The implications are that once the CRB has completed this major cycle bottom that we should see generally higher prices over the next year and a half to two years, presumably topping during a major currency crisis as the dollar drops into its next three year cycle low in the fall of 2014.
I think the 30 point rally in gold today is signaling that gold has put in its yearly cycle bottom. Since gold did not break below the December low of $1523 I think we can assume that this is a B-Wave bottom and should be followed by the consolidation phase of a new C wave that should breakout to new highs either later in the fall or next spring. The next two years should generate an even more impressive advance then the 2009-2011 rally, possibly even generating the bubble phase of the bull market in late 2014 or early 2015 as the dollar crisis reaches a crescendo.
As gold usually leads the stock market by a few days, we should see the stock market put in its yearly cycle low sometime in the next several days. However the outlook for stocks is not as bright as the commodity sector. While I do think continued currency debasement will probably drive the stock market to at least marginal new highs I also think an increasing inflationary environment is going to compress profit margins and constrict consumer spending. After a long topping process the stock market and economy will probably roll over and follow the dollar down into that 2014 bottom.
While I'm not ruling out one more quick dip below $1523 to wash out stops below that technical level, I think gold is in the initial stages of the next leg of the secular bull market. This last C-wave from 2009 - 2011 was the C-wave of silver with a 400%+ gain at the parabola top in May of last year.
This next C-wave will be the C-wave of the mining stocks. During the irrational selling over the last eight months mining stocks have reached levels of undervaluation that have only been seen one other time in history. That drove a 300% rally over the next two years.
I suspect we will see something similar or even larger as the market gets busy correcting this irrational undervaluation.
I think we are at, or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks.
In 1970s Gold bubble came after a 40% decline known as a bull trap. It also lasted from late 74 to early 76 and it went almost straight down. This doesn't mean that Gold has to mimic any type of action from 70s but I hardly doubt that Gold will start main phase right now (for various supply and demand reasons I constantly discuss on my blog).
ReplyDeleteGold is on support, sentiment is horrible, Dollar is at resistance, sentiment is extremely bullish. Gold is very oversold and Dollar is very overbought from the short term. The same is true for the whole CRB.
However, you do not have a catalyst bottoming commodities such as a major money printing exercise. And you also do not have a trigger for a catalyst, which is a Greek default or something along the lines. Maybe you don't need one, but recent events are starting to remind me of Lehman, where Greece is edging closer to major trouble.
Dont compare Greece with Lehman. Every man and his dog knows that Greek debt is worthless...and that the Government is bankrupt....
DeleteIn Lehman's case no-one outside of Lehman (other than the elitist banks and FED)knew how toxic they were or how a bankruptcy would affect the global financial system.
Sure TPTB have done their homework on that one by now....viz a viz MASSIVE LIQUIDITY.
Aside from that there is the impact of default / bankruptcy. This is the QUADRILLION $$ Q. All of the awful OTC derivatives are still lurking in the market.
Greece's issue is how it impacts the rest of EUR and the US...and the world's financial system...and how it can be contained.
Its not Greece edging closer to the cliff...this needs to be taken into context. The collective EUR, US, UK, CHINA et all major economies are edging closer because of what may eventuate from Greece.
I'm trying to ignore statements like "currency crisis" and "inflation fears" when there is more likely deflation at the moment. The Euro might dissolve or even the pegged Yuan can wreak inflation in China well before the US has issues. I think these type of statements are more sensational than fact. That said, trading based on those calls will get people in trouble. For example, the dollar is up over the last year and has yet to yield. And bonds who everyone predicts the death of are rallying stronger than gold. But his actual trades maybe a bit early or late but tend to work out.
DeleteIt is not Greece that is important, but the trigger of what happens next.
DeleteGreece is going to make Lehman look like a walk in the park. Greek debt is super steroid mega debt, because it spreads throughout Eurozone and affects all major banks.
When subprime collapsed, it spread all the way to Hong Kong and Iceland from the US. When Greece collapses it will spread to Mars and all the way to Pluto.
There is a risk of a collapse. And I would guess the government would do whatever it can to avoid this. Of course, it will be a struggle and the markets will voice their displeasure - and I can imagine corporations will cut back investment and hiring as well.
DeleteI'm not sure of the % but I would put it at less than 10% it collapses. And something like 89% there will be some damage to the markets of some form. And like 1% that things go smoothly. I just don't know how bad the 89% could be - anywhere from 2008/2010 sell off. And the other 10% would be make 2008 look like a walk in the park.
They cannt stop it, no matter how much they try. Some debt will be written off. We are in a de-leverging environment. Debt needs to be slowly written off from time to time if another secular bull market in stocks will ever start.
DeleteThis coming period will see Greece default, be it 2012/13/14 or whatever. Than we move on to the next one.
Oh We will have a currency crisis and that will propel gold. It just will not be my beloved USD.
ReplyDeleteI just want o say something else. Gold is up 11 years in the row. Here you are suggesting that Gold will be up every single year of this secular bull market and than it will go into a parabolic mania. I highly doubt things are that easy.
ReplyDeleteIn 1970s bull market it wasn't this easy. Why wold the market gift us this much money for free? It doesn't make sense... In 1974 Gold topped and declined for over a year not early 1976. Only after a 40% to 50% decline, did Gold manage to shake all bulls of the train and restart the rally which eventually went parabolic into 1979.
If you think about what will push central bankers into creating a good bubble, it will most likely be a crisis. Therefore a common chain of events wold state that deflation has to occur on a grand scale... like a default and banking freeze, before huge amount of money will be printed.
For gold to go vertical the Fed might not do a QE3, it just might monetize the whole US Debt by buying constantly under the whole 16 trillion is placed on the balance sheet. I ask myself, what wold drive Bernanke to do such a mad thing? A total crash in the stock market and economy triggered by events out of Europe.
"In 1970s bull market it wasn't this easy."
DeleteGreat to know this has been easy!
Gold is up 11 years in the row. All you had to do is hold and every year you were up. That is as easy as Nikkei in the 1980s.
DeleteBut it might not be that easy going forward!
With that x-ray hindsight and death-grip on the obvious you should be a superhero!
DeleteSplease tell me what the next 11 years portends.
-SM
www.SpeculativeMeasures.com
"All you had to do is hold and every year you were up. "
DeleteTiho, you are quite young, aren't you? That is the silliest piece of analysis I've seen in many years.
Gold will not bottom until June
ReplyDeleteNew trade alert from my friends site as well. Thanks Gary for sharing with all of us.
ReplyDeletehttp://humblestudent777.blogspot.com/
marketcycles79
Thanks Gary,
ReplyDeleteYou have with this analysis taken the shine off the upcoming FB IPO....(pun intended).
BRILLIANT timing... AND.....GREAT WORK.
Some reservations but in the main I am with you on these calls.
With all the CRAP you put up with....I admire your persistence & tenacity in getting your message out.
For the life of me I can't recall what the trigger was that caused the 50% correction in gold from 74-76 but I remember there was one.
ReplyDeleteI'm not suggesting gold is going straight up from here. I noted in the last two articles that gold should enter the "consolidation phase" of the next C-wave. That's the phase where it bumps up against the old highs several times before gathering enough steam to breakout to new highs. I don't really think we will see that break out till next spring.
After, Nixon removed dollar form gold standard, inflation strangled the economy while the dollar depreciated. To tame inflation and defend the dollar, the Fed raised interest rates from 5% to over 6 or 7% which createt demand for the USD. The higher rates, raised the dollar and lowered gold and inflation and also set the economy into to a recession and caused gold to sell off.
DeleteIt is crazy economy today that we have almost a 0% Fed rate and barely run in and out of inflation/deflation.
I can't for the life of me remember what it was, but that wasn't it.
Delete1974 (Dec 31) was also the first year that gold was allowed to be owned as private investment. Great for any private investor who bough gold (and probably dumped it near the bottom of the market).
DeleteCheck a history book Gary. It was the interest rate rise that killed gold, inflation and set off the recession.
Jeff,
DeleteMy understanding was that Nixon removed the USD redemption on GOLD..not the $$ from the Gold Standard, but I remain to be corrected on that.
Long story but this was part of a currency war that had its origins via France becoming suspicious of USA (currency manipulation and economic benefit), so it started to convert its USD (Reserves) holdings into GOLD. Others followed suit only for Nixon to kill the redemption (on a Sunday night) through a broadcast TV announcement.
There was one guy who actually became quite famous (and wealthy)for his prediction in 1974 of gold rising to $900/oz by 1980. He actually converted his gold holdings at the peak and timed his exit perfectly. THE trigger ...for exiting GOLD...Interest Rates increased....The name of the Chairman of the FED Reserve ...Paul Volcker..killed gold in its track. It has rested for 20 years...and now the PM has become top of charts again....this time....we have bigger problems to deal with.
the arab oil embargo in 1973 caused a price shock to the us economy which resulted in a deep recession. real us interest rates went sharply negative (by late 1974 they were at -5%). then as the us economy recovered in 1975 real interest rates reversed course and went positive, topping in 1976 at around +3%. they then reversed course again as the inflation of the late 1970's took hold, and remained negative until volcker decided to break the back of us inflation as the 1980's began. the price trajectory of gold in the 1970's (and since) is well correlated with real interest rates, they are the key. today, real rates are negative and getting more so.
Deletethere is little in common between the world of the 1970's and the global economy of today. attempting to draw an inference about the price movement of gold today simply from a chart of 1970's prices seems to me to be misguided.
i suppose it would be more accurate to say that much has changed in the global economy of today since the 1970's.
Delete1973 was the inflation shock from the OPEC oil embargo. Nixon resigned in August, 1974. Vietnam war ended in April 1975.
DeleteThis comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThat's is exactly the market we are in....ST...based on volatility trades....UNLESS...
DeleteYou play GOLD (LT).
Waiting around for the cards to fall in your favour can take an eternity. Besides when/if they do, invariably you need to be thinking exactly the opposite.
Keep the Macro issues closer to your chest. Dont get bogged down in the micro analysis.
You or I aint gonna change the world.....the signpost are there for all to see.
Remember "Scared Money..never Wins".
BTW ..the "IF" question is wrong imho. "WHEN" is not as important as "WHY" or "HOW MUCH" or "FREQUENCY".
Gary -
ReplyDeleteI know you are not real big on using indicators, but if you are familiar with John Townsend's TSI work, I just happened to notice that there is a strong divergence forming on the TSI index for the dollar. It's been setting up since the ninth when it broke the momentum trend. This is generally a pretty good indicator that "times are a changing," and this is a good one. We had a nearly identical set up starting back on March 7th (but not quite as pronounced as this one) that led to the April bottom.
The dollar is about to run out of steam . . . if it hasn't already today.
New highs are most unlikely for US stock markets. This is just my opinion. If new highs occur, it is a great short opportunity. We are topping here and smart investors should be listening to the tape... the message that the price is sending out for all to see. It seems that Gary does not follow anything other than the US Dollar Index, few commodities and S&P 500. Us Asian investors are not so much US-centric and tend to offer a refreshing view on the world.
ReplyDeleteSo many assets failed to exceed May 2011 highs and confirm S&P 500′s new high into 1420, which shows a broad topping process from March 2009 lows. MSCI World index did not make a new high, Crude Oil did not make a new high, Copper did not make a new high, Australian Dollar did not make a new high, Euro did not make a new high, Canadian Dollar did not make a new high, Tornoto Stock Exchange ETF did not make a new high, Nikkei did not make a new high, Emerging Markets did not make a new high, European markets did not make a new high, Semiconductors did not make a new high etc etc etc… you can go on forever!
With the Dollar rising, international earnings for US companies are actually shrinking due to the exchange rate. That will make revenues smaller and make profit margins mean revert. At the same time, the world is slowing down meaningfully, including the economies of Chi-ndia which accounts for 4 billion people on this planet!
Unless Fed does a trillion dollar QE (highly unlikely in my opinion), than we are now staging a bull market top. I was a bear on the US Dollar in January 2012. I shorted it. Now I have taken off my shorts. The bull market from March 2009 lows is ageing. What better way to finish at the top than to have a record retail investor subscription to Facebook IPO…
The reason I say that is because there is a smell of Lehman with the current Greek saga. It has dragged on for so long, that it could just all fall apart soon enough. But, from the short term, I’d buy the risk assets for a rally I guess, including Gold / Silver etc etc etc due to extreme negative sentiment. But for how long? A spike into mania like Gary says? I highly doubt it! What will propel investors to push Gold towards $5000 from now? Another $600 billion QE? No way, not enough at all!
I respect your analysis TIHO and your opinion.
DeleteMay I offer some support for Gold to move higher (other than further QE):
- Sovereign Debt Levels (globally) ...present and future.
- Private Debt Levels
- Toxic Assets Held on Bank Balance Sheets
- Toxic Assets Held on the FED / ECB Balance Sheets
- Lack of Mark to Market requirements for those toxic assets
- Technical Bankruptcy of the USA (debt > GDP)
- Technical Bankruptcy of several EURO 17
- Amount of Liquidity (Money supply) injected already into the financial system.
- Capital Inadequacy of Banking Institutions.
- Manipulated Fiat Monetary System
- Demand vs Supply (physical)
- Peak Gold theory
- Inflationary trends (ties into the additional liquidity)
- Manipulated PM market (paper)
- Artificially maintained stock market
- OTC Derivatives
Some of the above could trigger an absolute catastrophe without doubt...with massive wealth destruction across the globe. Ultimately then, where does value reside.
Here we have a "whole world" waiting to implode....what becomes of the Greek Saga indeed.
I think you pretty much answered ur own Q. TPTB dont have too many viable alternatives.
BUT...there are other factors working in tandem with QE... to ensure that GOLD takes its righful place once again. Putting a price on that value in the future is a foolish game.
The G8 made the unusually aggressive announcement this weekend that they will take necessary action to counter financial turmoil due to the Greek situation. I really don't believe Greece can be compared to Lehman because politicians and CBs are already on guard, and all the numbers have been on the table for years. The G8 announcement effectively guarantees a new QE, in my opinion. Furthermore, Europe is firmly rejecting austerity at the polls. Even Merkel is now willing to compromise, being swayed by the ousting of her buddy, Sarkozy. China is slowly firing up their presses with three, recent rate cuts, as well.
DeleteNo, the fundamentals actually support a higher gold price because the fundamentals point toward more printing, and soon. Cycles are sniffing this out. I also believe that once QE is announced, stocks will rally violently. However, market internals... which you thoroughly detail on your site... suggest it will be a rally to end the cyclical bull. So I agree with your assessment that the stock market is locked within a topping process.
However, I cannot accept an argument like, "gold has been up 11 straight years, so it should go down." This is an empty argument, and one that has been made since gold's streak hit 6 years. That said, I do agree that we will see a massive shakeout before the bubble phase. That shakeout should arrive as gold sinks into its 8-year cycle low in 2016/17. After a 2014 top... along with the dollar's next 3-year cycle low... I expect gold to suffer a massive loss into its 8-year cycle low, perhaps on the scale of the 1974-76 period. Gold and other commodities will then go parabolic into the bull market top, probably in the 2019-20 time frame.
Sounds reasonable to me :)
DeleteI've got to say that despite taking their time my cycles are beating your fundamental analysis. I said that the dollar should make new highs and it looks like it probably will. I said the runaway move in the stock market should end in a crash or semi-crash type of event and it is.
ReplyDeleteNow cycles and sentiment are saying that we should be nearing major intermediate term bottoms in gold, stocks and commodities any day now, which should mean the dollar rally is about over for a while. Greece is a non event. CB's have already demonstrated that they can halt a debt crisis with their printing presses. All it takes is a little pressure and politicians break down and take the easy way out. This year isn't going to be any different than the last two years.
At some point (probably soon) the printing presses are going to be turned back on and another trillion or so will be thrown at the problem and it will temporarily halt it again until the next round of liquidity is needed.
We just aren't going to make the same mistakes we made in the thirties this time around. This isn't going to be a deflationary depression. it's going to be an inflationary or hyper inflationary one.
Gary,
DeleteAgree with you on the CB intervention..
Already Merkel is making some noises and about-facing her(Germany's) distaste for further debt. She now realises ( from the recent Greek, France elections) that austerity measures are too harsh. People voted with their pockets and livelihood in mind. Her party is getting crushed because of her stance.
Politicians will tow the line...they will or they will be dealt with.
One man in the Greek political party is NOT going to bring the world financial system to its knees.
There will be some real sweeteners for Greece and Spain and Italy ...they will all get the necessary capital injections....and then some very attractive funding to boot...to ensure that they can attempt to at least maintain civility.
The only way out of this diabolical mess is as you say via inflation.
It may take several years....but ultimately it will come.
Storm in a tea cup....perhaps...hardly....but it will be sorted in time....knowing how they work. Me thinks there are a few anxious bodies in the IMF & ECB and FED at moment.
You are just talking miniature movements. I said stocks will not CRASH from a runaway move. I said that tops are a process and not an event. I still believe that is the case. Markets will stage a topping process which already began. Than a real sell off will occur.
DeleteThis year will be different than the last two years or the last 11 years. Gold might not make a annual gain this year, despite what cycles say. Eleven years up in the row is a bit too much. Gold needs to correct and technicals on the weekly and monthly chart need to revert to mean. They are still very much overbought.... Printing presses will not be turned on most likely, until something bad happens.
Finally, I am not very good at the markets. I do not think anyone really is. Mr Market fools us all. But I will tell you where I think you will be wrong in a metaphor:
You are a reading a book called Gold secular bull market. Instead of reading every chapter of the book, you have read the first 11 chapters (first 11 years). But the book has 16/17/18 or whatever chapters and instead of you reading the whole book from start to finish, you have no gone to the last chapter to see how it finishes. The ending is obviously a mania, which all of us know.
But you are missing the chapter in between that states the following: for Gold to enter an inflationary mania that becomes created by central bankers and politicians, the world economy will have to be hit by a DEFLATIONARY event of grand proportions, which will force central bankers hands to act.
"Gold needs to correct and technicals on the weekly and monthly chart need to revert to mean. They are still very much overbought..."
DeleteAre you kidding me?
Gold not only isn't overbought, it's very oversold, as a matter of fact it hasn't been this oversold since 1999.
Do you even know what overbought and oversold means?
Gold is only oversold on a daily chart and nothing else. Zoom out dude!
DeleteI will repeat my question.
DeleteDo you know what oversold or overbought means?
Please show us weekly and monthly charts where gold is, as you claim, overbought.
I am eagerly awaiting for your charts,this is gonna be a blast, i can feel it
TUESDAY, MAY 1, 2012
ReplyDeleteTHE INFLATION TRADE IS ON: BERNANKE HAS BROKEN THE DOLLAR RALLY
This comment has been removed by the author.
ReplyDeleteI was bearish on the Dollar in middle of Jan 2012. Now I closed my shorts and am closing my longs on Silver over a coming period when it rallies from negative sentiment (Gold Daily Sentiment Index reached only 5% bulls at $1530).
ReplyDeleteHaving said all this, US Dollar will now spike higher eventually as Credit Spreads and Dollar Funding becomes a massive issue. It is moving towards Lehman 2 now and no one can stop it. Not Draghi, not Bernanke... no one. The market is about to force Europeans to wipe out some debt and remove imbalances out of the system.
This is capitalism and it will be healthier for the whole world when Greece wipes out its debt. However, the process will be quite painful for all risk assets.
I believe Gold will crash!
Capitalism died when LTCM and AIG and BEAR STERNS were saved....along with GM and a myriad of other Institutions. If Capitalism existed the world wouldnt be is this MESS.
DeleteThanks to the FED ...
Capitalism is not dead, it has just been removed from the central point of view. During secular bear markets in equities, all market participants give up on capitalism. But, you just watch the next several years as capitalism slowly purgers itself from the rotten debt that is keeping it down. Eventually, by the middle or even the end of the decade, stocks will once again be ready to embrace capitalism that we saw at the 1921, 1949 and 1982 bottoms in previous major generational cycles.
DeleteYes agree debt needs to be purged, but what makes you think Capitalism will reappear.
DeleteCapitalism implies capital is at risk with a reward by way of profit in a free market without interference.
The STATE is progressively becoming the OWNER of last resort. Why does the Government stand behind the Elites when the SHTF ?.....Because their masters tell them to. Rule of Law and Regulations suit the Elitists....do not encourage capitalism...and are interpreted to discourage free market participation, private ownership,open competition, profit while removing individual rights.
Why doesnt the Govt regulate when criminal organisations are permitted to gamble in an unregulated environment knowing full well that these same organizations having the backing of the Public via socialised debt ?
Tell me where, over the last decade, has the US Government encouraged true capitalism ? Socialism is ensuring that "market participants" remain connected to the Government.
Then tell me why True Capitalism will reappear as if by magic over the remainder of this decade. Debt is not holding it back my friend.
It is DEAD. Long Live CRONY CAPITALISM.
Knowing what you know...and what you have witnessed..tell me please...I'm waiting.
The obvious answer is that letting the banking system fail would cause chaos and a nightmare depression for several years.
DeleteThe easy way out is to print the debts away. However that has the unintended consequence of creating an inflationary or hyper-inflationary depression further down the road. Unfortunately most politicians can't see down the road very good.
That's my point. CAPITALISM does not exist....it is not present.
DeleteCapitalism died when "they" weren't allowed to "fail".
TBTF , interconnectedness, Power, Control (market share)are all part of the same issue.
If you arent connected (with political elite) you take on too much risk and lose, dont expect the Govt. to save your ass. Oh BUT you can expect that they will regulate to suit their Brethren and invariably that will work against you.
My Q still remains to TIHO.....why Capitalism will return over the remainder of this decade.
The events of the most recent past will change the way business is done for many years to come. I would say it has changed permanently. You dont have to be a rocket scientist to figure that out if you understand the Macro Economic stories and overlaying those with the Micro issues.
Weve moved:
ReplyDeletehttp://changeintrend.wordpress.com/2012/05/18/119/
A free session at the best forex trading LIVE TRADE room:
ReplyDeleteLIVE TRADE ROOM
Not open everyday but opened today for those who want to have a peak at how Capital3x gets its pips from.
My gold system went to a buy overnight @ 1581.5 and does not have a stop established yet.
ReplyDeleteGary,
ReplyDeleteIf I see well, CRB just had a failed ICL. Failed ICL means next ICL will be lower than the previous. Then how your cycle on CRB has no indication on that please?
Continuing this, failed CRB how can gold go straight up if CRB failed?
Thanks a lot for your answer.
The CRB had a failed IC in 2009 also. It's not unusual for this to occur at that major bottom.
ReplyDelete"I said that the dollar should make new highs ... I said the runaway move in the stock market should end in a crash or semi-crash type of event and it is."
ReplyDeleteWow Gary, you are pretty full of something, no? Right after you claim your results beat 99% of hedge fund and claim to be a bigger star than Soros/Paulson etc, I know your fall is coming.
Look at what you said 2 weeks back -- Dollar is doomed with an intraday 1-cent breach on the lower low, claim dollar is dead and Hyper Inflation is coming. But market made a fool out of you and now dollar closed much higher than the previous highs. So what's your say now?
Did we crash already in stock market? Last I know based on the daily SPX charts, it dropped from 1410 to 1306 across 14 days for total of less than 8% correction. Crash? 8% over 14 days? or should say correction after such a big run up?
... the printing presses are going to be turned back on and another trillion or so will be thrown at the problem .... it's going to be an inflationary or hyper inflationary one.
I understand your luxury living depends on subscription, and the simplest and maybe your only reasoning for Gold is hyperinflation, as that easily sell subscription to make a living. But I have to let you in a little deeper secrets:
1) Printing does NOT equal hyperinflation. If you insist, then explain Japan to me. It printed hundreds of Billions of $$, over 2 decades, and all they got is Deflation, for equally 2 decades. So....? I know you have been avoiding this question for a long time.
2) Sometimes, guys like you get some shitty good luck. A simple historical lesson for you Gary -- Gold can rise during high/hyper inflation, but it also rised during depression and economical crisis. Look at US 1930 great depression. Gold was only one of few asset rising.
3) One last lesson for you, if you can comprehand. Go find out the total asset distribution of USA citizens among Stocks, Home, Cash, and Bonds. And think about boomer demographic retiring. So by your same "thinking" on contrarian and sentiment HATRED, you should have advised your followers into Bonds, yeah, Treasury Bonds. But I am sure you would just lay quiet on your Contradictory Attitude again. If my memory is correct, only 7%, yeah 7% of asset is in Bonds, and everywhere you look everyone advises SHORT bond and people like you shouting HYPER-INFLATION as that's what dumb masses can comprehand.
So yeah, you may eventually get it right that Gold rises, but for the wrong reason(s).
I am buying Gold mainly for economy crisis and coming deflation. I don't see hyperinflation anywhere near in the horizon of 1 year out. Just like you have been screaming from your lung since 2007 HYPER-INFLATION for 4 years now, I have been on the side of tame-inflation or deflation, and have been in bonds 90% of the time.
Where is the HyperInflation I have been promised for 4 years running? 3 strikes out, but it has been like 40 strikes already! lol! Spend your weekend think about point (1) and (3) above, and come back to me Monday, or even next year.
Don't bother Shawn, Gary like the market is always right :) well at least in his own mind.
DeleteGold rose in the thirties because FDR devalued the dollar by 50%. Tiho and I made a bet. He said the dollar would not make new highs because of the massive short interest in the Euro. I said cycles suggest that it will. I think this morning was close enough for me to claim victory on that one.
DeleteI pointed out that runaway moves have a tendency to crash or semi crash when they end. In 2010 the runaway move ended with the flash crash. When QE2 ended it resulted in the crash last August. I think it's safe to say that we've experienced a semi crash over the last two weeks and there's no guarantee it's not done yet.
No one I know of thinks hyper inflation is due right now. I've clearly stated the opportunity for it isn't until 2014 when the next three year cycle low is due.
The endgame of any debt bubble is a depression. In the 30s that depression was allowed to play out as a deflationary event. This time it appears we are going to go 180° in the opposite direction which means the depression will play out as an inflationary, or hyperinflationary event. Maybe at some point politicians will come to their senses and reverse course but I have seen no indication of that over the last 12 years.
Gary as I recall you first said the dollar would rally. Then during its weakness in April you said that Ben broke the dollar. A few days after that the dollar rose for 13 days and so your first assertion turned out to be correct but your revision confused a lot of people.
DeleteAlso you first called for a "crash" in the market. Then you changed the story that Fed was printing and would not allow it to crash (you also noted the junk bond divergence which has since broken down). After that revision, the market sold off sharply and again your first assertion was correct but your subsequent revision confused a lot people.
At the end of the day these "macro" calls are not important as much as the trade is profitable in. And so I hope we can continue to do well.
" think it's safe to say that we've experienced a semi crash over the last two weeks and there's no guarantee it's not done yet. "
DeleteWell, semi-crash? Can you define crash? A crash, at least from common sense, is always about SPEED and Points.
1) If market drop 10-points in 1 minute, is it a crash? It got speed, but little 10 points only. So, no, not a crash.
2) If Market drop from 2007 top SPX 1577 to today 1300, is it crash? Yeah you got 277 points which is a lot, but with little speed spread over 4.5 years. No, not crash.
Semi Crash? Well, you can always make it up to sound like you are always right to get more subscribers to pay for your luxury living.
"No one I know of thinks hyper inflation is due right now"
Wow ... changing statement again to make you sound right again? Go read your archives over last few years, and tell me how many times you claim High/Hyper-inflation is coming, because of your 1 simple reason -- Fed and Central Bankers are printing print print print? Buy gold Buy buy Buy. Subscribe to me Subscribe Subscribe Subscribe!!
It's Coming!!!!
Well now, you said "No one I know of thinks hyper inflation is due right now". Wow....
On the other hand, I do appreciate you postings and sharing your analysis.
Semi crash - 11 down days out of 13.
DeleteGo read the archives, I've always thought inflation would come along with a three year cycle low in the dollar. The next one isn't due until 2014.
DeleteJeff,
DeleteThe vast majority of the time a failed daily cycle means an intermediate decline has begun, so I was just as surprised as everyone else when the dollar recovered a shot back up. I fully expected to lose the bet with Tiho at that point.
Gary,
ReplyDeleteIn a currency crisis what do you think people should do with their 401k where you may not have as many investment options as you would with a regular brokerage account? (ie. can't invest directly in gold/silver or mining stocks) I would think you'd get crushed in money market funds in a hyper-inflationary environment. Rates would stop their down trend and begin rising which will hurt bond funds, especially long term bonds. You also are projecting stocks to go down. It seems there aren't any good options. Should you just put the money in the most conservative stock fund you can find and ride it out? Thanks
In a high inflationary environment all of the standard 401(k) options are a poor choice unless you have a gold or commodity fund.
DeleteWhich is the lesser of the evils?
DeleteBecause many do only have the standard options. Maybe play the bounces becomes a bit more acceptable?
This comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
Deletehmm, all B-Wave bottoms end like this.
DeleteThis comment has been removed by the author.
DeleteThis comment has been removed by the author.
DeleteAGQ was a wildly profitable trade even though we miss timed the top. I learned my lesson (again) I won't be trying to time perfect tops ever again. It caused me to take some heat when I missed the last 15 days of gold's C-wave but I didn't make the same mistake twice.
DeleteTVIX was a mistake. It was for all intents and purposes a short on the stock market but one with much more upside potential than a regular short position. I clearly violated my rule of not selling short. It's just too hard to time tops. On top of that I probably should have gone with a 5% position instead of a 10%. The irony is that if one had been able to continue holding the position will probably turn out to be a winning trade. Anyway, lesson learned, no more selling short.
As I have explained countless times my two main tools are cycles and sentiment. It's easy to say after the fact one should have done this or that. But in real time we don't get that luxury because we don't know what the future holds.
In real time gold was 23 days into its daily cycle and still holding above $1640. I simply can't violate my system and sell 23 days into a daily cycle. Why? Because 90% of the time that move will cost me money.
So based on my system of cycles and sentiment I made the right trade by removing stops. I also had an ace in the hole in the fact that this is a bull market and all timing mistakes are going to get corrected. I also knew that we were 20 weeks into an intermediate cycle and that any timing error would almost certainly be corrected during the next intermediate rally. So with a bull market and a new intermediate cycle working in my favor the only thing I had to worry about was a temporary draw down. Yes the draw down was larger than I would have liked, but without a crystal ball there was no way to know that on the 23rd day of a daily cycle.
facebook conspiracy analysis
ReplyDeleteheading higher, possible small decline for few days but don't count on it
Facebook heading HIGHER
facebook ipo is an insult on my fellow american's intelligence ... they may as well drop a load of crap on the wall street and convince everyone to eat it as if it was chocolate
ReplyDeleteFB up 5% today
Deleteexpensive crap
DeleteThey are making about $2.00 per share.
ReplyDeleteIt is very annoying to read comments filled with so much bile. What is the point? Can't you be civil in your disagreement?
ReplyDeleteGreece is a non event - hilarious........seriously. Could you please elaborate Gary?
ReplyDeletePriced in ten times over, if i may jump in for Gary
DeleteHave you checked out the SOS numbers?
ReplyDeleteFB @ 3,480 -- that's 3 billion 480 million...
there was also a 300 BOW print on the spy, which puts the BOW number somewhere around 1,000 over the past week or so
DeleteFB target 34$ .
ReplyDeleteGary, based on that chart, you expecting marginal new highs in S&P this year?
ReplyDeleteI do think the stock market will make at least a marginal new high even if a new bear market has begun.
ReplyDeleteThe Fed has clearly shown that they are willing to sacrifice the dollar with multiple rounds of quantitative easing in order to keep markets levitated. I think one would be foolish to expect this time the Fed will all of a sudden turn its back on the market when it has shown no inclination to do that for the last three years.
So at some point, probably soon, the fed is going to announce QE3. They won't label it that but the market will understand that another round of money printing is on its way. And when it does the market will respond just like it has the last three times.
c/o another analyst I read(thought it made a hell of alot of sense, and would provide our last panic down before the long road up again):
ReplyDeleteThe way things are evolving if nothing changes Greece will default in July. The markets are correcting into that and I expect once Greece finally does default we'll get another bottom. In fact at some point after the bottom I still expect gold and commodity stocks to lead the market.
To me this isn't 2008, but something more akin to 1998 or 1997 when bad debt news broke out in Russia and Asia and caused big and scary corrections in the US stock market and markets all over the world. Once these scary events played out though the Fed lowered rates and pumped money into the system.
Right now the European union is not going to print more money. They want Greece to collapse in punishment for its disobedience. They are sentencing the Greeks to economic death.
This is the way international bankers play.
Once Greece blows up though they will print money like mad to bailout Spain and Italy - nations that are simply too big to fail. They will use the punishment they inflict on Greece as a warning to the other European nations to stay with the program. It's pure power politics.
But the key is after the Greek crisis plays out the next few years will be dominated by more money printing. And that will help gold and stocks in general. But in this moment of time it is fear and that fear will build. But people get so scared and worked up that they can't see the future.
What is this, bash Gary day? If my system generates a stop in coming days, I would expect gold to do what it almost always does in a long consolidation, and that is go up to the upper Bollinger band on the weekly chart. However, IT bottoms have formed in the past when my system goes to a buy w/o a stop and then almost immediately gets whacked to new lows. I do like the fact that gold broke below the weekly bb but finished the week above, a good show of strength.NEO, if you have a system you have to consistantly follow it to play the % of wins, so every time it produces a loss you're that much closer to a win:)
ReplyDeleteGary
ReplyDeleteI have been following your writeups for awhile now and have even thought about signing up for your service based on your posts. Although from what I can tell your analysis does not seem to translate into trading profits. At least from the posts here you have seemed to miss the entire equities runup from the October bottom, the entire PM runup from the December bottom, and the entire shorting opportunity from the April top. I do not mean to be rude but where have you made trading profits in the last six months or have you just been sitting in cash the whole time? You seem to have strong opinions but have you traded your views and what has been the result?
First off I don't sell short. It's just too hard to make money on the short side. Most of the time one just ends up losing so much money trying to pick the top that they can never make it back, especially if they mis-time the bottom, which is almost always the case.
ReplyDeleteWe made decent money during the consolidation period last year. Now we are just waiting for the next intermediate cycle in the metals. I think it probably began Wednesday.
Thank you for the explaination. So were you in cash for the last 6 months? What else do you trade with the exception of the metals? Are you just a service for trading gold and silver? Just trying to understand if I were to shell out for a subsciption,
ReplyDeleteI prefer to trade the metals because it is a secular bull market. If I make an error in timing the bull will rescue my position.
ReplyDeleteStocks are in a secular bear market so I don't spend much time or effort trading the stock market. I do track it because intermediate & daily cycle declines will effect all other assets, as we are seeing right now.
So again have you been in cash for six months? You didn't buy at the december lows so when was the last time that you put money to work. I'm not trying to be rude but I would like to know more about your trading calls if there has been any.
ReplyDeleteWe did buy in Dec and Jan and made some decent gains. We were mostly in short term trades during that period trying to catch bounces out of daily cycle lows.
ReplyDeleteSeriously Gary it is very difficult to sign up for a service when it is difficult to get a straight answer. You put out entertaining articles with bold calls but there is no way to figure out if these turn into profitable trades. I've seen claims of great returns but I still have no way to tell if you have made any successful trades lately.
ReplyDeleteIt seems that people here either love you or hate you so I can't even tell who is telling the true side of things. Can anyone or any current subscribers here vouche for Gary's ability to make money consistently and give me any example of trades that have worked in the last year. The s&p was up close to 10% through the end of april so how do you compare against that. Would I be buying a subscription to a successful trading service or just a sensationalistic newsletter?
The obvious answer is to buy a $10 trial subscription, read through the archives, study the terminology document, COT reports, etc. and check out the model portfolio performance. If it's not what you are looking for you spent $10, less than the price of lunch.
ReplyDeleteThe B-wave can retrace most or all of the A-wave as long as it doesn't drop to new lows. If it does that then it would have to be considered a D-wave continuation. As of today we have a B-wave in play. If over the next couple of weeks $1523 gets violated then it will turn into a D-wave.
ReplyDeleteI could do that or I could ask you about your performance directly. I don't understand the run around. I would think someone selling somthing other that sensationalism could just give me a straight answer. Sure I could check out that stuff out and decide that your work is very professional and your reports are very convincing. But what really matters is how you have performed. You must benchmark your against something and have some relative performance numbers right? It doesn't matter if you return 10% if the market returns 15%. Can you answer any of these for me. How are you doing year to date? How did you do over the last twelve months? How did you do in 2011? Please, anything.
ReplyDeleteIn 2011 most subs made 100% or better. Since July of last year the model portfolio is up a little over 20% but taking a draw down right now because we entered our current trade about two weeks too early. This year we haven't done much because I haven't been willing to chase an overbought stock market because of the risk of what is happening right now.
ReplyDeleteThe Model portfolio WAS up over 29% (since July of last year) at its peak (in February), but when I checked a couple of days ago it was only up around 3% since July. In other words, the Port gave back most of its gain since July. Granted this may still work out okay in the end, but that was a very large drawdown relative to the peak. It may work out well in the end, but that type of volatility isn't necessarily for the feint of heart.
DeleteLet me give you the cold hard truth. No advisement letter in the world is going to make money every month or even every year. So if you are looking for that one magic guru, save yourself the trouble, he doesn't exist.
ReplyDeleteI use a system of cycles, sentiment, COT reports, money flows and a bull market. The system has proven to be a very good system, but like every system it has periods when it doesn't work. However, that being said it's the best system I've found and I've tried quite a few.
Thank you. Now can any subscribers vouche for these returns? And for those with all the negative comments can you give any actual evidence that he hasn't done well rather than just personal attacks on him. I am grateful to anyone that can provide any real feedback.
ReplyDeleteI've been a sub since July 2010 and I can vouch for the 2011 returns. They were amazing. This year is tough, but many PM traders are having a rough time. Spend the ten bucks and check out the trades. Gary puts a lot of effort in his 6 detailed reports a week. Hope that answered all ur questions.
DeleteI can also vouch for Gary's newsletter and his trades. He is simply the best in the business here at picking bottoms and riding them for large gains. The returns were very nice last year!
DeleteThanks for the recommendations gents. The cherry picked returns since July is what concerns me. We've all had periods of great returns that are given back over time. If your making 100% one year and then giving it back the next then that means you are probably not consistent and will blow up your account eventually. I agree that his reports here are well thought out and entertaining so I do not doubt that his 6 reports are well written. But I do not just want to buy entertaining reports that do not translate into returns. I'm trying to figure out if he is just a good writer or if he is accurate in his calls. My question is does subscribing to Gary give you any real advantage to riding the gold bull rather than just doing it yourself. Just like during the tech bubble many newsletter writers benefitted from simply riding the bull market instead of providing any real trading advantage. If he failed to get everyone out of silver in the spring and failed to get everyone into gold in December then where is the advantage? It doesn't take an expert to tell me to get into gold silver and miners right now. This is not an attack on Gary or anyone else. I am just trying to find out what advantage he provides. If its just compelling reading then I will go pick up a good novel instead.
DeleteStedil, FWIW, as of a couple of days ago, the Model Port. was only up around 3.4% since July. As of TODAY, it is currently up 5.8% since July, but keep in mind the good ole GLD is still up over 5% since the date of the 1st trade of the Model Port)
DeleteKeep in mind that, At its peak (in February), the Model Port was up over 29% since July, but it gave back almost most of those gains! It may work out in the end, but the volatility of the Model Port. is not for the feint of heart. In my opinion it is not a conservative port. To me, it is actually an aggressive port.
The current trade isn't closed yet. I won't close it until I think gold is near the next intermediate cycle top. We did manage to avoid almost all of the D-wave decline, but this B-wave bottom has been too complex with too many false bottoms for me to time it perfectly. I figured that out several weeks ago and decided it would be easier to just transition into 'Old Turkey' mode rather than use up all of our mental capital with multiple whipsaws.
DeleteThe vast majority of the time the model portfolio has very little draw down. This is just one of those times where we entered too early and then had to suffer through the selling climax as both stocks and gold both dropped down into a yearly cycle low.
I'm wiling to hold through this period because in a bull market timing mistakes get corrected. If I was trading the stock market I would not be willing to hold positions into a large draw down because the stock market is not in a secular bull market.
Gary
ReplyDeleteI'm realistic and agree nothing works all the time. Its just the first time that I've spent time reading your message boards and it just doesn't appear that some people can vouche for your service. The articles are entertaining but that doesn't money in anyones pockets. I would think that if the returns were there their would not be so many negative about your services.
STEDIL,
DeleteI can attest that Gary's returns have been phenomenal. But being phenomenal doesn't mean he is 100% correct. At the end of the day, what it matters is your money management. Personally, I lost money because of bad management due to my own greed and fear. It is just that whiners blame Gary while I blame myself for the lack of discipline.
Why does eveyone assume that I looking for someone who is never wrong. I have traded for 20 years and I know there is no silver bullet. I'm looking for an advantage thats all. My question again is what did gary provide that is worth paying for. A good bottom call? A different way to play the gold and silver bull? Not to keep harping on the point but if the top call and the bottom call wasn't there last year then what was the advantage? I can decide for myself that I should get invested in gold, silver and miners right here and now. What will gary provide that will help me ride the bull better?
DeleteGary - in my 401K they offer the Fidelity Select Gold fund. I have followed your advice and have been cash in my 401K for over a year now. The Fidelity Select Gold is mostly made up of Miners and topped about $58 per share and now about $33 per share. On Thurs I pulled the trigger and went 100% into Fidelity Gold (HUI 393). Hoping to just forget about it and hold on as it is a long-term investment - and pretty excited to see your analysis in this posting as a 320% gain in the HUI from the last major bottom. Thanks for the advice and hoping this one follows similar pattern!!
ReplyDeleteD wave in metals and a slow roll crash in stocks in underway. MOST are being fooled and will be left in tears, broke, and w/ no hope! What ashame it has to end this way. Gold is headed sub 1,000 lickitysplit. Too bad most will be wiped out! Good luck to you all and good bye.
ReplyDeleteI would say the odds of that are probably less than 1%. It's way too late in the intermediate cycle and it is an extremely right translated intermediate cycle to begin with, for this to continue down much longer. We'll probably see a panic day sometime next week that will mark the bottom and then the shorts will get destroyed just like they did out of the Oct. bottom.
DeleteOne has to be crazy to ignore the power of Ben's printing press. How many times must one get kicked in the teeth before they learn their lesson.
This will be just like the 70's. Money printing will levitate the markets and economy until inflation becomes poisonous. Then we will get a deflationary spat followed by more printing and more inflation. Ultimately it will probably lead to a currency crisis worse than the 70's and 80's.
Gary,
DeleteThe AUD futures are pricing in 125 basis points of rate cuts over the next 12 months. Based on the impacts on yields, Ben would have to do at least a 800 billion - 1.2 Trillion QE to keep AUD/USD constant over 12 months. This is all before their epic housing bubble bursts. When that happens, RBA will go to zero %. When the rates are identical AUD will trade at PPP which is around 60 cents.
Gary,
ReplyDeleteGiven recent bashing, I am afraid you would leave this blog unattended again. Please don't, as you see time and time again, there's no way to change their thought process or attitude. Unlike what you think, the majority of the readers here greatly appreciate your missives and comments. Hope you don't get discouraged by baseless complaints.
New post.
ReplyDeletehttp://changeintrend.wordpress.com/2012/05/19/wave-structure-supportive-of-short-term-bounce/
Bottom line this:
ReplyDelete1.) Do you think the Fed will act since S&P 500 has come off by only 10% or so in the last two months? If it is a no, it is going to be worse, before it gets better across the board despite oversold and overly bearish buy signals in the short term which should create a powerful short squeeze. If it is a yes...
2.) What do you think is enough money in a Fed program to restore confidence properly in the Credit / Debt Markets? If it is trillions, with an "S" meaning more than one, I would be immediately bullish on commodities (I'm bullish over the secular term anyway, but I'd actually buy a tone of them right here at bearish sentiment levels). Whenever central banks print money, raw materials adjust to the upside obviously. But if it is billions only like LTRO 1/2 or QE 1 / QE2, that will clam things for a week or a month, but I highly doubt new highs in any major asset will occur. If Ben extends the Twist program, than it is just a joke really... just a big joke!
So let us see now that Operation Twist is ending if Bernanke will repeat the commodity spike similar to 2008, by doing a massive easing program... say 2 or 3 trillion in QE (back than he cut rates aggressively from 5.25% towards 2%). Finally...
3.) Do you think Greece will default as this saga is now dragging since late 2009 (in half a year we will be in 2013)? If you think yes, than you obviously should understand that the Euro will take a hit at same stage and collapse (great buying opportunity when it happens). But so will a lot of risk assets including Equities, Junk Bonds, Gold, Oil etc. If it is a no, than I guess you believe governments will be able to hold the whole thing together indefinitely.
You answer yourself those three questions and you should than be able to come up with your own strategy for investment and risk management. I think 1.) 10% decline is not enough for a new program and 2.) if Ben does a new program anyway, unless its trillions, I think it will not be enough and 3.) I think Greece is moving closer and closer to a default, maybe even by early 2013.
As an aside note if you answer differently to those outcomes and you are more bullish than me, or someone at the Fed already tipped you off to a big program that is coming up (email me about it please), than you should definitely consider this chart to show how cheap Gold Miners really are. I am they are super super cheap, so Gary is wise to invest into value that has huge potential.
Having said that, if Ben doesn't engage into something big and Greece eventually defaults, those Miners could be even cheaper than they were in 2008...
Tiho,
DeleteDo you provide a service and if so what did your returns look like? You seem to have a good grasp on the big picture.
No I don't provide a service. I just run a blog that is free for all to read. It shows what I am doing with my own money. Since the August of 2011 I have pretty much done everything opposite to what Gary wrote here on the blog and have been right about 80% of the time. That means I bought stocks instead of expecting a massive bear market to 2009 lows, than I bought Silver and shorted the Dollar when he was expecting a spike in the Dollar in early 2012 and now I will probable be doing the opposite to this post again haha! :-)
DeleteWell then you better sell your silver if you want to do the opposite :)
DeleteBTW our bet was that the dollar wouldn't make new highs. I think it was close enough for me to call victory on that one. I said the stock market should crash or semi crash after the runaway move. Its been down 11 out of 13 days. Right again I would say. Now you are convinced that stocks have entered a bear market. I think they will at least test and probably break to marginal new highs before moving down again.
So it looks like we've reversed positions. You are now the bear and I'm the bull, although this has been my expectation all along. An intermediate drop followed by a test or marginal break out to new highs driven by QE3 (although it won't be labeled that as it's now politically incorrect).
p.s. iPad on Blogger sucks.
ReplyDeleteI second that.
DeleteAgreed, same with the iPhone this blog is horrible.
DeleteSTEDIL take a look at GLD......http://etfstocks.typepad.com/
ReplyDeletethat is my line of thought.
do your own research and stop following others
Doing a good analysis is much easier than making money in the markets.
DeleteGary is an excellent mentor for the price he charges, and if you follow him correctly and control your emotions, you will make money consistently.
Brutus Maximus,
DeleteThat is so not helpful. I do my own research but am looking for an edge. If someone can offer some advice that helps to ride than bull better then that is worth paying for. For someone to offer up GLD as a way to play gold well thats pretty obvious.
Stedil, I remember you from elementary school. You were that dweeb who kept asking redundant questions of the teacher after the bell had rung ...causing me to be late for recess.
DeleteLaundry calling for a bottom in Gld late June early July. Price 129-141.
ReplyDeletehttp://www.ttheory.com/index.php
STEDIL,
ReplyDeleteI don't take all of Gary's trades; I make my own decisions. However, I find his service very valuable because his methodology is good for picking probable bottoms. Before I subscribed I did not understand cycle theory. His premium site is an excellent place to learn how this theory works.
Sorry John but not taking the bait. I am just here looking for an investor newsletter service and I don't think it is unreasonable to ask how the recommendations have performed. It looks like I'm probably in the wrong place.
ReplyDeleteYou win without a doubt on the Dollar! My short didn't lose me any money in the actual trade as my entry was very good but I had to cover for a small profit as USD staged a rally for 13 or 14 days in the row. But, you win without a doubt. Would I short the Dollar now with very high bullish sentiment and record high Euro shorts? No, I wouldn't actually. I have a feeling the Dollar is not yet finished.
ReplyDeleteOn the stock market, we have not yet passed a 10% movement so this is still not a correction (correction starts at 10% and bear market at 20%). Since we are not in a correction I'd argue that this is not yet a semi-crash either, but if we do go past 10% properly and keep going (not just for a day and reverse), I guess you win that one too unless we revert back to mean as of next week. Moving on, here is what you recently said:
"Now you are convinced that stocks have entered a bear market. I think they will at least test and probably break to marginal new highs before moving down again."
Let me clarify because that is not correct. This is what I wrote on my own blog several days ago:
My portfolio holds commodities, but due to the possibility of a systematic risk I am reducing naked long commodities and in the future I hope to increase short exposure on stocks to get my portfolio to a more neutral position. I will clarify things more in coming posts over the next week, so everyone should understand more properly.
But for now focus on the post at hand, which shows that stocks are oversold, commodities are oversold, sentiment in risk assets is very very bearish and a strong rally should occur from current positions. It could take several weeks or even several months before I engage into any short activity, especially because election years always tend to surprise.
Recommandations
My watch list currently consists of SLV Calls and S&P 500 Calls. I will be executing both / either in coming days or week, depending on price action. At present, I do not recommend any core holdings in futures, ETFs or other tangible assets, due to the systematic risk from Greece. Options reduce downside risk and increase upside potential.
Since than I have bought SLV Calls on Wednesday. Why wouldn't I? I am always a contrarian regarding data, so why be different this time? Conditions are ripe rally. On Tuesday and Wednesday, Daily Sentiment Index showed only 5% bulls on Gold for both days. On Wednesday, Daily Sentiment Index showed only 6% bulls on Silver. We found out that COT positions have been dramatically cut this weekend, while the daily RSI got extremely oversold. Gold traded 4SDs out of the 50 day mathematical mean (very vey rare event) and Silver did 13 out of 14 down days (another rare event).
On the other hand, yes I've turned bearish on stocks, but I am getting ready to buy Calls first, before shorting them. I think like a fundamentalist but trade on technicals. I don't just turn bearish and short something that day. I am still recommending SPY Calls in my recent post on my blog as I believe a rally in stocks is also coming eventually. I am waiting for capitulation, whenever it comes.
It sounds like we are actually both in the same boat so you won't being doing the opposite of me. Although I won't be doing anything with the general stock market. It's in a secular bear market and I don't like to trade bear markets.
DeleteObviously the dollar decline isn't going to be straight down from here. I suspect it will be a choppy mess until we get into 2014 when I expect a very hard decline and extreme inflation.
My expectation is that money printing will continue to levitate the markets and keep the economy muddling along until the point that inflation gets to extreme and it collapses the economy.
Commodities should be coming out of a three year cycle low anyday now and so should rally quite strongly over the next couple of year. At first the stock market will probably follow but as I pointed out in the article there will come a point when the stock market starts to diverge as high inflation starts to take it's toll on profit margins and consumer spending. That's the point when I expect stocks and the economy to turn and follow the dollar down just like it did in 2008.
Finally, let us work out what me being a bear and you being a bull means:
ReplyDeleteI am a bear on global economy, global stocks, foreign currencies, junk bonds and many other risk assets. I never short commodities, because they are in a secular bull market, but I am now neutral due to economic and systematic risks. I am still very bullish on Agriculture. On this blog I have been saying to people for awhile to buy Grains including Wheat. You don't like it coz it doesn't have cycle counts. Fair enough, I like it...
Moving on, from what I gather, you are a bull on commodities right here right now due to your cycles. This includes PMs sector. You are also slightly bullish to neutral on stocks as you think money printing will support them too. You are super bearish on the US Dollar as you think it will now sell off into 2014/15. With this outlook, you think the economy will do at least ok from what I gather, because for stocks and commodities to rally or stay stable, money printing alone will not help. Economy will have to slug along and be decent, at least for awhile.
At lastly, I will say this from the fundamental point of view:
I think you will be disappointed to find out investors are becoming immune to small doses of sugar highs in the proximity of half a trillion dollars or euros per junkie hit from FED & ECB, while the real economy keeps drifting lower. Everyone is expecting Ben to help out. As Marc Faber recently said, they will come a time when money printing WILL NOT help. It might help your outlook for a week, for a month or for another quarter. But, another mild program won't do anything major. Let us remember that Gold topped on the news of Operation Twist and Silver crashed around the same time from $44 to $26. Unless your friends, who you are betting on to help your investment - Helicopter Ben and Super Mario - do a huge SUGAR HIGH multi-trillion dollar dose this time around, Gold will be trading lower than its current $1,530 support. The day Draghi and Bernanke print 5% of Global GDP... say 2 to 3 trillion dollars/euros together, is the day I will be ready to listen!
The key with Gary IMHO is to not take his absolute statements as gospel and keep position sizes within your own risk tolerance....I did not do this on the silver trade last year and literally got wiped out....so my (returns) for 2011 was a blown out account.
ReplyDeleteIf you are an experienced trader you would already know this and not be affected, but newbies beware and don't get caught up in the hype....always look at the risk first.
This year again my account is down 5% (got caught in the current draw down but small position size has saved the day so far)....
That being said I'm a subscriber for over a year....
I am still waiting for Tiho, self-proclaimed expert on just about everything, to show us his weekly and monthly gold charts where gold is "very much overbought" like he's claimed couple of days ago.
ReplyDeleteTiho was also right 80% of the time after the fact.
Tiho,you can run but you can't hide, i am afraid i won't let this go
Why do you need me to look at a weekly or monthly chart? Cant you do it yourself? In my opinion Gold is overbought on a monthly chart being up 11 years in the row. I also think it has been very overbought on the weekly chart for years and now needs to mean revert into proper oversold territory and has yet to do so. I also think is is extremely overbought on a quarterly chart too and also needs to mean revert.
DeleteJust what i thought.
DeleteYou haven't got a clue.
That's why you were dodging my question whether you even know what overbought means.
And yet you continuosly spout bunch of crap on this blog.
"in my opinion gold is overbought", "i also think it has been overbought on the weekly charts for years".
Jeezus.
Hahaha thanks for a nice compliment.
DeleteI don't really see gold overbought either. It's come down to tag not only the weekly but also the monthly lower Bollinger band. That has been about the norm for D-wave corrections throughout this secular bull market.
ReplyDeleteOne more thing to point out is huge volumes on GDX and GDXJ last week.
ReplyDeleteAs a matter of fact, we have a biggest weekly volume in history of both ETF-s.
Big money is in
i don't check this blog as often as i used to but i could have swore tiho was bullish on PMs as recent as last week. silver especially.
ReplyDeletein fact from his post on may 17 THREE DAYS AGO
"Yesterday, Gold price fell towards the 29th of December bottom at around $1,530. The price was so oversold, that we managed to reach into 4th standard deviation on the downside (opposite of the US Dollar's upside). Technical RSI level is now as low as Lehman type of a reading during 2008. Other than that, no other time has Gold been this oversold apart from the 1999 low in mid $250 price range per ounce."
http://theshortsideoflong.blogspot.com/2012/05/panic-grips-commodity-markets.html
but now this morning
"In my opinion Gold is overbought on a monthly chart being up 11 years in the row."
ohhhhkayy
I am bullish last week and this week, but on a sort to medium term time frame.
DeleteThan I expect more downside, towards lower lows.
Finally, if that occurs, I would argue that a great buying opportunity exists for a resumption of a secular bull market.
Yeah well, maybe he should lay off the hard staff
ReplyDeleteSo the market finally decides to enter in an intermediate sized correction, and this Tiho guy basically does a 180 flip flop and becomes bearish on pretty much everything meaning he is implicitly bullish on the USD. And yet for months and weeks before the flip-flop, this guy was pounding the table and preaching about how the USD had topped, how commodities are going to soar, how there are no signs of equities topping, how the Euro is going to soar due to sentiment and record non-com shorts blah blah blah... and he made sure to point out how those who disagreed with him including Gary, was inept and so wrong about everything. HAH. What's changed in the last few months and weeks, besides risk assets getting sold off and safe havens going higher? Did the Greece and Eurozone problems just appear out of no where? The current environment right now is not much different than beginning of the year and were anticipated well back, and yet Tiho's views were totally opposite than what they are today.
ReplyDeleteGary is not perfect by any means but he sticks to his conviction and system, whereas Tiho is as right and as much of a "guesser" as anyone, but with more of a touch of arrogance and hypocrisy. Ironic, since if he actually stood on the same side of Gary, he'd have cashed out his silver profits near the top and bought back in this recent low. Yea, so much for your calls buddy, look in the mirror first next time you feel like bashing someone else's record and opinions while holding your nose up so high.
i at least give tiho credit for posting his position which is more than most other people on this blog do who come to just make fun of everyone else's track records. i guess my only question for him is why he removed his portfolio section of his website when things went against him. you were wrong and your performance went negative. no shame there. i would just recommend not being so arrogant though when you mock gary's calls in the future. simple fact is that noone should make absolute statements and mock other's calls because we're all wrong often enough that we should remain humble
ReplyDeleteIs there something wrong with being a buyer in the short to medium term, but being a bear and still expecting an eventual lower low below $1530?
ReplyDeleteMarkets don't move in a straight line. Gold got oversold, so did Silver. I own Silver and I'm not selling it. I bought more Silver calls last week too. But after a rally I expect Gold to go lower. The bottom could come on a default out of Eurozone.
It seems strange how people do not understand that one can hold different views on different time frames. Oversold conditions at present make me bullish short term, so I bought. Gold could even rally for a few months from here too.
But in the longer term view, Gold is up 11 years in the row and very much overbought in my opinion. It needs to retrace properly, so I expect more downside. Finally, from a secular perspective, gold is in a huge bull market, which will end in a mania. So I am super bullish in the very long term.
Basically that shows one can be bullish, bearish and bullish again, based on different time frames. Markets are subjective, participants are allowed to use their brains to think of how the market will play out.
This is why I use cycles. It increases my odds of catching these intermediate swings.
ReplyDeleteI also do not want to get off the topic, but I thought I put forward a short term updates. It might help for the traders who take shorter term horizons than I do:
ReplyDelete- The stock markets around the world have taken a beating. S&P 500 is now trading in its 4th standard deviation away from the mean which is very rare (just like Gold only last week). On top of that, last Friday Daily Sentiment Index recorded only 7% bulls. As we wash out in coming days, I think a rally from oversold and overly bearish conditions could occur (once again just like Gold like last week).
- GEMs stock funds saw the largest outflows in 5 months (since December 2011 lows) according to EPFR Global - which tracks global flow of money. That tells us investors are once again in panic mode from the short term and the equity markets in majority of BRIC nations are also very oversold. However, GEMs stock funds saw $20.5 billion inflows in 2012 compared with an outflow of almost $11 billion for the same period of 2011. In other words, while the selling is overdone in the short term, maybe there is more to come down the road, as investors really poured money into GEMs in the first half of this year.
- EPFR also reported that investors pulled $611 million from commodity funds last week. This is now the fourth consecutive week of outflows - the longest slide of investor selling since October of 2011 bottom. Total commodity outflows were $1 billion in April. Gold and precious-metals funds accounted for $143 million of the outflows. GLD outflows war also strong last week, as already posted on the blog.
- US Treasury Long Bond is up 8 weeks in the row, very very overbought and has recently made marginal new record high in prices @ 148, above the previous record in September 2011. If the risk on markets stage a rally from oversold conditions, there is a chance that Bonds could reverse and create a false breakout on the upside, trapping all the bond bulls and deflationists. The correction could than be quite strong. The key word is IF... markets are ripe for the outcome, but a major catalyst might be needed.
- Two mining CEOs quit last week. John Greenslade of Baja Mining and James Komadina of International Tower Hill Mines. This could be another sign of contrarian signals to be added to the list, where a bottom is much closer than the top. Gold Mining companies have been slaughtered in recent weeks and are extremely oversold. Gold Mining Price to NAV, which is a very good sentiment / valuation measure, has reached close to 2008 lows. While extremely cheap, I personally will not be buying this asset class yet, apart from small trade positions in the future.
Hi everyone. For those curious about SMT Premium, I wrote a review of here: http://pure.xahir.com/smartmoneytracker/
ReplyDeleteGary did not request such a review. My site simply promotes what we consider the best blogs on the web.
I wouldn't call SMT Premium a blog.
ReplyDeleteThis is nothing more than a gambling tip line.
ReplyDeletegambling tip... great oxymoron!
DeleteSo is Bull Bear Talk and Slope of Hope. They are all sites for gambling addicts looking for tips. The problem is that 99% of the people do not realize they have a serious gambling problem.
DeleteSo your calling SB Poly Mr M and many others gambling addicts?
DeleteIf you do not employ hedging practices of some kind, then you are guessing direction and you are nothing more than a common gambler.
DeleteDidn't i give 34$ as a target for FB on May 18th on this very pages?
ReplyDeleteYes i did.
Great job. So what does that mean? We should buy @$34 or we should sell @$34. Or was it a WAG?
DeleteWell, since i called this when FB was at 40$, i think is rather obvious that you should have sold at 40$ and bought at 34$ .
DeleteThis wasn't just some made up number, there was a flag on 10min chart with target of 34$
STEDIL,
ReplyDeleteGary did great in 2011 as he was one of the few that caught the silver trade very early on so many of his subscribers rode that baby right from the bottom. Since then however, its been a lot of trades for just a few percentage gains here and there with some minor losses and some larger ones like the VIX trade. However, if Gary's current PM bottom call pans out then 2012 could so end up being huge like 2011.
Gary is a rock that can used as your anchor!
ReplyDeleteAstroCycle predicting downturn into June and miners cycle looking weak.
ReplyDeletehttp://changeintrend.wordpress.com/
My friend echen at Humblestudent blog has been providing great cycle work on the markets for years. Please see his work at
ReplyDeletehttp://humblestudent777.blogspot.com/
marketcycles79
This comment has been removed by the author.
ReplyDeleteI agree with ur evaluation.. I think this time is different than last Dec because the first low in Dec EVERYBODY said it was a ICL then it rolled over to make a lower low knocking EVERYBODY off. (I don't remember what you did). Then remember EVERYBODY WAS CALLING FOR $1400 ish gold. This time it seems EVERYBODY is waiting for a lower dip which probably won't happen because EVERYBODY is waiting for it.
DeleteThe reason everyone was expecting $1400 in December was because the intermediate cycle was still very early at that point. The odds were high the decline would continue.
DeleteThis time gold is right in the middle of the normal intermediate timing band.
Either way both declines were "in the timing band" for a low. If i recall you had dec 14th labeled as a ICL then re-phased it to dec 29th. I'm not being critical, just stating IMO That was big moneys way to shake everyone off the bull.
DeleteThis comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
DeleteI look at it differently. There is so much liquidity floating around in the world that this D-wave has unfolded as a sideways consolidation rather than the normal sharp profit taking event. So far gold has only corrected 38% of the prior C-wave. That is exceptionally mild and has never happened before. Rather than viewing the glass half full I recognize that something is preventing gold from developing a true D-wave magnitude correction.
DeleteI think we all know what that something is: Too much paper money flooding the world.
This comment has been removed by the author.
DeleteWe don't have to wait for something to happen...it already has.
DeleteWhether we have a deflationary or inflationary event or both....the question is where do you invest to preserve your capital. Typically one would run to hard assets (includes Gold). "Crashing the system" brings on a deflationary cycle. Money flows to safety to preserve purchasing power. During the Depression of the 30's Gold actually went up.
DeleteWaiting on the sidelines (unwilling to commit) will be like watching a slow motion train wreck. You see it happen but it doesnt shock you and you take the complacent or steady hand approach. When the event is over, you see the ultimate carnage that you have witnessed along the way to destruction. It is only at that point that you realise that time has passed by and you are worse off either by way of lost purchasing power or loss of asset values or both. Too many people become confused in these times because of the uncertainty.
Hard to know which way to act and when. However, what should be kept to the fore is the certainty of TPTB action's (whether that's inflationary or deflationary)and where that ultimately takes the financial system that we know, based on where it is as we know it today.
Gary,
DeleteThat "something" that is "preventing the true D-Wave magnitude correction" could very well be the impact that the CHINDIA buying has had on the physcical market. There has been a concerted effort since 2009 to take massive supplies of new production off the market. It can been seen as a war of the paper gold vs physical gold. I have a feeling that the paper sellers are losing the battle and that quite soon, numbers and volumes of physical buyers will outweigh them. This consolidation period will end when the sellers lose.
Gold appears to be trading inversely to the dollar at the moment. That being said the dollar is 15 days into its daily cycle and due to move down. Plus sentiment is at levels that have triggered intermediate tops so there's a good chance the dollar will put in a longer term top in this area.
ReplyDeleteGary, dollar looks to be breaking out. I don't know what your game plan is but as the euro weakens and liquidity crisis happens gold goes down.
DeleteSovereignty debt crisis = currency crisis = flight to quality = US Dollar strength (which is happening).
DeleteKing Dollar broke out from its Darvas box and is consolidating for the next move (higher??).
I am increasingly bearish on gold in particular.
"currency crisis " EURO is not even close to that point. Besides the sell side is way too crowded for it to have legs.
Delete"flight to quality = US Dollar "
very subjective.....also using nouns like "quality" is dangerous. USD is NOT a risk-less trade. Sovereign debt of the USA is greater than its GDP = BANKRUPT !!!
Dollar may be most widely used (liquid)...but is fraught with danger (like all fiats).
Well it hasn't broken out yet and it's late enough in the daily cycle that any breakout would likely just be marginal before reversing. In case you haven't noticed, this is how most major turning points are formed with a marginal breakout or breakdown to suck in the technical crowd while the smart money leaves them holding the bag.
ReplyDeleteDoes anyone have any thoughts concerns about Gold with respect to this EU summit tomorrow? Seems that expectations are for no real announcements, but I am concerned that gold has been weak the past 2 days when considering the stock rally. I would think that any spin from that Summit would be for more easing and yet the only pre-trade so far has been to buy stocks and not gold.
ReplyDeleteWell, regardless, with a couple days to gold option expiration, downside puts are an easy hedge for the summit.
DeleteThis comment has been removed by the author.
DeleteWell I sold the 1580 calls for $10. I figure I will let the market take me out of some long futures at 1590 by Thursday, and if goes down I will take the $10 bucks and keep my longs.
DeleteThis comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteIt comes down to whether one believes in the bull market and whether they think cycles will ultimately trigger an intermediate bottom. The way you trade you have to time perfect entries. As most people have figured out it just can't be done on a consistent basis.
ReplyDeleteFor as long as I've been trading I've never seen a time when an intermediate cycle didn't eventually bottom and reverse. As far as I can tell in over 100 years of history this has always been the case. since it's now 22 weeks into an intermediate cycle I'm content to wait patiently for that intermediate bottom (if it hasn't already formed). I will exit when I think the dollar has put in an intermediate bottom.
Gary do you think investor watches cycles forcing the bottom and reversal.
DeleteOr that emotions drive the cycles and the reversals have a somewhat repeatable timing pattern.
Gary u still have not replied how Gold underwent a correction for 80 weeks in 1974-1976 and stayed in a bull market. HOw would your system have dodged that bullet and what makes you so sure that cannot happen now?
DeleteFor the life of me I can't remember what it was that triggered that move but I know it isn't going to happen this time. The Fed has been very clear that they will print to solve all problems. They have kept that promise for 12 years now. No reaosn to expect them to stop now.
DeleteOh Gary with answers like that your subscription rate is going to fall.
DeleteIn 1974 the official CPI topped at 10.4% and bottomed at 6.5% in 1976. During that time while the purchasing power of money was declining albeit at a slower rate Gold declined 50%.
Let's see whether they can break this dollar rally. If I am right and you are wrong the dollar will cross 90 in 6 months.
Saif,
DeleteYour call on USD @ 90 implies EURO @ 1.15 and Gold @ $1420 or @ $1750 within 6 months also.
UR obviously bullish on the safe haven (Euro disintegration)bet ?
LM, I am also bullish on Gold medium term. But I think we may see sub $1,250 Gold prices before the final bottom. The miners look like they have discounted that so I have started buying.
DeleteMy bigger fear for Gold is Japan. Once that bond market goes to hell, the initial reaction at least is going to be very major dollar strength Gold weakness.
There are lot of other variables I am thinking about but other than sentiment (Gary is right on that)there is not much to get excited about.
The dollar marginal new high theory has some merit. Both $USD and UUP appear to be forming small broadening formations (think the left half of a diamond top). But the sell off could amount to nothing more than a modest pullback. I'd consider selling or radically tightening stops if PMs can claw their way back to May 1st prices.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteGold is at risk due to a rising dollar. If the dollar takes a dump options expiration is going to be meaningless. The dollar is now on day 15 of its daily cycle that averages about 18-28 days trough to trough. It's getting late enough to expect a top soon if it hasn't already formed.
ReplyDeleteIn case you haven't read tonight's report I noted those not willing to endure the short cycle scenario could put a stop at $1526.
DeleteThis comment has been removed by the author.
ReplyDeleteI'm going with the COT, sentiment, and cycles. There has never been any significant downside once the Blees rating hits 100. Sentiment is as bleak as it's ever gotten other than a brief spike during the 8 year cycle low, and it's now getting late in the intermediate cycle.
ReplyDeleteAll of the tools that have served me well over the years are saying a major bottom is at hand with not much downside risk.
Gary I would love to believe you, but the dollar is breaking out to new highs... its taking gold and silver down with it.
DeleteI've pointed out in the past that major turning points occur as technical traders buy breakouts or sell breakdowns. Smart money leaves them holding the bag. Very few breakouts succeed nowadays. Those are old technical patterns that for the most part don't work anymore.
DeleteGary,
Deleteif indeed you were right and very few breakouts or breakdowns would succeed these days, then this would suggest that nothing goes down and nothing goes up anymore as stocks require either breakouts or breakdowns to go anywhere other than sideways.
I would look for this kind of reversal if gold breaks $1523.
ReplyDeleteThis is almost always how an intermediate bottom in gold is formed. Big money sells gold below a technical level to trigger stops then they use the liquidity of that selling climax to enter positions.
Last May, this site offered up the worst investment advice I have ever received in my life....Many pundits called it quite accurately1 Virtually anyone could do better.
ReplyDeleteOnce again, subscribers are "fighting the trend".
ReplyDeleteThe trend in gold and the stock markets is DOWN.
Gold bounced off $1600 and is falling as we speak...
The SPX topped yesterday and will fall today (futures already down)...
Folks, buying "cycle bottom" is called "catching a falling knife".
Beware.
Rich, This bottom is too complex to have any hope of timing it perfectly. There have been too many fakeouts, and traders are just getting whipsawed to death. Now is the time to become a value investor and take long term positions and not worry about a temporary draw down. The bull isn't over and during the next intermediate cycle any position taken in this area is going to pay off huge.
DeleteNEW POST
ReplyDeleteGary, You probably have already read this short article from Doug Casey, but I thought I would pass it along. It questions the whole idea of gold market manipulation. I know at least one person has issued a rebuttal and I will try and find it... but here is the first part of the debate.
ReplyDeletehttp://www.theaureport.com/pub/na/13407