574 thoughts on “NEW POST

  1. David Kafrick

    Gary,

    For every mistake that we make that has already been made I can give you 2 things that we have changed and improved upon.

    Humans have definitely changed over the past 200,000 years. It is a slow progress, but a progress nonetheless.

  2. notGreedIsGood

    Gary

    i remember you said the fact that USD is making new lows, and yet the gold and silver market aren’t really budging too much to the upside, suggests there is more downside in gold and silver remaining. Do you still believe it is the case?

  3. Avann

    Just my preference … Please do not go to a video format … sometimes I like to print it and take it to go.
    I much rather prefer reading over watching … it’s so much easier to re-read something you may not have understood then it is to rewind and listen/watch again.

  4. Gary

    I’ve contemplated doing a video occasionally but scrapped it. Unless I’m actually talking face to face with someone I find it even harder to narrate the report unless I write it down. So I would have to write the report anyway.

    The new website has actually made my life immensely easier. I wish I had done this a year ago.

  5. Gary

    David,
    200,000 years ago Cro Magnon man was just emerging in Europe. Certainly we differ considerably from our first ancestor who’s main goal in life was to find food.

    Once global bond markets evolved and debt became freely trade-able we’ve seen a steady stream of credit bubbles and busts over the last 500 or so years.

    We just did it again, repeating the same mistakes of the late 20’s and Japan in the late 80’s so yes history repeats because humans continue to be driven by our basic emotions of greed and fear.

    No it doesn’t repeat exactly, but the big picture is always the same.

  6. Redwine

    All the various monetary theories are interesting to a point but can quickly become very boring when explained by fools.

    The debates could all be fairly decided by simply allowing the free markets to work their magic with money as they have with everything else subjected to competition.

    My problem with MMT, or any other theory that places the state in charge of creating and maintaining a money monopoly, is that monopolies don’t work nearly as well as competitive markets.

    Anyone requiring an explanation for why this is true can contemplate whether or not this world wide web could/would have been created by government agencies.

    Capitalism should at the very least allow CAPITAL itself to be subject to the competitive and innovative forces of free markets. After all, capital is the fruit of our labor and control of it by any central authority is basically slavery. So shove your MMT where there’s no light because I’m quite confident it would fail if required to compete.

  7. Gallo

    Tim and Jeanene and Gary,

    I’m trying to wrap my head around Tim’s theory. I have a question. I’m interested in the end game. My understanding is Bernanke wishes the dollar lower, much lower in part to attempt to pair down our debt. Pay it down with cheaper dollars. China has an interest in seeing their dollar as the new reserve currency. We hear nations refusing to pay for commodities with their own currencies because of our huge debt. I ask sincerely what happens if we lose our status as the reserve currency? What happens to the MMT theory?

  8. David Kafrick

    I don´t want monopoly as well. But I think you are judging MMT on something it doesn´t claim. From what I understand, MMT simply tries to explain the consequences of monetary policies in a world of fiat currencies. It does not claim (I could be wrong) that having fiat currencies is good or that the State having monopoly on the currency is good. It is simply a model.

  9. Avann

    Here’s a suggestion … for anyone wanting to continue this MMT discussion … why don’t you use the previous day’s post.

  10. ALEX

    Personally

    I just hope this blog morphs back into a blog for traders and investors , not so much HEATED theory and economics debates. friendly exchanges areless distracting, but yesterday got distracting…I.M.O.

    To T&J…you said , “I just want to share this info and answer questions…”..WHY NOT START YOUR OWN BLOG AND INVITE INTERESTED ONES OVER?

    For traders…FYI

    DNN broke out with volume yesterday, up almost 10%. URG did the same. A trader MAY buy the breakout for a quick trade, a cautious trader may put it on a watchlist and see if it retests the break out soon on lighter volume then turns back up.

    ALSO some OIL/Energy stocks are still breaking out.

  11. DG

    FWIW, I am very happy to see the MMT discussion and I am a trader/investor. Considering that the outcome of the current mess will hugely affect every asset class it seems like a relevant discussion to me. And T & J: sorry for the classless “shove it” comment from some troll earlier. You just have to ignore the the posters with limited emotional control. This blog is actually way better than most and sticks to debate rather than personal attacks (most of the time).

  12. Jayhawk91

    HUI has broken it’s trend line last week and held, 500 support held, 144MA on gold held, MACD on these miners & silver curling UP on the daily, MACD histogram about to go green on the daily. I think the silver trend line break is inevitable in the next day or so, especially this late in the cycle and in light of the dollar.

    We may have a situation where a several day pop is followed up by a quick scare down, but the prior support should hold up. That could be a day to add some leverage.

    I’m thinking add some here and some later today?

  13. DG

    Gary: stockcharts shows silver closing at $28.04 yesterday. Kitco shows silver (right now) at $28.33 + 14 cents, so an implied close of $28.19. Which ought I to use? Your chart is stockcharts, but kitco is the current price…?

  14. Gary

    DG,
    One really doesn’t have to wait for a close above the trendline as long as they aren’t leveraged. But I’m going to use stockcharts and a close above $28.25 as confirming the break above the trendline.

  15. ALEX

    Bought AZC after open, this is a good breakout…volume for today is ALREADY almost the daily avg volume . LARGE consolidation.

  16. pimaCanyon

    Redwine,

    Whether you like it or not, whether you tell MMT to go where the sun don’t shine, it is what we have.

    You don’t like it, don’t want to deal with it, then stop using US currency. As long as you continue to use US currency, you are a slave to MMT, a slave to the US government because they have a monopoly on that currency. That’s the reality. If you want to change that reality, chuck the buck and use barter. Or move to a country that uses currency that is backed by gold. (Are there any such countries today?)

  17. Redwine

    PC

    MMT is a theory the same as keynesianism or monetarism, so I don’t agree with your “it’s what we have”.

    Just because I argue that free market money would be ideal doesn’t mean I can’t deal with reality. I’m dealing with it fine.

    So what’s your point?

  18. pimaCanyon

    Tim and Jeanene,

    Thanks for answering the questions I asked as well as other questions, even though you had to fend off a hailstorm of verbal daggers to do it. Shoot the messenger seems to be something that humans have a hard time giving up.

    I agree with you that both political parties have it wrong.

    That is flaw with MMT: In order for it to work well, in order for our country to stay near full capactiy, there has to be an understanding of HOW it works by those in charge. The problem is the US government has a monopoly on the currency, but they haven’t a clue as to how to make that monopoly work for the benefit of all the people.

    They do seem to have a clue to making it work for the benefit of the wealthy though. If you have a stock portfolio, QE has been good for you.

    Trouble is, only 1 US household in 3 has a stock portfolio worth 10 grand or more. So 1 household in 3 may have a chance at keeping up with inflation, while 2 out of 3 fall further and further behind.

  19. pimaCanyon

    Redwine,

    The State DOES control our money. They have a monopoly on the currency. That’s not theory, that’s a fact. That’s reality. If you don’t like it, you can give up using US currency. That’s my point.

  20. Redwine

    PC

    You’re only restating what I just stated. Except for the part about choosing not to use US currency. Because it’s a monopoly I can’t choose to stop using it. Hello?

  21. David Kafrick

    Redwine,

    But why would you dismiss MMT just because you prefer the government to not have a monopoly on money? If MMT is the best model to describe monetary policies GIVEN that money is a monopoly of the government, you should judge its usefulness based on how it describes the way the world is, rather than how you want it to be.

  22. Onlooker

    Very impressive relative strength in the miners on that move down. Hard to put too much faith on such a short term move, but it could be very telling. Bouncing back quite strongly too.

  23. Slumdog

    Another day of gold’s consolidation inside the NY Market daily gap, 1333-42, with yesterday’s stab out and the slaughter of all directional traders.

    This is day 4, in fact.

    IMO failure to respect the NY Market’s power, the real trading, will repeatedly prove costly (dropping my sign saying “the world is doomed, repent now.”

    If yesterday was an inside day to the day prior, again on the NY Market measure (see Trader Dan’s normally daily chart), then I may have something to talk about.

    I somewhat concernedly see more of these choppy waters for the rest of today (even not now looking at what’s been happening as choppy waters, false breakouts, is what happens after major price moves which smack the players on the sides of their heads). For tomorrow as of now, I see nothing.
    My pt is if I see something or see nothing, I respect my view. Lots here are bullish. I’m agnostic at the moment, with the last and only trend down off the 1432 high.

  24. Gary

    Instead of concocting a theory for why this time will be different it’s usually safer to understand that it’s never different.

  25. ALEX

    NIKE BOY

    I.M.O. -This stock has AT LEAST a $6.00 target IF volume on the way up stays strong. Today is a breakout with great volume. I even sold another stock to add more πŸ™‚

    Onlooker

    I.M.O. THIS SELL OFF IS JUST NOISE SO FAR also.

    Gold selling off and miners closing opening gaps this morning , but not really selling off (volume is light so far).

    FEELS LIKE a lot of sellers are out, accumulators are coming in…again…SO FAR.

  26. Onlooker

    NikeBoy

    Generally a MA crawl is a continuation move, so it’s actually a bullish sign. It should break out to the upside, which is, of course, in line with overall expectations.

    Gary can correct me if I’m wrong here.

  27. Redwine

    Kafrick

    I dismiss it because it’s a theory about how to make the current system function correctly. The current system can’t function correctly, due to the fact that it is a state monopoly, and is in the process of imploding.

    It’s like trying to figure out how to fuel a two stroke engine with straight gasoline and keep it from seizing up. I’d rather focus on adding some 2 stroke oil to the fuel.

    To the extent I can operate outside the current system and protect my wealth I am. MMT is a waste of time because it misses the point that all fiat currencies collapse and this fiat currency is long in the tooth.

  28. Tudor

    Quick shoutout to Jayhawk. I’m pretty certain it was him who posted about Gary over on the Kitco forum, which led me here. I’m now firmly ensconced on the PM bull and hanging on for a great ride.

    Thanks, Jay! If you’re ever in Northeast Ohio, give me a shout. I’ll buy the burritos AND the beers.

    ohio dot tudorman at g mail

  29. ALEX

    Jayhawks

    It was on my watch list from this fall when it ran from $1.50 to $4.Look on a 6 month wkly!! I saw large volume in Sept and waited for a 50% retrace or something, but it just went sideways till now.
    So I put it on my watchlist .Today is what I was hoping for…expecting $6+

  30. Bob loves Hawaii

    What makes me scratch my head is the dollar is back to November levels, yet gold and silver is still struggling.

    If the U.S. was really rebounding, why the dollar weakness?

  31. Gary

    Because gold is trying to break out of an intermediate down trend while at the same time everyone is enamored with riding the stock market wave.

    Eventually smart money will start to leak out of the over extended stock market and find its way into undervalued assets. Now that the entire sector has regressed to the mean that would be precious metals.

    The 100 Blees rating is proof its already starting to happen. Big money is starting to accumulate.

    I never ignore a 100 Blees rating.

  32. Jayhawk91

    Tudor-

    My pleasure…I see a lot of confusion over there attempting to trade the miners and after watching Gary & Doc for a few years, I’ve seen how the cycles work. I’m still learning, but feeling more confident in buying these intermediate bottoms.

    One of these days, we all need to get together for a major Mexican fiesta. All this talk of burritos over the years is increasing my appetite for Mexican food 10-fold. πŸ™‚

  33. Patrik

    Yeah the dollar sucks..Thought that we were going to se a short rally in the dollar, but its going lower and lower and lower..

    If the problem in Egypt wont lift the dollar..What will?

    I think we will se some kind of parabolic moves in silver and gold..Dont know whats holding them down now?

  34. Gary

    I went to my fav Mexican cantina last night with a sub who was in town.

    I’ll give you three guesses what we had for dinner.

  35. Bob loves Hawaii

    Thanks all, I was tongue in check on the recovery, and I have been buying a little silver, uranium and gold miners every day since last Wednesday.

    I a just bothered that this can be held down like this.

  36. sophia

    Pretty amazing times…I was on the camp of Gary and Poly seeing a market selloff on Monday, but NO, people are still piling on the stock market!!! Gold and Silver reaction is even more troublesome, as if everybody is buying that idea that all is good in America and therefore selling USTreasuries and precious metals….very weird indeed when Oil is at 101$

  37. Tudor

    A meetup in Nevada would be cool, in conjunction with a tour of one of the historic gold/silver mines from the 19th century.

  38. DG

    I bought some AGQ this morning at 128.08. My first long PM since about $1380. I have a lot more to buy and am feeling nervous about it taking off without me.

  39. ALEX

    Jayhawks

    I did , I said DNN and URZ days ago πŸ™‚

    I DO try to post as I buy, since DG requested that a month ago. I Bought AZC this morning and posted at $9.59 (See above) , it was only at $4.14 cents…gotta be quick Bro πŸ™‚

  40. Gary

    Sophia,
    The metals aren’t being held down. They are being accumulated. (100 Blees rating)

    Usually what happens is they wiggle around just long enough to frustrate everyone. Then just when you give up and exit they take off like a rocket.

    Then you are forced to chase into overbought conditions or risk being left behind.

  41. DG

    Thanks, Alex. keep the posts coming. I will let you know when/if I join you (buy first, post immediately after, and maybe i can goose it for you!)

  42. sophia

    thanks Gary, I think that it is time indeed to buy some…If, as I think, the events in the Middle East start to unfold, Gold and Silver should rocket higher…

  43. ALEX

    oh , and vgz…looks good, this may be its bottom area…but not yet for me until it does something.

    F.W.I.W

    I do like AG, AXU , and EXK …but today they are retesting an area where I need to see more volume on a 5 day chart. they look like they may pull back a bit if someone was thinking of buying more?

    I may even sell half and TRY TO rebuy lower,since I got in last Tuesday

  44. pimaCanyon

    Actually, the line “all fiat currencies collapse” is itself a “theory”. Why? Because there are many examples in the world today of fiat currencies that have not collapsed. In fact, are there any currencies in the world today that are NOT fiat? They haven’t all collapsed because they are still out there doing their thing.

    In the past, currency collapse has usually been due to government collapse. Because a fiat currency is something that’s usually created by a government, when that government collapses, the currency may go with it.

    So to say “all fiat currencies collapse” is just not true. There are many fiat currencies that are alive and well. And until ALL of those collapse (which means ALL currencies being used in today’s world collapse!), then the statement “all fiat currencies collapse” is a prediction, not a statement of fact.

  45. Poly

    Sophia, Daniel,

    I’m still holding firm and the retrace back to the high’s was on cards. Closing at new high’s would not be good and I would like the next few days to “show me the money”.

  46. Tim and Jeanene

    vuvvy asked me: “Why do most families these days have to have both spouses working, when that was not the norm in the 1950’s?”

    You bring up a lot of points in which I could take another article to counter, but I will stick to this one. My response?

    Very true, but today that has more to do with materialism than necessity. Most dual income families don’t need 2400 square feet either with granite counter tops. We bought our first home from a lady who built it in 1947, and it was 1047 square feet with no closet space, linoleum and formica in the kitchen, single pane windows, and no insulation. I was easily able to afford the home in that condition in the San Francisco Bay Area when I was 21 years old on my salary alone, as well as make many improvements to bring up the quality of the home. If I wanted the McMansion off the bat, then you are probably right that I would not have been able to afford it unless my wife worked. Two income are needed because everyone wants their own bedroom and car now too, which wasn’t the norm back during the time you choose to compare with.

  47. pimaCanyon

    DG, are you still in that short Euro trade? Are you short stocks?

    So far double top on SPX, but Euro at new high.

    Also, OEX options traders are buying the calls today, two to one calls over puts.

  48. ALEX

    GARY

    You are right , I have seen that a lot in the past….they wiggle around and get accumulated, and put people to sleep, then rocket off. I better not get too cute …theres a time to trade and a time to accumulate.

    Can you tell me what Exactly the blees rating is…how it is derived?? Thanks

  49. Jayhawk91

    Alex-

    I know, you did mention the uraniums. This new one was out of the blue but you bought the break out, I got it.

    I just meant keep the ideas flowing-we all appreciate it.

    I added some AG today-I have a 10% position in this one. In AXU-it’s been pretty mild, but when it gets going it gets going. Added some SVM too.

  50. sophia

    sorry Gary to use your blog for that, but I re-read some comment of Doc and I am confused…Doc, are you for a 5-6 weeks correction on the stock market even if you say that the dollar will collapse??

  51. Tim and Jeanene

    vuvvy you mentioned: “but the real implications to our society as we know it today will be if the USD loses it’s standing as the world’s reserve currency.”

    We are a long way away from that. We are a $14 trillion economy and the next closes is China at less than half that. If China grows by 10% a year and we grow by 3% a year, it will take China 44 years to match our GDP.

    The world’s largest customer will get to dictate what they want to pay the world with, and until we lose that, this will continue to be the case. Wal-Mart does not get told by their suppliers how they will pay.

  52. Tim and Jeanene

    Avann asked me: “Please tell me you do not actually believe that economic policy, MMT or otherwise, had anything to do with our standard of living.”

    No – money is just the grease in the system, but productivity and innovation create wealth. I try not to use these types of blogs to “market” my articles, but I have a new one coming out that describes this point exactly which is a better way to answer rather than start a new hijacking of Gary’s hard work for this blog.

  53. vuvvy

    Tim,
    Most lower and regular middle class does not live in a mcmansion,nor has granite counters, and needs 2 cars to get to work for both spouses.

  54. ALEX

    Brian

    I was in MGH before, and I do tend to rotate stocks in my portfolio as some get over-extended and others look like they are starting to move. I like this one a lot, but as its climbing the right side of this possible cup..I wish it had stronger volume (demand), but I am watching this one too. It may get to the top and go sideways (cup w/handle) Thx 4 mentioning it

  55. Redwine

    PC

    No fiat in history has lasted longer than 40 years, yet. So you’re right that one could last longer, and probably will, in the future.

    But seeing how no government can last forever I’d say it’s close to guaranteed that no fiat will survive. The evidence is clear the US Dollar is staggering and weezing.

    My point is that odds are, historically/empirically, the USD is on its last legs and wasting time on MMT isn’t my cup of tea. You feel free to waste your time however you see fit.

  56. pimaCanyon

    thanks, DG.

    Euro may go to 1.382 before heading south. ‘course, it may not head south at all, and certainly won’t if the dollar keeps tanking.

  57. Avann

    T & J … please go read my earlier post … previous day.

    Please don’t tell me that salaries today can buy as much as they could 30 years ago … that’s just rubbish.

    And please do not compare us to 1950 … it’s only been the last 30 years or so that inflation has truly hurt us.

    My parents, making $3k a year were able to afford their first house in 1966 … 5 years after migrating to Canada earning less then minimum wage. This is just not possible anymore …
    This is getting very tiresome … sorry all I will not post about this BS anymore.

  58. Nick

    Question for people:

    How do you intrepret SPY showing on SOS page with -25 under “Total Money Flow” and +19 under “Block Trades”?

  59. Tim and Jeanene

    Redwine: “My problem with MMT, or any other theory that places the state in charge of creating and maintaining a money monopoly, is that monopolies don’t work nearly as well as competitive markets.”

    BINGO! I am not saying to like MMT – just saying it is the current reality. When you understand better the framework you live in, you know why things are happening the way they are. MMT should be renamed Modern Monetary Reality. Whether we like it or not is another story.

  60. Avann

    Sorry … I meant please do not skew your results by including the 50’s … start from 1980 and see what happens to the numbers …

  61. Bede

    Gary,

    You said that the blees rating is a measure of accumulation, if I have that right. Could you give us a little more explanAtion of what the blees rating is, please.

    TIA

  62. ALEX

    Jayhawks

    Yup, I knew what you were saying–sometimes in these posts the reply can be read as firm or sharp, when one tries to explain themselves…but I wasnt upset or anything close to that.It actually takes A LOT to upset me, nothing on here would,I think/

    I usually put the πŸ™‚ in there so people will know I am not upset. I was just replying πŸ™‚ πŸ™‚

  63. Jayhawk91

    Anyone ready for Tim to leave? Tim, start your own blog and drop by with a link so those interested can follow you there?

    Or if those here want to debate, go to his thread on SA and join in.

  64. ALEX

    Jayhawks

    I love the look of AG for the long run…since its so hard to buy ,Because it goes down $3 and up $3 in a week or two…you worry you’ll get in and it’ll drop $3…SO THERFORE -it feels like its going to rocket later!

  65. TZ(5288)

    T&J,

    >Wal-Mart does not get told by their suppliers how they will pay.

    The suppliers will negotiate and accept, in current valuations, anything acceptable to both parties.

    Approximately half a SECOND after the money (dollars as you assert) hits the suppliers account they are free to convert it to any other currency or security in the world.

    The argument that the money people choose to MOMENTARILY transfer in order to conduct a transaction is the same as whether the receiving party RETAINS that money 1 second after receipt is not correct.

    The dollar is a “share” (stock certificate) of the corporation called the US of A. This corporation:
    a) is completely BK
    b) doesn’t keep any promises to pay
    c) is run by some of worst and deceitful management in the world
    d) has employees (citizens) who have no savings, are spoiled, and ignorant.
    e) has customers which increasingly recognize that they get little to no value by ‘shopping’ with the corporation.

    Hold all the shares you want. But I warn others they are making a mistake.

  66. Tim and Jeanene

    Some of you don’t like the “other” conversation, some as DG have said find it useful.

    I am just answering questions folks are posing to me now. If I don’t – then you will just say “it must be bunk because he won’t answer, therefore we can move on.”

    I can’t win…. πŸ™‚

  67. Tim and Jeanene

    I also came here because I read about the impending collapse of the stock market. Why can I not bring in MMT and the POMO taking place to give the other side as to why the crash won’t happen until POMO is done?

    If you understand MMT, you will understand the math behind QE and why stocks will be mysteriously bid until late Spring, so drawing charts and using Gary’s posts for the coming crash will be made mute for the short while as QE provides that BS bid.

  68. Movax2

    Thumbs down for this MMT talk.

    Supply and demand no longer matters?

    Too much supply of US dollars will cause a rise in prices. Only a decline via interest rate hikes or and end to deficit spending (surpluses and paying down the debt) can stop that.

    The US dollar system has only lasted this long for a few reasons:

    -large, stable government with strong military.
    -the ability to essentially export inflation (China, Egypt..)
    -the game has been going on for a couple decades and no one wants to stop the music.

    Declaring something as being able to pay taxes obviously makes that thing valuable, but even tally sticks would be worthless if you could find them everywhere on the ground.

    MMT = nonsensical propoganda.

  69. sophia

    Poly, 8.25AM,

    I agree with you… this market is really resilient and I am really starting to scratch my head about this relentless rally…Is everybody short?

  70. sophia

    Poly, 8.25AM,

    I agree with you… this market is really resilient and I am really starting to scratch my head about this relentless rally…Is everybody short?

  71. Tim and Jeanene

    Avann go back and look at the graphs in the SA article.

    Since 1980 the CRB is up about 90-100% just eyeballing it. Disposable income is up over 100%. So the theory stands, increased wages has more than compensated for the rise in prices since the time frame you choose to compare.

  72. DG

    I really don’t understand why people are so disturbed about someone sharing an alternate view of how the monetary system works. Tim has been respectful and patient. Just don’t read it if you don’t like it. Gary himself has said many times he likes a healthy debate on the blog. I personally draw the line at childish insults and ethnic slurs, but someone espousing something other than the Austrian school ought to be fine. We may even learn something or, God forbid, change our minds! Isn’t that what trading/investing is about? Inflexibility will ultimately ruin your trading (and your life). And all we’re talking about is exploring it. It’s not like his comments are crowding out what to do about the PM’s or other trading issues.

  73. coolkevs

    In DeMark land, generic crude oil futures will be recording a DAILY sell signal today, good for the next 12 sessions. OSX Oil Service sector index has recorded a WEEKLY sequential sell this week, so good for the next 3 months! Same with the IYE Energy Sector ETF.
    Looks like we have a bit more to go with the SPX reaching new highs today. I did say the strength looked like it could continue into February, but I didn’t believe it myself! Dollar will be emerging from its 4 week sell setup this week. It’s been quite a reaction, leaving us just a little under 6% to go to the 72.5 dollar index target level for a MONTHLY buy to record. Given how gold futures and various gold issues have qualified downside breaks, it may be hard for the dollar to get down that far right now, but we shall see…

  74. ALEX

    DAVID

    Blogger David Kafrick said…

    For the sake of looking ridiculous, I think the S&P is going to 1350 before any meaningful correction.

    Me too..I drew this chart in early dec, then updated it early January…THIS IS WHY I kept trading stocks when others told me of imminent crash and stop. UNTIL this changes, I see SPX 1367…it MAY change , b ut this is what I saw.

    http://www.screencast.com/t/9IkeUpghPY1

  75. Avann

    I give up … if you truly believe that a single young adult can manage a home and a car on today’s salaries you truly have your head in the clouds … charts and numbers are great but I live in the real world where my kids will never be able to afford a home without my help.
    Sure they have more disposable income then I did … BECAUSE THEY STILL LIVE AT HOME!!!

  76. Movax2

    Sorry but it is nonsense.

    MMT has no place/validity in a debt based system. Maybe in a credit money system with no central bank, gobbling up interest. (A credit based system is described in Money as Debt I believe.)

  77. pimaCanyon

    Seems to me Tim agrees with most of us here re the effects of QE. That doesn’t necessarily mean he’s happy about it or thinks it’s a good thing (maybe he does, maybe not, I don’t know). He just sees it as the reality we’re living with and is trying to make the best of it. Makes sense to me that stocks are not going to tank any time soon.

    Just because you use MMT to try to understand how our fiat currency system works does not necessarily mean that you think the fiat currency is a good idea. But like it or not, we seem to be stuck with it.

    DavidK, 1350 looks very reasonable to me, especially considering the fact that the dollar just keeps dropping.

  78. Haggerty

    Gary,

    Where is the next support level for the dollar? I think the dollar would have to find support then trade higher before the stock market could correct right?

  79. David Kafrick

    DG,

    Good points. This is exactly the kind of psychology that you see in the investment crowds that make up a bubble. They just want to reinforce their beliefs about their investments and automatically dismiss any information that might go against their current beliefs.

    The most important thing that I´ve larned about trading, is that you should never ever take your opponent´s point of view for granted. You should never think that the person taking the other side of your trade is obviously wrong. There is always a good chance that you are wrong. Always keep that in mind.

    By the way, I believe gold will be in an uptrend for quite some time, but I never underestimate the other side, nor do I dismiss their views as stupid, silly and obviously wrong.

  80. pimaCanyon

    Tim,

    When you say “income is up”, what are you including as income? CEO salaries and compensation, along with the $8 an hour WalMart employee?

    Overall, income may be up. But the disparity between the very upper end of the income curve and the lower 50 percent has certainly widened over the past 30 years. If you would look at the bottom 50 percent of wage earners and compare where they were in 1950 versus where they are today, I believe you’d see a very different picture. Even the bottom 2/3’s I believe would paint a different picture.

    So I’d go back to your stats and graphs and try leaving out the top 10 percent or 20 percent and see what kind of picture you get for the working American or Canadian today (who’s not in the elite upper income level) versus 1950, 1970, and 1980. For those folks (which means most of us), there’s been a loss of purchasing power.

  81. Gary

    Pima,
    Historically all fiat currencies eventually collapse. That doesn’t mean that the US dollar is going to collapse tomorrow but eventually it will return to it’s true value (0). We’ve already had three currencies collapse here in the US (or was it 4?).

  82. David Kafrick

    Gary,

    Please explain why the true value of a dollar is 0? or why the true value of something is whatever it is?

    I would argue that there is no such thing as true value, if by true value you mean something like the notion of intrinsic value or absolute value.

  83. james r

    Tim,

    I have answered your question as to why I think interest rates will rise 6, 7, 8% (see prior log).

    Now answer mine.

    What will the Fed do?

    James

  84. Tim and Jeanene

    A quick point Avann in relation to your personal examples of how inflation is hurting you.

    You have to be careful of taking your own situation and extrapolating it to the rest of the country. I often hear bloggers state, “the CPI is crap, I just need to look at my own budget to know that inflation is here.”

    Bill Gates could say inflation has not been a problem. I could say my income is up 300% compared to 10 years ago, but we would both be wrong to assume that was the case for everyone, which is why we need to look at the country as a whole, and not just our own circumstances when making conclusions that may affect the way we invest.

  85. Gary

    David,
    A dollar is just a piece of paper. They only reason you can trade it for anything is because the government has made it legal tender.

    I guarantee if, heaven forbid, society broke down, you would find out really quick how much real value those little pieces of paper really have.

  86. Tim and Jeanene

    Thanks for the props DG – i was a little surprised at the anger I induced. I am not trying to sell MMT and then pitch them on why it is good for them.

    I am just trying to educate people to the reality of the system we are in. I do not know how it will end. Contrary to popular belief, we have never seen a world wide system like we have now. It may end indeed. Understanding MMT though will help one realize that it won’t occur because China decides to stop buying our debt, or hyper-inflation. It may end from a revolution instead. I hate being forced to accept MMT as well, but understanding it allows me to not invest assuming the collapse will happen due to the examples given above.

  87. ALEX

    David

    your welcome, it matched what you were saying, and you said “for the sake of looking ridiculous’…and that’s exactly why I didnt post that in DEC πŸ™‚

    Jayhawks

    As Gary says…”Anything is possible’

    and actually , my chart was a 1 to 1 projection ( a minimum target under the right conditions). I also do extension projections of a 1 to 1.382 and a 1 to 1.500 and a super 1 to 1.618…puts it way up there.

    so if you take the 192 point move x 1.382 = 265 points added on…
    add 265 to ‘c’ (1175)= 1440!! COOL

    the a-b-c projection on my chart for a 1 to 1.382 IS your 1440.

    1440

  88. vuvvy

    Some people were talking about the micro gold contract MGC a few days ago.I’ve been messing around with stop and limit orders and comparing them to how the large contract trades. Even though the micro has little volume CME has been arbitraging (or paying someone to)trade almost exactly as the large contract.The Liffe product YG doesn’t even come close to tracking GC as well.

  89. DG

    Tim: The CPI does seem to be absurdly off the mark. I can name LOTS of things that are up 5% over the past year. For the CPI to be at 2% it would mean an equal number of things would need to be down 1% so that the average is 2% (sloppily stated, I know, but you get the idea). Virtually nothing except housing is down. Oil, food, medical, movie tickets, dinner out…everything is up, and most much more than the stated CPI. How is this possible?

  90. David Kafrick

    The value of anything is related to our perception of its function. Dollar is just a paper, corn is just food. We perceive that corn has a function in satisfying our needs, we attribute a value to that. Same with the dollar. If we discovered that corn is bad for health, what would happen to its “true” value?

    I doubt society will ever break down. We are pathetic little creatures who can´t run very fast, don´t have sharp teeth, are not physically strong (maybe you are :)) and we have no chance of surviving on our own. What we have to our advantage is that we are highly social creatures and quite smart. So for better or for worse I believe we are stuck with each other.

  91. Gary

    Actually QE can keep the markets levitated only to the point at which inflation overwhelms the economy. We saw it happen in 08. With oil approaching $100 we probably aren’t all that far from it again.

    I’ve said all along that the catalyst for the next recession would come from spiking inflation and that the dollar’s collapse into the three year cycle low would be the driver for that spike.

  92. vuvvy

    To underscore Gary’s comment of paper currency being worthless, I have garbage bags full of Hungarian Pengos from my grandfather who was a large landowner in Hungary when the Pengo became worthless.

  93. Avann

    Tim … absolutely … this is why I tried to use average incomes and average home prices and average car prices in all my examples. I only use my personal situation to prove a point.
    This is a fact …
    Home prices used to be about 2x average salaries.
    When I was a young adult they were 3-4x average salaries.
    Today they are 6-10x times.

    This is from the US census bureau.
    Home prices ADJUSTED for inflation in year 2000 dollars.
    1940=30K
    1950=44K
    1960=58K
    1970=65K
    1980=93K
    1990=101K
    2000=120K

    Your just not on track with this nonsense …

  94. Gary

    Tim,
    You conveniently forget to mention that commodities were in a bear market from 1980 to 2000.

    A more appropriate measure is the CRB from 99 to the present. At it’s peak in 08 it was up almost 200%.

    But that doesn’t tell the whole story. Oil was up 1500% copper roughly the same.

    Supply and demand fundamentals will concentrate inflationary forces in specific sectors.

  95. Tim and Jeanene

    Because James – the government is not revenue constrained. They do not have to collect taxes (Federal level only) in order to pay debt. You need to do more work on understanding the role of debt in MMT. Wray does a great job in his book I have recommended.

    The true value of interest on fiat is 0%. Since we went to full fiat – the world rates have trended lower. They will continue to do so over time, just look at Japan who has a 20 years head start on this game. We will get strong spikes and they are volatile, but the trend should remain down across the globe.

  96. pimaCanyon

    Gary,

    Fiat currencies have collapsed because the government who created the currency collapsed, not because the currency was fiat.

    If you insist on saying “all fiat currencies have collapsed”, then why not say “all governments have collapsed”?

    Neither of these statements is true. Why? Because there are many fiat currencies in use today and they have not collapsed. And, there are many governments in power today and they have not collapsed.

    It is the nature of governments and currencies both to come into being, exist for a while, and then “collapse”.

    What does any of that have to do with the present other than the fact that we know that SOMEDAY our government and our currency may no longer be in existence.

    Species collapse, but saying “all species collapse” does what? It’s an irrelevant statement.

  97. Avann

    And BTW … MMT or not … that’s not the issue. I just have difficulty swallowing your “Salaries have kept up with inflation” BS … and if I have a problem with that then I have a problem with most/all of it.

  98. Tim and Jeanene

    Gary said: “A dollar is just a piece of paper. They only reason you can trade it for anything is because the government has made it legal tender.

    I guarantee if, heaven forbid, society broke down, you would find out really quick how much real value those little pieces of paper really have.”

    This is getting much closer to reality. The collapse of the current monetary reality will likely be because citizens say screw you the government and refuse to pay taxes and are willing to go to jail and be killed, while at the same time killing those in charge unfortunately. Revolution has a much better chance than a bond or currency crisis. I wish it would be as easy as the Chinese deciding to sell. Unfortunately, a lot of unnecessary bloodshed will probably have to take place.

  99. Gary

    Pima,
    Not exactly true. The US hasn’t collapsed yet we’ve managed to destroy 3 or 4 (I can’t remember which)currencies.

  100. Redwine

    T & J

    Many believe certain theories are reality and I don’t excuse myself. I just don’t believe MMT is reality.

    Those who believe in MMT, in my experience, believe that deflation is the enemy to fear and dismiss hyperinflation scenarios as impossible. Monetary history appears to prove otherwise.

    The US has experienced it already. Take the continental fiat for example. George Washington said something like “it takes a wagon load of continentals to buy a wagon load of goods.” History is littered with collapsed paper currencies and the USD will definitely suffer the same fate. The only uncertainty is timing.

    This doesn’t mean I’m a doom and gloomer. To the contrary, I think it may be the best and most exciting time in US history, even world history. The possibility that humans might free themselves, worldwide, from statist monetary enslavement gives me a tingling sensation all over.

    The only thing depressing is to see so many people being mislead into believing that the very cause of present economic turmoil (central monopolistic monetary control) is also the answer. That creating more money out of thin air (borrowing) will solve the problem of creating too much money out of thin air (borrowing).

    The free market will have its way in the end. The longer deflation is put off the worse it will be and the more likely hyperinflation will occur in the interim.

  101. Tim and Jeanene

    DG – I used to think the same thing and was a huge believer of Shadowstats as reality.

    But then I found this and this helped be understand my biases:

    http://www.bls.gov/cpi/cpiqa.htm

    It’s a long read – but well worth it.

    One quick way to answer is that healthcare prices have WAY outpaced incomes. But – the advancment in healthcare demands it. I would rather pay $8 for today’s heart care than $1 for 1970 – if they even had it. I could choose not to pay it because my income can only afford $4 worth. But back in 1970, they didn’t have it and I would have died. Today, I pay up to stay alive.

    (I do not have a heart issue, and this is a simple answer, but helps to get your head around the answer.)

    Take a look at that link nonetheless and you will understand better CPI is not a bunch of propaganda like even I used to tell my clients.

  102. Bob loves Hawaii

    The value of any currency is based on the net present value of future productivity of its citizens per unit of currency (cash and debt).

    When people lose faith in the ability of the citizenry to produce the required output per unit, the currency suffers or collapses.

    Debt is an exponential agent, and is growing at a rate faster than productivity per citizen and in aggregate productivity, and once you fall behind an exponential curve you are dead.

    So unless they declare debt juilees the dollar is in deep weeds.

    It is simple math and supply and demand.

  103. Redwine

    “In the end the Chartalists and MMT guys both favor fiscal stimulus for any problems. So their main conclusion is the same as the Keynesians. The difference is that Chartalists and MMT guys both favor fiscal stimulus even when there are no problems while Keynes thought the government needed to run a surplus in good times. So in some sense they are even more in favor of printing money than Keynesians, and I will lump them in with other Keynesians from here on.”

    “The place where the Chartalists go wrong is not understanding how a government that prints money goes bankrupt. They say things like, ” The overriding point, however, is that a sovereign government can always fund its liabilities as long as they are denominated in the currency that it issues under monopoly conditions”. It is true that unlike a corporation or a household it does not run out of money. However, when the market rejects the money that a government prints, that government is bankrupt. Imagine the government payments are supporting 40% of the population, either as employees or welfare/foodstamps. Further imagine that half of that money the government spends is newly printed money. Then if the money they print becomes worthless they can not support that 40% of the population in the lifestyle to which they have become accustomed. The “liabilities” of a government are not just amounts of currency. We call this type of bankruptcy hyperinflation. This happens to governments all the time. Once this starts with the dollar it is probably less than 2 years till the end of the dollar.”

    Vincent Cate

    http://pair.offshore.ai/38yearcycle/

  104. Tim and Jeanene

    Gary – oil is up because the world is getting richer as a whole in the face of fiat printing, and they become more productive with technology, thus demand comes from more places. Oil has less to do with printing and more to do with the fact that more money is creating more demand for goods and services as those countries become richer as they chase those paper dollars in order to exchange them for better lives.

    Its a charade, but its far far far from being over.

  105. Wes

    T&J,

    Could you give the website where POMO and it’s relation to the current stock market are discussed. I guess I missed it yesterday.

    Anyone that still thinks POMO is not having an effect on things is denying reality.

    To those who just know that the US is destroying the dollar, I’ll point out that the money supply is growing at an almost ideal rate. This is just fact. Go look it up.

  106. Tim and Jeanene

    Bob: “Follow-on, that is why a debt to 100% of GDP is important, that is the debt exceeds the collateral of the nation, if it had to sell itself to pay the debt.”

    Why has Japan – whose debt to GDP stands in the 250% range, not had the outcome you say will happen?

  107. Tim and Jeanene

    Redwine: “However, when the market rejects the money that a government prints, that government is bankrupt.”

    There is the point. The market will not reject it anytime soon, because they will be put in jail if they don’t get their hands on it to extinguish the tax liability.

    The only way the market will be able to reject it is with blood shed and revolution. It won’t just happen because some day the local grocery store decides to not take it.

  108. JReality

    Beanie wins! The stock market will never, ever have a real correction for the rest of the year, and we’re headed straight to 1500, and 1600 after that. Just hold you nose and buy every dip, and don’t allow yourself to be shaken out. The Fed can do no wrong!

    Full Disclosure: Long Reverse Psychology.

  109. Bob loves Hawaii

    Redwine, exactly my point. Just asked the Soviets.

    They are not stimulating the people they are creating more debt through government, this debt simply overwhelms the populaces ability to pay it.

    It is a system designed for the government to eventually own all of the assets in the country. Once this happens productivity collapses.

    This is socialism wrapped in a different cloth.

  110. Movax2

    Tim

    > more money is creating more demand for goods

    That is inflation. Prices cannot continue to go up without more money in the system.

    Do you believe this is good and it is better for money to lose value over time? To me, this is a warped view of money’s ideal function in the economy.

  111. Beanie

    JReality,

    In that case, I’m shorting your long reverse psychology. πŸ™‚

    The market was supposed to have topped like a few days ago.

    Gary is now extending it to spring. And then he’ll extend it to year end. And then the next year.

    But the fact is, the market and economy is improving dramatically. ISM manufacturing numbers up the zoo.

  112. pimaCanyon

    Tim,

    That link you posted that is supposed to answer questions about the CPI and debunk the shadowstats folks–it’s a government link! Isn’t that a bit like asking the fox what the hell happened to all the chickens?

    I will read it, but I don’t trust those *%&$^#’s! I’ll read it and as much as I am able try to keep an open mind about what they’re saying.

  113. Gary

    Money doesn’t create demand. Money is “supposed” to be a store of value. A method of transforming productivity into purchasing power.

    When a government expands the money supply beyond productivity you end up with inflation. If you couple that with supply and demand imbalances then you end up with a commodity bull market driven much higher than the normal market forces would take it by the inflationary forces unleashed by too loose monetary policy.

    It’s how you get to $147 oil despite the fact that we had plenty of oil.

  114. Poly

    Robert, against my better judgment, I’m going to ride into tomorrow, but this is will be the ceiling.
    Mainly because I was prepared for a retrace back to the high’s from last Friday so I want to give it the benefit of the doubt. Also, the leaders, NDX, RUT, TRAN’s are nowhere near their highs and have failed to come back. Could this be a blowoff top here?

  115. pimaCanyon

    Tim,

    And the other question would be: Do you believe the shadow stats guys are doing it wrong?

    Here’s one example of the governments lying lies: It’s obvious, and most folks know this, that the government figures on unemployment are grossly understated because they do not include those whose benefits have run out but are not working. Even the government tells us that there are several groups that are not counted in their “unemployment” rate.

  116. Gary

    Beanie,
    I’ve pointed out several possible daily cycle tops but I’ve adamantly advised everyone not to bother shorting the market… at least until the dollar puts in the three year cycle low later this spring.

  117. Tim and Jeanene

    Gary –

    I would argue that it does eventually flow to wealth creation, just not efficiently:

    The example I like to give is that the Soverieng US Government can start a totally useless agency (and they have plenty) print money to pay for it, and the money will eventually flow to those who create wealth, the producers. Therefore, printing will eventually lead to wealth, because money is demanded by capitalists in order to pay taxes and buy goods and services and get ahead from hard work. Sounds absurd, I know. Keep reading.

    Let’s pretend we start a useless government agency that hires 10,000 people to do nothing more than pick their ear and report on their experience. This in fact is useless and non-productive, a seeming waste of money. The government pays these people $20,000 a year to do this. It is not a great wage, but it sure beats pumping gas for $10,000 a year.

    Is that money wasted and gone forever, and wealth never to be created?

    If the government puts a 100% income tax on ear pickers, then nothing really happens. Money was printed but taken right back out of the monetary system by taxes. Assuming the government lets their new ear pickers keep some of what they are paid, whether or not wealth will be created depends on what these employees do with it. It they stick it in the mattress, then sure, it might be gone “forever” or until they spend it into the economy. Maybe some will use the cash to buy goods to start a new productive side business. If they go into their communities and spend it at local businesses, then this printed money that “does not create wealth” gets out of the hands of the unproductive agency workers, and into the hands of the hard working businesses. Unfortunately the current system allows the ear pickers more spending and a better quality of life than the hard workers, because after taxes, the money spent at the hard working businesses is less. The hard working businesses will have to pay taxes and have even less money to spend with the true wealth creators. By true wealth creators, I am talking about the modern day alchemists ( seekingalpha.com/article/247944-covanta-s-modern-day-alchemy-turning-trash-into-profits ) who turn something worthless like oil, into something valuable like gasoline. So yes, printed and useless money eventually flows into wealth creation, but because of taxes and mis-allocation, it is not very efficient in it journey there.

  118. Patrik

    Ty Gary!

    Wonder how far the dollar needs to fall until people on the streets are talking about a currency crisis..Maybe they already do that when they are tanking the car?

    If the dollar probably will fall further than 08 then we maybe will go under 70..wonder how high the gasprice will be then..:-)

  119. DG

    Allow me to get on my high horse here: I have been trading for a very long time. One lesson that has been branded into my hide is, when you are wrong trade smaller. And every time you are wrong, cut back. To still be short here is foolish. I am not saying we are not going down…this is a trading tactic comment not a statement about reality. If you have been wrong it means you are out of sync with what is happening. Accept that fact and act accordingly. Trying to prove you are right is very expensive. One of my favorite lines is “It is fine and expected to be wrong. It is criminal to stay wrong.” Don’t fight this thing into a serious loss. If we are really going to cave in there will be plenty of time. Again, this is a trading statement tactic and is always true, regardless of what the market is doing. i have learned this a few times over my trading career and refuse to have to “learn” it again!

  120. Redwine

    T & J

    “The only way the market will be able to reject it is with blood shed and revolution. It won’t just happen because some day the local grocery store decides to not take it.”

    Not true. It’s happened way more often w/o bloodshed than with. Rejection of the currency will mean exchanging it as fast as possible for items having intrinsic or tangible value, ANYTHING. When this happens prices will explode as dollars are treated like the proverbial hot potatoes. No bloodshed required.

    Actually the cycles from hard money to soft are more violent than from soft to hard, throughout history.

  121. Gary

    Tim,
    And I would argue that we just saw almost that exact thing happen.

    Greenspan and Bernanke printed a lot of money. It flowed into and formed a real estate and credit bubble and that is the reason we are in the mess we are in.

    Just printing money cause misallocation of capital and you end up with bubbles and inflation. I think we proved that in the 70’s and again in the last decade.

  122. Movax2

    >Therefore, printing will eventually lead to wealth, because money is demanded by capitalists in order to pay taxes

    You totally and completely lost me. (where is the block button?)

  123. thedocument

    sophia,

    I mentioned we have to see a failed daily cycle to trigger such a correction in the stock market, and we have not seen that, yet. Until then, the market is free to move higher.

  124. Avann

    Lowtax … I know where you’re at … my son has the same problem. All his pension funds are handled by one financial company and he MUST choose one of their funds. I told him to just pick the one with the fewest banks and the most resource based companies. Yeah it does suck.

  125. Gary

    TJ,
    Excess liquidity always ends up eventually in undervalued assets. It’s why despite printing trillions of dollars the stock market has only been able to make a marginal new high (still a long way from new highs in inflation adjusted terms) yet undervalued commodities have soared.

  126. Movax2

    Where does the (printed) money that goes to a useless agency end up?

    You said before you used to study mises.
    You should know the answer. It steals purchasing power from everyone and mis-allocates that potential economic activity to some area where it is not needed or demanded, wasting labor/resources when they could have been used for something that is in need/demand.

  127. Tim and Jeanene

    Avann – that is funny and unfortunately true to a point. It will end up int he hands of the banks if all those employees take 100% of their net and deposit it in banks. and never spend it.

    If they do spend it, it ends up in the banks of the businesses. If the businesses spend their net, it ends up in the banks of the wealth creators. If they spend it on epmloyees who take worthless oil out of the ground and create wealth by turning it into gas, it goes into the bank accounts of the shareholders and oil employees. The world gets gas production, the banks and government get to “use” it and are able to balance the ledger using tax and treasuries as their tool.

    It’s the way our system works at the moment, again – not saying I agree it is the best way.

    One fact remains, the money does not just disappear, unless of course it goes into leveraged speculation that implodes and wipes out money during the debt collapse of the private sector.

  128. Redwine

    T & J

    It ends up debasing the currency by not producing anything of value and results in the dollar losing 97% of its value over roughly 90 years, or 60% of its value in 40 years. It ends up ripping off the producers/savers and rewarding the parasites/borrowers.

    This is all good and fine when you want to create an empire and get reelected or praised by the something for nothing crowds. In the real world it’s unfair, unhealthy, and unsupportable.

  129. Tim and Jeanene

    Movax “It steals purchasing power from everyone and mis-allocates that potential economic activity to some area where it is not needed or demanded, wasting labor/resources when they could have been used for something that is in need/demand.”

    Correct in a full capacity environment. If the world can produce 20 million cars and the demand is only 12 million, does the government buying a car take that car away from me?

    I disagree with AE on this point, but used to agree. Once back to full capacity, the government should get out of the way. But we are a long way from there.

  130. ALEX

    OIL/ENERGY has been breaking out,so I am watching SD, but especially HERO , and am watching 1 day chart..buying BRNC today.

    (BRNC was a nice run DEC $4.50 to $8…light volume pullback…chart looks great to me)

  131. Yash

    lowtax, avvan

    I think talk is about few Mfs that are in accounts like 401k .. so just wanted to share this. If such accounts are with fidelity then they have something called link account. They open one more account linked to your 401k. Then in that new account you can do everything except shorting. All rules of retirement account stay on new linked account too. So no margin, no shorting etc etc, retirement account withdrwal rules etc etc. But you can then trade anything from etf to PMs.
    I don’t know if other financial instritues offer such linked accounts or not.
    hope this helps

  132. Tim and Jeanene

    Redwine: It ends up debasing the currency by not producing anything of value and results in the dollar losing 97% of its value over roughly 90 years,

    I have already answered this in that you are fotgetting thwage side of things:

    http://seekingalpha.com/article/248003-the-end-of-america-not-quite

    You forget that while $1 buys less, onr hour of labor receives many more $.

    If we were still at 1950 wage levels per hour worked, your argument would have teeth. Instead it is rooted in fear mongering and justification for being long on the death of America.

  133. Daniel

    T & J;
    I try to keep my mind open– But when it walks like a duck– acts like a Duck– and talks like a Duck I usually keep it pretty simple! I just do not see it!

  134. Redwine

    T & J

    I’m talking about the death of the dollar, not the USA. You fail to take into account the value of a producers savings since 1950 and the fact that a saver must constantly chase earnings to keep pace with inflation and then hav the honor of paying taxes on those phantom earnings.

  135. Daniel

    Although I do see some merit in parts of your arguments — (it seems to me to be somewhat semantical) the big picture does not add up to me! I was not attempting to imply anything malicious or otherwise with my DUCK saying!! LOL πŸ™‚

  136. TZ(5288)

    PIMA,

    >Actually, the line “all fiat currencies collapse” is itself a “theory”. Why? Because there are many examples in the world today of fiat currencies that have not collapsed. In fact, are there any currencies in the world today that are NOT fiat? They haven’t all collapsed because they are still out there doing their thing.

    Assertion: all bananas either get eaten or rot.

    Pima: but I can see bananas right now in the store and there will be bananas in the future. Therefore bananas don’t get eaten or rot cause they still are around.

  137. ALEX

    NIKE

    YES, THESE ENERGY S AND URANIUMS LOOK GOOD,ESPECIALLY SINCE OTHERS ARE ALREADY BREAKING OUT AND NOW THESE ARE STARTING TO GET THE BUYING.

    I FIND IT A BIT HARD TO BUY THEM WHEN GOLD/SILVER LOOK TO BE READY FOR THEIR NEXT RUN. I DID BUY BRNC THO

    STILL LOOKING AT TICKERS ‘HERO’ AND ‘SD’= GOOD VOLUME

  138. ALEX

    NIKE
    haha , when you said you alerted people on CPE last week…i thought you were saying you alerted people on a blog called CPE.

    I just looked at ticker CPE…very nice! I hope you took your own advice…sweet move.

  139. Gary

    Folks,
    There is the possibility that the silver miners are forming bear flags.

    So absolutely do not go heavier than 100%. You have to be able to survive another move down and if you’re leveraged you won’t be able to do that.

    Plus if they are forming bear flags we want some dry powder or margin to take advantage of the lower prices.

    So hope for the bottom but plan for another move down.

  140. Nike Boy2008

    Alex…

    I agree…

    I think that I wanna have 2% of my portfolio to uranium stocks…

    Also, yes…BRNC has a sweet chart..

    I wanna see SD to break $7.9 with volume, before I enter

    yea, I got into CPE…i’ve been watching that for a while as well.

  141. Redwine

    I’m hesitant to buy AGQ now after having been burned a couple times recently. Will probably hold off until we get one of the two signals from SMT Premium. These huge moves in and out rattle me.

  142. Shalom Bernanke

    I think the same thing regarding the potential bear flags, but to counter that the MACD’s are just popping into positive territory on the daily charts for the first time in awhile.

  143. Gary

    Bob,
    Just don’t get leveraged right now. As long as you aren’t more than 100% invested you will be able to ride out another move down…if it happens.

  144. Robert

    Gary,

    We should be getting a daily cycle bottom in the dollar here shortly. What odds do you put that we will see lower pm prices when we get that initial bounce out of the new daily cycle?

  145. pimaCanyon

    TZ,

    So what?

    Everything changes. Things come into being and things die.

    Species, currencies, governments, people–we’re all subject to the same laws of birth and death.

    Saying that “fiat currencies collapse” is just like saying species collapse, or people collapse, or governments collapse. Those statements are true, but completely irrelevant.

    Right now the entire world monetary system is based on fiat currencies. Will they ALL collapse? At the same time? And we’ll all start carrying little gold nuggets in our pockets to buy stuff with? I very seriously doubt that that will happen.

    Some fiat currencies will collapse, but so what. Some governments will collapse, but new ones will take their place.

    Do you hear people running around saying “all governments eventually collapse” as a reason for abandoning government? Then why is the statement “all fiat currencies collapse” given as a reason for abandoning a currency? It’s faulty logic.

  146. Redwine

    The good thing about gold is that it never collapses, never goes to zero, never will. That’s why it’s now in a bull market as the USD is a bubble in the process of bursting. Because everyone dies doesn’t mean it’s irrelevant, especially when it’s your turn.

  147. ALEX

    NIKE

    Yes, i usually wait for a new high break ,like you mentioned on SD. I DID jump into BRNC earlier than usual, but this is only because the volume is good and other energy stocks already successfully broke out.

    Best wishes on SD!

  148. Gary

    Like I’ve said before I don’t don’t manufacture a cycle low just so it can fit in the timing band. A cycle low has to do what a cycle low is supposed to do, namely clear sentiment.

    If I can’t clearly see a cycle low from across the room then it didn’t accomplish the purpose of a cycle bottom so I operate under the assumption the cycle is stretching. In that case there really is no good way to calculate when it will top or bottom.

    It’s just one of those times when cycles don’t work.

  149. Robert

    That SoS isn’t a lot IMO but also isn’t to be ignored. Coupled with a -321 or so SoS again a week or two ago, it is hard to forsee the markets going much higher from now.

    That said the more I look at the data on the SoS, BoW, the more I think it should be completely ignored (at least for now). Look at May 4th, 2010 (it might be the 3rd?), some goofball bought 400 million that day and then S P Y continued to crash for the next two months. That fund manager would have been down over 10% in July. Just a case of bad timing, one of many on the supposedly holy grail of SoS S P Y.

  150. wingman

    T & J

    One very practical problem I have with your perspective here is that the dollars my parents earned 30 years ago and stashed for their retirement don’t buy them what they need today. It took less of those dollars then to support themselves, but those were the dollars they earned as wages and that’s what they have to try to live on today…what they earned 30years ago. So practically speaking what they earned is worth less in buying power today. The $10 my dad had to work four hours for doesn’t it buy him the same thing those $10 bought him back then, but that’s what he has to live on…what he earned back then. So in the end, his retirement dollars have lost value. And the same will hold true for me. The dollars I earn today need to support me when I retire in 30 years, and those dollars which have buying power to sustain me today will not have that same power in the future.

  151. Robert

    I’d like to see more big triple digit SoS. Including bank stocks, mainly J P M. Arguably we’ve had enough S P Y to go down hard from here soon. It is clearly showing much more selling pressure on up days than buying pressure on down days overall.

    That said the correction could be minimal if and when it comes. Time will tell. Continue up and up and crash? Or correction then up and up and crash?

    The bear market will reappear again that I will assure you! I think we will see a long-term top this year, but who knows if it is this one or the next?

  152. David Kafrick

    IMO, these SOS and BOW have no predictive value at all. They pop up every week or so, therefore chances are pretty high a correction or a move higher will occur near one of these numbers. I could be wrong, but to me they are just like indicator divergences. They happen all the time when no significant bottom or top occurs, but they can also occur at some tops and bottoms.

  153. ALEX

    Blogger Gary said…

    Folks,
    There is the possibility that the silver miners are forming bear flags.

    I AGREE…and my best GUESS is that Earlier last week these have broken their downtrend lines…maybe simply a retest down to their ( OR a blast out of here tomorrow).

    Today I thought they were going up on too light volume compared to the past few days, but it seems to be getting better at day close.

    talking about SLW , HL , axu…I would love to see heavy buying at 3:50 p.m.

    Maybe your blog will push it! πŸ™‚

    P.S. as I wrote, volume on EXK and AXU look better on a daily basis

  154. Gary

    Correct Jay. All the silver miners have this look.

    BTW if one is itching to sell short just wait till the three year cycle low then you will have a massive dollar rally at your back.

  155. vuvvy

    Tim,
    More proof that we all have more disposable income than 1950.

    And as of November, the SNAP(food stamp) program had 43.6 million participants, an increase of 400k from October, and a 14% increase, or 5.3 million from a year prior.

  156. DG

    It’s a decent SoS number but not really remarkable. Should be well over $200mm to be a screamer. Lots of these in a row would be telling though. And it is not a short term timing tool. It just shows the big guys getting out.

  157. DG

    I’ve been adding bits to my PM’s all day and have the four positions gary likes (seems like a great spread without individual equity risk). Feels good to be back in them after a long time out. Now I don’t know if I want that one more dip or not?!

  158. Robert

    More disposable income than 1950?

    How do you judge that? The quality of goods has decreased tremendously from now compared to back in the 50s when things were hand made in America with fine materials. Now we get the cheapest materials or even new chemically engineered pseudo-materials made in sweatshops.

    Same with food, now all GMO. Clothes, all GMO.

    Hard to compare IMO.

    BUT take the finest automobile then and now and I bet it’d be harder to afford it now (any top of the line Bentley, Ferrari, or Lamborghini) versus the top of the line autos in 50. Now the nice cars cost the same as a nice US house ($500k – $1mil).

    We might have more cash but everything is shittier, I swear by it.

  159. pimaCanyon

    Silver is solidly above the TL, so unless it tanks here in the next 10 minutes, I’d say we have a solid close above the line.

    I plan to add a bit here too.

  160. ALEX

    Oh Dg..you DAWG!! YOU BOUGHT!!

    You scolded me once and told me to POST my buys before I buy them, because anyone can say later that they bought so and so for profit πŸ™‚

    Just kidding !! ( but you did request that a month ago)

  161. vuvvy

    Robert, a little sarcasm there. Tim is the one who claims we have more disposable income now. How is that possible when a record # of people can’t even afford food?

  162. Tim and Jeanene

    wingman –

    which is why even the 90 years clients we have still have a healthy dose of stocks in their portfolio. I am not advocating holding cash in any sense of the word. Just saying that it won’t collapse overnight, and the fact remains that an hour of labor today buys more goods than an hour of labor did in 1950. That is the key. We like to focus on the fact that the dollar only buy 4% of what it used to, but the real litmus test is that an hour of labor never changes. You want a currency that is backed by something that can’t change? How about an hour of labor? 60 minutes today is 60 minutes in 1950. Judge your purchasing power basis today compared to 1950 and you won’t be do distraught at the collapse of the “value” of the dollar.

  163. DG

    Geez Alex. I posted when I bought my AGQ and said I’d be nibbling all day. I’m not going to post every 500 shares bought of something we all know about! Besides I trade a lot and it’d fill up the whole blog. Besides I have a long way to go as I am only about 30% in now.

  164. Daniel

    T & J
    I have definitely had employees where 60 minutes of work today does not seem to come remotely close to 60 minutes of work 50 years ago!! Sad but true!!

  165. Tim and Jeanene

    Robert – for every example you might think you can give, there are plenty to make the opposite case:

    http://static.seekingalpha.com/uploads/2011/1/19/475264-129546726097454-Tim-Ayles.jpg

    or here:

    http://static.seekingalpha.com/uploads/2011/1/19/475264-129546739236357-Tim-Ayles.jpg

    Which is why you need to look at everything as a whole. On a whole, the stats show since 1950 in the graph in the seeking alpha article that we have more disposable REAL (not nominal) income today than we did then. Nominal income is up like 3600% – thank you devalued dollar.

  166. Wes

    T&J,

    Thanks for the article. I wonder if anyone has done a chart showing POMO’s effect on gold.

    When do you see the stock market correcting ? The indicators I follow, which called for the correction that didn’t happen, are more sanguine now.

  167. Tim and Jeanene

    Daniel – “I have definitely had employees where 60 minutes of work today does not seem to come remotely close to 60 minutes of work 50 years ago!! Sad but true!!”

    Yes indeed for those people. But this proves nothing as it is not the whole sample. I again could show you lots of people who do. We must look at the median/average to get a true feel for whether what we believe is correct as a whole or not

  168. Robert

    TJ,

    I don’t want to argue with you, actually I don’t have time right now, but you sure seem to come on here with some very erratic points that, it seems, are so erratic that you are trying to make a name for yourself. Are you selling something? lol.

    SoS

    Onto the SoS. I think today is a significant SoS day. If one were to look at every single SoS day in history, today would be one of those significant standouts.

  169. Tim and Jeanene

    Right Robert- Because my time is best sent trying to find customers on a gold bug blog in which I am trying to argue that their premise for the demise of America is off base.

    I’d have better success knocking on doors in my neighborhood if I were trying to sell something.

  170. Pseudopersona

    Here is my opinion on Tim and Jeanene:

    Thanks for the info on MMT, now if we are further interested we know where to look. But you are TAKING OVER THIS BOARD. I come on here to learn from traders, not economists. You are gumming up the works. Thank you for your perspective, but since you love to write so much, please start your own blog because its just too much. Wading through pages of text to find the quick comments from the traders I trust on here is not productive. You have your opinions and your theories, they have some validity and some holes. This isn’t the place to hash them out.

    Maybe I am alone in feeling this way. If so, my apologies.

    KTHXBAI

  171. ALEX

    DG

    I said I was kidding πŸ™‚

    You are honest anyways..you always say when you go short – and get stopped out, etc

    Good times…good times!! πŸ™‚

  172. Redwine

    T & J

    Any increase we do have in purchasing power isn’t thanks to government ‘workers’ counting ass hairs on each other. It’s due to increased innovation/productivity resulting from wht little free market capitalism is left.

  173. Robert

    TJ,

    I agree with your point- stuff is cheaper nowadays, you can’t argue that. That is obviously because of multiple factors- dollar devaluation, also tons of corporate R & D, and competition becoming globalized, hence products become much cheaper.

    We are now safely into the tech era, in the 50’s we weren’t it was new, and new things cost a lot more. Take for example going into space now. Virgin is the first one to offer it, what does that cost now, $5 million/head?

    So the point you’re trying to make is we can afford a lot more stuff now then we used to be able to? I would say that’s more because of technological advances than dollar devaluation.

  174. Robert

    That said the real good shit still costs a fortune- gold, silver, Ferrari’s, virgin women (jk of course but you all have seen the movie “Taken”).

    Supply and demand buddy.

  175. Wes

    wingman,

    That’s the rub about an inflationary currency, it sucks buying power from those who don’t or can’t invest correctly.

    And, if it’s true that in 90 years the dollar has fallen to be worth only $.03, (97%), that’s still less than 4% a year and is perhaps the price of creating the greatest country in the world. More people wish to immigrate to the US than to anywhere else.

    But, it’s a competitive society, and I love it.

    For those who don’t like it this way, or can’t compete, an airline has some advice for you :

    “Delta is ready when you are”

  176. S2

    Gary,
    I’m a first time poster here but have enjoyed your thoughts for a couple months. Let me throw something at you.

    USD fell 1985–>1992 (7.5 yrs), rose 1992–>2001 (9 yrs) retracing 50% and then fell 2001–>2008 (6.5 yrs). A 3-3.5 yr +/- cycle seems to work best if you split double tops/bottoms, and there appears to be a larger 16-17 yr cycle. If so, I agree mid-2011 should form a USD bottom and I’d also argue USD should make a major high in 2017 +/- probably retracing 50-60% of the 2001 high to $96-100.

    However, it is easy to argue that the current USD cycle has NOT been left-translated since the 2009/2010 tops were within $1 of each other and splitting them is nearly exactly in the middle of the cycle. If anything, that supports the consolidation/indecision view which also favors the triangle pattern since 2008. I’d argue we’re possibly in the 3rd leg of the triangle in which case $74.23 will not be broken in the coming weeks. Then, the 4th leg would rise choppily for about 6 months like the last 2 legs followed by one more juke lower and then a steady grind higher into 2016+.

    If the USD/SPX inverse correlation generally continues as I suspect due to QE efforts and the safety trade, that scenario would favor an imminent stock market top followed by a strong rally to a lower/higher top in the 2nd half of 2011 (maybe Jun/Jul) followed by the real bear market. It would also favor a further drop/consolidation in gold into mid-2011 before a retest of the highs can be made.

    Obviously, there’s no crystal ball, but if you take away the left-translated view, consider 2008 as a possible 16-17 year bottom, and consider the triangular nature of the action since 2009, I think it is reasonable to arrive at my scenario. Thoughts?

  177. Tim and Jeanene

    Thats fine Pseudo – I can leave.

    Again – i wrote so much because I had many many people asking me questions and I felt the courtesy to respond. If they too were not interested in debating/discussing, they probably would not have taken the time to write.

    I am just one person, but am having conversations with dozens. It has nothing to do with me “writing more” I just am getting more questions than anyone else at the moment. That won’t last long.

  178. Tim and Jeanene

    And another three questions come in….

    Robert: “So the point you’re trying to make is we can afford a lot more stuff now then we used to be able to? I would say that’s more because of technological advances than dollar devaluation.”

    I never argued that we can afford more due to dollar devaluation. In the article it is clear that the productivity and creativity has caused wages to outpace the devaluation, thus making the fear of inflation and going into depression over the loss of the dollar by 96% a moot point is all.

  179. Robert

    TJ, Sorry I haven’t been following all your messages lately just the past few.

    The point you make is obviously correct that productivity HAS outpaced devaluation for a long time, and I do agree that has been a good thing (I don’t think one can disagree) for the economy and its citizens.

    BUT I don’t think you’re seeing the forest through the trees. Devaluation IMO is going to finally start to accelerate, possibly exponentially, in the very short term near future. Everything accomplished and gained most likely will all be wiped out in the next few years of dollar devaluation. It will all catch up soon, there is no such thing as a free lunch as I’m sure you know.

    Ever think of currency revaluations? The USD will for sure eventually be revalued to a new currency or we’ll trade in. What will this new ratio be? 500:1 for USD to new currency X? We’re screwed when this day comes. Well most are.

  180. Robert

    Wages will not even be close over the next few years to catching up with inflation. Inflation will decimate everything! Minus of course ag, and pms.

  181. Robert

    It’s good to see GE show up on the SoS. Crazy over the years GE has turned into one of the biggest banks. Who would have thought that 20 years ago?

    GG y’all lets see this market correction and PMs with it to give us all better prices.

    No onto some outdoor puck, I just hope I don’t get more frostbite!

  182. Bob loves Hawaii

    WEs, your response to Wing Man is nonsensical.

    Living costs are outstripping pension gains, you do recall the last ten years in the stock market.

    Most Americans who are totally invested in fact professionally managed are falling behind.

    Anyone who thinks are just dandy needs their heads examined.

  183. ALEX

    JUST AN OPINION

    I think anyone looking to buy a Uranium stock got a GIFT today when URG paused..

    AND IF it even goes back near the gap at $3 ( on light volume)to become a small cup/handle that already broke out with volume???

    HUGE GIFT!!

  184. DG

    Sorry Tim. In fact this blog probably isn’t for you. Most people here are pretty die-hard in their views. I found your stuff quite interesting as I love considering other points of view (I am not persuaded, mind you, but I did learn a few things). If I were in Congress I’d need to understand all of this, but I am not (Thank God—I’d hate to have to shoot myself). Good luck.

  185. Wes

    T&J

    >>>Outright Treasury Coupon buys seem to have a much better performance than TIPS as per Jason from Sentimenttrader.<<<

    Oh, you mean like today. πŸ™‚

  186. wingman

    T & J

    Your comments weren’t about investing, they were about the value of the dollar, and that’s what I’m talkng about.

    If I need to support myself in 30 years off of the dollars I earn today, I’m cooked (unless I have the foresight to properly invest). That’s the real world we live in. I work today to support tomorrow, thus I need my dollars I earn today to be as stable as possible going forward. Working today to support today is one thing. Working today to support tomorrow is another.

    That’s one (among many) good reasons to buy gold. For every ounce of gold I purchased ten years ago it’s worth 4x as much today. And I trust it will be worth more and have more purchasing power in the future when I retire and ultimately leave an inheritance for my children.

    In any case, I appreciate the debate. I’m just not sold on it in the real world.

    Back to work.

  187. William

    I agree SIL is bear flagging. SLV filled it’s gap today. GLD could not break out. I’m still in cash.

    You folks are nuts to leverage, but at least you use hard floors.

    Is the SPY an exhaustion gap? Daily RSI(14) shows divergence.

  188. TZ(5288)

    Dollar looks sick.

    Gold is congesting and still hasn’t made it’s ‘recognition’ move from the low. Silver and the mining stocks have pre-empted the upcoming gold move, but not by too much.

    In the next 24hrs I expect gold to strongly break above 1350 (the daily downtrend, swing low, AND H&S line). A quick $40 higher near $1400 completes the H&S.

    Silver will probably jump to near $30 during the same move.

    I think we have a very strong 2-3 days ahead. BUT I’ve still got my stops in on gold to limit losses if the whole thing keels over.

  189. Redwine

    T & J

    One more point about this wonderful money pumping monopoly. It’s been responsible for creating the greatest borrower/consumer society in the history of mankind. I’ve seen first hand evidence in over 40 homes purchased on court house steps. Homes piled full of Chinese disposable crap bought at Walmart with HELOC loans. The amount of natural resources wasted in this credit frenzy is mind boggling.

    In the 1950s we had lawn mowers that would last a lifetime. Now you need to buy a new one every 2 or 3 years. Disposable.

    I know you’ll say it’s reality and I’ll agree. The problem is that MMTers dream is to perpetuate this nightmare by tweaking the knobs and pulling the levers. My wish is to see it fail, because it’s debt slavery, and the sooner the better.

  190. William

    OK, the Great Debate is officially over. Everyone said their piece. Or at least give the rest of us an intermission. It’s all interesting, but it’s too much talking. Feels like a doctors office.

    Nice SSRI chart jayhawk.

  191. Done

    While you guys are on the topic of that MMT mumbo, do u guys have any opinions on recession proof jobs that r safe from inflation/food prices & all that? I’m considering a career change away from finance right now and would like some input =)

  192. Tim and Jeanene

    Wes –

    Today was the first day of the month, which has been ridiculously good for like a year.

    Here is Sentimenttrader’s study on POMO:

    “But today I do want to touch on something that’s getting a lot of attention, which is the latest announcement of Permanent Open Market Operations (POMO) by the Federal Reserve, found here. This is where the Fed announces, in general, what they are going to buy and how much. Many are starting to believe that these funds wind their way through the system and end up in the stock market.

    I’m not going to pretend that I have any great insight as to whether this is true, the actual mechanics of how it would work, or what other ways the Fed might be using to prop up stock prices. I’m just going to take their data at face value and see what impact it has had on stocks.

    So let’s use the Fed’s data on their POMO days to see if the S&P 500 had any tendency to rise on those days, or immediately thereafter.

    The table below shows the S&P’s performance on days there were no POMO buys, and compares that to all POMO days, those greater than and less than $3.5 billion, and then by the different types of bond purchases that the Fed does. The data begins in August 2005.

    One thing stands out pretty clear – the market was more likely to rally, and with a significantly higher return – after POMO days than after non-POMO days.

    Looking at returns one month later, if there were no POMO operations, the S&P was positive 58% of the time with a median return of -0.3%. But if the Fed was active on a particular day, then a month later the S&P was up 78% of the time with a return of +2.6%. That’s a stark difference.

    And the larger the operation, the better the S&P did a month later.

    Looking at the various types of operations, the most impact seemed to be with Coupon Purchases (listed as Outright Treasury Coupon Purchase on the Fed’s website). And the most positive of all were large Coupon Purchases – if the operation was greater than $3.5 billion on those days, then a month later the S&P 500 was positive 89% of the time (33 out of 37 days) with a median return of +3.4%.

    Looking at the Fed’s website, it looks like that’s exactly what we’re in store for during the coming weeks.

    It’s exceptionally difficult for me to rely on data like this for trading decisions. Citing conspiracy theories for the basis of trades smacks of desperation. But it’s hard to argue with the data above, and the unusual way in which the market has been behaving.”

    This was written in mid October. QEII did not start until November 12. My question to most is, how persistent has the bid since QEII in mid- November been in stocks?

  193. Redwine

    Done

    I hear the US Government is hiring nose and ass hair counters. Seriously though I think anything in the bankruptcy sector looks promising.

  194. David Kafrick

    That´s what you guys get from being spoiled and coming from a successful and rich country πŸ™‚

    When you are faced with the threat of something like high inflation (or hyperinflation if you like) you freak out and think it´s the end of the world. Trust me, I live in a country that had inflation of 30% a month, it sucks, but the scenario is nowhere as bad as you imagine it. You don´t need to hide in caves with food and guns. Also, stopping hyperinflation is not as impossible or difficult as some of you imagine.

  195. ALEX

    Done

    Medical field is recession proof.

    Police, Firefighter , any other services that are needed, especially in crisis. ( well, fire depts have had lay-offs)

    Go with x-ray tech , or surgical tech (they offer 2 yr courses ,I believe)

    East coast dinner time…goodnight all

  196. ALEX

    David

    what country are you in??

    Gotta run , but I’ll read it later.

    Also, with harsh inflation, are you finding that the mkts are able to help you better keep your head above water more by investing in P.M.’s and so on??

    thanks

  197. William

    Jayhawk showed us the bear flag on SSRI. Well, on a 60 or 30 min chart, one can see that AGQ is in a rising wedge. That argues for a small pullback (to 126.42?) before we shoot higher. I’d enter on the pullback. If no pullback, I’ll reluctantly but decisively chase, w/a floor.

    Gary, how about GLD not confirming the move in SLV? Still worried?

  198. Jayhawk91

    William-

    I did show it but I’m not sure it will pan out. I was trying to see what Gary was showing. I’m a tad over 50% in now, but this still has a lot of proving to do.

  199. Gary

    William,
    I don’t know if it’s so much that gold isn’t confirming as silver is showing relative strength. The same thing happened at the July bottom and we all know what happened to silver over the next couple of months.

    Just don’t get leveraged yet so you can weather another dip down if it happens.

  200. Keys

    Guys I think we are missing the point. If Ben believes the way T&J does, what should you do? If you are someone who believes that there is a debt ceiling(so to speak) without getting into the details of the effects, didn’t your fundie strength for your PM’s increase?

    If Ben believes that he can print to the moon, whith no effect, where would you want your purchasing power?

  201. DumbMovingAvg

    Anyone know of any “Old Turkey” forums out there any where? Guess they would not post much. Maybe Gary could start different forums for active vs. core traders, etc. Kind of like K-12, community college, university, massters, doctorate, etc. or whatever. This forum is great, but there are actully too many posts to read. I thought I was not keeping up with Gary becasue I am new to SMT.

  202. aviat72

    Gary:
    On the previous thread you had mentioned that USD falling will lead to the Bond Market imploding.

    Two Issues:
    (1) Currencies are all relative. Of all the economies of large enough size, US is still the King. Chinese Yuan does not float. The Euro is flawed: you cannot have a central monetary policy and distributed fiscal policy. Japan is declining. The US is the one-eyed king when it comes to the reserve currencies. The commodity countries (CAD,AUD,NOK,ZAR) just do not have the economic size to become reserve currencies. And do not forget, the US too has a LOT of stuff. It is just less expensive to import it. While we think of the US is an exporter of services and high-tech goodies, a lot of our exports is “stuff”.

    (2) Bloomberg has an article today which takes about how European entities are issuing USD denominated debt since it is cheaper; they hedge the currency risk. And this supposedly is due to Ben’s policies.

    “You can get a better cost of funding” by issuing in dollars, said Suki Mann, senior credit strategist at Societe Generale SA in London. Also, “inflows into credit funds in the U.S. are still significantly more supportive than they are in Europe,” he said.

    http://noir.bloomberg.com/apps/news?pid=20601087&sid=aEG1NCmRvyMM&pos=6

    Currency trading gyrations often do not capture the entire picture. At the end of the day people invest in treasuries to get a safe return on principle. And no other country can guarantee that in the size the US can.

  203. William

    Hi Gary. Yea, that’s a good point about last July. I was thinking that that industrial aspect of $SILVER was rising, same as the $SPX, and not the monetary aspect, as $GOLD was not confirming. But, in the end, $SILVER is in fact rising, and so it’s time to enter silver w/stops.

  204. Wes

    I think I need to figure out a new stock market strategy to deal with QE2. You can definitely see the correlation with the POMO and the stock market.

    Short version, QE1 begins, market rallies into April where POMO stops. Market plunges. QE2 (which actually started mid November) is broadcast which starts market recovery, which still continues.

    Now, from this forum, you’d think every gold sale was the result of QE2, but the correlation is nowhere near as good with gold (and perhaps non-existent) as with stocks.

    In addition, sentiment readings that would have stopped most markets on a dime have had no effect on this market that I can tell. It seems to be all POMO, all the time.

    I’m guessing that the market will anticipate the end of QE2, (assuming QE3 hasn’t been announced) before it actually ends.

    So, as I see it, we need to figure out how to detect this coming downturn without using traditional indicators. This is begging for a charting solution, I think.

  205. DG

    DumbMA: If you really want to go entirely Old Turkey there’s almost nothing you need to “keep up with.” Gary posts a clear plane and you execute it. I’m not sure what you’d expect to find in the blog…?

  206. DG

    Wes: I agree completely. I am out of stocks and don’t know what’ll get me back in. The game seems rigged (I don’t mean “conspiracy”…just that traditional stuff is not even remotely working. We’re playing craps with weighted dice.

  207. Gary

    aviat,
    You must be kidding if you think the dollar isn’t flawed or that the bond market can’t get into big trouble.

    Weren’t you around in the late 70’s & early 80’s when interest rates were over 15%?

    If, or I should say when, the world realizes that we are not going to pay our debts, except in increasingly worth-less dollars the bond market will start to revolt. (It already is. The bull market in bonds is over.)

    It never ceases to amaze me how people can assume that just because something hasn’t happened, or hasn’t happened in a long time that that somehow guarantees it can’t happen.

    If that was the case then how in the world did the global credit markets implode two years ago?

  208. Gary

    William,
    It’s too late in the intermediate cycle to use stops. The only reason to stop out now is if you think you can get in lower. We are too late in the cycle to have good odds of that.

    Now one just needs to take their position and hold on.

  209. Gary

    Wes,
    It’s pretty simple really. The dollar is collapsing. Market participants are just protecting themselves from that collapse by buying something.

  210. Wes

    Gary,

    Not that it will matter in the least, but I’ll point out that the dollar is higher than the first week of November and the stock market is way higher.

    I’m not seeking a reason, I’m looking for a solution.

  211. Wes

    DG,

    I sense we’re missing a golden opportunity on the long side, here. But we must have a reasonable exit strategy to take advantage of it in case I’m wrong.

    Of course, on this board, the concept of somebody being wrong is foreign, so you’re excused if you didn’t think of that. πŸ™‚

  212. Gary

    Other than a few vulgarities all we’ve had the last two days is a spirited debate. Nothing wrong with that in my book.

    I’m not sure why anyone other than beanie would want to buy into an overextended stock market when they could buy the precious metal sector that has already regressed back to the mean and is still in a secular bull market.

    SLW will gain roughly 28% by just returning to the old highs. What are the odds of gaining another 28% by buying the S&P or energy stocks or any of the extended sectors.

  213. Gary

    Wes,
    A question and an observation.

    Do you think the secular gold bull market is over?

    And show me one intermediate cycle bottom in gold that didn’t look broken.

  214. Jayhawk91

    Those gold and silver charts always look busted after an intermediate decline.

    Regarding Old Turkey Forum-

    I think the best strategy is to go into a coma for the next 2-3 months and then have someone throw a bucket of ice water on you when Gary’s says “sell”. I know watching these wiggles is not good for me.

  215. DG

    Wes: I really have been converted to the idea that “there’s always a bull market somewhere.” Missed opportunities don;t mean anything to me. If the cocoa market doubled next year I wouldn’t regret not being in it. Our stock market has gone nuts and I am happy for whoever makes some money off it—but it ain;t gonna be me. Gold just dropped $100/oz in an ongoing bull market, so no comparison as to where I’d rather be. Somebody slap me…I sound like Gary!

  216. David

    Gary,

    Is this upleg we are (hopefully) about to experience supposed to be equivalent in duration and/or price movement to the one we experienced from August to December?

    I ask because you’ve referred to the coming move as the third and final leg of this c-wave. Did the move in the fall constitute one leg or two?

  217. Gary

    Somewhere in several of the daily reports I’ve gone over this, including charts. You could search for it if you want. But it should at least equal the last leg.

  218. pimaCanyon

    Done,

    A friend of mine’s son is going to school to be an undertaker. Not kidding. She said, “yeah, some find it creepy, but they’ll never outsource that job to China.”

  219. Gary

    David,
    Depends on your risk tolerance. 60% is obviously better than 25%. But if you are the kind of person who would freak out and sell at the bottom of a 15% draw down then you would never survive to reap the 60% gain.

    I think this is kind of what happens to a lot of traders. They set their stop too tight and as a result they take a loss when in reality they have the correct trade on if they could only let it work.

  220. Gary

    We should see something almost exactly like that scenario play out in the mining sector in the next few months.

    From the Dec. top to the recent bottom was an 18% correction. tough to hold on to but I’m pretty sure that the person that was able to hold on to that position will end up making 30-50% or more.

    Whereas someone working tight stops in the stock market will never even come close to those numbers.

  221. David Kafrick

    You´re right Gary, I guess it depends on risk tolerance.

    But I was just thinking that if you were to get a 2.5:1 leverage on the investment that gave you a 25% return with 4% drawdown, you would roughly get a 62% return with about 11% or 12% maximum drawdown, which beats the other investment. So assuming you can leverage yourself, the investment that gives you a better return per risk/drawdown should be preferable. Do you agree?

  222. Wes

    Lately, one indicator actually has been working just fine for the stock market. That indicator is seasonality.

    If we’re going to get a correction, seasonality says that February is the most likely month.

    There have been 15 pre-election years since 1950, and they are 15-0. That should make a real test of Gary’s coming bear market this summer.

    February is the second worst month of the average year, following September, and 8 of the last 12 Februaries have been down.

    But, for pre-election years, February is 9-6 for an average gain of 0.69%.

    While this is still positive, if we’re going to get a correction, February might as well be it since March in pre-election years is 13-2 for an average gain of 2.24%. And, April is 14-1, with an average gain of 3.67%.

  223. Gary

    In theory yes, but in real time a trade with a 4% stop will get hit quite often.

    If you are leveraged 2.5 times you will most likely lose all your money eventually.

    Even if you are an exceptional trader there will come a time when you have a whole bunch of losses in a row. (The shorts have just experience one of these periods.)

    Again if you are leveraged at 2.5 times you will do serious damage to your portfolio.

  224. Gary

    Wes,
    There is a lot more to the market than presidential seasonality IMO. Think about why those markets are up in the third year.

    They are up because of stimulus pumping. But in the environment we are currently in think about what more and more stimulus is going to do. It’s going to continue to spike inflation.

    If the administration continues to pump trying to enhance the economy all they will accomplish is to to spike commodity prices higher and higher. If they go too far (and they will) soaring inflation will destroy the economy again.

    It’s always been my contention that inflation would be the catalyst for the next leg down in the secular bear market.

    So far we are right on course.

  225. Haggerty

    Anyone,

    I was thinking about putting 15% of my position in something like June 11 calls SLW at the current strike price. I want to magnify my gains. Is this a dumb way to do it or is there a better way?

    Thanks in advance

  226. Bede

    Gary,

    I’m surprised that tonight’s post contained no mention of a bear flag in the silver stocks.

    Did you change your mind about that, or do you think it’s still in play?

    TIA

  227. William

    Hi Gary – need crystal clear clarification please.

    So you’re going in 100% in silver now, again? And w/out a floor? Wasn’t it like last week you went long 130% w/a floor, then were stopped out?

    I’m sorta shocked you go out/in 0/100%, rather than a smaller amt (as DG wisely teaches)…

    But my REAL question is, are the cycles lining up for gold now?

    It’s still burned in my brain that you were following cycles before – i.e. waiting for the $SPX to crash down hard, pulling gold/HUI down with it … you said it with such conviction, over and over – plus recently you said we’d have a bounce but not to play it as cycles would take it go lower …

    I am very confused by so many changes. It’s confirming my belief that cycles are not real. πŸ˜‰

    So the net is, cycles failed? And you’re going long using your other indicators?

  228. Gary

    Certainly it could still be in play. That’s why I emphasized not to take on leverage because there is a chance gold could throw us one more curve ball.

    As long as we aren’t leveraged we can weather the curve no problem.

  229. William

    Jeesh man, that was weak, man. πŸ˜‰

    So the answer is, cycles failed then, eh?

    Well, it’s good you are flexible.

    Take a 2nd look at using a floor – not % based, but using the last pivot low.

    Off topic, want to know 2 more things about you: a) what’s your best climb level, lead/onsite (eg: 5.11a)? And do you prefer cracks or smearing? b) what’s your max clean/jerk? snatch? and how about squat? bench? deadlift?

    All the power to you and the rest here. I finally have my answer about cycles now.

  230. Gary

    William,
    Last week I was convinced we had at least a daily cycle low in gold. That should have been good for at least a 4 or 5 day rally even if it was going to roll over. The stop was to take us out in case it did roll over.
    (realistically I thought I would recognize it quickly if the rally was going to sputter and get out even or maybe even with a small gain)

    What I wasn’t expecting was another quick push down the next day, especially that late in the daily cycle.

    If I had guessed that was likely I wouldn’t have bothered with the stop because the first swing wasn’t the cycle bottom.

    Now that we’ve had the second push down the game has changed. If we get a swing low then the odds are that would be the cycle bottom.

    One could then put a stop under that low. However if it gets violated immediately (like the next day) then it is not the cycle low and one needs to remove the stop.

    All that being said gold is very deep in the intermediate cycle and the COT report is the most bullish it’s been in almost two years (that kind of reading usually only happens at D-wave bottoms) for the COT to be flashing that kind of signal now is incredibly bullish.

    So this may or may not be the exact bottom but with the duration of the intermediate cycle and the bullish COT report it is close enough.

    I’m comfortable holding a 100% position. As long as I’m not leveraged then gold can throw another curve ball and it won’t knock me out of my positions.

    Once we either get another push lower or break the pattern of lower lows or lower highs then I will start to add a little leverage.

    I know that was complicated but that is the best I can do to explain how the cycles work and how I use them in a comment.

    I could do better if you come to Vegas, buy me a burrito, and we sit down and talk for about an hour πŸ™‚

  231. Gary

    William,
    My comment before was in answer to Bede’s question. I answered your question with the long explanation.

    Best lead 12c.
    I prefer crack climbing. Typically height isn’t and issue in cracks. I’m 5’6″ and sometimes reach is a problem on hard sport routes.

    most of my career I competed as a 75KG lifter.
    Best C&J 180 KG
    Snatch 137.5 KG
    deadlift 265×2
    bk squat 255 KG
    front squat 227.5 KG
    I never trained bench because it didn’t relate to Olympic lifting but I did manage to do 360 lbs with a pause once.

  232. William

    12 fu_king C? At 5’6″?

    And a 255kg squat?

    You’re DEFINITELY an Alien man. That’s for sure.

    Jeesh. 12C? You must be some kind of frickin’ reptilian gecko.

    Well I’m DONE messing with you man. πŸ˜‰

  233. William

    Just for you non-climbers know … rocks are rated in levels of difficulty. Category 5 means the climb is technical, requiring ropes to aid in case of a fall.

    But there are various levels of technicality – from easier to harder – so sub-levels were invented: 5.5, 5.6, 5.7 and so on.

    40 yrs ago, the hardest climb was 5.10. I think it was Royal Robbins in Boulder, CO that bouldered one. I grew up on those rocks. The breakthrough was possible because of the equipment, that allowed one to protect onself using new tools that fit better in various shapes of rock cracks, and on faces.

    Then came 5.11, and then came even futher subdivisions, a, b, c, d. So 5.11a, 5.11b, and so on. 25 yrs ago I could do 1 arm pullups, and pushups on 1 arm 1 thumb, but could only manage 5.11a lead/onsite.

    Then the equipment maxed out, and climbers’ minds started to change. 20 yrs ago (was it Gary?) came 5.12. At this point, old rock climbers like me start to auto-urinate at just the THOUGHT of a 5.12 climb, especially when there’s exposure (500′) below. A 5.12 climb is akin to climbing a sheer pane of glass. You laugh, but it’s pretty darn close. You need some serious kahuna’s to lead a climb like that up a crack thats 500 feet from the hard ground.

    Then came 5.13, which happened in Europe I think – an 18 yr old w/no fear at all – thinking about 5.13 brings about even more self-defacating convulsions, as it’s pretty much akin to climbing a *slated* or *overhanging* pane of glass, soaked on water.

    And now there’s 5.14. Probably less than 10 (is it Gary) people on planet Earth can do a 5.14, and there’s probably less than a dozen routes WW that are confirmed 5.14.

    My facts and numbers may a bit off, but the knowledge that Gary can lead a 5.12d climb, onsite, makes me worship the ground he walks on.

  234. Gary

    Actually there are quite a few 5.14 climbs nowadays. We even have a couple of guys here in Vegas that have climbed 5.14.

    I suspect there are probably 100-200 people in the world that can climb 5.14 even quite a few girls.

    Chris Sharma and a few other Europeans have even done 5.15a

  235. Gary

    I’ve seen videos of Sharma climbing one right outside Vegas at Clark Mtn.

    I still can’t believe a human being can be strong enough to pull off the moves I saw him do. One of the most amazing things I’ve ever seen.

    Right up there with Sulymanaglu C&J 190KG at 60 KG body weight

  236. skogie

    Gary your lifts are amazing. A 180 c&j at 75kg puts you in Olympic team contention, doesn’t it? It must. I’ve been training for years (I’m 40). I’m 5’8″ and squat 500, bench 350, deadlift 500 but I can only clean (no jerk) about 225. Drives me insane. I’m too slow to get under. I can get 315 on a clean pull up to the bottom of my chest no problem but could never in a thousand years get under it. (All weights in pounds). Got a book or dvd to recommend for coaching/advice? Anything? I live in a small town and am self taught (have read with no real coaching available. (I’ve read Greg Everett’s “Olympic Weightlifting” and have Jim Schmitz’s manual). Thanks in advance! Best blog I’ve ever read btw. Trading and lifting, couldn’t be better.

  237. S2

    Gary,
    Speaking of horseshoes, how do you explain the US Dollar 1991, 1992 and 1995 bottoms in terms of your cycle beliefs. You must believe the cycle from 1987 extended to 4.5 yrs OR the 1991-1992 bottoms made a shortened 1.5 yr cycle OR the 1995 bottom extended to 4.5 yrs. You cannot come up with a fairly clean 3-3.5 yr cycle unless you split double bottoms/tops.

    Those 3 bottoms formed an inverse H&S which met its target by 2001. And, the 1991 and 1995 bottoms were momentum lows while 1992 was the slight price low. Unless you count 1991-1992 as a short cycle which I seriously doubt, then you have a 1991-1995 cycle with a severely left-translated cycle in whic 1994 made a slightly lower top followed by a slightly higher bottom in 1995. The conundrum of the left-translated cycle forming a higher low is solved by splitting double tops like 1991/1994

    I grant you that today’s situation is not perfectly identical (rarely is) since we have a potential triangle versus inverse H&S, but it’s the closest example I could find since 1982 where a supposedly left-translated 3-yr cycle made its final yearly low as a higher low like might happen in 2011 if 74.23 holds. Just like you argue about key s/r levels not being exact, I think the key take-away from a double-top, whether it falls 1 penny short or rises 1 penny beyond a previous high, is to understand the cycle pressure was still up into those time periods. And, the same applies to the downside. Could a drop to 74.24(or 75.5) not be the 3-yr cycle low? It’s not written in stone nor apparently in history. Good luck.

  238. Gary

    Previous 3 year cycle lows
    End of Dec 87.
    Jan. 91
    Fall of 92 (very shortened cycle)
    spring of 95
    Fall of 98
    Fall of 01
    Dec. 04
    Mar. 08
    spring of 2011 ?

    Average duration about 3 years and three months.

    A left translated cycle doesn’t guarantee the cycle will move below the previous cycle bottom just that the odds are high that it will.

    And occasionally a right translated cycle will collapse and move below a prior cycle bottom, even though the odds are against it.

    The last 4 year cycle in the stock market was not only the longest 4 year cycle in history but it was also a right translated cycle that moved below the prior cycle low. (the market dropped below the 02 trough).

  239. Gary

    Skogie,
    I was the first alternate for the 84 team.

    I don’t really know any books to suggest and AI doubt they would help anyway. You probably need a coach.

    We used to do a lot of speed work. Poly metrics, jumping, sprints, speed squats and such.

    Olympic lifting is really more about speed, power and flexibility than just brute strength.

  240. james r

    Gary,

    Thank you for the heads up on the silver bear flag.

    Today I unloaded a few shares today on SIL. It had gapped up this morning and I suspect it may fill that gap any day now.

    Gold on the hand has been lagging behind silver. Maybe for good reason. It has not bottomed.

    Gary, I think you may be right. The markets may take down the metals any day now. If this happens it will take only a few days to reach the bottom. I think HUI will retest the 500 level and gold will drop right under 1300 with silver about 26.

    If not I buy at a higher price.

    So we will see!

  241. vuvvy

    My mechanical system was within 1.50 of going long yesterday, and the buy has been basically flatlining the past 5 days. That is very unusual. The system’s long term long trades win 65.28% of the time, with wins being 1.99 times as big as the losses.I’m hoping for one more strong push to the downside but wouldn’t that be extremely unusual for this daily cycle to extend so long?

  242. jc

    Might not be a happy day for the euro.

    IRELAND’S RATING CUT BY S&P; MAY BE CUT FURTHER

    IRELAND: Their rating has been cut to ‘A-‘ remains on negative watch at S&P.

  243. Patrik

    Oh man I was lucky..Me and Poly was short the stock market..Yesterday was not a nice day but the stockmarket in Sweden the OMX30 havent done so well the last days..And today its down bigtime!! Booom!

    πŸ™‚ This was pure a lucky move and know I will focus on silver and gold instead.

    But propably the market will fall further now when I sold the futures but I dont care..

    Bought Silver futures for 30% of my portfolio. The problem is that the leverage is *5..Is it to much..If the the silver metal falls 2% Then I loose 10%..But im not fully invested just 30%..

    You can choose leverage from *2 to *10..I in the middle..

    Is it to high? If we fall back it will no be fun, but Im just 30% invested for the moment.

    Maybe if you got this high leverage maybe its not that wise to get 100% in the same future..Maybe use some with smaller leverage..

    Could need som help with this..

    I know Gary just have instrument with *2 or was it *2,5?

  244. Gary

    Pat,
    Futures are leveraged instruments. If you have 30% of your capital in futures and the trade goes against you by even a little bit you could quickly lose 30% of your capital.

    I try and try to tell people the risk of extreme leverage but people just don’t listen. They think this is a get rich quick business. It isn’t.

    If you use heavy leverage you will blowout your account eventually. There are never any exceptions to this rule.

    Believe me or not it’s up to you.

  245. vuvvy

    Patrik,
    That’s why I trade leveraged gold. It will give excellent results when the next upleg comes with much less volatility than silver futures.Why not just trade the least leveraged silver product?As Gary always says getting too leveraged will stop you out right at the bottom and you will be unable to act when the upleg does start.That’s why I trade a mechanical system with rules as it by and large takes emotion out of the trade.

  246. Avann

    Gary, regarding leverage … is there a difference between using account leverage and using an actual loan (i.e. home equity).

    I’m assuming there is since on a loan you would never be called upon to payback the loan in full regardless of how much your account is down.

    The risk of losing money remains the same but the advantage is you would have more time to recover with a loan vs. leverage.

    True?

  247. vuvvy

    Another way I calculate my risk is to watch what happened in the last gold bull market, and that was risk down to the 65 week MA in gold.If I go all in and the worst case scenario happens what will my loss be? That MA in gold is at about 1220 and hopefully it will not go there, but if you’re buying and holding that is a risk. We had our move below that MA in 2008 so it should hold firm from now until the bull is finished.

  248. Patrik

    Ok Gary..I understand..But if I use futures with low leverage..For example *1,5 or *2. Is that better?

    But it is as Gary says..You want to do fast money but it will instead stop you out.

    I see that you Gary got AGQ..Its a sivler ETF i think..The leverage is *2..

    Is it different to use silver futures with 2 times leverage than a ETF..Must be the same?

    Will listen to you guys and buy a future with smaller leverage..2 or 2,5..

    Thanks for the advice Gary..And thanks vuvvy for the advice on gold..I appreciate it..Do not have the same experience like you guys so i will listen to you..

    Thanks!

  249. David Kafrick

    By the way, you don’t buy a futures contract based on how much of your portfolio the margin will be. You buy it based on the size of the position relative to your portfolio. So when you say that you bought 30% worth of silver based on a margin of 20% (5:1) what you are actually saying is that you bought a 150% position in silver.

  250. Gary

    I don’t trade futures so I’m not familiar with the margin requirements but just calculate if you would get a margin call if silver where to dip down to $25. If you can’t weather at least that much draw down then you are probably too leveraged.

  251. vuvvy

    Patrik,
    A gain from 2 to 10 on this last run? A very nice gain and any more leveraging than that and it could get quite scary.

  252. Patrik

    Hi again!

    Yes David that is correct..150% of my portfolio.

    The leverage is *5..The problem is as Gary say that the stoploss is at 24,80..

    There will be big problem for me if silver goes down hard. I then must sell my instrument otherwise the stopp will get hit and its all over..The end! Finito..:-)

    So it is much safer for me to buy the other instrument with a lower leverage because I will not be forced so sell..I think the stopp is at 16.90 on Minilong Silver E with a leverage at *2,23.

    http://markets.rbsbank.se/SV/Showpage.aspx?pageID=16&ISIN=NL0009438019

    So i can easy take a hit in silver to 25..The stopp is 16,90..Hopefully we will not get that far down..:-)

    And if a buy that instument for 75%of my portfolio with a leverage on 2,23..That means im invested in silver for 150%..The same as the first one with a leverage for *5. But this time a can take a hit and still survive easy..More money invested but its safer and I can take i hit..I big hit and I will survive easy..

    Ty David for the calculation..What instrument do you use?

    Sry for my english..Im swedish..That should explain why!?

    lol

  253. TZ(5288)

    Gold is tracing out a COMPOUND reverse H&S pattern. It has two shoulders, the first beginning almost 10 days ago on 1/20.

    We are now tracing out the lows of the 2nd shoulder, if it works.

    Target will still be $40 higher once we break out.

    One heck of a long basing pattern.

  254. TZ(5288)

    Just because you CAN buy something for a zillion-to-one leverage doesn’t mean you SHOULD.

    Regardless of what you buy in ANY instrument, it has a FULL or NOMINAL value.

    One gold contract is $100xPRICE or about $133,000.

    That is the only number you should focus on REGARDLESS of how much money it takes to OBTAIN that position.

    If your account is $133,000 and you buy a SINGLE contract then you are full invested at 1x leverage.

    It does NOT matter whether the cost of that contract is $100,000, $1000, or $1.

    IF the cost is $1000 and you say “oh wow…goodie, I can get 133 contracts” then you have no idea what is going on. Again, no offense.

    In ANY security, you look at the resulting NOMINAL or FULL value of what you buy, regardless of cost.

    (PS: the margin on a single gold contract is about $7000 so you can go up to about 19x leverage. If this is your target, good luck).

  255. Patrik

    Im still waiting to get all in but Im waiting for the signal..I dont know what the signal will look like but I want silver to go past 28,72 at least and then I will buy some new instrument to my portfolio..

    Wonder how it goes for Polys shorts? Companys like ABB, Atlas Copco,Elctrolux, Scania and SKF are falling big time in Sweden..

    The higher commodity prices are not that good for these company..

  256. Poly

    If we could close around or below 1,300 today, I believe we are still well within the script and a good setup for a Thursday and Jobs Friday sell-off. Could easily be below last Friday’s lows by COB Friday. Sure still looks like a bear trap, but yesterdays action could end up being a huge bull trap!

    Timing sets up well with a potential dollar swing and 7-10 days of a dollar rally. Plenty of damage can be done in 10 days.

  257. TZ(5288)

    PATRIK,

    Saying you would lose $25,000 on a stop is MEANINGLESS. What PERCENT of your account is lost if that stop is hit?

    If it is over a few single percent then you are making a mistake.

  258. Patrik

    Ok maybe i shoul buy miners instead..Dont know what the different is if Im buying future with a leverage on 2 compare to AGQ ( *2 )

    Im not used to buy futures..first time for me..

    Got 2 miners and 2 oil company but I will put the rest in gold and silver..

  259. TZ(5288)

    To those of you who have 401K’s and complain about being locked into bad investments, I have never understood why you don’t go to HR or the company CEO and say:

    “Here’s the deal, I have two weeks of vacation. I’m gonna quit, we will roll my 401K into an IRA, I’ll let you have a week of my vacation for the trouble, then you hire me back again as the same employee a few days after all the paperwork is in an legit.”

    That’s what I would do.

  260. Patrik

    TZ

    Yeah but some here are fully invested and if silver falls hard now they will lose more than 1 or 2procent..

    I think future is great if you got a low leverage say *2..Now worser than anything else on this board..

  261. TZ(5288)

    Patrik,

    Based on what I’m hearing you should probably just follow exactly what Gary does. Why are you trying to do your own thing when you dont seem to have invested much before?

  262. Patrik

    TZ

    I havent bought futures before..First time for me..But I own stocks and been trading for 6-7 years..2010 have been a nice year for me..but Im not as good as you guys..But that doesnt mean that im a worser trader..

    With future..yes probably..But the stockmarket overall..Maybe not..

  263. Gary

    AGQ is more volatile because it tracks twice the move in silver but it isn’t exactly leverage. You aren’t going to get a margin call because AGQ drops 20%.

    By leverage I mean taking on margin from your broker. If the trade goes against you you could be forced to sell at a loss.

    That won’t happen by buying AGQ. You might have to weather a severe draw down but you won’t get a margin call and be forced to take a loss.

  264. ALEX

    Nike ,

    Yeah , I saw some serious buying come into REE and tried to post quickly. I got in at $12.90 and 5 minutes later it was $13.20! I still think iys got quite a ways to go anyways.

    URRE…yes it does.A lot of the uraniums are running good )6 month chart). I see UEC breaking out and looks good because it averages near a million volume…today has over 1/2 million at 10.20

    same with urre

  265. ALEX

    TZ

    That was a nice explaination…clear and easy to follow. I liked it…and I think it will help Patrik to ‘see’ better

  266. vuvvy

    Patrik, a future contract leveraged 2-1 will return approximately the same % as AGQ to the upside. AGQ may be the better choice for someone inexperienced because if the futures go down enough you will lose all your $, but you will not with AGQ unless silver goes to zero.

  267. Sandy

    Did everybody go to 100 % yesterday. I bought some and got to 50 % invested.

    For those who bought partially, what strategy are you guys using to get to 100 %.

  268. Wes

    O.K Poly,

    I am offended. You accused me of copying sentimentrader, now prove it !

    Nothing I’ve said here was ever even on sentimentrader that I haven’t acknowledged. as being from there.

    You said it. Prove it or apologize for saying it!

    If you can find anything that comes close to what I said about seasonal tendencies there, show everyone, know it all!

  269. Nike Boy2008

    Alex,

    yea..after you posted REE, I went to look at the chart and it just shot up like 25 cents while I was looking hehe

    Yep..all uraniums look like a good buy now

  270. T.J. Rand

    Sandy-

    I went to 50% – I’ll wait for some combination of a Weekly Swing low in Silver (should happen this week), a weekly swing low in Gold, and HUI confirmation of 548+. These are Gary’s confirmation signals. I feel pretty good about where we are now- on Jan 25, the HUI bounced off the 61% retracement from it’s July-Dec move.

  271. TZ(5288)

    PIMA,

    >Obviously, you have never worked in corporate America land.

    Think you are a slave, or think you aren’t. Either way you are right.

  272. ALEX

    Brian

    UR welcome , but just keep an eye on them ( they look great), but you’re a longer term holder…

    I rode REE from $9 to $17 last run, but if I didnt get out…it went back to $12.

    Take it , and dont give it back πŸ™‚

    It had AVG 20 million volume daily for 5 days straight up to there last time…if this goes up on light volume…take the $$ (there are sellers up there waiting to get out πŸ˜‰

  273. Patrik

    Gary yes its true..The higher the leverage is the closer to the stoploss you are..So there is some nasty risk with high leverage..But i will never never use it again..

    Ty vuvvy for your help..I will buy AGQ then..But i will buy some futures also..:-) very low leverage on 2,23

    So AGQ cant go to zero?

    Im kind of old in my strategy..Focus on oil and gas mostly..Stocks only..

    So I will not trade with my whole portfolio..I already got 50% in stock..The rest will I put in silver..

    Gary..When you say that you are fully invested..Does that mean everything really?

  274. Gary

    Pat,
    At 100% invested I can’t get a margin call.

    At some point I want to add a little leverage for this final C-wave. But I need to either see one more push down or confirmation the intermediate cycle has bottomed first.

  275. Brian

    TZ, My company wants the 401 to only have what they view as low risk investments. I view most of them as high risk, but that doesn’t matter. They would point to the last 12 months as an example.

    As for your ultimatum type move. They would most likely say it was nice knowing you.

    Apparently we have a new Brian here too.

  276. Brian

    Alex,

    That wasn’t me that bought REE and URE. I bought the only Rare Earth company that is producing that I could get shares in when this all came to light about China withholding the metals.

    Tasman Metals has been nice. Up 122%, but it is a small position lottery pick.

    You are right, I am a longer term holder, and I like to buy when the right side of the cup is forming instead of waiting for the breakout. I’ve had too may breakout failures.

  277. DG

    Alex: Don’t be mad ay me, but I shorted FCX at 57.50 and waited too long to post it (though I did post to short it at that price twice last week—before the split at 115). Mea Culpa! (That means “tough on you”). I am looking at it as a partial hedge against my PM’s though I think they will both work.

  278. Slumdog

    pimaCanyon said…

    TZ,

    Obviously, you have never worked in corporate America land.

    SD: Walk in to the CEO’s office? Take a dagger and stab yourself first. Moreover, the CEO is elsewhere in the world; so is the HR office.

    If anyone even began to ask other than politely if there are any other options, the pink slip would arrive within days.

    Don’t talk braggadocio when you don’t know Fortune 500 reality. You get what you get. Don’t like it? Get out. Do your job, choose among the options, submit a suggestion as an inquiry, and eat the gruel which for many is very nourishing, what with all the health and vacation and bonus goodies tossed in.

    But please don’t wax on a topic you truly don’t wish to understand, or have never been exposed to.

  279. TZ(5288)

    BRIAN,

    >As for your ultimatum type move. They would most likely say it was nice knowing you.

    Why is it an ultimatum if you MAKE IT WORTH THEIR WHILE? Give them back some vacation for free or something.

    At *some* level they will be interested in the proposal.

  280. Onlooker

    TZ

    You really don’t understand big bureaucracies, do you? The people you deal with DON’T CARE! For them it’s just more work, that they don’t have to do. And anybody who would care (i.e. who would benefit from the exchange) isn’t accessible.

    And if you make a stink about it, you’re just a troublemaker, who is replaceable, especially in this job market.

    So as nice as your proposal sounds, it won’t fly in big company America. The only way you could pull it off is to have some kind of personal relationship with someone in the HR dept that would make it happen for you. It’s who you know, not what you know.

    That’s just reality.

  281. Avann

    TZ … it could be done … my son works for a very large company. He wanted to get a large salary increase or he would quit. They told him that the company can not give a current employee such a large increase (I think it was around 25%). His manager actually suggested that they fire him and rehire him to facilitate the increase … and that’s what they did. If you do not ask you will never know.

  282. Onlooker

    Of course there’s bound to be an exception or two that proves the rule, but in general you don’t get anywhere with these creative solutions in a large bureaucracy.

  283. pimaCanyon

    TZ,

    Corporate America does not want to deal with people who want special treatment that will mess up their internal systems.

    I tried for years to REDUCE my hours and take a corresponding reduction in pay and benefits (like a 4 day week and a 20 percent reduction in pay and benefits), but the answer was always the same. NO. And this was during a time we the company went thru several layoffs.

    I even suggested next time we have a layoff, before laying people off ask for volunteers who would be willing to cut their hours and pay and benefits. And see if that would result in enough of a cut in payroll expense to prevent laying people off. The answer: NO.

    One of my co-workers wanted to go half time. Same answer. NO. She finally find a half time job with another company.

    Corporate America is generally run by tight assed narrow minded workaholics who don’t know how to think out of the box. They are focused on one and only one thing: Bottom line for THIS QUARTER, so they can get their hefty bonuses, the future be damned.

  284. Brian

    TZ, It wouldn’t matter for me as I am in a union with 3000+ other people, but on the corporate side they just wouldn’t do it.

    Everything is done by committees and lots of meetings. If one person wanted to do that, they would most likely allow you to quit, but most likely not hire you back; but rather get somebody to do the same job cheaper. They would just look at you as selfish.

    They call it picking your battles wisely.

  285. ALEX

    DG

    haha πŸ™‚

    Thats quite alright , I don’t short so I couldn’t have followed it with you πŸ™‚

    I kind of thought fcx lead the metals at times , but you may have a quick short there. I see it filled that gap , but I am actually thinking it will go higher ( the hist is shortening on MACD and the MACD is turning up near the zero line.It also regained the 50sma and 20sma.

    Keep an eye on it…gotta plan??

  286. ALEX

    and Brian / Brian

    I think I called the wrong Brian a long term trader, so disregard that statement ( you probably wondered what I was talking about…it was the other Brian that I spoke to another time who said he is a longer term holder of trades)

    Maybe you can both sign your posts Brian 1 and Brian 2 j/k

  287. pimaCanyon

    Here’s another thought re the 401k:

    Take a big loan out on your 401k balance. Use that money to put into a trading account.

    You pay the 401k back with payroll deductions (including interest), but since it’s all going to you you’re paying yourself interest.

    Your 401k balance will be reduced by the amount of the loan, but if you invest that money (that you now have in a regular–and taxable–trading account) and make better returns than you can in the 401k, you come out ahead.

    Lots of 401k plans are set up to do the loan thing online, so you don’t have to hassle with paperwork or deal with approval.

  288. DG

    Alex: I usually don’t have much of an exit plan or a target. FCX broke down on volume then rallied up to the former triple bottom at about 57.5. Once I get in the black I put in a break-even stop, so I either win or no harm no foul. I rarely carry a profitable position into the red. I cover when something tells me to (I get bullish in general, there’s a high-volume reversal, the stock drops to some sort of MA support or gets overdone on the downside, etc.)

  289. n1tro

    Pima,

    How is one to eat and pay for day to day stuff following that plan? I can see it happening if one has reserves to fall back on.

  290. ALEX

    DG

    I missed the $57.50 part last time, so it looks like you’re in good shape. There is a gap below too…so that could get filled.

    I tend to get 100% more nervous when I short for some reason , and I over analyze …so I consider myself NOT GOOD at shorting. My weakness.

    best wishes on that trade!!

  291. Onlooker

    Alex

    FCX tracks with copper; not perfectly, but very closely. And definitely not with gold, regardless of their company name.

    Put them on a chart together, you’ll see what I mean immediately.

  292. Yash

    I posted this yeatrerday too. There may be ways in 401k to use money for regular trading. How many people know fidelity (which is huge 401k holder) allows linked trading account to 401k. They open regular trading account that is linked to 401k. All retirement rules remain on linked account too like withdrwal, no margin, no shorting etc but with linked trading account you can do all regular trading paying regular commission schedule. Find out if other institutions allows the same. Give then fidelity’s example.

  293. Jayhawk91

    Alex-

    What type of position size do you do with these picks (Solars, uranium, RE’s)?

    I added some UEC & DNN-kept them around 5% of my portfolio.

    Also, JASO and the solars doing well today. C&H on LDK daily?

    I’m about 60% in there now Sandy–I’m just adding slowly but surely. Will wait for final confirmation Gary pointed out to top it off.

    One thing I noticed coming out of last summer/fall-There were dips, but they were quick and in the mornings. So one could keep a close eye on their favorite stock and buy a early AM dip.

  294. Slumdog

    As I’ve been posting, this is choppy waters.

    The major move has left a trail of losses among all the directional traders.

    And IMO it will continue. This is a long tail of another possibly 7 days.

    IMO, all directional trades will prove disappointing, even with the spikes like the drop to 1322 leaving all those in tears and those up to the 45 level also in tears.

    The gap is 34-43 with a few points on each side. And this market is proving that this is one of the statistically normal responses to the major vertical move.

  295. Brian

    Pima, I have had thought of doing exactly that for awhile now. They do have some restrictions. I believe you have to say you are buying a house, education, or some other worthy cause.

  296. ALEX

    ONLOOKER

    Yes, I wasnt going by company name , and not really saying that it TRACKS gold-or ends up with a chart that looks like gold…follows or leads gold through time…just that it turns first …more like directionally, it seems to have lead the direction. SO if we were looking for gold to go up..I would imagine FCX would go up first.

    Like first Copper breaks upward, and fcx , then Gold goes.

    Maybe I’m wrong, but in the past , I would notice FCX taking off…then Gold stocks soon would too.

  297. Brian

    I just checked. You can borrow 50% of your vested balance up to a maximum of 50,000 from our Fidelity 401k. No linked trading option is there.

  298. basil

    On January 27 and 28 we GLD built a so called pipe bottom. These were also the two highest volume days in the month of January. On the 27 GLD went down on high volume, on the 28 it went up on high volume. You can see that well on a one month chart.

  299. Yash

    Brian

    I beleive fidelity allows everybody to have linked account. There is no such option online that you can see. You need to call them and ask for it. Then they send you two page paper form and linked account brouchure.
    I did it this way myself when no one in my company including HR was knowing it and did not believe something like this even allowed.

  300. ALEX

    JAYHAWKS

    It really depends on

    1) my conviction/ confidence that the trade is in my favor (some set-ups look far better than others) , so less risk= more shares.

    2)whether I want long term or not – Like the EXK I bought the other day , It was %5.40 so I felt it was a good value and long term (I expect it to be MAYBE double this spring…so I went in pretty good)and will just hold.

    3)Value of the company to my trading portfolio/and plan. Like when we get the absolute confirmation of a gold bottom…I really want to sell most other holdings and buy all P.M.s

    Right now I have BRNC , UEC , DNN , REE…mixed in , and I may sell them to have more cash for the I.T. low.

    So far my ‘trading’ through Nov to now, while waiting for that low, has almost doubled my so called ‘dry powder’—so even if I miss the exact bottom getting re positioned into all my favorite P.M.’s, I still came out way ahead.

  301. ALEX

    Basil

    Your ‘pipe bottom’..is that good? Like a solid floor or something??

    I remember Joe Grandville used to see a stock sell-off (crash) in one high volume day down, then tear upward the next day…like you pointed out , only to a greater degree , and he called it ‘railroad tracks’,,,and said , ” BUY IT”

  302. pimaCanyon

    Interesting development in the PM’s today:

    Yesterday during regular trading hours Gold hit the downsloping TL from the recent triple top (using the third top as the start of the TL), poked very slightly above it overnight and is now trading well below it. Looks like the TL repelled gold’s advance of the last few days.

    Obviously, in order for the IT bottom to be in, gold will need to break thru that TL. First touch of the TL we would expect a pullback, so what’s happening is not that unusual. The real test will be whether gold will make a new low or whether the low of 1/28 will hold.

  303. pimaCanyon

    Brian, I believe you’re correct about the reason–except that I believe that USED TO BE correct. Now, I am not so sure. You may not need a reason.

    I borrowed a couple of times, once to buy a house, and once to remodel a house.

    I believe at this time they don’t care what you use the money for.

  304. basil

    Hi Alex,

    you can google ‘Bulkowski pipe bottom’ and you’ll find an explanation of that formation. These pipe bottoms can form over various time frames. This is a two day pipe bottom. From my understanding it is an indication that at least over the next days this should be a bottom. That is my conclusion, but these bottom formations only have a percentage likelihood to perform a certain way, it’s not a certainty. Best to check out the Bulkowski definition of a pipe bottom and see if you draw the same conclusions.

  305. pimaCanyon

    Brian,

    Sounds like the linked account is the way to go, IF you can actually do it.

    Fidelity is pretty good with customer support. It would be worth a phone call to find out.

    Good luck!

  306. ALEX

    PIMACANYON

    YES , but just as interesting is that in that same scenario , GDX and HUI and individual p.m. stocks broke above that trendline , and even somewhat retested the top of it the following day.

    If Gold breaks down , I would imagine the most downward move you get on GDX and HUI is the possible retest of that trendline.

  307. sophia

    It feels like the market is about to turn sour…Usd up, gold down, Tran down, but Nsq up, Brazil down but Asx up? All correlations are falling apart, which means that people are confused….

  308. Gary

    Carlos,
    A close below $28.52 isn’t necessarily a bearish pattern. Silver still broke the down trend line yesterday.

    If you are nervous about further down side action then keep positions at or less than 100% so you don’t get a margin call.

    Either way at 27 weeks and with the COT at a 100 blees rating it’s
    too late in the cycle to stop out of positions.

    All that will accomplish at this point is to force you into a buy high sell low spiral.

    The time to stop out is if the odds are good you can re-enter lower. We no longer have those odds in our favor like we did last month.

  309. Gary

    Jay,
    FWIW silver doesn’t look like a bear flag at all. It’s formed a weekly swing low and a nice rounded bottom basing pattern.

  310. basil

    Sophia,

    or it’s simply that the leadership is changing from Transports and Russel and Nasdaq to Dow and S&P. Their charts looks decent, and the others might just be resting a little longer.
    My feeling is they will need to correct ultimately, but I am hopeful that they extend their run for at least a little bit longer.

  311. Brian

    Yash, Thanks for the info. I called them and they said some 401k’s allow linked accounts. Unfortunately mine isn’t one of them…….

  312. ALEX

    Basil

    Thx ,I will!

    p.s. oil and solar doing rather well 2day. SOL=break out again w/volume

    anyone catch these charts?? over the last 3-6 months
    energy stocks…

    BEXP =(DOUBLED)

    PCX =(TRIPLED =coal)

    ICO= Doubled,

    BRNC= doubled

    IO = doubled

    While gold stocks floundered…
    They did we we are hoping p.m. stocks will do. πŸ™‚

  313. Sandy

    Gary,

    How much possible drawdown in terms of percentage do you think can happen given your protfolio distribution at this stage of gold cycle.

    This answer would help set expectations and help new subs like me.

  314. basil

    Gary,

    for the dollar to hit a 3-year cycle low this spring, it should really continue here to work its way down below the November low, correct?

    Do you still expect a mini currency crisis in the dollar to take place this spring?

    Thanks.

  315. Gary

    Unfortunately I can’t see the future any better than anyone else. The best advise I can give you is not to be leveraged so you won’t be forced to sell for a loss.

    I’m still leaning towards the bottom being in and silver leading. But I’m prepared to weather a draw down if need be.

  316. Gary

    Basil,
    Well the dollar is due for some kind of short term bounce soon. But once that has run it’s course (it could be as short as 3-4 days) then I would expect it to get busy collapsing down into the final low, possibly by late March or April.

  317. basil

    Gary,

    the bounce should still be kept within the one month old downward trend line, because if it turns into too much of a bounce, it would begin to look like a higher low (compared to the Nov low) and that wouldn’t be hinting towards a breakdown.

  318. DG

    If the Dow closes up for the day I will get a sell. As I always point out, unfortunately, the sells are not as good as the buys. The buys you can take to the bank, the sells are about 65%. Each calls for an immediate 1% move. Given how lousy the tape looks today I may take a shot.

  319. Robert

    hi SMT blog

    i’m thinking gold might have a bit more to drop here, based on this chart of the gold:dollar ratio which i feel is a better indicator than spot price alone as it incorporates both price and sentiment, to a degree. the ratio (black line) hasn’t broken support yet but i would feel a lot more comfortable to see a retest of the last peak, or about a ~15% differential from here as all the other significant corrections have. this doesn’t necessarily mean gold will fall, but if i had to guess i’m thinking we get a further 10-5% drop here in concert with a 5-10% dollar rally soon.

    GLD/UUP daily: http://i55.tinypic.com/10xzxuq.png

    and similarly SLV/UUP, which is sort of a mess: http://i55.tinypic.com/9tg3dz.png

    P.S. I’m a different Robert than the one who already posts here, maybe one day I’ll figure out how to change my display name

  320. Gary

    Robert,
    Very unlikely the dollar rallies 10% at this point. It’s in the process of collapsing down into a major three year cycle low. It could pop up for 3-9 days though.

  321. Beanie

    Whoever that is shorting SPX, you’re better off buying a penny stock like STVI , which is likely going to $5.

    Me? I’m long the semiconductor stocks. This is their year.

  322. Gary

    Beanie,
    I will be willing to wager a burrito that inflation will have destroyed the economy by late fall.

    We should have a left translated intermediate cycle by that time and a move below the prior cycle bottom. (basically a Dow Theory sell signal)

  323. Gary

    Remember a couple of months ago when everyone was talking about loading up if we got a pullback?

    Remember how I said it’s not as easy as it sounds? No one ever rings a bell for you at bottoms.

  324. Gary

    Rb,
    It does seem likely that the dollar will test the November pivot before putting in a cycle low. If that’s the case I wouldn’t expect much of a correction in stocks, at least until that pivot is tested.

  325. Beanie

    Gary,

    I have no doubt that inflation is coming. But you seem to be in such a hurry that inflation needs to destroy us the next 1-2 years. I totally don’t agree with the timeline. These things don’t happen overnite.

    Look what the bears have been doing. They keep on thinking that our debt will kill us immediately, like the next 1-2 years, even though we’ve had debt problems for the last 100 years. These things take time. The bears are always in such a hurry, as if they’re Speedy Gonzales.

  326. Gary

    Beanie,
    My timing is based on when the next 4 year cycle low is due for the stock market. (Sometime in 2012)

    In secular bear markets the move down into a 4 year cycle low corresponds with a leg down in the long term bear market and a recession.

    Bear market legs tend to last 1 1/2 to 2 years. So in order for the 4 year cycle low to bottom in the normal timing band this cyclical bull has to top sometime this year.

    And the inflationary process has been ongoing for two years now. Ben is just topping it off with a completely unnecessary second round of money printing that will make sure we have a dollar crisis at the dollar’s three year cycle low this year.

  327. Slumdog

    David Kafrick said…

    I doubt we´ve seen the bottom in gold. This kind of action that we´ve seen this week suggests one more leg down.

    DK, what historical precedents do you have for this?

  328. pimaCanyon

    BoW number on SPY is big. Also, the OEX options traders are buying more calls than puts. Moreover, the wave pattern looks like there’s more upside ahead of us.

    I’m now thinking that March or April will be the earliest that we’ll see a top. And if QE 3 is announced, who knows?

  329. ALEX

    sorry to post this late …DG!! Was away this afternoon–

    But when REE really started to run , I jumped into AVL ( same rare earth arena)

    When these run with increasing volume…THEY RUN!!

  330. DG

    I’ll get the sell if we close up. Trying to decide whether to do anything. I think I”ll buy more FXP as China is already in a bear something.

  331. DG

    Slumdog: Gold is sure hanging out in that 10 point range you mentioned. How long do you expect that to continue?

  332. basil

    Gary,

    I know that everyone is expecting that correction in stocks that is due; but somehow I get that feeling that the markets might start making a run for their 2008 highs instead (with Nasdaq, Transports and Russel exceeding theirs); they might just all together skip the 10% correction Rietholz and Faber and Walayat and whoever else are expecting. That would surprise everybody, and it would create an extreme of bullishness and thereby the best set up for another leg down in the bear market, if that will indeed materialize eventually.

  333. David

    Basil,

    We’re already in unprecedented territory. The market hasn’t been this overbought since 2000, if not longer. Sentiment is also off the charts, from what I’ve seen.

    It’s possible that all the QE hijinks could send the indexes to new highs and beyond — but it’s also possible that the aftermath could be much more dramatic than anyone thinks possible.

    Anyone who tells you they know what happens next is an idiot. All the old indicators are now meaningless.

  334. basil

    David,

    agreed. My gut feeling however leans towards more immediate upside. And of course gut feeling is a very questionable technical indicator πŸ˜‰

  335. Gary

    Basil,
    I’ve done everything I can to keep people from shorting the market despite the fact that a correction is due.

    I’ve seen how long these tops can last. trying to short one often just drains one’s account. It’s usually not worth the headache or heartburn.

  336. thedocument

    Futures are only technically leveraged instruments in that only a small deposit is required to control a contract. However, there is no rule that states that if you have a $30k account you have to buy $200k worth of silver or anything else. If you have a $30k account, you buy one silver mini (1000 oz), and you have roughly 100% exposure. No leverage.

    The bad reputation carried by futures stems from the greed of many speculators back in the 1970s who used futures accounts to go 10-1 or 20-1 against their capital. That kind of exposure is foolish, but I’ll repeat: there is no requirement that a person leverage their capital base when using futures. For liquidity and tax purposes, they are still far superior to stocks and ETFs, especially when it comes to intermediate-term trading.

  337. Gary

    David,
    Amazingly sentiment is starting to cool despite constant new highs. The dumb money confidence index has dropped from 79 to 67.

    And the intermediate score is back in neutral territory. Sentiment isn’t anywhere near as extended as it was two weeks ago.

  338. David

    My sentiment indicator is anecdotal: middle-class acquaintances who previously had no interest in the market are suddenly all frothed up and looking to trade stock tips.

    One such person used the phrase “buy the dips, sell the rips” as if it was the first time it had ever been spoken.

    It was all I could do not to remind them that what we’re presently experiencing is a “rip”.

  339. basil

    David, Gary,

    initially it’s a good thing for the markets if more retail comes in, so I would take that as a healthy sign for now and get worried when Transports, Nasdaq, and Russel make new highs.

    I am positioned for more upside here in agricultural commodities, commodity stocks (mostly uranium), and also in PMs, but I will watch closely with my finger on the trigger.

  340. basil

    Gary,

    I read your earlier comment about the dollar testing the November low rather than bouncing. I would hope that the dollar slices right through. Not that I wish any of us a dropping dollar, but if we want to see that magic C wave top, we better get started on the upside in PMs.

  341. Gary

    Basil,
    It’s so late in the intermediate cycle there just isn’t a lot of time left for another big move down in metals.

    That’s why I’ve been saying we are “close enough” at this point.

    We’ve accomplished the goal of sidestepping most of the intermediate correction. Now it’s time to quit worrying about trying to time the perfect entry and start getting positioned for the next leg up.

  342. T.J. Rand

    Gary-

    I took a look at the Gold-Silver ratio…and it dropped like a stone from late ’08 (52% above the mean(200 SMA)) until now (24% below the mean). Is it reasonable that during the next C leg that gold might outperform silver such that the ratio reverts to the mean? If so, might loading up on gold vs. silver make sense?

    Thanks.

  343. Quality Stocks

    Looking for a positive day tomorrow. Check out the BOW numbers for SPY. This market is going up some more folks. We had a nice consolidation day today digesting the last move. Look for strong price action to the north. Good luck

  344. Gary

    I don’t think there has ever been a final C-wave leg where gold outperformed silver.

    Historically silver is still too cheap compared to gold and silver is again showing tremendous relative strength.

    So I certainly wouldn’t bet on gold over silver.

  345. David

    TJ,

    Silver usually outperforms gold at the end of a big C-wave. The compression in the gold-silver ratio so far was expected and the trend can be expected to continue.

    Where the reversion to the mean will take place is the D-wave collapse that follows. Presumably you can expect silver to revert back to its 200DMA, which at that point will be a long way down.

    We’ve been told to expect gold to extend 40% past the 200dma at the c-wave top, but silver could go 100% past it. Then, when we crash down to the 200dma, silver will get cut in half. Presumably the silver stocks will get hammered even worse — possibly a 60-70% decline.

  346. ALEX

    Man!

    I live in New England and we just got 2 ft of snow on top of 2 ft on top of 1 ft and more on the wkend. Just spent all day shoveling the roof and walkway.

    so DJ

    Yeah , fcx looked good and now with that gap below , you may get that filled (unless you closed it).

    ONLOOKER

    Yes,,but you were still correct in what you said…”It’s all good!” πŸ™‚

  347. David

    Data point, FWIW:

    “As the price of gold has declined, gold sentiment has tumbled. The Hulbert Gold Newsletter Sentiment Index (HGNSI), which tracks market timers’ recommended exposure to the gold price, fell to -1.3%, the lowest reading since July 2009. A negative figure means that market timers suggest having net short exposure to the gold price, a rare occurrence and, from a contrarian perspective, bullish for the gold price.”

  348. TZ(5288)

    Gold has now congested sideways and also bounced on the daily downtrend line for 4 days. The blog comments are useful as well – you can see a certain frustration coming in.

    That’s what markets do. As as soon as enough people lose patience, walk away from the screen or say “how long will this go on”…BOOM it moves sharply while you are in the bathroom.

    The downtrend is unlikely to hold after being pushed against for so long and the reverse compound H&S pattern is still in play. I thought it would break today. It didn’t, but it isn’t broken.

    I would say the odds that metals are going lower is low 25-33%. Almost everything else (real) in the world is surging due to the fiat printing flood. Gold and silver are the main ultimate benefits of that eventually.

    Somebody earlier in the MMT discussion (no. I do not want to resurrect it) said that money is growing exactly normal and as fast as it should. Not true and showing something helps this discussion.

    The most correct measure of money (printed stuff people are holding for value, roughly) is TMS – the true money supply. M1,M2 and M3 have certain distortions.

    TMS
    http://www.greenfaucet.com/system/files/1164/saville-122810a.jpg

    Since general human society grows at about 3% per year, you can see that at all times on this chart money printing is too high (which is what you would expect when you realize the dollar has dropped for 100yrs).

    Nevertheless I draw your attention to the surge starting 2002. That surge in printing (in response to 2001 crash) caused the real estate bubble – the largest so far in mankind.

    You will then notice the printing surge following the 2008 crash.

    Here’s the catch (you can verify this from actual fed documents), money printing takes about 1-1.5 years before the effects start rolling into inflation and bubbles.

    The surge in recent printing started 1-1.5 yrs ago and is now hitting as we speak – right on schedule.

    Beanie’s market is going up. Grains and oil are going up. Copper is going up. And gold and silver are going up.

    Food is starting to tighten on the poorer people in the world. Riots are occurring. Unrest, etc.

    It’s simply an effect of this printing (and the CHOICE of non-US nations to either ACCEPT our printing or LINK their currency to ours – which is just another acceptance.) It is the willing and stupid acceptance of OUR inflation by the world that has both A) allowed us to play games longer than we would have normally and B) caused pain in THEIR countries instead of OURS.

    The printing bubble you see here on that chart is what is rushing toward the US and the world. It is hitting right on schedule after it was started. And I use it to argue agreement with Gary that the dollar is going to head down into a crisis and to argue that gold and silver are headed higher.

  349. ALEX

    ooops, did I call DG…DJ?

    sorry man , oxygen high from the shoveling.

    BRIAN #2

    looks like you caught the REE trade pretty good too! Volume is swelling nicely , so if it runs like last time , it COULD do in a week what slw does in 5 months (double, that is πŸ™‚

    AVL seems like the same trade/chart.

  350. Gary

    Hook,
    That’s not usually how it has happened in the past. Usually the retail trader gets all bulled up at tops and gets caught.

    It’s pretty unusual to hit the kind of extremes we saw last month and then continue to grind higher as sentiment falls.

    Most of the time sentiment falls because the market is also falling.

  351. TZ(5288)

    Unions and S&P 500 companies represent only a small fraction of the workforce. Sorry you guys are in those situations, but you CHOOSE that. (And yes I’m quite aware of how it works – I’ve been to the DMV after all :-). That’s why I took different and much more successful paths in life than 40yrs and a watch at retirement.)

    For the majority of the rest, the advice to find a beneficial way to quit and re-hire themselves (maybe over a normal holiday period) is likely useful.

    Oh, and companies only want “safe” investments in a **RETIREMENT ACCOUNT** cause if they put something in there where you lose money they are open to a lawsuit.

    Yes, I’m aware they will be wildly successful, but *they* dont know that and have ZERO concept of what is going on in the world (and nobody ever got fired for buying IBM i.e…simple bond, stock, and money market funds.)

    You will see commodity and precious metals funds available in retirement accounts as the ending bubble phase takes hold – just like what you saw with the tech boom. Somebody has to buy from us πŸ™‚

  352. DG

    Alex: A serious question…Percentage returns are great, but it also depends on how much you put in. I can put 1/2 my net worth into SLV or GDXJ and not worry about it, but these little flaky things…? It’s fun to have a $5 stock turn into a 1$10 one, but I’d rather have a huge load of a stock that goes from $25 to $35. Can you/do you really load up on the ones you post? That’s not something I’d be willing to do. I rarely put real money into non-ETF’s, and never into stocks under $10.

  353. TZ(5288)

    GARY,

    >Remember a couple of months ago when everyone was talking about loading up if we got a pullback?

    Yes, I *do* remember saying that
    πŸ™‚

  354. ALEX

    TZ

    Thanks for the charts. I was just thinking of Copper in that situation too. Gold ran with Copper aug to Nov , then gold came back and copper kept going, so GOLD lagged again.

  355. The Hook

    Gary,

    Dumb money confidence topped at 75% on April 16 and fell to 71% then 67% by 5/4/2010. Smart Money bottomed at 29% on 4/15/2010, and by April 27 was up to 42%.

    Pretty clear that sentiment turns down before any correction.

  356. TZ(5288)

    Joking a bit aside, my performance was pretty crappy last year. I’m recovering from that and I think I nailed this trade so far with gold.

    I’ve been trying to angle into silver futures though, and got whipsawed multiple times. If I get stopped out of all positions I’ll now lose about 2.5% net worth instead of the 1-2% I mentioned earlier. An acceptable cost for trying with silver.

    Despite all my bull comments and seemed enthusiam remember that we *could* go lower so don’t do something that panics you or wipes you out if so.

  357. Gary

    Hook,
    both the intermediate score and dumb money confidence topped almost exactly with the market in April. This time the intermediate score has been steadily declining for almost a month and dumb money confidence since late Dec.

    I think you are noticing the beginning of a change but that is due to the whipsaw action that took place at the April top.

  358. TZ(5288)

    Regarding our copper comment:

    http://stockcharts.com/h-sc/ui?s=%24gold%3A%24copper&p=D&b=3&g=0&id=p18809758925

    gold lagging copper badly.

    I would say for two reasons:
    1) manipulation by central banks and finance powers (yes, I know the opinions on the board)

    2) recognition of what gold is and its role not widespread in society. The more simple goods are rising first. As people catch on and close to the end of this game, gold/silver will pull ahead.

    Note that silver *IS* keeping up much better lately than gold is. I would attribute that to the inability of central banks to manipulate silver unlike gold because they don’t hold inventory they can rig.

  359. Gary

    Here is the intermediate score. You can see that at the Jan and April top sentiment peaked almost exactly at the market top. The current situation is much different with sentiment steadily declining over the last 3-4 weeks.

  360. TZ(5288)

    The time lag of money supply increases:

    http://nowandfutures.com/money_and_lags.html

    “Significant changes in the growth rate of money supply, even small ones, impact the financial markets first. Then, they impact changes in the real economy, usually in six to nine months, but in a range of three to 18 months. Usually in about two years in the US, they correlate with changes in the rate of inflation or deflation.
    The leads are long and variable, though the more inflation a society has experienced, history shows, the shorter the time lead will be between a change in money supply growth and the subsequent change in inflation.”
    — Milton Friedman

  361. The Hook

    Gary, maybe you should get a magnifying glass.

    The Intermediate Score was already below the red line by April 27.

    My comments stand. The Dumb Money indicator tops well in advance of index prices.

  362. ALEX

    DG

    I understand what your saying…and my reply is with a nice tone… πŸ™‚

    (REE ,NAK , isnt under $10).

    And you know me by now…I am an investor in P.M.’s and a trader during most of the ‘correction’ in p.m.’s
    ( I even watch you nibble on shorts, and could also ask..are you re trades worth it)? Buy yes, mine really are!

    I am a trader , and I have developed my own method of selecting, trading certain set-ups. I am very confident when I buy My set up…and quickly see if I am wrong.

    Honestly , I used to mention ‘trades’ and people asked me to post them as I traded…so there they are. I posted over 35 trades…32 wins , 3 losses of less that 2% (TZA , JASO stopped me out, and 1 more) My gains were 80%, 50% , 40%.

    EX…NAK (solid company, not shaky as you say) GMO..solid molly co) , EXK..solid silver producer, etc Under 10 , yes, today…but also undervalued. Did you see NAK?? Whew.

    Everyone saw me by NAK , REE , FTK , GMO , etc. I RIDE THEM, I am not afraid jumping in and out because I know what to look for…not listening to everyone who thinks a crash is imminent- I buy maybe 2000, 3000 shares here , 1500 there…and I trade often. Yup, it has been very worth it…it adds up if you cut losses and add gains ..I know now I have QUITE a bit more for the p.m. IT low then if I stood still in Nov, but thats how I trade πŸ™‚

    I love ya Bro.. it was an honest question ,I didnt take it wrong. I hope i dont sound arrogant, I’d rather trade and just chat.

    gotta shovel more,,,later

  363. Gary

    Hook,
    The whipsaw action at tops will start the indicators trending down. But that action occurs in a very narrow price range as you can see from the chart.

    The current chart is nothing at all like prior tops. That is pretty easy to see without a magnifying glass.

  364. ALEX

    DG

    I should have done the long story short!!

    You said…”It’s fun to have a $5 stock turn into a 1$10 one, but I’d rather have a huge load of a stock that goes from $25 to $35.”

    And I say…yeah, but you havent been able to do that Nov to now…so your money has to wait. I just have a better way to ‘wait’..UNTIL WE CAN jump in SLW BIG and ride with out thinking about it πŸ™‚

    Again, it was an honest question…I just dont think those stocks are flakey..(EXK, NAK etc) sometimes the juniors run after the larger caps. Its just ‘timing the trade’

    Its all good πŸ™‚

  365. DG

    Alex, Oh I trade little stuff all the time. I too am waiting/hoping to catch the next bull in gold. I wasn’t suggesting getting a small position in a stock that doubles is a waste of time, I just didn’t know if you were playing them with big money or little money. Even the junior PM’s have too much company-specific risk for me. I’m an old fart at this point and am not trying to shoot the lights out. 50% in a huge bull gold move with 1/2 my NW is fine for me! In the meantime my waiting has been fruitless and yours has been profitable…enough said.

  366. Jayhawk91

    How do you predict a move like NAK? I had a decent chunk but sold it. That thing is a monster. I just get why certain miners do that (GORO) and others like AUY suck for years.

    Good comments TZ. I would say you and me tend to over think (you sound way smarter than me) and can talk ourselves out of any trade out there. I desperately need to be right and sit tight this year, OLD TURKEY for REALZ.

    I agree with Alex. So much bullish action going down in other sectors, why not trade some of these charts while we are in waiting mode? Shoot, ags, solars, coal, etc…just had VERY nice moves. I’ve thrown a few bucks at DNN & UEC. I might just let those ride for a long time. Same deal with a chart like LDK. Nice C&H base on the daily, looks like a double.

  367. Gary

    No way would I even consider playing energy at this point. OIH is stretched 33% above the 200 day moving average.

    That’s not a point at which one would expect to have huge upside potential.

  368. Gary

    Both Uranium, solars and rare earths are pretty common trades at this point and are talked about frequently on CNBC.

    Usually if the trade has lasted long enough to get the media all bulled up it’s getting long in the tooth.

    No one is talking about gold or miners anymore except to tell everyone that the bubble has burst.

    That’s the kind of sentiment where I want to put my money. The chances for a huge move are infinitely better with that kind of sentiment than one where everyone is falling all over themselves to get on board.

  369. Wes

    TZ,

    I think you are confusing the money base with money supply. They are very different things.

    Nobody doubts that money base has been increased enormously by the Fed, and that creates the potential for inflation. But, until that base is loaned out by the banks, that money is not in circulation, and just remains potential, not actual, inflation.

    The Fed plans to retire that money before much can be loaned out. We’ll see if that happens.

    Meanwhile, the 3 rate of annual growth of M2 is currently running at 5.57%, well below the Fed’s “ideal” rate of about 7.5%. And that’s why they are pumping so hard, trying to increase that rate, so far with little result.

  370. Wes

    Sorry, should read :

    “3 year rate of annual growth”

    By the way, the growth of M2 in just the latest year is running at only 4.2%, so you can see the Fed’s problem.

  371. Bede

    Chinese Gold Demand Stuns London & Hong Kong Traders

    “‘The demand is unbelievable. The size of the orders is enormous,’ said one senior banker, who estimated that China had imported about 200 tonnes in three months.”

    “I think the key here Eric is that inflation is roaring out of control in Asia, particularly in China. While the western monetary authorities are doing their best to convince their citizens that inflation is not a serious problem, the reality is quite different. To quote Bernanke, ‘Fear of inflation is overstated.’ The citizens of Asia and other regions are not impressed with such statements. Those people have been buying gold and they will continue buying gold as long as inflation is alive and well and I see no end to that in the foreseeable future.”

    http://preview.tinyurl.com/4ua5yj3

  372. Gary

    I would point out that the money is being loaned out by the boat load to the banking system and they are putting it to work in asset markets. It’s why we have inflation already. It’s why gas no longer costs $1.60 or why bread is almost $5.00.

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