I had been expecting the daily cycle to bottom on last Friday’s revision to GDP or possibly with Friday’s jobs report. Yesterday’s big rally more than likely confirmed the daily cycle low did come last Friday.

Now we have a test coming. If the market can break above the August highs it will complete a 1-2-3 reversal. That will confirm the trend change from down to up and the odds will be good that we will test the April highs.

Actually I expect we will probably test and at least marginally break to new highs even if we have entered another leg down in the secular bear market. I’ll explain why.

Back in July I posted an article showing how big money runs technical levels in order to trick technical traders into puking up their shares. That allows big money to accumulate large positions without moving the market against themselves. Well the same thing happens at market tops and bottoms.

Both the `02 bottom and the `07 top occurred with a slight break of a significant technical level that immediately reversed.

My expectation is that if the market can complete the 1-2-3 reversal by rallying above the August highs we will probably see the April highs marginally broken. Now if that break is immediately sold there is pretty good odds that big money used the technical break to unload positions onto technical traders in preparation for the next leg down in the secular bear market.

206 thoughts on “TEST THE HIGHS?

  1. Anonymous

    With not many people around before the holiday, we could rise on fumes. Never short a dull market, and don’t fade the G-Train!

  2. Frank

    Quote of the day:

    “The evidence is more consistent with a view that the run-up in house prices primarily represented a feedback loop between optimism regarding house prices and developments in the mortgage markets,” Bernanke said.

    I suppose that the high gold price is also due to “optimism” and a “feedback loop”.

  3. Onlooker


    Another good way to get prices on futures is to get the free software at thinkorswim.com and then you can watch prices in real time with charting, etc. You don’t have to open an account, just register and download the software. You can then also watch stock futures after market, etc.

    Works great.

  4. Anonymous

    Its starting to look like the reversals on the silvers a couple of days ago where just a big fakeout. Damn why and the hell can’t I just listen to Gary and stop clicking my stupid mouse (argh)

  5. Anonymous

    Sounds like you need to re-read the 03 market story again 🙂

    I’ve done the same thing in the past and G’s story about trading the 03 bull was a great reminder not to make that mistake ever again.

  6. Anonymous

    Very smart post. I recall watching Apple run back up to its highs back in 2007. I thought (on the days of the 2nd high) – -“oh my, i just missed a 50% run up in price”… after realizing however that it was just a final blowup before a breakdown, I was thankful that I didn’t get fooled….

    Major trends end in double bottoms and double tops.

    Glad you’ve posted this Gary…

  7. Anonymous

    what about /GC and /SI and what’s the difference? And Why $GOLD and $SILVER is not recognized by prophet charts in TOS software?

  8. Anonymous

    Bought SLW puts. Sept. Strikes 21 ($0.19) and 22.5 ($0.51).

    SLW has a pattern showing exhausting momentum and has a tendency to make sharp moves down on corrections.

    I won’t go broke if this doesn’t work and I’m aware this is a bull mkt. But I think the risk reward is pretty good on this trade.


  9. pimaCanyon

    I think you want /GC and /SI for gold and silver futures. The /Y ones are the mini-futures contracts. I’d look at the volume on each. Unless the mini’s have several times the volume of the big contracts, I’d watch the big ones.

  10. Anonymous

    What about gold, looks a little tired, will the S&P rally perk it up or send it downward (short term ,of course!)


  11. Anonymous

    That last chart looks like the market would be crashing upwards. What news would justify such a strong move up at this point?

  12. Anonymous

    I don’t but there’s always news that rationalize what is happening. I just can’t think of what that would be. Can you?

  13. Anonymous

    I’ll try to put this gently.

    You are making classic newbie mistakes. You were unable to buy the dip and are now you are forced to chase. Instead of chase you’ve decided you will short trying to pick a top in a strong bull move.

    You have way too much leverage. It is affecting your decision making process.

    Just get back to sound investing principles otherwise you are going to end up making nothing, or worse, losing a lot of money if you continue this madness of trying to short bull markets.

    PS. Just like the G-man says heavy leverage will cost you your portfolio because it requires perfect entries. Perfect entries are impossible so heavy leverage will cause you to contiuously get stopped out of your trades eventually destroying your portfolio.

    I know I’ve done it myself!

  14. Gary

    Sure that one is easy. The market was due for a cycle low. That low came in above the prior low. That means the uptrend that has been in place since the July bottom is still intact.

    As long as that is the case trend followers will want to be long. If enough people chase this bounce out of the cycle bottom then we will break the August highs. Buying begets buying.

    If that happens then big money will try to drive the market to new highs where they can unload on the little guy…if the fundamentals are calling for another bear leg down.

    If not then smart money will just buy into a rising market until the fundamentals do tell them to sell.

  15. Anonymous

    -I’m not a newbie.
    -I dont have any leverage now. But I have a LARGE core. The leverage is for times like what is coming up.
    -There is nothing inherently wrong with leverage. But you don’t put on leverage after moonshot moves. And you do have risk parameters to exit.
    -Puts on SLW are a good risk/reward bet here. If you don’t see that you haven’t been in SLW over the years. I wouldn’t characterize it as “shorting a bull mkt”. I would characterize it as “SLW is straight up 27% without much of a breather and the momentum is dropping.” Silver and gold are also back up near highs and it would not be a bad bet to suggest they won’t break through initially.

    I didn’t willingly miss the low. You make it sound like I sat around and said “THERE is the low…i’m NOT gonna buy it.”

    Everybody has viewpoints on the market. In the most recent case I anticipated some lower action and it didn’t happen. That’s how it goes sometimes. I’ll be in soon enough. But in the meantime the SLW puts look like a good 1-2 week trade. We will see.


  16. Anonymous

    I do understand your comments and I *HAVE* had plenty of hits to the head like you and gary suggest. We ALL have. There are pros and cons to every angle here. I think I have one that fits my comfort and mannerism.


  17. Anonymous

    WHich is it?

    The 1-2-3 model says the previous high/low should not be broken during the test (the 2 of 1-2-3).

    But then again, you are saying, the 2 will be slightly penetrated by market manipulators.

    So, it is an either-or situation then.

  18. Gary

    The 1-2-3 reversal that is in progress has nothing to do with whether the April highs are bettered.

    It’s just a technical method to determine if an intermediate trend has reversed.

    If it does then we can probably expect a test of the April high and possibly a break to new highs even if a new leg down in the secular bear has begun.

    This is one of the reasons I keep warning the bears to be patient and wait for confirmation. Bull markets, even cyclical ones, don’t usually just roll over and die like this.

    The bears are letting their emotions rush them into a trade that just doesn’t need to be taken yet.

  19. Anonymous

    Think about what you are doing.

    You are shorting one of the strongest stocks in the market right now. You are doing so right as gold is about to test the all time highs. That is still about $15.00 away. I would have to think if gold rallies to $1265 it is going to pull silver up with it, probably right through that $19.50/$20 resistance level. Do you really expect SLW to drop if silver is smashing through $20?

    You are basing your decision on nothing more than technicals. At least have the patience to wait for gold to tag $1265. That would make a lot more sense than just shorting right in the middle of nowhere.

  20. Anonymous

    Gary’s right. This sumovabitch has turned higher.

    Where’d all those shorts go, with their “price action tells me what to do”?

  21. Marc

    Watching silver has been interesting lately. It’s pretty clear that any drops are being bought, with sharp upward moves happening regularly.
    Gary said something is brewing in the silver market and I concur.

    One thing I wonder about is while a 10% jump in the price of silver would seem to produce a 10% gain to the bottom line of a silver miner, the miners do hedge their production. How much of their profit due to price increase isn’t hedged away?

  22. Anonymous

    I have my reasons for the SLW trade. I posted it and I’ll post the honest outcome. Let’s wait and see.


  23. Frank

    I own SLW (my biggest miner position, partly due to how it has outperformed) and I thought about selling calls during the last upturn in the 21s, but I am glad that I didn’t. The reward was not particularly attractive and very timing sensitive. Buying puts would have been very tricky.

    There are much better things to do than be on the short side of the king of the PM stocks, especially if it’s not a hedge.

    Also, look at the fundamentals. The latest report was outstanding.

  24. Anonymous

    The contrary point would be that you are suggesting someone should go *long* SLW here (short term). I would call that suicidal (remember i’m talking short term).

    Obviously it could keep going up. It could do anything. But that doesn’t mean that is the way to bet.


  25. Frank

    It all depends on gold/silver. If they break to new highs, SLW will keep going.

    I would not take any short term position on SLW here.

  26. Anonymous


    My comment was a continuation of the ANON reply earlier. Sorry.

    As for your thoughts, I wouldn’t ever sell calls. Not worth it.

    As far as buying puts. Yes, it’s tricky. But you have to agree it is a bit LESS tricky when SLW is up 27%, overbought, losing momentum and silver is approaching resistance at previous highs.

    This is only a 1-2 week trade (the options expire 17th).


  27. Frank

    BTW, I agree about the historical volatility of SLW, but the last downturn did not exemplify this and I think it is because the market is much more comfortable with the business model, progress and potential.

    The technical crowd will say that SLW broke out, especially if you contrast it with GDX.

  28. Anonymous

    not sure why you guys are trying to talk TK out of shorting or buying puts. Go ahead, I think its a great idea.

  29. TenYear

    So much for the Hindenburg Omen. I believe it has expired by my calculations.

    Lots of SOS in silver today. But, I think it is strong enough here to test its 2008 highs…with SLV around 20.75.

  30. Gary

    I would caution that trying to time anything other than the SPYDER’s is a big waste of time. SoS for SLV is completely meaningless.

  31. Gary

    Selling on strength. It is a money flow indicator. Smart money tends to sell into strength and buy into weakness.

    They have better onformation than us peons so when they are buying into a decline it’s usually a good indication the market will bottom soon.

  32. Anonymous

    Looked at those SLW puts for put protection, but they seem really expensive! I think I will just hold on instead. The risk is to the upside and me losing my position.

  33. Anonymous

    I just realized you bought out of the money puts with two weeks left and you are going to lose Monday to the holiday. Your 21’s have a delta of 19. What are you thinking? You expect us to believe you aren’t a newbie with an idiotic strategy like that?

    Geez you could just donate the money to me rather than just giving it to the market gods like that.

  34. Anonymous

    let him short. Short it all. Short everything. Short short short. do it .. but fer pete’s sake, stop telling us about it … we dont care.

  35. Anonymous

    I typically defer to Gary’s analysis, but my indicators also are screaming we have more upside. The pain has only just begun for shorts.

  36. Anonymous

    It would be nice if you guys could at least distinguish between me being one of the ‘bears’ or ‘shorters’ on the board instead of somebody making a SMALL SIDE BET on a pullback in SLW after a 27% VERTICAL gain.

    I’m in the ‘gold to the moon’ category. Trust me. But nothing goes straight up.

    If this doesn’t work out, I’ll be honest about it.


  37. Anonymous

    My system isn’t that complex for this trade. And I don’t ‘do’ options mostly so you won’t see strangles, straddles, wiggles, woofles, or anything else from me.

    I expect a pullback before these options expire. My expected level for a pullback is about 21 (but increasing slowly). So I split my buy at 21 and 22.5.

    SLW has moved quite a lot very quickly. Markets have a way of punishing people who think that is the norm or who keep buying higher and higher (*somebody* is buying). The momentum is slowing.

    We’ll see how this works. I did the same sort of trade on SLW before and made 3x my money. I’m aware that doesn’t signify an trend 🙂


  38. Anonymous

    “So much for the Hindenburg Omen. I believe it has expired by my calculations.”


    It remains on the clock for 120 days from August 12th no matter what.

  39. Jayhawk91

    TZ guy-

    Ha! I tried that same move early in the year when SLW was in nose bleed area…Of course, I missed the move and was now praying that the miners would come back down to earth. Of course, I chickened out thinking I would wake up and SLW would be up 4% one day. Wouldn’t you know, it came crashing down right after I sold them. Of course, this time with the dollar ready to move into it’s intermediate and yearly low, you have got to be insane trying to short the strong stock in the strongest precious metal. But hey, I’ve been there. 🙂

    I’m also chewing my nails off trying to look for a pullback as I’ve got a lot of $ ready to deploy. I have a core position, but not enough.

  40. Gary

    I think if the triangle on the HUI breaks out one has to just get in and stop worrying about drawdowns that the bull will correct anyway.

    We are getting a front row seat to how a trader mentality and fear of drawdowns is costing some people a lot of potential profits.

  41. Jayhawk91

    From historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and usually takes place within the next forty days. The probability of a panic sellout was 41% and the probability of a major stock market crash was 24%. Though the Omen does not have a 100% success rate, every NYSE crash since 1985 has been preceded by a Hindenburg Omen. Of the previous 25 confirmed signals only two (8%) have failed to predict at least mild (2.0% to 4.9%) declines.

    PS, once I get on board with more miners, the correction will begin in earnest. I’ll let you know TZ guy so you can short the heck out of SLW. 😉

  42. Jayhawk91

    Yea, Gary, that chart is loading up for a massive move, nice trend line support–a huge consolidation pattern all coming to a point on that triangle.

    I’ve been dollar cost averaging into bullion, but have my miners I’ve been watching. My favorites if anyone has insight-ANV, EGO, SLW, NGD, TRE, and GDXJ. GDXJ has been a machine, very impressive run.

  43. robertkudla

    Great posts today Gary, looks like GDXJ is not waiting, sitting at the highs already.

    The market knows something is brewing, and all pullbacks are being bought hard. I am leveraged on AGQ, and my sell signal (for my leverage) has not hit for eight days, which is not usual. Now that the BB bands and Keltners are turning up, I am in no hurry to cover.

    That weekly ascending triangle is a thing of beauty.

  44. Anonymous

    You can do anything including shorting SLW as long as your risk is defined and you honor your stops.

    But ultimately, you are just picking up nickels in front of a steamroller. Personally, I prefer to be on the steamroller rather than in front of it.

  45. Gary

    One can certainly do anything. It just doesn’t make a lot of sense to do something with very low odds of success.

    There is no big pay out for taking a long shot here, like there is in a casino.

    When one takes a very low percentage trade they are just giving up the one advantage they have in this business. Namely, the luxury of waiting for as many pitches as it takes to get that fat slow ball right over the plate.

  46. Jayhawk91


    I bought SLW puts during the May top around 21 and change…Sold them for a loss pretty quick as I kept hearing Gary’s voice saying. “NEVER SHORT A BULL!”.

    SLW hit 17 a few days later. 😉 Sure, I would have made a few bucks…But if I would have just held onto my original position entered back in Jan/Feb, I’d be all good right now. I had a boat load of SLW, GDX, GDXJ, PAAS, etc…Stock and calls. I sold them for small gains and break even in some cases. Yes, I suck.

  47. TommyD

    Jay and Everyone,
    We are all human. This game goes against our nature. It was great for me in 06-07 that basically anything I bought went up if you stuck with it. Then in late 07 things changed.

    Fast-forward and here we all are.

    I joined Gary’s premium back in spring. I quit my evil ways. Got religion. I quit short EFTs and bought miners. I forgot about trading and helped the wife around the house.
    I’ve lost 20 pounds due to being active. I have 40 more to go:(
    The money and time I lost cannot be totally replaced.
    Through a new beginning here I have discovered a door well worth opening.

    Being here and living in the now is paying off more than the money. Thank you for reading.


  48. Keys


    You hit it right on the head. Focus on family. Even if you get rich the wrong way, you die before your kids know that you did it. Congrats on the 20 lbs. Keep on your path.

  49. Anonymous

    For those that remember, I mentioned that the stochastics had embedded in the gold dec futures (and many of the miners) which means they have gone from overbought to locking in a trend and getting stronger. This theory holds that all breaks in the market are bear traps and should be bought until the stochs un-embed. Well so far that has played out very well as there have only been very shallow retracements and each has been a buying opportunity. Well, fwiw, silver is now just about 1 day away from embedding (and at a fairly high number I would add). Silver’s stochs are already in the embedded range (above 80 on both lines of the slow stochs) but the conservative view is to wait 3 days for this to be confirmed although some jump the gun if the trend seems favorable. This would mean that silver would move from overbought to locking in the uptrend and getting stronger. It will still be another day or so to confirm the embedded nature but given where the stochs are right now I think it is a safe bet to assume it will embed. Just some food for thought and if these stay embedded it is my guess that both markets will continue to get even stronger and any breaks will be bear traps.


  50. Jayhawk91

    Very wise words TommyD…I’m Gary circa 2003-2004 this past year-trying to time the bull. I’ve not been trading much since last spring-just trying to buy a little bullion here or there.

    Starting to trade on and off again the past month or so. Had a few very nice hits, but was really waiting to deploy my capital into some miners for the old turkey to end all old turkey. I REALLY was going to get on the train on the first daily cycle correction. Unfortunately, it lasted about 30 minutes on the 24th. I know Gary like to say just buy and the bull will correct, but I guess my perfectionist/procrastination ways are causing me from pulling the trigger. Major anxiety/analysis paralysis. :0

    I’ll get on board, I promise!

  51. Anonymous


    I see your point on stocastics, but they stay embedded…until they aren’t.

    If you look back in time the limits on gold embedding are usually a month. There are a few times when it tends to go longer, but all the times I see are when you are in new high territory and climbing.

    Gold has been embedded for about a month now and we are not in breakout new high territory (yet), but instead approaching previous highs as resistance. I still suspect this wont be a clean shot through it going up and up and up.

    Either one more pullback to put in a flat top triangle on gold, or a break, but immediate pullback to test and shakeout.

    I don’t have a lot of results to show for my speculations yet though. I know that. Everybody call it as you see it.


  52. TenYear

    The Hindenburg Omen is in fact now void. To the naysayer on the previous post indicating it is valid for 120 days: FALSE.

    Once the signal has occurred, it is valid for 30 days, with the highest percentage of a crash occuring during the first 14 days. During the 30 days, the signal is activated whenever the McClellan Oscillator is negative, but deactivated whenever it is positive.

    Sorry you folks got misinformed by that anonymous poster…would have corrected him sooner had I stopped by.

    Gary, you ever considered mandating a username for the discussion?

  53. Anonymous


    The embedded characteristic isn’t really related to whether a security or commodity is in record territory. Gold has embedded while not in record territory before such as in 2009. Being embedded is just saying one simple thing and that is that gold went from overbought to locking in that trend and getting stronger. It is pretty counter-intuitive but that is the theory. Does it always work? No. But it tends to have a pretty darn good track record and you can see it by looking back. I have no idea if gold pulls back here but if the stochs stay embedded my guess is that the pullback will be shallow (even though it may seem sharp and scary, meaning quick) and it will likely be a bear trap. I would say that everyone is expecting gold to pullback, pause, hit the old highs and then pullback, produce a nominal high and then pullback, etc. I don’t think anyone is expecting gold to breakout and then just keep on going. Again, I don’t know but the stochs are one piece of the puzzle that says it is possible for that scenario to play out. Gary has mentioned a similar scenario where gold goes to $1300 and then pullsback. It’s not much concern to me because other than day-trading I have not touched my core holdings (primarily GDXJ and AGQ).


  54. Gary

    Gold is down less than 1% and already coming back. Smart money ignores the emotional retail knee jerk reaction and uses pullbacks to get on board the trend.

  55. Anonymous

    That’s right, G-Train!

    I’m going to add to my etfs sometime before 10am. No longer in DGP, but adding more GLD, and starting to buy SLV, and SIL, getting me back to 50% invested. If lucky enough to open down next week I’ll get fully invested. Exited DGP as I don’t like to ride the 2x etfs through down moves.

  56. Anonymous

    Gary, right on the spot on the job report! Now more retail or fund money will start flowing into the mkt. The get me in mentality!

  57. Anonymous

    The shorts should have listened to the G-train.

    How are those puts doin Gary UK?
    Just burning through that theta aren’t cha?

  58. Anonymous

    And Justin’s long dollar/short stocks trade has beaten him into hiding. LOL!

    Never, EVER, stand it front of the G-Train.

  59. dowgoldratio

    This bounce out of broader markets looks like it is out of intermediate low. Is that a possibility?

  60. Gary

    GLD just about filled the gap from earlier this week. Once that is out of the way the hedgies will quit shorting into the gap fill.

  61. Garo

    Can anyone here shed light on why GDXJ is outperforming GDX so much in the past couple of days? I’m not complaining because I own both but just curious.

  62. Gary

    No the intermediate low came in July. This was just a daily cycle low and the first one of the intermediate cycle that began in July. We should have one or maybe two more daily cycles nested inside this intermediate cycle.

  63. Jayhawk91


    Nice support there for now on HUI 480…Looks like a bull flag/pennant on the 60 minute chart too.

    ABX led the group down yesterday, but now appears to be strengthening.

  64. Rod

    Thanks Gary but i already have a position: half in gold half in silver half in not-leveraged half in 2x gold and 2x silver long etfs.

    So my average lev is 1.5.

    I am searching for something with more leverage to use with a small extra amount of money.

  65. DG

    Nope. I am not back heavy. I am happy to sit at only modestly long for a while (and long lots of various precious metal stuff—thanks Gary!) I tend to bet hard when I feel strongly, but am happy to sit out when it’s not clear. I agree with Gary that clearing August’s highs would be telling and am waiting to see what happens there. With the volatility we have been having I am not worried about missing something. There’s always another pitch to swing at soon. Gold is in a clear bull market. while SPX is in…? Haven’t posted in a while because I have nothing useful to say right now.

  66. Gary

    If you are already leveraged 150% you probably better quit.

    If you get too leveraged you won’t be able to hold through the normal ups and downs. That’s how people lose money on the long side in a bull market.

  67. Anonymous

    Yes, and as I mentioned they gold is embedded and silver is about to become embedded. Breaks should be shallow and bear traps and the overbought condition has locked in and morphed into a stronger uptrend. But we do have some bollinger band issues near these levels.


  68. Anonymous

    I closed my SLW puts for 33% loss. Not gonna hold them.

    The gold drop in the morning of only $15 which promptly was met by 15000 contracts exchanged(bought), stabilized, and going back up convinced me of the strength. This is having a hard time getting any weakness. (And silver didnt really even drop).


  69. Anonymous

    PS: as a guy with some scars (like anybody else in this for a while) I will point out that not feeling comfortable holding a bet for something to go DOWN can be just as much a sign of a TOP as not feeling comfortable holding a bet for something to go UP is a sign of a BOTTOM.

    I could easily see my belief that this trade won’t win (and the confidence of the people posting) as this thing still being vulnerable. (But my money is no longer betting that way. I just have my core gold and silver positions).

    We will see what happens. Good luck to all.


  70. catbird

    For holders of physical gold/silver:

    1) What dealers can you recommend in terms of low mark ups and low fees?

    2) How do you feel about unallocated storage in the Perth Mint?

    3) Finally, are you concerned about having difficulty selling when the time comes?


    ps–I currently just hold AGQ and UGL.

  71. John Fuller

    Catbird, I once had 1/2 a ton of silver with the Perth Mint unallocated, and decided to get it allocated as the risks of losing most of my holding would have been high if/when there’s trouble.

    Eventually I even got out of allocated as I didn’t like their clause about force majeur [sp?] which allowed the state of Western Australia to have it if they wanted!

  72. Anonymous

    1) depends on whether you want to take personal delivery or you want some other entity to be holding it for you

    2) don’t use perth at all

    3) wont’ be a problem, everybody else will want to buy

  73. Anonymous


    Contrats on reading all the fine print for Perth. Anybody who does will never go there. But few read or every think the words mean exactly what they say they do.

    previous anon

  74. Anonymous

    wow…i need coffee; sorry; repost cleaned up


    CONGRATS on reading all the fine print for Perth. Anybody who does will never go there. But few read or EVER think the words were written by EXACTING lawyers and politicians and mean EXACTLY what they say they do.

    previous anon

  75. catbird

    To Anon 8:57:

    I’m interested in the cheapest PM dealers who still provide the best customer service for people who want to actually take delivery of their coins.

    In my view, it kind of defeats the purpose of owning physical gold/silver if you don’t keep it in your possession.

    I’d appreciate anyone’s recommendations, as I’m sure this blog is full of people who have bought the physical stuff!

  76. Anonymous

    I don’t know if silver wants to take a break here. It acts like it wants to keep on chugging straight thru the highs.

  77. Anonymous

    Stocks bears should’ve just subscribed to smtpremium. They would have avoided the ugly losses and been partying on the G-Train where the big money is.

    Even with the answer key, some will still manage to screw things up.

  78. Anonymous


    >In my view, it kind of defeats the purpose of owning physical gold/silver if you don’t keep it in your possession.

    Then why was one of your options to go with Perth? I was answering your ‘buying’ question with whether you wanted to hold it or someone else for a reason.

    previous anon

  79. Anonymous

    Embedded stochastics are when both lines in the slow stochastics go over 80 and stay there for 3 days.

  80. Anonymous

    being 85% in PM there are way to many positive market and PM posters here. we need the troll meter up again gary with a gold bug meter along side to scare everyone.

    I am getting worried as I am climbing back to even from January fall in PM’s. Mostly SLW dragging up my juniors.

    come back the trolls please
    fat boy

  81. Anonymous

    The trolls will be back. They’ve only disappeared for a few days after getting their food stamps re-upped on the first of the month.

  82. Keys

    Looked through the job report. I was curious to the reaction today.


    Forget about -54(loss of 121 from gov jobs) so private sector up 67.
    Problems. 331 became underemployed. So 67 got full-time jobs, but there were 331 full-time jobs that were lost due to under-full time stats. That probably has a net negative to aggregate employment.

    Further the US needs to produce, from what I can read up on(so if I am wrong sorry) about 100 new jobs a month in order to compensate with a growing labor market.

    This in my opinion was a horrible report. I think the market was just looking to have something to rally off of…the theme of today “things weren’t as sh*tty as we thought”

    More thoughts to this new recovery thesis. If the current belief that we are out of the woods comes to pass, then the bond market will continue its path down, which will raise rates. The FED, I am guessing, will want to see the 30 below a certain rate..say 5%, I don’t know. So either we get QE due to a need to prop the economy up, or the FED is forced into QE due to a recovery to keep rates down. I think the Fed is planning QE either way.

    So still good for pms, but bad for stocks IMO looking at the fundemental picture only.

  83. Daniel

    Agree Keys–
    except the QE will provide liquidity for stocks— so we may move up or even sideways depending on the amount and cause of QE

  84. catbird

    Anon 9:37:

    I asked about Perth initially just to get the opinions of others. Like I said in my next post, *my* opinion is that if you bother to buy physical, you should have it close at hand. Sure enough, John Fuller gave me a good reason not to use Perth.

    I’m in the AGQ and UGL ETFs now. I like the fact that they are so liquid (I’m not going to be a nervous nellie and sell when we get a drawdown).

    I think the biggest drawback with the physical stuff is the hassle of selling when we reach the end of the C-wave. Like Gary, I want no part of the D-wave drawdowns.

    (plus with the 2x ETFs you can profit more as PMs go through their C wave advances)

  85. John Fuller

    Catbird : I think the biggest drawback with the physical stuff is the hassle of selling when we reach the end of the C-wave. Like Gary, I want no part of the D-wave drawdowns.

    I forget now what the likely timeframe is for the next D wave. Can someone tell me please?

    I feel it should be safe enough to own paper gold for perhaps another year.

    I am gradually converting to physical … regardless [probably!] of drawdowns.

    To me the threat of a derivatives disaster is worth respecting.

    For instance, as the dollar falls it’s (perhaps not too apparent) but the real price of oil is gradually falling.

    The Arab states need oil at $70 a barrel (based on the value of the dollar a year ago). I think the dollar has probably fallen since then as ALL the curencies have been devaluing together.

    Below that value the threat of bankruptsy looms … and the Gulf States oil market is a centre of massive paper derivatives worldwide.

    If that happens paper will lose value and everyone would want to have gold and silver in their hands.

  86. Anonymous

    Well folks, the bulls held S&P 1040 again (sheesh). I think that was the fifth (count them, thats right)time!

    What this means is that 1040 is becoming ever more fragile. The next move down will cut through 1040 like a knife through warm butter.

    If you are lucky enough to grab a short or puts at 1130 (should we even get that high), do it hands over fists. You will not regret a good short opp. This low volume pop will not be sustained yet again.

    Economy is in the pits and the S&P still needs a test of 950. Enjoy your weekend and do your own DD.


  87. Anonymous

    My thought on QE2 is that there will not be an offical announcement of anything of the sort while gold and silver are at highs (like they are now). At the MINIMIUM they will pull out ALL the stops to push the metals down *at least* enough so that on the QE2 annoucement, EVEN IF the metals rally, they will *not* initially make new highs.

    In in other words, on the day or week they do QE2, they do not want the news to connect like this:

    “Today the Fed announced a large new financial stabilization plan…gold and silver have jumped sharply TO NEW HIGHS.”

    Gold and silver will obviously move up, but they don’t want them to move up in such a clear manner that the masses can **connect** the two. They want it to just be another footnote running across the screen amid the noise.

    Remember gold is the anti-fiat kryptonite and most sheep don’t know what’s going on yet. The guys in charge seek to keep things that way as long as possible.

    Thus…i don’t see a QE2 yet in the current situation


  88. Anonymous

    I’m in agreement with people who are worried about metals going up over a month almost straight. YES, this is a massive bull and it will continue (people seem to miss that I keep saying that), but it is HIGHLY unlikely as we approach the highs here that there will not be a sharp correction in the next two weeks. Especially in SLW (although I closed my puts at a loss – no temperment to hold at this time.)

    Buying SLW sept 22.5 or 21 puts would not be a bad strategy to cover your emotions a bit, KEEP your position, but protect your sanity and profits a bit against silver and SLW’s tendency to correct HARD.

    Not financial advice. Just my opinion. Buyer beware.


  89. Anonymous

    if this is day 8 of the daily, as I believe it is, the time to take profits on all those leveraged dollars will be by the end of next week. At that point I assume we’ll be at the top of the SLW/Miners Prce levels for this cycle ( or close to ) , and there will be a drop down to finish the cycle. I guess leverage back on at the start of next daily cycle which should be approx 2 weeks from today.

  90. Gary

    Under normal circumstances you might be right but every little dip is being bought furiously. This has the earmarks of a runawy move.

    When one of those gets started you can just throw everything you know right out the window. A runaway move will roll right over overbought levels, cycles and sentiment.

  91. Anonymous


    I agree and could be wrong. We both know this is more a game of odds than 100% assertions.

    I’ve seen the runaways and been in many of them. But they simply don’t start/happen UNTIL you get to new highs (* there is a technical criteria exception I’m leaving out here, but my statement is roughly true.)

    I assert we wont have the runaway possible until we break gold silver and gdx highs on a weekly basis. Until then I think a drop in next 2 weeks is very likely to correct some excesses from a month long rally.

    As I keep saying, I’m not calling things right yet. But patience has a way of being rewarded. What I want to do right now is buy buy buy and make loads of money. History and battle scars are telling me to wait a bit longer.


  92. Anonymous


    What are your thoughts on gaps if we have a runaway move? I would think there would be many gaps on the miners in the chart that will not get filles, at least not perhaps until the D wave hits or an intermediate term bottom. GDXJ, for example, had about a 9 cent gap open today. Do you think this is very likely to get filled or perhaps not so likely given that a runaway move MAY occur.



  93. Anonymous


    Let me reverse the question a bit cause the way this keeps getting structured I end up looking unreasonable.

    How many weeks of CONTINUOUS GAINS do **YOU** think we will have or will be ‘normal’ here before the excesses get to much and there is a violent correction.

    Tell me what YOU think is too much.


  94. Anonymous


    I’m not all that convinced that they don’t want that headline. Right now Bernanke wants to create inflation and, at the very lease, the impession of inflation. He wants to “smoke” people out of cash and into risk assets. Yes, some money will flow into gold but it is still a very small market and most of the money will flow into equities if people think the dollar is going down and the dow responds the way I think it will (up this time on QEII but perhaps not next time).

    Just some thoughts…


  95. Keys

    Anybody else have a wager for QE2? Reasons for it, if at all.

    TZ, I take it you are in the can’t see it yet camp.

    I am in the view that if bonds fall sharply enough, it will cause rates to correct sharply up. The Fed will be forced to come in.

    Any other takers, on what you would be looking for?

  96. Gary

    If a runaway move happens then gap fills are probably wishful thinking.

    Look at the runaway move out of the 06 low. That move started way before new highs were made.

    You are still talking yourself out of getting on this bull. In the meantime you’ve missed a huge move in SLV and silver SLW.

    You should have been buying as soon as the triangle broke on silver and as soon as SLW broke out of the consolidation.

    How much longer are you going to wait? The next daily cycle low isn’t due for another two to three weeks.

    Maybe instead of worrying about a minor (and temporary) drawdown you should focus on where this C-wave is going.

  97. Gary

    How much longer can it last? Well the runaway move in 06 lasted 6 months.

    The next intermediate cycle low isn’t due till late November or December. And the dollars 3 year cycle low isn’t due till next spring. This thing is starting to give off signs of being in a runaway move and you are talking yourself out of probably the greatest C-wave we have seen yet because you are fretting over possibly experiencing a couple of days of drawdowns.

  98. Gary

    Heck you got a slight pullback this morning. Why didn’t you at least get a small position?

    We both know the reason. Because you are worried it might continue down further so you couldn’t buy. Well that feeling isn’t going to get any less with a larger pullback. As a matter of fact it will only get harder to buy if the pullback is larger.

    We had a great buying op in July. I even told you what to look for to get in. But the fear of experiencing a drawdown caused you to balk when you should have been swinging.

    Now you are forced to chase or miss, one or the other.

    That’s the tough part in strong bull runs. Theres just no telling when a correction is going to reverse. It’s why it is so hard to make money shorting. One never knows when to cover and if they miss they can be back in the red in the blink of an eye.

  99. Wes

    I’m not a gold holder as I prefer to trade stocks, but I can’t see a logical reason for gold to bolt straight up from here.

    Most people equate high inflation with a need for owning gold and there just isn’t any inflation that the public can identify. If the move up is to be triggered by an overwhelming demand for gold, what’s going to trigger it ?

    Meanwhile, I’ll point out that we’ve just had a gap and go day in stocks.

  100. Anonymous

    People calling for a correction due to the 1 month up move are simply not looking at the charts. We have been up 10 dollars a week for three weeks! You consider that over bought? What correction is necessary here? We are less than 10% above the 200DMA for Petes sake!


  101. Gary

    That ones easy. Gold is in a bull market. Bull markets go up. That’s just what they do.

    And the most important reason. Buying begets buying.

    Not to mention if the miners and gold can break out to new highs the entire complex will be tradig in a vacuum with no competion from any other sector of the market.

    Any hedge fund worth their salt is going to want a piece of that.

  102. Wes


    I’m not calling for a correction in gold and I recognize that a new all time (unadjusted for inflation) high might occur. And I agree that there will be interested buyers if that happens.

    But it seems to me that people posting here are looking for a “feeding frenzy” in gold that is going to cause a runaway move to the upside. That may happen some time in the future, but it will be caused by demand from the public, not from some hedge fund.

  103. Anonymous


    It’s a myth that gold trades in tandem with inflation. The WSJ had an article about it a few weeks ago. They found little statistical correlation between gold and inflation.

    Gold tends to perform well in periods when faith in paper assets is eroding. Its last bull market was during the 1970’s, when stocks were in a secular bear. Then, during the secular bull market in stocks, gold fell for 20 years. In 2001, when stocks’ bear market was just beginning, gold started to move again.

    Gold is best thought of as the asset of last resort. It’s where money goes when it is not being treated well anywhere else.

    Moreover, gold doesn’t have to go straight up. It can just keep doing what it’s been doing for 10 years. At some point it will go parabolic as the herd finally catches on, but that will be the terminal phase for the bull market, and the beginning of a bull market in stocks.


  104. Wes


    A more careful reading of what I posted will show that I never equated the price of gold with inflation.

    But the public does, and some written piece in the WSJ isn’t going to change that.

  105. Gary

    I don’t think you understand what a runaway move is. It’s not a parabolic rally.

    A runaway move is a persistent trending market with shallow measured corrections.

    The Aug. 06 to March 07 S&P is a good example.

  106. Gary

    BTW the public has no idea why gold goes up. They certainly don’t buy gold because they are worried about inflation.

    The public will buy gold for one reason and one reason only. Because everyone they know is buying gold and getting rich off it.

    It’s the very same reason they bought houses in 05.

  107. Wes


    You’re right, I didn’t understand that an extra strong market was what you were talking about. I haven’t heard that called a runaway market and I was picturing a parabolic move.

    I agree that an extra strong move can happen on a breakout.

  108. Jayhawk91

    Bought some ABX, EGO, AUY, CEF today, will continue to add to my positions. Silver stocks certainly leading the pack now, junior miners having a nice run. Still want SLW, GDXJ.

    Looks like the HUI/GDX is in a bull flag, gearing up for a move higher.

  109. LowTax

    Wes, another thing to think about is that the public is not currently buying gold. They are busy selling – mostly based on those late night ads wanting your “unused” gold and silver. When that reverses, and they DO start buying gold, it WILL go parabolic and that will be the time for the rest of us to sell it to them.

  110. Jayhawk91

    Also, one thing I don’t get is the “wait until the public” gets in theory. I mean, the overwhelming majority of people are flat broke or living pay check to paycheck. The baby boomers are moving into “safety” and are for the most part (not the genius boomers who read Gary) brainwashed to trust and obey what the PTB tell them to do. Most likely their broker is getting them into bonds.

    I’ve been talking to my very well off dad for 2 years about gold and silver. He has yet to get one ounce or either or one share of stock in a pm related company. His broker is telling him not to…So we are very early here.

  111. Wes


    Interestingly, all the ads I see and hear are trying to sell gold. I even posted when there was an insert in my local paper trying to sell shares in a gold ETF.

    If someone told me that this huge advertising blitz (it’s on almost every AM radio station all day, also many TV stations) trying to sell gold to the public was the cause of the gold bull, I couldn’t argue.

  112. LowTax

    Wes, you must live in a weird area or perhaps you only watch/listen to a certain section of what is broadcase. I’m not the only one that has noticed:





    I’d say your experience so far is in the minority.

  113. Frank

    If you watch Fox, esp Glenn Beck, you will get a heavy dose of gold coin salesmen. The one with G. Gordon Liddy is hilarious.

    However, elsewhere you get junk mail, placards on utility poles, ads in local newspapers, it’s all sell your gold. Also, I noticed that for every other hotel stay at the likes of Hilton Garden Inns out in middle America there is someone with a gold buying operation in one of the rooms.

  114. Wes


    Ads to buy gold aside, would you say that the ads selling gold are much more plentiful than in the past ?

    I can recall the ads in 1980 to buy silver. They were everywhere. Burglars would only take silver in 1980. Everything else was safe.

    You silver investors need to find some Hunt brothers.

  115. Anonymous

    I’m looking at the dollar (DX-Y.NDB) on my yahoo home page and it shows it went up 1.72 today. The yahoo finance chart shows two big spikes at the end of the day. The spikes aren’t showing up on my Think or Swim charts. Is there any significance to this? Did somebody really spike the dollar at around 5:30 EST?

  116. Daniel

    I see that too–
    Mine was after hours though (I think) I had to leave before the close??

    Dollar Index ($DXY)

    83.10 +0.72 (+0.87%)
    Stock Price Quote as of Friday, Sep 3rd, 2010 (INDEX)


  117. Anonymous

    Bede, I’m sure you’re right about the misprint. I was thinking this may have been a prelude to the dollar surging higher next week.

  118. LowTax

    Wes, I would say you are right that “buy gold” ads are also more common these days. There are definately lots of ads for buying coins (mostly in more conservative outlets) as well as for ETFs (on teh financial channels). However, as far as the Joe-sixpack, I think he’s only seen the “sell gold ads” because he’s 1) out of a job and hittin’ hard times and 2) if he has a job, his financial advisors keep telling him that gold is in a bubble and that he should sell (Jay’s dad in this same thread!).

    As to the Hunt Brothers, I don’t think we’ll need them this time around, the good ol’ US Gubment has taken their place 🙂

  119. Anonymous

    Looks like good ole TK is now in the process of giving back all of his gains from the last couple of months. I think I remember him saying he was leveraged 170% short at the beginning of the week.

    This should be good to lose him the rest of the investors in his hedge fund, if there are any left.

    That should teach people to give their money to a gambling addict.

    Sheesh, just insane.

  120. Gary

    We will know it’s time to sell when we start seeing lines at the local coin dealer.

    That’s a long way off yet.

    BTW my local Ameritrade rep called me the other day to introduce himself. We got to talking a bit and sure enough they are still spouting the typical canned wall Street nonsense. Diversify.

    I asked him how well diversifying worked during 08 😉

    When I told him he would be doing his clients a big favor by getting them into gold he couldn’t get off the phone fast enough.

    When I hear him preaching to buy gold then it will be time to think about selling.

  121. LowTax

    Gary, that’s hillarious – I had the same phone call with my local Ameritrade rep just a few days ago. They wanted to sell me the same things – a diversified portfolio. They must not be paying attention to the growth rate on my self-directed account… 🙂

  122. Wes

    In the past 30 years the stock market has been up more than 1.5% the week before Labor Day on 5 occasions. We were up 3.75% this week.

    Strong performances in the previous week in this time period seem to carry over to the first two days of the following week.

    During those 5 years the first two days after Labor Day are 9-1 up days to down days. FWIW.

  123. Gary

    Also the market is only on day 5 of the current daily cycle and the dollar is collapsing down into its daily cycle low.

    The half cycle low in stocks usually arrives around day 15 to 20 and the dollar cycle can last 30 days. We can probably expect the stock market to continue higher until the dollar puts in its cycle low sometime in the next two weeks.

    If that low happens to break below 80 its going to be all over for the worlds reserve currency. The cancer that began in the Euro will now have spread into the worlds reserve currency.

    We will be in the very beginning stages of a currency crisis in the US dollar.

  124. Anonymous

    Um, no Ten Year.

    The Hindenburg is still on the clock. In 2008 we got it in June…It can still crash within 120 Days.

    From Zerohedge on the FIRST HO-


    “Today, all five conditions were satisfied. June 2008 was another such reconfirmed event, and as Barron’s pointed out then, “there’s a 25% probability of a full-blown stock-market crash in the next 120 days. Caveat emptor.” Boy was the emptor caveating within 120 days (especially if said emptor was named Dick Fuld). Which brings us to the present: should the Omen be reconfirmed within 36 days, all bets are off.”

    Since then, we have had 4 more. OK, let see what happens in the next months. Still on the clock buddy.

  125. Anonymous


    You are not going to believe this, but on Friday, August 27th, we got both a fifth official Hindenburg Omen observation and a 90 percent up day. Completely bizarre combination, which is the point. It is this sort of confrontational confusion inside markets which is the basis and background for all of the stock market crashes over the past 25 years. This does not mean we are definitely going to get a stock market crash, but it does mean the odds of getting one are far greater than the normal less than one-tenth of one percent on any given day. Because this set-up is rare, only 27 such set-ups over the past 25 years, it throws the market into a unique and infrequent population of only 27 occurrences, and within that unique 27 occurrence set-ups, we have seen a market rattling stock market crash 8 times, or 30 percent of the time this unique set-up occurred. The time span for this set-up is 120 days, 120 days of high risk. The market lacks uniformity, lacks certainty, lacks its normal stability. There were no instances over the past 25 years when a stock market crash occurred without an official Hindenburg Omen being on the clock. We now have a five observation Hindenburg Omen cluster.

  126. Gary

    There is little chance of a crash with the dollar collapsing..well until the world wakes up and realizes that we now have a currency crisis brewing in the US dollar. That won’t be for a while yet. Contrary to popular belief the markets aren’t really a discounting mechnism. They can’t see the future any better than the people who trade them.

  127. Anonymous

    You must work for Goldman $ucks Ten Year–Trying to calm investors that the HO is over??


    Experts say that for the Hindenburg Omen to be effective, it has to appear at least twice, and up to five times within a 36 day period, and that the the subsequent market sell off has to happen within a120 day time frame.

  128. Bede


    What’s the magic with breaking 80 on the dollar? We were lower than that in December, and in 08 we almost touched 70. Why would breaking 80 precipitate a dollar crisis?

  129. Gary

    Because breaking 80 would signal a failed intermediate cycle after only 4 weeks. Intermediate cycles last 20 to 25 weeks. We would be looking at potentially 15 to 21 weeks of falling dollar price.

  130. Bede

    Thanks Gary. I can’t decide whether I want that to happen or not. It will make my PM stocks go up, but what will happen to my life?

  131. fubsy_cooter


    I love the anecdote about your Ameritrade Rep. My guage is my brother’s crew. They were flipping houses like mad men at the top. Now, when I mention silver, which has my largest holding for months, they tell me they can;t believe I’m buying into the gold/silver hype. I love it.

    I don’t know about you all, but i don’t see it. I mean, yes there is hype, but in the investment community most of what I hear is doubt and disdain over how expensive gold is. On Fast Money today, the Brit, Simon just continued to snark about owning gold. I don’t know anyone outside of this board who is loading up. It’s rare.

    My guess is that if this is the continuation of a C-wave we are embarking on, the tone of my friends and family wil change as we puch higher, and they will give me the signal when to get out…I presume right as Gary’s indicators are flashing the same message.

    Congrats on a good week. Here’s to more of that.


  132. Frank

    The TD Ameritrade reps don’t know or shouldn’t know what is in your account. Maybe the current value. I think they are just some youngsters who are told to call their better customers to make them feel good.

    I remember getting a call from a newly minted rep at the end of 2008 or early 2009. The objective was to give a pep talk to hang in there and not close the account and put all money into savings.

    2008 was my best year ever thanks to Downey Savings and Loan, Fed First Financial, Lehman, General Growth Partners, et al. I told the guy about my YTD “progress” and there was a long silence……

    I think my biggest mistake in 2008 was not to change to IAB. I would have saved thousands in commissions.

  133. Gary

    If the aquiring company is buying with stock then often the price will drop and invariably they will have to pay more than market value for the company being aquired so the price almost always rises on a take over.

  134. Anonymous

    Thanks. Regarding the money flow data I can only find daily numbers at WSJ. Wouldn´t it make sense to look also at weekly/montly datas or even intraday charts and where can I find them?

  135. Gary

    All you can get is the daily closing price. That’s all we need though. We are only interested in big money flows into or out of the SPYDER’s.

    Professsional’s measure themselves against the S&P. So when they think the market is going to head down they start selling shares of the SPY or vice versa if they think the market is ready to bottom.

  136. Rod


    your approach on USD almost identical to mine, just for the detail that what i am studying is the EUR cycles.

    What i see is a yearly cycle started 6th July.

    Now i am looking for a new intermediate.

    The sum of the 2 cycles (EUR up + USD down) can possibly bring the EUR/USD up to 1.4-1.5 sooner than we expect.

    That means dead bell for Euro economy, fot it lives of exportations. Good news for gold inverstors at least.

    I would like to know your view about that.

  137. Anonymous

    I have doubts as to if gold can become a bubble

    first of all, too many investors know about the rumours – whether they believe it to be true or not

    second, the public cant really get involved in the speculation.

    they can with houses, tech stocks and even tulips

    but wtf will they do with lumps of pm’s?

    I own gold and silver stocks and if gold can convincingly rally to new highs here it might help

  138. Gary

    LOL Aparently you weren’t around in 1980. It’s much much easier for the public to come into the precious metals market than virtually any other asset class.

    In order to buy a house one has to go through a lengthy qualification process and all the paperwork at closing, etc. Quite a multi-week or month ordeal.

    To buy gold all one has to do is drive down to the local coin dealer and walk away with their gold coins that day.

    And they will do the same thing with gold that they did with tech stocks, houses or tulips. They will try to sell them at a higher price to someone else.

  139. Keys


    I liked your Ameritrade story. It is consistent with what I get from local advisors in my area. I hope you offered him a good deal on a subscription. Maybe send him a couple of free copies. By the way I think you are diversified. Gold, silver, miners. Sounds pretty diversified to me.

    Well coffee is done, off to do something outside.

  140. Anonymous

    “second, the public cant really get involved in the speculation.

    they can with houses, tech stocks and even tulips”

    Are you joking? It’s easier than ever for gold to become a bubble. In 1980, you had to go to a dealer to buy it. Then you had to store it, insure it, etc. Now you can buy GLD and SLV with a mouse click, just as people bought JDSU and pets.com in 2000.

    As a result, I think the blowoff will be bigger than in 1980.

  141. Anonymous

    Gary, Can you clarify Friday’s intense buying pressure? Volume at Comex was huge to the downside when using 1 min bars, with the rebound on much less volume.

  142. Gary

    I just meant that there was no follow through to the downside and gold came back to almost break even.

    Even with another big up day in the stock market there are buyers under every dip. The dumb money just lost their position because they think gold is only going up because of fear. When that fear was alleviated somewhat by the better than expected jobs report the dumb money dumped their gold.

    Nothing could be further from the truth. No one is buying gold because they are afraid of the stock market going down. People buy gold because they expect the price to rise. That has nothing to do with stocks.

  143. Anonymous

    I’m long but extremely nervous to see the Jr’s and silver running hard here,as I know what usually follows.

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