CARPE AURUM

Just like the stock market, gold runs in cycles (all markets do because the humans that trade these markets go through periods of optimism and periods of pessimism).

For the purposes of this discussion we will concentrate on the intermediate and daily cycle, after a quick explanation of the two larger degree cycles.

At this point all one needs to know is that gold’s 8 year cycle bottomed in `08 and isn’t due to bottom again until 2016.

The yearly cycle bottomed in February, and no yearly cycle except the one at the 8 year cycle low has ever moved below a prior yearly cycle low since the secular bull started in 2001.

That means in order for gold to move below $1044 we would have to entertain the fact that the current 8 year cycle has already topped in only two years. That would also mean the secular bull has likely topped.

I just don’t buy that, as no secular bull in history has ever topped before reaching the bubble stage and gold is clearly a long way from that. So all this nonsense about gold falling back below $1000 is just that – nonsense. The odds of a move back to $1000 anytime during the remainder of this bull market are probably less than 1%. I don’t know about you, but I make it a rule to never bet on something with odds of success at only 1%.

Now let’s move in and take a look at the next larger cycle, the intermediate cycle. This cycle has averaged 18 weeks since the secular bull began in 2001, but has lengthened to 23 weeks after the global debt problems began in `07.

My guess is that the Fed’s extreme monetary policy is acting to stretch golds intermediate cycle slightly. As you can see from the chart, gold is now about to enter the 24th week of the current intermediate cycle. This of course means it’s becoming extremely dangerous to sell gold. On the contrary, this is the time where savvy investors want to be looking to add to positions. Remember, this is a secular bull market after all, and you only get this kind of opportunity about every 5 to 6 months.

You certainly don’t want to blow it now as you will have to wait another half year before it comes again, and since this is a bull market the next opportunity is going to come at higher prices. For all you traders who claim that you are going to back up the truck when gold experiences a pullback, well you are getting your pullback right now. The question is, will you follow your own advice?

Now let’s look at the smaller daily cycle and see if we can pinpoint a closer time frame for when we should be looking for the final bottom of this intermediate cycle.

On average the daily cycle tends to run about 20 days. However, it’s not completely out of the question to see a cycle run as long as 30 days occasionally.

I will also note that we usually see a failed daily cycle as gold moves into a final intermediate cycle low. With that in mind here is where I think we are in the current daily cycle which, by the way, does appear to be a failed and left translated cycle as it was unable to break to new highs.

It appears we are now on day 16 of this cycle. Since we know that the average duration trough to trough for a daily cycle is 20-30 days, we can extrapolate a reasonable timing band for a final bottom somewhere in the next one to two weeks.

Here’s what to look for. First off, I think gold will need to retrace at least 50% of the intermediate rally. That would come in around $1155.

Next, I would like to see sentiment turn extremely bearish. We are already well on our way to that happening as public sentiment is now nearing the same levels we saw at the February intermediate cycle bottom.

Another big clue will be to watch the comments on the blog. At intermediate cycle bottoms troll infestation will become intense with comments reaching upwards of 200-300 per post. That is always a fool proof sign that gold is about to slam down on the shorts. Hey, this is a secular bull market after all, what could you possibly be thinking trying to short gold?

About this time we will see the conspiracy theorists start blaming a mysterious gold cartel for what in reality is just a normal correction within an ongoing bull market, and one that happens like clockwork about every 20 weeks.

So the bottom line is we are on the verge of getting one of the best buying opportunities we ever get in a bull market sometime in the next week or two. The question you have to ask yourself is, will you take it or will you let the “technicals” talk you into missing another fleeting chance to accumulate at bargain prices in the only secular bull market left? Let’s face it, at intermediate cycle bottoms the technicals are not going to look like a bottom.  Instead, they are going to look like the bull is broken.

Only those people who can think like a value investor and keep the big picture firmly in mind are able to buy into an intermediate cycle bottom. You have to make a decision. Are you going to seize the opportunity or are you going to let the bull trick you into losing your position?

Carpe Aurum
(Seize the gold)

228 thoughts on “CARPE AURUM

  1. Justin

    Do you think we could ever get a 40% pullback in gold, like what happened during the 70s? I personally never rule out the possiblity of where prices could go, for you can’t ever predict what humans will do at emotional extremes either.

    I truly don’t see why gold couldn’t go back to $1000 here, especially since a lot of big names like Paulson and governments (like India) bought a lot of gold right around that level. What’s preventing them from experiencing a little squirmishness on their positions? Nothing in my opinion.

    I also find it a little odd that gold hasn’t had a down year yet, even in a bull market that is rare.

  2. Gary

    We may see a 40% decline at some time but it will come during a D-wave decline. That’s just not in the cards as gold begins to move into the most bullish season and with the intermediate cycle so far into the timing band for a trough.

    And it’s probably a big mistake to expect central banks to think like a retail investor. Countries don’t jump in and out of positions like day traders. Their positions are so large they can’t just sell without moving the market against them.

    These are people and institutions that make investing decisions based on fundamentals and once they do they hold those positions until the fundamentals reverse.

    Actually it’s a very small percentage of the investing world that invest based on lines on a chart. Most institutions and by that I mean probably 75-80% of all the money in the markets is put to work based on fundamentals not technicals.

  3. Gary

    Here’s the problem. Investing for deflation means shorting. The problem with shorting is the mathmatics are against you, not to metion the government and the Fed.

    If there wasn’t a secular bull market anywhere then I would either reluctantly try to make money shorting or I would just go to cash until a bull market materialized.

    However, lo and behold there is a secular bull market still alive and well (just take a look at that last chart in my next post).

    As long as that is the case I will never opt for getting tangled up in the ruthless world of trying to short stocks.

    Let’s face it after three vicious counter trend rallies less than 5 bears out of 100 have even made any money trying to short stocks.

    You (and every trader) make it sound like the easiest thing in the world to make money shorting, but I can tell you from years of experience it is anything but.

    Making money in the stock market trading is one of the toughest businesses in the world to succeed at. Let’s face it you are competing against the smartest, best capitalized people in the world. These people have inside information you don’t. They have research teams that number in the hundreds if not thousands.

    What do you have? Some charts. Do you really expect anyone to believe you are going to get an egde over these people with only a subscription to a charting service? If so I have some beach front property I’d like to sell you here in Las Vegas.

    Now that is trading in a bull market. You want to know how to make it 10 times harder? Trade in a bear market.

    History has proven over and over that the vast majority of retail traders don’t make money in the stock market over a significant time period. It has also shown unequivocally that people trading solely off technical signals also don’t make consistent money over a significant time period.

    Now you can claim you do and we can believe you or not, but what I’m telling you is that 95% of all the people that read this blog are not going to make money trading. Most will lose money.

    I’m not trying to help that 5% that do have the discipline, risk management and skills to trade and make money, I’m trying to help the 95% that are just going to throw their money away to the professionals if they try to “trade”. Especially if they think they can trade a bear market.

    So you are just wasting your time trying to convince me that trading is easy. I know better and hopefully most of the people reading this blog have enough sense to see the truth and just stick with a bull market so they can actually reach the end of this with a small or large fortune instead of a big hole where their life savings used to be.

  4. khalid

    Gary wrote:
    And it’s probably a big mistake to expect central banks to think like a retail investor. Countries don’t jump in and out of positions like day traders…These are people and institutions that make investing decisions based on fundamentals and once they do they hold those positions until the fundamentals reverse.
    With regard to big institutions like central banks, have you analyzed their timing in the gold market? Central banks are notoriously poor gold investors and their mistakes are legion.
    One of the things that makes me nervous on a daily basis about the gold market is the fact that you have such aggressive buy-side behavior from them the past couple of years.
    Europe’s CB’s have essentially stopped selling and are holding on to what they already have. Then you have CB’s like India buying at all time highs. I worry because the last time we saw the smaller CB’s starting to buy gold at record highs the market soon entered the bear market.
    I had articles/reports on the subject saved some time ago on another PC, but CB’s have proven to be, literally, the dumbest money in the market.
    But I’ve never believed institutions were better investors than individuals anyway.
    One more thing:
    UBS’s metals people note that GFMS reports that “investment demand in 2009 exploded to surpass jewellery fabrication for the first time since 1980”.
    Who knows? This time may really be different? and there’s still ways to go from current levels πŸ˜‰
    I myself am not as confident as you are that we won’t go below 1000 in the next 18 months. But I’m a buyer in the 900’s and 800’s. A few weeks below 800 may mean the bull is dying. My opinion for whatever it’s worth… and I don’t know about you, G, but I like to be a little nervous about my investments every day. I tend to worry if I find myself making statements like the one about the 1% chance of going below 1000 πŸ™‚

  5. Gary

    Well certainly Britains selling of gold at the bottom was poorly timed but I would have to say that any central bank that is buying now are doing so at a fairly opportune time as I think we are still in the second phase of the gold bull with the third bubble phase still to come.

    My guess is they will be unable to spot the top and will sell way to late after the bubble has already burst.

    Just go back a few years and remember what happened during the real estate bubble in `05 or during the tech bubble in `00.

    Do you see anything even remotely similar happening in the gold market at this time?

    Are people camping out overnight to be first in line to buy gold at any of your local coin dealers?

    Do you hear some stranger at the gas station bragging about how much money he made on gold stocks?

    Heck silver is still over 50% below all time highs. You can’t have a bubble when an asset hasn’t even made all time highs yet.

    From the top in 1980 and 90 of $40 oil went up almost 300%.

    Just to match oil, which had virtually no participation from the public sector, gold would have to go to $3400 and gold being a thinner market than oil and one easily accessible by the public will go up many multiples more than oil did.

    K,
    There is no need to overthink this. Just ride the bull until we start to see true signs of a bubble. When that happens you have about 1 year to push the pedal to the metal before it’s time to jump ship.

  6. khalid

    Re Gary & John Fuller discussion in comment section of previous post-
    The Fed’s “two basic” monetary policy goals.
    See question on “compatibility”…
    The stated long run goals of Fed Monetary Policy are the promotion of both “price stability and sustainable economic growth.”
    I haven’t decided yet whether or not it’s best to abolish the Fed.
    But they do seem to have the best websites of any central banking system out there.

  7. Anonymous

    How can gold be seen as anything except for what it is, an alternative to a fiat system. So the implication that gold will dive down fails to respect the fact that gold exists within a current fragile time. We are brinking on a currency crisis, and gold will plummet because gold is losing its value…What?

    There is no currency out there that is sizeable enough to park purchasing power of any good quality. There is nothing else…oil probably ran up first in 08, due to the logical need for it. But that lead to an unsustained amount, so people bailed. Now we are into gold…which has no fundamental use, and a great benefit to the bull since we don’t need to worry about Joe “still unemployed” jimbo bring down the price due to him needing gold.

    So what has changed? No, even if gold were to tank due to hedge funds gone wild again, it would be short lived. In order for this bull to end, true value has to come back to another asset class…this could be the dollar, stocks, real estate. With a depressed economy I just don’t see value anywhere. Even worse with all of gov’s printing nothing has changed, except price increases…thanks morons. People are losing their jobs and prices are going up…way to double poverty.

    In any event, this is an easy bull. I think the stock market is finally ready to tank (not today!) but sometime in the next decade. My timing is not very good, but I wouldn’t be surprised for the stock market to tank (like a solid tank in real-terms. Nominal is a different story, opinion’s out on that one) within the next 3-5 years. At this moment, some real value might be found. This may also be a sign of a dying gold bull, as an alternative to gold is found. Hopefully the dreads will be sharply selling the stock market to prop up gold to insane levels. So we get to sell gold high, and better, buy the stock market cheap.

    Either way….

    In terms of a bond bubble…it is inevitable. I have been searching for an investment vehicle that could take advantage of this. Shorting or buying inverse related bonds are not in my flavour. Interest rates would have to soar quickly and I would still be responsible for coupon payments etc. I was interested in finding some way of going patiently long interest rates without the effect of shorting. I found some interest rate options, but they are not even leaps, and I don’t like timing things. I thought I would query the blog while I was here. Interest rates are set to soar, eventually, at some point, at sometime. A vehicle that can take advantage of this…ie money that can be patient…may produce massive returns.

    cheers

  8. Gary

    Bond cycles turn slowly and as you can see last for decades so one could short bonds but it would be a very slow trade.

    Much easier & faster to just buy the gold bull I think.

  9. Justin

    Gary —

    I’m not trying to make it sound like it’s easy to make money shorting, I really don’t think it is. But since I think that is a trend that is starting again, I’d like to hop on it and make some money.

    I disagree that institutions are necessarily better traders than individuals who have a trading methodology that works for them. The only advantage they might have over me is some inside information that they are privy to that I’m only going to find out about after the fact. Other than that they are observing the same price action I am. I have a huge advantage by not having as much money to move around as they do, and since I answer only to myself I can pretty much do whatever I want at any time in the markets.

    The only reason people lose money in the markets is they don’t know how to limit losses. I also disagree that trading a bear market is harder, because trading in a bear market is the only thing you can do to make money. If you didn’t have gold as a buy and hold bull market you’d be forced to trade too.

    Jesse Livermore was said to close his doors, listen to know one else but his own observance of price action, and trade according to what he believed. If he was successful at doing that I’m not sure why other people couldn’t be. Of course everyone is not going to be a good trader but some people are good at things that others aren’t.

    I think the average person during this bear market should be out of stocks, in some gold and in cash. They will probably vastly outperform most other people by just being extremely defensive. But most people are still convinced that buying and holding stocks and buying dips for the long term is a successful way to make money, they will probably be forced out of the market at some point during this bear.

  10. Anonymous

    Thanks Gary.
    Already in old turkey gold and staying put…the best game in town.

    I am trying to see if there were any patient and easy investments for a rising eventual interest rate. This low interest rate enviroment is unsustaibable. But as you noted, nothing easy out there. I guess I will keep racking my head with all the spare time I now have since going old turkey. πŸ™‚

  11. Gary

    Justin,
    Actually limiting losses is exactly the reason most retail traders lose money.

    Now let me clarify that.

    Most retail traders place their stops to tight (usually because their position size is too large) So they are continually getting their stops run even when they are on the right side of the trade.

    The other mistake the average trader makes, and this has a lot to do with those tight stops getting constantly hit, is that they take profits way too soon when they do manage to score a winning trade.

    The problem is they are nervous form continually having their stops hit and they think if they take profits quickly they will cure that problem.

    In reality all that does is limit winners to small profits which aren’t large enough to recover the money lost by taking a bunch of small losses on their tight stops.

    As much as you traders want to hound us investors about draw downs the ability to weather drawdowns is probably even more important to a trader. Without that discipline you will forever be setting stops too tight and the pros will be more than happy to run those stops and take your money.

  12. Justin

    Pulling up some charts I noticed that ANV and SLW are beginning to break down as I suggested and NEM also filled it’s gap higher and has now gapped lower. If anyone has an itchy trigger finger buying more miners at this time I’d suggest waiting.

  13. Gary

    I did set out the time frame for when we can expect the intermediate cycle to bottom πŸ™‚

    But even so this is a bull market. One can buy at any time and the bull will correct any timing errors.

    So if you are going on vacation next week you could simply place your buy order and head off to the beaches of Hawaii. By November when the next intermediate cycle is due to top your position will have long since gone into strong hand status even though you might be a little early on the timing.

  14. Justin

    Gary —

    When you get on the right side of a trend all you do is raise your stops as your positions go higher but try and give it enough room to absorb the volatility. Sure, it’s not an exact science but neither is human emotion. But if you don’t use stops then you can take those 40% hits that end up forcing you out of the market depending on how much money you have in there, due to the paralyzing fear that you will lose more.

    Recovering from small hits is easy, recovering from a knockout punch is much harder. I fully believe the separation between someone who makes money in the markets and someone who loses money involves the ability to take losses and minimize risk. I know from personal experience that I became profitable when I figured out how to do that.

    If a trader is consistently getting dinged all the time maybe they aren’t trading with the trend then? I personally don’t know any retail investors who quit trading since they got chopped up so much they lost a lot of money, instead most people just take one big catastrophic loss at some point and are petrified from then on. I actually can’t think of one person I know who got died of a death of a thousand cuts.

  15. Gary

    I suspect you are right about those that quit. But that isn’t really what I was getting at.

    I was just pointing out what happens to the vast majority of retail traders and why they are unable to make money trading.

    You and I both know that most traders don’t make money, yet they continue to trade the market under the false assumption that what they are doing will eventually produce results.

    Of course it never does and they just continually donate money to the kitty.

    Only a very few are ever able to break the negative patterns that cause one to lose money in this business.

    The biggest one is the matter of risk control (position sizing).

    Without someone to enforce risk management on them almost all retail traders eventually succumb to the lure of too large of positions (institutional traders who decide to go it alone also usually fall into this trap).

    I dare say the reason insitutional traders make money probably has more to do with an impartial risk manager looking over their shoulder than anything else.

    Someone who has no emotional attachment to a trade will simply not allow one of their employees to take positions large enough to hurt them.

    And that is the reason they make money. Not because they are right more often than not.

    Go read almost any trading blog. What is invariably the first thing you will see? That’s right the blogger or trader will post his amazing success rate. (of course that success rate will convienently leave out any strings of bad calls).

    What I’m getting at is the average retail trader thinks the ticket to success comes from a high sucess rate. Nothing could be further from the truth. One can easily blow out their account even if they win 95% of the time.

    Success is determined by risk control and discipline not winning percentage.

    Now show me the blogger that admits he only wins 50% of the time but brags that he has the best risk control methods of anyone and that’s the person you want to follow.

  16. Narayana

    Take a look at the weekly MACD… we have the first obvious, confirmed divergence of the entire bull market. I also have noticed that the longer any blogger’s post is, the less likely it will be correct. Good luck Gary!

  17. Gary

    Actually there was a divergence on the weeklies at the beginning of 04, one near the end of 04, one in late 05 and very close to a “confirmed” divergence in MACD in 07. None of those signalled the end of the bull market.

    Now surely you understand that post length in no way has anything to do with anything financial any more than the length of womens skirts or who wins the super bowl has anything to do with financial markets.

    Come on now that’s just pure nonsense. I can show you tons of long posts prior to the breakout last Sept. by your reasoning I would have to assume that because I wrote several lengthy posts it made gold break out of it’s consolidation and put in the next leg up in the bull market.

    Folks lets give the fantasy logic a rest and deal with reality.

  18. Narayana

    Good call, I see the one in 2004. I don’t see the other in late ’04, ’05, or ’07… maybe you’re looking at the histogram? Either way, they don’t happen often, and this one is very clearly defined.

    Post length is significant. When one is confident in their analysis, they don’t have to show a thousand charts and write a novel. When one is not confident, they try to find as many indicators as possible to justify themselves.

  19. Justin

    Gary —

    I agree with your comment that most financial blogs make it sound like they win all the time trading when in actuality that is impossible. Either that or they never show their real results but always brag about how well their clients are doing. I think that kind of stuff will never go away though since their is always a new crop of people for the charlatans of the investment world to hoodwink.

  20. Gary

    N,
    I have been confident in my position for years now and I have written long posts and short posts. As far as I can tell neither has had any material effect on the price of gold.

    I pray no one invests or trades based on the length of my posts.

  21. Anonymous

    N,

    it is not the length of the post that is important, but rather the simplicity of the explanation.

    The people who tend to write breathless essays and thousands of charts also tend to make their words and charts difficult to understand. They think they can pull the “I’m highly educated” card on their readers even though they really don’t have a clue what they’re talking about.

    Many bears are of that nature, ie. Jim Mauldin comes to mind.

  22. Anonymous

    …and Robert Prechter.

    The bears who make it simple, and thus usually know what they’re talking about, are Marc Faber and Jim Rogers.

  23. Anonymous

    Gary,

    I have been investing in PM miners since 2001, so believe me when I say that I do not doubt the gold/silver bull. I can’t imagine why anyone would right now, with gold bullion only about $50 off its highs.

    However, having recently read this article, I am starting to question the argument for owning PM stocks vs. bullion or GLD/SLV/CEF.

    http://www.bmgbullion.com/lib.pl?rm=show_document&record_id=721

    Of particular interest for me was the chart depicting the performance of Homestake Mining vs. Gold bullion.

    Now, admittedly, this guy is talking his book to a certain extent. But the charts don’t lie. Gold miners have underperformed gold throughout this bull market, even when you exclude the downdraft of 2008. For instance, Newmont Mining and Barrick underperformed gold throughout the 2001-2007 period. And don’t get me started on HL, CDE, etc.

    What is surprising to me is that there is precedent for this during the 1970’s gold bull as well. I had always assumed that the miners had provided leverage to gold during that period, but it seems that’s not true.

    The entire point of owning miners is leverage to gold, because you are assuming company risk, as well as political risk in some countries. Then there’s the relentless dilution these companies indulge in.

    If you are not being rewarded for that extra risk, then there is no reason to own them. My entire rationale for owning the miners was that they would achieve bubble valuations at the top — but what if they underperform gold as they did in the 1970’s, and as they have for the past ten years?

    This is a very serious concern for me, because I don’t want to underperform gold and silver during this bull market. Presumably neither do you.

    So my question for you is: is it different this time? And if so, why? I can hear you saying that the HUI/Gold and XAU/Gold ratios indicate that the miners are undervalued, but presumably that would have been the case in the 1970s as well.

    Again, I am not questioning the PM bull. I am questioning the case for owning miners over bullion.

  24. Gary

    The reason for owning miners is two fold and let me say that I have no desire to own the majors.

    First off pull up a long term chart of Gold:XAU. What you will see is that miners got irrationally mispriced during the crash. They have been slowly coning back ever since but they are still historically way too cheap compared to the price of gold.

    That is the current rational for owning miners instead of gold and if one had owned miners out of the Nov. 08 bottom they massivley outperformed bullion by a margin of almost 3 to 1.

    All that being said let me say again that I have no desire to own the majors. They are going to be depleting reserves as this bull progresses. What will they do to replace those reserves? They will be buying juniors.

    That’s where one wants to be as the second phase of the bull comes to an end and the bubble phase begins.

    On top of that remember silver is still more than 50% below all time highs that is the other area that has massive profit potential.

    My own personal portfolio consists of 50% in a shotgun basket of junior miners, 50% in the five largest silver miners and a 10% margined position in the ultra silver fund AGQ. I am looking to add another 10% as soon as I think the intermediate correction has run its course.

    Remember what happened as the tech bubble topped? Worthless little internet companies that never had any chance of ever making a dime were bid up to astronmic levels. We will see the same thing as the gold bubble matures. There will be little junior miners that will increase many thousands of percent simply because the words gold and miner are in their company name.

  25. Dave Narby

    Thank you Gary.

    I find it humorous that some commenters are stating India bought at all time highs, when TTBOMK they bought in at 1044…

    …Which is one of your major support levels.

    Great analysis. Thank you.

  26. Anonymous

    Gary,

    That’s been my rationale as well. My portfolio looks a lot like yours, in fact — GDXJ, SIL, SLW are my largest positions.

    But the counterargument is that while we are in a secular bull market in gold, we are in a secular bear market in stocks. And gold stocks aren’t gold, they’re stocks. They tend to do badly when the stock market does badly as in 2008.

    The one problem with your “tech bubble” analogy is that that bubble came at the top of a secular stock bull when all stocks became overvalued. In contrast, the gold bubble will top in part due to an aversion to, and exodus from, stocks.

    I could easily make the argument that because stock valuations are in a secular downtrend, the gold stocks will mirror that downtrend.

    At this point, unless gold and silver miners start outperforming and closing that valuation gap, I will probably start shifting into CEF.

  27. Gary

    You could make that rationalization but you would be wrong. Pull up your charts and see what happened to gold and miners during the 2000-2002 bear market.

    The only reason miners got hit so hard during the last bear market was because we had a once in a generational market crash. There was margin selling across the board in everything and that included miners.

    Don’t make the mistake of taking one little slice out of history and assuming that is the norm.

    Ultimately miners will follow gold just like energy stocks followed oil.

    I’m mean seriously give me any kind of sane rational for how the HUI can possibly remain at 450 if gold goes to $5000.

  28. Anonymous

    I don’t think that the HUI will remain at 450. But my thinking was that if gold went to $5000 – a %400 gain from here – then the HUI should go to 4000 or thereabouts (an %800 gain). But what if the HUI only goes to 1200?

    The miners have underperformed throughout the bull market. Who says that can’t continue?

  29. Gary

    You must have studied a different kind of math than I did πŸ™‚

    Gold has gone from $250 to $1265 a 400% increase.

    During that same time the HUI has gone from 35 to over 519. That’s almost 1500%.

  30. Anonymous

    Most of that gain took place in the first two years of the bull. From 2003 on the HUI has underperformed. The Thomas Tan article talks about this.

  31. Gary

    That’s why you don’t concentrate on the majors anymore you focus on juniors and silvers. It’s like getting in at the very beginning of the bull all over again.

  32. Anonymous

    Do you think that if we have an additional %400 ruse in gold, we will see a %1500 rise in the HUI?

    I kind of doubt it, personally. And believe me, I would love to show a %1500 gain in my portfolio.

  33. Gary

    Probably not for the reasons I already stated. Majors will be depleting reserves.

    But I do think if we see a 400% rise in gold we could see a 600-800% rise in the majors.

  34. Anonymous

    We will see, I guess. I hope you’re right.

    But that xau/gold ratio needs to start coming down soon. It’s been at 7ish for a very long time.

  35. Gary

    I think there will be plenty of juniors that will see 1500-10,000% gains during the rest of this bull though.

  36. Gary

    The HUI is just building a base to break through that huge resistance level above 500.

    Once that finally breaks I wouldn’t be surprised to see the HUI move up to 750 – 1000 in short order.

  37. Anonymous

    Ok, so if we see a %400 rise in gold, what should we see for the juniors, ie gdxj? Or the silver stocks?

  38. Anonymous

    Seems you answered my question before i asked it πŸ˜‰

    I would be curious as to what the precedent is on the performance of the juniors in the 1970s. I’m sure there were some highfliers but was there an index of juniors at the time, and how did they do as a group? And how about silver? Were silver stock investors rewarded as well or better than those who just bought bullion?

  39. Anonymous

    The ultra funds are problematic. They are not for long term investors. Over time they tend to wildly underperform their benchmarks.

    The people who run CEF have a silver closed end fund — I will probably shift into that at some point. This is much better tax-wise than SLV.

    Also, HL and CDE are companies to avoid like the plague. They dilute their shareholders relentlessly.

    SLW, PAAS and EXK are the only ownable companies, IMO. SIL is also interesting because it provides access to Fresnillo and Hochschild as well as some juniors.

  40. Gary

    Since it went public AGQ is up 128% as of friday.

    During the same period (1 1/2 years) silver is up 80% so yes AGQ does underperform a bit. I would only hold AGQ during a move out of an intermediate cycle low and would attempt to exit as close to the top of the cycle as possible.

    Which is why I’m buying it right now because we should be very close to an intermediate bottom.

  41. khalid

    @ Dave Narby:
    At the time, India bought at or around the all-time highs, a few months before out current ATH of 125x dollars/tr oz.
    Oh, and before you mention it, yes, I’m aware those are only the nominal highs, and that the gold’s yet to breach the real all time highs.

  42. Anonymous

    HUI 443.87
    This is well below the 450 G-mon said it never go below. When are you people going to realize that Gary has no crystal ball and he is just marketing a way for him to bleed your money from you on donations.
    C’mon people think for yourself. Lazy ass’s!

  43. Gary

    Yes it does appear the HUI is going to drop back below 450 but it’s still a bull market so once the intermediate correction is finished the HUI will come right back and eventually break through to all time highs. Those that just hold their positions will do just fine.

  44. Anonymous

    Jackass,
    I’ve made so much money following Gary’s advice over the last couple of years that I could make 100 donatations and it wouldn’t even make a dent.

  45. Anonymous

    Looks like the Troll infestation is already beginning. When we see this little moron madly posting end of the world for gold it will be time to buy.

  46. Anonymous

    Hope you guys sold some longs in the last few days. Alot of selling/margin call pressure will take gold to at least 1150 this week. Just keep holding those longs!

  47. Anonymous

    1182 in gold now. If we, I mean when we close below 1185 there will be massive selling taking gold much lower for some nice entry points.
    Wonder where loud-mouth is these days. All his huge gains are evaporating away. Just like those options. Decay decay decay. You were warned.

  48. Gary

    Old Turkey my friend, just in case the unexpected happens. It is a bull market after all and in bull markets the surprises come on the upside.

    This isn’t the time to sell it’s the time to accumulate.

    The time to sell will come sometime in Nov. or Dec.

    This is why emotional retail traders lose money. They sell into weakness and buy into strength.

  49. Anonymous

    FWIW, I read an article (I think it was Rob McEwen) that showed the PM’s basically flat while gold doubled at the end of 1979 and then AFTER gold topped and started to come down at the beginning of 1980 many PM’s (big ones) went up 500%-1000% over the next 9 months in 1980. Odd but the only explanation that made sense to me was that people didn’t believe the gold price was real and wouldn’t give the PM’s credit and then they decided to give them credit, ironically, once gold topped (of course they didn’t realize it topped at the time). I have no idea how this will play out this time around.

  50. Anonymous

    Why did Bill Gates dump his PAAS and why is Buffett no longer in silver? Do they know something we fools don’t?

  51. Anonymous

    Thanks to Gary, I’m still up 16.8%, and looking to add more gold into this pullback, some today and some tomorrow.

    I might even buy silver and some miners, then back to the lake!

  52. Anonymous

    yep troll infestation is beginning. Just waiting for these wrong way traders to get really intense then it will be time to load up the truck.

  53. Gary

    Anon,
    Be patient, the bottom is still probably at least a week away maybe a little more.

    I think gold has to retrace at least 50%. Almost all intermediate cycle correction do give back at least that much.

  54. Anonymous

    I will be patient for my larger orders are at $1150 and $1080, but as far as nibbling, I really enjoy buying into pukes.

    I haven’t done anything today, but will certainly buy a dips tomorrow at the latest if this action continues. Not concerned about a short term return to strength, as these declines can take some time to work out before any serious upside.

    Strong hand status makes trading much easier. πŸ™‚

  55. Anonymous

    And although I don’t love drawdowns, I actually prefer gold has a moderate down week this week and closes there.

    When I try to perfect entries, I don’t get the trade size I should have.

  56. Anonymous

    Since this is an investor blog, so speaking to investors.

    What are you planning on accumulating? I am liking silver and SLW. Gary mentioned AGQ. Anything else in terms of getting a good bang for our buck even if you don’t time your entry at the perfect point for accumulation purposes?

    Phil (as in phil r up)

  57. Anonymous

    I will be adding to DGP and SGOL, my only 2 big positions.

    Also adding to silver (physical).

    For stocks, I’ll buy smaller size positions in NG, SVM, GDXJ, and SIL.

    I know miners will outperform the metal, but don’t like huge % drawdowns, even if I sacrifice some of the potential upside, so that’s my strategy.

  58. Anonymous

    I’ll be waiting for the weak longs to puke it up and then nibble on covering shorts and then the long side. Never try to catch a falling knife.

  59. Anonymous

    Sorry, the buy and hold cause the bull will correct any timing mistakes just doesn’t work on the garbage silver stocks you like to recommend Gary. The POG? Yes, but the silvers could really hurt newbies. My positions in SSRI entered back in Jan?

    -29.12%

  60. Gary

    Patience my friend when silver begins to move, and it will, silver stocks can regain all that in less than a week.

    The all time high for SSRI is over $47. Before this is over it will be way above that price.

  61. Jayhawk91

    FYI, I’m trying out the Aden Sisters (did that come out the right way?) for the next three months. They say a close under 1180 and the C is over and D is upon us. Right there today.

  62. Gary

    Jay,
    They made a premature call in Jan. also. I think you will be better off just following the intermediate cycle.

    A D-wave needs at least 5-6 weeks to unfold and usually retraces 38 to 50% of the entire C-wave. We are so late in the intermediate cycle that there probably isn’t time for a D-wave not to mention gold is about to move into the most bullish season.

  63. Anonymous

    G-man you need to just relax a little bit here. You are sounding very desperate here. You missed an easy sell at 1250 area. It is still not too late to lighten up on the longs.
    Aden sista’s are very good and widely followed.
    Patiently waiting for the puke to cover shorts.

  64. Gary

    My friend I learned this the hard way over many years.

    I never, never, never short a bull market.

    In bull markets you buy dips. That’s what I’m doing. I have my core position and now I’m in the process of adding some margin to it as gold moves into the intermediate cycle low.

    I got half last week at what I’m guessing will be about the half way point down. I will get the other half as close to the bottom as I can.

    Only retail traders sell into weakness. Smart money sells into strength. I prefer to behave like the smart money so I can actually make money in the markets. So I would have to be nuts to sell this late in an intermediate cycle.

    I don’t think I’m nuts…well at least I hope I’m not, although I suspect some would look at my climbing pictures and disagree πŸ™‚

  65. Anonymous

    Hey dumb ass explain to me how selling into a breakout was an easy sell signal.

    Sheesh do these morons really expect anyone to buy into their after the fact BS!

  66. Anonymous

    Test of the 200dema for GDX this morning. The reaction might shed some light on how willing it is to keep falling. Not much volume considering the price move (i.e., not capitulation). Looks more like a buyers’ strike.

  67. Gary

    We should have at least a week to go maybe two so no need to jump in with both feet yet.

    I suspect by the end of the week sentiment will be back at February levels.

  68. Gary

    I haven’t looked at history to see if or how many times it’s happened before. I guess it’s possible stocks could dip again. Gold obviously hasn’t completed it’s intermediate cycle yet. So perhaps the stock market will follow gold down one more time.

    Now you see why I have no desire to trade stocks. his market seems determined to eat both bulls and bears alike.

  69. Anonymous

    Gary, gold price is down only 10% from its peak. But look at the miners, they all down 20 or 30%. Too many hedge funds are chasing them and liquiditing them. It seems like everyone is buying miners except retail investors.

  70. Gary

    The HUI is only down 14%. That’s not even as much as the stock market yet.

    During intermediate cycle corrections miners can fall 20 -25%. So nothing out of the ordinary is happening that I can see.

    On the plus side we are starting to generate some real doubts now. That has to happen before an intermediate bottom can form. Another week or two and the bul will have kicked of just about all riders. Then we should be ready for the next leg up.

  71. Onlooker

    As to the question about a conservative way to “short” rising interest rates, one way is to lock in a low rate mortgage. Even re-mortgaging the house if it’s paid off. As long as you don’t just go blow the money on consumption it’s not a dangerous move. Of course this will depend upon your fiscal discipline.

    If rates do go up and inflation sets in, you’re able to put that money to work at higher rates while getting the benefit of your payment becoming smaller in real terms. I’m doing this myself.

    Again, it’s a low cost bit of insurance against inflation. Especially if you plan to stay in the house for a long time.

    Of course if we get a sustained deflationary period it’ll work against you, but not too badly unless you’re very highly overleveraged overall. And as long as you don’t blow the money somewhere else you only get hurt on the interest rate arbitrage.

  72. Gary

    I don’t see any special news. Just more sellers than buyers.

    Just par for the course. This is a volatile sector after all.

  73. Gary

    I wouldn’t buy banks but I can easily tell you why to buy metals.

    Secular bull market.

    But wait a few more days before you start.

  74. Anonymous

    Come on troll babies we needd to get the troll meter up to 100 so I can back up the truck.

  75. Gary

    The problem only comes if you then sell for a loss before the bull can rescue your position.

    Are you selling for losses?

    If so maybe you would be better off buying physical.

  76. Anonymous

    GLD leading the BoW table, for what it’s worth (judging by the lack of response from GDX, not much thus far).

  77. Daniel

    Anon said–

    GLD leading the BoW table, for what it’s worth (judging by the lack of response from GDX, not much thus far).

    Thanks Anon–
    GARY- What say you?

  78. Gary

    The only thing I’ve found ot be of any significance is the SPYDER’s. Professionals measure themselves against the S&P.

    Everything else is just noise.

  79. Gary

    Pay attention to what I said in the post folks. The cycle isn’t due to bottom for at least a week maybe two so there’s is nothing that needs to be done this week.

  80. Anonymous

    “Come on troll babies we needd to get the troll meter up to 100 so I can back up the truck.”

    Where are we at anyways? lol

  81. Anonymous

    Can a true bottom be in without trolls arriving to announce a selloff after the selloff is underway? Hard to imagine.

    Nice rounded move off the 200dema for GDX, but not exactly the stuff of emphatic bottoms, esp. with SPX putting in such a strong show if it.

  82. Anonymous

    Gary,

    I don’t know if it was always there or not, but I just noticed your troll meter on the home page. LMAO! Great Stuff!! HA!

  83. Anonymous

    Sounds like a quality vs quantity metric.

    How about this where each portion repersents 25% of.
    Troll meter%=
    .25*(%of blog that are trolls/50%)+
    .25*(number of severe threats/3)+
    .25*(rating on 10 to the agression of the trolls/10) +
    .25*(% of trolls that are complete loons and aren’t making any sense)

    Too much time on my hands.

    Son of Old Turkey

  84. Anonymous

    Tim Knight proclaims “Nothing Could Be Finer than to Short All The Miners.”

    So there’s one pre-condition for a rally in place.

  85. Daniel

    Gary–
    It sure seems that the miners seem to underperform lately when the market ralies and underperform worse when PM’s flat to up and market gets slaughtered– (Last Friday)
    I assume these are all symptoms indicative of finding that intermediate term bottom.

  86. Anonymous

    I’m buying. Covered my shorts this afternoon and went long. This is going to the moon.

  87. Anonymous

    Stox dropping hard after IBM #’s.
    You longs better sell now. Much lower equities coming forth.
    The market is going to take all your paper profits.

  88. Anonymous

    I miss Dollar Guy and the other contrarians who did a little more than just squawk like Chicken Littles. The conversation could use more than the garden variety Yahoo message board poster to make the bear case. Too much to ask?

    We’re at a decent risk/reward point for dollar bulls, imo, at least for a trade. The action off the 200dema for $USD will be just as interesting as that for GDX, if not more so.

  89. Daniel

    Dennis Gartman seen on CNBC a few minutes ago stating he was wrong about being Bullish on Gold last week and Deflation is the current worry? Why is everyone so upside down on this Deflation /Inflation issue. Bernanke and the Feds will NEVER — NEVER let deflation take hold. NEVER

  90. Gary

    Like I said other than housing which is suffering a severe oversupply problem there isn’t anything one can point to that is collapsing in price.

    If the price of EVERYTHING starts to crumble then we will have deflation.

    That started to happen in 08 and early 09 but Ben stopped it dead in its tracks with his printing press.

  91. Anonymous

    Dennis Gartman is a mellonhead. Are you sure he wasn’t bullish “of gold”, vs. “on gold”.

    Don’t worry Daniel, gold will make you rich, but it isn’t easy unless you just leave the trade on and walk away. When we watch, the temptation to avoid every little jiggle is great. Gold may go lower, but it doesn’t mean exiting and re-entering are the best move. You need a cushion to get strong hand status, and the only way to get a cushion is to sit tight, through draw downs and rips higher.

    Crazy trolls are just performing mental masturbation. Of course they’ll get a call right here and there, but they don’t make money over time. Let them chirp away, it’s got nothing to do with me.

  92. Anonymous

    And gold was still the best place to be, as it declined less than everything else. Those that think the dollar will be a safe haven this round could be mistaken. I won’t be surprised if gold becomes the currency of choice in the next collapse, if it even occurs.

    Either way, inflation or deflation, gold is the place to be this time around.

  93. Anonymous

    What if “Carpe Aurum” becomes the rallying cry of the Obama administration? I’m sure they’ll buy it back from current owners for a fair price.

  94. Gary

    I just don’t understand this irrational fear by gold bugs that the government will seize gold. For what earthly purpose would the government want to take everyones wedding rings… and gold coins?

    In the 30’s there was a very clear reason behind the governments seizure of gold. The dollar was still anchored to it. In order to debase the currency the government had to rasie the price of gold.

    They obviously didn’t want to raise it and then have to buy it at higher prices. That wouldn’t serve their purpose. They needed to collect the gold and then raise the price so the government would get first use of the debased currency.

    Inflation only works if the government gets first use of the money.

    Since the dollar no longer has any ties to gold there just is no reason for the government to risk public outcry by trying to take everyone’s gold.

  95. LowTax

    Gary, it’s an irrational fear. They can’t help it. Dark conspiracies swirl in the minds of gold-bugs worlwide – it’s a character flaw they all share.

    Personally, I’m more worried about the political to-and-fro of the government. The Fed, regardless of what is said, is not independant. They can be (and have been) pressured by politicians and I could easily see then tightening or refusing to loosen policy for a long enough time that stocks and miners get really hurt.

    Granted, we know the rules of the game and nasty drawdowns are one of those rules. But they’re nasty just the same.

  96. Anonymous

    If the dollar no longer had any ties to gold, then there would be no reason for the United States to have gold reserves. Incidentally, the USA has the largest gold reserves in the world.

    The tie is implicit…in order for our system to function, the dollar has to be worth something. In a crisis, it will be implied that dollars are backed by USA gold reserves.

  97. Anonymous

    I am getting the itch to start to accumulate more shares. The itch is driving me nuts. But the odds are still lower, and my core is still invested.

  98. Anonymous

    Do you know what implicit means? How about the idea that perception is reality?

    While other central banks were auctioning off their gold 10 years ago, the USA did not sell a single ounce. Perhaps you can explain why that is, Mr. Financial History Expert. (FYI, FDR took office AFTER the stock market collapse was complete. Make a note.)

  99. Anonymous

    Because the criminals in control of this country were busy holing out the bars and filling them with tungsten?

  100. Anonymous

    To be fair, since the FDR days, even if the US didn’t sell any gold, they sure have printed a lot of paper! πŸ™‚

  101. Anonymous

    This is a new one. Most goldbugs believe the Fed loaned the gold out to the banks, which sold them to manipulate the gold market down. Moving onto the COMEX plague. I didn’t know the US somehow got it back. Someone please explain. :O

  102. LowTax

    Sorry buddy but it’s still a sweaty gold-bug dream. The amount of gold in Fort Knox isn’t even enough to paint all the paper money we have in gold. The amount of paper money we’ve printed since ’73 has gone exponential while the gold has just sat there gathering dust. It is so tiny in quantity relative to what it is “implicitly” backing that it is virtually non-existant. Now that doesn’t mean it’s not an asset – it is, and a very good one. Since the USG no longer needs it for currency backing, there’s also no reason to sell it is there? πŸ™‚

    As to your “crisis”, we’ve already had several wars, an arms race and a complete global financial collapse and that gold didn’t mean a damn thing. Only the Fed’s digital printing press made any difference. What “crisis” did you have in mind? The end of the world?

  103. Anonymous

    Only a fool would not look to be a buyer of fold as it declines. Keep heaping on those shorts!
    Even gold bears don’t believe gold is in a bear market, only that it’s gonna take a hit. That’s what makes bull markets.

    Tell me how comfortable a gold bear will be, IF we ever get to $1050/oz.?

    Gold bears will be butchered. Too many buyers for too many reasons.

  104. Anonymous

    PM bears will be crushed once the monster deflation they predict only drags down paper and a few other commods, and the rush to PMs resumes.

    To think ’08 will play out exactly the same again is a mistake.

  105. Anonymous

    fat climber
    anonymous 7.43 am
    My positions in SSRI entered back in Jan?
    -29.12%
    mine -32.15 i guess we could sell now and lose like the bears want- NOT!

  106. Shrek

    Nope on the troll meter. Us trolls haven’t even begun to fight yet! Still need the drunk’n rants to begin and the swearing to begin. We only have polite trolls right now.

  107. Anonymous

    Maund encouraged people to go “all-in” on PM miners in summer of 2008, because they were cheap on a valuation basis. Then they crashed 50-90%. I’m sure that was traumatic for him. Ever since he’s been in crash mode. That doesn’t mean he’s wrong, but there is a definite psychological bias.

  108. Justin

    Not sure where you inflationists live but almost everything I buy is down in price over the last 2 years. I can bargain for almost anything, I got an awesome deal on a golf vacation I just took on both the hotel price and the greens fees. In fact I’ve been paying less on green fees all summer due to how badly the golf industry is doing. I just bought some golf balls and gloves from Dicks last weekend at prices I was laughing at.

    This environment is so anti-inflationary it’s not even funny. Probably why the bond market isn’t hinting at a whiff of inflation, but inflationists are simply ignoring that right now because it doesn’t jive with their theory.

    The only thing that might be up over the last couple of years are insurance rates and taxes, and that’s only because the medical industry is so screwed up, and so is our government. Everything else is still down in price and likely going lower as all the debtors hock their goods to pay off debt.

  109. Gary

    I’m certainly not seeing anything like that in Vegas, although I will admit I don’t play golf.

    My food bill is still the same as it was two years ago. Of course health care and education are still rising. The price of my favorite meal at my favorite restaurant is about 20% more expensive now than it was two or three years ago and of course the biggy gasoline is still flirting with $3 a gallon.

    More than anything, especially in a high unemployment, low demand environment, if there was real deflation (shrinking money supply) then the price of energy, specifically gasoline should be collapsing.

    That is exactly what happened in `08 when we did have a true deflationary event.

    Here in Vegas gas went from over $4.00 to $1.60.

    If we have another deflationary event we will see the same thing happen again. Until it does the only way I can explain $3.00 gasoline at the same time as 15% unemployment with supply coming out our ears is inflationary forces are propping up price.

  110. Gary

    I tell you what I have noticed is that quite a few items in the store haven’t really gone up in price but the size of the package has shrunk.

    I used to buy a half gallon of ice cream for $3-$4 now they come in 1.5 quart containers for the same price. In my book that’s inflation.

  111. Justin

    What about the fact that the amount of cars being driven on this planet are an order of magnitude more now in the past 10 years than they were the previous 10 years? I think commodities have weathered this sour economy at higher prices than they typically would because of increased demand from Asia. But that demand could also shrink as Asia enters an economic downturn.

    Like I said before if inflation was a problem the bond market would sniff it out. But you have to wait until that uptrend is over, trying to get ahead of it is potentially hazardous to your financial health.

  112. Gary

    Let me ask you this. Did the bond market smell out the severe inflationary forces from 03 to July 08? No it did not.

    The reality is that markets, especially markets as large as the bond market, don’t turn on a dime. They are like a giant ocean liner. They take a long time to reverse course.

    I think they are now in the process of ending a 30 year bull market but they aren’t going to just all of a sudden price in what’s coming 20 years from now.

    One could buy a 30 year bond with a yield under 4% right now but in 30 years you will have lost a ton of money because you would have bought at the top of a very long bull market.

    Retail traders made the same mistake in tech stocks in 2000 and in real estate in 05.

    Now they are going to make it again thinking they will protect their wealth by investing in “safe” bond funds.

    The truth is there are no “safe” investments.

    In order to make money one has to buy at the beginning of secular trends when it is toughest to buy and sell at the end of secular trends when it’s toughest to sell.

    Now after 30 years of a bull market and with rates under two percent you tell me are we closer to a top or a bottom in bonds?

  113. Gary

    Now there are certainly more cars in the world but that doesn’t change the fact that we have too much supply and too little demand. That combination by all rights should be bringing price down. The fact that it isn’t coming down tells you something.

    It’s saying there are too many dollar bills out there chasing too little oil and gasoline.

  114. Keys

    Justin I respected your comments until you mentioned green fees going down. That has to be the dumbest mention of anything. When people lose their jobs the demand for discretionary items fall. Money printing inflation does not act the same way as growth inflation. People still need to eat and work (if they can). You obviously have had privileges in life, and have not noticed price change merely due to the insignificance it has had on your life. Milk goes from $4 a unit to $4.50. To people as yourself, this is not material. To a family of 4 with kids and are fighting unemployment that extra amount is alot. This is due to the fact that extra 0.50 is not just in milk, but in everything they need.

    I will only say this once, because I hate my addictive time on this freaking computer. Deflation and inflation are relative terms. If prices go up or down by 10% but your wage does the same, there is no inflation or deflation on a relative basis. The same as a stock split.

    That being said, people are vastly unemployed, prices should be coming down. To those that hold jobs things should be cheaper (even if their wages are cut), and those that lose jobs it should become more expensive. In aggregate nothing changes assuming the money supply stays the same.

    Now what do we have, unemployment close to 20%, and prices haven’t fallen at all. Prices should fall in such an environment, this is inflationary.

    I won’t debate this, since it is so bloody retarded. I mean anybody on a budget is feeling the pinch. People laughing about green fees, screw off. You obviously have zero understanding of life, except for the fact that you have alot of money and from that have zero sensitivity to price changes.

    Having lots of money is not an issue!, but having no clue is!

  115. Justin

    The bond market sniffed out the fact that the 03-08 inflation trade was simply a bubble that ended up popping. Oil and the housing market morphed into huge unsustainable bubbles and the bond market kept plugging along with lower and lower rates and the inflationists couldn’t figure it out. The reason they couldn’t figure it out is ultimately they were wrong, and since they couldn’t see the other side of their bubbles they lost money.

    Now that doesn’t mean we won’t have inflation in the future, but for sustained inflation, and not speculative bubble formation, the bond market will trend lower and rates will trend higher. My own personal opinion is we have another deflationary collapse around the corner, and the result of that will be higher inflation but not until later.

    Of course the bond market is closer to being done with it’s bull market than starting it. But given the choice of making 10-20% vs. losing 40% or more in the next deflationary wave I’ll choose to make a little money. Coincidentally that’s why I’m short and long the dollar.

  116. Justin

    Keys,

    Is it a bad thing that I’ve saved all my life, been prudent with my money, never taken on a lot of debt, driven cars until they die, studied hard and got a good job?

    Sorry if you’re having a hard time with your finances, but there’s nothing wrong with taking advantage of a bargain if you’ve got the cash. Heck I’m helping these golf courses stay in business, they sure don’t mind me showing up and playing.

    Unfortunately most people suffer during an economic downturn, that’s just the way it is.

  117. Frank

    Even the housing market is quite strong in certain pockets where the is strong “real” demand. In the more desirable areas of the DC metro area they are asking 20-30% above the current 2010 assessments, which typically reflect last years market price. That was the norm in 2005 when the market was running away.

    And this is enabled by QE, idiotic FHA government sponsored subprime and 720k “conforming” mortgages in this region. It starts to get trickier as you approach and exceed $1 million because people need to actually put significant cash on the table.

    The deflation scare is classic. The power elite has been playing this game successfully in the 2000s. The master manipulator is of course BB with his legendary helicopter speech, which was the peak of the 2002 deflation scare. It’s sad how unenlightened these people are and how this nonsense can be passed off so easily.

  118. Anonymous

    I saw this posted on ZeroHedge and immediately recognized that it came from SMT. However, they cited that it was submitted by Toby Connor from http://www.goldscents.blogspot.com/ which apparently is the exact same blog as SMT in terms of content. It’s all the exact same posts. It even has the same disclaimer on the side but has “Gold Scents” where “SMT” or “Smart Money Tracker” would be. I’m somewhat confused. What’s going on here?

    link to ZH post:
    http://www.zerohedge.com/article/guest-post-carpe-aurum-seize-gold

    link to Gold Scents copy of “Carpe Aurum”:
    http://goldscents.blogspot.com/2010/07/whats-happening-ii.html

  119. Anonymous

    Keys,

    Actually, having prices and wages go up 10% at the same time is a pretty standard inflationary scenario, the dreaded wage-price spiral in which expectations of future price increases drive wage demands.

    One of the better arguments in favor of deflation, or at least lack of inflation, is the apparent lack of wage inflation (though it sounds like Wall Street is managing okay, bless it). Hardly a surprise, given the unemployment picture.

  120. Gary

    The GS site is a partnership between my editor and me. Any marketing he does directs traffic to the GS site so we can track it. That way I have some way to calculate his commissions.

  121. Anonymous

    The market makes a fool out of everyone. When a sector rallies to no end, some pundit will come out and say it is about to end…only to get squeezed to death. And when he says there’s plenty more to go on the rally, the rally stops entirely and smacks him with huge losses.

  122. Keys

    Justin,

    I didn’t say I was suffering. I am doing very well. It’s that I can obviously see your perception of deflation is solely based upon your personal life, and nothing else. Obviously the rich get richer during bad times. My point is that you have no freaking clue about what inflation or deflation is, and your countless posts are based upon personal experiences and nothing that will add to investment advice, since your illusion of deflation is only for those with money, in aggregate inflation is already alive. Being rich is not a problem, stupid rich is! I am getting the feeling that all deflationists are rich dumb-asses…It’s getting to the point of being unbelievable at this point. Like food hasn’t gone up, and education, and health care, and driving a car, and heating your house, and what the f*ck am I wasting my time with obvious knobs for?

    This is stupid. I have had enough. I am going back to my deflationary world, where in 5 years I will be a relative billionaire…I am so done!

  123. Justin

    Keys,

    Heating your house is cheap as hell now in my area, due to very low nat gas prices. Education costs are high because colleges are screwing everybody. Ditto with health care. Ditto with insurance. Ditto with taxes. Food costs are still not bad, especially compared to how big of a percentage of income they were historically. Read some history and find out that in the past people had to pay a much larger portion of their income to eat than they do know. Maybe that changes in the future but right now it’s relatively cheap.

    House prices are obviously cheap again, and gas is still higher than it was in the 90s but lower than it was post the oil bubble.

    Does that about cover it? Why don’t you go study a chart of the long bond and figure out that one of the biggest markets in the world could give too hoots about all the inflation scare mongering you inflationists are flooding the Internet with.

  124. Keys

    Why am I still here? Again addiction to this freaking computer?

    Look prices have gone up. Which point in oil would you like to choose? In 2003 when oil was at 35 or in 2008 when it was at 145. I am not talking data points. We are at double for 2003

    Macro inflation is flying nicely up. I am bewildered to why I am in this debate! Like prices haven’t gone up! I shake my head at times. So the average family is not paying more! Yup got me there. The average family is swimming in money and going to Disney every year with tons of money to save. I mean what the heck are you talking about. I don’t give a sh’t about data points, all that matters is what comes out of your pocket. And if more comes out on a relative basis you have inflation.

    So if Joe average was breaking even last year, and this year he is in debt, that means inflation. If he has more money then deflation.

    Joe Average has lost his job and can’t afford to pay his mortgage either.

    Enjoy the green fees Justin, you obviously come here only for the debate.

    Why the hell do I keep posting to this dumb stuff? Look if one is convinced of deflation by all means, please continue. I can’t handle that amount of stupidity anymore. Justin, all the best brother, I am done with this nonsense!

  125. Justin

    Gary,

    Is your message board chalk full of inflationists or are their any unbiased people out there who can take a look at a few charts and see there’s case to be made for deflation. I guess the Ben Bernanke story and the threat of QE is just too appealing for some reason, maybe he and Steve Jobs are building a Death Star too and forming an Empire.

  126. Anonymous

    The fact is nobody really knows whether we’re in deflation or inflation or stagflation, until many years later after the fact.

  127. Anonymous

    Whatever we’re in, gold just made news highs, and that’s a fact, so who cares inflation, deflation, or stagflation? Do you want to be right, or make money?

  128. Anonymous

    All you gold loving suckaz is about to get smashed again. All aboard, the pain train is just leaving the station.

  129. Gary

    Justin,
    I think you are trying to find deflation based on a bond chart. The rest of us are just telling you that in real life we are finding prices either rising or at best stagnate.

    I’ve kept a record of all my expenses for years. Just as an exapmple my food bill is almost 20% higher than it was in 06 -07.

    Obviously energy expenses are only slightly lower than they were in mid 08 and much higher than they were a year ago.

    I don’t see where clothes are any differently priced than before so no deflation in that area that I can see.

    My health insurance has gone from about $200 per month to almost $400.

    A visit to the chiropractor has gone from 30-35 dollars several years ago to 60-70 now.

    If we were seeing deflation we should be seeing prices collapsing. We did see exactly that happen in 08. That was true deflation.

    In a deflation the money supply shrinks so “all” prices will come down.

    When we see the price of everything start to tank then I will buy into the deflation scenario. But until that happens the action in the bond market is just a sign of bubble mentality and investors fleeing to a sector where they mistakenly think they will be protected.

  130. Anonymous

    Frank

    Are you totally clueless!!!!!!
    The only up market for housing is the DC area because all this insanely stupid spending for more gov’t jobs. This is going to end very badly.
    The executive branch has absolutely no f’in clue as to what to do. Just spend spend spend.
    Stupid Amerikanz!

  131. Anonymous

    Hey moron catch a clue. Right there in the post Gary says gold has another week or two of declining price.

    Sheesh you must have an IQ of 160 to figure that out.

  132. Anonymous

    Moron??
    Then WTF are you?
    You stupid ass for holding gold $80 from the high and thinking of buying more.
    I just sit here and laugh. You must be feeling kinda stupid losing all those gains and you probably bought more on the way down.
    You my frien are definatley feeling the pain.
    I will be there when you puke to pick off the easy fruit.
    Ohhhh! Gary this and Gary that. Gary is so yesterday. Always trying to predict but always looking in the rear view mirror.
    Suggestion…..THINK for yourself douchebag!

  133. Anonymous

    Hey moron you said the same thing in February πŸ™‚

    Gary has made me a ton of money over the last few years. If I listened to idiots like you I wouldn’t have made a dime.

  134. Anonymous

    Anonymous posters calling each other names. I love the smell of YahooFinance message boards in the morning.

  135. Anonymous

    AHHH.
    The old troll meter. Its pretty sad when you have to go back to elementary school to get investment advice.
    And you fools pay for this crap!
    Douche, you should go back and look at your posts. They are all over the place. You are so funny!

  136. Anonymous

    LOL classic troll response. G are you sure you shouldn’t move the troll meter up to 75%?

  137. Anonymous

    You would think these little troll babies would have learned their lesson in February but I guess some people are just destined to make the same mistakes over and over.

  138. Frank

    Re housing the reason I brought it up is that is one of the weakest segments of the economy and an area where Gary pointed to weakness in pricing power. But CPI does not even measure house prices; it’s rents and Owner-Equivalent-Rent, which allowed the govt to report 2% CPI inflation when house prices were going up 20-30% p.a. in some markets in 2004-5-6.

    To some extent the QE and other machinations has been successful in supporting the housing market. DC was not the strongest market in the latest Case-Shiller: San Diego and SF showed more than double-digit growth yoy. DC and LA remain the most inflated relative to where the market was in 2000.

    As long as the bond bubble continues, Fannie and Freddie see their endless bailout continue then they will be able to support this. But I believe it is possible to have another leg down in housing despite or at least protracted flatlining of the market.

    But the success of governments in maintaining ultra-low bond rates while racking up ridiculous amounts of debt is a phenomenon that has to be considered. It should and has to break down, but when I don’t know.

    I was looking at prime residential real estate in Tokyo. It’s still damn expensive by global standards despite a 18 year bear market. Roughly Manhattan type prices but for an area that is much larger. It’s supported by ~1.5% mortgage rates but these loans are difficult to obtain and they are variable rates, so you can imagine the long term risk you are taking if Japanese bondholders (all domestic) start demanding some yield on their long term bonds.

    In many ways Japan is the model for what will happen if the US and ECB are unsuccessful in their QE and other money printing efforts. Like I have said many times, Japan never had monetary deflation but M2 shows that the money supply has been kept at roughly a Friedmanite level (+2%) since 1992. The Japanese model has been to large deficits funded by lending domestically without reckless money printing. Ben will print money recklessly if necessary and nobody cares here because savers are a vast minority.

  139. Anonymous

    Good morning all,

    I don’t want the troll-meter to back down at all just because I’m licking my chops to buy more gold. Hoping today gives a quick early morning spike lower so I can LOAD UP!

    Like Joe up above, you can here my truck backing up….beep….beep…beep.

  140. Anonymous

    Oh yeah, thanks to the G-man, I’m still up 16.9% before the open, and after this supposed “rout” these troll-clowns keep yapping about!

  141. Anonymous

    Gary said…
    Hey the troll babies are starting to get nasty. What do you think G time to raise the troll meter?

    Why are you talking to yourself? Were you trying to get an anon response instead? How many personalities do you have on this blog anyways?

  142. Anonymous

    Interesting pre-market action in gold. A dip down to 1175 followed by a quick rally to 1185. GLD still being held in check by support-turned-resistance at 116.

    Now back to our regularly scheduled name-calling.

  143. Gary

    We did have a Bollinger band crash trade yesterday so we should see a bounce. It’s probably still too early for a final intermediate bottom just yet though.

    I would guess next week and a move down to at least $1155.

  144. Anonymous

    “Now back to our regularly scheduled name-calling.”-anon

    LOL…This site is awesome!

  145. Anonymous

    It sounds like troll boy is upset he has missed the entire bull market in gold, and is now paralyzed by fear so has a deep need to fight.

  146. Gary

    The same thing happened back in February.

    The troll meter was only half joke. I do actually expect to see a bottom right about the same time troll infestation becomes overwelming.

    So even though it isn’t the most scientific sentiment gauge I suspect it is going to spot the bottom pretty close.

  147. Shrek

    Still not good enough. We trolls are still not angry enough. Douch bag is over-used, let’s try another word. Be creative!

  148. Anonymous

    BB crash yesterday? I don’t see that for GLD/$GOLD on the 20,2. Do you mean for $HUI ? Don’t really see it there, either.

  149. Gary

    I would like to see silver put in one of those big down days on heavy volume that breaks through a resistance level.

    That always gets the technicians to freak out and we get a big dump. Of course as we’ve seen many times over the years and that I have repeatedly warned against, silver is simply too thin to obey any logical technical patterns.

    You just can’t trade silver on technical signals.

    Just look at what happened in Feb. that technical break blew synapses in technicians everywhere but it really meant nothing as silver came roaring right back.

    The same thing happened in mid 07. Technicians got taken to the cleaners if they tried to short into the technical break.

  150. pimaCanyon

    The troll meter is a great addition to your site, Gary! Funny, but I suspect it will turn out to be useful tool for indicating a turn.

    Carl Futia has also noticed that when comments on his site get nastier and more abusive than normal, it’s often indicative of a bottom.

  151. Anonymous

    This reversal doesn’t bode well for the rampant bears. A positive close would put a serious dent in the bear argument.

  152. Anonymous

    TZA – 39.9
    higher lows and higher highs since the end of May says it all. If it only climbs to 50% of where it was in 09 thats TZA = 250. Any comment on that Gary, you used to hold it….

  153. Anonymous

    Impossible for TZA to go to 250, from 40.

    If the russell drops 100%, the TZA would only reach $160.

  154. thedocument

    I would note for all those who are already nervous about their PM positions that gold (and especially silver) tend to conclude these summer doldrums sometime between July and September with a nasty shake-out day. Go look at August 16, 2007 as a prime example.

    Since gold is now due for an intermediate cycle low, such a blow-out day would have a very high probability of marking the bottom. It is an event to be bought, and one should be mentally prepared so as not to lose one’s positions or, even better, to scoop up assets with both hands.

  155. Gary

    Well of course TZA has higher highs and higher lows, the market has been in a correction since Apr.

    The problem is that we are in the timing band for a major intermediate degree bottom. If so then we will probably see that trend busted and a new trend of lower highs and lower lows develop in TZA.

    We are either way too late in the intermediate cycle or way too early (if July 1st did mark the bottom) to mess with TZA at this point.

    This is exactly why I do pay attention to cycles it gives you a tool to resist emotional decisions.

    Emotional bears are now all caught up in the correction and have convinced themselves they are going to get rich on the downside and that the market is going straight down from here.

    If you can take your emotions out of the equation you will understand that it’s just too late to press the short side right now.

  156. Anonymous

    Anybody else hear that?

    It’s troll silence and it usually happens during a market reversal. LOL

  157. Anonymous

    Can’t wait for the big drop.
    Beep beep beep…..
    Gonna load this bad boy to max load with margin….

  158. Anonymous

    Oops, posted this on the last message by Gary earlier!

    FWIW, we bounced on the pitchfork line this morning from the weekly chart (for those interested in pitchfork analysis). IF we hold then we MAY have put in a low and could be looking at a retest of the old highs. Early still but encouraging.

  159. Gary

    I think everyone knows by now that Gary and Toby are the same person.

    It’s not really a donation BTW. It’s a fee paid for a service.

    I stated my goals in wrting the newsletter (June 28th report) pretty clearly.

    My main goal is keep investors, notice the word “investors”, focused on the big picture gold bull.

    Secondary is to help traders trade the stock market as best I can. To do that I monitor sentiment, cycles, money flows and any specific trade setups that might come along and have in the past presented low risk opportunities.

    I’ve also warned repeatedly that one would be much better off not trying to trade the markets. For one they are going to be very volatile no matter whether we are still in a cyclical bull or back in the secular bear. Those kind of conditions are going to be very tough to make money in and the vast majority of traders will not have the risk management skills or discipline to be successful in those conditions even if I where to get every call correct (which I won’t).

    Personally I think my subscription fees are very reasonable and much chaeaper then most other newsletters, easily affordable by almost anyone who needs a “coach” to keep them focused.

    So what is there about that you object to?

  160. Anonymous

    I’m not necessarily a bear (not at the moment, anyway), but let’s keep a little perspective here.

    PMs picked a reasonable spot to bounce, but it remains to be seen how much of it will stick now that GDX has filled an overhead gap (Gary seems to think none of it will before further downside).

    SPX still negative. Not a clear win for either side, imo.

  161. Daniel

    Allright all my Non Troll Friends;
    I would like to develop a list of some of your favorite Juniors out there (actually exploratory companies) that I can purchase when this Intermediate Term cycle bottoms. Any and all!
    Thanks.

  162. Gary

    My advice is to just take a shotgun approach to it with companies that have shown signs of heavy volume accumulation on the weekly charts.

    I think it’s virtually impposible to fundamentally analysze these things and even if you do find one with solid fundamentals that’s no guarantee the market will decide to reward the stock.

  163. Daniel

    Gary-
    My advice is to just take a shotgun approach to it with companies that have shown signs of heavy volume accumulation on the weekly charts.

    Will you provide these names when the time is right?

  164. Gary

    Daniel,
    Don’t make the mistake of thinking I will be able to guess the next big junior winner any better than anyone else.

    Just pull up weekly charts for as many juniors as you can and go through it looking for ones showing relative strength and heavy volume accumulation over the last year.

    Then just pick 10 or so. That’s what I did πŸ™‚

  165. Anonymous

    Mild T-wave so far. Doing my best to get things going, but this ain’t the bottom yet folks.

  166. Anonymous

    Gary how does the performance of your 10 compare to the GDXJ? Wanted to know if it was worth the work?

  167. Anonymous

    I sure would like to see lower gold for the next couple days so I can put more money to work.

  168. Gary

    Some have vastly outperformed and some have underperformed. I’m just trying to find one or two really big winners. Hence the shotgun approach.

  169. Anonymous

    Nah it’s time for me to go climbing πŸ™‚

    Spoken like a true old turkey!

    I am gone too! Better things to do.

  170. Anonymous

    Ahhhh yes. Old Timmy Knight is short the GLD, which guarantees the bottom has been put in.

    I was waiting for more of a drop, but might have to get busy sooner!

  171. Anonymous

    Gdxj works fine for the juniors. You will have to diversify no matter what, so your performance probably will be in line with Gdxj anyway.

    Moreover, I find that I feel less anxiety/annoyance with gdxj than with individual stocks. I adopted this position after what felt like the millionth dilution from these companies. It’s always annoying to see one of your position down %10-20 after they announce a share offering.

  172. Anonymous

    It’s all a scam, Hoss. Scams are proven money makers as long as you’re running the right one. πŸ™‚

  173. khalid

    Junior Miner is a hole in the ground with a liar standing over it.

    LOL
    truer words were never spoken

  174. Natanarchist

    wow..200+ comments..the bottom must be coming soon for Gold/Silver. my son and I had dinner with Gary about 3 weeks ago. We didn’t chat very much about the market, except G asked if I read the latest report. I hadn’t so I said give me the quick version. He said Gold’s moving into the intermediate low, sometime in the next few weeks/month. So I have been on the road off and on enjoying the summer and dang it, here we are about 3 weeks later and G man’s call was correct. Kinda glad I have been away from computer/tv..helps to stay focused. Old turkey is the only way for me and the G man keeps me focused on that. By the way G man..say hi to frank and fina. It was good.

  175. Anonymous

    G-man I had my doubts but I got to say if the market continues higher and breaks above 1130 I’m going to have to give you some big kudos for standing your ground with all these trolls breathing down your neck.

  176. Gary

    I’m not sure Faux trolls count. We need real trolls and we need them real emotional.

    Unfortunatley days like today tend to temporarily squash the troll population πŸ˜‰

  177. Anonymous

    The trolls may not be coming out since we are talking about trolling. We keep scaring them off. Not peeved enough yet. Perhaps a nice talk about inflation and the fact that gold bugs are nuts will get both sides going. πŸ™‚

    Toby on the other hand seems to be dealing with some nice ones though.

Comments are closed.