THE PARTY MAY BE OVER!

About it every 35 to 40 days we get a major profit-taking event occur in the stock market. In bull markets that’s all it is, a profit-taking event. In a bear market it is a resumption of the cyclical downtrend triggered by deteriorating fundamentals. It still remains to be seen whether or not stocks have rolled over into another cyclical bear market.

However we are entering the timing band for one of those daily cycle corrections. It’s not unusual to see this begin as a profit-taking event on the employment report, as we enter earnings season.


As long as earnings season meets expectations then that is all this should be, just a profit-taking event. However, if earnings season disappoints then this could intensify significantly. If in addition we start to see stress in the European debt market escalate it would magnify the rally in the dollar increasing the downward pressure as stocks begin the move down into that cycle low. Let’s face it the problems in Europe aren’t going away. The cancer in the debt markets is going to continue to chew its way up the sovereign food chain until it finally reaches the US bond market.

The fact that the dollar has consolidated for several weeks above the double top breakout is a strong sign that another powerful leg up is beginning.

Even more concerning for the bullish case is the fact that the next daily cycle should roll over into a much larger degree intermediate decline. That would almost certainly power another leg higher in the dollar and depending on how severe the stress has become in Europe we could see the October lows tested, and even broken if this is a new cyclical bear market.

The kind of selling pressure that is generated at daily cycle lows and especially during an intermediate degree decline effects every asset class to some extent. Gold will be no exception. This is why I have been warning people to wait for the daily cycle low to form in stocks before jumping heavily into precious metal positions.

Gold may or may not have put in a final D-Wave bottom last week. But there is a good chance that bottom is going to get tested in the next couple of weeks. And then of course we will have to contend with the selling pressure as stocks move down into their intermediate degree decline in February and March. That could conceivably drive gold back down below $1523, although I think any dip below that level will only be marginal and quickly recovered.

Right now patience is the name of the game until the stock market has formed a daily cycle low which is due sometime in the middle of January. Cash or a modest position in the dollar index is safest bet for the next couple of weeks.

683 thoughts on “THE PARTY MAY BE OVER!

  1. guy

    Gary,

    I know it would foolish to ask if you advise a s&p short position.
    would you advise it in your agressive portfolio service?

  2. Gary

    The same rules apply to the aggressive portfolio as the model portfolio. It’s just too hard to make money on the short side unless you are willing to wade through thousands of financial statements and find sick companies.

    Are you willing to do that kind of due diligence?

  3. Gary

    You are under the illusion that you are going to be able to make money selling short with no more due diligence than a charting service. The odds of that happening are pretty small.

    Successful short-sellers have research departments that uncover sick companies.

    Retail traders selling short based on nothing more than lines on the chart almost always lose money.

  4. angelo851

    Gary,

    I just thought that since you are pretty sure that the S&P is heading down because of the strong dollar, then shorting the index using an inverse ETF would be profitable. Does that not make sense?

  5. Gary

    You are making same the mistake that many others have made. You are trading my expectations instead of following my trades.

    I don’t sell short because it’s too hard to make money. I wait until a daily cycle low has formed and then I buy.

  6. andybuji

    The inverse funds will only track so far – daily resets over the longer term will cause divergence (for better or worse). I believe SB has mentioned in the past a better strategy – if you can, short the long fund.

  7. p2000x

    But Gary,

    You are pretty sure a DCL for the stock market is imminent.
    Would that not mean lower prices than where we are today? It seems obvious to me, not to mention your “more severe” scenario with the ICL also coming.

    I’m shorting this pig, WW and others here doing that, too, so I don’t think it’s something ill-advised.
    Safer to play long side, for sure, but barring an unprobable QE3 there is simply not much to the upside in this market. Imo of course.

  8. Gary

    It’s easy to say I’m going to short into the daily cycle low and it’s a surefire moneymaker. In real time it’s a whole different ballgame. For one, as we have seen over the last several days, you never pick the top perfectly. so most people get whipsawed multiple times before they catch the top. By then there so gun shy they can’t hold onto the trade.

    Plus once we start down you have intraday moves that knock you out of your positions early, and often at a small loss.

    The simple fact is that markets go down differently than they go up and it is much much harder to make money on the down move than it is on the bull side.

  9. p2000x

    BTW, I like to play it safe, so I’m not gonna be a hero whatsoever.

    My trade is pure and simple, based on the assumption that we’re gonna tag the breakout point of the 200-day MA.
    That’s 20 points down from here, and even an 1x ES contract would make you a thousand bucks.
    Major-major overhead resistance in the 1300-1320 SPX band, and should the big boys try and pump the pig up to that level, I will just add more shorts. It’ll break eventually, and when it does, money will be made on the short side…
    Simple as that and seems a low risk/reward play for me. Okay, QE3 could ruin this plan, but with 100+ oil and 1280 SPX I don’t see it happening near term.

  10. William Wallace

    Gary,

    “Retail traders selling short based on nothing more than lines on the chart almost always lose money”

    I remember you shorting the SPX when it was in waterfall decline, I believe it was august 3rd’s bounce that you shorted.

  11. andybuji

    Averaging losses is arguably the #1 most dangerous trading habit. But it’s one thing to do it on a vehicle you can sit on – opportunity costs and emotional wear and tear are the biggest downside (assuming your price point rolls around eventually). Doing it on ES is crazy. Funny how those contract rolls come up sooner than you’d imagine when you’re losing. Go into June if that’s your thing though.

  12. William Wallace

    Gary,

    Please correct me on that if im wrong because I remember it vaguely, but I remember some of us calling it a “legendery” trade also.

    I remember you doing it very nonchalantly too, you said “oh well, I guess I will put the short trade back then” or something along those lines.

  13. St. Deluise

    added to my short at es 1276 (via SDS though). last one was at 1272 a few days ago.

    this thing is still about $50 rich as far as buy volume goes.

  14. St. Deluise

    finally able to post charts again..

    /ES, /GC, /ZN 4 hour charts with effective volume subgraph

    http://i44.tinypic.com/20af6kw.png

    since november more money has left /ES on the way down than on the way up. can’t last forever.

    combine that with the epic amount of cash that flooded /ZN in the december rally.

    no real edge to gold here, but there hasn’t been much of a positive divergence here which is why i’m inclined to think a new low will be made.

  15. coolkevs

    According to Kevin Depew at his twitter feed (kevindepew) and from what I see on thinkorswim, the WEEKLY gold (GC) futures are on Bar 7 of 9 of a BUY Setup. Need a new low below 1522 however over the next 2 weeks, to perfect the BUY setup. This will be good for 1-4 weeks after. TDST WEEKLY down level is at 1485, so need an up close (this week), followed by a down close below 1485 next week, then a down open on Monday to qualify.
    SPX did record a 13 DAILY Sequential SELL this week, but needs a Bearish price flip below 1257.60 futures.
    As I mentioned yesterday, all measures of the Euro (6E, FXE, EUO) are showing some kind-of rebound in the currency coming. I also just noticed DX dollar futures are showing a WEEKLY SELL Setup as well this week, good for the next 1 to 4 weeks. So, this is going to be a tricky time.

  16. basil

    I have a buy signal on stocks, and I am seeing quite a few stocks that have reversed from recent bottoms quite significantly. I am expecting a breakout to the upside say within a week and then a small correction.

    The reason that I believe the markets to do well for now is the same reason why I believe precious metals are not going to break their recent lows.
    I think the Europe problem is priced into stocks (for the time being) and they have temporarily ‘solved’ the problem. Btw, I was over there at the peak of the crisis, and practically no one even mentioned a crisis. In all of Northern Europe people could not care less. It’s much greater news over there than it is over here (for obvious reasons). Europe will disappear from the news sooner than later (again, for the time being). The new year is tired of crisis talk and ready to continue the rally at least for some time. I’m not going to bet my house on it, but I am currently long.

  17. basil

    Instead of:
    It’s much greater news over there than it is over here

    I meant to say, of course:
    It’s much greater news over here than it is over there

  18. hamvestor

    Does anyone know the futures symbols for gold, silver and oil for use on the list of indices on the TOS platform (i.e., the equivalent of ES, NQ, etc.)? Hope that makes sense. tia.

  19. Gary

    WW,
    Yes I have sold short before. But over the long run I’ve lost more money than I’ve made. I just don’t bother anymore.

    It’s called learning one’s lesson.

  20. EricH

    Retail sector continues to show strength. RTH on crisp of another 52 week high. Everyone talks about a recession and the poor job market, but take a look at a retailer like Macy (new 52 weeks high, 3 year high today, up 10% this week) and you have to wonder who is spreading all this pessimistic view out there.
    Things aren’t GREAT, but it certainly isn’t horrible.

  21. EricH

    I read in another forum. A good trader pull out a chart of the s&p over the the past recession. Not once have price closed above the 65 week moving average. If this was a continuation of the bear leg down from August 2011, then one have to seriously consider why this time it will be different.

    Gary said it’s because of the dollar. Well, equities and the dollar have rallied side by side for 3 months now.

  22. Aaron

    AAPL stock has only been down 2 days since mid December! Techs lead the way, and the economy is fine? no. The economy isnt dictated by the stock market.

  23. Gary

    Danno,
    As you can see from the charts daily cycle lows are clearly evident. The only time in recent history that the market has stretched has been during QE1 and QE2 And even that didn’t prevent a significant profit-taking event from occurring it just delayed it a little bit.

  24. Gary

    EricH,
    Actually stocks have only rallied on days that the dollar was falling they just haven’t given much back when it rallied.

    However that cannot continue for a significant period of time unless we were in another productive phase. We haven’t seen any true productivity increases since the tech bubble burst in 2000. That’s why stocks generally only rise as the dollar falls.

    In lieu of true productivity the Fed is expanding the money supply to generate a phony bull market in stocks. This isn’t a real bull market and it’s why we had such a devastating collapse in 2008 and 2009. We will eventually get the same result this time.

    In the real world it’s not possible to print prosperity. You get a short period of time when it seems like things have been fixed but eventually you have to face the unintended consequences.

  25. William Wallace

    Gary,

    You know what I love about you, your relentless in sharing your experiences with others to help them. Your a good guy, you really are. Your like a man on a mission πŸ™‚

  26. Dan

    The consolidation in HUI/XAU over the past few days now looks like a bull flag. And this has been while the dollar has been rising so it appears will get a breakout as soon as the dollar takes it’s necessary breather.

  27. EricH

    “seen any true productivity increases since the tech bubble burst in 2000.”

    Why aren’t you classify the housing bubble from 2000 to 2006 as a productivity period? More homes were build in that period of than ever before in a 5-6 year period.

  28. Danno

    Does anyone else see the nearly perfecly symmetrical Rounding Bottom forming in ZSL that began in late June, with a spike midway through the bottom as is very common with Rounding Bottoms? Average trading price target would be $26.23. ZSL is currently at $14.62. That would be a DOUBLE my friends. Ultimate average price target would be aprox $29.21. Not sure this will pan out but pick up some ZSL today just in case things get hairy.

  29. Ivan G

    Ok .. now I am betting for a CLASSIC inverse H&S forming in daily gold chart. In Silve the figure can be even cleaner πŸ™‚

  30. Ivan G

    And another 2 cents … I think next week will be bulish for stocks. They consolidated over the gap this week and did not reverse today. If we break 1300 on S&P by next friday, gold will be out of time for a fall under 1525.

    Question is can we get another DC before the IC in stocks bottoms ?

  31. Gary

    Eric,
    Housing wasn’t true productivity driven by demand. It was driven by a credit bubble. That’s why it collapsed catastrophically, nearly imploding the global credit markets. The ramifications of that are going to be felt over years if not decades.

  32. Adam

    @AOL.com? What year is this? What are you on your way to see Jerry McGuire listening to Boyz II Men in your car? Are you wearing baggy jeans and trying to look like your from Seattle? Who’s your biggest celebrity crush, Alicia Silverstone? AOL… get real.

  33. William Wallace

    Why work hard or take the risk of producing something original of lasting value when your house is “working” for you or you can get in on the millionaire-making housing-related job market?

  34. EricH

    Gary,

    How would you terminate what’s true productivity and what’s not?

    The tech bubble looked like it was first driven by true demand, but eventually it got out of control and burst. The precious metal are going through that phase now. How can one argue that there’s no true demand caused by true productivity from nations creating all these goods that we purchase on a daily basis.

  35. William Wallace

    Adam,

    You making fun of me? I had this email forever, since you were wearing baggy jeans trying to look like your from seattle. Its like saying change your phone number.

  36. Gary

    Eric,
    True productivity is a sustainable industry that’s not built on a credit bubble.

    In order for that to occur a couple of things must happen. First we must cleanse 40 years of debt from the system. Second we must solve our energy and general shortage of commodities problem.

    Once we do those two things then the world will be a position for the next secular bull market to begin. I suspect that it will be driven by biotech and the need to sharply reduce health care costs, which are a big part of our debt problem to begin with.

  37. Ivan G

    EricH,

    what is there that you can produce and export. If you can exchange tech job output for a plasma TV from Thailand that’s OK but not anymore. If you can make plasma TV in the US that’s even better, However the labour cost in the US is ridiculously high because of stupid government regulations. Instead of getting out of the way and let the cost of labour drop they want to debase the export currency (USD) and achieve the same result…blahhh..

    Everyone wants to have a construction job or drill. What for ?? People should go and think how to use energy out of the ocean waves and come up with artificial kidneys…

  38. Ivan G

    WW,

    do you know that Pac-Man was the testing program for the first PC motherboard out of IBM around 1969..Which version do you have πŸ™‚ ?

  39. smartbullion

    Ivan G, ha! I HAVE learned, however, that when I had this feeling in the past it was a portent to making mistakes on my part out of frustration
    I will wait, I aint making any dumbass mistakes. The wait is part of the game I have learned

  40. riley

    My DX trade turning old turkey, Thanks Gary, put on when you first mentioned UUP way back. You do make me ponder my sds trades but I guess I’ll learn one way or the other. I am man enough admit only real money made short was during 2008. I’m slightly down with post 2008 shorts, but learning to use shorts more judiciously.

  41. riley

    Forgot old turkey gold stocks since 2002 my biggest money makers by far. Just wish had that decade to do over, Would be in Tahiti,

  42. Haggerty

    Don’t worry my friend Gary is aware of Toby, he’s about 8 inches tall, 12 inches long, and weighs about 4 lbs.

    That’s gary’s alias

  43. Gary

    As you can see from your chart. Those kind of divergences can last a long long time. And quite often a divergence gets corrected like it did in early 2001.

    I doubt anyone makes any consistent money from divergences.

  44. Ken

    Does this mean the worst year in human history has just began or does it mean that we’re (hyper)inflating and gold is headed to $20k? JK!

    Serriously though, I’d like a trending market (up or down) just don’t give me this up/down chop! πŸ™‚

  45. ILUVPMS

    TO the individual who posted Hubbart from 321 gold… that commentator is CONSISTENTLY WRONG. i subscribe to him and cannot believe how wrong the majority of his analyses are. Hubbart was calling for a gold stock explosion in september followed by a crashing USD, and a gold super highway to 2300 rapidly. This guys volume analysis is amateur style and whenever he is wrong all he says is that ” dont worry these stocks will go higher in the future”. Not worth the money and the read IMO.

  46. smartbullion

    Gary, thank you. I was hoping I could avoid a subscription to get this data. I want to data mine the all the last 119 Daily and 30 Intermediate cycles of current gold bull. Hopefully it will allow me to download the data

  47. smartbullion

    Just trying to plan how to do it. Maybe the best approach is to create a relational database of all the price and cycle data and then mine the data from there

  48. RJ

    What about kitco.com? I can’t tell on my iPhone if the raw data table can be copied and pasted.

    Go to historical gold chart, check the year and select data only.

  49. Rob L

    smartbullion,

    I believe you can get free historical data of daily spot gold, if you open a paper-trading account at Thinkorswim – which is also free.

  50. Rebecca

    Hi Everyone,

    I am debating whether I would continue to max out my 401(k) contribution and would like to have your inputs. Please help. Thanks much.

  51. SF Giants Fan

    Rebecca

    If your thinking what I’m thinking and that tax rates in the future are only going higher then that might be a good plan. I would contribute the max to your 401k to capture any company match then max your Roth IRA out.

  52. Aaron

    Danno, its the timimg. Will the snp ever make it to 1300? sure it will… but will it make it to 1300 this week is the question. It very well might, but its worth the worry that it might not.

  53. Danno

    I was annoyed that no one was talking to me. That’s actually the truth, as juvenile as it may be.

    FWIW I am currently considering Poly’s idea that gold may drop well below 1400, to possibly the 1200 area. Too early for me to make a decision but, based on page 24 [Measure Rule for Trendlines] of the book ‘Getting Started in Chart Patterns’ I am beginning to believe it is possible.

  54. Gary

    Seems unlikely gold will make it to $1200. Maybe a 50% retracement at $1400 though.

    We just have to wait and see how the current daily cycle plays out.

  55. smartbullion

    Gary, please forgive me if you have answered this already. But is it possible we have already seen the A-wave, peaking last November? Thus we would be on the verge of entering a new c-wave? Thank you

  56. Dan

    Danno,

    No one responds to your predictions because it appears your just learning so inherently the predicitions are of limited value to people who have been doing this many years, your predictions lack confidence and are usually hedged and just in general it’s too frequent and too many so the value of each one gets diluted. It doesn’t seem your overly serious about this anyways ie. Deleting your predicitions because no one responded? Or asking to be thanked because one of your predictions came true? Really?

  57. coolkevs

    A little late on this one, but REE has run over 100% on the last 5 trading days. But its DeMark chart lined up. Daily – 2 consecutive Perfected BUY Setup 9’s. WEEKLY – recorded a Sequential 13 in the 3rd Week of December. Finally, the MONTHLY recorded a Perfected 9 BUY Setup in December. So, the stock is exploding – whether you believe DeMark mumbo jumbo or not, this shows that it appears to have some power of prediction!
    Weakness in GOOG – it had a Daily Sell Setup 9 last week, and its pretty much down ever since. AAPL getting close to DAILY exhaustion as well. AA reporting tonight is on Bar 8 of 9, but needs a low below the December low to perfect. If it sells off after the earning report, it could be a buy!

  58. ...at ease

    WW.
    Made a lot of money that day when I asked you for next lower MA to exit some positions for the holiday weekend. Turned out to be the low and I got out of the shorts and went long. You may forget July 1st, but I won’t! Looking for another one. πŸ™‚

  59. Ivan G

    Silver is nicely crawling 4 days in a row over the 10th day MA – support for a big move or final break ? The answer is cose … πŸ™‚

  60. Romeo Bravo

    Gary, I’m getting some security error’s trying to access the Premium site. Maybe it’s just me, but I got a not-trusted certificate error on both my desktop and iPad. Any security problems there?

  61. Ivan G

    Gary,

    can you compare CRB and Gold in terms of potential price gain. Question is because at the start of the bull they both were priced the same ~ around 200 in the beginning of 2002

  62. Gary

    The CRB is heavily weighted towards energy. Energy already had the largest part of it’s run during the last bull market. The big moves are going to occur in the precious metals market from this point on.

  63. sophia

    FED: LOCKHART: GIVEN DLR’s RESERVE ROLE, US HAS SIGNICANT TIME TO CURB
    DEBT; KEY TO HAVE CREDIBLE, L-T PLAN OF DEBT REDUCTION. WOULDN’T BE
    SURPRISED TO SEE Q1 GDP RETRENCHMENT.

    Complete denial from the FED! The Dollar IS losing is Reserve status, and they are like ostriches head in the sand! Japan and China are already creating an FX Zone between themselves away from the Dollar

  64. Gary

    Alcoa is a meaningless company with a track record of missing. What the market is waiting on is some indication of whether earnings are going to meet expectations. I suspect by the middle of the week it will decide.

  65. smartbullion

    Hi all,
    I got the gold price data I was seeking from 2001 to date. Thanks to all who responded
    Don’t ask me how I got it – if I told you I’d have to shoot you afterwards.
    Now, time to build my application…

  66. Poly

    @ Danno – posted January 9, 2012 7:52 AM.

    Sorry, I’ve never said gold will or even could anywhere near “well below $1,400”.

  67. james r

    I am convinced as long as unemployment rate drops and CPI remains flat, it is possible we may see $1200.00 or $1000.00 gold by end of this year.

    As I mentioned on SMT this is not a profit taking event back to the mean but a fundamental change.

  68. Ben

    Romeo/Gary, the security exception is due to a self-signed certificate. Either it’s a new one your webmaster generated, or ?? Most security certs come from Verisign or some other agency that allows the certificate to be checked. Self-created ones can be just as secure — I’ve generated them before — they just cannot be validated by an external source. It’s a lot cheaper and much less hassle go generate one’s own. The only problem is if the certificate is the result of a hack, of course…

  69. Ben

    Gary, you should confirm with your hosting site that this is OK, esp. since nobody was getting this error before. As Firefox warns:

    If you understand what’s going on, you
    can tell Firefox to start trusting this site’s identification.
    Even if you trust the site, this error could mean that someone is
    tampering with your connection.

    Chances are it’s nothing, but you should be sure for the sake of all the account info & PWs on the site.

  70. William Wallace

    Eamonn,

    Gold shouldn’t move back below this bottom unless it is still in a D-wave. If you think this bottom was a B-wave bottom than this is the first time in 10+ years that a B-wave moved below an A-wave, it wouldn’t be the ABCD pattern then.

  71. Danno

    I don’t quite understand how 2012 can be the worst year in human history and gold not be sold off with the markets like 2008. I’m sure this question has been asked. Must have missed it. As most people here seem to agree, I must be a little slow.

  72. smartbullion

    A-waves are 1 or 2 daily cycles, with the exception of 2008, during which it was 3.5 daily cycles. Its a tricky time with gold. Wish the c-wave would start soon

  73. James

    The miners don’t seem to think we are still in a d-wave. Even kinross, the second worst of all big miners, is up today.

  74. William Wallace

    Again, B-waves dont move below A-waves. If gold makes a new low then a D-wave is still in effect. If afterwards we just see gold continue to push higher with normal DC and ICL’s then the ABCD wave pattern would no longer be.

  75. sophia

    Gary,

    I have a problem also with the Premium Website…Does it mean that there won’t be access for your newsletter tonight?

  76. Danno

    Haggerty,
    Bought Dinar back in 2004 and 2005. Still holding. Wouldn’t really recommend buying much. I’d probably wait for an Iraqi ETF then pile in. Or you can wire money to an Iraqi bank and have them invest the money in their stock market. Go to: InvestorsIraqForum.com. They have all the info.

  77. Daniel

    TZ-
    I have taken advantage of the lull in trading and moved one of my accounts to Interactive Brokers! I have all of the quotes and research I need…. (only need IB for cheap trades and open trading.) Will probably do ETF’s//stocks// options…(and possibly futures) I have traded futures in the past!! my question!! Should I use the Trader Workstation or Webtrader! Any thoughts or opinions!

  78. intelliblue2000

    I am starting to accumulate some US eagle and US Buffalo gold coins. Found a local deal and bought some two weeks ago.

    Does anybody know of a good physical gold IRA?

  79. Tiho

    “Yes I have sold short before. But over the long run I’ve lost more money than I’ve made. I just don’t bother anymore.”

    Too bad. My advice is to learn from someone who knows what they are doing, instead of just following cycles. Maybe you should take some timing pointers from Jim Rogers – he seems to be able to pick almost prefect tops and bottoms regardless of asset class.

    Practice makes it perfect buddy! πŸ˜‰

  80. Vonda

    I see Sophia posted at 1:44 that she was having problems with Gary’s main website: me too. Firefox is advising not to turn up there–might be someone disguised as Gary πŸ˜‰

    Anyone know what might be going on?

    Thanks,
    Vonda

  81. Gary

    Tiho,
    You have no idea what you are talking about. Were do you come up with this stuff?

    Rogers had to hold his short on FNM and FRE for 5 years before they paid off.

    Please go troll your nonsense somewhere else.

  82. basil

    I think the crisis is over, at the very least until fall 2012 or even 2013. If I am not mistaken we are at a bottom in housing now (and that is the first time I am thinking and saying that), I believe commodities have bottomed, and I see a bunch of strong reversals in stocks that have shown weakness throughout 2011. All the doom talk for 2012 raises the likelihood of this becoming a great year. Also, I believe that the administration is starting to power this thing up into the election, and we will see a severe correction only after the election. The economic numbers look good enough to get people excited. And mostly people are getting exhausted of the constant negativity and pessimism. I’ve seen this before, and it’s usually when things take off to the upside and leave doomsayers in the dust. In all humbleness, I am getting bullish here, at least on some beaten down stocks and commodities with good long term fundamentals. Not withstanding a moderate (but perhaps swift) correction, I don’t see a single reason why the uptrend should falter. There is global printing, some visible improvements in the economy, and no imminent threats. Forget about Europe, nothing is going to happen that that would threaten the global economy, certainly not before later this year anyway. Iran is the only potential lose canon, and I don’t think anyone will start a war before election. So, without throwing caution to the wind, I am mildly psyched.

  83. Gary

    Nope still in the millionaire ranks, but then so is Rogers.

    I’ve just had enough of your rude and obnoxious comments.

    Do you really think you are going to teach me anything about investing or trading?

  84. Gary

    I think you and Basil are the only two people that have ever accused me of not being humble, but then both of you are generally the only two people that are consistently rude and sarcastic.

  85. Tiho

    Personally, I am not as good as you are. I struggle to time markets coz I’m also the worst trader in the world. On top of that, I am not very wealthy, as I barley pay my bills!

  86. smartbullion

    Anyone know where I can view the McClellan oscillator for gold? Cant find it in stockcharts.com or Netdania…
    In today’s report, McClellan see the 10% trend line (currently $1618.14) as a KEY resistance for gold to break to be bullish in outlook. Alternatively, a break below the Price Oscillator unchanged line ($1587.70) will likely see a retest of at least $1540

  87. TZ(8155)

    Daniel,

    Until tonight I have never even used Webtrader. Ever.

    I tried it for about 5min.

    Stick to TWS and use the standalone download (so it is resident on your machine – one less point of failure if A) your browser breaks, B) the internet clogs up between you and IB, C)IB’s download server ever has a problem)

    TWS is necessary for speed, ease, and complexity. The web interface would be an emergency type thing (or if you really don’t trade in a fast market) as I see it.

    Use both. I’m pretty sure you go with TWS on your own decisionmaking.

  88. Rob L

    Gary,

    I am having difficulty re-entering the premium section of SMT. I have not had this problem before tonight.

    It is giving me the following message:

    If you feel you have reached this page in error, please contact the web site owner:
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  89. TZ(8155)

    Despite many of you who probably suspected my statements were eternally one-sided I want to point out that GDX has now met one of my criteria for “mining stocks BEATING straight metal”!

    stockcharts[PUT.DOT.HERE.TO.FIX]com/h-sc/ui?s=GDX:CEF&p=W&b=3&g=0&id=p71233057988

    Well…that statement isn’t entirely accurate. Let me clarify.

    GDX has now demonstrated it is no longer underperforming ‘straight metal’ (50/50 gold silver as I measure it using CEF).

    It has NOT yet demonstrated OUTperformance by my measure, but it is close enough that that additional criteria might only take a few more weeks. (Remember I don’t believe in anticipating it because anybody doing that since 2004 has been waiting a long time. So while it might be soon, I will let the market SHOW me to believe it.)

    Sorry I’m not explicit on the actual criteria I’m using to make these calls. I promise it isn’t a magic 8 ball and the criteria are reasonable (but nothing is perfect of course….and money can still be made by proper timing as gary shows.)

    Anyway, just wanted to say it is looking better.

  90. TZ(8155)

    Another way I could say my statements is that GDX vs gold/silver now look to be a wash from a performance basis. But I’m still sticking with straight gold (not so much silver) until there is clear outperformance.

    Though performance may be equal I don’t view risk as equal so I want more gain in exchange.

    And I’m sticking with gold over silver for the same reason:

    stockcharts[PUT.DOT.HERE.TO.FIX]com/h-sc/ui?s=$SILVER:$GOLD&p=W&b=3&g=0&id=p23233278086

    There is yet no clear and sustained outperformance of silver over gold. Maybe it starts next week. Maybe it starts in 2013. Don’t know. Don’t care. Will let the market show me.

  91. Dan

    Looks like were gonna break out of the bull flag we’ve been forming over the past few days in PM stocks.

    Jeff Clark of Growth Stockwire has an interesting piece out today on the silver bear being over also.

  92. Gary

    Way too early to determine that yet. And that was never a bull flag.

    Wait until stocks move down into the next daily cycle low. Usually the first move out of a coil lasts about 3-4 days before reversing. There is a very good chance we are going to put in the top of this intermediate cycle sometime in the next few days.

  93. Dan

    Gary,

    How was it not a bull flag? XAU/HUI was consolidating after a large move up, in a narrow range, with a downward bias. It looks like a classic continuation pattern? And if we break out this morning that’s the last piece confirming it was a bull flag. What am I missing here?

  94. Gary

    A bull flag would have been a downwards corrective move after a sharp rally. The miners only rallied for 3 days. Hardly a sharp rally.

    It was just a consolidation before what will likely be a final move, the same as the stock market.

  95. Tim and Jeanene

    Very coherent post basil. The blogospere is calling for the end of American and the world this year. With all the reasons they bring – it should have happened many times over by now.

    Treasuries were supposed to collapse (instead they were the best performing asset class) and commodities should have exploded higher. Yet, another year goes by and we are all still here.

    But this is the year……

    You are wise to be cautiously optimistic this year. There are great new economic drivers in America that is driving down the cost of goods (think shale gas) and creating jobs in some of the most depressed areas in this country, for the first time in decades.

    It will be a much more profitable venture long term to view the economy as reaching a low point with a long to view of improvement, rather than viewing it at the beginning of the precipice, and preparing to collapse.

  96. SF Giants Fan

    “Jeff Clark of Growth Stockwire has an interesting piece out today on the silver bear being over also”

    Funny how these stories are always written on gap up days…

  97. Dan

    Gary Its your forum so I’ll leave it at that.

    I will however point out that besides the permabulls, every analyst i follow is expecting atleast one more move down. Can anyone name a non-permabull that’s bullish right now? It makes me wonder if we won’t just head up until one by one all these writers turn back to being bullish. Won’t take more than a few strong days before people start jumping ship.

    No one is expecting a move up here and as Gary says, the surprises come to the upside in a bull market.

  98. Tim and Jeanene

    Gary said: “We haven’t seen any true productivity increases since the tech bubble burst in 2000.”

    I would strongly encourage you to read about the baby boom in shale energy. It is creating massive supply of cheap gas, and those deposits are also very wet with the product that produces ethylene. Ethylene is the product that is in almost everything we buy. Massive cheap sources of that chemical is causing companies to open new manufacturing plants to be built here for the first time in half a century. Companies are choosing America for manufacturing now so as to get their hands on what will be a lower cost of production. Look at the new denim factory in Edinburg, TX. This is a Brazilian company! Aren’t we supposed to be sending all of our manufacturing jobs to them instead?

    This is happening all across the shale plays. And it is undercover still. There is a new American revolution coming to our shores, and it all has to do with lower gas and energy prices.

    Good luck being constantly bearish into that.

    http://www.prnewswire.com/news-releases/brazilian-manufacturer-opens-new-plant-in-texas-124281629.html

  99. Ivan G

    Sophia, how dare you πŸ™‚

    @T&J

    the price of labor in USA is extremely expensive compared to the emerging markets. Above all the unions and crap the price of assets is artificially high to support growth. There is no way this can change before the assets collapse. I know one interview with Jim Rogers some guy working in a London bank was convincing him UK will prosper on music industry, Rolls Roys and the Premier League…

  100. Shalom Bernanke

    Looks like EXK is taking Sprott’s advice:

    “Due to the correction in metal prices in the 4th quarter 2011, Endeavour management elected to hold a significant portion of the Q4 silver and gold production in inventory rather than sell at the lower prices. Management plans to monitor the metal prices closely and sell some or all of the silver and gold in inventory at appropriately higher metal prices, or if the need arises for more cash.”

  101. Gary

    Dan,
    Actually sentiment is pushing bullish extremes so the exact opposite is true. Almost everyone is expecting blue skies ahead.

  102. Gary

    T&J,
    We have to cure our energy problems before the next secular bull can begin. We also have to cleanse 40 years of debt. Neither one of those are true productivity. They are conditions that have to be met before true productivity can be sustained.

    I know most academics would like to believe it’s so, but you really can’t cure a problem of too much debt and too much spending with more debt and more spending.

    History is crystal clear on this one and its been tried many times in the past. Piling on more debt to mask the cancer creates a temporary sugar high that appears to have cured the disease. But ultimately it just means there’s even more debt that has to be serviced. So the problem just gets bigger.

    Just like real estate problems started in the weakest sector (subprime) and eventually worked its way all the way up the food chain, sovereign debt problems started in the weakest countries (Iceland, Ireland, Greece) and now is working its way up the food chain into much larger bond markets (Italy, Spain).

    My best guess is at the next intermediate degree bottom due sometime in March or April we will see the cancer move up another level into possibly the French bond market. Ultimately it will chew its way all the way up the food chain until it infects the US and German debt markets.

    Unfortunately in the real world it’s not possible to create sustainable prosperity by printing money. It can create the temporary illusion of prosperity, think real estate bubble, but in the end the unintended consequences always come back to bite you in the ass.

  103. Feel

    How is it that tuned-in active traders can have polar opposite views on “sentiment”?

    This is a sincere question coming from a sentiment newbie so I’m sure there’s a simple explanation.

    Are you simply referencing different conflicting sources? Is there disagreement on what constitutes a sentiment indicator/barometer?

  104. Neo

    May we have a douple top on 5hrs Gold´s chart. Top 1 on 21.12.2011. Top 2 today. Target +/- 1410. I am not a good AT, but is what i may see πŸ™‚

  105. Danno

    SF,
    Why are you focusing on the fact that ZSL is down a little bit? Why not say something like, “Gee Danno, you were absolutely right about $SPX moving higher even though some people here treated you like you were an idiot for saying so.”

  106. sophia

    ALEX,

    how are you? Long time not seeing your post, hope all is Ok for you and your wife.
    Still trading from my kitchen ( tonight, very nice T-Bone steak LOL!!) and the market has been quite kind with me recently thanks to all SMTs’ advise.
    Best wishes for 2012
    Sophia

  107. Danno

    SF,
    For real? If you are serious, thanks man. That was cool.

    My feelings about ZSL? Betting against ZSL is like saying the dollar will see no further upside and gold will see no further downside. I sleep better at night knowing I’ve built a modest position in something like ZSL. Especially if I’m very long PMs, which I have been for weeks. I don’t always keep a counter position (hedge). Just when I feel risk might be increasing. Then I may even dump my long positions.

    Rounding Bottoms are rated 5 out of 23 (1 is best) so I’m trying not to ignore the potential RB in ZSL. And that jives with the idea that gold may still see sub 1500 numbers.

    I’m just taking it one day at a time. This market is tricky. You have to re-examine your position almost daily.

    Rounding Bottoms
    http://thepatternsite.com/roundb.html

  108. Dan

    Wow Danno’s posts never cease to amaze me. I just can’t figure out if the person behind that screen is a kid, a troll or someone I should just feel sorry for.

  109. SF Giants Fan

    Danno

    Before I will buy a >1x EFT I will always check the Premium/discount to NAV and avoid buying when there is a large premium.  Remember those days when silver is down, AGQ is down and ZSL is down? That is because the price of ZSL is adjusting to the NAV after a big move. I have seen premiums as high as 10%.

  110. sophia

    Thanks for checking NikeBoy2008.
    Since late October when W2 gave us a scare, I like checking on regular bloggers as they are now part of my life and I care of all people around here who so nicely participate to the life of this blog.
    Most probably Alex is enjoying a well earned vacation somewhere exotic with no high speed internet!!

  111. sophia

    BTW, I would not short anything yet… It seems to easy for the time being… Maybe take profits if you have some longs, but why short this market now?

  112. Arun

    >> UNG all time low..

    It will make another all time low, tease you with a rally, then another one. Rinse & repeat. Never touch that with a 100ft pole. It’s a widow-maker.

  113. William Wallace

    Eamonn,

    Even if gold were to break above the 1644 high in a couple days its still early in this cycle, it could still be left translated and possibly drop to a new low. Although it may seem unlikely right now, lets see the pressure gold is under when the market pulls back. Gold continues to pull back when the market does.

  114. Ivan G

    Bloomberg put another chick on Market close. She’s blond and dresses provocatively πŸ™‚ Not bad sign but I suspect the TV isdesperately trying to convince ppl to watch and pour into their head the bull market going up up…

  115. Adam

    We got some reasonably significant Selling on Strength #s in SPY today. I like seeing other ETFs like EEM on that list as well. This rally is probably going to run out of juice in the not-too-distant future.

  116. Danno

    Have you guys seen Margin Call? Best money about markets in a long time.

    Check out the scene where the tall blonde English guy who makes 2.5 million a year shrugs his shoulders (about market projections) and says to Kevin Spacey, “I don’t know. What the heck do I know?”

    Classic scene.

  117. p2000x

    Oh, come on bulls, is that all you’ve got?
    I couldn’t even add to my shorts today as the gap-up had no follow through at all…
    Never mind, there’s tomorrow for another try. Lol.

    (Don’t get me wrong, after next week’s OPEX pullback I do expect a counter-trend rally of some kind into March so I won’t be messing with the ‘bull-forces’ as from February).

  118. riley

    WW you in gold at moment, I’m still waiting for market dcl? Was going to add to DX but listening to Gary and holding.

    Sophia you sound like a truly nice person.

  119. ver

    I’m pretty sure Doc, Gary, and Poly have all said that a higher high in a subsequent daily cycle confirms an intermediate degree bottom was put in. Things can get weird with D-wave declines but if we do print a higher high in gold in the next few days, all the odds are in favor of the D-wave being behind us. In that case, even if this cycle is left translated it almost certainly won’t make a lower low.

    We haven’t seen the kind of intense buying pressure behind gold over the last two weeks since the July intermediate bottom. I personally think the D-wave is done. A bit remiss about not buying in (was watching the stop run in real-time) but I’ll be plenty happy to catch a daily cycle low here, so long as we get one.

  120. gideon

    I said several weeks ago I expected gold to approach around 1645 before beginning its big final descent to upper 1300s or low-mid 1400s. It hit its upper channel line today at 1641.4, and I think that was enough. It should begin its descent very soon.

  121. Gary

    A higher high does not confirm a D-wave bottom. A higher daily cycle low would confirm that an intermediate , and hence D-wave, bottom has been achieved.

    Of course we won’t know that for about another 11-15 days yet. That’s when the next DCl is due for gold.

  122. Feel

    ver: I personally think the D-wave is done.

    gideon: …beginning its big final descent to upper 1300s or low-mid 1400s…

    How many different subscriptions do I need to reconcile this???

    LOL! These zany markets!

  123. William Wallace

    Riley,

    Not in gold at the moment, gold hasn’t even closed above the 200dma yet, and whether or not this DC will be left translated or not is to be seen. So im just sidelined right now on gold, waiting for the market to dip into a DCL so I can see what gold plans on doing.

  124. ver

    My mistake, I looked back at Gary’s and Doc’s comments from a couple weeks ago and neither of them made any reference to a higher high, other than to confirm the daily cycle low was put in (of course). But I do remember hearing it elsewhere, perhaps it was Poly (hey, I get three swings at bat don’t I?).

    In any event, I agree it’s simply wise to let the gold daily cycle play out before jumping in. But I’m not excited about trying to catch it. If the cycle rolls over soon, we’re not going to have a good handle on whether a double bottom is put in or whether the cycle fails in a big way (market is never that nice to make this clear).

    And regardless of how this daily cycle plays out we’re talking a lot about an upcoming intermediate decline in stocks, which using the same rationale as now would suggest we have to play hot potato with PMs even through the next bounce until stocks put in an intermediate decline. At that point gold will be well into its intermediate cycle / A-wave. Yuck.

  125. TZ(8155)

    Notice how most of us are out of gold and watching?

    THAT is why the bottom was in 2 weeks ago and why it continues up strongly.

    The market did what markets do…it trained us to step aside and watch at the exact wrong time. And our tendency after the multi-month grind is to still do the same thing. We continue to watch.

    When people get antsy and feel like they are missing things and start to capitulate buy, then we will likely get a break.

    Take it from me…I went through this patient ‘waiting for a pullback’ last year when I joined the board. It lasted a long time and everybody was telling me to just get in and get something.

    I’m out (except for a core position) like most of the rest of us. That’s why this is going up
    πŸ™‚

  126. TZ(8155)

    Clearly I’m not SURE the low is in, but I have that feeling. (That link by Chris Puplava was another good indication.)

    I’m waiting like the rest because it is reasonably prudent as opposed to chasing and because ‘there is always another trade’ or ‘another entry’ and because the bull has a long way to go.

    Gary has a good feel for getting in close enough.

  127. TZ(8155)

    PS: my post just now pointing out the size of the rally from the low and talking about it could, in and of itself, be a sign of a close top.

    It is getting to me also.

  128. SF Giants Fan

    TZ

    I’m in your camp. This is what I posted a week ago.

    It seems like EVERYONE is waiting for gold to hit the $1400’s. Not just this blog but many others (except doc). And you know what happens when everyone is waiting for the same thing. It never happens. I hope I’m wrong…

    January 4, 2012 6:28 PM

  129. Farm Girl

    Spain will sell as much as 5 billion euros of debt due in 2015 and 2016 tomorrow, while Italy will auction up to 12 billion euros of bills. I expect both of these auctions to go “surprisingly” well thanks to LTRO. (I could be really wrong!)

    If they do go well, this should be the catalyst for a big euro rally (1.35? 1.42?) and dollar decline.

    Still long NUGT and may go on margin near the close. Just my two euros.

  130. Farm Girl

    Huh? Germany sold 3.15 billion euros ($4 billion) worth of 5-year debt at 0.9%, the first time it ever sold for less than 1%. The bid-to-cover ratio was a healthy 2.8.

    Yesterday, Germany sold 6-month bills at a negative interest rate. They don’t need LTRO to get all the buyers they want.

  131. p2000x

    Market reactions and commentaries weren’t that impressed last week, but then I’m not an expert analyst on bonds whatever, so I can definitely be wrong.

  132. sophia

    p2000x,

    to be fair with you, the US and UK press doesn’t understand a bit of the European problem and is just re-vomiting to you what people in dealing rooms and politicians are saying…It is pretty useful for Obama, B. Bernanke and Cameron to spit as much as possible on Europeans to make look like all the issues that the American people and the British people are suffering from are ONLY coming from the “stupid and lazy” Europeans…It makes them look good…
    But at the end of the day, it is the Fed that is printing right, left and centre and jeopardizing the future of the Us citizens – and they don’t give a damn because the USD has a special status…Just wait a bit and when it will lose it, it is going to be recognition day….As Gary says, the future is going to be tough

  133. Tim and Jeanene

    “But at the end of the day, it is the Fed that is printing right, left and centre and jeopardizing the future of the Us citizens – and they don’t give a damn because the USD has a special status…Just wait a bit and when it will lose it, it is going to be recognition day”

    I’ve liked most of your posts until this point. China is actually blowing away the FED with their money creation, but nobody complains about that since it seems most traders LOVE China and despise the US, for whatever reason.

    The US is also a LONG ways away from losing the reserve currency status. It is always presented like there is some committee that just decides one day that the US is no longer the reserve currency. In reality, the markets decide it.

    http://seekingalpha.com/article/286247-debunking-myths-of-a-u-s-monetary-collapse

  134. p2000x

    All right, Sophia, I hear you.
    Respect your opinion, and didn’t mean to disparage any of your comments.
    I’m just not expecting anything ‘special’ of tomorrow’s auctions, that’s all.
    As for me, I’m here to learn, and all comments and points of view are welcome.
    Appreciate that you share your thoughts, thanks.

  135. sophia

    T&J,

    Thanks for your comment…What is going to happen to the dollar in the coming years is starting now…This is not Bretton Wood where some comitte decided that the Dollar is no longer worth the status of reserve currency..This is the market participants, the compagny CEOs, the Govies slowly shifting their assets away from the dollar into Yuan, Peso, Reals and Euros…It is happening now, and will continue for a while

  136. Tim and Jeanene

    “What is going to happen to the dollar in the coming years is starting now”

    That is pure conjecture. The reserve currency “happens” not because countries decide that to be the case. Countries hold reserves of foreign countries based on business and trade with those countries. If the world does a ton more business with Canada than the US, you can expect the world to begin holding more and more Canadian Dollars, and by default, that currency will become the reserve currency of the world. If you want to do business with the US, you need a ton of US $ on reserve.

    The reason for a weaker US dollar the past few years has much more to do with the fact that the rest of the world is raising their production, meaning that countries and businesses need more of those currencies in order to make trade. As the US dollar goes down in value, US companies become more competitive and trade begins to move back to the US. I have shown links to articles of companies bringing back factories and plants now to the US. Cheap shale gas energy sources is driving down the cost of production. This will be a long term trend due to shale gas. Yesterday I posted a link of a Brazilian Denim manufacturer building a plant in Texas for that exact reason. When in the past 20 years has that happened? It seems all the companies were leaving to the everging markets for cheaper manufacturing.

    We are a VERY long way away from the US being even close to losing the reserve currency status. For that to happen, there will need to be a much bigger market for the world to sell into. Could be China in a few decades, but not something to lose sleep over this decade.

  137. EricH

    Seems like every few years we have this dollar crisis talk but every time we have any crisis, there’s a stampede back into the dollar & US treasury.

  138. Tim and Jeanene

    You are correct Eric – and that is because most people don’t actually understand the monetary system in which we live. They view the US Government Balance sheet as if it were their own. If you took on a ton of debt, much more than you could afford to pay for, you would go bankrupt.

    The current US system is not like that of your household though. The Euro system though is, and that is why you are seeing them have problems that are similar to an over-indebted household. You won’t see the same problems here in the US, in Japan, nor in the UK. Guaranteed.

    http://pragcap.com/the-burden-we-leave-our-grandchildren

  139. EricH

    Let me take back my comment.

    It should have read…

    No one find it surprising that almost all assets are bucking the dollar strength.

  140. Tim and Jeanene

    Mike –

    A question like that reeks of a position that you somehow think QE is money printing……

    which means you may not be getting the monetary system either:

    http://pragcap.com/milton-friedman-misunderstood-quantitative-easing

    http://pragcap.com/ben-bernanke-explains-fed-qe

    VERY helpful articles that will catch you up on the truth of our system, which will in turn make you a better trader.

    http://pragcap.com/wp-content/uploads/2011/08/qe2.png

    This chart shows that rates went DOWN both times after the completion of QEI and QEII. If they were inflationary, rates would have skyrocketed, yet they didn’t. Market participants figured it would be hyper-inflationary, but have been proven wrong.

    As this next article states, misunderstanding the monetary system can be bad for your portfolio:

    http://pragcap.com/misunderstanding-the-monetary-system-is-bad-for-your-portfolio

  141. mikezza

    t and j
    not saying qe is money printing. investors like rogers say that fed is in the market now. just asking if you can you tell us how that is happening without announcing qe3

  142. Robert

    Just think about this number for a minute: the Federal Government is borrowing at a rate of $200 billion per month right now. That’s $278 million per hour in a 30 day calendar month. That is insanity. Based on that, the math from the original debt limit deal is tragically wrong and Obama and his happy Government spenders will run out of borrowing capacity by the end of June 2012. That’s insane. California is a great microcosm and reflection of the fiscal insanity at the Federal level. Yesterday an hour and a half after the stock market closed, California announced that its current fiscal budget deficit is $2.5 billion wider than was forecast 6 months ago. I honestly don’t know how California’s Government stays open.

    If you don’t think that the Government and the Fed are going to have to print a lot more money in order to feed the $278 million per hour borrowing – and to prop up the de facto insolvent banking system – you are crazy
    From Dave in Denver

  143. Tim and Jeanene

    Rogers sounds like a conspiracy theorist. He and Faber are both doom and gloom guys, along with Schiff, who don’t quite get why we haven’t fallen apart yet. As all three tell us every time they get on the tube, “Just Wait! It will happen soon enough!!”

    Another year just went by….. I’m still waiting.

    Schiff and Faber in Jan 2011: Worst time to buy bonds in history!

    http://www.youtube.com/watch?v=qdd0ORv0wss

    Jim Rogers Best Bets for 2011:

    http://www.youtube.com/watch?v=IGlGz2IKnBM

    In Summary:

    Highest prices for commodities in 2011. (CRB ended lower)

    Don’t sell your sugar. (Sugar ended the year lower)

    Hold on to your rice. (Rice ended lower)

    Bill Gross – The Bond King – predicting there will be no buyers for Treasuries:

    http://contraryinvesting.com/federal-reserve/bill-gross-end-of-qe2-is-americas-d-day/

    Oops.

    Not that these guys haven’t made billions, but this shows that even the gurus are often wrong. And these gurus have been predicting for YEARS that the US will default.

    Bull markets make people look like geniuses, even if the reason for their genius is misplaced. Unless they learn why a bull market is here, they will stay on the trend too long, and get spanked.

    So back to your question. The Fed is in the market because their actions are creating people to do things based on what they THINK is going on. That creates a short term spurt, but the reality is that its not there. If people think that the feds are buying stocks etc and secretly propping up the markets, well…. I pay $5 per picture they take of black helicopters flying over their head.

  144. Tim and Jeanene

    Robert, or Dave in Denver:

    “the Federal Government is borrowing at a rate of $200 billion per month right now.”

    This statement is bottom line wrong. The US Government does not borrow money that they can create if needed.

    I wrote an article some time ago explaining why this is not something you need to worry about. It was done in story format….. please take the time to read it:

    http://seekingalpha.com/article/282117-debt-ceiling-debacle-strategy-do-nothing

  145. Shalom Bernanke

    Tim is really Timmy Geithner from the ministry of propaganda. Keep sucking up those bonds at 0%!

    Any way you slice it, less people are interested in buying bonds and that is how markets turn. I’m sure they will keep it afloat much longer than most people think possible, but the fact is the Fed is now it’s own best customer, buying most of the empty promises sold by the Treasury. (via all the billions in loans at.25% to zombie banks). Nothing more than scratching each others’ backs to buy time.

  146. Tim and Jeanene

    We’re going down an econ lesson here that I didn’t want to go down. Back to the original purpose that I am writing…..

    America is on the precipice of a new boom in economic activity, and it all has to do with the fact we are pulling MASSIVE amounts of energy out of previously unviable plays here in the states. Getting access to massively cheap energy and natgas will continue to cause companies to move production onshore. That will bring jobs and money and reverse the downward spiral America finds themselves in economically. Here are just a handful of new plants being built, bringing jobs, and money flow from around the world:

    http://www.pennlive.com/midstate/index.ssf/2011/06/shell_planning_cracker_plant_f.html

    http://www.bloomberg.com/news/2011-04-21/dow-pursues-additional-feedstocks-from-the-eagle-ford-marcellus.html

    http://www.prnewswire.com/news-releases/brazilian-manufacturer-opens-new-plant-in-texas-124281629.html

    http://marcelluscoalition.org/2011/12/what-they%E2%80%99re-saying-%E2%80%9Cshale-gas-development-is-a-game-changer-of-huge-proportions%E2%80%9D/

    Bottom line – don’t miss the revolution that is starting now due to massive new energy that will make input costs much cheaper for American business, all because you are caught up in worrying about government debt!

  147. Tim and Jeanene

    rrrright Shalom….. you have it figured out.

    did you come up with all of that on your own?

    I think you told me LAST year what a bad investment the long bond was going to be. Seems like it was a better investment than gold in 2011. Of course, THIS is the year…. right?

    Tell me….. why have Japanese bonds stayed even LOWER than US, while their debt-to-GDP is over twice as much as the US?

    Bonds have much further to run, unless of course, the US economy turns, which is good for everything else.

    THERE IS NO SUCH THING AS BOND VIGILANTES IN THE US!!

  148. mikezza

    t and j
    you ever notice that your mmt guru – mr roche – doesn’t have an independent thought of his own. all his articles are simply taking someone elses work, and either agreeing or disagreeing with it. there is a reason that he gives his work away for free. noone would pay for it. he is just an amateur economist and more specifically just a writer. i wouldn’t just present his articles – which really aren’t even his own thoughts – here as if it is fact.

    all the answers are there for those that are willing to go find it for themselves. the financial media isn’t smart enough to figure these things out themselves, and those that know aren’t out talking or writing about it. they’re trading it

    i would humbly suggest having more of an open mind and consider the fact that you might not have all the answers. the only way we grow is by considering all possible viewpoints and then forming our own opinions

  149. Gary

    Actually Rogers, Faber, and Schiff do get it. It’s the academics that don’t understand.

    Everything has and is playing out exactly as I have been predicting for years.

    The academics claimed there was no housing bubble and that all the money printing Greenspan did to soften the recession in 2002 would have no unintended consequences.

    I knew all along it was creating a housing bubble and that that bubble would pop leading to one of the worst recessions in history. I knew it was a pretty good bet that the governments would take those toxic assets and transfer them to the public balance sheet thus moving the cancer from the private financial sector to the sovereign debt markets.

    I also knew it wouldn’t cure the problem, it would only make it worse. Again this is playing out exactly as I predicted. We are already starting to see the weakest sovereign markets fall.

    Just like real estate started in the subprime sector and worked its way up the food chain, the cancer has started in the weakest countries and is now working its way up the food chain and will eventually infect the US bond market.

    Then we will have a choice whether or not to let it end there or we will continue to print money and the cancer will move from the sovereign debt markets into the currency markets.

    The problem with academics like T&J is that they cannot see the unintended consequences of their actions. All they can see is the here and now and they assume this will continue.

    These are the same people that couldn’t see the housing bubble forming or the unintended consequences that would result.

    Gold is also unfolding exactly as I said. Despite claims to the contrary I knew that a C-wave would eventually be followed by a D-Wave decline.

    I also knew that the dollar would put in a three year cycle low sometime in 2011, which it did in May.

    And just like I’ve been right about everything else, I’m also going to be right about the terrible unintended consequences that are going happen as a result of printing trillions of dollars to stop the financial market implosion in 2008.

    Academics always assume that this time we are smarter, this time we have figured it out, this time will be different. Unfortunately history is crystal clear, it’s never different this time.

  150. Tim and Jeanene

    mike –

    Have you ever considered that I already know that he is not the founder of the thought?

    I reference his articles because he is easier to read than the guys who did start MMT, Mosler, Wray, Fulwiler, etc.

    I can reference their work, which is the same, but most won’t take the time to read theirs as it is very academic.

    So nice try with the false sense of humbleness.

  151. Shalom Bernanke

    Timmy G is right about one thing, the criminals can always change the rules when necessary, kind of like when they switched the asset and liability columns to keep banks afloat.

    See, everything fixed. πŸ™‚

  152. Tim and Jeanene

    Gary –

    If you have been right in everything, why is it that you owe me a burrito for betting that the bond bubble had popped last year and that the bull in treasuries was dead?

  153. mikezza

    t and j
    i’m not talking about actual mmt theory. i’m talking about ALL his articles. please find me one where he has an independent thought and isn’t just saying why someone else is wrong or right. find one where he is presenting a novel concept or idea and not rewriting somebody else’s conclusion. in other words, one where he does some independent research and forms his own conclusion.

    also, the humbleness was sincere. i don’t profess to know everything and can certainly learn something from everyone on this board. i guess that’s where you and i differ

  154. mikezza

    oh yeah, please stop posting articles from pragcap and seeking alpha as proof of anything. one is a website of a guy giving away his thoughts for what they are worth – free – and the other is a site where anybody can post anything that they want. hardly two credible resources

  155. Shalom Bernanke

    Gotta love the guy that comes out with an “econ lesson” for everybody to digest, when he can’t understand that more of anything (supply) makes it less valuable, bonds and dollars included.

    And citing Japanese bonds doesn’t bolster his case, either. Sure, rates have stayed low forever, but Japanese bonds haven’t made owners any money for over a decade. How much lower can they go, that’s the question. The only way bonds pay out substantially is with another systemic crises, which ain’t good for anybody. If everything is so rosy and getting better all the time, with zero consequences for actions taken, why must we deflate before good times are here again?

    Anyway, TimmyG can have the last dig. I was just checking end of day prices and don’t find the conversation interesting in the least.

    Good luck tomorrow, even to TimmyG. πŸ™‚

  156. Tim and Jeanene

    “hardly two credible resources”

    I’m dying to know….. what makes a resource credible or not?

    Is it not the content that is there to be reviewed and debated… or is it just the domain location.

    Cullen and my thoughts both are foundationally based on the writings and research of Wray, Mosler, Mitchell, Fulwiler, etc… all of which have been peer reviewed.

    Are they too not credible sources?

    Are credible sources only that which you agree with?

  157. Tim and Jeanene

    Shalom:

    “but Japanese bonds haven’t made owners any money for over a decade”

    Gotta love the forum clown who has a snakry comment for everything, but rarely brings anything substantive to the debate.

    “but Japanese bonds haven’t made owners any money for over a decade”

    Relative to their CPI index, it has made them real money with little risk compared to their CPI for a decade. In relation to the 75% drop in their stocks, they have made (or saved) a TON.

    Looking forward to your next snarky response.

  158. mikezza

    like i said, because i can learn something for everyone. i come here occasionally because there are some good traders with methodologies different than my own – gary’s and poly’s cycle analyis, ww’s use of moving averages, gann360’s use of gann theory, alex’s informative charts. i don’t agree with everything, but i keep an open mind and hope that it enhances my own work

    look, it wasn’t my intention to get into a pissing contest with you. have a good night

  159. St. Deluise

    one thing i’ll say re: T&J round XXIV or whatever is that just because something like the 30 year UST has gone “up” in the last year, doesn’t mean it still isn’t an extremely risky investment.

    in other words, you’ll need a greater fool to sell it to.

    otherwise if you’re a grandmother trying to live off your retirement (ha) or social security (double ha) and you buy a 30 year at 4% last year and it falls to 3% this year, that’s fabulous. but i sincerely doubt that the mean payout over that 30 years is going to be less than 4%.

    and don’t get me wrong, i’m mega bullish on bonds here but i know damn well there are going to be tons of people left holding the bag on these, BIG TIME. the USTs they’re printing now very likely will be the first in decades that actually end up losing money vis-a-vis inflation, which of course in MMT land doesn’t matter assuming of course that imports don’t matter, resources are infinite, and your employer gives you a steady 2+% wage every year. which i guess happens when you’re the chair of an econ dept but i’m pretty sure the guys emptying your trashcan aren’t exactly maintaining their purchasing power.

    whew! anyway still bearish as living hell here. on everything. /zn had a nice quiet strong breakout of its 3 week wedge. just need a catalyst to get the ball rolling.

  160. Z1

    IMHO the academics are not the problem. Politicians are the problem. They have crated the Euro zone, a totally unsustainable political project. Germany is exporting debt to the weaker members of the Euro zone. Those countries, the PIIGS, should not have joined the Euro zone. Now their debt will just keep on growing. So the first problem is the Germany which reduced their salaries and are trying to export as much as possible with the help of a weak currency called Euro. The problem is that Germany is exporting debt (capital) which will be destroyed in the PIIGS. German citizens are the one who will loose the most. It sounds like a paradox but politicians seem to like it that way. Perhaps Germany will get more political power trough that process but whole Europe will be left behind in the new world. The second problem is China which is not allowing its currency to naturally get stronger, they are printing and following the Dollar. One has to know that all of big economies (India, China, Brasil, Russia) are printing a lot. Everybody is just focusing on the FED printing. The USA debt is the least of all the problems. Some inflation (lets say 5 %) would solve the debt problem. The real problem is that lets say countries which are in top 10 meaning big economies such as USA, China, Germany etc cannot be exporters and have surplus trough a longer period of time. The example of a natural process of the currency getting stronger and the economy less competitive is Japan and its Yen. The same thing should have happened to China and Germany but they are artificially fighting the natural process. One trough printing and the other one trough the Euro. FED should print and give China as much Dollars as they need and the Euro zone will fall apart sooner or later. Everyone is focusing on the USA debt and there are two elephants in the room who everyone just keep ignoring. One is that there is no such thing as saving the Euro zone and the other is that China just can not avoid financial crisis if they continue to do what they are doing. Not only that they are stimulating industry (?!), keeping salaries low and printing a lot of money to keep Yuan low. They are planing a new credit expansion which when put together with the printing part is a path to a big financial crisis. One thing is to print in the US when private sectors are in the process of deminishing their debt and the other is printing in China plus creating a credit expansion at the same time. Let me just add that the academics knew that the Euro zone was doomed from the start. Euro and the Euro zone is the worlds key problem from the day it was created and markets are starting to realize it.

  161. Veronica

    T & J, how is it that China is printing more Yuan when it is pegged to the US Dollar? BTW, have you 2 bought gold in size yet? I think I know the answer to that, and I will treat my long term portfolio the same way I have for the last 10 years:)

  162. Z1

    Veronica how do you think it is pegged if not by printing a lot of Yuan? Yuan should naturally rise plus FED is printing meaning China has to print even more. China is artificially trying to keep their export high, similar to Germany but with a different tool. Both countries are exploiting their citizens with such a policy.

  163. Z1

    As I have mentioned earlier China is even planing credit expansion towards the economy with that money which will lead to a new financial crisis while there is an opposite process going on in the US private sector.

  164. Tim and Jeanene

    Veronica-

    “T & J, how is it that China is printing more Yuan when it is pegged to the US Dollar?”

    Well – how do you explain facts:

    http://pragcap.com/wp-content/uploads/2011/03/m2.png

    James:

    “If you want anyone to take you seriously, you need to first cleanup your typos.”

    Give me a break dude. That is the most overused attack in blogosphere. “He can’t spell, therefore, he is stupid and should not be listened to.”

    Do I need to go and find the hundreds of typos on these blog threads from many you probably align with, including the leader of this board?

    Use a little common sense. When typing a ton, and responding on an obscure forum, I don’t have the time to go back and read each comment for typo’s. If you are referring to some of the articles, yes there are some, but keep in mind those got past professional editor’s that SA employs as well.

    If I had the time, I am pretty confident I could go back through the history of these threads and find a typo here and there from you. Does that make your ideas worthless and not worth listening to?

    Please.

  165. james r

    Tim says

    “My long term target unfortunately is 1% on the ten year and 2-2.5% on the 30 year. It will be a bumpy ride, but that’s the target. Of course – if the details change, so might the target prices.”

    Only if the Fed is doing all of the buying…

  166. Tim and Jeanene

    james r:

    “Tim,

    Do you think interest rates will rise this year or next year such as the 10 yr bond?”

    Perfect example. This sentence structure is grammatically not correct. I get the point though, and didn’t need to try to point that out as the basis for not taking you seriously.

    But hey, no need to judge yourself by your own standards.

  167. Veronica

    T&J, don’t you find it astonishing that the world continues to honor the USD/Yuan peg at the same time as China prints so much more? Bloomberg must have some clout to get those incredibly accurate figures from China, of all places:)

  168. Tim and Jeanene

    “Only if the Fed is doing all of the buying…”

    If you spend the time learning the true workings of the monetary system, you would understand this statement to be true, but also something not to worry about.

    The bond market is just the mechanism in this country that is used to target rates. The Fed’s set the rates, and the market reacts. It is the reason why the long bond will continue to make it’s way more towards the overnight rate set by the Fed. In non-Sovereign currency issuing states (think Europe) the market sets the rates on bonds. That is why you will see bond vigilantes in Italy, and never in the US.

    Guaranteed.

    The bond vigilantes, because of the monetary structure in Europe, will force Europe to integrate their financial system even more (think United States of Europe) or it will force the break up of the EU, forcing all of those countries back to their original sovereign currency.

    Guaranteed.

  169. Tim and Jeanene

    Then I take it you must not take Gary seriously. I have seen many typos/bad grammatical statements from him.

    Why are you here then? He must not be taken seriously then either, correct?

    You should be an editor if you care about that stuff so much, no?

  170. Z1

    Tim and Jeanene said:

    “…will force Europe to integrate their financial system even more (think United States of Europe) or it will force the break up of the EU, forcing all of those countries back to their original sovereign currency.”

    There is no way Germany will want to be in the same country with Greece though it would be a solution. Something like the USA. If some country would attack one state in the USA people from some other distant state would feel attacked as well. If for instance someone would attack Greece German people or Italians would not feel as if they were attacked. What I want to say is that there is no way United states of Europe can be created because rich countries do not want to help the weaker ones. So the only scenario is the collapse of the Euro zone.

  171. Tim and Jeanene

    james r:

    If the occasional typo, or misspelled word is the biggest objection you can come with in regards to the ideas presented forth today, I’ll take that as a win.

    Look past a typo, and debate whether the ideas being presented have merit or not.

    You will embolden your case in the process.

  172. Tim and Jeanene

    Z1 –

    I would agree with you at first. There is too much history of nationalism in a sovereign pride in Europe to think they will ever get along as one nation. Where did both World War’s originate?

    But – Germany has actually benefited greatly from the EURO structure thus far. They have much more to lose from a break up.

    It’s a tense and interesting quandary. If there is a break up, better sell everything, including gold, and hold cash and buy treasuries.

    If there is unification, get ready for the next great bull market in everything.

    My opinion.

  173. james r

    Tim,

    When unemployment reaches the Fed’s target, the Feds will have stop buying the bonds long ago.

    Unemployment is the reason the Fed is buying the bonds.

  174. Z1

    Tim and Jeanene, I live in Europe but I do not think it is about nationalism. There is nationalism everywhere, even in Scandinavia, not to mention the USA. The problem is that there is no way one could make German people live in the same country (meaning share their money) with the PIIGS. Germany profited from the Euro just on the first glance. The money they created got exported to the PIIGS, they exported the debt to the PIIGS. Their capital will get destroyed in the PIIGS, it is already being destroyed. Germany did not make their people rich buy exporting to the PIIGS. Not only that the PIIGS can not return the debt to Germany but the debt just keeps on rising. The collapse of the Euro zone is the only possible scenario. Perhaps they can alter the Euro zone somehow but it is all going to be very expensive and unsustainable in the long run.

  175. riley

    Gary never heard you brag about anything other than kidding Beane. You state what you believe and back it up with performance. You trade real time, and post.

    T+J give you credit for defending your posts hospitably, and with your interpretation of markets. I disagree with you but will always understand I could be wrong. Will continue to trade along with Gary and others in cycles as produces.

    Gary do you have a finacial bio., always curious how people get to where they are? And how did you get started?
    Know you are busy no big deal if not respond. THanks though.

  176. William Wallace

    02′ – D-wave #1 dropped below the 78.6% fib level.

    03′ – D-wave #2 dropped below the 78.6% fib level.

    04′ – D-wave #3 dropped below the 61.8% fib level.

    05′ – D-wave #4 dropped to the 78.6% fib level.

    06′ – D-wave #5 fell just short of the 61.8% fib level.

    08′ – D-wave #6 fell just short of the 78.6% fib level.

    If the current D-wave were to drop to the 61.8% fib level, it sits at $1295.

  177. riley

    Now you’re talking WW. Could you imagine the bearish sentiment then. I could then place my order for tahiti retirement home. I need a lesson on TOS form you, I thought I was fairly proficient, left in the dust.

  178. William Wallace

    Looking at the 08′ D-wave and making some comparisons. Following the 4th DC into the correction (the first DC’s of both D-waves include part of the top of the C-wave), the current DC (5th) would be right translated with a shallow DCL, followed by an extreme left translated 28 day DC that tops in 5 days. Which would mean that the next DC would have to be exited very quickly, in 08′ the bulls were trapped in a new DC as gold plummeted to a new low 23 days later had they held thinking they were in a new DC that would continue higher after a slight pull back.

    Tricky to say the least huh Gary,
    do you remember what you did in that DC that topped in 5 days on 7/15/08, were you trapped?

  179. Steve

    WW,
    you can go back to Gary’s old blog to see his comments from 2007 to 2009.

    http://garyscommonsense.blogspot.com

    I haven’t posted much before, but I’m a big fan of your trading. I’m a 39-yr old retiree (from the benfits of trading gold over the last 4 years) … I will try to post my thoughts going forward.

    Steve from Winnipeg

  180. James

    riley,

    I wondered some of the same things myself. It’s not Gary’s financial bio, but thanks to Steve posting the link to Gary’s old blog, I found the March 24, 2009 “Make a living or get rich!” post very helpful. I’m guessing Gary followed one of the three proven methods there.

  181. ver

    James: Nice find, thanks for sharing.

    Gary: As a benchmark for all the Old Turkey-hopefuls out there, what kind of return (5x, 10x, 20x?) would you expect if one were to successfully execute on your advice to “jump on the bull and ride until the secular trend finishes” given where PMs are today? I bet people underperform massively but never realize it because their account balance still goes up during the bull…

  182. Shalom Bernanke

    Looks like nothing needs to be done today. I’ll just keep everything and wait for the pullback Gary anticipates so I can get the rest of my paper money converted to miners.

    This rally out of the recent lows has been sharp enough that I won’t have to entertain trimming in the next week+. The breakdown late last year had me thinking to clip some if the subsequent rally didn’t have legs, but that’s no longer a concern. Looks like dips will be bought.

    I don’t look too much into any one day’s action, but it’s worth taking note that miners can rip without the general market. Let’s hope we get that pullback to buy! πŸ™‚

    Have a good day, fellas.

  183. Gary

    I’m still leery about the rally. Volume has been exceptionally low. While it’s true that sustainable rallies can and often do unfold with light volume. The fact that this is occurring right in front of a move down into a daily cycle low for stocks has me a little concerned.

  184. Shalom Bernanke

    True, and I also don’t think miners can entirely resist a hefty decline in the general market just because they show a little relative strength.

    We’ll just have to be patient and see how much damage they suffer as the market turns lower.

    I’m outta here for the day, take care. πŸ™‚

  185. mikezza

    t and j,
    serious question. how did your strategy of going long select value names vs short the S&P perform. did you guys have to file a 13f

  186. Movax2

    T&J I love your posts.

    Really they do get me to think while they baffle me.

    Because something seems to fit your theory, it doesn’t mean your theory is correct. And if you look through enough turds, you can eventually find something shiny.

    As well: I would attribute the apparent USD strength to one main factor that you have said and that I agree with – you have to pay taxes/debt with it or they throw you in jail.

    Other than that – the choice for safety is really gold/silver or USD.. and many people are still uncertain about gold/silver and don’t understand the corrections or why they should own it.

    Bonds are safer than significant cash in a bank account and plus you know there is a buyer later – the Fed. Easy choice for safety – for now. (They can probably keep rates down forever. At some point they will probably be the only buyer though.)

  187. Tim and Jeanene

    Movax2 –

    You are correct on bonds safety, as much as everyone likes to say otherwise.

    Money, cash even, is US Government debt.

    The moment the government spends $100, they run a deficit. On the other side of the ledger though, a private citizen gets $100 credited to their bank account.

    People in this country will scream and shout that the government shouldn’t be spending money they don’t have. That $100 is not theirs!

    Here is the funny part though. Since the government determines what money is by force, can they first tax the private citizen $100 before spending it into existence?

    A logical, yet confounding question for most.

    Most people want the government to run a surplus and to pay off the debt.

    Think that through to it’s logical conclusion. If the government spends $100 into existence (deficit spending) and then turns around and taxes the private sector to the point of paying off the debt…… riddle me this, how much money is then left in the private sector?

    That is the reason why sovereign currency issuing government debt is not the same as you or me owing money to JP Morgan. Understanding that concept is an eye opener.

    Europe on the other hand, is not the same as us.

    On another note….. NG is now at $2.70! Cheap shale gas supplies are causing a new revolution for American manufacturers.

    Things aren’t as dark as the media likes to portray!

  188. Tim and Jeanene

    mike –

    I am actually not allowed to post performance returns publicly on a forum like this, SEC rules. I can say that we grew AUM, so we didn’t pull a John Paulson, that’s for sure.

  189. Tim and Jeanene

    A better alternative to gold going forward? Stocks with large cash flows.

    If more money makes dollars less valuable and gold more valuable, as there are more dollars chasing gold, then that argument is even stronger for stocks.

    They are finding more and more gold, thus adding to the supply of gold.

    Stocks of big, safe companies on the other hand, have seen their share counts dwindle. Look at a company like MCK. Since 2005, their share count has dropped 26%, while their earnings have risen 15.5%. So in the face of a larger money supply, MCK shares have actually been shrinking. A shrinking supply in the face of increasing dollars = an explosive long term combination. Most safer rated stocks (Value Line) have the same “problem”. Tie that to the fact that cost of production for US factories will be going down due to cheap supplies of gas, and folks, you are potentially looking at 1982 all over again.

    I’m going to go out on a limb and offer Gary a chance to win a burrito back. I will bet him that the multi-year win streak in Gold is broken this year.

    I will disclose that gold makes up 20% of my IRA and silver is 5% of it. So I don’t have a vested interest in seeing PM lower this year. Quite the contrary.

  190. Aaron

    Just an FYI, the SEC does not allow a hedge fund to publicly advertise returns. Disclosing them publicly in a forum can be an issue. Sending mike an email with the performance is perfectly fine.

  191. Movax2

    T&J It sounds like you don’t believe that the Treasury/Fed team have the ability to create and devalue the dollar – everything balances out? There is a lot of deflation, but like Ben said, if you print enough dollars you can have inflation. It may be a battle, but you can.

    There can be no true growth except for a few specialized areas in an economy that is either in a risk on leverage print) mode or risk off deleveraging mode (caused by the former) and a financial system based purely on profiting rather than investing and producing.

  192. Danno

    I mentioned the statistical average trading target for the bullish breakout of $SPX’s Inverted Head & Shoulders pattern was 1323.

    I was wrong. The average target is actually 1345.

    I was using statistics for Head & Shoulders tops. I was supposed to use statistics for Head & Shoulders bottoms (whose breakouts are statistically identical to Inverted Head & Shoulders patterns).

    FWIW

  193. Haggerty

    Dollar down a lot, and the market hasn’t reacted, except HUI, hope Dollar rages higher so we can swoop in and buy miners at their lows

  194. jhnewman

    Alf Field’s latest big gold analysis is out. Here’s the headline supplied by the guy who posted it over at Turd’s: “Gold correction over as per Alf Field any cross of $1710/$1764”. I have no idea if that’s an accurate characterization of what Alf is saying, since I haven’t had the time to read it. (Been sick and going back to bed.) Alf’s analysis is about halfway down the page:

    http://www.tfmetalsreport.com/blog/3249/breakout-coming-important-24-hours-begins-now?page=2

  195. Farm Girl

    Today’s news, as I expected:

    “In 2012′s first real test of appetite for debt from the euro zone’s battered periphery, the Spanish Treasury raised 10 billion euros from the auction of three bonds, doubling its target of up to five billion, and yields dropped by about 1 percentage point.

    “They were able to attract good interest for the bonds and raise money at lower than anticipated yields, and yields lower than the ones at the previous auction, so markets obviously view that as a positive for now.”

    “The market will take it one auction at a time right now.”

    Italy also fared well, paying less than half what it did a month ago to sell one-year bills at its first auction of the year.”

    BUT HERE’S THE KEY:

    “It’s too early to say whether this is linked directly to the LTROs but the yield movements should suggest that some of the sovereign debt crisis is abating,” Sondergaard [Nomura economist] said.

    “It’s too early” is Street code for “I’ll stay in the middle of the pack and keep my job. When the pack declares LTRO a success, so will I and then claim I was ahead of the curve on January 12 when I pointed out that “the yield movements should suggest that some of the sovereign debt crisis is abating.” (ROFLMAO emoticon goes here)

    LTRO is bigger than QE1 and QE2 combined. If those two screwed up the cycles, watch out for the effects of QE-E. Just my two euros.

    (still long NUGT, still not on margin – but soon, I think, when Gary calls the low)

  196. Gary

    I think he is just noting the reversal in the commodity complex in general, which shouldn’t be surprising considering we’ve been expecting the stock market to begin moving down into a daily cycle low any day now.

  197. Danno

    Although statistically speaking the S&P500 will most likely see further upside to 1320+ and undoubtedly drag PMs up a bit higher… I dumped all of my long PM positions today and added to my ZSL position. This may be a week or two early but I’m okay with that.

  198. Adam

    And how can you say “it’s ugly” when it’s up for the day!? I’m bearish on crude as I think it’s moving into a daily cycle low, but c’mon.. “ugly” “cliff” I’d expect something to be down 12%.

  199. Adam

    I have CL/1 just over the past few minutes as down from yesterday’s close. Perhaps we’re looking at a different contract or something.

    Gary, I am not questioning the significance of what could be a key reversal day. But a “cliff” implies a certain connotation that is not evident in today’s price action.

  200. GP

    Adam, Dont just get stuck to a word”cliff”. What i meant has been explained well by Gary. Also English is not my first language. Move on… Lets not fill this space with unnecessary stuff

  201. Big Money J

    Danno – rounding bottom in ZSL? ha

    ZSL is going to eventually trade under $5 and then reverse split just like the rest of the leveraged ETF’s.

    ZSL should be used as an intraday trading vehicle only

  202. Greenspansconscience

    Something’s gotta give. Bond yields continue to drift sideways to down. Everything is techincally overbought on ST charts save for inverse bond etfs.

    The $hui daily and monthly charts look ugly. Gaps and black candles all over the place on the daily. The hui has never exhibited this type of chart action.

    If the market keeps going sideways to up, Bernanke has no cover for QE3. We are at a major inflection point. Either bond yields finally start going up, which will likely drive up stocks more, or the stock and commodity markets tank bigtime. I do not buy into the “we’ll muddle through” story. The volatility is a result of this uncertainty. Which cracks first, the bond market or the stock market? Something big is coming and we will known on the next few months.

  203. ver

    Greenspansconscience:

    Agreed there’s something odd afoot with PMs, stocks and the dollar all hovering in overbought territory over the past week or two. We’re anticipating a move up in the dollar as stocks and PMs rollover into a daily cycle low, but on the other hand it looks like the euro is putting in an island reversal bottom today on high volume (and an island reversal top on the dollar). Not sure how much weight to put into that pattern but the euro seems long overdue for a bounce. As much as I don’t like it, there’s a real possibility that the euro rallies hard right here pushing the dollar down and driving a melt up in stocks and PMs (perhaps even enter runaway moves).

    Farm Girl: you may have nailed the read on this situation…

  204. Gary

    Generally speaking about the time everyone starts talking “melt up” is usually about the time a cycle tops.

    We are now 32 days into the daily cycle and about to run into resistance at 1300, with the 5 day RSI extremely overbought and sentiment at levels that usually forge intermediate tops.

    Now is the time to focus on the cycle count and ignore the charts.

  205. ver

    Gary:

    Agreed the correction is going to happen, but without any catalyst this kind of lazy action can easily continue for 5-10 days without violating the cycle count. We know extreme sentiment and overbought conditions can beget even more extreme conditions, and this intermediate comes off the back of a wicked yearly cycle low with a lot of basing. And we have yet to see meaningful selling on strength numbers, though I know that’s not a requirement.

    Perhaps we’ll get a high-volume, capitulation buying move to cap this cycle soon (I’m hoping so, been waiting for one to go short) but can’t ignore the risks here.

    And yes I know you’re going to abuse me for wanting to short, but at this point I have to say I’m more comfortable with going short the way overbought SPX than buying into the recently overbought USD. We could see both fall hard in the coming weeks.

  206. Greenspansconscience

    Also FYI gold:silver ratio hit oversold on the stochastics today.

    I think odds favor a stock market correction soon. Spx is way overbought on stochs. I would bet the doublewide tommorow will be red.

  207. coolkevs

    DeMark-wise, things seem to be lining up. We have the conditions tomorrow (1/13) for a perfected DAILY Sell Setup 9 in SPX, NDX, COMP, RUT, GC (gold futures), GLD, BAC, BKX, XLF, JPM. Interestingly, though, DJI does not have a sell setup. As a reminder, these SELL setups are good for a reaction from 1-4 days, so beginning of earnings season could be pretty rough!
    We did record a SPX DAILY Sequential 13 last week, which is still valid into next week – never did get a bearish price flip (close below the close 4 days earlier) to confirm. NDX DAILY also recorded a DAILY Sequential SELL a few days ago, so we do have some things lining up. SPX MONTHLY needs a high above 1325 to record a Sequential SELL on that time frame, so look for the coming dip to be temporary before another leg up.

  208. Tim and Jeanene

    Movax –

    “T&J It sounds like you don’t believe that the Treasury/Fed team have the ability to create and devalue the dollar – everything balances out?”

    Technically speaking, that is correct if you want to get into the nuts and bolts of the system. The Fed has tools that can alter the perception of what market players are thinking. For example, lower rates and hope that people spend the savings on interest in the market. Or maybe cause them to refinance, and invest/spend the savings. Do QE and hope the banks lend money out. What we are seeing is none of this really happening on the scale they had hoped.

    The Fed does not create inflation, only the environment for it. Congress is the spending arm of the government. They also determine the tax laws. If Congress spends more money than the private sector can provide labor and production for, you will get your price rise.

    Here is the basics of the system, in a very simple example. (It is a bit more complex than this)

    Congress spends money buying up the labor and goods of the private sector. Let’s say they spend that $100. They have now created a $100 deficit because they did not “earn” the revenue through taxes. (Remember, you can’t tax that which is not created in the first place)

    John A gets $100 for providing labor and goods to the government sector. He then decides to save the $100. The US Government offers him a Treasury bond for $100 paying 3%. In that scenario, the government has created $100 in debt, and everyone is all worried and sad that they owe money. when you look at the reality of the system, there is simply nothing to worry about. What is most worrisome, is that the economy will only have $3 per year, rather than $100 that can be spent.

    Where does the real inflation happen? If John A takes the $100 and deposits it in the banking system, in theory, then the bank lends $80 out to John B. John B now has $80 to spend. That $80 WAS CREATED/PRINTED etc from the banking system. Now there is $180 of money in the system. If John A wants his $100 – well – the Fed is there to provide the needed reserves etc through the overnight interbank market. That is another layer to this.

    The best part though is that the bank doesn’t even really lend their reserves. The reason we do not have run away inflation, and won’t for some time, is that there is no demand for loans, which means there is no bank money being created, and the productive capacity of the US is about 30% idle. There is a LOT of slack in the economy than can be utilized before we need to worry about paying for bread with wheelbarrows full of cash.

    So the Fed can print, do QE, lower rates, whatever, and you won’t get runaway inflation that destroys America like everyone is thinking.

    “Yeah but, look at the prices of commodities for the past X years!!!” is usually the next statement. To which one only needs to show that commodities were way under priced in relation to a world economy that was turning into a middle class world, from a low class world. “Printing” really, foundationally, mathematically, has not a ton to do with it. Real commodity costs, over time, always go lower in real terms. That is a fact. Right now, we are in just a re-adjustment phase. Higher prices though will bring about new technology and more focus from producers, and the cycle of commodity prices will go lower.

    As for gold, let’s just say it’s good many here have been right in the trade, even if for the wrong reasons.

    Best of luck

  209. Tim and Jeanene

    At the core, people get the Federal debt argument wrong in that scenario above because they think Uncle Sam has to call China first to borrow $100, or tax $100 before they can spend the $100.

    It’s the exact opposite. And that is the reason many have been stumped for decades on how the government can be “so indebted” and not default.

  210. james r

    Banks are not the only focal point that money can pass. Government can disburse monies to the state and have the state spend it on roads and reconstruction projects.

  211. Daniel

    Ludwig von Mises agreed that there was a core of truth in the Quantity Theory, but criticized its focus on the supply of money without adequately explaining the demand for money. He said the theory “fails to explain the mechanism of variations in the value of money”.[

  212. Daniel

    Sure as the sun will rise tomorrow, The Austrians are the closest thing to having Economics nailed down!! Argue if you want.. I will choose to disregard! πŸ™‚

  213. james r

    And yes commodities have been rising, but not due to velocity but moreso due to speculation.

    But it is speculation that foretells real inflation to come.

    Why do you think they call it the futures?

  214. Tim and Jeanene

    you are right…. the key is velocity. The money has to get spent. Either from John A – of the states governments. The move now is to cut spending though…… and we can actually afford to have more spending right now with 8.5% unemployment and total industry capacity utilization sitting at 77.8% as of November.

    http://www.federalreserve.gov/releases/g17/current/

    People working and spending money will get the factories up to capacity, which will cause higher prices. We are a long way from that at the moment – but thankfully heading in the right direction.

    Shale energy is a game changer for this country. Expect continued improving economic data with intermediate fits…. that will continue to confound the bears and bring up cries of conspiracy.

  215. Tim and Jeanene

    “And with rising prices..people spend!”

    Sure isn’t happening at the moment…. and we have a supposed massive new amounts of money supply based on the Fed balance sheet. Gotta make the hyper-inflationistas scratch their head and wonder where they went wrong.

    I know….. just wait….

  216. Gary

    T&J,
    I’ll say it again. Never in the history of mankind has the problem of too much debt and too much spending been cured by more spending and more debt.

    Didn’t you learn anything from what happened in 2008?

  217. gideon

    gold came within 4 points of invalidating my count today. If gold goes above 1667.1, then I would be wrong, and that would mean the low was in at 1525. I am still hoping my original count was right so I can get in much lower.

  218. Tim and Jeanene

    “I’ll say it again. Never in the history of mankind has the problem of too much debt and too much spending been cured by more spending and more debt. “

    Gary – I’ll say it again. You need to learn the difference between private sector/banking debt and US sovereign debt vs. Euro country debt. Private sector/banking debt is bad debt, and the reason for 2008.

    Have you not learned to wonder why you have been wrong on stating the US government is bankrupt?

    Huge difference you need to SERIOUSLY get right. Because your misunderstanding is causing you to not get it.

  219. William Wallace

    For those of you who trade gold futures and are brave enough to short, I just wanted to mention that I believe we have a good risk/reward short here at $1650 with today’s reversal…I think its very likely that when stocks dip into a DCL gold will test the 275dma, if not the 300dma. I took the short today at $1660, sorry I didnt post the trade, it was a quick entry and was not sure whether or not I would keep it on for long. Place stops at your discretion, remember $1660 would be break even for me.

  220. Tim and Jeanene

    “And Tim when we do have real inflation, how do you think the Fed is going to stop it?”

    Yeah – higher interest rates and taxes. Both of those suck money out of the private sector. It worked in the 70’s and will work again.

    But, we are a LONG way from that. Just look at Japan.

    “And Tim that is why China is going to spend our dollars here!”

    I can only hope. Can you imagine the amount of jobs and wealth that will be created when a huge customer like China begins buying up the labor and production of our workers? Boom time. Hyperinflation? Hardly.

  221. smartbullion

    if it of any interest to someone, McClellan believes that it is very unlikely that the Dec 29 low is the fulfilment of the major cycle low in gold and we have at least a retest of the lows due

  222. Gary

    T&J,
    The US is bankrupt. Yes we can print money to pay off the debt but that approach has an end game. Eventually it destroys the currency and breaks the bond market.

    And yes you will say but look at the bond market, rates are under 2%. That is true but that assumes that rates will stay low. That of course would be a foolish assumption since all bull markets eventually end and the bull market in bonds will also end and rates will rise.

    Heck several months ago interest rates in most of Europe were low until all of a sudden they weren’t.

    It simply isn’t possible to pretend the US isn’t bankrupt just because we can print money. A default is a default whether it is done honestly or through inflation.

    All we have done is add more trillions of debt and what has it achieved? We have a temporary period where it seems we’ve cured the problem. We had that same felling in 2005 and 2006. But we haven’t cured the problem we’ve only made it bigger.

    There is no good way for this to end. There never has been in history when a debt bubble was created.

    We can either let the cancer stop in the sovereign debt markets and suffer a deflationary depression or we continue to bandage over it and it moves into the currency markets. That leads to an inflationary depression.

    One way or another we will have to suffer through a depression. No debt bubble in history has ever avoided one.

  223. Tim and Jeanene

    Follow up to Gary saying:

    “T&J,
    I’ll say it again. Never in the history of mankind has the problem of too much debt and too much spending been cured by more spending and more debt.

    Didn’t you learn anything from what happened in 2008?”

    I find it amazing that you think somehow the US Government debt was the cause of 2008 and not the over indebted private sector. You are missing that connection by a country mile if that is your conclusion Gary. The private sector is getting their balance sheets back in order, which means the economy will muddle along for awhile.

    Long ways away from massive inflation. I’ll bet you a burrito.

  224. Gary

    LOL and what did higher interest rates and higher taxes accomplish in the 70’s/early 80’s? That’s right a double dip recession, soaring unemployment and a secular bear market bottom for stocks.

    Of course now we are much deeper in debt than we were in the 70’s so the effect of rising rates and taxes to quell inflation will be many multiples worse than what occurred from 1980-82.

    You really need to read a history book.

  225. Gary

    Of course it was private sector debt that caused the problem. What I’m trying to point out is that that toxic debt hasn’t gone away. It’s been moved over to the governments balance sheet. Now it’s your and my responsibility.

    Now even though I did nothing wrong I’m going to have to pay for those mistakes. That can come either in the form of higher taxes or higher inflation or both.

    Either way now I’m paying the price for others stupidity. Fortunately I can afford it but a big chunk of the population can not afford higher taxes and higher inflation. So what happens is that we now end up damaging the rest of the population. The ones that didn’t make any mistakes.

    This is what happened in Japan. It has ended up draining what was once one of the richest most productive countries in the world.

    Like I said just read a history book.

  226. Tim and Jeanene

    “all bull markets eventually end and the bull market in bonds will also end and rates will rise.”

    The low rate trend will end when the economy turns up, not because of some bond vigilantes here in the US – guaranteed.

    “Heck several months ago interest rates in most of Europe were low until all of a sudden they weren’t.”

    The fact you want to keep comparing the US to Europe is confounding to me. It’s apples and oranges and I have stated as much. Shoot, MMT academics were predicting this would happen back in 1992. Why don’t you instead compare the US to Japan or the UK since we are all on the same monetary system? Europe DOES have bond vigilantes because of the structure of their system. It’s night and day difference though, and I hope you don’t base you business on that thesis, because time will prove you wrong. Guaranteed.

    “It simply isn’t possible to pretend the US isn’t bankrupt just because we can print money. A default is a default whether it is done honestly or through inflation.”

    They were saying the same things in 1990 when the “debt” was at $4 trillion. Your thinking is more dangerous than you realize as you are probably a proponent of “paying off the debt”. Well – you have a lot of explaining and debunking of my $100 analogy and how paying off the debt WON’T remove every single dollar from the private sector. Ever wonder why the US GDP is roughly the same as the national debt, and been that way for decades? You should figure that one out.

    You say a US debt bubble eh? What was the level that it turned into a bubble? The private sector is where the debt bubble was, and that is deflating. Please tell me, at what level does a sovereign currency issuing nation hit debt bubble levels? You really should think through what you are saying, the actual mechanics of what you say, before just saying what you hear on the boob tube or read. It all sounds good on the surface, and you would be right with EVERYTHING you are saying, if you lived in Europe.

    Let’s both put up $50,000 into and escrow account and bet on our thesis within a certain time frame. I’ll let you pick the time frame. Winner take all.

    You game?

  227. smartbullion

    You guys in the US think 8.5% unemployment is bad. We have 14.5% unemployment and our country is forced to follow the directions of Germany and France. This is the result of socialism and big government and big regulations. IMO, the only way forward is small government, small regulation, and big freedom

  228. Tim and Jeanene

    “LOL and what did higher interest rates and higher taxes accomplish in the 70’s/early 80’s? That’s right a double dip recession, soaring unemployment and a secular bear market bottom for stocks”

    LOL indeed. Then in lies the proof oh wise one. Higher rates and taxes suck money out of the private sector, causing a brake on the economy. It is not the means that caused the problems, but the utilization of the means.

    My bet is that when the economy heats up again, taxes and rates from the Fed will go up too quickly.

    It is a policy implementation matter, not the idea of raising taxes and interest rates. There in lies the rub. The theory is sound, the way politicians implement the theory is what will crush the economy when it starts to boom.

    I know plenty of history. The burden of proof actually lies with you.

  229. Gary

    It becomes a bubble at 80% of GDP. That is the point at which no country has ever recovered. We are already past that point.

    The only thing that could save us would be for the next technological shift to occur and a new productivity boom to begin. Something world changing like the computer and internet, or plastics and electronics.

    Something completely new that will create millions and millions of new jobs.

    And don’t say shale. Energy is not a new industry that is all of a sudden going to create millions and millions of new jobs. As I have pointed out before we need to cure our energy problems before the next bull market can begin.

  230. Tim and Jeanene

    smartbullion –

    actually in you country (European I presume), you need a different monetary system first. More or less government will not change the fundamental structural flaw you are living within under the Euro the way it is.

  231. Tim and Jeanene

    “It becomes a bubble at 80% of GDP. That is the point at which no country has ever recovered”

    Baloney – again you are just regurgitating some study you read. I have read that as well.

    The reason a country gets to 80% and above is due to maturing of the economy. Its the size factor. It is why Berkshire Hathaway can not continue to grow as it has in the past. It is why large companies that used to grow turn into slow growth, dividend paying companies.

    That is the reason. I promise you, once most Sovereign currency emerging market fast growers like India get mature, their debt to GDP levels will be over 80% as well.

    And yes, shale is a game changer. It lowers the cost of production and increases profits and creates jobs here. That improves the lifestyles of those who live here. Shale is projected to bring 1.6 million jobs for it and supporting businesses.

    Game Changer.

  232. smartbullion

    Tim and Jeanene, I dont know, maybe you are right on that.
    All I’m saying is that this European Union project has gotten ugly and I don’t those ugly French & German monkeys influencing the democratic way of our beautiful country.
    Sarkozy absolutely disgusts me. Ever see him grovelling when Barack Obama is around?
    Merkel scares me because she is so clever

  233. James

    Merkel is just a very angry, frustrated communist lesbian. Sarkozy is a homosexual midget who uses that gorgeous wife of his as a cover.

    Nothing clever about that.

  234. Sang

    Exactly!

    “It becomes a bubble at 80% of GDP. That is the point at which no country has ever recovered. We are already past that point.”

    Never. Ever. In history. Search and you shall find none.

    Also, never in all of human history has a debt bubble not lead to a depression through the devaluation of currency. Not the Han Dynasty. Not the Romans. Fast forward all the way to recent history, and no, not the Germans, Argentinians, and the list goes on.

    Never. Ever. Search and you shall find none. Trust me. I’ve challenged economists to name just one instance in all of recorded human history where this has worked.

    Zero. Zilch. Nada.

    The only answer I get is from the Keynsians who attempt to fool me into believing that this time, we really finally figured it out. That this time, it truly is different. That now, we can get away with it by printing our problems away.

    Which is exactly what people were told the past 5,000 years.

    So, do you really believe that we really figured it out this time? That we have found the magic that creates prosperity out of thin air?

    Don’t kid yourself. We are not God. You can simply get away with the gluttony of debt overspending without any repercussions. There will be payback, and as Gary says, it’s pick your poison.

    Either take the austerity pill and suffer deflationary depression.

    Or print till kingdom come and suffer hyperinflationary depression.

    One thing that I’ll add Gary, is that also, in human recorded history, we have always attempted to print our way out. It’s in our nature to try to fake ourselves with false hopes. It’s also politically easier.

  235. Rod (RJ)

    Saw there is a new “RJ” posting to the premium site so I decided to change my alias to Rod (RJ)….No biggie.

    WW,

    Nice scalp tonight but I have a question for ya.

    You mentioned the other day that your GC short position was a lot smaller than the long from a week ago. What % do you typically use? So, for example, if you were long 10 contracts – would your short be like 2 or 3?

    Thanks.

  236. William Wallace

    RJ,

    Exactly. I start the short with 1 contract, if im confident with the move I will add on the way down. Today’s short at $1660 I was a bit hesitant to add on the way down because the 200dma is right here and I was anticipating a bounce off it, just now I seen the bounce and covered my short and went long. Now I captured this bounce, when I see that its getting toppy, I will take off the long.

  237. KAL

    Eamonn,

    Hey man. Hope you’re doing well.

    I gotta tell you as a descendant of Scots-Irish settlers who fought in the Revolution it hurts me to see what’s become of Ireland after that growth recently, and with the whole Catholic/Protestant thing getting more peaceful too. That stinks for you man.

    I wish you all could have just told Europe to shove it. But, I guess that would be messy. I just hate to see you made the bondservant to a distant central government. Sounds like deja vu all over again.

    Take care!

  238. smartbullion

    KAL, the European Union has gone too far. I can understand some harmonisation between countries in Western Europe as we have broadly similar cultural values. But its been pushed too far forward.
    I have to say Sarkozy makes me want to vomit. Trying to be President of the free world with the Libya thing.
    France has a long history of criminal colonialism, and a history of surrendering when the going gets tough. Dont mind as long as they keep a certain distance

  239. KAL

    Yeah, Eamonn, I’m with you. Don’t get me wrong, my country has screwed up a whole lot of stuff both before and after we became a superpower. I’m part Cherokee (I think everyone in the South is) so of course the Indian Removal episode is one to note. Then you have the Mexican War, Spanish-American War, Vietnam, etc. etc. But the thing that strikes me as being most American, maybe, is the independent spirit and desire to forge our own destiny. That’s why people came here, and that’s why we stand alone on so many things. Anyway, would love to see the countries like Ireland and Greece and Hungary (as well as others for sure) have the right to blaze their own path forward. I’m sure you agree on that one. Nobody who lives in another country can tell me what do to. When that changes, the US is in some pretty deep doodoo.

  240. www.gregor.us

    Asian markets are ripping higher, the forex complex is becoming even more bullish with CHF, AUD, CAD, and now EUR bolting against the USD, and it appears that GC has performed (so far) a quick corrective overnight to test its 200DMA. Perhaps this is the set up to get everything higher before we correct in SPX down to the next DCL. One wonders, however, given the potential sea-change in the forex complex that we could extend or have a very mild DCL in the SPX? In the post 2008 environment, the forex complex has been my guide to just about every turn. Has The DOC called this one, on the USD? We know that the bearish array on the EUR was incredible coming into this week. If so, that weakness in the GDX names the past few days might have been a strange kind of fake out. Best to all.

  241. Tim and Jeanene

    Oh Sang! OH SANG!

    Your post sounds so sure….. yet. I am about to blow it up. Sorry.

    You posted:

    “It becomes a bubble at 80% of GDP. That is the point at which no country has ever recovered. We are already past that point.”

    Never. Ever. In history. Search and you shall find none.

    Also, never in all of human history has a debt bubble not lead to a depression through the devaluation of currency”

    ERRR Check the facts friend. The US debt to GDP hit almost 120%. From what I can tell, we have recovered pretty well since that point in time, no? And that recovery was on a different monetary system than we are on today. You said non…. debunked.

    The UK hit 175% of GDP in the 20’s and nearly 250% in the 40’s. Did they blow up? No. Their levels have come way down. There are more…. but there is two.

    I thought you said Zip. Zilch. Nada?

    “Fast forward all the way to recent history, and no, not the Germans, Argentinians, and the list goes on”

    Let’s see. Weimar – different monetary system and indebted in foreign currency debt. different situation than we have today.

    Argentina, same situation, mostly foreign denominated debt. Different situation.

    I’ll add Zimbabwe to the list for you. Foreign denominated debt, therefore a completely different situation than we have today.

    Thank for the examples, but they are truly irrelevant.

    So a HUGE swing and a miss. It all sounded good and un-debatable….. but I leave with this:

    Is that all you got?

    Count is “oh and two” my friend.

  242. Tim and Jeanene

    And another blow to Sang’s thesis:

    “You can simply get away with the gluttony of debt overspending without any repercussions”

    100% true statement, in regards to household/private sector or countries that borrow in foreign debt (Think sovereign Italy borrowing money that needs to be paid in Euros, that is no different than Weimar, Zimbabwe, etc. but nothing liek the US or OK.)

    Like most end of America sensationalists, you give partila truths that might resonate with those who don’t understand, but are completely hallow to those who do. Pure fear mongering.

  243. MΙ™tuΕ‘Γ©laαΈ₯

    @KAL

    Don’t kid yourself. The US has been under the control of the Vatican/Jesuits since the days of Lincoln. Everything the propagandized american corporate plantation peasants believe about themselves and the world, is reality turned upside down. The american corporate peasants/slaves are the most ignorant people in the world, and that is why they’re such useful tools for the fascist Jesuit order and the drive to re-establish Romanism, aka, the new world order, aka, the old dark ages.

  244. Tim and Jeanene

    Refute this US debt naysayers. the explanation as to why California with a Debt to GDP of only 5%, or Luxembourg, with a debt to GDP of only 20%, are in dire straits……

    From Mosler:

    “As previously discussed, spending and deficits for currency issuers like the US, Japan, UK, and the euro members when they had their own currencies are not constrained by income or market forces. Observed debt to GDP levels for currency issuers can be anywhere from 50% to maybe 200%, as they serve to provide the net financial assets demanded by the various institutional structures of those nations. And regardless of debt ratios, interest rates are necessarily set by the Central Banks, and not market forces.

    “Spending and deficits for currency users, including the US states, businesses, households, and the euro member nations since adopting the euro, are, however, necessarily constrained by income and market forces. That’s why observed deficits for currency users are far lower than currency issuers. California, for example, has seen its financing difficulties even though it’s debt to GDP ratio is under 5%. Luxembourg’s debt to GDP ratio of about 15% when it adopted the euro was by far the lowest of the euro member nations. And that’s because Luxembourg never did have it’s own currency. It was always a currency user, and so market forces never let it’s debt get any higher than that. And even with the current financial crisis Luxembourg’s debt is only about 20% of GDP.”

    Be careful out there US bears….

  245. Z1

    Smartbullion, your (and mine even though my country still does not have Euro) is the Euro zone. Euro zone is the political creature that is the real cancer. On the first glance it is good for Germany but on the second glance one can see that Germany not only exports debt to the PIIGS where their capital is destroyed but exploits German people by convincing them to work for less money. My conclusion is that either there are companies who profit from that or that they are deliberately creating an environment to convince the German people (after they convinced them to work for less money) into some kind of a big Europe country. By the way I believe there is a zero chance for such an United states of Europe.

    Tim and J, for some reason there is a perception among the Americans on this blog that the US is in a similar condition as Greece is. There are IMO two big problems in the global economy though. One is the Euro zone crisis (it was visible from the start what is going to happen). There is just no way for the Euro zone situation to be cured. Euro zone recession can drag the rest of the world down with it. The second problem is the Chinese communist government not allowing the free market.

    Regarding Japan, their situation is not brilliant but they are in the normal process of allowing their Yen to become stronger and their economy loosing competitiveness. In this phase they have to move some production out of Japan and of course a time will come for it to come back. At this moment they earn almost nothing on the cars thy produce. If there were only two big economies in the world – Japan and USA then now the car production in Japan would decrease and the US’s car production would increase. That is the normal process between big economies, they exchange places. The problem is that Germany trough the Euro zone and China trough the communist party’s policy does not allow the free market to settle things.

    Regarding the US, I have little doubt that some inflation (5%, perhaps up to 10 % at the peak) combined with (for a few years) some modest growth will resolve the public debt situation.

  246. Z1

    Let me just add that this economic views don’t have much to do with Gary’s (very successful) trading. He adopts very fast and makes money.

  247. Danno

    It appears $USD is having a little trouble closing above resistance (its November 2010 high) while $SPX did manage to close above its resistance (October 2011 high).

    In other words, speaking very short term only, the S&P500 has won the battle and should move higher… before (potentially) rolling over.

    This jives with the divergences in the $USD chart which have been suggesting that a mild pullback is due.

    I would not expect anything crazy though. No big S&P500 rally. No big dollar sell off. The S&P500 has massive overhead resistance around 1333 in the form of a 4+ year downward sloping trend line. That’s where I would expect the roll over to happen.

    NOTE$USD has a nearly perfect Rounding Bottom that is fully formed with a right rim. If it pulls back here there is a good chance it will morph into a Cup With Handle. This helps to validate the potential Rounding Bottom forming in ZSL (2x Inverse Silver). Meaning, the odds are good that PMs are going to get their teeth kicked in fairly soon… and it could get ugly.

    But what do I know.

  248. Gary

    Actually Sang didn’t swing and miss. The UK had a depression after the 20’s and also after the war when it lost the reserve currency status and all its colonies.

    As long as you continue to blindly ignore history then it is pointless to continue the conversation. It’s impossible to “debunk” your theory because you refuse to admit historical facts.

    What’s the point? You are never going to be able to see that the king has no clothes.

  249. Sang

    Come on… are you trying to “explain” away all the failures in the past by saying that their “situation was different?”

    As Gary says, this is a pointless discussion and a waste of time.

  250. William Wallace

    Gold is fighting to hold the 200dma again, last night it held and there was a nice bounce back up to my short trigger at $1650, where it reversed again. Lets see if it holds now under the pressure of a declining stock market.

  251. mikezza

    actually it’s sad and pathetic of me, and i’m embarrassed that I had to resort to that, but that guy is just unbearable.

    i apologize to all of you that you had to read that

  252. BinBad

    I beg to differ. It is not sad and pathetic of you. You said what many here have thought but did not. Someone had to say it! A big thank you to you sir!

  253. Tim and Jeanene

    Gary said:

    “It becomes a bubble at 80% of GDP. That is the point at which no country has ever recovered. We are already past that point.”

    So the US never recovered? The UK never recovered? Oh yeah….. except for those instances. But yeah….. it’s different THIS time, yes?

    You also, like Shalom like to throw in little snarky comments, and then act like I don’t know history as the reason to not believe anything I say, yet you absolutely REFUSE to address the FACT that the monetary systems you want to compare are completely different, and you can’t begin to explain why that is so important.

    Take the bet Gary, it is a sure thing for you to win. “History” is on your side.

    Time to put the money where your certainty is.

  254. ...at ease

    Mikezza, Thank you!
    Please, no apologies needed, I appreciate the time, research and thoughts you put into your response. Hopefully T & J will take it elsewhere to spew their knowledge.
    LETS GET BACK TO MAKING MONEY!

  255. Tim and Jeanene

    Sand –

    Here is the ironic part….. it was you and Gary that said there has never been an instance where debt-togdp has gone over 80% and the country has recovered….. ever, never, nada, zilch.

    Then of course I show you the US, and the UK. Both of which have recovered, and expanded, and grown.

    I am saying the US will be fine and will again grow, not some how default. It is YOU who are saying it is different this time. We and others HAVE recovered from over 80% debt-to-GDP, but are the one saying it can’t be done.

    Welcome to reality pot,
    Love The Kettle

  256. Tim and Jeanene

    Thanks for the ad hominem there mike, but I will have to respectfully disagree.

    Just because you don’t agree with what is being said doesn’t mean you need to drop to the cesspool you just did.

    It is pretty obvious I have done nothing but defend accusations….. not been the attacker.

    From you included….

  257. Tim and Jeanene

    in fact Mike – that was the most pompous and inaccurat ad hominen I think I have read…..

    I am fine with the attack….. because I know you missed by a mile.

    Humorous at the least, libel at the worst…..

  258. smartbullion

    mikezza, you said “somewhere along the way, i realized that there was a different level of intelligence out there that i and the majority of the people certainly did not possess”. I would like to know what I do not know. Can you give some examples of this, just so I have an idea of what you mean? Thank you…(innocent person with average iq here)

  259. ...at ease

    WW,
    Sure would appreciate if you could tweet your trades. So much to weed through at times that need to be followed in real time, and your trade posts can get lost in the blog. πŸ™‚

  260. Tim and Jeanene

    mike –

    You acuse me that I think I know everything….

    I find that humorous. All you need to do is go back and read how the posts started. I just stated in my opinion that we are fixing the energy crisis that Gary said we need to fix through shale gas. I also stated we don’t need to worry about the US Government debt.

    How is that attacking?

    You will then see the snarky and sarcastic responses to that thinking. A “different” idea than is what is preached here is not accepted well. I proceeded to point out the holes in the line of reasoning used to attack the theories presented.

    Get you facts straight before taking the stance you are on the high road somehow.

    And please – humor me with all the holes you think there is in the line of thinking presented with the way the monetary system works. I promise you, it will be helpful for you to think through it.

    I used to be a die hard Austrian, until I realized in 2008 that the world didn’t fall apart like it should have that I was wrong.

    I have NO problem admitting I am wrong. I have done it in my article on SA. My wrong way of thinking was as a die hard Austrian. I don’t present the case for the bond as proof I am not wrong. I present it as a case to not need to worry about the US default. Why don’t you go even further back in my article portfolio and see the transformation. I wrote many articles on why we were in a depression and how things would fall apart. I notice you selectively didn’t point that out though. You needed a case for your ad hominem tirade. The point being, I was wrong, and can be wrong again, but this time have yet to been shown any proof where the thinking is wrong. You want to use proof of what I used to fully believe, without seeing that YOU infact might be where I was in your line of reasoning 3 years ago. But you choose to be dogmatic, knowing a nut job like me is clueless.

    Finally –

    To use calls on stocks that have gone down as being wrong means nothing as you don’t know position sizing or timing, if the facts have changed and it requires selling or holding on those stocks, or many other factors. I was called an idiot for my article on going long CSCO compared to NFLX as well on SA. As CSCO sank and NFLX ripped higher, I was mocked for bad analysis. The timing of the article was not great, but in the end, the analysis worked. I don’t ever claim to get the timing correct, and don’t trade around the time of my articles. Refute the logic, not when the article came to fruition.

    As far as NWM, indeed, we are a very small firm. When I joined, the firm has $26 mm in assets, which is the most he have in 17 years in the business. I was actually asked by George to come on board as the second bear in a decade was causing him to want to leave the business. I brought my methodolgy to the firm which has done our clients well in a violent time. We currently have about $60 million in assets. Although still very small, we have seen nice growth because the story we have resonates well with people that hear it. Hopefully the ad hominem made you feel better though.

    Waiting for you to blow up my line of thought. I guarantee you and I will learn much more about the workings of the monetary system that we know now by going through the excercise. To just say ” Look at history, this is no different”, truly misses the point and the knowledge to be gained. History will not be different for the places where the same monetary system is in place. We are seeing history repeat in the EuroZone. I don’t deny that.

    I have yet to hear anyone tell me why the US will experience the same fate as Europe though, and am willing to bet $50,000 on the outcome. That is not pompous, it just elevates the stakes for each party to say, “I know without a doubt that what T & J is saying is wrong.”

    You game?

  261. Gary

    T&J,
    I never said we won’t recover. Humanity always finds a way to solve its problems.

    What I said was that every single time in human history that we’ve created a debt bubble, and we do it on average about every 80 years, it has inevitably led to a depression.

    This can’t be stopped with monetary policy. It can be temporarily halted, but the consequences end up being worse than if we had just taken our medicine to begin with. We got a front row seat to this in 2008.

    You seem to think that monetary policy can relieve us of the price we are going to have to pay for creating a debt bubble. What I am trying to tell you is that never in the history of mankind has that been possible.

  262. Tim and Jeanene

    mike:

    ‘yesterday i politely gave you the opportunity to disclose that your silly idea of long other peoples’ value ideas and short the S&P wasn’t really a winner”

    Dare I say it, but you are wrong here. There is plenty of data going back a long time to show as such.

    Follow this guys blog: http://www.mebanefaber.com/2010/01/page/2/ for that data. he writes peer reviewed white papers on the topic.

    Of course, I can’t teach you anythign though, because I am pompous and don’t know what I don’t know. Depending on the hedging stratgy used in 2011, the results were mixed. Long tern, they are decent.

  263. Mean Guy

    WOW,
    Public blog was starting to become somewhat stale.It has been action packed last couple days.

    WW, I also took that Gold short past 2 days, thanks for that close out price.

    Rest of you go for a walk or something.
    T&J you are awesome,relentless arguing via typing is your calling.Forget trading. Give those digits a rest you’re gonna pull a finger muscle or something.
    Good day UUP, EUO, DZZ.
    Love all you guys keep it up.

  264. Tim and Jeanene

    Gary your post at 6:06 on January 12 states:

    “It becomes a bubble at 80% of GDP. That is the point at which no country has ever recovered. We are already past that point”

    So you did in fact state that none has ever recovered. I will give you the benefit of the doubt though and presume you meant what you say in this follow up post:

    “What I said was that every single time in human history that we’ve created a debt bubble, and we do it on average about every 80 years, it has inevitably led to a depression.”

    I never disagreed with you. I just qualify the fact that a consumer debt bubble is ALWAYS followed by pain. It was the same in the 1920’s. We were not close to being over 80% debt-to-gdp in the 20’s in the US, yet we went into depression.

    Japan was not pover 80% debt-to-gdp in the government arena prior to their bust, but the private sector was. Once the deleveraging of the private sector happened, the public sector debt load skyrocketed, allowing GDP to continue to grow and guarantee a bloody revolution did not take place.

    Public and private sector debt are two completely different animals. Private sector debt loads SHOULD be feared. European countried is structured like that of a private sector. Thus you have the problems we are seeing now there. We are different. Not to say we don’t have our pown problems. But bond vigilantes and collapse like that of Greece, is not one of the problems.

    I never said monetary policy is the key to our problems. You just say it is the reason for them. I say it has nothing to do with the problems. The problems are based on private sector debt and the implementation of the policies.

    Ron Paul is the most dangerous man in America for our economy, most just don’t realize that yet. And I typically vote Republican.

  265. mikezza

    t and j
    no, i’m not game. i’ve wasted enough time on this. like i said, i apologize for having to go there. i’m neither happy nor proud that I did that but nothing else seems to register with you.

    if you say that i missed by a mile, then ok. only you know, right. i admit to all that I don’t know what I’m talking about and probably took some liberties filling in the details. i’ll even delete the posts since they apparently struck such a nerve.

    btw, can someone please tell me what an ad hominem is. big words, shiny objects and fast moving things confuse me.

  266. Gary

    T&J,
    Of course they weren’t over 80% to begin with. It’s the bubble that pops that leads to the massive build up in debt.

    This has never changed in the history of mankind either. It was the bubble in the Japanese stock and real estate market that led to two lost decades and now a debt to GDP ratio of over 200%.

    It was the stock and credit bubble in the roaring 20s that caused the Great Depression.

    It was the bursting of the tech bubble that led Greenspan to cut rates and massively expand the monetary base. That created the debt and real estate bubble.

    When that bubble popped instead of allowing the cleansing process we moved that toxic debt over to the public balance sheet. Now the cancer is starting to eat its way up the sovereign debt food chain, starting with the weakest countries.

    Eventually it will work its way all the way up into the US debt market just like the cancer in subprime eventually infected the entire mortgage market.

    Then we will have a choice. We can either default honestly, which will cause a deflationary depression, which of course we will eventually recover from. Or we can push the cancer from the sovereign debt markets into the currency markets.

    In that scenario the depression will unfold as an extremely inflationary event. We will eventually recover from this also, like I said humanity always finds a way, eventually, to solve its problems.

    Whichever scenario unfolds we still have to pay the price for creating a debt bubble. Never in the history of mankind has any country or Empire ever avoided paying that price.

  267. mikezza

    t and j
    one other point. i have alot of respect for small business owners, so calling your company a second rate shop was irresponsible and for that I do apologize.

    now, i really have wasted far too much time on this. blog fights are the biggest waste of time and have never made much sense to me

  268. Tim and Jeanene

    I agree Gary, and we are paying the price for a debt bubble. A real estate, and private sector debt bubble.

    I just don’t think you realize how the current monetary system we have saved the US from turning into moltav cocktail throwing bloody in the street Greeks.

    It will not make it’s way to the US Treasury market though. The system is not the PIIGS system. And the US debt to gdp load is not the cause of our problems.

    And no – this is not Keynes.

  269. Gary

    Oh but it will eventually make it into the US debt market. Like I said not once in history has a country or empire been able to avoid paying the price. Since we moved the toxic assets onto the public balance sheet there is no way it can’t eventually infect the US market.

    A new or different monetary theory still doesn’t abort the natural laws of the universe. We’ve had a new theory for why this time is different every time and not once did it abort the cleansing process.

  270. Movax2

    Tim and Jeanene said…

    I just don’t think you realize how the current monetary system we have saved the US from turning into moltav cocktail throwing bloody in the street Greeks.

    Maybe for now, but OWS isn’t over.

  271. Gary

    Oh but it will eventually make it into the US debt market. Like I said not once in history has a country or empire been able to avoid paying the price. Since we moved the toxic assets onto the public balance sheet there is no way it can’t eventually infect the US market.

    A new or different monetary theory (a euphemism for hey we figured out a new way to f**k everything up) still doesn’t abort the natural laws of the universe. We’ve had a new theory for why this time is different every time and not once did it abort the cleansing process.

  272. RJM

    Mikezza:
    Thank you for the expose of Tim and Jeanene. I had just about decided that their tag was a pseudonym for Paul Krugman and Barney Frank. Where exactly did you get the information?

    I think the problem is one of lag-times between policy actions and their obvious impact. The existence of lag-time is certain, but the forecasting of the nature, sequence and timing of policy impacts is very uncertain. The interaction between policy and the vagary of the market compounds uncertainty arising from the dubious ability of the authorities to select and impliment policies. The implications for investment decisions are profound and all of the serious people here are engaged in the very difficult process of trying to read the tea leaves in this murky Bernanke soup.

    I am inclined to regard the attention of people like T&J and Basil as a testament to the stature of Gary as an analyst and the quality of the commentary on this Blog. The attention rapidly reaches the point of heckling and harassment.

    T&J: I totally get it that the authorities are doing a pretty good job of handling economic and financial problems right now, but are likely to make mistakes in the future because of intimidation and interference from Republicans, Tea Party Terrorists and perhaps even (shudder) Ron Paul.

    Smartbullion: Go UKIP! But tell Bloom to get Farage and Hannan to back off recommending currency devaluation for the PIIGS. It makes sense tactically but is fundamentally cynical.

  273. Gary

    John,
    Yes but we had two new industries, plastics and electronics, that supplied the productivity boom to recover and service that debt.

    We had already suffered the depression that was caused by the debt bubble of the 1920s.

    Like I said humanity eventually finds a way out of its problems. In the case of the debt after World War II it was two new industries that finally broke the back of the depression that had started 15 years earlier.

    We will eventually cure this problem also, but unfortunately we keep doing things that are going to make it get worse before it gets better.

  274. john

    I agree that things are quite different now …including the fact that, after WWII, we had the undisputed worldwide kick ass currency and an intact industrial base v row.

    The only thing that I’ve seen you write on this subject that I disagree with is your statement that some new productivity-juicing technology could possibly save us. If a new technology came along now, pols would continue their behavior and voters would be happy to delay any pain for awhile longer.

    Political will, born of pain, is needed before debt can be cleansed.

    other john

  275. mikezza

    smartbullion
    i didn’t forget your post. between trying to place trades, getting into internet dustups, and getting through early morning calls, been a little busy.

    it is really hard to describe the level of intelligence other than how some people compartmentalize and process information differently. most people gather information through reading and study, process that information and then internalize it as their own. here’s an apropos example this morning, i agree with mmt so i will study it and acquire intelligence in this subject matter through learned knowledge. some people can take it a step further and have critical reasoning skills where they can rationalize various schools of thought and selectively identify positions that they agree-disagree with. example, mmt gets it right here, but the austrians get things right in other respects. both of these levels of intelligence are merely thought followers however, as opposed to thought leaders. being able to retain information, critically reason and regurgitate other’s thoughts should not be confused for raw intelligent horsepower

    the intelligence that i was referring to was more of an ability to compartmentalize and process information independent from learned knowledge. perhaps it could better be described as the ability to process inputs and come to independent and innovative conclusions. it may sound like a bunch of nonsense until you see it. a hypothetical example, i worked with individuals, who when presented with information could determine the impacts and come up with third and forth derivation trades instantly that would not be completely obvious to the merely well educated or well read. once they heard about the announcement of the ltro, they could tell you instantly how to trade sovereign debt, european bank debt, related currencies and knock-on effects on other asset classes, while simultaneously considering the “unintended consequences”. it wasn’t through experience or learned knowledge, but rather the ability to instantly process that information and come to independent conclusions while anticipating several steps ahead. there are people on wall street with no formal job descriptions or titles, but are merely idea generators. they are not the people that are paraded out on CNBC as researchers, but were merely thinkers. this brilliance exists in all walks of life to a gifted few. think goodwill hunting’s description of mozart.

    this is why I initially asked t and j about how the fed was in the market buying bonds without formally announcing QE3. it’s the great market mystery right now, right, the stealth qe. some investors know exactly what the fed is doing and are trading with this info, while others will have no idea until they read it somewhere or are told how it’s being done. i chose a topic that hasn’t been figured out by the masses because i wanted to gauge his ability to form his own conclusions rather than giving me something that he had read elsewhere. rest assured that the only time the financial media and most market participants will know about additional easing is when the Fed wants you to know

  276. FXMaster

    C3X performance continues to rocket with 1064 pips over 26 trading calls and achieving a 94% hit rate.

    Over the last 5 months, they have shown how to make money in FX world.

    The live trade has just added the most important element to FX trading: transparency.

    Performance

  277. Z1

    Mikezza, “ad hominem” comes from Latin (homo, hominis = a person), it would mean criticizing or attacking a person instead of attacking an idea. One should always try to discuss an idea.

  278. smartbullion

    mikezza, thank you for answering me. The different types of intelligences is something that interests me. While obviously I have known very smart people in my life, I would like to spend some time in Goldman Sachs or jp Morgan or even the us national security agency to see you they get to grips with complex systems and how they organise out of it.

  279. mikezza

    rjm,
    what i said about t and j was inappropriate and i am now remorseful for taking that approach. its safe to say that he is a pretty well-read guy, albeit a bit closed minded at times. in terms of his bio, he can tell you any of the pertinent facts rather than listening to the non-factual ramblings of a crazy anonymous blogger.

    z1,
    thanks for the explanation. I now think its time for my pills and afternoon nap before the nurse’s visit. signing out

  280. sophia

    Just got back at my desk…Gold and Silver ( and mostly Copper) are holding pretty well despite the selloff in Eur/USD… Turning tide?

  281. Gary

    Sophia,
    It just depends on if this swing marks the cycle top. If it does then gold is stuck in another left translated cycle and the odds are high it will move below $1523.

  282. Haggerty

    Gary

    If stocks leave that candle underneath it does that throw the odds in it’s favor for a little more upside before it falls over in to a DCL? Or this late in the cycle is that insignificant?

  283. Shawk

    T&J

    I’ve read some MMT stuff and agree with some concepts, though I never got the impression that the theory guarantees that a market goes up or down. You seem confident that MMT theory proves a bullish outcome is imminent in the intermediate to long term from this point forward. That is interesting to me.

    Anyway, I do have 2 questions.

    1. Can you explain to me if there is any positives or negatives of the Federal Reserve increasing its balance sheet? I believe its at $3 trillion now… Conceivably, can the Fed increase that to $6, $9, $20, $100 trillion by purchasing bonds and MBS and other assets. Will there be any repercussions from this?

    Also, do you believe that the issuer of the currency controls its value or is it the user of the currency?

    Thanks in advance.

  284. Arun

    Last DC high = Day9, this DC high = Day9
    Last DC peak = $100 from Day1, this DC peak = $115 from Day1

    *If* same pattern holds, we could see a final D-Wave bottom at 1422. Close to the 50% retracement that Gary mentioned. Will it happen?

  285. Gary

    Haggerty,
    No way to know. It’s getting very late in the cycle though, and I don’t have any reason to expect a stretched cycle. So I think this swing will probably mark the top.

  286. sophia

    Cac40 unchanged on the news…The worst has been priced in for Europe…For the US markets, I am not sure as we have rallied a long way already

  287. Haggerty

    I was thinking it would show strength here towards the end get people on the fake bull, and make the shorts cover to open up down Tuesday.

    BTW I think Gold holding up well, hoping that 1523 does hold and we can enter somewhere under 1600 with a tight stop. But best place to be is on the sidelines

  288. Danno

    sophia,
    Be careful. The dollar may pull back on profit taking, but it is a volcano that could erupt to 90+. Do you know the average price target for $USD’s Rounding Bottom?

    You won’t believe it… but it’s over $100. I’ll work up a chart sometime this weekend.

    You seem like a nice person. I would not want to see you get hurt.

  289. 86d4life

    Mikezza,
    Good post at 1024. One thought or question; regarding the feds additional easing. Even if the fed tries to enact a stealth type QE, the results have to show up somewhere. If they are engaged in some sort of QE with `invisible` results, what`s the point?

  290. sophia

    Danno,

    Thanks’! It is thatnsk to people like you that I made it from the back of my kitchen! We all look after each other!
    Have a great weekend

  291. coolkevs

    So, we got our TD DAILY Sell Setup 9’s today in SPX, NDX, RUT, BAC, BKX, XLF, GC, GLD. Not so for Mr. Dow Jones, only on Bar 4 up. Interestingly, today the German DAX reported a qualified breakout of 6137.05 today, so this should serve as some kind-of support. Also, as I’ve mentioned recently FXE recorded a DAILY Sequential BUY and EUO a Sequential Sell, but still a couple bars off in the 6E futures, but 6E does show a WEEKLY Perfected BUY Setup. Dollar also showed a WEEKLY Perfected SELL last week, good for the next 4 weeks. Very curious. So, we shall see if all these debt rating downgrades are already priced in. If we see a rally up to 1300 or so, I will be shorting. But above 1310, I will take that bearish bet off…
    Have a good weekend!

  292. royboy1979

    Interesting tweet from a guy I follow on twitter, @ZorTrades, “$VIX put to call ratio chimes in at .13…other times when it has been that low (plot w/SPY) 12/6, 7/25, 7/20, 6/27”

    Looking at these dates and the corresponding moves that resulted, the June (6/27) move in the SPY was a move up and came out of a cycle low. The other three (7/20, 7/25, 12/6) I believe were nearing the end of a stock market cycle and absolutely tanked. We are nearing the end of a stock market cycle now…would be quite a sight to see something that resembles these past moves when put-to-call ratio was so low.

  293. Harry

    T&J, what exactly is your definition of everything’s going to be okay? You brought up the example of Britain in the 20s and seem to be claiming victory on the premise that the entire island of Britain was not completely incinerated, flattened into a pancake, and ejected into orbit to serve as a parasol for its creditors.

    You are indeed correct that the world is not going to end. The sun will rise the day after we drop three zeroes off the dollar (or however it ends). As Gary says, humanity always finds a way out. But there will still be a terrible depression.

    You seem to think that 08 settled the question. I think you have no real undetstanding of history. Without getting personal, you’re an asset manager so I can’t really blame you for being so focused on the short term (though I manage funds, too, so that shouldn’t be an excuse).

    These great turnings of history take a long time to play out, and if you can make money buying pharma stocks in the meantime, more power to you. Even if you have no real understanding of history we’re going to need a better explanation than this time is different.

  294. Tim and Jeanene

    Harry quipped:

    “You brought up the example of Britain in the 20s and seem to be claiming victory on the premise that the entire island of Britain was not completely incinerated, flattened into a pancake, and ejected into orbit to serve as a parasol for its creditors.”

    Actually you present that out of context. It was in fact Gary who said any country that has reach 80% debt-to-GDP has never recovered. Sang said….. ever.

    I just said hey, the US hit 120% in 1940….. we did fine. So the correlation of over 80% debt-to-GDP and never recovering is broken in their line of thinking. To say we can’t recover is actually them taking the stance that it is different this time…. not me. For they are saying “well, it’s happened a few times, but this time is different. We won’t recover”

    See the irony?

    Giving Gary the benefit of the doubt, he did backpedal a bit and attempt to clarify what he meant. That is fine, and I may press that further, but the initial comment was a response to an innaccurate statement. It was not me “making a stand.”

    No offense, but for you to read it that way, as me being the aggressor/point prover with hollow ground, in that debate, is classic from someone without an open mind. You came to that post with a bias and expected the burden of proof to be on me, when in fact, I was just responding to a dogmatic statement that was made by two people on the blog.

  295. Robert

    Tim

    How to do ever find the time to run your fund and do research on companies ?
    You seem to be on this blog 24/7 .
    seems to me you would be better served to spend more time on the fund you run than posting every 2 minutes or so .
    i enjoy your posts but it seems every other post is coming from you..give it a rest for awhile please

  296. riley

    T+J I do agree with possible energy boom due to shale, but as long as Obama in office will fight this source of energy. Mainly enforcing epa. Hopefully he will aquiesce, or more favorable political party in office.

    Still disagree with idea of fed expanding money supply, however it is lended into the system. I think congress should vote on increasing supply. Don’t like so few at the fed making such decisions without true oversight.

    As population grows money supply has to be expanded, but under a consensus that can be moderated or controlled by voting public. My 2 cents.

  297. Gary

    You sound like Beanie and his solar obsession.

    We aren’t going to produce millions and millions of jobs world wide because of shale. Plus shale is geologically specific. It’s only going to produce jobs in the area where it’s located.

    We need a completely new industry to do that. Eventually it will come but it is going to take time. We also have to cleanse 40 years of built up debt and cure our energy problems before it can happen.

  298. Tim and Jeanene

    Robert –

    Use a little logic here. You write as if I am just writing posts blindly, when in fact – the truth is that I am in multiple dialogues with multiple people. Notice how you addressing me is now causing another post. Had you not offered up advice directly to me, it would have saved a post. If I have 6 people all presenting questions and making statements for me to answer, and each writes 3… then as part of the dialogue, it is polite to engage them. Unless of course they are personal attacks. That means I can easily write 18 posts, which is 9% of the page, making it seem like I am just posting and posting.

    If you didn’t want another post from me, you shouldn’t have engaged me in dialogue. Of course, you had to take a little dig though. How about refuting the ideas rather than attacking the person? It is those kinds of posts that truly take up space and detract from the conversation.

  299. Tim and Jeanene

    riley –

    I pretty much agree with everything you present. The boom will be much more likely under a different regime, but the good news is, the White House is actually not as opposed to all of this as the loony liberal environmentalists would have you believe:

    http://blog.newsok.com/politics/2012/01/11/white-house-says-natural-gas-boom-could-mean-substantial-economic-benefits/

    http://energytomorrow.org/blog/the-white-houses-natural-gas-manufacturing-connection/#/type/all

    Fracking stocks have been crushed recently due to worry over the EPA bringing a moratorium. This most likely won’t happen, but it is usually scary news that causes opportunity.

    Check out CJES from a valuation standpoint. They growing at 140% a year, and trading around 8 P/E. Next year they are estimated to earn $4.28 a share. Slap a 8 P/E on that, and there is room to rocket. Careful with frack stocks in the short term though. Regardless, they are ready to explode.

  300. Tim and Jeanene

    “You sound like Beanie and his solar obsession.”

    That is a bit lazy in your analysis, but it is late Friday night, so I will cut you some slack. Shale liquids are profitable and do not need government subsidies. Solar, well that’s another case. The two are apples and oranges. A government subsidized energy source is not the answer. A private sector revolution that is creating massive wealth, is a different animal. Hopefully you can see that.

    “We aren’t going to produce millions and millions of jobs world wide because of shale.”

    That is purely your opinion. You would benefit yourself to read industry reports and peer reviewed studies of people who know how much oil is in those plays, rather than just wing it with an opinion.

    http://fuelfix.com/blog/2011/12/06/natural-gas-boom-projected-to-fuel-job-growth/?utm_source=twitterfeed&utm_medium=twitter

    And they are just scratching the surface on the size of these plays. Millions of jobs from this revolution, plus many more from velocity of paychecks from these jobs moving through the rest of the economy.

    “Plus shale is geologically specific. It’s only going to produce jobs in the area where it’s located.”

    The size of all the shale that has been discovered is about the size of France. That is not just a few towns geologically. It will effect places across multiple states.

    Next, those people in the Bakken in North Dakota for example. They have jobs, and make money. With it, they buy cars, and jewelry, and clothes, and bikes, etc.

    Are all of those goods made in the Bakken, therefore leaving only the Bakken region to benefit?

    Of course not.

  301. riley

    Dang Gary, obsession, really, I’m under no illusions of our debt problems. I’ve been between 50-60% gold stocks since 2002. I couldn’t believe we didn’t have major cleansing post tech bubble. I was new to markets and money flow. The fed changed my view on things quickly. I know the money problem has only been shifted to governmental books.

    But saying a boom in shale energy relates me to solar rejuvination. Count me out. I think we are on a one way street to depression-ville. But I also think there will be a boom in shale recovery in relative terms to actual recovery amounts, and companys related.

    I guess my best comparison would be apple with I-phone, which I consider a boom to cellular, but never ever think a resolution to our debt crisis. Lump me on pessimestic side, but solar and Beanie.

    Since you don’t know me I will say I did bust out laughing, and never take offense, as I’m grown man and can take verbal critique smiling.

    I will say your bottom picks uncanny as been reading quite a few cyclists that don’t match your deal. Anyway still think big money in shale but never stated savior to world economy, but would be happy if it was. Still laughing as type, but T+J has valid point money there.

  302. Danno

    Wav,
    Thanks. Made a few bucks long PMs but nothing to write home about. I’m mainly focused on jockeying for position before the next big move.

    The odds seem good that anyone long the dollar is going to make money, if you’re willing to suffer through a short term pullback. I’m staying away from options though, as things are taking a bit longer than expected to pan out. It’s too maddening to be correct and still end up losing money.

  303. Danno

    Wav,
    To answer your question I am not long anything at the moment (aside from the old turkey account). I’m building a modest position in ZSL but not going crazy as there could still be more upside for $SPX before any potential rollover.

  304. mikezza

    t and j
    i woke up this morning with a horrible sense of remorse for my posting yesterday and i feel the need to issue a mea maxima culpa

    for starters, i need to apologize to you once again for my unprofessional and inappropriate post. sometimes one’s emotions get the better of oneself and it leads to really stupid actions. i posted out of anger and frustration over what i perceived as your condescending exchanges with many on this board. i justified my actions to myself as defending others that were subjected to your posts. well, i can only say that i was wrong in my thoughts and in my actions. it is never acceptable in any circumstance to attack a man’s character or his livelihood, especially when one does not have all the facts. you are right, i don’t know you or anything about you other than some snippets gleaned off the internet. more importantly, i don’t know you as a person, yet i presumed to have you all figured out. for that, i am truly sorry.

    i made the comment that you needed to look inside yourself to explore the void that existed, when it was i that probably should take that advice. perhaps i need to explore my own insecurities that led me to write such a nasty post that was really out of character for the person that i believe myself to be. you’ve proven yourself to be a standup guy in accepting my apology yesterday, so i can only hope to match you by reiterating my regret over this inexcusable lapse of conscience.

    well, i’ve said my penance and hope there is no ill will. God bless.

  305. mikezza

    86d4life
    the results are not invisible, only their methods. the result is that treasuries retain a bid and the government continues to have the luxury of financing at artificially low rates. their method in doing so? well, that’s the million dollar question.

  306. Z1

    IMO Tim and Jeanene is right about the USA prospect. For some reason people on this blog from the first day I got here think that one can compare USA situation with Euro zone situation even with Greece (?!). People are also for some reason obsessed with USA debt which will be taken care of with a little inflation and somewhat slower growth (no depression needed). However Tim and Jeanene, similar to a majority of people here, do not realize how bad the situation in the Euro zone is. The problem is that not only the situation in the Euro zone is bad but that it is not curable because the whole system is wrong. Further integrations will just make things worst, one should look at the MMF’s PIIGS debt projections for 2015. The United states of Europe could theoretically be a solution but that can not be accomplished in reality. There is no way gold bull could be terminated with Euro zone still alive in a present form.

  307. guy

    Z1,

    can’t see the big difference between EU and US problems. Both financial systems are rotten to the core. You guys have the reserve currency, but for how long? IMO it’ll be gone sooner than you think. This way it makes sense for EU to swap a lot of dollars, maybe within a few years we’ll pay the US back for a cent on the present dollar. Easiest way out ‘ll be to print like they haven’t print before. Though I have to admit US has military muscle, I guess that’s the only thing keeping USA in the front seat for the moment.

  308. Tim and Jeanene

    Hey Mike –

    Thanks again for sharing your heart. Know that it is your own conscience that is building you into a good guy at this point, I truly appreciated and let go after yesterday. I have been forgiven much more that what I need to forgive you for. That was easy.

    Trust me, I have done that plenty of times in the past, and may do it again. Therefore I am not somehow above you or anyone. I am just as guilty. It’s a hot topic. How do you think I learned what the word ad hominem meant? πŸ™‚

    I promise there is no ill will, and your response afterward shows the true character of the man that you are. The previous post just gave you the chance to show it. Rest in that.

    Now, what about shale gas?

    πŸ˜‰

  309. Veronica

    T&J, The estimates I’ve read about oil from shale require oil prices to be very high to make the shale fields economically feasible. No way will this provide cheap energy for the future. Natural gas, OTOH,definitely could provide cheap energy for decades but the infrastructure needs to be revamped. BTW, if you want respect on this board why not post your funds 5 year performance report. $ 60 million is not a large fund and should be able to have some eye popping returns with the right person at the helm.

  310. Danno

    That’s what you’re for Gary! I’m just using patterns to dial in my timing a bit and help with expected price targets. I think your cycles system is the real key.

  311. RJM

    For those interested in the debate between Gary and T&J over when debt becomes unsustainable there is an excellent presentation by CiavaccoCapital “Eurpean Debt Crisis Explained”. It runs about 35minutes and was done in mid to late December. It can be found on YouTube or CNBC.
    In my previous post, I referenced Basil when I meant to reference Beanie. I’m afraid I have’nt studied Basil enough to have an opinion.

  312. RJM

    Would’nt the method be buying north of 75% of all new treasury debt to compensate for lack of private demand? This may be kind of shadowy, but not exactly invisible.

  313. Veronica

    JPM head finally acknowledges that his bank will have huge losses in European sovereign debt. I think this will be the start of massive inflation as large holders of money will start to invest in private assets going forward.

  314. High 5

    It’s possible that money will continue to flood into US Treasuries and that this UST bubble will burst just before gold reaches its peak.

  315. High 5

    Again, this is what Exter seemed to believe (above) and he was no gold bug whacko. UST are just above gold in his pyramid theory.

  316. SF Giants Fan

    Info on Proshares K-1

    When can I expect to receive my Schedule K-1?

    We generally expect to mail Schedules K-1 in mid-March. We have to gather information regarding ownership interests bought and sold during the year from the firms that sell our products. Once received, the information must be reviewed for accuracy and processed, and only then can we print the Schedules K-1.

  317. Danno

    Gold plummeted through a 3 year trend line. Even if gold rises to 1700+ I would not get too excited. Symmetrical Triangles experience Pullbacks to the breakout price 59% of the time on downward breakouts. In gold’s case a Pullback should not be a surprise. It should be expected. Technically, Pullbacks complete their rise within 30 days. January 11th marked 30 calendar days. That’s not to say price cannot Pullback even more after 30 days, but technically speaking, you’re not supposed to call them Pullbacks after 30 days.

    Note that I drew this chart showing the expected pullback weeks ago (including the dotted lines). I have not altered it since.

    http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=1&mn=9&dy=0&id=p71062551266&a=241643000

    Not trying to say what will happen, because I don’t know for sure. But the statistics suggest that gold longs should not get overconfident here.

    This chart shows the broken trend line.

    http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=3&mn=11&dy=0&id=p26989721386&a=253184115

  318. PST

    Mikezza,
    Out of curiousity, were you asking the question about additional easing because you believe it is now occuring but are unaware of how it is being done, or do you have some idea and are just testing others? It is kind of a trick question, but based on your posts, I have a feeling that you are aware of that.

    Regarding the Dr Ed comment,are you an old Prusec or DB guy? Are you still in the business?

  319. William Wallace

    Riley,

    Currently long.

    “RJ,

    Exactly. I start the short with 1 contract, if im confident with the move I will add on the way down. Today’s short at $1660 I was a bit hesitant to add on the way down because the 200dma is right here and I was anticipating a bounce off it, just now I seen the bounce and covered my short and went long. Now I captured this bounce, when I see that its getting toppy, I will take off the long.”

    January 12, 2012 8:33 PM

  320. William Wallace

    Since 1/4 we have a 10dma Swoop in effect which has supported this move higher three times in this DC.

    Now the second time during this IC, gold is holding above the 10dma late into a new DC. This would typically be indicative of a First Daily Cycle of a new advance (A-wave in this case)…. Only during the 08′ D-wave, has this not been the case. The 08′ D-wave had two DC’s that held above the 10dma for more then 10 days into the cycle before breaking to new lows. This D-wave, like the 04′ and 08′ D-waves, was a failed IC and exibited the same type of behavior having moved above the 10dma for more then 10 days during atleast one of its DC’s, before continuing to break to new lows.

    If this D-wave were to play out similar to the 08′ D-wave we will see gold move back below the 10dma in a day or so, failing to make a new high and most likely another left translated DC breaking to a new ICL.

    But if gold is indeed in a new first daily cycle of an A-wave, and playing out similar to the move out of the 04′ D-wave, we shouldn’t see gold move back below the 10dma before making a new DC high, and before it dips into a DCL. The 10dma would continue to support the move higher into a right translated daily cycle.

  321. intelliblue2000

    WW – really enjoy reading your last post about gold’s behavior relative to the 1st daily cycle.

    I think some poster will say that I am kissing up, but whatever.

  322. Farm Girl

    “Many wells are unprofitable because gas is being drilled (irrationally) at low commodity prices to hold leases on a deadline. Unfortunately, now that rigs are migrating away from the Haynesville Shale, it is unlikely that the supply/demand dynamic will change much because the great hunt for liquids, especially in places like the Eagle Ford Shale, has the collateral damage of producing natural gas a byproduct. It may not be in the same quantity as the Haynesville, but it is coming to market as a secondary product regardless of gas prices.

    New York Times: Insiders Sound an Alarm Amid a Natural Gas Rush

    http://www.nytimes.com/2011/06/26/us/26gas.html?_r=2&src=me&ref=general

  323. RJM

    Z1: Re. YouTube, Warren Buffet babling incoherently to Charlie Rose is rather revealing, but this particular installment on his political protection policy is the equivilent of a bounced check.

  324. Tim and Jeanene

    Farm Girl –

    That is all well known actually. The key is that companies see the massive source, and are producing factories and plants near and in the shale area. A new source of demand is now at the cusp of changing the dynamics of America. When they do slow drilling down, prices will go up, making it more economical to drill again, thus pushing prices back down.

    The vast resource that is local shale is beginning to create a potential ceiling on the price of gas. Without it, who knows how high gas prices would go if we were faced with limited supply. Supply is not long an issue now, only demand. And the proof shows the demand is being created by the plants and factories moving to the shale areas.

    Keep in mind NY Times is very anti-fracking as well. Environuts, so most articles linked to fracking are written through a very biased lens. Careful what you believe is actual, factual truth.

  325. Tim and Jeanene

    As well – I have read most of those emails….. note they mostly refer to nat gas. Nat Gas from fracking right now is a money losing proposition. Which is good for America at the moment because it means their heating bills are lower because of low price.

    Most of the activity in fracking right now is being down on liquid rich regions of the shales. Look at North Dakota. The Bakken now produces more oil per day than some small OPEC countries, and that is going higher. If you look at the drilling going on in Texas, most wells are being drilled in the liquid rish areas, while the gas only or dry gas areas are being neglected. These are all positives.

  326. Tim and Jeanene

    James –

    You are talking out of your mouth, which stinks just as bad….

    I know Nat Gas is low, and THAT is the reason the shale plays are moving to liquids, not nat gas. BECAUSE nat gas is so low, and there is an endless supply, companies are opening processing and cracking plants to these areas BECAUSE the input costs of Nat Gas are so low.

    Maybe you should be slow to speak, lest we get confused which end the diarrhea is coming from.

  327. Tim and Jeanene

    This whole thesis of the revolution of American industry it based on the fact there is ample supplies of energy that will cause the prices of input costs for manufacturers to be LOWERED.

    Lower energy prices is the goal James. Didn’t think that one was so easy to miss, but you figured out a way to do it.

  328. Tim and Jeanene

    awwwww – ok……

    That’s the best you have? Your opinion and conjecture after supposedly showing me “proof” of low gas prices?

    Ok… because James said so, I will give it up and give it a rest.

    Thanks for setting me straight on the truth.

    Bottom line is you don’t like my ideas, because they don’t go along with your thesis of massive inflation in the face of a collapsing country. If I am right, your “trade” is in danger, so you feel the need to attack my idea by making it personal.

    You have a lot to learn.

  329. Sang

    “awwwww – ok……

    That’s the best you have?”

    Really? Come on, can we up the quality a little bit here? Taunting?

    Let’s hope what’s going on in Daneric doesn’t happen here. What a waste.

  330. Tim and Jeanene

    Wow Sang – you’re not biased or anything are you?

    You find it totally ok for James to write this:

    “T and J,

    You’re talking out of your ass.

    Please take a look at the nat gas chart and don’t embarrass yourself.”

    Why don’t you get a bit more consistent with your high road and call out your own team members for the way THEY are writing?

    Oh yeah, I forgot. It’s because they agree with your thesis, and I disagree. Therefore, I will always be in the wrong.

    Stunning.

  331. DP

    eelseth —

    There is some basic book on Hurst cycles, which is called “The profit magic of stock transaction timing” by J.M.Hurst. Also, you can look at youtube for “Hurst cycles”.

    Another source is Amazon.

    What kind of use do you get from OminTrader Re: Hurst cycles?

  332. Sang

    “Wow Sang – you’re not biased or anything are you?”

    Relax, I simply didn’t read the entire thread because I didn’t want to read all the bantering back and forth.

    Your comment happened to be the last comment which was why I quoted it. The other comments you bring up are just as bad or worse.

    The point I’m trying to make is that the content in general is degrading and it is getting harder and harder to find the few gems hidden among all the BS.

  333. mikezza

    rjm,
    if the fed was buying 75% of new treasury issuances, you would see it reflected on their balance sheet since their purchases and holdings are pretty transparent. besides, the fed does not typically purchase newly issued bonds directly from the treasury for their own accounts which would be direct monetization. instead the fed buys previously issued treasuries for their own accounts directly from the primary dealers during open market operations or episodes of qe. again, all of these transactions are very transparent so the market wouldn’t be left wondering what was going on.

  334. Elaine

    Lower energy prices are a fantasy. Every utility in the country is trying to pass along price increases to consumers. Our power generators, nuclear power plants and power grid are all old and need to be replaced to the tune of hundreds of billions of dollars. There is no “magic” way to get energy to consumers for less money.

  335. ...at ease

    Ok, thanks, checking back. I got out yesterday with profits at 1631, as I couldn’t watch the last two days. Will wait for another clear entry.

  336. mikezza

    pst
    if you are insinuating that you one needs to consider the ultimate demand for treasuries, then yes it was a trick question. anyone who claims to understand monetary policy though should at least be able to suggest possible policy actions that would allow the fed to continue to provide or encourage additional liquidity while avoiding the outright expansion of their balance sheet. i can’t see how someone can claim to have an investment opinion on treasuries if they don’t understand what’s happening first.

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