ONE OF THE GREATEST BLUNDERS IN HISTORY

Many years from now when we look back at history I think yesterday will be seen as one of the greatest blunders ever made by a central banker.

The dollar was already headed down into a major 3 year cycle low.

The first round of QE had already guaranteed that the dollar was going to be under severe duress by next spring. Bernanke just added insult to injury yesterday and virtually guaranteed we will have a major currency crisis by next spring.

I think history will come to view yesterday as the beginning of the end for the dollar as the worlds reserve currency and unless the Federal Reserve comes to their senses soon the dollar is doomed to follow every other fiat currency in history into an eventual hyperinflation and total devaluation. 

One has to protect their purchasing power from the depredations of central bankers bent on destroying the dollar. That means one has to exchange their paper dollars for real assets. It’s not safe to hold cash. 

One can buy stocks but soaring inflation will destroy profit margins and the stock market is going struggle more and more to rise in the face of soaring input costs.

There is one and only one sector that is positioned to protect one’s wealth from the Fed. That sector is of course precious metals. The more the Fed devalues the better the fundamentals become. Gold is now entering the parabolic phase of this particular leg of the ongoing C-wave advance.

I doubt we will ever see sub $1300 gold again for the duration of this secular bull. Now that the HUI and silver have broken to new all time highs we have a rare condition in that the entire precious metal sector is trading in a vacuum with no real overhead resistance. This is the only sector in the world in this position. That is the recipe for an incredible move higher in a short period of time as funds begin to chase the outperformance in this sector.

The key now is to spot the top and lock in profits, but not to exit too early, and believe me most traders and investors are going to exit too early because they will try to trade this based on oscillators and overbought levels. That will be a huge mistake during a parabolic surge.

I will reopen the 15 month subscription briefly for those that want to ride the bull and need a coach to keep them focused. And a voice of reason to get you out at the top when your emotions will urge you to stay at the party too long. 

249 thoughts on “ONE OF THE GREATEST BLUNDERS IN HISTORY

  1. catbird

    Gary,

    For someone like me who took nothing off my AGQ position yesterday, would I be wise to put more capital to work on this frothy Thursday?

  2. Gary

    As long as you have a position I would wait and see if we get a bit of a pullback in the first hour before adding. Usually these emotional opens give back at least a little during the first hour or two.

  3. Razvan

    Thanks for the moral support guys. This morning I feel much better with the direction of the market…green screens everywhere 🙂 🙂 . The SoS was telling us people were pulling out before the statement which is what we should have done also! Actually we would have gotten an even better position by waiting for the statement and entering at the end of the day so I think it is a great tool to have on our side.

  4. pimaCanyon

    Gary,

    What’s the chance of getting caught in a major whipsaw here, buying way up here in the stratosphere only to see the dollar and PM’s reverse?

    I bring this up because more often than not, whatever stocks do right after Fedspeak, they often reverse the next day or on Friday.

  5. Gary

    If it happens it will just be temporary. The dollar is now in a failed daily cycle with the next support at 74. I doubt we will see any significant pullback in metals or stocks until the dollar bounces off that support zone. So yes the metals may pullback later today or tomorrow but two weeks from now I exp;ect them to be many percentage points higher than today’s open.

  6. Elaine

    Gary,

    Thank you for keeping me focused yesterday. There’s no way I could have executed the trades successfully enough to come out on top today.

    Elaine

  7. John

    From the ‘man inside’ at the biiwii blog

    “…Names will be named and my COMEX brokers tell me that the seller who piled on with indiscriminate selling of ~10-15,000 DEC futures just before noon yesterday driving the price down over $30 bucks was J. Aron & Co, the commodity arm of one Goldman Sachs. “

  8. bamster

    Gary,

    we just started this parabolic rise and you are already are looking to sell at the top. With that in mind, what is your timetable for the top on this move. i’m hoping itss no5t in the next 2 – 3 days. Thanks.

  9. gusto

    Gary, isn’t this the reverse of what you were predicting in terms of coming out of the coil? So could we get a reversal of this action on the jobs number friday and given the extended cycle of the up move?

  10. Gary

    I’ve discussed this in the nightly reports. I think this will be one of those times when the coil doesn’t follow the normal pattern.

  11. pimaCanyon

    Gary (and anyone else who cares to comment),

    Can you tell me again why the selling on strength (or buying on weakness) numbers on the WSJ webpage are useful ONLY for SPY?

    Today I see large block trades in the selling on strength page for leaders such as XOM, AAPL, C, GE, and GOOG. Makes me wonder whether we’re seeing a selling climax here and we’ll have our first significant pullback in stock since the late August low. And also whether PM’s might get sucked in to that downdraft.

  12. Brian

    Pim, The SOS numbers would be much higher than that for an “end is near”. Go back and look at late Dec 07 and you will see what I mean. I forget the exact date. Just start at the end of the month and work your way back.

  13. alex

    Gary,
    It does seem we are in the parabolic blow off phase of the c`wave. I would expect what you are saying in your report, especially with the dollar crisis due nxt yr…

    when oil went parabolic, it didnt seem to pullback at all until the top, but with GOLD it will for 2 reasons, right?

    In Dec, people may sell to lock in capitol gains taxes at this yrs rate ( they still go up nxt yr)& also a small bounce in the dollar. you still old turkey through all that (maybe no leverage)

    thx

  14. Gary

    Now that I know gold isn’t in a runaway move I will try to get out of a big chunk of my positions later this winter when I think this particular phase is done. Then I will look to re-enter after the intermediate decline has bottomed although it will probably be more of a sideways consolidation than a real correction.

  15. pimaCanyon

    Thanks, Brian.

    I’m not expecting an IT top here, more like a pullback that lasts a few days to a couple of weeks.

    But your suggestion to compare prior tops with today is a good one. I could look at early August top or the late June top, for example.

  16. DG

    Pime: That’s because when the smart-money pros want to hedge their long portfolio they trade SPY not anything else.SoS is used to time a general market top so SPY is the only relevant equity to watch. I don’t know if anyone has studied individual stock money flows, but if someone has I’d love to hear it.

  17. Gary

    DG,
    For the most part individaul stocks are worthless. I looked at it a bit and didn’t really find any predicitive value for anything other than the SPYDER’s.

  18. Frank

    GLDX is clearly a “true” junior index. I am familiar with about half the names in there.

    Sabina is a high flier, having more than tripled YTD. Unfortunately, I don’t own it.

    This ETF could go hyper-parabolic if gold goes parabolic.

  19. pimaCanyon

    okay, SPY is now showing up on the SoS page. Not a big dollar amount yet -28.1, but the day is still young.

    I find it interesting that IWM and QQQQ are showing up there as well.

    And, on the BoW page, FAZ and PSQ (short QQQ) are showing up .

  20. Poly

    I think the new Global X fund GLDX is a real sign of the times and confirmation that we’re in a major bull market.
    The fund consists of some real speculative exploration stocks and the majority of the 30 holdings are market capped below $1B, so some of it is in the micro-cap arena. I guess as a speculative holding this ETF certainly could really take off, even more than the juniors too. But if today’s volume is any indication and judging by the makeup of the fund, I wouldn’t be holding too much of it.

  21. Robert

    Pima,

    Those are hedges, very tiny numbers.

    If you’ve been looking at SoS and BoW over time you’d come to totally ignore those tiny amounts. Look for $200, or now with all Ben’s dollars, $300 million for anything meaningful in SPYDERs.

  22. Robert

    Gary,

    If you had to guess, in this winter consolidation, what would you guess the Gold and Silver price would be at that time?

    And oh yeah, not to rub it in, but I think FRMSF, SVM, SLW, AXU, and AGQ will over time SMASH the SIL! I just got tired with HL, PAAS, CDE, SSRI, etc, they are too “plain” and their floats are too big. Let me know if you think I’m wrong (maybe only time will tell).

    Thanks,

    Robert

  23. Robert

    Gary,

    I don’t think its ignorance the DXY is crashing. My little sister could figure out how to debase a currency. It is just a new form of taxation.

    -Robert

  24. Robert

    Not new, but something “Americans” don’t know much about!

    The Europeans are well used to currency devaluation, hence why so many more of them buy PMs.

    It’s estimated that only 2% of Americans own PMs.

    What percentage of financial advisers you think are buying PMs for their clients. LOL, NONE!

    All my friends work in financles and they are head over heels on Citi. They all are taught to avoid commodities at all costs.

  25. pimaCanyon

    thanks, Robert.

    So the -28 mill on SPY right now could amount to 50 or 60 million by end of day. If that number needs to be -200 or greater to be significant, then unless things change radically in the next few hours, today will not be an SoS day.

  26. pimaCanyon

    Robert,

    You’re right, it’s a form of taxation, but it’s not new. Been going on ever since the Fed was created nearly 100 years ago. It’s just that in the past year or two the tax rate of that tax has gone way up!

  27. Robert

    Pima,

    Correct. Those numbers can add up though over consecutive days. If you saw 5 days in a row of -60 you might want to think more about it.

    BUT, IMO that is just noise right now. The focus should be holding onto a massive PM equity position until a very nice parabolic top. We are weeks/months away from that so just sit tight and don’t let anything get you off the bull. You’ll hear many things many times about “dollar bounces”, “SoS”, “Swing Highs”, although Gary mentions all of these many people forget he says he’s holding his positions (the bull always surprises to the upside!). These are good things to know and look out for, especially if you have some try powder, but ignore them for now, and just listen to G-Man for when he removes a significant amount of his positions.

    GLTA

  28. Robert

    Finally silver is getting some f’in respect!

    It the most conductive element on the planet!

    That RICO suit also helps. Combined with being an ex-monetary metal for the last 20000 years. Hi Ho Silver!

  29. alex

    SVM up 16% today! WOW!

    I see EXK breaking out with good volume, and on yearly charts, it has NO OVERHEAD RESISTANCE soon, and even $5.50 was minute volume.

    This one could move fast once she breaks…in my uhmble opinion.

  30. alex

    Gary, you made a good point when you said…

    ‘Now that I know gold isn’t in a runaway move I will try to get out of a big chunk of my positions later this winter when I think this particular phase is done.’

    BUT now you have me thinking…this could start a run-away move…Because Mr Bernanke has opened the gates, and todays volume looks like people are cramming in.

    we’ll have to watch for that in time 🙂

  31. pimaCanyon

    Read a comment on another blog yesterday that reported that if all the QE II money was put into the SPY etf, that would amount to buying 2000 SPY shares EVERY SECOND during regular trading hours for the next 7 months!

  32. coolkevs

    whee – couldn’t help myself, but bought GDX 60 calls right before the Fed Meeting for 0.03, and sold them today for 0.30 – that’s the kind of hyperinflation I like 🙂
    I know, I know, slap me on the wrist, but I only risked $75 in my small potatoes account

  33. alex

    I saw cnbc yesterday , FAST MONEY. The smart one was pounding his fist to buy gold, another said …Golds reaction was weak after the fed…the $$ already baked into it…I AM SHORT GOLD, and suggest you do the same!!

    BAAA HAAA HAAA HAAA!!

    Eat your SHORTS! 🙂

  34. pimaCanyon

    Well, I’m getting a lesson on monitoring SoS numbers during the day. The SPY has completely disappeared from the list! Looks like the big boys are using any small pullback to buy.

    So apparently these numbers don’t mean much intraday (unless they are huge). Numbers at the close are the ones to look at.

  35. Frank

    I usually zip through Fastmoney on the DVR. There is one particularly smug dimwit called, ironically, Cortes (he’s not on there frequently) who is always proclaiming that he is short gold.

    However, I noticed yesterday that both the Italian oil trader and the “Armenian gypsy” were pumping GDXJ. That’s unusual that such a name gets a mention, although they were talking about SLW the other week. We will know it’s time to get out when they are salivating about the like Sabina Silver and Gold.

  36. alex

    Frank

    it was actually the 1/2 hr version at lunchtime, but same players. The guy with the pony tail is pretty sharp, watches put/calls a lot and trades where big $$ goes. He called buy Gold. not sure who the other was, but he’s sad today no doubt.

    There was a chart guy too. ( they interview 2 of them, Gartman & another) that was not liking gold. Says he was in it from 2001, but its done…he is sad too.

    Gary should be on CNBC, no one talks cycles on there.

  37. Frank

    The guy with the pony tail is the “Armenian gypsy”. He’s an extreme short term trader. And when he comments on the big picture he will go on about that it’s better to buy copper, oil or other “useful” commodities. Loves to pump FCX.

    Cortes is a slightly fat guy with greasy lips and smug attitude.

    Then we have “Guy’s Adummy” who claims to have been a GS gold trader. He is a gold permabear but has given into the relentless price action. He warns the CNBC retail investor that it is going to “end ugly, it always does in gold”. And he’s probably been saying that since $600.

    This is extremely blinkered. If the guy traded gold in the 1990s (he looks too young for the 1980s)then, sure, it was quite ugly longer term. We entered a different era in the 2000s, a so-called secular change. This kind of mindset is shocking for a so-called successful trader. I guess he wouldn’t be moonlighting on CNBC if he had any real skills.

  38. TZ (7006)

    Without an ‘i told you so’, I simply want to point out that the Fed or ‘guys-in-charge’ did exactly what I said they would do yesterday.

    They didn’t want the news of the night to say “…and immediately on QE2…gold and silver SURGED to NEW HIGHS!”

    So…they slammed the metals down before lunch in a clear attack.

    The metals were strong enough to come ALL THE WAY BACK by close, but the mission was *accomplished*.
    Gold and silver did NOT hit new highs for they day. They didn’t even gain a penny.

    Yes, *today* all the gains are happening including the NEW HIGHS on metals, but they kept gold/silver out of the news and out of being a ‘connection’ on the day that mattered. They made it impossible for the news of the day to including “this means you need to dump dollars and be in gold and silver” in most mainstream commentary.

    Yes the metals are manipulated lower (or slowed in their ascent). They are a direct threat to the functioning of the fiat monetary theft system. This will become clearer and clearer to those who doubt it as time passes.

  39. DG

    I love how well “they” are manipulating gold. If this keeps up and they keep manipulating it lower I’ll be very happy in a few months! I doubt manipulation is true, but even if it is, who cares what they do for an hour or two? They’re going to “manipulate” it all the way to $1600. No one can hold back the tides, including the Hunt Brothers—er—Fed. Besides the dollar collapse and gold rally will be all over the news and everyone with a fraction of a brain will be linking it to QE II.

  40. alex

    Frank…you nailed it.

    I like that show out of all the cnbc, because they are slightly ‘with it’. The Armenian gypsy ,as you call him, is sharp in my opinion. Guy Adummy…he is wrong more often than not, and I CANNOT believe he was a GS gold trader,but I heard that too. You are right, he must have rode trades down all through the ’90s, lost his job, and knew someone at the station for the job he has now.

    Overall entertaining, I do enjoy it from time to time.Theres a uy on there always buying Brazil and other BRIC eqiuties. He has always liked oil & gold & metals, so I give him credit too.

    Again tho, someone at lunch yesterday CALLED THE TOP in gold and advised we all go short Gold…cant wait to see if he comes on again…with tire tracks across his head 🙂

    p.s. who’s the girl ( not the host) and HOW DID SHE GET THAT SPOT?? Is she ever right with her lagging fundamental analysis??? “BUY WALMART!!!” YAY

  41. EricH

    Gary,

    I know you talk about coil action on bottoms, can the same apply to tops? For example, if this breakout out of the coil gets reversed in 2 weeks, would you say the market stock ‘might’ have topped?

  42. DG

    Gary: I am not a “buy the whole wad at once” kind of trader. I have quite a nice chunk of GDXJ/SIL (thanks!) but would like to add more on the way up over the next week or so. I assume there is no particularly intelligent way to do this other than buying down openings or other spots of weakness. If there is a tip you can pass along, I’m all ears!

  43. Poly

    DG, surely this being a 90% up day we’re bound to get some pullback tomorrow and maybe Friday. But judging from previous moves, it hasn’t been easy nor has it paid to try to chase and game a few points, when the risk is it moves away like today. I’m sure plenty of people held out from buying the open only to see this thing gap higher all day long.

  44. DG

    Polly: Normally I would agree but there are times when a realization/sudden shift sinks in and you get buying panics that can go on for a few days. By the time they pull back it is from a much higher price and you’d have been better off holding your nose and buying into the up day(s). If your crystal ball is working, let me know which this is! I bought a little more GDXJ at 38.85 this morning thinking I was nuts and it’s up well since then.

  45. Poly

    DG, go with your gut, there is no right answer here.

    This last hour move was a little “heated”. Going to be a sweat holding over the next few weeks 🙂

  46. Poly

    and was interesting that the dollar didn’t exactly collapse in tandem today, relatively flat or up since the -.75% open.

  47. alex

    ATTN BEDE:

    My humble advice…

    If you look at your 3 month charts and look at the AUGUST lows for say — SSRI or SLW or PAAS or HL or PAL or NG…you see where they were AUG lows and where they went OCT high??

    We are at the start of another run like that. Its like we are at the AUGUST LOWS AGIN.. If you sold sept 1st for profit , you’d feel sick about it later.

    I am holding on for a few weeks ( it may get bumpy, but it’ll almost surely be a bumpy ride upwards!

    Please sit on your hands for a bit 🙂 even if down tomorrow at the start, the upside is where this is going.

  48. Frank

    Shalom, not really. I have only 50% of my liquid net worth in PMs. It’s part of my conservative nature I suppose.

    The only recent buying I have done is in under-valued things like NXG and JAG. They under-perform on momo days like this. But both are up 5% so not complaining.

    Maybe it’s time to stop stock picking and focus on the big picture. I am looking at GLDX with some interest for easy exposure to the junior end.

    p.s. GDXJ prints 40.00 after hours.

  49. Poly

    I noticed the $40 print too, nice.

    What’s also interesting is that GDXJ easily had it’s biggest volume day today, as did many of the miners.

    GLD, SLV and most of the miners had double and some even triple their average volume today.
    However QQQQ and SPY barely broke above average volume, interesting.

  50. Natanarchist

    Ok…TZ…I don’t want to hear about Head and shoulders, inverse sideways up/own triangle FlintRubble Bubble cake. I just want you to post that you FINALLY bought some gold/silver??? There were some great entry’s the last week or so…did you any? You gotta make cash instead of worrying about charts..

    just busting your chops..haha

  51. catbird

    WARNING FOR PM BULLS:

    Today’s action convinced Tim Knight that gold miners (GDX) are up for an amazing run. We’ve been warned.

    Next we’re going to have Justin rearing his head again to announce he’s a precious metals bull.

  52. Shalom Bernanke

    True catbird, that is not a good sign. I’m not selling yet, but we might have some rough days in the near future.

    The good news is Tim will flip-flop back to bearish after the first down day.

  53. Jayhawk91

    INSANE day. Been watching some of the rare earths stocks and I kept thinking when is this going to happen with the gold and silvers???

    I don’t know how you add on a day like today, I saw SSRI not up as much and grabbed some quickly, was loading up on PSLV as it was undervalued but since is a trust this could be premium issues. I had my target list of stocks to buy that looked oversold and could be worth riding a bit so I bought a little of each. (JAG, MFN, XRA, NXG, NAK, HL, GSS, GBG) These started the day only slightly up and ended gaining or staying flat. Sold some yesterday and wanted to re enter this am and was hoping we would get opening weakness, but not even close. Sad to say I lost my SLW, SVM and ANV positions yesterday. That plan looked good on paper, but I got punked!

  54. Jayhawk91

    I was looking to top off the tank and yesterday got me flustered not knowing if I should add or not based on the reaction, but now it looks like get on board or miss this move into the end of the year.

  55. Keys

    Haven’t talked to much…simply been holding through this entire thing..did nothing, seemed too much work and too complicated. I went with the Ben’s a moron investment approach.

    Poolboy, Napboy and I got into a fight about what to do first. We decided to drink beer sleeping in the pool.

    Gobble Gobble

  56. Poly

    I hope the great Richard Russell does not mind me quoting from his subscriber post tonight:

    “Gold continues to climb higher in its primary bull market. Primary bull markets tend to wipe away all mistakes. Primary bull markets also tend to rise higher than anyone thinks possible. Buy gold at the highs, buy gold on a correction, buy gold when its in a confusing consolidation, and within five years you’ll thank the day when you bought it. “

  57. Jayhawk91

    Is anyone else buying PSLV? I’ve been jumping on it big time, but don’t think it’s gotten much press so many don’t know about it yet. I added a bunch yesterday and today.

  58. LowTax

    Fusby, I hear you. Upon waking up and checking the tape, the first thing I felt was fear. THAT is very odd – it sure seems I should have been elated at the huge increase in my account balances instead. But fear it is, and it hasn’t gone away. Regardless of how much money we make, we all know that it is because things are getting worse and not better. It sucks to see America go down the drain.

  59. Frank

    Holy smoke, I turn on CNBC and catch the end of Jim Cramer: “Gold is not a commodity, it’s a currency.”

    I used to think that the guy was a moron.

  60. Onlooker

    LowTax

    Yep, I know the feeling exactly. There’s a bit of cognitive dissonance here as I see my positions rise in value by leaps and bounds, but realizing why it’s happening. But I sure am glad to be positioned well here to survive the storm.

    Thanks to Gary, again, as he has called this thing masterfully. So many others out there are completely lost on what’s happening, sure that the stock market should tank any second. The cycle theory is flat out the best, no doubt.

  61. Onlooker

    I’ve gotten worried about holding a large position in PMs at times lately as they’ve relentlessly cruised higher in value, just because of a natural contrarian bent and because I can’t help but think that surely Bernanke will wake up to the insanity of his monetary policy.

    But then I take a sampling of the mainstream media/economist viewpoint out there and realize that they don’t have a clue and continue to think that we have to do this, etc. And then there’s Bernanke’s Wash Post editorial laying out his thoughts on QE2, and that lays all those concerns to rest. It’s going to go on and on, and the dollar is being beaten like an abused step child. It’s ugly.

  62. Frank

    Bernanke and other Keynesians fear deflation and have an arrogant belief that they control inflation in the unlikely (to them) event that CPI inflation starts to accelerate. So he will never come to his senses.

    In the modern post-Volker era, CPI has been rigged and that guarantees that there is no follow through on wages from Joe Sixpack like in the 1970s. And we’ve had this 25+ era of asset inflation in various forms. Through the end of the 1990s they had a grip over gold and commodities but that slipped post-2000. Now all they can do is pump up non-leveraged assets.

  63. Robert

    Gary officially announced retirement today with this move and moved to Hawaii already?

    That’s the word on the street.

    I know, I know. Gary’s at the casino, possibly strip club with today’s success.

    It’s possible he overdid the Mexican lunch knowing how many burritos he could afford and is still passed out, or maybe he had no worries in the world today with this morning’s jump that after lunch he decided to join the Mexican’s for a siesta and their still out cold.

    Gary, what’s up?

  64. TZ (7006)

    NAT,

    >Ok…TZ…I don’t want to hear about Head and shoulders, inverse sideways up/own triangle FlintRubble Bubble cake. I just want you to post that you FINALLY bought some gold/silver??? There were some great entry’s the last week or so…did you any? You gotta make cash instead of worrying about charts..

    I went “RAZVAN” on silver futures last night around midnight. (Sorry Raz 🙂

    I’m now up over $1.30 with solid status.

    I also got gold futures today as they were congesting around the previous high. I expected an imminent break and it happened.

    Today was a ‘recognition’ day. You could see it across the board. It was recognition (1) by those waiting for lower buying points that they simply won’t arrive – the train is gone they have to either not play or buy up now. (2) It was also a recognition by people who didn’t know what the markets were doing lately, what to buy, and whether gold was the answer. They are slowly realizing it is.

    HUGE sums of money are trying to flood into this sector. This is PHASE 2 with Institutional/Billionaire type money. The clown masses are PHASE 3. They will START asking question and tip-toeing in the water at the END of this C wave (only to get crushed). And then finally join during the next A-B-C wave after that.

    I bought last night cause I figured ‘da boys’ threw all they had at the metals before fed and yet they only managed a drop of a few hours. So I called those lows my stop points (higher now) and jumped in.

    I’m not going to go into how much leverage I put on (maybe later) cause gary will just lecture me, but suffice to say it is large an will easily compensate for earlier missed gains. (It is also leverage NORMAL with how I trade.)

    I expect silver $35 or higher (cause everybody else is expecting $30) and $1600 in gold in this leg up. (Although since everybody seems to think this then maybe we really top at $1800.)

    Silver might actually go nuts if the shorts get squeezed out and it turns into a ‘commercial signal failure’ as others discuss. $50? who knows. Like gary, I prefer silver more here than gold.

  65. Shalom Bernanke

    Jay,
    I haven’t bought PSLV yet, but will convert my silver etf’s to that one at some point. I think once they get fully invested and things temper a little it’ll be the best.

    I do own PHYS, along with 3 miners and both SIL and GDXJ.

  66. Jayhawk91

    Shalom-

    Good to know you have your eye on it. I think once people learn about PSLV it’s going to be a hot fund.
    Regarding AXU…A good thread over at Kitco is discussing various juniors. Here’s a summary from one of my buddies over there-

    “Alexco (AXU/AXR) is a top shelf silver junior that also performs “environmental cleanup” of former mining sites reclaiming gold and silver while simultaneously cleaning up tailings and other detritus around former mines. They are paid by the government for their cleanup and get to profit off the recovered metals. They also do mining themselves. An excellent future blue chip stock IMO”

    https://www.kitcomm.com/showthread.php?t=67230

  67. Gary

    Steven,
    I expect it to be more of a consolidation rather than a correction. Probably more sideways to let the 200 DMA catch up.

  68. Gary

    EricH,
    I wouldn’t be looking for a top anytime soon with the Ben throwing free money at the market.

    This one is basically a no brainer. As long as the dollar is collapsing down into the yearly cycle low one has to protect themsleves from the Fed. That means you have to buy something real.

  69. Gary

    DG,
    I doubt we will see much of a correction until the dollar tags support at 74. There’s a lot of air between where the buck is now and 74. One has to ask themselves does it really matter if I enter and then have to weather a one or two day minor drawdown before the dollar gets busy heading down to 74?

  70. Gary

    Robert,
    I’ve been out climbing most of the day and no Mexican for me until Sunday night. I’m going to another weightlifting meet Sunday and I’m still about 3 lbs overweight. So I will be dieting the next several days. You better believe I will be eating a big burrito come Sunday night though.

  71. TZ (7006)

    True statement:

    Take same amount of food/callories:

    1) eat majority in morning – lose weight

    2) eat majority at lunch – same weight

    3) eat majority at dinner – gain weight

  72. coolkevs

    Demark boy here on the scene of the dollar collapse, as always for what it’s worth. Doesn’t seem like anything can get the market down or gold/silver. But in Demark terms, we are in the midst of weekly sell signals on everything – Dow, SPX, NDX, Russell, gold, silver, you name it – sell signals on weeklies are good for 3 months (12 weeks) which would take us into January. But another key thing happened today, the dollar recorded a perfected buy setup on a weekly basis. Starting next week through the first week of December, there is the potential for a dollar rally that might take us back to that 80 level again. I’m seeing some funky behavior in the Euro today/tonight – you would think it would have been up to 143/144, but Ireland and other things are weighing it down around 142. Resuming the sovereign debt crisis is not bad for gold/silver as we know, but just be aware there could be a pause in all of this euphoria. Still looking at that DXY 72.5 level to be hit to reach long-term exhaustion – this is the monthly level. This level being hit would be indicate a 1-year (12 months) signal. Quarterly exhaustion level HAS already been achieved at 76.69 – folks, this is a 3 year long signal of dollar strength (12 quarters)! See http://www.minyanville.com/businessmarkets/articles/Gold/9/8/2009/id/24328, especially the section “The Dollar, Technically”. I know, I know, the article is over a year old and even I have to laugh at “dollar is near bottoming and gold is near topping”, but then the Euro crisis happened. In sum, I believe we will have our dollar “collapse”, but it may not be as deep as being reported here.
    Keep on your toes, and thanks for reading!

  73. Robert

    Gary,

    what are your projections for the winter consolidation in terms of gold and silver prices at that time??? thanks, and good luck on the weight loss…

  74. Jerred

    coolkev,

    with all due respect this has to be the dumbest statement I have ever heard.

    “sell signals on weeklies are good for 3 months (12 weeks) which would take us into January”

    so you are telling people to sell now and come back in 3 months. If it goes against you then hold for 3 months, then cover.

    maybe it’s just me but that sounds ignorant!

  75. Gary

    CK is trying to call a top based on overbought conditions. Unfortunately bull markets can get extremely overbought. Then they get even more overbought. And then more overbought.

    It’s a fools game trying to pick a top in a powerful bull run with oscillators. Oscillators are for when markets are in trading ranges.

  76. Robert

    I know nobody has any clue to that question but some have more “educated” guesses than others. Would you care to share some “guesses”? Thanks, Robert.

  77. Robert

    KWN:

    “If silver holds for a few hours above $25.50, they (local traders who have been invited short) will just capitulate. You could see a $1 move in an hour if there is a race for the exits. Above $25.50, the locals that are short will literally get margin calls and will have to exit their shorts and it could become disorderly on the upside.

    The jaws are closing on these shorts. The silver market is underpinned by everyone who is waiting in the wings to accumulate, that is why you saw the extraordinary buying yesterday off of the lows which continues in today’s trading.”

    There was also mention that the industrial users of silver are close to losing faith in the banks which have been telling them there are no problems with silver supplies:

    “The industrials, when they see that there is tightness or delays in shipping, will then go out and stockpile silver so their assembly lines are not shut down. We would then be talking about potentially tens of millions of ounces required for delivery to these industrial users in a short period of time. The banks have told these industrial users for years that there is no problem with silver supplies. When these industrial users lose faith in the banks, they will move right away to secure stockpiles.”

  78. Nick

    Gary: Great day today! Thanks! Is this offer for new subscribers or can existing subscribers add to their subscription?
    Like Robert, I’d love to be a subscriber till the final blowout top!
    Good Luck to all!

  79. makutaku

    Let me bother you guys with my first post by asking what is SoS and what is BoW ?

    Where/how can I learn to use these “tools” ?

    I couldn’t find information about them in the Terminology page.

  80. Gary

    Buying on Weakness and Selling on Strength. It’s a sign that smart money institutional investors are expecting a top or bottom.

    If you look through a few of the nightly reports you will find links to the page in the Wall Street Journal where the data is published daily.

  81. thedocument

    Looks like I now owe you a burrito, Gary, but I still revel in the fact that I am the only one here to win a bet against you. Shouldn’t have doubled down on the second bet, but I must say my portfolio has thoroughly enjoyed losing that bet 😉

  82. Robert

    Now you sheep be very good tonight,

    remember one thing,

    soon, very soon, you need to sell all your mining shares, I don’t care if you like gold or silver more,

    but, you must, I repeat must,

    transfer everything into GLD and SLV.

    do as your told, protect your assets from inflation, buy cars today to protect your wealth, and if someone give you the crazy idea of buying gold, gld is your ONLY option.

    http://www.marketwatch.com/story/10-step-inflation-survival-guide-2010-11-05

  83. John

    Robert: “….and if someone give you the crazy idea of buying gold, gld is your ONLY option.”

    Sorry, doesn’t compute.
    Is there something I need to know – or are you joking?

    {8-o

  84. Shalom Bernanke

    “While is true that gold/silver are heavily overbought now and PM stocks are either in heavily overbought territory or rapidly approaching heavily overbought territory, during strong runs in past gold/silver bulls, the underlying metal prices and stock prices have remained in overbought territory for months on end. This alone is not a reason for a correction as Central Bankers have been fighting the fundamental weaknesses in their fraudulent global monetary system daily for quite some time now. When bankers legalize fraud through the legislation they sponsor/endorse, technical analysis is insufficient to ascertain the short-term direction of not only stock markets but also gold/silver markets.” -Zero Hedge

  85. Gary

    Why is there some rule that says that an asset can’t trade back above a certain level?

    We still have 5 to 15 days before the cycle is due to bottom. I expect it will make it down to 74 before it bottoms. How it gets there is insignificant but I am confident it will get there before this short term cycle ends.

    Those traders that dragged their feet yesterday are getting another chance this morning. I suggest they don’t make the same mistake twice.

  86. Chrys

    Gary – Gold:Silver ratio is down to 53. Do you expect that when gold hits it’s intermediate high that the ratio will be down around 46-47 such as it was in 2008? My gold & silver price history doesn’t go back further than 2008. What’s the lowest it’s gotten at gold high turning points? Thanks

  87. Shalom Bernanke

    Miners have a long way to run, IMO.

    Btw, couldn’t get that Tudor Jones pdf to come up, but I know he’s a buyer of what worked best so far in 2010, like ags, gold, and even India’s Nifty Fifty.

  88. Shalom Bernanke

    Jay,

    I stand corrected on the PSLV. It looks as though Sprott has already put all the proceeds from the offering to work.

    I’ll be a buyer at some point, both with new funds and proceeds from rotation out of SIVR.

  89. Poly

    AGQ prints $120…..F**ing Rock Star!

    That marks a 100% gain on the stock, thanks Gary!!! Add a tip jar to the site so I can throw you one AGQ NOV $100 Call 🙂

  90. Razvan

    lol no, Gary has the discipline necessary to exit when tings dont turn out the way he planned. As for us, we will either bail out too quickly or stay in position until there is nothing left.

  91. catbird

    Shalom,

    Yeah, I held my nose, bit down on a stick, took a shot of Dewar’s and bought a TAD more AGQ this morning. Half of what I usually buy.

    Goes against every instinct in my body, but you know, “this is a bull.”

    If this drives the price down so newcomers have a better opportunity, they can thank me!

  92. catbird

    Isn’t it something how the metals started strong this morning even as the USD spurted higher?

    Is that more of an expression of how oversold the USD was (dead cat bounce) or how strong metals are? I know it’s a little of both, but a divergence like that can’t last long.

  93. Gary

    The metals are startng to trade on momentum as more and more funds start to chase the move.

    It is the only sector in the world trading in a vacuum.

  94. Marc

    Agreed, the dollar has almost retraced the drop from yesterday and still the market and PMS especially aren’t budging.

  95. Trader H

    gary,

    although i have been trading for 3 years, im fairly new to options so excuse me for a newbie question. you mention that you buy calls with a beta greater than 80. how do you find out the beta number of a stock?

  96. Gary

    A delta greater than 80.

    Let me warn you that if you aren’t completely familar with options then you have no business trading them. Options have destroyed more portfolios than the 29 crash.

    If you have only been investing 3 years I really doubt you are ready for options yet.

    Now is not the time to buy options anyway. That time will come at the bottom of the D-wave. Right now if you want to add a little leverage use margin.

    I’m going to lay out exactly what will happen to you if you choose to load up on call options thinking you’ve found a sure way to get rich quick.

    You go all in on at-the-money calls and next week we get a one or two day pullback. Your total portfolio takes a 75% haircut, you freakout and sell for a massive loss that then takes you a year or more to recover from. Or you go all in again trying to make back everything in one trade and the same thing happens. Now you’ve lost so much you can never recover.

    Trust me on this one this is not a get rich quick business. I will let everyone know when the time is right to use options, and when we do it, we will do it the right way.

    You would do yourself a big favor if you read the options doc in on the website.

  97. hiptwist

    So, in some weeks we’ll have to reduce our exposure to PMs. As I have about 20 miners in my portfolio: Any opinion or studies about the best strategy what to sell?

    – the best performers? (“What rose most will drop most”)
    – the worst performers? (“Sell your loosers, let your winners run”)
    – other ideas? (equal haircut, … )

  98. v

    Gary,

    Dollar is ralling from 76 levels. is it a sign to book book some profits or we should just switch off and let the bull run.

    V

  99. pimaCanyon

    SPY SoS -64 today so far. We’ll see where the close ends up.

    TA has all kinds of reasons that we should see some kind of pullback here in stocks. Not sure if or how a pullback in the broader market will affect PM’s or miners, but maybe we will get another chance to add to our positions.

    Dollar is surprisingly strong today.

    Bonds have been falling since Fedspeak which means interest rates are rising. That can only have a positive effect on the dollar, so maybe we are seeing a long term dollar bottom here. It’s either that or rates need to reverse soon.

  100. Shalom Bernanke

    I am no longer taking the $USD as a cue to the metals since they have no problem going up together.

    Eventually the strong dollar/weaker metals relationship will resume, but for now all that matters is money is flooding into the sector=bull mkt.

  101. Frank

    My UUP hedge (Nov calls) is looking better today, as I added yesterday. If PMs are only going up as a non-leveraged function of dollar weakness then I am not too happy about it because it is a zero sum game.

    Especially since I am leaving the US in a few months…….

  102. pimaCanyon

    Frank, are you leaving the US because you think things will get bad enough here that you would prefer to be somewhere else, or are you leaving the US for other reasons?

    What country are you moving to?

  103. pimaCanyon

    Just refreshsed the SoS page and now we have a pretty big number on the Q’s -139. SPY is at -57.

    Stocks are certainly due for a pullback here, so maybe it’s starting.

  104. Gary

    Rav,
    Let me ask you a question. If you close your positions at $1400 and then gold rallies to $1550 or $1600 are you going to wish you hadn’t done that?

  105. Gary

    PC,
    Q’s are meaningless only the SPY has any predictive value and it’s not a very good timing tool. We could get -200-300 million and still have a month before a top arrives.

  106. Razvan

    i am only closing for the weekend because i am very close to winning the traders challenge on my broker and there is $3000 prize! do not worry, Sunday at 6:00pm eastern time i will be back in! : )

  107. Razvan

    out of the top 10 traders for this week i am the only one trading metals. Everyone is killing themselves trading currencies, mostly EUR/USD. lol if they only knew the power or the gold bull!

  108. Poly

    LOL Razvan, a few days ago you had margin calls, now you’re winning competitions, hope you see the correlation.

    Next time you walk into the Bellagio, place a bet on Black 13 for me would you!

  109. Razvan

    yes Poly isnt it ironic? i went from having a major depressive episode on Wednesday to a feeling of euphoria today. Like Gary said, the bull will correct the mistakes, i just didnt think it would be so fast!

  110. Frank

    Pima,

    I wish that I could say that I am fed up and leaving a sinking ship, but that’s not the case. I am moving to Japan.

    So I am moving from one basket case country to another. 🙂

    It’s actually pretty interesting because Japan is going to have to start printing like crazy since its bond bubble is unsustainable due to demographics. As much as Krugman and co. would like to run up debt to 200% of GDP it’s not possible for the USA.

  111. TZ (7006)

    POLL OF THE DAY:
    For those who want to divulge/discuss…
    ===========================
    HOW MUCH ARE YOU LEVERAGED?
    (And proportion of gold vs silver stuff)
    ===========================

    Gary I think is 1.3x
    Razvan?
    Others?

    If you don’t mind I’d like to withhold my response for now 🙂
    Pollster’s privilege!

  112. Gary

    The dollar isn’t even close to getting back above resistance at 77.

    Why are you worried about the dollar all of a sudden? We have a confirmed failed and extreme left translated cycle in progress.

  113. Frank

    How do you define leverage?

    I recall that Gary used to define naked options as the equivalent dollar amount of buying shares, so if you buy 100 GDX calls it is the equivalent of buying 10,000 shares of GDX. It is a good way of getting leverage without risk of a margin call, etc. but losses can be substantial on the amount risked unless you are deep ITM.

    In the fall of 2008 I had about 60% of my account in real dollar terms in miner calls.

  114. Razvan

    lol How are you going to ask a question but not want to divulge your position??
    on my conservative account i am overall 10:1 and on the risky account 26:1 (70/30 gold to silver , gold more leveraged)
    I cannot compete with N1tro who is 400:1

  115. TZ (7006)

    FRANK:

    Few have (or should have) options. Just ignore them unless it’s your entire portfolio or something like that.

    For futures, the NOTIONAL value is what counts. 1 gold contract is 100oz so that’s $140,000 of a position regardless of how much margin it takes.

    I’ll go into what I did last few days in a bit. Don’t want to jinx it now. Not trying to be a jerk.

  116. n1tro

    I think Poly’s point is that you are just gambling and not investing. Can’t make it “big” if you are day trading is the motto around here.

  117. fubsy_cooter

    Just because I haven’t seen it mentioned yet….

    Today is a tell. Dollar index is up, and Silver is trading like the dollar dropped half a percent. Next week, if the dollar drops, the metals will likely turn on the afterburners. There is a major put under the metals market. I added another 5% today. My next 5%add will be on a red day near the close.

  118. Frank

    Ok, in that case I am leveraged 1:2. 🙂

    Up until January 2009 my portfolio was nearly all options and cash. I held a lot of that through expiration in January 2009 to build my base in PMs and then became a lot more conservative.

  119. Pseudopersona

    !!!Newbie question alert!!! When you “take profits” does that mean selling off your entire position and buying back in at a lower entry, or just selling off the portion equivalent to the amount of money you have made so far on the trade.

  120. Gary

    P,
    I wouldn’t sell everything. Keep a core position during this C-wave.

    If you want to take profits in front of a daily cycle decline you could maybe trim positions back to your core or a little more than core.

  121. Shalom Bernanke

    Frank, Japan is an interesting choice. Do you want to move there, or do you have to (for work, family, etc).

    I’d like to spend some time there, but have never been. Good luck on your adventure.

  122. pimaCanyon

    Leverage?

    I am not leveraged. I have about 60 percent of my account invested in GLD, GDXJ, SIL, SLV, and DGP. One could say the DGP is using leverage because it’s a double long gold ETF, but it’s only a small percentage of my overall holdings.

    If I take off any positions before the IT low, I will sell GLD, and put back on DGP instead, and possibly AGQ.

    I am somewhat new to Gary’s letter (a few months now) and because I’ve been burned in the past following other analysts, I am still a bit cautious (which is why I am not 100 percent invested). But I have to say that Gary has been ABSOLUTELY RIGHT ON since I’ve been following him. His subscription service has got to be one of the most amazing bargains available in any market place.

    Hats off to Gary and many thanks for sharing your knowledge and making it affordable for all investors, even those with limited funds!

  123. Nick

    Gary, would you scale in and add to Silver or AGQ @ these levels? Have a position from close to the daily cycle low in Gold and getting a little greedy wanted to know if adding at these levels would be prudent, given that 1400 on gold is a stone’s throw away (Could reverse @ this round number)

  124. Gary

    Nick,
    This C-wave has a long way to go yet. If you are trying to time the perfect entry I’m not going to be much help. If you understand that the bull will correct timing errors then any entry is OK.

  125. Shalom Bernanke

    There are also other commods outside the stock/futures accounts that I’ve been buying, like physical metals and timber properties.

    Don’t like to keep it all in paper, just in case they change the rules and yank the carpet out from under us. Such things like miner taxes, etc.

  126. Nick

    “This C Wave has a long way to go” –

    I know you have mentioned this several times, but wanted to hear it once more:

    The above statement is based on the $$$ yearly cycle low, and not on a round number in Gold or the SPX secular bear market?
    thanks,

  127. Frank

    The Japan move is work related, but 100% voluntary. It actually involves their dysfunctional economic policies but I can’t discuss further. I think it’s a hoot.

    I am annoyed, however, that the yen is around 80. Thanks, Ben Shalom. Bring back the carry trade!

    I actually had half of my cash reserves in yen until end of 2008. I was forced to sell because of technical reasons. I wish that I would have held on to that. I bought those yen at 120-125 to the dollar and had closed out all my EUR holdings.

  128. Frank

    JAG is having a good day. I wish that I could say the same for NXG who reports on Nov 10. Hoping for some good news for once!

  129. DG

    Hey guys! Possible sell signal at the close on the SPX. it’s gonna be close so i will post at 4:05 for after-market trades. It’s been a while. Remember, the sells are not as good as the buys and this is for a TRADE (if I get it) so don”t marry the thing.

  130. DG

    Sorry Driver, but I can’t share it. I am in the middle of negotiations to be the trader for a new hedge fund base on the system, being set up by a long-established fund. They’d be a little unhappy with me if I published the guts of it! It has been backtested (no optimizing or data mining) to 1980. The buys are right over 80% of the time, but the sells are only about 60% right.

  131. Nick

    Gary,

    One last thing, let me rephrase my question:

    The stop below the daily low of the past couple of days on Gold makes sense…But since we have rallied so strongly since then, the odds are that we will book profits when this daily cycle tops (Nov end?) rather than have Gold go into an intermediate decline below the daily low?

  132. Poly

    I’m 22% metals for the long haul in our family IRA’s and long term investment accounts, no leverage on these.

    I’m 60% metals in the speculative accounts, nothing but options, so fairly levered up. Good amount of it is high delta with plenty of time, but I would be lying if I didn’t say there were plenty at one time out of money options.

    For those that know the feeling, there is nothing like staring at a 10 bagger entry in your realized gains screen. Before you get excited, I would add there are plenty of 100%’s in there too…and they’re not green!

  133. driver1

    DG, interesting stats. My model (SPX) from 12/31/86 to present is 74% for longs (100% winning years) & 61% for shorts (92% winning years,) with 16 trades/yr. ave. for both.

  134. driver1

    DG, one additional stat: I use the combined model (2 long to 1 short) which has had no losing years & 69% winners (not considering stops.)

  135. pimaCanyon

    Thanks for the post, DG. I took a small SDS position earlier today based on a timing window and I’m holding it over the weekend. I also liked the look of the wave pattern and other technical indications that we might have some kind of pullback. Moreover, I see it as a bit of a hedge against my large PM and miners holdings. If stock go down a bit, miners could go with them, but my SDS position will make a little money.

    Have a great weekend all!

  136. DG

    Pima: The stop is 1%. If we rally more than 1% the market essentially becomes random going forward as far as the signal is concerned. I may just hold through it as things are overdone on the upside and I also am looking at it as a small hedge against my PM’s. (By the way, SoS at $68mm today. Not much but more than we have seen, so…?)

  137. Brian

    TZ: You said something about the recognition point yesterday that makes a lot of sense. I have had friends, who trade a lot of money and had me harping to them on PM’s, now crying the blues because they are missing it. One just said hell with it and bought 500 shares of AGQ on the spot today after telling me yesterday it had run up too much. So yes it now turns into a momo program.

  138. Brian

    TZ, I was always afraid of leverage and options. Never used leverage. Had my azz handed to me on options. Until Gary taught me about cycles, was I finally able to see how the money gets made with options. I levered about 20% with AGQ, but the options have made me the % and $ profits in this run from the intermediate bottom. I only buy in small quantities per issue ($500-$1000), and only after a large retracement. I only buy calls, and I only buy when the stock is going down. It isn’t written down, but it is working. I tend to sell half as soon as I have a 100% return, so I am guaranteed to stay in the game. Being an options loser is not where anybody wants to be. I know Coach wouldn’t totally approve, but I am pretty careful with this part of my portfolio.

  139. Gary

    It’s still too early for gold (and silver) to move down into a daily cycle low but we have had two really strong up days in a row. I wouldn’t be surprised to see some mild profit taking or sideways consolidation early next week.

  140. Narayana

    Yo Gary, back in July when you called that final washout spike before gold would resume it’s uptrend… that was a sick call!!! Nice work!

  141. Robert

    Shorting the market is a mistake. QE is a very powerful force negating this, as is a top in the bond market (bond capital transfers out and into equities).

    You might get lucky once or twice but over time you are guaranteed to get burned.

    It is simply amazing how so many are handed money on a silver platter (they are told what is going to happen in the market, i.e., right now, inflate due to the inflation of our currency) and something propels them to then act against the market. It’s like they need to test out the alternative, proven-false side, just for the thrill of it.

  142. Robert

    It’s almost stubbornness.

    You’re told where the only vacuum is, you are told which exact location of the vacuum is expected to have the best performance (Ag) and then you decide not to listen out of stubbornness so you go elsewhere or act against the very advice you were given (shorting) so that you can have all the glory about being right once out of 10 times.

  143. Robert

    What happened to the sure win strategy of just buying, holding, and adding on dips, and then selling at major tops?

    What about Gary’s history lessons about 100% guarantees to underperfrom the “Old Turkey” by trying to play the wiggles.

    I think Gary should implement a change to the username to oldturkeyoldturkeyoldturkey just so that you guys remember.

    But whatever, short the market, lose some cash that should be going into PMs. Just means cheaper PM shares for the rest of us 🙂

  144. Robert

    Gary I was informed through an oil elite insider that oil would hit $150-$200 this Spring (this is scary), and gold will hit $2000 (ironically this is kind of what you just hinted at may actually happen this Spring). Silver he said would shoot up with gold but he didn’t mention any price targets.

    I know this is a market and there are no guarantees, but I just wanted to inform you of this insider forecast. He has made numerous, outlandish at the time, calls on oil (moving up to $150 and then back to $70-$85 range to consolidate for over a year) and he has been spot on.

    Just letting you know so that you can maybe keep your eye on this scenario playing out. He is basically royalty.

    Good luck lifting them weights.

Comments are closed.