of being wrong have no place in the world of trading... I am not afraid of being wrong. Tell me how many people here post the levels at which they are wrong.. Or come out accept that what they said was wrong...
Great article, along Gary's Silver consolidation theme post, worth reading.
ReplyDeleteGood weekend all.
http://news.silverseek.com/SilverSeek/1298049018.php
Poly,
ReplyDeleteLet's go old school on comparing gold to Nasdaq.
Print a weekly chart of each on separate sheets of paper. Then hold them up to a window, slide them around and see what you get.
If you can get an interesting match that way, let me know and I'll try again.
meanwhile...
ReplyDeleteJames is hammering tequila shots in the bar car
Everyone have a nice weekend
@NJ
ReplyDelete>>>Wes -
So if not a dollar collapse, what are your reasons for PM's going up?
Do you share Gary's current C-wave view or also share his view for 2016-2018 as far as PM's go?<<<<
NJ,
I'll try to discuss this a bit over the weekend. But, whether my thoughts prove correct or whether Gary's do, or it's some combination, both ideas point to significantly higher gold prices ahead.
And nothing in my ideas would change anything Gary has said about how difficult it can be to ride the gold bull, so we both best keep following his lead.
WES, you're missing my point. Basically the idea behind the chart was to show that over say a 15 or so year bull market, like the NASDAQ, it's the last (3rd stage) third that produce most of the gains. It's this last third we have yet to witness on Gold, so the chart attempted to show what's ahead.
ReplyDeleteThe chart I referenced simply highlighted that Gold's current 500% run (From $285) after 11 years was similar (not an exact overlay that you seek) to the NASDAQ first 11 years. For example the NASDAQ in 1985 was at $285 and 11 years later was at $1,250. 4 years later the bull expired at almost $5,000.
The point being we are tracking a similar path and if it follows that Bull to Bubble we could expect $5,000 gold.
Poly,
ReplyDeleteI don't think I'm missing the point. If the first 11 years mapped out O.K., then the last 5 of those 11 should also.
GLD tracks closely those last 5 and I got zip.
Try the old school idea.
NASDAQ bubble burst in 2000. GLD etf was created in 2004, this tells me you're not getting my point.
ReplyDeleteDG,
ReplyDeleteYes if gold also begins a runaway move then daily cycles are going to become very vague or nonexistent.
Just another reason to go old turkey at this point.
Poly,
ReplyDeleteI shifted the GLD chart back into the 1980's, and all points in between. This is not rocket science.
Don't go TZ on me.
Poly,
ReplyDeleteBoth the GLD and Nasdaq charts are low on the left side of the page and high on the right side. It's what's in between that doesn't seem to match. I could find no part of the GLD chart that matched any part of the Nasdaq chart no matter how far left (back in time) I shifted the GLD chart.
It took both charts about 5 years to go from 500 to 1250. But, if you line up the 500's and the 1250's, in between they look like a clam shell.
WES,
ReplyDeleteIt's Friday 9pm EST and I please the 5th. (drink)
I will get you what I found, over the weekend.
Poly,
ReplyDeleteHave a great evening.
P.S. An ugly clam shell.
WES,
ReplyDeleteI'm not even sure this was the chart, but this is basically what it looked like. I think it shows that the best part of the gold bull is still ahead of us. :)
http://www.moneyweek.com/investments/property/why-compare-uk-house-prices-to-gold-02204
Poly,
ReplyDeleteFrom that chart, it looks like housing and Nasdaq went down during the 6 months between year 8.5 and 9. (i.e., where the chart says we are now)
Of course the article was dated 6 months ago, so it seems to get that part wrong.
Better take that up with Gary.
We don't need to worry about gold till the Dow:gold ratio is down to 1:1 and we see lines outside the local coin dealer.
ReplyDeleteSecular bull markets don't end until valuations reach stupid expensive levels.
Gold hasn't even reached inflation adjusted new highs yet much less extreme overvaluation.
And silver hasn't even reached nominal new highs.
I wasn't clear. My point was not to say that gold will experience all of the same wiggles and drops the NASDAQ experienced, at the same time comparison. It was only to show that if gold is a real bull, we still have a LONG way to go higher, much higher. It also clearly shows the "juicy" gains are still ahead.
ReplyDeleteOK, every one got that? MLMT is calling for a massive, fall down an elevator shaft plunge is the price of gold starting next week. This is in addition to the GDX to 44 call and the gold will never touch 1400 again, ever, call.
ReplyDeleteA drop to the 1360-1375 doesn't count. It needs to be under the previous low a at 1307 to count. As a matter of fact, I think he said 1150. We will see what happens.
Gary,
ReplyDeleteDo we currently have a mental stop price to save us from some unforeseen massive event - I don't mean a drawdown, I mean like a full on market crash event? Thanks
P
I posted the stop in the nightly report.
ReplyDeleteYou posted tonight's report already? It doesn't seem to be up on the premium site for me.
ReplyDeleteFeb. 15th report.
ReplyDeleteAnybody knows if AGQ is based on futures? May silver lags 6$ compared to XAG spot on my charts here. I'm long XAG-fx silver, spread betting. (Gold is XAU) Only 4% (stable, never hiked) margin. What if default happen and futures really starts to lag badly. This XAG will be king?
ReplyDeleteAlso remember, long term AGQ decays (evaporates) badly, especially in sideways markets, 30% per year. But it leverages steep uptrends, that's advantage.
AGQ Proshares ETF main page is here:
ReplyDeletehttp://www.proshares.com/funds/agq.html
All information about how it is constructed and works is detailed, including a 146 page prospectus near the top left.
No, I have not read it and can't answer the questions. I don't trade AGQ, but this would be your source for definitive help.
ReplyDeleteGary,
ReplyDeleteWhenever you make long term projections they NEVER turn out like your charts. I challenge you to show me one chart that looks like you projected it would. Please prove me wrong.
So they even jacked up margin requirements again on silver today and the result the price rocketed higher vs. the panic sell off back in Nov/Dec when then did that. (Don't recall the exact date)
ReplyDeletegoldlion,
ReplyDeleteYou are making the mistake of thinking I'm charting targets. I've said countless times when I draw a chart I'm just trying to illustrate general trajectories.
I've been saying for months the dollar would go down into a three year cycle low. I said it long before anyone believed me and everyone was bullish on the dollar.
The dollar is now dropping down into it's three year cycle low.
I've said for months that gold would put in it's final C-wave advance as the dollar dropped into it's three year cycle low. It's now starting.
I think the stock market will roll over into the next leg down in the long term bear market once the dollar starts to rally out of the three year cycle low. That should also drive gold down into a D-wave decline.
We'll have to see if I'm right on this one because it hasn't started yet.
I said the Fed would run QE2 and it would cause inflation to surge and exacerbate the dollar's collapse into the three year cycle low. Inflation is surging. We are starting to see food riots all over the world and commodities in general have exhibited massive gains since QE2 began.
I said that the bond bull expired back in 09 when Bernanke professed to be able to artificially hold rates down. I also said one could take the other side of the Fed's trade because the market was bigger than the Fed and they would not be able to manipulate the bond market.
I was right on both accounts. The bond bubble has or is in the process of bursting and fading the Fed was the right trade.
I said silver would outperform when most everyone was fed up with silver's boring lack of movement for over two years.
Silver has massively outperformed virtually every other asset except maybe cotton and sugar.
I said that the Fed could print all the money they wanted and it wouldn't create jobs. They did and it hasn't.
Other than the stock market rallying longer than I expected (I warned traders countless times not to short the stock market even though I expected it to drop) I think I've gotten just about everything else pretty close don't you?
WAIT!
ReplyDeleteThis one was not bad at all...drawn by Gary last August 2010.
I give it a "Heck Ya"!
http://www.screencast.com/t/kh2ecoCmRlZ6
We had Just broken out and he said we'd prob go just over 1400 (we did) then consolidate up & down , then off to 1600ish.
ReplyDeleteOn his chart , he also shows the consolidation Nov end to a break out end of Feb/start of March.
That chart was not bad for last Aug to now?
Gary,
ReplyDeleteI noticed a few posts ago you drew a chart of gold's possible D-wave low, at around 1250 - you didn't mention your views about where silver would end up.
Gary:
ReplyDeleteWonderful summary of your calls. Amazing. Simply Amazing.
I was looking for the catalyst for the USD to drop and it seems the ECB is providing it by their interest rate calls. So while Ben ponders QE3, the ECB is going to raise rates. This is so much like the spring of 2008.
The one caveat though is the fundamental existence of Europe. They are going to have that meeting in the end of March where they will decide on the big bailout fund. I guess we will see a pause in the rise of the Euro then. Depending on the outcome of the meeting (I believe they will decide to continue with a super-fund), the Euro will also get a stability bid, driving the USD to its 3 year cycle low.
But I guess something dramatic will happen in the geo-political front to end that cycle as the one-eyed comes back to rule. My the Greeks decide that the taxes are too much to pay and decide to leave the EU and then Ireland follows after looking at Iceland, and the dominos start falling. That perhaps will be the period where the Dollar and PMs will rise in synch.
Gary,
ReplyDeleteYou are doing a superb job for your subscribers and yourself. Do you anticipate a pullback in silver next week or are we still headed higher going into delivery at the COMEX?
Gary,
ReplyDeleteIn Feb 15 premium post, you had stops for HUI and miners. How about silver or gold?
TIA
Gary said: "We don't need to worry about gold till the Dow:gold ratio is down to 1:1 and we see lines outside the local coin dealer.
ReplyDeleteSecular bull markets don't end until valuations reach stupid expensive levels.
Gold hasn't even reached inflation adjusted new highs yet much less extreme overvaluation.
And silver hasn't even reached nominal new highs."
Gary I am now 100% invested Old Turkey style and looking to ride the c-wave
However I'm very concerned that the Fed will stop at nothing to disrupt or even destroy the natural course of the PM bull with CME rate hikes, mining company royalties even confiscation and anything else I can't even think about...
Just can't see gold hitting $5000 or silver hitting $300 with the Fed/government doing nothing
Does this have an impact on your long term view?
Do we need to expect the unexpected?
Thanks
ollie
ReplyDeletegary and alot of these guys know more than Me,
but the fed do nothing? that is one option i have not heard of anyone talk about =)
Rod,
ReplyDeleteAgain let me stress charts just show general trajectories. I have no idea where gold or silver will be at the bottom of the next D-wave.
Ollie,
ReplyDeleteYou need to quit reading the Gata conspiracy nonsense.
The Fed could care less what the price of gold is and they certainly have no need to confiscate it. They didn't confiscate gold in the 70's why would they do so now?
The Fed is no longer restricted by gold. They can print as much money as they want. If they want to control something they need to control the price of oil.
They can't though anymore than they could force interest rates artificially lower. The markets are bigger than the Fed.
HKC,
ReplyDeleteWe only need the one stop for the entire sector. We aren't trading these things separately. If the stop is hit we would exit the entire sector.
Paul,
ReplyDeleteI'm going to talk at length about late entries, taking profits and holding positions in the weekend report.
Thanks Gary, true, the price of oil does seems much more important than the price of gold
ReplyDeleteAnd also true there was no confiscation in the 70's
Yes, it seems I spend too much time reading zerohedge! :)
Gary, the Fed does care about gold prices, that is a fact. Also, they do care about the price of oil. Have you seen the difference between crude and Brent? The CFTC said that it was due to storage/transportation issues...such stupid responses make me laugh.
ReplyDeleteThe fact that the Fed (through its instruments...JPM), shorts the hell out of anything they dont like is very apparent.
Gold Lion, On 12/17/09 Gary published a long term chart of the 3 year cycles on the dollar. I duplicated that chart complete with the lines, arrows showing yearly cycles, and boxes showing the 3 year cycles. Amazingly accurate to date.
ReplyDeleteNow we have this massive Head and shoulders pattern on that chart. It projects to his price target.
I think Gary is doing an outstanding job for his subs, and usually quite a bit more than that.
Aaron,
ReplyDeleteThe difference in the price of WTI and Brent is that we have a huge oversupply of Lt sweet crude. We have no where to put it.
If the Fed is using JPM to short gold or silver why isn't it going down? How could it be in a secular bull market if the Fed can short unlimited amounts of gold and silver?
Give me one logical reason why the Fed gives a damn about the price of gold. And don't give me that useless crap about how rising gold signals inflation.
If the Fed is targeting gold why isn't every other central bank in the world doing the same. Instead they are buying gold.
You and I both know 9 out of 10 people on the street have no earthly idea what the price of gold is. Gold isn't factored into the CPI. Rising gold has no bearing on the quality of life of anyone.
What signals to the general public that inflation is rising is gasoline and food, along with health care, insurance and other assorted necessities.
The only reason the Fed has ever cared about the price of gold was during the period when the dollar was backed by gold. During that period they would have to manage the price of gold to stay in line with money supply.
That's not the case now. The Fed is free to print all the money they want.
Instead of blindly buying into this ridiculous conspiracy nonsense, just ask yourself if there really is any reason what so ever for the Fed to give a rat's ass about what the price of gold or silver is.
But what I cannot figure out is why would some of the smartest people in the world continue to create more short positions for themselves in silver and gold knowing the nature of cycles, COT reports, and dollar yearly lows?
ReplyDeleteThey are the smart money, aren't they? Conspiracy or stupidity to have the level of unbacked paper to a physical commodity against a delivery month. We are on the long side of this trade who is short?
Gary,
ReplyDeleteJust because the price of gold or silver are going up, does not mean that there is no manipulation, they can easily kill the intensity, yet not the direction. Why you ask that is? simply...physical. When countries like China and Russia buy up physical, there is a strain in paper, which is why the price is 'forced' to move up. This also explains the recent shallow dips that cant last longer than a month or two, there just isnt enough physical to meet demand. This is very evident is silver as you know, with unprecedented backwardation.
The oil story doesnt hold water and you know it. Its rigged, plain and simple. YOu cant have 1 entity short 1/5 of the market and call it a hedge, thats just being silly.
On to your question of 'why'. The higher gold goes, and the faster it moves in times of crisis, the better of a safe haven it is deemed, and there lies the clue. Treasuries and the dollar are the only things that keep this country going, the last thing the Fed needs is competition from Gold.
We shall agree to disagree on the manipulation yet you cant just throw out ideas that are starting to make sense. The physical short squeeze in silver is a result of manipulation!
Bob,
ReplyDeleteWhat the conspiracy nuts don't bother to tell you is that most of those shorts are miners hedging forward production into record high prices.
Entities like GATA with with their own agenda would rather you not know that. That way when they miss a call they can just blame it on some mysterious group of bankers.
It's one of the oldest tricks in the book for never having to own up to your own mistakes.
If the Fed was trying to depress the price of gold or silver then how on earth did the COT reach a Blees rating of 100 recently?
Gold was going down. They had it on the run. How can they possibly achieve successful manipulation if they lift shorts at the very time they got the metals moving in the direction they want.
If one just uses a little common sense its easy to see though the conspiracy baloney.
Gary,
ReplyDeleteWith regards to your response to Aaron, and I'm only talking about this because we are on the subject.
the one thing that I always have in the back of my mind is "what is the Fed going to do to make sure JPM doesn't end up like Lehman or Bear Stearns".
They say that JPM has a big short position in silver that can wipe them out. Because of all the backroom dealings that have been going on between the brokerage houses and the Fed since 2008, I'm always suspicious of what they might come up with to make sure JPM survives. They banned short selling, margin requirements keep rising for gold and silver, now they want too tax the mining companies...Now I'm not saying the Fed is behind all this but who knows. The fact that JPM is now accepting Gold as collateral as of a few weeks ago made my spider sense tingle...who knows how much gold is hidden in Ft.Knox, and how they can manipulate it to their benefit. All this to say I don't trust the Fed one bit.
I don't want to start a debate about government conspiracy theories cause we'll never end that conversation. I just thought give my personal paranoia. Thanks for listening. Now back the C wave.
Bam,
ReplyDeleteAny position that JPM has in silver is miniscule compared to what the banks had in collaterlized debt in 2008/9.
I suspect JPM could write off every silver position and not even blink an eye.
Besides the Fed can just hand out free money to the banks like they've been doing for the last two years. What difference does it make if JPM has to write off a couple of billion in bad silver trades when they can just borrow another 500 billion from the Fed at 0% interest?
You people really have to stay away from the GATA site. :)
Hamster
ReplyDeleteRaising margin a little at a time seems prudent to me. When they crushed the hunt brothers , I think they went from 10% to 50% overnight
Bamster
ReplyDeleteSorry. Hamster was a iPhone typo
Having just read the weekend report, let me be the first to say how exciting it is to read what Gary wrote and see those silver charts!
ReplyDeleteI'm locked in and already my portfolio balance is way above the December top, before the whipsawing and gnashing of teeth and calming words from Gary. I was down over 8% from my top after all that craziness, but I had decided to follow Gary last year and I'm glad I've had the good sense to do so. Just this week I'm up 10% overall, and 20% since buying back in @140% last month (no margin, just my big line of credit, for which sensible people deem me crazy). :D
After becoming a subscriber I found out that Gary is a former US Olympic team weightlifter. Hell, he linked us videos of the Pocket Hercules! It all makes sense to me; unexpected sanity from an unexpected source.
Yes, I'm hyped today, but I am also determined not to get too down when the down days come (like Jan. 3-6!). So let's buckle up, enjoy the various reasons for a long weekend, and enjoy this ride.
A shout out to the Canuck who led me to HZU.T. I added it this week to my miners, and plan to add more next week, too.
K.
Dave Morgan is not on the bull side for this move in silver. He thinks the rumors out there are bunk, backwardation is misunderstood and not a big deal, this is still an intermediate top, etc...He also said that if certain things change he will jump on board. This is he first time I've heard him interviewed. Kind of cocky guy who seems to be pushing that he's pretty much the go to guy and the average schmucks like us need to subscribe to him to be able to trade silver.
ReplyDeleteTowards the end---the last hour overall is interesting-
http://radio.goldseek.com/
I don't know when Dave did that interview but I'd say he missed badly :)
ReplyDeleteJayhawk,
ReplyDeleteDavid Morgan is a bit cocky and you are right, he likes everyone to think he's the foremost silver guru on in the world. To be fair, he was one of the first to be bullish on silver a decade ago and still is bullish long-term, but doesn't hold a candle to Gary in terms of timing.
I subscribe to his Report but will not renew when it expires next month. It's mostly interviews with silver and industry "experts" and answering questions from readers. A lot of stuff on rare earths as well which is not my bag.
I met him at the London Silver Summit last Nov. where he was the guest speaker. At a coffee break I asked him why he was still recommending Goldcorp as his top gold stock pick when it hadn't done anything in over a year, and he admitted it hadn't performed that well. Then I noticed he had removed it from his list in the next report (who knows, maybe I had something to do with it).
He likes PAAS but some of his silver jr recommendations have been awful--one of them went down 80% after terrible drilling results and he sent emails around to subscribers apologising and telling them to consider selling, that the mgmt hadn't been truthful with him.
Anyone reading, you could save yourself $160 a year by not subscribing. It is only a monthly letter anyway (wish I had heard of Gary when I last took out a yr sub to Morgan). Incidentally, far better ideas on individual miners from this blog IMO.
Cheers.
mamaloshen said...
ReplyDelete"Can anyone tell me the exact date of the D wave bottom so I can note it in my diary?"
Gold at 2140 will be within 50 points of the top. That's a 55/45 probability. It will become easier to see after we see the March breakout formation. And, no, it won't go directly there. This is achieved only if you are buckled in to this rollercoaster.
What's needed is a firm conviction, and a way to slough positions as one moves towards it. IMO, if one wants a million bucks at 2140, then one has to prepare to invest double what will yield that million because along the way, profits should be seized without affecting the bingo outcome. It reduces the anxiety in the game to exit at 2 or 3 prior price points, thereby reducing risk as probability drops in the outlier areas.
Thanks for your thoughts, Slumdog.
ReplyDelete$2140 seems awfully high and implies gold outperforming silver from now on, but who can say, it's possible.
If I aim for a million, I'm going to fall on my face, so my pyschology is to settle for paying my credit card bill each month:-)
Actually, like most here I'm doing well, and better for not being on margin as I can't handle it pyschologically. Then it's easier for me to hold out for higher prices rather than selling too soon (which is what I've done when on margin before).
I thought Gary's weekend report was great for his thoughts on "staying the course" and not selling early. I had actually thought of selling some of my SLV calls when (if silver) gets to $37 (maybe even next week), but think I'll hold out for a higher price (though I might jump the gun and get out at $48.95 and not $50:-).
I do agree it makes sense to scale out as prices rise, though. As to the D wave that comes after, previous declines have lasted 5-6 weeks after a major C wave top, but plenty of time to think about a stategy as to whether or not to play that bounce later.
mama-
ReplyDeleteThanks for the feeback on Morgan. I'll take Gary & Doc as well.
Gary-
That interview had to have been recorded before the break out Thursday & Friday. He sounded a bit silly in light on the massive move up last week! :)
I'd love to see some big picture expectations for this intermediate cycle.
1. I'm assuming this was indeed the intermediate low. The timing for putting in one more leg down makes it almost impossible especially in light of the price action across the board. So, that HAD to be the yearly low on gold as well, correct? Your cycle theory says will form a low once a year and last years came in Feb. So, if we saw the low at 1307, how would a D wave fit into that model. A peak of our C this Spring/Summer then a furious D wave could retrace gold to 1250 before the end of the year.
2. This first daily cycle is a confirmed right translated cycle. I'd assume all dailies in this intermediate would be right and all the dailies on the dollar would be left.
3. I'm guessing this cycle would run longer than the short end of most intermediates. (15 weeks) and push pretty far out.
I totally agree with your comments about having to chase this and losing positions. Last summer's move was so fast and offered little to no opportunities to get on board. Other cycles were a bit more tame and gave bulls a shot. I just recall one daily cycle last summer/fall that had a daily swing high/swing low in one day.
My major concern is being too heavily weighted on the silver side. I could see TPTB throw the kitchen sink at this thing to keep it from going crazy (as witnessed by the constant margin requirement hikes).
Thanks/
Thanks for the report Gary. Heard on CNBC yesterday the next stop for silver is $36.5. I don't know how they came up with that number. Do you have a specific price for silver to take a breather before resuming its ascent to $50.?
ReplyDeleteNow Gary, please don't read the follwing:
For options traders out there. I would like to know if any of you are able to put a stop limit price on your options. My broker does not allow it and I'd like to know if that is the norm. That is the one big thing I hate about options. I can't put a stop limit so you basically have to be on top of it constantly which is very stressful. Thanks.
Of course you should be able to put in a stop limit! Who are you with?
ReplyDeleteBe very careful doing it though, make sure there is liquidity and tight spreads otherwise you could get caught on any sudden drop. Make sure it's not tied to the bid price.
>If the Fed is using JPM to short gold or silver why isn't it going down?
ReplyDeleteIf the wind is pushing against my car while I drive down the road, how come my car isn't going IN REVERSE?
All of this JPM losses and needing FED bailout talk nonsense only confirms this gold bull is certainly bleeding into the mainstream.
ReplyDeleteI'm not sure If we're entering the so called 3rd stage yet, but I doubt we're far away.
http://www.constitution.org/mon/greenspan_gold.htm
ReplyDeleteThe reasons that the government (or "statists" as worded here) have a desire to mislead, suppress, or attack gold was clearly outlined by Greenspan decades ago well before he became Fed chairman. (I'm sure that was just a coincidence.)
I respect Gary, but I would suggest Greenspan has some clout on this topic. I'm on Greenspan's side.
TZ,
ReplyDeleteJust my opinion, but I doubt Greenspan has much credibility anymore. Wasn't it he that created the easy money partly responsible for the housing bubble? And then he recommended people getting adjustable rate mortgages and levering up their housing debt (many who followed his advice are now in foreclosure).
This is a contrary view, but I wonder if the Fed might actually want gold prices to go up. With by far the largest gold reserves in the world, they stand a lot to gain it if was revalued closer to the current price. Right now I believe U.S. gold holdings are valued at the official price of $42.22.
>How could it be in a secular bull market if the Fed can short unlimited amounts of gold and silver?
ReplyDeleteThe flaw here is simple and known buy the Fed. It is based on freshman economics 101 and the reason that their paper 'adjustments' to metals markets have natural limits.
Tonight the president, congress, UN, and all countries of the world declare that Ferrari's are officially $100 each.
What happens?
So shall it occur with gold and silver if the "official" (Comex) price is pushed too low for too long.
TZ,
ReplyDeleteThanks for Greenspan's article. It all makes sense now. Taxation, deficit spending and inflation are all about wealth redistribution. Deficit spending and inflation would not have been possible under gold standard. Good analogy on Government pricing on Ferrari.
MAMA,
ReplyDelete>I doubt Greenspan has much credibility anymore. Wasn't it he that created the easy money partly responsible for the housing bubble?
The tobacco companies readily tell you that their product is bad and will kill you.
People say "OK, give me a carton".
There are two types of responses:
1) "I won't do that cause I think it is wrong".
This response never makes any money and lives in a shack eating ramen for their life. But they die diseased and in poverty comforted that they did the 'right' thing.
2) "Sure thing! You only want two? We have a special on a box of 5 and I can put you on a frequent purchasing plan with low rates!".
This response says "I told them the risks and they still wanted it. I might as well get rich instead of somebody else". This response lives well, enjoys the finer things in life and never has a bad conscious because they know they told the person and the person still decided to destroy themselves anyway.
Greenspan decided not to suffer because people wanted to be stupid. He was, however, nice and honest enough to tell them exactly what would happen if they demanded (or quietly accepted) paper money.
Poly,
ReplyDeleteSorry I was called away by my boss(wife). I live in Canada and I trade with Royal Bank action direct. Who do you deal with? So just to make sure we understand each other, if, for example, an option is trading bid $14 ask $15, you can put a stop limit at $13?
Bam
ReplyDeleteMy comex broker tells me they just take it on the trading foor if you try to do that with options
Jeff,
ReplyDeleteThanks for the info.
Gary:
ReplyDeleteAgain wonderful comments about conspiracy theories.
It SHOULD be well known but Silver broke out of the $20 ceiling the week JPM announced that it is shutting down its prop commodities desk; yes the famous desk which shorts silver.
There have been numerous reports of silver miners hedging their production by selling futures expiring further out. If you have the supply side hedging, it is a no-brainer for the backwardation to occur.
The futures market are showing exactly what should be happening. There is a short term supply squeeze, while in the longer term there is supply from miners available. Reflected really well in the forward curve.
FWIW the 32.80 area saw some good supply side pressure in the /SI contract. I also noticed that $5 scaffolding on the AQG is a good place to define support and resistance.
Jayhawk:
ReplyDeleteI respect your opinion, but please do not talk about the margin requirements hike as a measure by the big boyz to control the price.
Margin works both ways: for longs and shorts. The silver contract is heavily leveraged and very volatile. It can easily exhaust your margin in a single day and ruin you. Hence it is appropriate for the margin to rise with the value of the underlying and increase in volatility.
Just to offer a perspective, the margin for ES will not be exhausted unless it moves 100 ES points against you; i.e. about an 8% move in the SPX. Keeping in mind the daily movement in ES, the margin for /SI is too small. It should go up even more.
It's going to get very interesting in the next several years when the price of gold reaches $3,000, $4,000, $5,000 and beyond. That will be the time when gold fluctuates over a $100.00 an ounce on a single day and one's account can produce swings in the excess of tens of thousands of dollars
ReplyDeleteWill you people be mentally prepared when that day comes?
Will the stress be too much?
Will one panic and sell too soon?
Yes, things are going to get very interesting.
James
ReplyDeleteI'm trading with Gary. I'll be fine. =}
Yes Bamster and I'm certain all the major online brokers offer stop limits on options, it's a very basic trading order type. I use Schwab primarily. .
ReplyDeleteJames R, it's all relative!
ReplyDeleteGreenspan was talking about managing the price of gold when we were on the gold standard. Totally not applicable today.
ReplyDeleteGary, great post today, esp. the chart pattern example of the candlestick showing that it may be over when it was extremely premature to sell -- the 'down' time was so brief that few of us would have gotten our positions back (not me, I know that). Patience, grasshopper, is what I tell my self. Also the idea that these intraday reversals from what appears to be overbought to intense buying pressure somtimes within the span of an hour or less is very revealing about the many sweating it out on the sidelines.
ReplyDeleteJames R, I'm getting ready for it. On a bike ride a couple years ago, I met a guy who built a fortune during the tech bubble. He raised his asset value from about $1 million to $12 million at the peak, and he has single days when it went up, or down, by over $1 million. But, alas, he had no Gary in his corner (or even me, for that matter) and he rode the beast all the the way down and lost over 100% of what he had -- he also had to give up his home on Lake Washington and move up the hill (he showed me his former home, worth over a million today). The single most valuable help we will get from Gary is a concrete exit strategy at or near C-wave tops. The 2nd most valuable thing we will get imo is help in staying aboard the train.
ReplyDeleteBen, Gary will tell us when to exit. Of course as the bull is running, many won't listen! Your friend would have been one of those.
ReplyDeleteAgree with you on both counts, Ben. A few years ago, I read "Reminiscenses of a Stock Market Operator" and one thing Jesse Livermore pointed out was how when small traders got a profit of 10% they were happy and sold out, whereas he would let his profits run and ride a stock bought at $20 all the way to $100.
ReplyDeleteI've been in and out of SLW 4 or 5 times in the last 2 years and, except once, I ended up buying higher than when I'd sold, so missing out on a lot of profits in between.
What I find particularly useful is Gary's pointing to previous action in the silver market as examples, such as he did in this weekend's report. I was actually thinking of taking some profits next week; now I will just stand pat.
Now if only someone could only tell me the exact date and price of the D-waqve bottom:-).
Yup, JPMorgue is going out of business. This was released a week or 2 ago.
ReplyDelete"A scary figure was revealed at J.P. Morgan’s investor day presentation on Tuesday: the bank had a perfect trading record for the second half of 2010 and only lost money on 8 days out of 260 possible trading days for the full year."
Just maybe, Gary is right,and JPM is actually very good at trading silver's reversion to the mean and their short position is actually reflecting hedged mining positions...?;)
ReplyDeletemam,
ReplyDeleteI think we will get pretty close to the bottom of the D-wave when the time comes. They aren't terribly hard to spot.
http://www.zerohedge.com/article/tired-all-qe-just-asset-swap-rhetoric-then-read
ReplyDeleteGary, is this bogus information? From Harvey Organ.
ReplyDeleteThe huge rise in silver price has caught the silver bankers totally offside on the silver banking. The BIS data released in November (www.goldexsextant.com) shows that the G 10 bankers have collectively sold forwards and swaps to the tune of 4 billion oz and short naked calls for another 3 billion oz. The total, 7 billion oz represents 10 years of production. If you just do the forwards, then it is 7 years of annual silver production. Let us say the average cost of acquiring these derivatives and forwards equate to $15.00 for silver. Thus collectively the entire G10 bankers are feeling massive pain (losses) to the tune of:
7 billion oz of silver( 32.30-12.00) = 7 billion x $17.30 = 121.1 billion dollars of losses.
This is in a market of only 14 billion dollars. It begs the question to what economic need was this done.This is still off balance sheet.
If you include only the forwards or swaps (the lending of actual metal to which nothing has come back yet) then the losses are:
4 billion x 17.30 or 69 billion dollars.
Regardless how you look at it, the bankers are in serious trouble with this huge rise in silver prices. I hope you understand the severity of the situation.
There may not be a conspiracy, but they did the same stuff with naked CDO's in 2008. Why are bankers even screwing around with silver if it is so insignificant and only miners are hedging their book?
I don't mind as I am very long, but something does not pass the smell test to me.
Thanks
I'll look forward to it, Gary(hopefully all in cash by then)!
ReplyDeleteHaving a thought and figured I'd run it by here.
ReplyDeleteGiven the time decay of the ulra funds, and the advantage to the downside over time, it makes sense to short the ultra short funds ZSL and GLL. They are bound to go to zero over time as they return double the inverse of silver and gold and lose value with each reversal of price.
Has anyone tried this tactic?
Fubsy
Aviat-
ReplyDeleteCouple questions- Are you long anything in the pm complex at this point? If so, what % are you in? I'm just curious how big of a believer you are in this overall thesis and how much you are risking on it.
I'm also wondering what age bracket you are in? I'm 42 and find that most of the baby boomers tend to be much more trusting of the system. I'm a cynic and my default is to question authority or what the status quo is in most areas of life. So, I tend to have a lot of distrust for what we are being told.
Fubsy,
ReplyDeleteOver at Slope, someone came up with that strategy, but they couldn't borrow the shares to short.
Best
Bede,
ReplyDeleteOf course not. Too good to be true. I maqy place some orders anyway and see what happens. Sure helps my CAPS score.
:)
Shorting 2x precious metal sector ETFs is not a good idea. Gold does correct hard enough for that to work. They may degrade, but they still go up (at least since 2008 bottom) For example:
ReplyDeletehttp://finance.yahoo.com/q/ta?s=HGU.TO&t=2y&l=on&z=l&q=l&p=&a=&c=
opps... does NOT correct hard enough
ReplyDeleteoh nm, inverse funds where the topic :)
ReplyDeleteBob,
ReplyDeleteI couldn't get the link to work but I can tell you that there is nothing in the COT report that says who individual holders are. Just total position sizes for each category.
So I never did understand how the conspiracy theorists came up with the idea that it was a certain bank or banks that held such and such a position.
That data simply can not be determined from the COT data as far as I can tell.
It does make for an interesting read just like the end of the world Elliot wave nonsense will certainly catch ones eye. But all in all they are both probably worthless for making money.
Fubsy,
ReplyDeleteJust for the heck of it I tried to short a few shares of one of the ultra funds several months back.
Like I suspected you can't borrow the stock.
bamster,
ReplyDeleteAre you sure that you've thought through the idea of placing a stop limit, especially on options ? That sounds like a way to be left holding the bag at just the wrong time.
The whole idea of a sell stop is to sell the security. If you have a stop limit, and the price trades through your limit, even by a penny, you won't be stopped out.
I think that's a bad idea.
GARY,
ReplyDeletesilver is on his 18th day , gold in the 15th and the dollar in the 12th day of their cycle. Do you see a short cycle for silver to digest its gains or the dollar slide will override the lenght of the silver cycle? it seems to me that we could see a little weakness soon in the miners to allow a little digestion of gains
Marinho,
ReplyDeleteRead the weekend report.
BTW silver is on the same count as gold. Day 15.
ReplyDeleteFrom my experience the PM market is volatile enough that if you put stops on options there's a good chance you will get knocked out of your position.
ReplyDeleteIf you are using options correctly you can use a trade trigger to activate a stop when the underlying asset hits your trigger. ie. if GDX tags our stop your trade trigger would sell your options.
If you are using options for leverage and you are trying to treat it like a normal trade then the only way to avoid getting stopped out is to pick the bottom of a dip and never have the underlying move against you.
How often does that happen? Pretty much only at the exact bottom of a daily or intermediate cycle. which means you have to have perfect timing.
If after all the warnings and all the examples I've given and even a few real time blow-ups (think Robert and Gary UK) you still ignore me about leverage then I have no sympathy for you if you blow up your account.
Please tell me you aren't leveraging to the moon with options.
Hi Gary,
ReplyDeleteThe only options I have been trading since last year is the AGQ. What I'm trying to accomplish is to have the least amount of money at risk but get the biggest bang for my buck. Last year, you got me in just before the run up to $30 for silver. I got out just before it came down. Since then, I've been waiting for your signal to get back in for the final C wave advance. I have made only very small trades since then. My account hardly budged since december. Now when you gave the lastest signal, I got back in with out of the money AGQ options, maybe 10 points out of the money, for the month of march. As these options came into the money, I would sell them and buy the same amount of out of the money options again, thus reducing the amount of cash at risk, but having the same amount of options still in the game. As of Friday, I am now playing with the houses money. I am now waiting for April options to become available as June was the next month available as of Friday. Hopefully, they will be available Tuesday at which time I will sell my March options and buy April to give more time for the C wave to complete. Now if what you say that silver is going to be anywhere between $43 - $50 by April, I will be able to afford the next get together in Maui and thank you personally.
Bam,
ReplyDeleteYou are gambling with out of the month front month options. If you've read the option doc you know I rarely ever buy anything but deep in the money and only as a substitute for shares.
The problem with what you are doing is that you might be successful at it. Actually the problem is that you were successful at it last fall so now the spiral has begun.
You think you or I am smarter than the market and that you will be able to "get away" with this very dangerous strategy forever.
I can assure you at some point you are going to miss and lose everything you've made in the blink of an eye.
I'll say it again. Huge leverage always ends up in a blown out account. There are never any exceptions. And the worst thing that can happen is to win big the first time you go down this path.
It convinces you that this is easy. It's just like a casino. Why do you think the house will comp you all kinds of goodies if you are winning? Because they don't care if you win they actually love it when you win. All they care is that you stay at the table. If they can keep you playing they know they will eventually get all your money.
Leverage is the same way. It's incredibly seductive if you initially win. It will keep you at the table until the odds finally defeat you.
Gary,
ReplyDeleteYou're right, options are always dangerous. Believe me I have listened to you and kept the amounts small. Right now, I only have a small amount invested and its going to stay that way. I'm not aiming for the fences. Maybe if I was 25 years old, I would have the balls and energy to go crazy, but at 50 years old, I want to make enough money to buy a nice condo in florida for retirement in 10 years, and get met out of this cold part of the world. My trading account is not six figures, so when I tell you I have only a quarter of it invested in AGQ options and the rest in cash, do you still think it's too much?
Well only you can answer that question. If you were to lose 25% of your account in less than a week how would it affect you?
ReplyDeleteIf you did lose that much would you then double down and go in with 50% to try and make it all back in one trade? And if that trade was mistimed also and you lost 75% of your account in a very short time how would that affect your livelihood?
Remember we've already had a mistimed trade at the top and one at the bottom. The one at the top could have cost you all 25%. The one at the bottom probably would have cost you 15 or 20%.
If you managed to avoid both of those it was pure luck. How long can you expect to survive on luck?
AGQ is already a leveraged investment. You are leveraging on top of leverage. Not a good combination IMO.
ReplyDeleteGary,
ReplyDeleteI got caught in the last one. I bought AGQ puts to counter that trade which minimized the loss but I still wound up with a loss albeit a smaller loss.
Okay Gary, what I'm going to do tuesday is sell the options and buy 500 shares of AGQ. By the way, do you have a stop limit price on AGQ?
The trigger for all PM stops is HUI 518.
ReplyDeleteGot it. Good luck for the remainder of this C wave. I'm going to turn in for the night. Thanks for the conversation.
ReplyDeleteThis paper from 1997 that the Fed was ordered to release today by a judge, documenting how important a low gold price is for the authorities, is it also a 'conspiracy theory'?
ReplyDeletehttp://www.gata.org/node/9624
Gary you are hero. Try as you may, we will probably add Bam to the list..........
ReplyDeletewe're on the verge of a historical multiyear stock market breakout to lifetime highs.
ReplyDeletetrond, from your referral website, GATA's secretary observes:
ReplyDelete"The minutes of the April 1997 meeting of the G-10 Gold and Foreign Exchange Committee, which the Fed sought to conceal, along with the secrecy on which the Fed successfully has insisted for its other gold records, are powerful confirmations of Western central bank interest in controlling the gold market surreptitiously. The minutes have been posted at GATA's Internet site here:
http://www.gata.org/files/FedMemoG-10Gold&FXCommittee-4-29-1997.pdf"
GATA's problem here is that these are not "powerful confirmations of Western central bank interest in controlling the gold market surreptitiously. It's powerful confirmation of Western central bank concern, but not that they took any action to control price.
Is it probable that if the public were to become aware of how much physical gold is either not in Ft Knox or has been sold by the lessee (JPM) to others and can't be replaced except in the open market, that would blow the roof off of the price of gold?
Do you know if GATA publishes its guesstimate of how much gold the USTreasury has assigned out on lease, either directly or via the Gold Certificates the Treasury issued to the FedRes?
In this tightening supply market, IMO, this rumor or now legitimate conclusion (as we have no idea how much gold was reacquired by JPM to get back the gold, unless JPM itself merely leased the gold to "others" and can claim it back) that the UST is without recourse save "please" and "mother may I", could and IMO would, legitimately cause a panic against the USD and in favor of the precious.
This is bothersome. What are the consequences? Blood in the pits, and massive front months and even front years price appreciation nearly overnight.
That is a respectable parabolic culmination moment. Only Jim Sinclair thinks the price will rise and stick rather than collapse.
I've never seen a parabola rise on a longer term basis and stay up, although at this time, we're experiencing an old but for all alive, a new, ballgame.
I hate to drag in more physical as I want the money for other things. Pennies worth of gold relative to anyone's portfolio just doesn't do the trick, does it?
So, there are two operative facts: true impossibility or improbability to replace the gold that's been sold or leased by JPM in any timely manner; and major up and down trading opportunities in the futures and stocks over this certain to become an actionable issue by the public.
Choices... but it's clear there are only 2 choices, and one that's not a choice is ownership of any currency which is not provably backed by signficant amounts of gold.
Who needs this Gordion's Knot?
Probably doing both of the above is the rational set of actions.
Whadda pity.
The minutes point out clearly that much gold
Chris, if one is honest with the daily chart pattern, it's been the higher probability now for months. The recent failed retracement I speculated last week, will result in an increasing parabolic curve up in the US equity market indices, but as of Wed/Thurs/Fri, it's just been the same grind "up".
ReplyDeleteIf the silver miners are selling their contracts forward at say 30-31, what would happen to SIL if silver keeps going up?
ReplyDeletetrond,
ReplyDeleteI don't see anything in this supposed document that says the Fed is manipulating gold. BTW in 1997 gold was in the depths of a multi decade bear market.
Why would the Fed need to pressure gold down during a bear market?
Just more ridiculous GATA BS to draw in suckers.
I'll ask again. If the Fed is supposedly trying to depress gold why aren't all central banks not doing the same?
Central banks are now net buyers of gold. If they are buying gold then they are contributing to the rise in gold price.
If the Fed is actively trying to depress price then they are just making it easier for other central banks around the world to drain gold out of the US.
Like I said people just a little commonsense is all it takes.
It's safe to say there is a complete lack of commonsense at the GATA site.
You people really have to quit reading that crap.
Notice how the stock market rally as slowed as inflation has risen.
ReplyDeleteThere will be no melt up in stocks. The market will struggle more and more to rise in the face of higher and higher inflation.
Obviously liquidity is and will continue to leak out of the stock market and go into commodities as the only real protection against the Fed debasing the dollar.
This runaway move in stocks will end like all runaway moves end. Momentum will continue to fade and then when the downturn begins everyone will try to get out the exit door at the same time and we will see months of gains evaporate in minutes.
It happened in Feb. 07 as the 8 month runaway move collapsed and it happened last May during the flash crash.
QE2 has set in motion the next crash scenario.
gary
ReplyDeletei agree with you, but in order to get the heart rate up =) how about this
If the Fed is actively trying to depress price then they are just making it easier for other central banks around the world to drain gold out of the US.
answer : to spred the wealth
i do believe that is the stated goal of our beloved leader
sometimes for me its hard to tell even on the job site if
ReplyDeletea) people are stupid
b) really working for the otherside and destroying a project on purpose
c) or really think they are doing a good job
Common sense tells us the reason CB's want to keep gold price down is because they want to buy it in large quantities cheaply in order to cover the paper gold they've floated.
ReplyDeleteHow can you keep price down and buy at the same time?
ReplyDeleteThe same way smart money managers have been doing it. They cause dumb money panic selling whenever possible and use other tactics that I'm sure are above my head and yours.
ReplyDeleteReally? Smart money tactics?
ReplyDeleteIsn't it more likely that the gold bull is just doing what normal bulls do?
That the ABCD waves are running just as would be expected in a normal bull market?
That the daily, intermediate, yearly and 8 year cycles are all playing out just like clockwork as would be expected in a normal bull market?
That when the parabolic phase of a C-wave gets too stretched above the 200 DMA a normal regression to the mean profit taking event occurs just as would be expected?
Is there anything about this bull market that doesn't look like just a normal bull market? And if not then why would anyone think the Fed is "tampering" with gold?
Gary said,
ReplyDelete"Central banks are now net buyers of gold. If they are buying gold then they are contributing to the rise in gold price."
Two questions.
1) Why are they net buyers of gold if, as you say, gold is just an intrinsically worthless shiny metal?
2) Why wouldn't CB's try to manipulate the price of gold if it constitutes their greatest reserves and if they're wanting to buy it up?
It's not a conspiracy because its right out in the open for anyone with eyes to see. Gold is, after all, the most important reserve for central banks. They are well aware that gold is fiats only true competitor.
This is just short term manipulation that we see at the bottom of an intermediate cycle I have to ask who cares?
ReplyDeleteWe use that short term manipulation to our advantage to take positions at the bottom of corrections also.
There's nothing catastrophic about that. It's just a short term move below a support level so big money can enter positions into liquid conditions.
Is this really what GATA is so up in arms about? Usually this kind of manipulation lasts one or two days tops.
"Is there anything about this bull market that doesn't look like just a normal bull market? And if not then why would anyone think the Fed is "tampering" with gold?"
ReplyDeleteYour cycles seem to work well with DXY and I'm fairly certain you wouldn't claim the USD has not been manipulated.
"Is this really what GATA is so up in arms about? Usually this kind of manipulation lasts one or two days tops."
ReplyDeleteI don't know what GATA is worried about. I'm just pointing out that the USD and gold are obviously manipulated by CB's. Knowing it is and how it is can be beneficial to someone wanting to make scads of money.
You track smart money in order to make money, right? Why not just admit that central banks manipulate currencies and gold and attemptm to use those manipulations to make money?
Red,
ReplyDeleteThere is a very good reason for the government to manipulate the currency markets. They are debasing the currency in a failed attempt to abort a secular bear market.
They are monetizing a debt spiral that can't be service any other way.
There is no logical reason for the government or Fed to give a damn about the price of gold unless the money supply was backed by it.
It's not anymore. The Fed can print as much paper as they wish with no constraint. The Government can then trade that freshly printed money in for goods and services, effectively stealing from the public.
If the money supply was constrained by gold they couldn't do that as the public would retaliate by trading their debased dollars in for gold.
When the US went off the gold standard they ended all recourse the public has against government theft from the masses.
So like I said before there is simply no need for the government or Fed to give one rat's ass about the price of gold. They've already perfected theft from the masses to the point where we can no longer prevent it.
Redwine, I can empathize with you wanting to know why and to affix a sinister reason to this.
ReplyDeleteI tend to go there myself, but I an tell you overthinking this will lose you money.
Our beliefs trump market discipline. This is why I subscribed to Gary last year, my beliefs were not jiving with these moves at intermediate moves and Gary's cycle work was a big aha for me.
I can tell you my trading is a lot less stressful and much more profitable.
Gary,
ReplyDelete"There is no logical reason for the government or Fed to give a damn about the price of gold unless the money supply was backed by it."
What you fail to recognize is that gold IS money. It's part of the money supply. Why do you think CB's use it for reserves? Why do you think the richest families have used gold for reserves throughout history?
Of course they give a rats ass what gold price is in USD. The problem, as they see it, is a global confidence shift from fiat to gold. It's happened in CYCLES throughout history.
Red,
ReplyDeleteYou're kidding yourself if you think gold will ever be used as money again. It's way too unwieldy and to hard to divide into serviceable units. How would one go about paying for a gallon of milk with gold?
Gold is a store of value. It's never going to be money again. Copper is also a store of value. So is oil or wheat or cotton. So are diamonds, rubies and emeralds.
Is the government going to manipulate the price of every commodity because it can be used to store value?
Gary,
ReplyDeleteThanks for circling the weekly return indicator at the top of the Stockcharts.com charts (weekend report). Hadn't noticed it before, and it's very useful information!
Why does it matter if an asset class is being "manipulated" or not? Your job as a trader is to win money, the price of all assets go up and down regardless of any collusion that could be happening, therefore one can always win money in any market under any condition.
ReplyDeleteAll governments can do is print money. When they succumb to the temptation of free money it leads to inflation. If they succumb to the temptation of debt and if they try to service that debt by inflating the money supply it leads to the destruction of the currency.
ReplyDeleteThis is the path of every empire in history, mostly because human nature never changes. If the temptation of free money is available every country or empire in history always eventually takes a bite of the forbidden fruit.
And once a country starts down this path they almost never get off.
BLH
ReplyDeleteI really don't see anything sinister about CB gold and dollar manipulation. They are run by very booksmart people who've experienced a certain level of indoctrination during formal education. I believe their intentions are pure.
My only point is that a knee jerk reaction to anything associated with GATA or any other organization can be counterproductive in attempts to understand the world of money.
Gold is money, not just a shiny metal. Nothing works better as a wealth preservative, throughout history. That's the reason for this gold bull same as it was in the seventies.
DK
ReplyDelete"Why does it matter if an asset class is being "manipulated" or not?"
For the same reason we care about SOS or blees numbers. It's easier to make money if you follow the "smart money".
Gold is smart money.
It seems like we have been making pretty good money... despite the governments best efforts to take down the price of gold :)
ReplyDeleteRedwine, The smart money got in during the accumulation phase of the 1st ten years of this bull. Now that we are in the recognition phase, the late comers are jumping in. The mania phase is when the public fully engages. Hence the bigger swings you will soon see.
ReplyDeleteGary
ReplyDelete"You're kidding yourself if you think gold will ever be used as money again."
Gold is money.
"It's way too unwieldy and to hard to divide into serviceable units. How would one go about paying for a gallon of milk with gold?"
Ever heard of digital cash or Goldmoney? Not that I support either gold as medium of small exchange or a gold standard. Since we weren't discussing this I'll call it a strawman argument.
"Gold is a store of value. It's never going to be money again."
Because gold is the best store of value it IS money.
"Copper is also a store of value. So is oil or wheat or cotton. So are diamonds, rubies and emeralds."
Again, off topic, I will say that gold is , by far, the world champion store of wealth. It's simply the best for many reasons I won't get into.
"Is the government going to manipulate the price of every commodity because it can be used to store value?"
Of course not. Only gold competes with fiat as a store of value in the real world. Note that central banks don't use wheat or silver as reserves and neither do the wealthiest families.
"It seems like we have been making pretty good money... despite the governments best efforts to take down the price of gold :)"
ReplyDeleteManipulating and 'taking down' the price are two different things.
The fed is manipulating gold -- but it's manipulating the price upward, not downward. The intent of QE is to lower the value of the dollar against gold in order to create inflation. And it's working.
ReplyDeleteBTW, as for the JPM conspiracy -- not only will JPM not go bankrupt anytime soon, but they will make vast sums of money from the coming PM bubble, just as they did in the last two bubbles.
Ok as soon as the world starts using gold as money again you come let me know.
ReplyDeleteYou want to define a normal profit taking event as a take down. I just look at it as a normal occurrence in normal bull market. I use it to take profits and then re-enter at lower prices.
Brian
ReplyDeleteThe smart money is still getting in. They know gold is the deal of the century and are gladly exchanging slips of paper for it hand over fist. They know to keep it slow...otherwise will have to pay much more.
"Ok as soon as the world starts using gold as money again you come let me know."
ReplyDeleteYou're kidding right? The world is using gold as money. The central banks are using it for international exchange of huge amounts of wealth. They're using it for wealth reserves and, yes, they're using it to back their fiat (secretly in the open).
If you can't accept the fact that gold is money then we have a vastly different definition of money.
Hey Gary,
ReplyDeleteas of this weekend I'm a proud paying member of the Gary club; I think yours is only the second paid newsletter I have ever subscribed to.
So you're targets are 43 $ and 50 $ as I understand. 43 wouldn't be much, considering that we just ran 5 bucks in about two weeks. At that same pace we'd be there in a month; but you're saying that you're going to pull the plug only at the end of the fourth quarter?
Also, by the time we get to 43 AGQ should be around 100$ higher from now, that'll put the price at about 270$. 320$ roughly, if Silver goes to 50$. Is my calculation right?
Thanks
Just because Nixon took us off the international USD/gold exchange doesn't mean gold isn't money. It actually has the opposite meaning, otherwise why would Nixon have cared about foreign countries emptying Fort Knox of worthless shiny metal?
ReplyDeletered,
ReplyDeleteJust because you keep repeating that gold is money doesn't make it true. Gold hasn't been used as money in ages.
Gold is a store of value. In order to purchase groceries or fill up your tank or any of the myriad activities of life you would first have to exchange your gold for paper currency (money) before you could buy anything.
It's been that way for more than a century here in the US and it's not going to change anytime soon.
Redwine,
ReplyDeleteHow has your knowledge of a hypothetical manipulation in gold improved your trading results? Do you have any specific strategy that comes directly from this knowledge and that gives you an edge in trading gold?
gary,
ReplyDeleteGoogle the definition of money and get back to me.
DK
ReplyDeleteIt's yet to be determined. Like most I try not to let ideology get in the way of business. I'm not a gold bug but at some point, using a rising scale, I expect to be fully transitioned from paper to physical.
My theory is that counterparty risks will continue to increase for paper gold, paper silver, derivatives, USD, bonds, equities, and everything else besides physical gold.
The main thing holding gold down has been paper "equivalents" synthetically increasing the supply. These will probably collapse as physical surges.
There are over 600 trillion in derivatives globally. If/when this house of cards collapses I believe pretty much all paper investments will go up in smoke.
Mining shares are subject to massive exogenous forces, especially during panics. Governments can change the rules and in the blink of an eye our paper profits could vanish. Mine nationalizations and windfall profits taxes are just two examples of an infinite number.
I'm still trying to figure it all out, like most of us I'm sure. I know my knowledge is very limited and appreciate Garys' extreme intelligence along with yours and others here.
"Money is any object or record, that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context."
ReplyDeleteAs I said try using gold to pay for goods and services nowadays.
I guarantee if you go into Walmart you will not be able to use a 1 oz. gold coin to purchase anything.
You would have to exchange your gold for paper currency before you could transact any exchange.
Gold is a store of value but it hasn't been used as money in over a century and it won't be used as money any time in the near future. It will remain as a store of value probably for many thousands of years but it's never going to be used as money again. Certainly not in our lifetime.
Basil,
ReplyDelete$43 is the target of the possible T-1 pattern on the silver chart. However silver is notoriously volatile so I would put virtually 0 faith in chart patterns for silver.
I tend to think as soon as silver clears $40 the 1980 high of $50 is going to act like a magnate drawing silver relentlessly to it.
Gary,
ReplyDeleteNot to belabor the point but:
Medium of exchange. Central Banks constantly use gold as a medium of exchange presently.
Unit of account. USD are priced in gold. I know that's weak but it was the ultimate goal of statists.
Store of value. Central banks and the very wealthy know it's the best long term store of value and has been for millennia.
But we're conveniently off the subject of whether or not central banks care about the dollar price of gold.
"Gold is a store of value but it hasn't been used as money in over a century and it won't be used as money any time in the near future. It will remain as a store of value probably for many thousands of years but it's never going to be used as money again. Certainly not in our lifetime."
ReplyDeletehttp://www.youtube.com/watch?v=7ubJp6rmUYM
N,
ReplyDeleteWhen we see gold being traded for products at Walmart then I'll believe gold is being used as money again.
Gold is a store of value and as such it can be hoarded or traded by central banks as Redwine points out, but it is not going to be used as a medium of exchange for common every day transactions. That is the role of money. And in modern society that role is filled by paper currencies.
Gary,
ReplyDelete"When we see gold being traded for products at Walmart then I'll believe gold is being used as money again."
I certainly don't remember having to pay for anything with gold coins in the sixties and, surprise...surprise, we were on the gold standard in the sixties.
Have you ever heard of silver or gold certificates? Sheesh.
Still not money in the sixties either. The money supply was backed by a store of value (gold) but gold was not used as money.
ReplyDeleteYou are confusing store of value to mean money. One doesn't lead to the other.
In order to complete virtually any transaction gold must be first converted to money.
I heard of the silver certificates. They were a fraud, more than there was silver in the vaults.
ReplyDeleteRemember the big turn in? On x date, one could no longer exchange them for silver. Every certificate controlled silver worth more than the certificate face value.
That too, btw, added silver into the private market, as did the liquidation of the govt stockpile., and the 1981-82 silver melt.
Assuming a gradual increase in the commercial demand for silver (even with it being dropped from xrays which are now in western countries I assume digital), imo, the stocks are now depleted.
We can always each of us look into the future. When I took my position in 2000-2002, in physical, this shortage was obvious and looming. What was weird and of note was, like with the miners a few years ago, a major disconnect, a dissonance, between reasonable consequences of greater consumption than available inventory.
The price had to go up. It's going up.
Tha markets are closed tomorrow. What should we do?
ReplyDelete