I think it may be time for the miners to start outperforming the stock market again. I know when one looks at that semi parabolic chart of the S&P for the last two months it certainly appears that buying miners has been a poor choice. The reality is that miners have matched the gains in the S&P although they admittedly have been more volatile. Of course that’s just par for the course in this sector and one of the things precious metal investors just have to accept.
One of the things I’ve learned over the years is that this sector has a very sneaky way of boring everyone to tears, then just about the time you get fed up and leave the sector shoots straight up for a couple of weeks. If you are out you miss the move. Then about the time everyone panics back in the sector enters another consolidation.
The only way to avoid missing the move is to just stay in. That means you are going to have periods that try your patience but ultimately the reward is worth the wait.


  1. Anonymous

    Hey Gary, great call on getting back in the PM miners.
    You put up with a lot of BS on this board, so you should get the pats on the back when you deserve it. I think many of the critics are just arm chair QB’s, telling you what went wrong on Monday morning, not in the battle real time.

  2. Jayhawk91

    Dude, I doubted you on this recent all in call based on you track record this year. So, congrats on getting this one right. I wish you would have used the logic you posted in the last two blogs (don’t trade, miners will bore you to tears and then run away from you, grab a position and hold, etc.) during the past few months. These used to be your mantras, but you changed your tune recently. Instead, you started calling D waves and cutting your positions and scared me into selling. Then, when you make a call to get long again, I’m left wondering WTF to do.

    What sucks is I was holding a great entry on SLW and RGLD, but cut my winners short.

    I’m pretty annoyed right now sitting mostly on the sidelines watching all the fun unfold after studying this stuff day and night for months. I know I can grab a position, but stocks don’t just shoot straight up. We will get some oversold readings sooner or later on the miners and a jump in point should present itself.

  3. Gary

    I had to call it that way. Gold was making lower lows and lower highs. Until that changed there was no other way to call it unless one had a crystal ball (which I don’t).

    Once that was corrected and all four of my conditions were met it was time to re-enter.

    Now you are going to let your fear of a drawdown keep you from entering even though you know this is a secular bull market and any timing error will be corrected.

    I think you need to sit down and see if you can rid yourself of this trader mentality and fear of drawdowns so you can actually profit off this bull market.

  4. Gary

    BTW lets face it you just had an opportunity to jump back in and you didn’t take it. What makes you think it will be any different next time.

    When the correction comes it’s going to look scary that’s why everyone is selling.

    I’ll say it again. we are still early in the daily cycle. If you are going to wait you will need to wait for the next cycle low. That probably won’t come for another two to three weeks. Are you really willing to let that amount of time pass just because you are nervous about a draw down? A draw down that you know will be meaningless in the big picture.

  5. Anonymous


    What is your estimated timeframe and eprcieved gain percentage for your current miners trade.


  6. Gary

    I will just point out that was a once in a generation crash. Not likely to happen again. It was also the 8 year cycle low for gold. The next one isn’t due for another 7 years.

    But if you are going to worry about very low probability events happening and if it is going to prevent you from pulling the trigger then your best bet is to just buy bonds and forget about the stock market.

    Although I will say that bonds are most likely now in a very long term bear market and cash will most likely be inflated to the point of worthlessness.

  7. Gary

    Maybe this will help you put it into perspective.

    If you enter right now and the HUI only goes back to the old highs (which is probably a given considering this is a secular bull market) then you will gain almost 13%. Not withstanding any drawdown you may have to weather, you are guaranteed at least 13% when the miners test the highs.

    Now I can virtually guarantee you are going to suffer some kind of drawdown, that’s just the way the market works. I can also guarantee that if you don’t make a move you will miss that 13% and then you will miss even more when the miners break out to all time highs.

    Maybe you just need to look out the windshield instead of in the rear view mirror.

  8. Jayhawk91

    Gary, I’m pretty sure you gave me the exact same advice back in January. 😉 I jumped in and got creamed, so you can see why I’m a tad gun shy here. At that time, the overall market was primed for a correction, which we got big time. I think I was expecting at least a move back to 1150 and the miners would take a hit along with the overall market. Yes, I see your logic on the daily cycles and the HUI still having room to run. I need to think this thing out.

  9. DG

    The problem as I see it, Gary, is that you have no risk management strategy, or at least none that I can see or that is consistently applied. You “know” we are in a bull market. What if we aren’t? Arguments about “but we made a new high” etc. aside, the financial markets can do ANYTHING. We just had a whole host of “never-befores” in 2008 and 2009!. Without proper risk management you only need to be wrong once. There is no realistic return from a 90% drawdown. If you don’t take a huge hit you can play the game forever. Once your capital is lost because you “knew” something, but turned out to be wrong, you are gone for good (unless you are just trading with a few thousand dollars in which case other than ego, what difference does it make.) I really hope you are never simultaneously certain and wrong in a big way, because then your blog and life savings will both go away, as you have a lot to offer and I enjoy reading your stuff (and I hate seeing anyone get tooled in the markets).


  10. Gary

    That is the risk in investing. If this secular bull does something different than every other secular bull in history then yes one will lose.

    That is the risk one takes to make the big bucks.

    A trader on the other hand can avoid losing big but they will never make the big profit.

    I’m betting the fundamentals are intact and that human nature hasn’t changed. I’m willing to risk my capital on that basis.

    If one isn’t willing to do that then go the trader route and settle for small gains if you are good or small losses if you aren’t.

  11. DG

    Almost, but not quite. I am a “trader” yet I bought the Q’s in 2003 and held them for two years. The gains are not small if you let your profits run. After a decent gain (5% or so) you place a break even stop. If it’s a bull market you can still capture the large gain. If your timing is bad you get stopped out with a small loss. A double in the Q’s is plenty for me. Compounding over years with no huge hit works very well. I had three whole-account 25%+ years in the past 10 years (’03, ’04, ’07). To me, those are not small profits. Get into gold if that’s the market you want to play, let your profits run, but don’t sit there and take a 90% hit. You may even get stopped out 2-3 times until you catch it right, but that’s fine to. Just make sure you have an account left when you are sure and wrong. I suppose there are different ways to play the game and I am just built differently from you. I never want to make the “big bucks” or go broke even if the odds are on my side. I have done well over the years and am not subject to greed or rolling the dice even if the odds are great. What for? The one time you are wrong your financial life is wrecked.


  12. Gary

    Well as I said I will try to exit in front of D-waves and I did miss almost the entire crash from March of 08 into the 8 year cycle low.

  13. DG

    Yes, I am aware, and you clearly know how to do this and have been at it a long time. It’s just clear to me that a number of your readers are much newer. I made a LOT of money trading as a kid (from 21-26 years old), and lost almost all of it—$650k— in 9 months. Believe it or not, the lesson learned was worth the tuition. I will NEVER do that again. It was most unpleasant. I just wanted to stick in a plug for risk management amongst all the waves, bottoms, cycles, and such. Thanks, Gary.


  14. Gary

    I will be the first to say and I have said over and over that if you are going to trade then you have to use strict risk management.

    There’s just no way around that. Bsically trading is trying to time the market. You take a loss when your timing is wrong not so much the trade. As we all know from experience most of the time any trade will soon reverse about the time your stop is hit.

    History has shown over and over that very few people will successfully time the markets on a consistent basis. Since that is the case one has to control risk so that when they miss the timing they can lose samll and go on to the next timing attempt.

    An investor takes the timing part out of the equation. Unfortunately most retail investors aren’t really able to do that and they end up losing money in a bull market not because they aren’t on the right side but because they are trying to time moves.

    In the volatile precious metals market is is especially hard to do and if one is going to trade then positions need to be pretty small to compensate for those big volatile swings.

    The end result is small gains if you are lucky enough to get a fair percent of your trades to pan out.

  15. Anonymous

    Here’s a little bit of brain droppings of mine to argue about. This is something I never hear discussed in the investment chatter.

    I think it only makes sense to add investment risk to one’s financial life when one’s capital becomes large relative to income. In other words, as long as you can grow your capital through savings at a healthy rate, then do that. Once your capital grows to the point where you’re no longer able to grow it risk-free–by saving and investing in CDs–then consider adding risk. By then, you will also have enough capital that you can theoretically make a non-trivial amount of income from it without taking large risks.

  16. Return to Resistance

    Jayhawk – Analysis Paralysis

    If you’re a trader then I highly recommend you develop a system that you believe in rather than try and cherry pick advice from others.

    No system or trader is 100%.

  17. LowTax

    Jayhawk – I’m in the same boat. I sold it all near the peak, bought back in when SOS on SPY popped up and sold it all again during the whole D-wave thing. Retrospectively it was idiotic to sell a second time after having bought back in at a much lower price, given that this is a bull market. The only option now is to simply bite the bullet and buy, buy, buy.

  18. Jayhawk91

    You just gonna jump in with both feet on Thursday or do you have a plan? 🙂

    Which ones do you like best?

    I looks like gold is catching a much better bid here based on the “currency crisis” play with the Euro.

    Return to Resistance-I hear ya. Yep, analysis paralysis for sure.

  19. LowTax

    I’ll probably buy in with at least a couple of chunks. I’m following Gary’s picks with 50% in the big boys (GDX, SLW, etc.) and 50% in the fly-by-night silver miners. I’m leaning toward: PZG, AUY, AAU, ANO, ANV, GRS, BAA, EXK, CDE, NGD, AZK and NG. I may also dip my foot into GDXJ. Here’s hoping the bull market bails us out!

  20. LowTax

    Gary, I just came across this on Zerohedge. Though I haven’t confirmed it, it sounds like the government is considering some sort of ban or limitation on investors’ ability to buy commodities by targeting OTC and ETF vehicles. It doesn’t sound like it applies to miners but if they succeed in eliminating a bunch of buyers from the market, it could substantially impact the gold market. My take would be that the paper price of gold would plummet but the price of physical would skyrocket. Not sure what to make of it. Thoughts?

  21. Anonymous

    “My take would be that the paper price of gold would plummet but the price of physical would skyrocket.”

    That’s absolutely impossible. They are basically arbitraged against each other.

  22. Anonymous

    There is going to be a steeper and longer correction in the stock market; perhaps it is even the correction you have been waiting for until you went 100% in, just a few days ago. I don’t think that PM stocks will be immune to the stock market correction, which I am expecting. A belief in decoupling is premature at best and if you are lucky PM stocks will correct just somewhat less than the overall market.

  23. Gary

    So what? It is a bull market after all and if the stock market does drag down the miners the secular bull will just drag them back up.

    One risks missing a big move because they are afraid of a draw down. Is it really worth it?

  24. Anonymous


    I’m not happy I’m only 25% invested, but the plan I’ll use is to get half my remaining capital invested over today and tomorrow (into intraday dips), and leave the last 25% of capital to be deployed IF we get a significant pullback.

    Takes some of the risk out of the picture along with some of the upside, but I can live with it.

  25. Gary

    Let me ask a question. If miners (HUI) were to drop back down to 360 would you freak out and sell?

    If you answered yes to that question then you have no business investing more than 10% of your capital in miners.

    If you aren’t able to weather those kind of drawdowns then you aren’t going to be an “investor”. You are going to have to choose the trader route. That means you strictly control risk.

    Small position size will be mandatory. Since miners are very volatile you probably shouldn’t have more than 10-20% invested even in an ETF like GDX.

    So if you know you won’t be able to survive another hard correction then you’re perfectly invested with 15 or 25%. Put a reasonable stop under those positions and be done with it.

    If you are able to ignore corrections because you’re confident that in 5 years those corrections will have been meaningless then take an investor position and quit worrying about trying to make the perfect trade.

    Let’s face it the only time we are going to see a run like we did in November is during the very last daily cycle of an intermediate cycle. Until that happens we are going to see the normal two steps up one step back type action.

  26. Anonymous

    Gary, Are you intending to hold these positions for several years or just couple of months.

    Keep up the good work.

  27. Gary

    My intention is to either hold them through a C-wave continuation or if I think this is an A-wave I will take profits on at least half my positions if I can time the top of the A-wave semi-successfully.

    I’m going to go over my strategy for spotting an A-wave top in tonight’s report.

  28. Jayhawk91

    LowTax said…

    I’ll probably buy in with at least a couple of chunks. I’m following Gary’s picks with 50% in the big boys (GDX, SLW, etc.) and 50% in the fly-by-night silver miners. I’m leaning toward: PZG, AUY, AAU, ANO, ANV, GRS, BAA, EXK, CDE, NGD, AZK and NG. I may also dip my foot into GDXJ. Here’s hoping the bull market bails us out!

    Thanks for your feedback. I’ve not been impressed with GDXJ so far. My favorite is SLW and I had a huge stake in it (notice “had”…sucks that is in the past now). I’m having such a hard time pulling the trigger as both GDX and HUI are pushing to top of the channel they have been in since Feb and can’t seem to break through. I think a dip is coming soon, so I’m inclined to wait. I just don’t like to buy in way over bought readings…sorry Gary I can’t do it.

    I actually think this is harder watching the trade I have planned for run away vs. the large -20% position I found myself in almost in a blink of an eye back in Feb. Interesting mental games going on.

    Right now, I’m in CDE, SSRI, HL, GDXJ, NGD, EXK.

    My wish list-ANV, EGO, RGLD, SLW, NG, PAAS, SVM, UXG, GG, NEM, IAG, GOLD to name a few. 🙂

  29. Gary

    I don’t know if this will help you, but maybe concentrate on juniors. There are quite a few that have had big runs and have now pulled back significanly, some to the 200 DMA. RBY, AUY, BAA, MGN, VGZ, TRGD and quite a few canadians come to mind.

    These are a long way from overbought and many may be done or close to done correcting big moves and ready for another leg up.

    I would also try very hard to lose the technical pattern nonsense from
    your analysis. These are mining stocks, they are volatile. Trying to count on them to follow patterns will just keep you from getting in.

    I remember someone last year warning me that the HUI was going to be trapped in a channel. Of course right about that time it blew right through the top of the so called channel. If I had listened to pattern crowd I would have missed a big move.

  30. Gary

    It might also help if you watch the weekly charts instead of the daily charts.

    On the weekly chart MACD has just now crossed over and RSI isn’t even close to being overbought yet.

  31. Anonymous

    Gary, Its strnge that you were so concerned about a stock market correction dragging stocks down only a few weeks back. Now the markets are even higher than they were, gold is well above it’s 200day mva and there are about a thousands black swans and shoes floating about waiting to drop all over Europe – yet you all of a sudden decide it’s the perfect time to go all in???? Sounds like rash impatience to me no matter how you want to justify it…

  32. Gary

    Let me say it again. This is a secular bull market. I know I’m not going to time every entry perfectly. Hell I’m probably not going to time any entry perfectly.

    But none of that really matters now does it? The bull will correct any timing mistake anyway.

    Gold completed my four conditions so I’m satisfied that the D-wave is over if it was a D-wave. As long as I feel confident that’s the case then I need to get back in.

    Gold just put in a daily cycle low I got in as soon as I was confident that the low was in. That is the best time to enter and not have to deal with a draw down.

    I’m not going to play the trader games, trying to time perfect entries, needing nonsense confirmations etc. etc. That’s not how you make money in a secular bull market. In a bull you get in and stay in. The one caveat is that I’m going to try to avoid D-waves if at all possible. Once I got as much confirmation to that effect I’m back in “Old Turkey” mode.

    Now if you want confirmations or are worried about draw downs then do what ever you have to do to sleep at night. I can sleep perfectly fine, I have 9 years of confirmations under my belt. That’s plenty good enough for me 🙂

    In regards to the stock market sentiment reached ridiculous bullish extremes. 99 times out of 100 that would have led to a vicious correction. The one exception is if we are in a runaway move. It still remains to be seen if that is in fact what is going on.

  33. Anonymous

    I wanna get long the yeller junk…dang market will not let me get in…am very worried about euro markets…not lookin good over thar…short (very) equities
    ..short oil…long dawler until 85 area…

  34. Gary

    BTW there are always black swans and planty of shoes to drop in every bull market. If you are going to let that keep you from investing then you will be better off just buying treasuries…although I think you will be buying into a long term bear market.

  35. Gary

    I learned my lesson a long time ago about shorting bull markets. When ever I start to think about shorting in a bull I go over and beat my head against the wall until I knock that idea the hell out of there 🙂

  36. Basil

    Is it just me or does this stock market action look top-ish? I wrote here a couple of weeks ago that I believe the market is skipping any cycle low and is making a walkover or runaway move. I expected it to last through May, but I sold my stocks a few days ago, when the markets started to roll over. Today I wondered whether the markets will continue upward, but the charts don’t look convincing to me. I now believe there will be a correction going forward. I also wrote here yesterday that I don’t think the PM stocks will be able to withstand the downdraft, so I do believe this is the wrong time to purchase and hold. Of course, like anyone at any given time I can be wrong; and I certainly share Gary’s opinion that the PMs have a bright future; and yes, timing the market like a trader is mostly a non-lucrative undertaking; however you got to time it somehow. Buy and hold might not be dead, but I think it has a much shorter life-span today. So my two cents is to hold for a correction and spot a better entry. Good luck to all!

  37. Gary

    I never understood how a market can “look” toppy. Almost every top I’ve ever seen was virtually impossible to spot in real time and took months to unfold with multiple whipsaws along the way.

    Btw the market has now recovered over 61.8% of the recent correction. In theory that would suggest all of the correction will be recovered and new highs will be seen.

    The transports are already at new closing highs if they end the day here.

  38. Basil

    Really? Well, they do look top-ish to me when the charts look top-ish. The charts look top-ish when chart analysis suggests there ‘might’ be a top building. Chart analysis is a tool that doesn’t always work but overall works perhaps more often than not. You talk a lot about cycles. I see cycles analysis fail quite often, in fact I haven’t been able to spot the cycle low that you have been writing about for a while now. To keep it simple and easy to spot in the charts: The swings are widening, the pattern in most looks like a megaphone, meaning the highs are slightly higher and the lows are slightly lower. I have not seen an upward move following that pattern. I can look at the past year though and can point out several occasions where this pattern lead to a downward correction. Btw, you’re right, the DJT is the best looking of the indices. If I would look just at that and not at the other major indices, I would probably expect more upside. To me at least the Dow and the S&P look weak. Am I sure about what’s next? No! Do I think downside is more likely than upside? Obviously; otherwise I wouldn’t be out right now. Did I hold since February while you were out of the market? Yes, I did.

  39. Jayhawk91

    Gary, I had the same thoughts about chasing now with some juniors. Just don’t like a stock that can’t seem to get up off the carpet during an big run up like we’ve had, but I will check out your list. AUY is considered a junior?

    I own some of them, but they have been a lame performer this year. I’m still down 8% in my position in AUY entered back on Jan 4th. Maybe they are “coiling” or something.

  40. Gary

    I was hardly out since Feb. I was holding miners. I took profits on some when I had them and waited for my four conditions to be filled. Now that they have been I’m back in buy and hold mode.

    I do see the megaphone thingy on the S&P so maybe you are right. Although I certainly wouldn’t let it keep me from taking positions in the precious metals sector.

    Like I said it is a bull market after all and the bull will correct any timing error.

  41. Gary

    Btw cycles aren’t a perfect timing tool. They are more of a “it’s too late in the cycle to buy now – or that was probably the cycle low, now it’s time to buy” type of tool.

    Let me give an example. As we can see a few (probably a lot of) people can’t buy when they should because it doesn’t feel good to buy into a correction.

    Gold is still only 8 days into the daily cycle so they could still buy now and probably have more upside before the next correction starts. unfortunately what will most likely happen is they will wait for some kind of confirmation. That will come as the cycle is topping out. At that point it will be easy to buy. it will feel good but it will be too late in the cycle.

    They will buy because at that point they will be afraid of missing anymore of the rally. Then of course gold will proceed to correct into the next daily cycle low, they will sufer a drawdown and heaven forbid take a loss in a bull market.

    It’s easy to say one is going to wait for a correction to buy but when the correction comes it never looks like a buying opportunity so traders end up letting it pass because they want some kind of confirmation.

    Like I said I have 9 years of confirmation. In my book that’s plenty.

  42. Jayhawk91

    Good article by the Aden sisters. They make many of the same points.


    Many of you know the importance we place on the big picture. The big picture is most important, and knowing where the mega and major trends lie is a key to good investing.

    Our main goal has always been to invest in the major trends and to stay with them. We can’t stress this enough because over the years we have found that more money can be made this way, rather than trading the intermediate moves.

    Sometimes trading works well and when it does, it’s great. But unless you’re prepared to devote a lot of time to trading, or follow the advice of a good, professional trader, then it’s easy to make mistakes. This usually happens when an investor becomes too emotionally involved.

    Most frustrating is that a major move can be missed because you’re too busy trading a correction. And remember, the major moves are where your focus should be. They’re the most profitable.

  43. Anonymous

    Jayhawk – I know you are struggling with re-entry. I’ve mentioned Jesse’s blog as a solid resource indicator (if you don’t know how or have confidence in your own analysis). Here is something he wrote tonight.

    “Gold did sell off hard in the market plunge in October of 2008 reaching an intraday low of $680, a buying opportunity of the first order. Many who said they were waiting to buy a dip never bought, because like most speculators they keep waiting for ‘THE’ bottom, and keep lowering their target buy price, and never really take a position. Then watch it run away from them, and wait for a pullback, but again never buy back in. Oh they will point to certain stocks that performed fabulously off the bottom, but they did not buy and hold them either, except in their fantasies and trash talk.”

    Hope things work out for you. Sounds like you’ve over-analyzed the situation. If you have any belief that there are problems with world debt, currency debasement and a general feeling that we are to some degree, f**ked, you could probably safely buy. I personally think we have a long way to go before metals/miners are through.

    – KB

  44. Jayhawk91


    I love Jesse’s blog, I read it all the time. Thanks for recommending him. I just read that piece and chuckled to myself. Problem was, I was a hard core deflation guy back then and thought gold was going to 400 or so such nonscense!! To think, SLW coulda been had for the price of a cup of coffee. The buy of our lifetime and I missed it.

    I keep wanting to take a physical position, but I can’t seem to act! I had my order in today two or three times and deleted it. Also got my Goldmoney account set up, but can’t seem to fund it. Reading picture stuff like The Aden Forecast and Jesse today have helped me to get the long term picture back in focus. I need to make a decisve move and break out of this paralsis.

  45. Gary

    I think you need to admit to yourself that you aren’t going to be able to travel the investor path. Let’s face it if miners got whacked back down to 360 after you enter you are going to freak out and never enter again.

    Unless you can somehow alter your risk tolerance then you are going to be better off as a trader. In that case your 15% position is exactly where you should be. Any correction will only minimally affect your total portfolio. So you can put a stop under your position and if it’s hit you won’t be any worse for it.

  46. Jayhawk91

    You may be right Gary. Although, I did weather the storm well early in the year and didn’t freak out and sell. I held on firm and even added during some of the I’m gonna puke days. I only unloaded when you started talking D wave, which is the only wave you recommend selling before it takes it’s grip. I was thinking a 30-40% physical position (GoldMoney and some coins), 30-40% miners, and 20-40 % cash/trading positions.

  47. Anonymous

    Aw, the dawler is getting smoked. You guys were right, Gold is beautiful.

    I was wrong about “yeller junk”.

  48. Anonymous

    Jayhawk –
    One last suggestion. Try not to look backward. You said something like I could have had it for a song back when . . . This thinking clouds your judgement and gives you a false reference for price. Price is subjective. Everything is worth what someone is willing to pay at a particular moment in time. Food, oil, a car, art, wine . . gold. Time keeps moving forward, so you should too. I believe this is a life lesson as well. Not just investing. BTW – I don’t claim to have all the answers (or even any). Just trying myself each day.

  49. Jayhawk91


    Thanks for the words, you are right and I need to take them to heart.

    I’m just going through a period of frustration, but I need to regroup and get my eye on the ball here.

    I had become convinced of the trade last fall…Missed the entry on the November run. Waited patiently for the correction and eased in late Dec/Early Jan. Quickly saw the trade get blown up and my positions down 15-20% in a heartbeat. Kept cool…added some at the bottom. Sold when Gary called D wave. Waiting for entry on this move up and it’s feeling like November all over again. Ah, nobody said it would be easy. I’m really an investor on this theme, so I need to act like it and grab my position and go to Fiji or something.

  50. Anonymous

    > “That’s absolutely impossible. They
    > are basically arbitraged against each
    > other.”
    > Could you expand on that? Thanks.

    The prices have to move (and stay) together because of arbitrage. If the price of “paper gold” is too cheap relative to physical gold, traders (with big capital) will buy “paper gold” (and take delivery of say futures or ETFs) and sell spot gold locking in a risk free profit. If physical gold becomes more expensive, they sell physical gold and buy “paper gold” (delivering it, and again locking in a risk free profit).

    This is the way that most trading in the real world works. It is all about spreads, differentials, and ratios – not “timing.”

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