1. RA


    If the dollar cycle fails and starts moving down to the 3 year cycle low, then you are expecting the final leg of the C wave to begin right? Then what about the intermediate low for gold? Are you expecting it be higher than the last daily cycle low in this event?

  2. MBS

    If the daily dollar cycle has actually topped, this would constitute a pretty left translated failed cycle, correct? If so we can expect an orderly move down into the 3-year low due in about 15-20 weeks?

  3. Ollie

    Gary, aren’t traders just running stops in the current low volume/high volatility xmas environment? Can’t the USD move be just a shakeout? I mean the dollar dipped quite hard but is coming back very strongly…

  4. hiptwist


    the DeMark indicators are described in his books. The problem with the rules are, that they are described ambigously.

    To always get the correct signals it is necessary to subscribe to some expensive services like Bloomberg. He supported these companies to implement the signals correctly.

  5. DG

    I love this game, even when it drives me crazy! I am holding my shorts and fortunately didn’t get shaken out. China is down 4% since I posted that short idea last week. I am out of PM’s and hope to get some, but I think we have a mini-crash in our stock market near future so will surely be there for that. Glad to see the PM’s and SPX going in opposite directions. I am not convinced the dollar rally is over (it’s recovered almost all of its earlier decline today) nor that gold is done consolidating, so we’ll see. Gary is a helluva lot better at that market than i am. Fascinating, as always, though, and with the volatility it’d be great to get the current setups right as the opportunities are large.

  6. TZ(5288)

    Went long some various stuff with reasonable stops. Gonna see how much carry through this buying has today. There might be a lot of people out (like many of us here) that will start to chase and realize (again) the dip isn’t coming like they thought.

  7. TZ(5288)

    SLW breakout of a down wedge (daily) also. Everything is breaking higher from congestions.

    Note that I would think gold will rally at least $100 before we get to next resistance point (*IF* this is a bona fide move higher)

  8. TZ(5288)

    I said last night how I had the sneaky feeling things wanted to break higher. Mentally I was pretty prepared for this and now that it’s looking true I got not problem switching sides and heading out long again. (I wasn’t short. I’m just saying re-adding back metals)

  9. Gary

    I have no idea. I don’t invest in individual companies except SLW. That way I don’t have to worry about underperformers or company specific news affecting price.

  10. TZ(5288)

    I went from zero to 60 in just a few min. gold silver futures and slw. everything.

    All currently long with profits already. I’m now waiting and watching to see how the day pans out. I suspect it could be very strong up. If not and we collapse back or it doesn’t look real I can get out without much trouble or loss.

  11. Natanarchist

    Just when I was getting good at twiddling my thumbs….Could this be a case of deja vous all over again? I am still going to wait for the new year. Are you ready for another month or two of abuse Gary? Remember how bad it got last year? Well still have my core so I can handle waiting a week or two longer. Plus 2010 was a phenomenal year..let just enjoy it that success for a little longer eh…haha

  12. TZ(5288)

    Markets live to surprise people and throw them off. What better than to continue up strongly during low vol vacation week when few are looking or expecting?

    Of course it could also be a low vol fake out. And gold/silver futures options expire today so maybe that’s playing a game with us.

    Like I said, I’m gonna see how the day progresses. It’s easy to hold and watch when you have a profit. Having losses is where you lose it mentally.

  13. Steven

    Odd. The dollar has come back from its losses yet the PMs didn’t correct (especially silver which continued to go up!). Any thoughts on why they are moving on their own now? Options related expiration doesn’t seem to explain the strength.

  14. Steven

    Maybe this is a short-squeeze which is made worse for the shorts due to thin volume. Then again, SLV has traded over 11 million shares which is not that thin. I’m still long but trying to understand the reason behind the move although I know many don’t care about “reasons” I’m one of those that do.

  15. Steven


    Are you saying it may be that the bull has bull has taken off again into its C wave even if the dollar is not yet ready to cave in in anticipation of the 3 year dollar decline.

  16. DG

    Gary: Your reason for buying back into gold this morning was that the dollar was breaking down from the bull flag. and the that dollar will be the driver of the last leg and final C-wave. Now that the dollar has reversed its sharp drop, do you still think the dollar daily cycle is over, and if not—and the dollar keeps rallying—what then for gold? I suppose tonight’s report will address these things. Very interesting and lots of curve balls, eh?

  17. Gavin

    Gary you said in your post yesterday that it was unlikely we would get the start of another intermediate cycle up in gold, ‘Not until we get a wicked profit taking correction first. Gold needs to give everyone a good scare and it’s safe to say it has done no such thing yet.’ Two questions:

    1. Is there any price confirmation in gold that would convince you to add back leverage, or would you only do this if the dollar broke below 78.82? In other words if the dollar kept rallying and so did gold would you just retain a core position no matter how much gold went up?

    2. What would confirm for you that the PMs are not heading up again and in fact heading back down to an intermediate low?

  18. Gary

    I didn’t buy back. I never left my core position to begin with.

    I was just warning those people that sold all their insurance that they probably better buy it back immediately because what was supposed to happen didn’t.

    Yes the dollar has rallied back, but it never should have broke down in the first place. That makes me think we got a preview of things to come this morning. The fact that gold isn’t giving back any of it’s gains is confirming that.

    So everyone should be prepared in case the dollar confirms a failed cycle and if that happens gold should take off into the final leg of this C-wave. Stocks could continue to creep for a long time if the dollar is collapsing.

    The safest time to short stocks will be at the bottom of the three year cycle low.

  19. Steven

    Another possibility is what Gary always says that the big money gets people all excited by moving above a big round number (i.e., $30 silver & $1400 gold) so they can exit. This move is utterly confusing!

  20. OptionsOnly

    I still think we will get an int correction, as it’s in the cycle timeframe for such. As long as the Q’s and SPY stay below their VWAP (currently at 54.69 and 125.64, respectively), we should see more sellers come in the next few days, even if it’s just profit taking. SPX posssibly to 1210 or so by the time this short term correction is over.

  21. Gary

    I don’t know there is a confirmation on the upside because a cycle can top at any time. The confirmation will come if the dollar breaks down.

    We would have confirmation on the downside for gold if it moves below the prior cycle low at $1161.

  22. alex

    oa92000 said…

    is it triple tops for HL? good or bad?

    I bought HL at $11.00 because it is only a triple top if it retests the top on lighter volume each time. Since HL had 2.5 million at 10.00 a.m. , I bought thinking I could sell at day end if it gets light.

    now at noon it has 9 million , prob double that at days end…it hasnt had this much volume all day for the past 5 days…so it is PUSHING against the high with volume. Looking for a breakout.

    this is how I played GMO…(see that chart for example …also why i rebought REE at close yesterday)…pushing highs on volume.

    This is ‘trading’ example , not a recommendation. also bought EXK for same reasons

  23. Slumdog

    From the below thread line, it’s again obvious that I can call the numbers. I’m not here to prove that.
    Do you know the name and contact details for a competent psychologist who specializes in trading behavior, anywhere in the USA or the world?
    MLMT, I joined your blog. Contact me, if you would.

    Gold’s night session is creating a heckuv an opening NY Pit day over day gap.

    Those gaps don’t stay open, except on such extremely rare occasions that they’re memorable. They fill in 1 to 3 market sessions.

    It’s a very high probability drop back to 1386 range, the high for the day. So, I shorted the first position at 1391.3, and I’m waiting to see. 8:37 pm
    Apologies, I won’t post like this again. The risk of this current 60 min bar blowing out the top from where it is now 1392.1 is too high. Exited the gold trade at a small loss. 10:02 pm
    #3 Gary said…
    Now you see why I never short a bull market and why I keep some kind of core position 🙂 The surprises come on the upside.
    December 28, 2010 2:34 AM
    Last before I hit the hay… GC1G is at 1394.8, with a high at 1395.6 or 8.

    Gold is moving off of Mon morning’s double bottom low, with the extra fuel of the first low, on 12/23, a major reversal. I just noticed it because I’ve been so mesmerized by all these new measuring tools I didn’t “look”. Monday morning’s double low was one of the more powerful setups. The market target will be 3x. 1X at 1390 was reached later on Monday and there was a skirmish, and now the next targets are 1398.5 and 1405-1408. The stretch will be to the prior high, around 1425. That’s a 5x and the max on this run would be 1430-1435.

    I’m entering long at 1394.9 area, with a tight stop. I’ll exit the first position at 1399+ and the rest higher.
    December 28, 2010 2:40 AM

  24. Gary

    I’m not sure what you are trying to “prove”.

    All that’s obvious is that gold suckered you into shorting and then took your money away.

    I learned this rule a long time ago. Never, never, never, never, never, never, never short a bull market. It’s quite simple really 🙂

  25. Gary

    Hardly. The dollar should have a minimum of 12 weeks before the intermediate cycle bottoms. Gold can go a long long way in 12 weeks especially if it is the final leg up in a huge C-wave advance.

  26. GGuy

    I’m not short but fully flat. But i suspect a trap here. Euro is weak. The new intermediate that is just started do not take off as it should have already done.

    If Euro go below 1.3055, just 50 tick away, we will have a failed intermediate, not on USD but on EUR, and usd target will be 90…

  27. Nick


    Interesting times indeed….Silver is way over mean, Gold is about moderately over…

    If dollar were to break, given how stretched Silver is, odds favoring an under performance by silver?

  28. GGuy

    @aaron: maybe situation is not so clear there in US, but it’s hard to imagine HOW BAD Europe is now.

    There is 1, i mean ONE and ONLY ONE country that is working and growing and making all the slum still staying up.

    Well, unless they took out theyr celtic cross flags from theyr drawer and make another europe empire ending all that keynesians madness, which happens to be MORE madness here than in US, there’s no future for Euro.

    By the way, that of course won’t happen (at least i hope not) so we are fu..ed anyway 🙂

  29. Gary

    I think that is where everyone has it wrong. Europe is in a deflationary environment and they aren’t trying to print their way out of it (at least not yet). That isn’t a negative for the euro. That is a huge huge positive. The deflationary forces are going to suck up lots and lots of Euro’s. That means a lot less supply and that means value goes up not down.

  30. GGuy

    Gary, European Central Bank cannot print money at will. It is not in his “constitution”. Really, they can’t (I thank God everyday for that).

    But they have just talked and agreed to made the new “Euro bonds”.

    So, the cat has gone out by the door, and will come back in by the window…

  31. Gary

    The fact remains that the Euro isn’t going to weaken in a deflaitonary environment. The seeds are ther for a Euro rally and we all know Ben is merrily printing 7-10 billion a day over here.

  32. bluebox

    After having pared down to just under 10% each in FKRCX and INIVX last week, I’m still a bit reticent to start jumping back in here (20-25%). This could be a last head fake before another move down, even though the bullion banks have yet to short hell out of it again (it is Tuesday, after all). Seems like Europe is buying gold and the dollar, which is a few pips from posting a green finish.

    So, so confusing.

  33. Gary

    Bull markets are confusing. If they weren’t it would be easy to ride them.

    Just follow the plan and hold your core until we get confirmation the dollar is toast. Then we can start adding back.

  34. Romeo Bravo

    Let’s also not forget it is the end of the year and there is a certain amount of tape painting, tax loss selling, large funds squaring accounts up, etc. I was hoping for a more forceful move down before Jan 1st, but perhaps it is not to be. Will wait until things clear up a bit more.

  35. Jayhawk91

    I’m not buying this move yet. The bitter taste of last year’s intermediate cycle in stocks crushing the miners is still fresh in my mouth.

    Interesting junior silver miner I’ve been watching and had some bought sold it a while back. (Silvermex Resources–merger of Silvermex & Genco Resources). Pink ticker GGCRF. Nice looking chart.

  36. Nick


    Quick question again: should the $$$ break down, given how stretched Silver is over its Mean, any thoughts on going long AGQ if $$$ broke down? Or should we stick with SLV / SIL?

  37. Gary

    That’s a tough one. Silver is incredibly stretched but gold and miners are not.

    At the C-wave top I expect the HUI to be 40-60% above the mean. It’s at 18% today. So who’s to say silver, a very thin market, can’t stretch 100+% at the C-wave top.

    I guess you would just have to decide about AGQ yourself based on your risk tolerance.

  38. Nick


    One more question: Looks like the miners are lagging Gold. Shouln’t they lead if this break is genuine? Or will they slowly outperform once the $$$ breaks down?

  39. alex

    I am looking at todays markets and feel like we are seeing a disconnect

    SPY, DJIA ,NASDAQ =absolutely anemic volume. Even the GDX is off to a weakish volume break upwards , but look at (on 3 month daily charts)…

    GMO , EXK , HL , REE and a few others show real supply/demand as they lift up from downtrends or sideways moves.

    GMO is a very legitimate breakout-

  40. Gary

    I’m not sure what you mean by lagging. the gold:XAU ratio is very near the low for the last two years. It looks like miners are still in the process of correcting the massive mispricing from 08 to me.

  41. Nick

    Yeah…sorry…Was looking @ GDXJ, which looks to be doing a gap fill today.

    Somebody had mentioned a while back about dividends, so maybe that’s why it fell apart past couple of days.

    The HUI is strong.

  42. pimaCanyon

    Here are some thoughts re the dollar, reposting here from earlier comments section:

    I can draw a nice looking uptrending channel using the 11/3 low and today’s low for the lower channel line and the upper channel line touches both the highs of 10/27 and 11/30. I would want to see the dollar break below this lower channel line (at least, better would be a break below the 12/14 low) before I’d give up on the dollar rally.

  43. Gary

    We can run a million what if scenarios and one of them is bound to be right.

    If one follows the plan, holds onto their core, then if we get confirmation the dollar is indeed headed down into the three year cycle low then we will add back to positions.

    If one does that they will come out of this just fine and add significantly to the already huge gains we’ve made so far.

    If one tries to analyze this to death they will probably talk themselves out of a perfectly good plan and miss the final move or at least more of it than they should.

  44. Jerred

    I got a huge laugh out of this today.

    Nouriel Roubini bought a 5.5 million dollar apartment (recently)

    He was on CNBC and says that housing prices can only move down!!!


  45. Bob loves Hawaii

    Gary, does this move qualify for the move to new highs before we dscend into the intermediate correction. As you posted about earlier in the month. The big boys selling into these moves on a quiet week?

  46. Gary

    The fact is that gold and the dollar are not doing what they are supposed to be doing. The stock market is just creeping higher like it’s been doing for weeks.

    The stock market isn’t really my concern. The dollar is what I’m focused on. We know the three year cycle low is coming and when it does it will drive commodity prices into a huge parabolic top.

    The only question is whether or not the strange action in gold and the dollar is a sign that the decline into the three year cycle low has begun or not.

    I’ll explore all the scenarios in tonight’s report.

  47. Gary

    Technically the S&P just took out the intraday high from last Wed. so we officially have a negated 4 day corollary. One could go ahead and trigger stops to cover shorts right here.

  48. Robert

    IMO I wouldn’t be so quick to cover shorts right here. Volume is 1/5 normal today (yesterday too), the SPY is atop the SoS today with this small volume, and we’re in the cycle timing band for an intermediate correction. Going to cash is not a bad option amongst all these contrary forces, but going long I believe, the markets, right now is the last place one should be.

    What is so complicated for everyone just to follow the DXY plan of 78.82?

  49. Gary

    I didn’t say anything about going long. I doubt anyone in their right mind would go long the stock market at this point.

    We have negated the 4 day corollary. So anyone selling short based on that signal should cover because the signal has failed.

  50. Ben

    I’m still in the doubter camp. Bull sentiment quite high, dollar up strongly from the lows, although I don’t think it quite hit yesterday’s high. I keep feeling like I’ve seen this picture before, with inexplicable rallies through the end of the year, then 5 down days to start the new year. I kept a core position and so today has been an up day overall.

    If this was easy, we’d all be retired, right?

  51. FreeBoundary

    Hi, my core position in gold is GDXJ. I entered this position few weeks ago and still in slight red excluding ‘distribution’. Could anyone shed lights on the implication of coming distribution in terms of tax issues? I plan to hold this until Gary says otherwise, but it wouldn’t hurt to know what’s behind my position. Thanks.

  52. TZ(5288)

    Closed my slw positions. Not much gain and I don’t like the overnight gap risk. (I bought a lot.)

    Close gold futures too. Not much gain by end of day and I don’t like to hold overnight if that’s the case.

    Silver futures position with very nice gains. Still open and holding.

    We’ll see where this week goes. Interesting action no doubt.

  53. Slumdog

    OT, but may be of interest re: silver.
    Many months in 1981 or 82, on the slide off the backside of the parabola, silver was priced at $25-35. Instead of using the $50 parabola top, the inflation adjusted, opportunity cost included value of money then in today’s dollars I’m thinking is $75-125/oz.

    If the top, $50, were considered, that would price silver at $125-$200.

    Either way, we’re still a long way below the value of a price reflecting more robust speculative interest.

  54. Gary

    If you use a different spacing for your axis that line becomes meaningless. It’s already been violated today if you look at gold on stockcharts.

    Your fooling yourself if you think you are going to get any kind of edge by drawing lines on a gold chart.

  55. Gary

    But only has my final and least important tool. And I think a lot more people are using stockcharts. In stock charts that line you drew has no meaning as it was broken handily today.

  56. Beanie

    Let me be the first to say that it is a mistake to use the dollar as the determinant of where the stock market is headed. Furthermore, even if we’re to have a dollar crisis, nothing says that has to happen in the next 2-3 years. Nothing.

    Further, the dollar and market doesn’t necessarily have to have an inverse relationship, nor do they have to have a positive correlation.

    Also, nothing in the charts, economy, or political situation indicate to me that the market is headed lower, and definitely not to new lows in 2012, as the bears surmise. Unless there is another MASSIVE fraud going on like the mortgage fraud, this market is headed higher, much higher.

    Cheap money can and will drive economies, much further and much longer than anyone can remain solvent (shorting the market). I don’t know where you folks get the idea that the shit hits the fan in 2011-2012. No, the shit doesn’t need to hit the fan next year or the year after. It could be 10 years down the line, and that’s when I think it will hit.

  57. FreeBoundary

    Here is my short term trading for the last two days: Bought and still holding AG(=FR)@12.44 9:50EST today (It was closed at 13.6).Bought SLV’ March calls and SLW/HL just before closing yesterday. Closed the option today and will most likely close SLW/HL/AG tomorrow.

    What drove me to load up these positions yesterday was based on the following quote by Marty Schwarz at ‘market wizard’: “If the market is letting you off the hook easily on a position for which there was a basis for fear, there much be strong underlying forces in favor of the direction of the original position.”

    I had few bleeding short term positions, but I was able to close them at small profit yesterday, which was rather surprising to me considering the fear I carried since the announcement of the rate hike by China on Sunday evening, and I thought that this is a good case of Schward’s quote and I decide to increase my long position. I am not sure if this was just pure luck from gut feeling, but I think Schwarz’s call is simply amazing and worth to learn through.

  58. David


    The shit doesn’t need to hit the fan in order for stock prices to head lower.

    Valuations are very high right now by historical standards. While that doesn’t matter to someone trading the next tick, reversion to the mean guarantees that stock prices have to fall over the next few years. Either that or earnings have to explode simply to keep stock prices where they are.

    Buying stocks for the long term represents a low-percentage trade right now, akin to picking up nickels in front of a steamroller. I was bullish in March 2009 and have been ever since. But as of now, valuations and sentiment have priced in the recovery and then some. We may have a few months of rally left, but at some point we will be on borrowed time.

  59. Gary

    Show me any year in the last 10 that the stock market was able to rise along with a rising dollar. I can save you the trouble you won’t find any. That’s because we are in a secular bear market. In order to keep the markets levitated in a secular bear market the Fed has to debase the currency.

    The fly in the ointment is that this strategy will continue to spike inflation and that inflation will continue to destroy the economy when it gets too intense.

    The dollar most certainly will have at least a minor crisis next year because that is when the three year cycle low is due. These have been coming like clockwork for 40+ years.

    The stock markeet will most certainly fall back into at least an inflation adjusted new low and probably a nominal new low because the 4 year cycle is due to bottom in 2012 or 2013 at the latest. And that’s what secular bear markets do. They bring extremely overvalued stocks back to extreme undervaluation so the next secular bull can begin.

  60. Brian

    For the technicians out there: XRA is on the verge of breaking a 6 month downtrend line. GRS is having a 50x200EMA crossover on the daily and 13x34EMA crossover on the weekly.

  61. TZ(5288)

    Added my gold futures back just a few min ago with small stop (we’ve got a congestion pattern looking to break higher); appears to be some strength.

  62. TZ(5288)

    I still suspect today wasn’t a fluke and this really may be starting a strong up phase. Thus, I’m willing to risk small losses with tight stops to establish a large position. It only has to lock on one time – and that isn’t as hard as it seems.

  63. TZ(5288)

    If I wait longer till gary’s trigger is hit, then obviously I have more certainty, but conversely I have a worse risk/reward position to get in. My style is a bit more suited to more risk by assuming a direction and having a small stop if i’m wrong. I’d rather be in before the move starts strong corrections that make it harder to add.

  64. trond56

    I think one have to look at the concrete conditions in the society itself. The infrastructure – Excellent. Education, more and more capable people, progress of research -faster and faster yoy. Are the institutions breaking down? no, very capable run. The democracy is functioning.

    So it is the superficial paper-things that is out of order. Burn the paper, inflate a period to dilute the debts and revaluate gold. The concrete basics of society mentioned above will still be there. What about Zimbabwe, well in that country everything basic is destroyed. It is fundamentally not a inflation or paper-money problem. Germany after WW1 – completely destroyed, large part of the population killed. International trade-wars.

    I’m laughing of the post-traumatic stress syndrom (cronic baby-whining) after Lehmann and 10years of stragnation.

    And the sentiment too good, well that is biggest problem after many years of bull, when everybody are in. Presently most people are on the sidelines, and then positive sentiment is a RECRUITMENT-FACTOR. (Different from a mature bullmarket when there are not more to recruit). So don’t use it as a mechanical rule without thinking.

  65. Jayhawk91

    I’ve been given the task of managing a portion of my in-law’s portfolio. They have about 80% of their money in a bond fund (I looked it up and it’s mostly UST’s.). 20% has been in various stock positions (including a position in DUG and SH they have held since 2009!–both down 30-40%, and a position in a tiny drug pink sheet THTCF (around 15K worth) that is down 20%. These were put in play by their prior broker.

    So, they are finally seeing the writing on the wall and want some inflation/dollar stability protection and want me to position things. I was hoping we’d get the big intermediate correction so I could dump the SH and DUG. I’m ready to cut loose the drug pinkie now. They had small position in GDX that I took the profits on and will move that $ into GDXJ. Eventually, I want to get this 20% into SIL, GDXJ, SLW.

    My parents just retired and have a sizable nest egg. Almost 90% of it is in CDs. My old man just bought a little gold and some TGLDX. I think he’s going to start buying more, but they are also way under invested for what could be coming.

    Any one else dealing with retired baby boomers who are not prepared for this? Any advice? Thanks.

  66. thedocument

    It could be a bit dangerous to chase precious metals simply based on a failed dollar cycle. While a failed cycle on the DX would almost certainly indicate the resumption of the dollar’s plunge into its 3-year low, it does not necessarily mean gold and silver will immediately rocket higher.

    Just observe gold’s decline into the July intermediate low. Our little yellow friend fell $100 even as the DX formed a failed cycle and plunged 4 points.

    Personally, I have no intention of taking a big plunge into PMs without an obvious intermediate cycle low, but I will be more than happy to short the DX once we see a failed daily cycle. In this way, I have a well-defined trade and can control my risk.

  67. Gary

    The market rose 2.4% for the year. I count that as sideways. Which is about the best the market can do in the face of a rising dollar.

    Keep in mind that during this time we were right in the middle of the greatest real estate bubble in history. At full employment. And all the market could do was 2.4%

  68. Gary

    I admit that is a tough one. If we go back to full exposure we run the risk of repeating last years mistake, although I doubt we are going to see another year long consolidation like last year.

    If anything is going to drive the final leg up in this C-wave it will be the move down into the three year cycle low in the dollar and that is due this spring.

    I will point out that the intermediate decline in 06 only fell for 8 days before taking off into the final leg up. That leg up did include a 2 month consolidation.

    Gold has already gone through a 2 1/2 month consolidation though.

    What I find hard to conceive is for the dollar to rally back above the 200 DMA prior to moving down into the 3 year cycle low. That is what would have to happen if stocks are going to correct to any significant degree.

    So unless the dollar can do that, rally back above the declining 200 DMA, I have to wonder how the stock market is going to correct.

    Despite terrible breadth & sentiment I’m prepared to see the stock market form a really stretched intermediate cycle. Probably not all the way into the dollar’s three year cycle low because liquidity will continue to leak into the commodity markets and at some point surging inflation will halt the rally. But maybe all the way through earnings season and into the middle of Feb.

  69. alex


    no disrespect , but

    I’m not really sure that you are making a valid COMPARISON when you point out that the dollar in (June and July) went down and gold didn’t take off , because the time prior to that doesn’t match the time prior to where we are now…we just had an inverse dollar/gold relationship prior to now


    In Feb to June…Gold & Dolar didnt have inverse relationships…so Gold was tired, needed a consolidation at that point…it doesnt need one now…

    Back then, both went up together. they weren’t in an inverse relationship like Aug to Nov…The dollar went from 78 to 88 , while Gold went from 1060 to 1280. THEN they both pulled back a bit and gold rallied, dollar dropped.

    so on a 1 yr chart….gold was strong , rallied Feb to June, corrected a bit to the low , rallied hard again , now corrected a bit…now??

    the dollar rallied , crashed , rallied a bit…now??

  70. TommyD

    On 12/22, at the close, heavy buying came in on GDXJ. Then look at the heavy buying the morning of 12/23. GDXJ’s low on 12/23 was the 38.2 Fibonacci retrace. Is that then resistance level if I was charting?

  71. DG

    I have covered most of them. If I am shorting against the trend I don’t give them much room (getting stubborn and fighting the tape is the best possible way to go broke!) , so I lost another sliver of the year’s gains. Rats. I expect to be there is some size once we start down in earnest, though, as with sentiment as it is the drop should be significant. These “creep up with no down days” rallies trend to end in mini-crashes. In the back of my mind I have some concern that a dollar drop might just propel them higher and higher, but I don’t think that’s going to happen. We’ll see. And sure, PM’s can rally as the mkt falls. Correlations stay in force…until they don’t. Very hard to know that stuff in advance. i just play the correlations until they stop because they tend to last a long time.

  72. Prasad

    SLV facing resistance at prior high at 30 , any. Thoughts whether it would break above or fill the gaps below ? Before running high again ?

  73. Brian

    I think SLV busts right through 30. Then takes a big fall and fills all the chart gaps and sweeps all stops everywhere. As soon as everybody is out, it races to new highs!

    Or, it just fails at resistance!

  74. Slumdog

    Here’s what I know.
    GC1G reached 1407-1408. That completed the highest probability move up from the 12/23 low on the 60 min chart. Today, in the 5 min, the first strong reversal set up occurred at the high a few hours ago.

    This means the market is facing down. There’s a time value to the trigger, so no action above or below the high or low rather soon, like in 12 more bars, approx, will void the signal.

    This reversal means it’s explosive but only a short distance, with 3 pts being the unit of measure. Given the power of the 60 min, still facing up with a stretch to 24-33 within the power of the double bottom, and with this now new “fuel”, I think we will see the current move to be a failed reversal and a blow out to 1422-23.
    We already had a failure to decline below the 1410.2, which just ran the stops against the 1410.3 prior low.

    Without doubt, we will see the 1413.2 penetrated. On a separate logic, the round number 1400 was tagged and we’re off to the races to bang against 25 and maybe the high. I don’t see currently the source for fuel beyond that range, however… yet.

    My position is simple. I believe I can make money hedging my physical positions by avoiding the drawdown I experienced in ’82-90 and a few years ago from 1000 to 685 or so. That phrase, “never again”, rings in my mind. So, I’ve approached being here as a trader, not one who is dealing with core. I respect Gary’s logic greatly. My dad would have benefited hugely from his advice. I’m just in a different flock, and I’m prepping to tank blast the highest probability trades, with the new software and hardware and the staff invovlement. If it works, great. If not, I’ll end up with some new hardware.

  75. thedocument

    Well, for what it’s worth, gold will now form a weekly swing low as long as it holds above $1362 this week. Anyone who believes we will see a shallow correction could use this action along with a failed dollar cycle as a pretense for purchases.

  76. Gary

    I’ve always been a big fan of KISS.

    All these reversals this and time values that, etc. etc. sound like a great way to make something really complicated when all one has to do is just buy and put a stop under $1361.

    How hard is that?

  77. TZ(5288)

    Gold is pausing at the underside of the downtrend line drawn by using the lows in nove and early dec. I would think we break through and continue shortly.

    This trade still looks good and I am leveraged long with stops that exit at breakeven (gold/silver futures).

    So far I would say (like many here) that the market is not yet convinced this rally is real. We still have a ‘recognition’ point ahead of us if we were to rally today and, say, tomorrow. If the strength to the upside continues then there will be an ‘oh crap…i’m missing it’ pile in effect.

  78. mamaloshen

    I really wonder whether following the dollar index so carefully in timing gold/silver purchases is all that useful. Apparently it is 56% weighted by the euro. I think following the Australian Dollar may be better. Gold has a habit of bouncing off the 200 dma and this provided useful entry points in late July, November and just recently (you can get it by keying in $GOLD:$XAD in Stockcharts).

    I worry that we could wait several weeks before 78.82 on the dollar index is broken to the downside and we could see gold up to $1500 by then, silver up to $35 and the HUI 15% higher.

    Personally, I sold down to core but wish I hadn’t. Today, I bought back some of the stuff I had sold: ANV, AZK and SLW. What is annoying is that by selling in Dec. I will have a fairly hefty tax bill. There’s something to be said for following Jesse Livermore’s maxim: “the money is made in the sitting.” Trading is a mug’s game for the most part IMO. I will never again sell in December, that’s for sure, C-wave correction or not.

  79. DG

    Prasad: Yes it would (dollar up, everything else down), assuming the relationship holds and there’s no reason I can see to think it won’t.

  80. Gary

    You weren’t going to be able to avoid the taxes anyway because the C-wave should expire before you could hold a year.

  81. pimaCanyon


    yes you can sell SLV based on a condition occurring in another stock or even futures instrument. So you can sell SLV at the market when gold futures trades below 1361.

    My broker is TOS and you can do enter these kinds of orders on their platform. You’ll have to check with your broker to find out whether they have this feature.

  82. TZ(5288)

    To make this interesting I’ll let it slip that I’m over 6x leveraged on my position. This is a *normal* trade and approach for me.

    The positions are well profitable now, the stop losses are at BREAK EVEN at this point. When I took the position this morning, the stop loss was LESS THAN 1% of my net worth.

  83. TZ(5288)

    The stop on gold was less than $2. Yes this is small. Yes it is possible. You only have to hit a trade once in a while for it to work out. Yes, in the meantime you will take a few losses while you get stopped out trying to establish the position. I’ve got it now (it seems) and holding to see where we go.

  84. TZ(5288)

    Oh..and YES I will be following gary’s approach more as well in the future, but for now we still don’t have an INT low and the market is throwing various curves. So I’m running the game my way in the meantime till some kind of substantial low occurs for a more “Gary” type entry. For now (since we don’t know the direction or if this rally is real; just look at the concern or debate…for example DOC) it means that any positions you take (if large) need to have small stops.

  85. Gary

    Now that you have your position you can reach strong hand status as long as you just honor your stop and don’t try to second guess.

    If you get nervous and take profits too soon then you will be right back trying to enter again.

    If this is the begining of the final run and you just sit Old Turkey with this position you stand to make a huge sum of money.

    Now you just have to have the discipline to sit and let it work.

  86. Brian

    OA, I use Fidelity and TOS. You can do conditional orders on Fidelity, but I don’t think you can make it conditional on futures. That seems worthless anyway since you are trading an apple to an orange. Seems easier to condition off GLD and SLV.

  87. pimaCanyon


    Yes, happy with TOS. Was happier before they sold the company to TD Ameritrade. Their software upgrades seem to have a lot more problems now than before, I’m guessing TD laid off a bunch of programmers and support staff (gotta cut costs so the CEO can make as big a bonus as possible!) and as a result quality has suffered. But the last update went okay. Platform has lots of features, not always intuitive as to how to use them, but you eventually figure things out.

    Some have complained that the platform is slow relative to some others. Not a big deal for me (or even noticeable), I think it might be if I were day trading.

    I considered switching to Trade Station when TOS started having problems, but inertia set in and I did nothing about it.

    Interactive Brokers gets high marks from some folks, but they are geared more toward folks with lots of experience (support may be somewhat limited) from what I hear.

  88. pimaCanyon

    whew! serious tankage on the dollar! broke below the 78 percent retracement of yesterday’s impulsive rally off yesterday’s low. Yesterday’s low is likely to get taken out.

  89. TZ(5288)


    >You weren’t going to be able to avoid the taxes anyway because the C-wave should expire before you could hold a year.

    Unless you have futures – which get 60% long term gains rate no matter how long you hold.

    Warning: Not tax advice. Please seek professional as necessary on this topic.

  90. MLMT

    Does it bother anyone that gold is almost at the new highs and GDX is 5% off the highs?

    What has this usually meant in past? I haven’t tracked PMs for long.

  91. TZ(5288)


    >If you get nervous and take profits too soon then you will be right back trying to enter again.

    As I mentioned a while ago, my historical problem was taking profits too LATE, not early. The recent silver smackdown caught me. But I’ve cleared up much of that problem by building in some new rules.

    I’m actually pretty good at getting into an up phase and adding to the position as we go. I just overstay my welcome many times. (My performance and gains on the fall rally were horrible. Worst of 10yrs trading. It happens unfortunately.)

  92. TZ(5288)


    >Do you know if that tax treatment also applies to options on futures?

    No, but the google knows 🙂

    60/40 applies to:

    “…Section 1256 contracts include: regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts. For a partnership that’s a qualified fund, Section 1256 contracts include bank forward contracts, foreign currency futures contracts, and similar instruments prescribed by IRS regs….”

    Of course, you won’t have any gains on your options anyway so how the profits are taxed won’t matter much 🙂 (I include myself in this characterization). Options are a wonderfully exciting way to lose money. 🙂

    Warning: not tax advice. Reader beware.

  93. TZ(5288)

    Note that article seems to be using the word “commodities” and “section 1256 contracts” as two categories. As usual, the rules and regs are detailed and confusing.

    I said 60/40 applied to “section 1256 contracts”, but it may actually only apply to “commodities” which *are* “section 1256 contracts”. As I said: warning. Seek professional advice.

  94. mamaloshen

    Hi Gary,

    Thanks for the reply. I should point out that people who can trade within their IRA’s can postpone their tax bills, but for those (like myself) who don’t have them or aren’t allowed to buy double etf’s like AGQ in IRA’s, we have to be aware of the tax implications before selling. So an item would have to go down at least 10% before you break-even after taxes. Now, that (and more) would happen in a D-wave, but it assumes one could cash in near the top and buy in near the bottom.

    With the benefit of hindsight, the smartest thing one could have done is to put $50,000 into the HUI in 2002 (allowing two years after the bull market began) when it was 100 and just hold, no trading whatsoever. It’s gone up 6 times so it would now be worth $300,000 (a similar investment in the S&P would be maybe $65,000 today). I wonder how many of those trading in and out of the pm stocks would have done better (though I appreciate your subscribers demand timing advice).

    I find one of the hardest things to do is to buy back at a higher price something you’ve already sold. If you don’t mind my asking a hypothetical question, Gary, if
    silver is 10% higher from here when (if) the dollar index breaks 78.82, would you recommend buying back AGQ even though it’s 20% plus higher than now?

    Thanks in advance.

  95. alex


    I just got a pretty strong buy signal from my uraniums.

    this is not a recommendation, but I am now in URZ as of this morning , and URRE is very good looking TO ME at this point.

    still in my GMO, REE EXK URZ and now

    URRE at 3.28

  96. Gary

    Sure I would. What does past price have to do with future price?

    Until the C-wave is finsihed the trend is up.

    Lets just take a conservative estimate and say AGQ goes to $300 during the final advance. Are you really going to pass that up just because you missed the move from $150 to $180?

  97. pimaCanyon

    the movie Inside Job: I saw it yesterday evening. I thought it might get overly academic and end up being boring. Boy, was I wrong! Most riveting flick I’ve seen in a long time. Highly recommended!!

  98. Nick

    FWIW: AGQ has a tendency to pop out of the 2.0 Bollinger Band and then drop back in and fill gaps.

    Have been whacked on the head a couple of times myself these past couple of months trying to chase it.

  99. Steven


    Do you really mean it when you say conservative estimate for AGQ at $300 by the end of this C wave or was that just throwing out a number?

  100. Gary

    Is looking at recent history. If you look at Aug. and early Sept. you will see AGQ pushed above the upper BB and never looked back.

    I seriously doubt anyone is going to successfully trade this with indicators.

    Just watch the dollar if it goes then the odds are high the final move has begun. That’s the best we can do in this business.

  101. mamaloshen

    Thanks, Gary. I guess AGQ doesn’t really care what price I paid for it:-)

    Interesting observation, Nick. Looks like the middle Bollinger Bands are a buy zone, now around 145 or so.

  102. Nick

    Geez, you can never get a Tech analysis past Gary! 🙂

    Gary – am a newer sub – been on aboard since Aug – Sept this year and took me a while to get on baord with your analysis…Sigh! Should have found you earlier and trusted your work since the get go!!

    Yes – I was looking @ recent history since Nov….if you look @ the 2.0 Bollinger band, AGQ travels above it for a couple of days and then comes back in around the mid BB line (20 dMA)

    But yes, Gary is correct – since July Aug, AGQ kept KISS-ing the upper 2.0 BB.

  103. Slumdog

    Gary said…

    I’ve always been a big fan of KISS.

    All these reversals this and time values that, etc. etc. sound like a great way to make something really complicated when all one has to do is just buy and put a stop under $1361.

    Gary, I completely agree with you, if I didn’t hold the physicals position I have. I’ve ignored the fluctuations for 3 decades and 2 decades and again a few years back when it dropped significantly.

    I’m not in a position to sell my holdings, emotionally. I got the goods. That’s what this commodities rally is about. Paper is paper. Account holdings are paper. I want the real thing, and hold that in size.

    And I can move all my wealth into more inventory for my biz; but it’s a cash cow.

    So, my position is probably different from others.

    I want the physicals, in fact more, but I want to protect against the retracements.

    Your world is different than mine. I’ve been retired and didn’t have hobbies like you do. I’ve a hobby, “game playing”.

    So, I’m combining the hobby with knowledge I have.

    It’s not at all unreasonable to allocate a portion of the portfolio to track what you advise, too. If you’re still doing this in a year, I’ll probably be a camp follower as to part of the portfolio, as well. I come with some pretty singed wings having watched and trusted too many in the past. I trust “me”. I’m reading the last year of your subscription postings (ugh) and when and if I trust you, I’ll be a camp follower, too. Right now, it’s me.

    But for 95% of the people who are your subs, what I’m doing is nuts and a waste of their time. Your statement of KISS and your advice carry value; hence my subscription, too.

  104. pimaCanyon

    Regarding Bollinger Bands on AGQ: Double long and double short etf’s are likely to give different results on charts than when charting the underlying. If you’re going to mess with charts and TA, I’d stick with either silver futures or SLV etf and avoid charting the double (and triple) etf’s.

  105. MBS

    Gary– I’m trying to determine the timing on the intermediate cycle in gold. Do we have a new intermediate cycle and when did it start? OR, just a continuation of the prior intermediate cycle and a new daily cycle?

  106. Steven

    Does anyone know if AGQ has a special dividend/distribution similar to other ETFs (like the one given to GDXJ shareholders recently) and, if so, when is it scheduled to be given?

  107. Steven


    What is your rationale for not just putting everything into AGQ? If the metals are what we think will take off why have any company risk (even if it is through an ETF or a royalty company)? Just curious.

  108. Gary

    Well to do that one has to be prepared to lose 50% or more of their portfolio if something unexpected happens.

    Are you prepared to take that kind of risk?

  109. Jayhawk91

    I’m not quite following your logic on the “currency crisis” you are describing. So, the dollar dives into it’s three year low which should bottom this Spring/Summer. Then we get a massive rally in the dollar out of this low taking all of our inflation hedges down big time. So the dollar is not going to collapse or anything according to cycle theory. We are just due to put in a hefty low.

    Are you saying this 3 year cycle could get out of control and really plunge into the depths? (Like 60’s?) If this “hyperinflation” that you are predicting comes to pass, a rally out of the low could be brief this time. (i.e. end game could be closer than most think)

    Martin Armstrong often talks about the hyperinflation tipping point–crisis in confidence in the underlying entity backing the currency causing a massive fleeing and velocity to skyrocket. Just saying we could be looking at a point where things could very well get ugly on us.

  110. Gary

    I think there is a good possibility the dollar could drop into the high 60’s.

    The 3 year cycle after that should also be left translated perhaps only moving back up to touch 80 this time before beginning the long slow slog back down to the next 3 year cycle low in 2014

  111. TZ(5288)

    Gold is triangling around the uptrend line (daily; drawn on lows in nov and early dec). I would say a break higher is imminent – prob within next few hours.

  112. alex


    what does your term ‘triangling’ mean? And are you looking at gold afterhours on a certain timeframe ( minutes? , 15 minute? Hrly?) thx

  113. Steven


    Are you saying that AGQ is riskier than your other silver holdings? And if so then do you also think it has more upside potential?

  114. Steven

    But the miners are also more volatile that silver and you previously said you expected them to do about the same. I’m just confused.

  115. TZ(5288)


    Your site doesen’t use a popup at all so I’m unsure why your password emails always say “turn off popup blocker” unless you have some previous reason.

  116. TZ(5288)


    >what does your term ‘triangling’ mean?

    TRIANGLE-ing; congesting; putting in a triangle at a support or resistance point in anticipation of it continuing through that point.

    I was looking at gold intraday (24hr) against a trendline drawn on a daily chart connecting the lows in gold in nov and early dec. We haven’t gotten over that line yet (and the earlier break BELOW that line which is what started everybody on the “we’re going down now” vibe).

  117. Gary

    I don’t really follow any other currency than the dollar. I know what the normal timing bands are for the dollar. For the most part risk assets move inversely to the buck. So the majority of the time we can get semi close to tops in asset markets like stocks and gold by spotting bottoms in the dollar cycle.

    The dollar in my opinion is the critical currency. What the Fed has done to it over the last 10 years is the fundamental driver for a lot of the problems in the world today.

  118. Steven


    Do you pay much attention to bolling bands during a time like this (i.e., C wave advance). The current silver futures contract is trading a bit over the BB which would normally be a time to at least back off a little but I was curious if you thought this type of indicator loses some / all of its value during this time?

  119. Gary

    Markets go up differently than they go down.

    It’s the reason why the Bollinger band crash trade works on the downside but not on the up.

    More often than not a push outside the upper bollinger band is a sign of increasing momentum not a sign of exhaustion like it is on the downside.

  120. Steven

    Thanks Gary. Another quick question. DO you think the IT happened and it was just a very shallow one like in 07-08 or this cycle will be extremely stretched and it will eventually happen, hopefully at much higher numbers?

    Also, how stretched have you seen a cycle become?


  121. DG

    O.K. Gary. I am back somewhat in the metals. I didn’t miss all that much, but have to admit your trading style would have been better for me than what I wound up doing. I bought a good chunk but have more I’d like to do so we’ll see who this plays out. Thanks for the encouragement not to try to game the situation and just get some exposure (that is, if it works!) I can;t wait to see whether the insane level of stock bullishness can overcome a dropping dollar and get us a SPX decline.

  122. Gary

    I don’t manditorily pick a cycle low just to make it fit in the “normal” timing band. If it isn’t obvious then I operate on the “stretched cycle” thesis.

    The last daily stock cycle is a good example. One could have tried to rationalize a cycle low in the middle of Oct. However it wasn’t obvious so I assumed we were seeing a stretched cycle. With the benefit of hindsight that was the correct assumption.

    Currently we have nothing that even vaguely looks like a normal intermediate cycle low in either gold or stocks so I’m assuming we are again in a stretched cycle.

    As I pointed out in last nights report the intermediate stock cycle in 06/07 stretched to 39 weeks because the Fed massively debased the currency.

    Could that happen again? Sure anything is possible.

    If the dollar doesn’t start rallying immediately then there is definitely the possibility that stocks and certainly gold could continue generally higher until the dollar hits the bottom of the three year cycle low.

    That’s probably about 12-17 weeks away.

  123. TZ(5288)

    Now that metals have moved up enough over two days to suck people in or change strategies (including gary/me/others), it would be a good time to drop and fakeout *IF* indeed this isn’t real. Many sideline or reduced people are going long again or adding up. Now would be the time to reverse back if this isn’t legit.

    I’m still holding my long futures with breakeven stops and just waiting.

  124. alex

    as pointed out 2 wks ago…love the pattern / volume in ANO and held position,

    bought more today @$1,55 on volume surge. More volume at 10 a.m. than in an entire day. Breaking out of large 3 month flag.

    still holding REE and GMO (getting frothy tho), and URRE and URZ as recent buys, bought more urre todaya , volume surging in also.

  125. DG

    TZ—yes, exactly right. The PM’s are starting to “look” better. If in fact a dip is in the near future, now seems like the time, especially with the SPX seasonal support ending. An SPX tank would hit the miners especially.

  126. Keys

    Brave call on the 100% move up. I still remember last winter, very cold and bitter winter! But nothing can beat old turkey. My core being close to 100% anyways, I guess I will ride this train with you. I topped off my massive 5% missing from 100% with some silver maples today. Might as well take advantage of old turkey while it is easy…Gold at $2500 and silver at $100, then the turkey might start turning into a chicken, but I will deal with that when I get there.

    Good luck to all. Hair pulling (being out) versus heart-attack (being in)…choose your fate! And don’t worry, in the short-term, you will be 100% wrong no matter which path you choose. 🙂

  127. Onlooker

    It’s early yet, but the P/C ratio at CBOE is .39, and opened up at .26

    CBOE Intra-day

    Very low numbers no matter how you look at it.

    And ISEE (Equity Only) shows, yet again, high level of call buying among retail traders.

  128. Steven

    Does anyone know of another proxy for AGQ. I’m asking because at some point I would like to hedge to get long term CG treatment. Shorting 2x SLV is too risky b/c it may not track especially if it is an up/down market.

  129. Keys


    I do both…no real reason for maples. I am mostly bars, but chose something nicer to look at this time. Bars are real boring to look at. So not a real wise short-term move, but long-term either won’t make a difference in my mind. I guess the best bet is to buy massive blocks of silver; use them to prop up the TV or lifts weights with.

    I basically buy physical as insurance against my future stupid self. Gold and silver will be much much much higher in the future, and the premium I pay today for the metals, will be well worth the safeguards of forcing me to hold during trading moments. Even during this up-coming D-wave, I plan on holding me pot of gold. Miners and like are different. My views.

  130. pimaCanyon


    This talk of AGQ makes me wonder: why not just use SLV combined with margin? If you want to put 20 percent of your portfolio into AGQ, why not put 40 percent into SLV (where half of that 40 percent is margin)? That way, you avoid any counter party risk associated with swaps and you also avoid the decay that double long etf’s incur when the market goes into a trading range.

    Gary, I’m wondering about this for your portfolio. If you plan to use 20 percent margin and put that all into AGQ, why not use 40 percent margin and put it all into SLV?

  131. Gary

    That is an option although when AGQ goes in the right direction you get a little outperformance.

    From Aug 23 to the present SLV gained 71.6%. If you double that with margin you get 143.2%

    During the same period AGQ rose 176.5%.

  132. Bob loves Hawaii

    Hey Gary, I am winding down for the holiday weekend, I am fully loaded and now will sit back.

    Thanks for a great year, you really helped my perspective on trading.

    Here’s to 2011.

  133. n1tro


    You pay the about the same premium buying maples vs bars here (~$3 over spot) in canada so why not get the maples since it’ll be easier to exchange at the bank is my thinking.

  134. OptionsOnly

    Looks like we may be finally getting that int correction starting. Better late than stretched. Still looking for 1235 or so on SPX for support for this move.

  135. Gary

    We’re going to need a lot more than two points to get an intermediate degree correction and we are going to need the dollar to rally, probably back above the 200 DMA.

    That seems unlikely now that the dollar is starting to fall apart.

  136. pimaCanyon

    Note to self: Get the hell out of the house–or go on vacation–during the week between Christmas and New Year’s.

    Like watching paint dry…

    OEX put/call ratio confirms this: It’s essentially one to one, indicating this market is going nowhere near term.

    Okay, enough whining, I’m off to do something more interesting

  137. TZ(5288)

    >Note to self: Get the hell out of the house

    Except, for example, during dec 07 when metals resumed shooting higher in a massive C wave blowoff….after a congestion…just like what we have had here….


  138. alex

    Its going to be tough holding through the weekend knowing that when Monday comes , institutional investors may come and

    -slam gold down $60 pre-mkt


    -Thrust gold upwards $60 pre-mkt


    but dollar rolling over (79.48) to lows as of 2.30 thursday

  139. Gary

    This isn’t even close to a massive blow-off C-wave top.

    HUI was 26% above the 200.

    At a C-wave top the miners will be 40-60% above the 200 DMA.

    Usually at a top we will see gold rising at a 75% or greater rate for almost an entire daily cycle topping with an exhaustion move.

    Nothing about the current set-up says C-wave top.

    We know what is going to drive it (the three year cycle low in the dollar).

    Patience will be rewarded with one more monster rally before this is over.

    I really doubt the largest C-wave so far in the 10 year bull market is going to end with a whimper. It will end like they all do with a mighty roar.

  140. alex

    I am going to delete my comment above the one about the coming wkend.

    I reread it and it sounded a little smart-alec like

    that’s really not my personality even though no one really knows me here 🙂

    I think I was just trying to say that its possible (though tricky) making money in tough markets and gave proof…but honestly…short term trading isn’t for everyone and shouldn’t be. my apology if I seemed smug at all…

    (I cant stand being around people like that myself haha )

    let me just say still holding GMO , ANO , REE , URZ , and now DNN

  141. Rosabarba

    I know you’re not a big fan of most option plays, Gary, but the ambiguity of the action, coupled with the expectation of a big move in some direction might argue for a straddle or strangle until the next move develops.

  142. Rosabarba

    Indeed, buying all the premium would be a loser if we just keep grinding sideways. But since you seem to be bird-dogging either a dive into an intermediate low or a runaway to a C-wave top, taking a somewhat delta-neutral approach seems worth exploring.

  143. Neil


    That’s what I did this morning. Bought some April SLV calls and will let my remaining Jan TZA calls ride so if we get a good stock correction in January I can still benefit. Hopefully April will give plenty of time for the calls to work if the correction comes.

  144. Rosabarba

    As an addendum: I know we’re in the never-never land of low-volume EOY trading, but the action in miners yesterday and today certainly hasn’t confirmed the move in gold or the dollar.

  145. Gary

    Yes the BB bands are getting very squeezed on the S&P. A straddle or strangle might work unless we just continue this creep for two more months. But I think to really make make any money one would have to expect the move when it comes to be down.

    This late in the rally we aren’t going to see a big volatile move higher.

    In order to get a big move down I think we need to see a huge move higher in the dollar. At the moment that doesn’t seem likely.

    One might be better off just waiting for the dollar to put in the 3 year cycle low and then play the straddle.

    I’m not talking individual miners. I’m talkiing an index. When the market gets speculative enough to push the HUI 40-60% above the mean it will be time to head for the door.

  146. Gary

    What about the miners seems to be lagging to you. They bounced off 550 support and look to be heading towards a test of the highs.

  147. Elaine


    That really is some massive volume on REE. What services/tools do you use to track stocks?

    I am open to suggestions from others on the board.



  148. Rosabarba

    I agree GDX daily has not made a lower low on the daily, has held key horizontal support thus far and is above the 20 and 50 (though below the 10 today).

    That said, given the move in the dollar and gold yesterday, I would have expected more than the little black-bar candle for GDX (and a red one for the GDXJ) we got yesterday, and the continuing underperformance we’re seeing today. If the bull signaled a major move up with that fat green candle and gold, it is being awfully patient for people to climb aboard the miners.

    I’m not saying I don’t think a big move up isn’t in the cards. I wouldn’t be playing a strangle if I didn’t think it was a strong possibility. But I’m inclined to see non-confirmation from the miners as a reason to hedge, for now.

  149. alex

    Hi Elaine

    REE was on my personal watchlist from a prior run up on huge volume…to compare..

    if you look at the chart FTK

    it too had a large volume run up……

    then yesterday it caught my eye as volume increased, moving up & out of recent consolidation (notice the selling volume DIED drastically as it went sideways)

    yesterday it was telling me that it took a breather and may be ready to go again (and on a 6 month wkly chart , it has a ways to go) , so I enter and if it doesnt do what it signaled it would…I sell.

    same story with GMO.

    Cut losses short , let winners ride , and often your gains are 20-40% or more if you let them run , losses are always cut to 10% (or less if volume is heavy on the way down).

    Hope that helped. The markets can turn (bad) on a dime..so always watch closely volume and price direction. 🙂

  150. contulmmiv

    @ Gary: I am glad to see that you began paying attention to the euro since every reader benefits from the comprehensiveness of your opinions. However, the theoretical underpinnings of this particular opinion are insufficient.
    Inflation, understood as price increase, can be obtained either by the increase of the quantity of money, or by the debasement of the currently existing money. In the end, they converge in the same direction, but the mechanisms are different. You believe that in Europe there is “deflation” because the ECB does not “print” euros. This may be the case, but the fact remains that it cannot be easily determined whether the “sterilization” of ECBs intervention is real or not.
    However, what _can_ be incontrovertibly determined is that the ECB _alters the composition_ of its balance sheet (with or without sterilization) with junk assets: bonds of failed/failing sovereign states. In fiat money systems the only underlier guaranteeing the value of money is the quality of the assets detained by the CB emitting the money. From this point of view (and if the “sterilization” is real), the debasement of the value of the euro is more similar to the debasement of gold coins, when one devalues the money by tampering with the alloy grade, or by clipping the edges of the coins.

    By underlying the euro with junk assets, the ECB is undermining its value. This is to be reflected in the exchange rate: and it actually is, if one cares to examine a long-term chart of the euro. The trend of the euro changed in the fall of 2008 not because “investors fled to the safety of the dollar”, whatever this may mean, but because the bailouts were _first_ introduced by European governments. The euro failed to match the all time high of 2008 in November 2009, when the Greek crisis begun, and confirmed the downtrend in June 2010. While the high achieved on October 31, 2010, at 1.42 _failed_ to reach to upper limit of the downwards channel, thus increasing its slope of descent. The line where we are now is the high of 1989 (ECU times). Perhaps it takes a longer time for the market to recognize _qualitative_ debasement of the currency as opposed to the mere _quantitative_ one (“money printing”), but the recognition cannot fail to materialize.

    All this impacts in a pure mechanical manner on the dollar, via the composition of the dollar index (56% euro) and, thus, on all the implications you derive from the dollar to stocks and gold. There is no way for dollar to go through the process you described except for a euro rally to aprox 1.41 (in order for the intermediate low of November 05 at 75.6 in the dollar to be reached) and/or beyond (in order for the next intermediate low for the dollar to be lower). This is a necessary _formal_ condition. Is it achievable? This is for each to decide but, as argued above, there is little chance of that.

  151. contulmmiv

    @ Gary: I am glad to see that you began paying attention to the euro since every reader benefits from the comprehensiveness of your opinion. However, the theoretical underpinnings of this particular opinion are insufficient.
    Inflation, understood as price increase, can be obtained either by the increase of the quantity of money, or by the debasement of the currently existing money. In the end, they converge in the same direction, but the mechanisms are different. You believe that in Europe there is “deflation” because the ECB does not “print” euros. This may be the case, but the fact remains that it cannot be easily determined whether the “sterilization” of ECBs intervention is real or not.
    However, what _can_ be incontrovertibly determined is that the ECB _alters the composition_ of its balance sheet (with or without sterilization) with junk assets: bonds of failed/failing sovereign states. In fiat money systems the only underlier guaranteeing the value of money is the quality of the assets detained by the CB emitting the money. From this point of view (and if the “sterilization” is real), the debasement of the value of the euro is more similar to the debasement of gold coins, when one devalues the money by tampering with the alloy grade, or by clipping the edges of the coins.

    By underlying the euro with junk assets, the ECB is undermining its value. This is to be reflected in the exchange rate: and it actually is, if one cares to examine a long-term chart of the euro. The trend of the euro changed in the fall of 2008 not because “investors fled to the safety of the dollar”, whatever this may mean, but because the bailouts were _first_ introduced by European governments. The euro failed to match the all time high of 2008 in November 2009, when the Greek crisis begun, and confirmed the downtrend in June 2010. While the high achieved on October 31, 2010, at 1.42 _failed_ to reach to upper limit of the downwards channel, thus increasing its slope of descent. The line where we are now is the high of 1989 (ECU times). Perhaps it takes a longer time for the market to recognize _qualitative_ debasement of the currency as opposed to the mere _quantitative_ one (“money printing”), but the recognition cannot fail to materialize.

    All this impacts in a pure mechanical manner on the dollar, via the composition of the dollar index (56% euro) and, thus, on all the implications you derive from the dollar to stocks and gold. There is no way for dollar to go through the process you described except for a euro rally to aprox 1.41 (in order for the intermediate low of November 05 at 75.6 in the dollar to be reached) and/or beyond (in order for the next intermediate low for the dollar to be lower). This is a necessary _formal_ condition. Is it achievable? This is for each to decide but, as argued above, there is little chance of that.

  152. alex


    see above I guess 🙂

    I have developed my own trading eyes, I guess. I dont trade unless I get certain signals , certain set ups (volume is key for me= supply & demand).
    And usually its a set up stated above to Elaine that works best, because its coming off from a bottom (basing pattern)…so if it breaks down on volume…you are OUT, no exceptions , but if it breaks up (wait for vol confirmation)..you can just let it run.

    see REE GMO , and I suspect FTK now, so if you see FTK breakdown, I am out , if it keeps going , I am in until I get my sell signals.

    I hope this makes sense-my wife says its a foreign language to her hahaha

  153. Rosabarba

    Just to clear up another point, Gary, since you might have assumed I was talking about a straddle/strangle on one of the indexes, I was talking about using that play on the miners.

  154. FreeBoundary

    I like your call “you will be 100% wrong no matter which path you choose”. I shouldn’t really worry too much about not being right too many times…

    I closed all of my silver positions except my core GPR/AG/PSLV yesterday. Today, I picked up small chunk of AGQ(Arian Silver) which returned 1300% YTD. Can anyone knowledgeable on this little monster shed lights on its potential? Thanks.

  155. JD


    Yeah, I think about that too. Two very lousy currencies and two continents in a world of financial trouble, and we’re wondering how/why one of those currencies should out-shine the other.

    I guess sooner or later people will be asking whether fiat money is in fact money, as they still sometimes ask about gold.

    I’m pretty much gone onto a personal gold standard. Not much more for one person to do than that.

  156. Wes


    Those are interesting observations that make sense to me.

    Wouldn’t it also be true that in order for the dollar to reach a three year low, the euro would also need to exceed it’s three year high made in 2008 ?

    I know the other currencies also count, but as you point out, combined they count for less than the euro.

    While things can change, right now that seems inconceivable.

  157. Jerred

    contulmmiv, wes and the SMT Blog,

    why cant it result from money flow. If people dont want to own currency then it flows into another asset.

    Why cant the 6E and the DX go lower at the same time?

    At the end of the day it is money flow that drives the prices of assets

  158. William

    I agree w/Rosabarba that GDX may not go up from here just yet.

    The daily GDX chart looks like it pivoted down today. The $USD is consolidating sideways here – it’s in a short term up-trend unless it breaks below the last pivot low of 78.82, or 79.29 MOC basis. I’m nt an EW’er, but using their A-B-C correction lingo, the $USD could be in a B wave now, with another C up next. That would peak the dollar in mid-to-late Jan. This might bring $GOLD down to the 200d EMA.

    Gary, if so, would this more closely match your cycles work that you wrote about a few days back?

    Gary, fyi the BB’s are really pinching on the daily Q’s.

  159. Wes


    The dollar and the euro can both become worth less wrt gold as gold demand increases. But the dollar index cannot decline while the euro declines (ignoring the minor currencies) by definition.

    The dollar index is inversely proportional to the euro.

  160. Steven

    The Euro and Dollar can both go down if the Chinese are serious about giving us back our inflation via allowing their currency to appreciate. That being said, since the peg is to the dollar I doubt the Euro will go down but I do think the Chinese allowing their currency to appreciate is, well, underappreciated.

  161. blammo

    Gary, I posted a comment for FreeBoundary re: Arian Silver, that is not showing up.

    It had two long links in it, maybe it got snared by the spam-checker?

  162. Steven


    Thanks for the suggestion but the problem is that I am already in the position and this would entail me selling and incurring the short-term gain which is exactly what I’m trying to avoid. I wish there was another 2x silver ETF. But shorting twice as much SLV is too risky because it can go nowhere at times (just up & down and be in the same place months later) while this could cause AGQ to go down more than the tax benefits are worth. I suppose it’s a good problem to have next year if it comes to pass.

  163. Jayhawk91

    Possible triangle on the dollar-would play into our fake out gold move, market correction in Jan takes DX to a break out over this pattern.


    Gary-This is scary how much this scenario matches last year’s set up. Swing low forms on gold despite us getting the intermediate overall market correction, big move in the Spring is anticipated so we are all antsy to get back in, etc.

  164. contulmmiv

    @ wes: this would be true only if the relative rapport of strength between the euro and the dollar remained unchanged to the conditions of 2008. But my argument also signifies that although the euro is in absolute term stronger than the dollar, _it depreciates faster_.
    The evidence is here: http://www.barchart.com/chart.php?ss=1&spread=dxy00*ecy00%2F100&p=WO&d=M&sd=01%2F01%2F1989&ed=12%2F31%2F2010&size=M&log=0&t=LINE&g=1&x=13&y=9&sh=100&indicators=SMA%2839%2C16711680%29&chartindicator_1_code=SMA&chartindicator_1_param_0=39&chartindicator_1_param_1=16711680&addindicator=#jump
    By comparing the spread chart to a standard ECY00 (euro currency cash contract) or the ^EURUSD pair, one would notice the difference in slope since 2008, and especially during 2010, comparatively to the previous periods.

    The implication is that when the dollar will have reached a new (3 year) intermediate low, the euro will reach a _lower_ high comparatively to the 2008 data points. Which also means that the next 3 year low for the dollar will likely _not_ be a lower low.

    As I pointed back in November, I am of the opinion that we are witnessing a change in the historical relations between the dollar and the euro which prevailed since 1999. The market is seeking a new definitional trading range for the dollar and the euro which is unfavorable to the euro and, by pure mechanical reverberation effect, favorable to the dollar.

  165. Brian

    Jayhawk, I have been watching a similar, but much larger triangle on the monthly $USD chart that goes back to the 2008 low. As triangles go it should have broken down last month, but the yearly cycle seemed to give it a bounce. Being a continuation pattern, and measuring the size, it seems to line up price wise with the move to 60 Gary discussed earlier.

  166. contulmmiv

    @ Jerred:
    “Why cant the 6E and the DX go lower at the same time?”

    DX is not “_the_ dollar”, but a dollar index, and only 44% of the index is “not euro”. If the dollar (in pair-based trading) drops by relation to all other components of the index, and the euro drops by relation to the dollar, the index will necessarily move slightly upwards because what makes is drop is less than what makes it go up 😉

    The dollar and the euro can drop at the same time, but then one needs am external reference to both, which is _not_ the dollar index. For example, as one could see these past days, a third currency, such as the Swiss franc (GHF) or the Australian Dollar (AUD): both the USD and the EUR fell by relation to these pairs. Gold is another such third term of comparison, for the past days it got more expensive in both the USD and EUR.

    But the point to retain from this exercise is that, presently, the rate of depreciation of the euro is larger than that of the dollar, and this represents an indirect support for the dollar index which Gary uses as gauge for the movements of gold.

  167. alysomji


    Sorry. I meant the 55-day EMA – not the 50-day SMA. The DX is crawling along the 55-day EMA and closed slightly below it today.

    I like the 55-day EMA as an intermediate support (a common place for daily cycle lows) for most asset classes. Usually if an asset class breaks it, it will head down to make its weekly cycle low somewhere between the 150-day SMA and 200-day SMA.

  168. Gary

    The difference of course is that instead of a bounce out of an yearly cycle low for the dollar like last year, we have an impending collapse down into a 3 year cycle low.

  169. Done


    What month do you approximate the C-wave to finish? I want to allocate 20% of my PM funds to options. Any thoughts on what expiration I should shoot for?

  170. Gary

    Well first I would suggest you not use options here. But if you are going to do it anyway at least wait till the dollar breaks below 78.82 so we have some kind of confirmation that the 3 year cycle low is in progress.

    That low, if it starts now should come (along with a gold top) around Mar./May.

    But if somehow we get another year long consolidaition like last year then it could be next winter.

    This is why I don’t suggest using options at this point.

    The next oppurtunity to use options will be at the bottom of the D-wave decline.

  171. Steven


    Can you elaborate on the possibility of a year-long consolidation. Are you saying the dollar could bottom in mar/may but gold may not top? I thought you were fairly certain the D wave AND the dollar 3 year bottom would come in the spring/summer time-frame.

  172. Gary

    I don’t think gold will consolidate for a year but I didn’t think it was going to go through a year long consolidation last year either.

    In this business anything can happen.

  173. Steven


    I got the two text messages tonight for your update but all I see is a description of your new site. Is there another report coming?

  174. Steven

    Apologies I missed that. I’m still confused on your prior answer about the options question. Are you saying it may be possible that the 3 year low in the dollar and corresponding top in gold could take the form of a long consolidation and actually happen next winter instead of the Spring/Summer?

  175. thedocument

    FWIW, there are two recent triangle patterns on the daily silver chart which both project price to $32. Perhaps we see a January 3 pop to $32 (along with across the board new year’s rallies) and then our intermediate corrections finally set in. Not predicting anything… just food for thought.

  176. Gary

    With the dollar behaving so rotten I almost think that we would have to see the three year cycle low come next fall in order to have a correction in stocks and gold now.

    We’re just running out of time for the dollar to rally and then turn around and move down to a major three year cycle low in the current intermediate cycle.

    If the dollar rallies and assets correct then that would pretty much eliminate the current intermediate cycle as a candidate for the low to occur.

    That would mean Ben would either have to extend QE2 or we would get QE3 into the fall.

  177. n1tro

    mr. mom,

    its not a matter of wanting to pay a premium for coin/bullion but it just a fact if you can not buy 1000oz bar in one shot. The premise is that it costs more to mint or produce a single ounce vs a 1000oz bar thus the premium. But in the end, who cares when silver is at $200/ounce anyways!?

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