Gary, I listen your interview. Before you mention that Silver could hit 100 level during the next C wave.In the interview you had mention that you will not touch Silver 2 or 3 years= Somehow I dont make connection.How come Silver could hit 100 during next C wave,but at the same time you dont want to buy it 2-3 years?
I was in the Trinity Alps yesterday, took a little toke of one of my favorite herbs, and had a little epipheny regarding the markets, and a low risk, high reward way to play what looks like what is turning out to be a major trend reversal in the dollar.
So, if you’re interested in the ramblings of an infrequent stoner, read on…
Here it is. As most of us here agree, the dollar is trying to put in a bottom. Since almost all asset classes have been driven by a weak dollar over the past two years, this is a significant event, and offers a sweet spot for getting into position for the counter trend which will likely last until sentiment on the dollar swings to the polar end of the spectrum, and the masses believe we need renewed intervention to weaken it again.
A low risk, high return tactic for trading this shift….
The dollar has put in a reversal at 72.69. If it puts in a right translated cycle, and corrects into a new daily cycle bottom that stays above 72.69, then a reversal off the correction should be bought with stops appx 1% below the bottom. Its low risk only if one chooses a position size that restricts their losses if the stop is hit.
A hypothetical portfolio of 100k (nice even number) that uses DUG to play the trend, and is willing to risk 2% of portfolio value on an initial position could buy appx 300 shares of DUG. My asumption being that DUG will be at appx 32.00 at a dialy cycle bottom on right translated cycle, and that the stop would be at appx 25.00 if the dollar drops 1% below 72.69.
300 shares x 7.00 (32-25) is a 2100dollar loss (2.1%). With this tactic, one controls for risk, and gets positioned at the beginning of what has high odds to be a multi-month move. Positions can be added to at daily cycle low reversals on the dollar, and breakouts following DCLs.
Hope this is helpful. Its how I’m playing it. The key is waiting for the setup to occur, and not try to guess what is happening before it happens.
I’m not defining this market turn as the beginning of a D-Wave, but reframing it as a sea change from dollar weak to dollar strong.
With that said, I do see the D-Wave as creating an epic oppty in the next few months, but I think the oppty to play a strong dollar is perhaps equal to playing an A-wave, and if one plays with capital preservation in mind (which I always do), one can make a nice chunk of change at the unwinding of positions that have relied on or benefitted from a weak dollar.
The key is being patient and waiting for a high probability setup to unfold, and to control risk with position size in case the trade goes against me.
The setup wasn’t there last week. Too much uncertainty. To limit risk, I have to be willing to give up a little ooomph at the very bottom, and wait for the trend change to be verified by seeing the daily cycle low hold on a correction. Anyway, giving up a little here is a pittance compared to what will unfold if the dollar puts in a bottom.
DG, EUO is the second position I plan to establish. Its a good way to diversify the play. And you make a good point re the long term trends in each.
Nat I plan to wait for a correction of the dollar after the cycle becomes right translated. I’ll buy the first daily swing reversal during the correction and put in my mental stops. If the cycle is right translated I’m going to assume that it s high odds play.
What are your thoughts on the recent chart damage action in gold (last 24 hours)? 1500 may be an “imaginary” barrier but it looks like today’s violent cross below it might be the final nail.
Its funny, just the other day it looked like gold had the strength to get easilly back to 1575. Today, 1575 looks to be a really long way there – I’m having trouble finding a possible way it can do that at this point.
ZSL and AGQ reset at 7:00AM the noon London Mark. They are tracking SI/SLV exactly.
Problem is that people are using the 4:00PM stock market cash close which is meaningless when it comes to compounding.
I have been tracking and trading them intra-day and they are within a few ticks of the calculated value. Not surprising since the PM trade is one of the hottest right now and any arb is quickly taken away by the HFT computers.
FWIW, the 7:00AM Wed to 7:00Thursday saw silver fall more than $6 (17%). AGQ and ZSL moved 34% in NAV during that 24 hour period. Unless the market is strongly trending these are not the be held overnight.
Aviat .. could you elaborate a little on ZSL. I noted this AMs NAV on it was 24.51$ .. so, “theoretically” if Bouillon was off 5% during the course of its trading day ( and I realize its London Spot ) it should theortically be up 10% correct. Which means hte next days NAV should be 24.51+2.45=26.96$ So “theoretically” it should open at 26.96$ and how it trades after depends on supply and demand of shares? Or am I totally off ?
I was listening to someone on the radio this morning making the point that the dollar index/euro would be bouncing in a range for the next 4-6 weeks..76-73..that would keep everyone in stocks, pm’s. etc..while grinding lower (market). I guess the volatility will be good for fast finger traders’
That 24 something mark was on 7:00AM Thursday. That was pretty much the low in silver and high in ZSL.
ZSL had gone up about 34% from the NAV on 7:00 Wednesday, just about the time the crash in silver started.
So if you had bought ZSL on 7:00 on Wednesday and sold it on 7:00 on Thursday you would have been up a cool 34%.
I really wish I was living in Europe instead of the West Coast. In the PM space often the overnight action seem to have the excess which marks the top and bottoms. If anything you should be at your desk by 5:00AM East Coast time. I think that is about the time that US traders also start becoming active.
This is true of ES also. You can often get the best prices over night.
aviat: But since SLV and AGQ and ZSL all close at the same time, shouldn’t they at least track each other? I get why the different closing times has them vary against the London fixings for silver itself, but…? Sorry if I am being dense, but what am I missing?
Oh wait…it just occurs to me. SLV probably keys off yet another closing time so they won’t even track each other. I wish these mutual fund companies would play nice together and coordinate this stuff. It all should work out in the wash though, I suppose.
Thanks Aviat. DG>> ZSL doesnt track SLV .. it tracks Silver Bouillon Spot, but you are right about the variation in trading times, it sure makes things complex. I am guessing though, f Silver goes down to some expeted levels, this should mirror AGQ as it picks up speed.
SLV is not levered. So the closing time does not matter. It will essentially track silver futures 24 hours.
ZSL/AGQ are levered with their base NAV reset every 24 hours. So the time is important.
If you take the 7AM price of SI/SLV as the base and then calculate the percentage change, you will find that ZSL/AGQ will be 2x that change based on their 7:00AM price (when the NAV is published). You can trade them after hours and it pretty much trades near NAV. Very easy to arb away anything significant since AGQ/ZSL just hold a bunch of long/short futures with the total nominal value equal to 2x the cash invested in them.
I agree with Fusby. I bought a July Dollar Index contract Wednesday. Not looking to make a killing, just to add to the cash reserve for the A wave. I think it’s a more conservative way to go than SLV or GLD puts where the premiums are huge and your timing has to be almost perfect.
The dollar index contract is 1000x the index so less risky than shorting the euro or cable due to the larger contract size there. Just hope margin requirements aren’t raised!
I still refuse to sell one of my silver miners. Great earnings announced yesterday and I think resource estimates are going to be vastly increased. I’ll just ride it down if necessary. It’s a long-term investment for me.
With all due respect to all the D-Wavers, it sure looks to me like we’re still in the C-Wave. I think that will become clear next week. I had what I thought was a decent post on this at the close yesterday (Thursday), but it appears to have gotten chewed up in the Blogger Mishap.
Big Picture: At the beginning of last week, money fled the “Risk On” Trade for the “Risk Off” Trade. This happened apparently because of perceived problems with Greece and rumors that Greece was going to ditch the Euro.
[My understanding is that gold/silver/miners can either be part of Risk On or Risk Off. Lately they’ve been part of Risk On.]
So, the problems is Euroloand is what caused the Euro to tank, which is what caused the dolllar to bounce.
At the same time, the Powers that Be raised silver margins 5 times in 2 weeks to slow the silver and gold locomotives, which also added to the fall of commodities.
But as I mentioned yesterday, it sure looks to me like the “Risk On” Trade has price basing action. It sure looks like gold/silver/miners are basing, as are stocks, commodities and the Euro.
And my charts say the dollar is still, at this point, a big head fake. For instance, a very-long-period momentum indicator I use shows that, so far, this dollar bounce isn’t even as strong as the bounce into mid-February.
Anyway, overall, it looks to me like the “Risk On” Trade is basing for a move higher, and that the “Risk Off” Trade is going to be the head fake, and is going to be lower.
And as for the “fundamental fact” that might bring the dollar down, apparently we will be over our federal debt limit on Monday, and the fight over that might turn the dollar.
Anyway, just wanted to mention these possibilities. With my usual caveat: I MAY BE ABSOLUTELY WRONG.
But I think we’re still in the C-Wave, and that gold will hit 1720 – 1750 by the end of June, with the miners breaking out and silver dragged to new highs.
I offer all these thoughts in the same spirit that Gary started his service: to help one another make money.
Again, I may be entirely wrong, but it looks to me like, next week, GLD will be closing the “147 gap” and then moving above this week’s “short-sellers’ covering bounce”. And then it will eventually keep moving above that.
P.S. I’m just asking people to keep on open mind on both scenarios, and to try to look at the charts with “unbiased eyes” (if it’s possible to do such a thing).
I guess what I’m saying overall, is I think Gary’s “pre-AGQ crash” analysis was — and still is — absolutely dead on. And, to me, the price action and my charts are confirming this.
Regarding a BB crash trade, either hold for 15 days or sell on any positive close so are we suppose to sell on open the next day? Just curious, no positions.
Nothing in my cycles understanding dictates that the 3yr dollar cycle must have occurred. Obviously, a new IT cycle has begun, but it by no means disqualifies another LT dollar cycle from occuring here. It would be within the 3yr cycle timing band.
HR I bought very small position in July SLV 25 puts. Much larger position in GLD 140 puts. Overall I will play 5% of portfolio. Leaving a little on the side for now if Gold goes higher or if it breaks the 1460 level, then I will add the rest. Whatever comes first.
The C-wave may not be over but there are red flags everywhere it could be. Not worth the risk to me, especially since being in cash is safe while the dollar is surging (gaining purchasing power).
So the D-Wave tries to keep people on so they lose money, and the C-Wave tries to kick people off so they don’t make as much money as they could. But then you have to worry that you’ve overstayed your welcome in the C-Wave, running the risk of seeing all your profits evaporate in a sudden and sharp reversal. It’s a wonder anyone makes money playing the waves.
jhnewman, I too tend to believe we are still in the C-wave. However, I am in all cash, waiting to see how things develop. My strategy, however, is not to go long gold, but to wait to see if gold will actually rise to new highs, and they buy out of the money Puts. If I am wrong, I am waiting for the A-wave :o)
I’m holding a small position in miners that are down slightly. I have never experienced a parabolic move in a commodity in which the producers did not outperform. For that reason, I do not think the C-Wave is completed.
Silver has held above its recent lows on declining volume. I expect the weakness in the stock market to continue exerting downward pressure on precious metals and producers. Once, the market bottoms we should see miners go parabolic.
For those who look at Ichimoku clouds, both Gold price and conversion line crossed below base line, indicating momentum. They are still above the cloud which is green. The last time this happened was January 4th and did not cross over above the base line until February 15th.
I am also inclined towards resumption of upward move in gold & silver..why..because gold has shown a relative strength in all the strength shown by dollar…if dollar really starts to go down or consolidate in downward fashion then gold should go up…now whether it will go to 1575 or to 1675 or to 1800 is anybody’s guess….what is missing is a strong up day from here… Poly coming to the dollar, i too think we have seen an IT low but would be surprized if this turn out to be a 3 yrs cycle low…
Quick refresh on the calls for this cycle’s top in silver from about a month back. Cycle is still in play, so we will wait and see…But here were the calls back then.
Me-55 Rob L-60.05 Vonda-60 Iveeatensilver-58.80 Bookguy-53 Clarkatoid-55 (he put 55-58, so I gave him the lower #) Haggerty-52 Moondoggie-56 Catbird-52.09 Gottahaveit-67 TJ Rand-53
And my handwriting was sloppy here, I can’t figure out what I wrote for this user name.
RQ or PQ?? They guessed 49.50. Looking good there.
It is best not to argue with the market. What looks like basing may turn out to be a bear flag. What you need to look at is whether higher prices are being sold. So far all rebounds have been sold.
In all the excitement of the run we forget that the bubbles happen because the hot money is willing to chase things higher and higher. Right now there is no incentive for the hot money to do that. The silver smackdown, has seriously hurt the willingness of punters to keep on pyramiding up like they were doing for the past few months. There is also the question of the end of QE. There is also the issue of seasonal weakness.
Do note that the fundamentals that drive the move have not changed. Perhaps they have even worsened as inflation is rising and the economic news is not all that great. But price movements in the short term do not follow fundamentals; in the longer time frame they do.
For those who follow E Wave: The first move down was in 5 waves: (1) 49.75 – 44.61 (2) 44.61 – 49.47 (3) 49.47 – 33.15 (4) 33.15 – 39.46 (5) 39.46 – 32.31
The corrective wave up should retrace to one of the following: 38.2% Fib 39.09 50% Fib 41.17 61.8% Fib 43.24
This should be the last chance to exit longs before the plunge into the 20s. I would’nt advise trying to catch this bounce – just use it to exit longs…..
I agree that with jhnewman that the c wave is not over…Gary was right that we should see a retrace to 41.33 in silver before downturn. Believe the charts are being driven by the BOTS programmed to misrepresent. It would be easy to program…if you intention was to mislead.
Holding postions till low 40’s in silver as predicted…time will tell.
Flaunt, Let me remind you that we were all making huge money. We just got caught in a very unusual set of circumstances. No gap down on that Monday and we all would have converted to gold and just taken a very miner draw down.
Not that the unexpected can’t happen but let’s be realistic. Silver is broken, it’s not coming back.
The dollar has put in an intermediate cycle low. Even if it isn’t the three year cycle low it’s certainly an intermediate low and it’s going to rally for at least 6-8 weeks. And if it is the three year cycle low then it should rally for a year or more.
Gold has shown very little ability to resist the dollar other than a brief oversold bounce. If the dollar is up gold is down.
If the C-wave was intact then miners would be rallying. They have dropped below the 200 DMA. Many of the majors are perilously close to seeing the 50 DMA move below the 200. I think we all know this would not be the case if gold had another leg up.
Now gold has fallen back below $1500.
At 15 weeks it’s apparent gold and the rest of the sector has begun an intermediate degree correction.
If gold is going to make a higher high it isn’t going to be during this intermediate cycle. It will have to be during the next cycle which would require the dollar to have another leg down in the fall.
Folks you need to accept that you are denial and just can’t bring yourself to take the loss. At some point the market will force you to face reality and when that happens it’s going to be a lot more expensive.
At this point there are just way too many negatives stacking up to sit and hope for a low probability outcome to save you from a bad trade.
I’ve said it before if the alligator has your leg it’s always better to sacrifice the leg before he takes the whole body under.
i was looking to go long the dollar. Did i miss the entry? should i had bought the swing, or the tag of the 50 MA? did i just miss the boat? you have said it would be a nice safe play, but were is the playground entry
May I ask you, Gary, how you plan to advise making money for the year when the A-wave ceases and before the C-wave begins? Have you any ideas for this time period?
I do but I think everyone needs to resign themselves to the fact that once the A-wave is over gains are going to be very meager for a while and we could just end up spinning our wheels till the next C-wave really catches fire.
Gary, or anyone, Bear with me but I don’t understand that in a rising dollar situation, why would the general market decline? Is it not perceived as a stengthening economy situation?
I really doubt we are going to see the next C-wave for at least a year or more. A move as massive as what gold went through over the last two years will need to consolidate for quite a while.
MrMiyagi, I’m scratching my head here wondering how I will make money. I’m thinking of NYSE:SRTY. My understanding is that the stock market is due a nose dive beginning sometime in June due to the ending of QEII
You did say before that the energy sector is impaired and it was a good short candidate during the D wave. Will you be following the cycles of crude oil soon on a regular basis throughout the D wave?
Gary, Would we not experience a C Wave around the same time next year? A wave through late summer early fall, B wave down consolidate and then another C wave in the late winter to spring again?
It would be nice but I think gold will probably have to consolidate for at least a year after the B-wave before it will be ready for the next big move up.
An excellent article. Numerous long term economic indicators are predicting slowing growth/deflation in the second half of 2011. Goes along well with Gary’s cycle analysis.
I’m amazed that some folks still think we’re in a C wave. Silver have already corrected more than 33% from the peak to the recent lows and Gold about 7.5%. I see folks throwing in the towel at price points where the leg down might be more than 50% done. For example, 28 for Silver and 1460 for Gold. At 28, Silver would probably be below the 200dma and 44% off the peak. If you’re a believer of this commodity bull, silver at 28 and below the 200 dma is a BUY not a sell.
What i’m trying to say is, by the time everyone is absolutely convinced that gold & silver is in the D Wave it might technically be starting to bottom out.
eamonn – if you are thinking of a late June stockmarket tank, take a look at TZA, EDZ, or FAZ. All are inverse funds that seek returns of 300% of various sectors of the stock market. TZA is small cap inverse fund that i like the most right now. small caps always seem to outperform the general market in bulls, but way underperform in bears
Again on Fukushima and the nuclear damage that will keep on coming.
I said it was worse than was reported. Here’s another report. This ratifies it is worse than was reported.
And what’s coming next will be even worse. The ocean is poisoned. It will get worse over time. The people have been exposed. Wait til the next major windstorm and rainstorm. Microscopic particles of this nuke material will cause cancer and will kill ALL living things exposed to them.
Cute, eh?
“TOKYO/NEW YORK, May 12 (Reuters) – One of the reactors at Japan’s crippled Fukushima nuclear power plant has a hole in its main vessel following a meltdown of fuel rods, leading to a leakage of radioactive water, its operator said on Thursday.
The disclosure by Tokyo Electric Power Co (TEPCO) (9501.T) is the latest indication that the disaster was worse than previously disclosed, making it more difficult to stabilize the plant.”
What’s up Eamonn? Something tells me (Gary’s posts?) to wait for that 1460 point in gold before you move into a 3x inverse ETF… Those ETF’s bleed you of your money when they go down or sideways. Also, remember you’ll be going against a bull. Take proper care to protect your Euros for that A wave dude! We all need to do well in the A.
summer is almost always a weak stock season and paired with a rebounding dollar, i am expecting a roll over. but like KAL said, maybe best to wait for that confirmation. those are just a few ETF’s i’m keeping my eye on and thought you may be interested.
Hey Eamonn. How’s it going in Ireland? I’m totally with you, I’m making some D wave plans myself. Picked up about 3% of my portfolio’s worth of July SLV puts. That’s all I’m gonna put out there, and I’m in EUO and UUP for the dollar play. I will probably put a % in an inverse gold ETF and an inverse S&P-ish ETF when the 1460 dam breaks. I don’t think I want to mess with an inverse oil ETF. Energy seems more dangerous and unpredictable to me… For instance, let’s say oil is tanking as part of the D wave. Then, there is unrest in Nigeria or Venezuela or some other place, and the oil price goes up and you lose $. Doesn’t sound fun to me…
EricH said… What i’m trying to say is, by the time everyone is absolutely convinced that gold & silver is in the D Wave it might technically be starting to bottom out.
MAY 13, 2011 8:07 PM
EricH, That is the whole point of D wave action. To shake people off who absolutely can’t believe that the C Wave ended. You will consistently see them here. Once they are removed from the picture (money and shares gone), we can rinse and repeat, but not before.
I would bet here and now that at the D Wave bottom there will be few posts on this blog, other than trolls telling Gary he is crazy if he thinks gold can ever go up again.
Gary said… Ya know there are times when the right thing to do is to do nothing.
In my post early this week, I termed them “action junkies”.
Their dilemma: They don’t have other income. They “need” the build of their portfolios from their market gambles. So, they are by definition caught in a desperate need to win, without a high probability outcome known to them.
Most of those folks will blow out their accounts.
I speak from experience of some decades past. My advice: If you need to get the money from this effort, stop. Flat out, stop. Spend the money on a vacation or a trading psychologist. Just stop placing your bets in the market.
Get a life. Join GA. Focus on volunteering or collecting trash or risk taking on bungee cords. Just stop playing the desperate, needful king without a dominion.
As a buddy said to my graduating classmates back in xx, “What I’ve learned is worth twice the price.” Get out. Stand back. Come back later; the game will always be here.
“I’m scratching my head here wondering how I will make money. I’m thinking of NYSE:SRTY.”
Don’t forget Direxion Small Cap Bear 3X Shares (ETF) NYSE:TZA which tracks NYSE:SRTY and has been around longer. Be careful with either, I’ve lost my shirt with TZA. Both of these stocks will bleed you dry in short order.
You might also consider NYSE:SKF. I’ve made money with this stock before and works better in a choppy down market.
Brian: “I would bet here and now that at the D Wave bottom there will be few posts on this blog, other than trolls telling Gary he is crazy if he thinks gold can ever go up again.”
1981 to 2001, 20 years to the bottom, last time, a drop of 80-90%. 4 years to go up 100% from the bottom. 4-5 years more to double again. 2 years to rise 50% to the high.
Many will be dead or engaged in other activities before this game plays again.
The backside of the parabola is steep and terminates every gambler, bar none. Only those who bought, now lost, and hold for a helluva long time will see their money back and a profit to boot. That’s well under 5% of those here.
Hmmm….combine the above contrarian indicator with some of the folks (Poly, Jhnewman) talking about a possible resumption in gold – almost tempted to try some limited Gold calls next week.
But I do agree with rest that risk is just too high- especially if we have a broad market sell off (?):
1) “Sell in May, go away”
2) Recall the RUPPERT guy saying that only in Q2 will impact of the Japan Earthquake will be reflected finally in earnings and will cause market selloff.
Just add INDEXSP:.INX (S&P) and/or INDEXDJX:.DJI (Dow Jones) to the graph and scroll back to 2007. You’ll see how the Dow Jones U.S. Financials started crashing before either the S&P or the Dow.
things are always simple till one makes profit…its that one moment always which throw the curveball and make you fall hard…if u think c wave is/was non-complex then may i ask you what ur final tally on profit in % terms (including the last curve ball)…and if you feel the last curve ball is non complex then u need to look in mirror ask the question to ur self
i m not saying that c wave is still on…what i m saying is i am biased towards the c wave because gold chart is sill no broken and given the tendancy of dollar to consolidate at the 3 yr cycle low or if this is not 3 yr cycle low then anyway the current IT cycle will roll over as we already have jumped 3.5 points from bottom
may be what happened in 2006 is happening now but on wider scale on price & time axis…If gold can form a convincing swing low here (no gurantee) then there is very good chance of an good upside potential and then many buyers might be left behind and will chase in the ending move..
u only said once that human mind has tendency to project the past moves into the future…what is that differentiate your call on d wave and not projecting silver price action slaughter…can u justify your d wave call by showing me it on gold chart
HR I’m really am not a timer. I just waited for a day where the bull fought back and the puts I wanted would be down in price. In my head I think the trend is down for now, so I just bought puts far enough out(July) where I think I would be in the money by the time we get close to expiration. If Gold goes down to the 1300 level that should put GLD at roughly 128, so my 140’s should be about 10 dollars each. That’s one of the reasons I still have a little cash on the side for this trade, if it decides to move against me at first I will buy more on the cheap. But if it(Gold) starts to fall like a rock at least I have some skin in the game
Don’t let the Hulbert poll fool you, the public sentiment opinion poll for gold is still on the high side of neutral. No intermediate decline has ever bottomed until sentiment reached excessive bearish readings and a D-wave will reach an excessive bearish level, bounce, and then dive again at least once and sometimes twice.
I think we all recognize that the dollar has begun an intermediate degree rally. Those have a tendency to go at least to the 200 DMA. Gold has shown little to no ability to fight a rising dollar other than a two day oversold bounce.
We’ve got weekly swings in silver and miners and a bearish engulfing candle on the weekly gold chart going on week 16.
If this was going to turn into the parabolic move gold would be surging higher by now not dropping back below $1500. And the miners would be leading, not trading below the 200 DMA.
There is some hope that this is only an intermediate degree correction and that the true top might happen in the fall during the next intermediate cycle. It would require QE3 though.
At this point there is little doubt gold has begun the move down into, at the very least, an intermediate degree correction. If one wants to hang on hoping for QE3 and another intermediate cycle up they will do so knowing that the risk is very great that this intermediate correction will turn into a D-wave.
Doesn’t seem worth the risk of holding hoping for only an intermediate degree correction. We usually try to avoid those anyway, with at least part of our capital. And this late in the game I would avoid it with all my capital because of the D-wave risk.
Regarding your new portfolio, as written on the bottom of your w/e report: is that the watered down version? and if it is, may I ask how many times that exposure is your real personal portfolio?
Hey, Bruce. From my perspective, I am surprised that Gary even mentioned shorting the D wave. He was very adamant recently about holding cash during this period in preparation for the A wave so we don’t mess up our capital positions. I have a feeling his portfolio is a “bit” more aggressive but we won’t be privy to it, so he won’t get flak about being blamed for our mistakes going forward.
I am cool with my EUO/UUP setup for now. Making a little off deflation is nice (or am I?), waiting for the “for sure” D wave announcement and avoiding settlement issues with my IRAs. I’ve got small put positions but that’s all for aggressiveness for now. Waiting for those cycle lows to broken on gold and the S&P in this freaky market to give us more reliable indicators seems prudent considering our recent emotional losses… Any thoughts?
Gary, You speak of being “done with silver” and if I understand from your interview, you don’t think it is “coming back” for years. I’d be interested to hear in more detail how you think gold will rise and leave silver behind. Doesn’t seem to add up to me. Do you have a GSR number in mind? Thanx
Silver is not done for years, IMO. A smashing like we’ve seen does take time to recoup, but don’t forget the monster run +300% in just one year, either.
Do not underestimate the bull even if it’s been temporarily broken. I don’t expect the metal bull to rocket higher yet, but they have far more upside than down from here.
Not, To begin with this is a very small test trade to see if the bear has returned. I won’t put real money behind this trade until I have confirmation. So forget about the double inverse funds.
Pull up a long term chart of gold and look at long the consolidation was before the 08 C-wave top was broken.
Gold and silver both will have a long period ahead of them before the next breakout IMO. The only difference is that gold will hold up much better during the D-wave.
Silver should get completely hammered during the D-wave.
Interesting historical silver chart. I noticed there was almost a double top after the parabolic rise in 1974.
Suggests to me, if anything like 1974 were to repeat again, that people buying puts here on SLV are certain to lose their capital. On the other hand, people who take long positions at higher prices will likely also lose unless they are very nimble.
Looking at the chart confirms to me Gary’s approach of staying away from silver for the rest of the year makes sense.
Report says if the miners take out the Japan lows, the D wave is confirmed.
They already did take out the Japan lows which was in March. They are about to take out the intermediate cycle starting point in Jan if that’s what you meant?
I don’t necessarily think that this silver run has to match any prior run. It just is what it is.
Do I think silver has topped for good? No I think that’s still a ways down the road. But I do think this parabola is done and will be done for at least a couple of years.
Silver is going to need a long consolidation period for people to forget this and to get it into strong hands again. That’s just going to take time.
Ultimately this bull will end like all secular bulls do with a massive bubble. Every Tom, Dick and Harry will be buying gold and silver. The Dow:gold ratio will drop to 1:1 and we will see a year of unbelievable gains in the entire sector not just silver.
Yours is counter to some of the mainstream buy and hold guys, like Sinclair and Dines.
But I’ve been on their ferris wheel and I don’t like the drawdowns.
When gold dropped from 500 to 350 and from 1000 to 650, those were painful.
Hammy thinks I am nuts for liquidating the physical positions I’ve held for 10 and 30 yrs. But I’m glad I left gold, and due to the way I hold silver, I’ll be shorting the futures or shorting SIL, so I can lock in profits while I distribute the pile of fabricated physical which I sure hope won’t get melted. Silver is what’s called “ephemera” in any society. In the old days, the royalty would melt their “plate” to use as money during war times. That’s why the silversmiths were so busy all the time.
But I wish to return to substantial PM positions, later, after the newbies and weak hands let go, if just out of boredom, but most probably out of continuing defeat as the market slips lower.
In 1981, the drop was 50 to 36 range for a while (which left many in hope of a bounce back), a creeping decline into the low 30’s and then it declined into the mid 20’s and low 20’s. When that happened, my collecting stopped. Few who still held the plate would sell.
What you’ve just said is that this is not the front side of a daily or weekly parabola, but instead, a parabola on its own, which means the backside will be one of continuing defeat for those who hope.
If we see a similarity of defeat, we would see within the next 60 days a drop down to the mid and low 20’s. I’ll be hedged this week.
Slumdog, I do expect a much bigger parabola at the final bull market top but as of right now I’m pretty certain the D-wave has begun.
The only thing that I think could abort it would be another round of QE.
Bernanke has been very clear that QE would end in June though, not to mention I don’t think it’s politically feasible at this time.
Neither QE1 nor 2 accomplished their goal of suppressing rates or creating jobs. It’s going to be pretty hard to justify another round when the first two clearly didn’t work.
At this point I think it would take a crisis or at least a semi crisis to justify another round of QE.
FWIW my local bullion dealer has a sign in the window stating that he is out of silver maple leafs and silver 1oz rounds. I haven’t seen that sign in his window for about a month or so.
“Ultimately this bull will end like all secular bulls do with a massive bubble. Every Tom, Dick and Harry will be buying gold and silver. The Dow:gold ratio will drop to 1:1 and we will see a year of unbelievable gains in the entire sector not just silver.’
If you’ll stick around for that one last hurrah (in fact, just the next one!), I’ll be a subscriber.
I trust your ability to have seen three times the turn around windows, two on the way up, and this landing area, on the way down.
Steven is sour grapes, and understandably so. But he ignored your conservative approach and imo didn’t manage his portfolio well.
How could he not have set stops, irrespective of what you were thinking or saying, when he had such a large profit %?
A trailing stop at 40 would have been reasonable, given he was looking at exiting within hours.
And with his position, the fact that he did not have an open futures account is CRAZY. He couldn’t trade 22.5×5, even if just to place trailing stop loss orders.
Steven is smart. But he must struggle with the superior/inferior issue and individuation. This experience will change him. It certainly changed a bunch of posters here.
You’re doing a great job.
So, btw, is Hammy who backed away from both gold and silver around the same time Poly first left the trade. Hammy never re-entered until recently, and now trying to scalp a few points. I
I like your short choices. But these are long term plays, many INT cycles out right? being the bear has many months to move down into the equities 4 yr low.
Will you ride these positions and just go into the A wave with 15% less or flip?
I may increase the position size if the bear is confirmed but most of the portfolio will be allocated to the A-wave because the gains will be much larger.
I will attempt to exit shorts at intermediate cycle lows also in order to avoid the violent counter trend rallies in bear markets.
The main thing that precipitated this dollar bounce was the big fall in the Euro. That was mainly caused, as I understand it, by worries that Greece was in trouble again, and rumors that Greece might even “leave the Euro”.
Currency expert Ashraf Laidi is pointing out that European officials (finance ministers) are getting together this weekend (actually, I believe Monday night), to discuss restructuring Greek debt.
Here’s part of Ashraf’s comment. Notice particularly paragraph 2 and the end of that paragraph:
**********
Intraday Market Thoughts
Dollar and Yen Finish Strong, Euro Plunges
May 14, 2011 02:58 ET : The dollar and yen were easily the top forex performers on Friday while the euro limped to a second consecutive weekly drop despite better-than-expected GDP numbers. Risk aversion was the dominant theme in the market as European officials struggled to find solutions for Greece.
In European trading, the euro gained nearly 150 pips on strong GDP data but worries about Greece reversed that trade, sending EUR/USD down nearly 250 pips from its highs. Die Welt reported on a rift among European policymakers on how to deal with Greece’s debt burden. The European Commission, IMF and Germany are said to back a debt extension with the ECB and France opposed. Meetings are scheduled for the weekend and uncertainty led to position squaring.
Aside from continuing eurozone debt fears, there was no catalyst for the risk off environment. This suggests positioning and seasonality were drivers in the move that sent stocks about 1% lower. Economic data was benign to positive. US CPI was in line with the consensus at 3.1% y/y and core at 1.3%. The U of Michigan sentiment survey rose to 72.4 from 69.8 (exp: 70.0). Inflation expectations fell to 4.4% from 4.6%………
**********
Germany, as the Strong Woman of Europe (Angela Merkel), usually wins these battles. So if Germany wants a debt extension for Greece, it’s likely to happen.
And if it does happen, that could possibly send the Euro back up, and, therefore, the dollar back down.
So, news on this could maybe hit on Sunday before the markets open, or on Monday, or Monday night (which is when I believe the meeting actually is taking place).
Gary, for the “C” wave it appeared asset selection was extremely important. Silver metal was pretty much it, at least for the blow off phase. How will this effect our “A” wave selection. Could only the one sector you identified be it?
RB, One can play gold or miners but I think the gains will be better in the undervalued sector because I think liquidity will find it’s way into that area just like it did out of the 08 bottom.
Actually the miners increased 140% during golds C-wave. Granted not as much as I would have liked but they definitely rallied nicely. Much better than semis, tech, energy or virtually any other sector.
If the US stops the QE (+ not raises the debt ceiling) they’re going to default. So either more dilution of the dollar or default. With the exploding debt and reduced trust from bondholders and creditors, the luxury of ‘business as usual’ don’t seem to exist. Both of the above alternatives should be beneficient for gold.
I remember Eric King whining about how the fundamentals couldn’t possibly support gold below $700 during the crash.
The fact is the market can do any damn thing it wants fundamentals or no fundamentals. That’s why I use cycles analysis because it gives me a timing band for when to expect something to change and they do change no matter what the fundamentals are saying.
There is no fundamental reason for the dollar to rally but the three year cycle low says it will do it anyway and sure enough we now have a very powerful rally in progress in the dollar index.
Gary: while buying @ the bottom of the D wave will be tough given the annihilation in Gold, Silver and miners, how difficult will it be holding during the A wave?
In the A wave, do you see Gold rising with a rising $$$?
And roughly how long will the A wave last?
Lastly, since you are looking @the A wave retracing almost the entire D wave, am guessing you are looking at the retrace for Gold and expect Silver to lag massively and not make it anywhere near 50?
Many thanks and here’s to recouping most / all the lost profits in Silver, during the A wave!
Currently sitting in cash. I’ll play the rally in the dollar once it has given confirmation through a right translated daily cycle.
Once it does this, I will buy the swing low of the first correction in the dollar. By buy, I mean DUG, EUO, SH, maybe some others as sectors show their relative weakness.
Looks like Gary has laid out a couple good choices for shorting. XLE is another target for me. I looked into semiconductor puts but the volume isn’t there. I like Gary’s choices and I like Fubsy’s play in DUG. I’m far from done researching. I plan to buy something before Wal Mart reports on Tues. I think they will beat (gut feeling) helped by a weak dollar. Thats when I want to have a position.
I spent 30 days hiking Nepal, did a small “trekking” peak and spend two weeks between 14k and 18k ft. Great time, I’m sure Gary would appreciate it, though I hear the “coca-cola” trail will be paved by 2020, I can’t imagine that. I went there at 20 year old in 1998.
Does anyone know of a tool where you can enter in forward daily closing prices of gold/silver, etc. to be able to see the resulting curvature and trends of the RSI, MACD, SAR, etc?
The metals are now in the timing band for an intermediate degree correction. Silver and miners have both confirmed this. Gold will do so this week if it trades below $1462.
HotRod, call Trade Station, an 800 number, and speak to one of their sales people. Don’t settle for one of their regular guys. They have a tech support desk. Get to those guys/gals. They will be familiar with the many options they’ve built in.
For those who like to handicap the economy, thus the SPX, QQQ, etc. this is going to be an important earnings week. Obviously probably best not to play the earnings themselves but the reaction by Mr. Market will be telling: http://tinyurl.com/3kmw33j
Gary, I am thrilled you have mentioned some ways to stay “in the game” during the D wave in your report, but are your recommendation less “risky” in your opinion than buying puts on slv? Given your strong belief that silver was heading south, it just seems like the obvious play is shorting slv.
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free spread trade short sept silver long aug gold from the venerable moore research:
http://www.mrci.com/client/spreads/strat/s3549.php
there is a seasonal long nowto july in bond can find it here:
http://twitter.com/mooreresearch
scotia very big in precious metals, they have comments posted by late afternoons mon/fri here:
http://www.scotiamocatta.com/scpt/scotiamocatta/prec/pm_daily.pdf
Morning all.
US$ index almost hit 76 today..
Silver +0.8 %
AGQ. +3.7%
ZSL. -8.0%
I’m so confused. Glad to be on the sidelines.
Maybe it’s Roadrunner.
A great article about QE2 and current fiscal policy.
It covers a lot, but hopefully it will clear all the misunderstandings of QE2, inflation etc…
http://www.lewrockwell.com/paul/paul740.html
Gary, I listen your interview. Before you mention that Silver could hit 100 level during the next C wave.In the interview you had mention that you will not touch Silver 2 or 3 years= Somehow I dont make connection.How come Silver could hit 100 during next C wave,but at the same time you dont want to buy it 2-3 years?
I think the problem with ZSL is that it was overbid during the panic. It should have rallied about 60% but instead it was bid up 88%.
It’s probably just correcting the mis pricing.
Ivan,
Look at how long it’s been since the last C-wave top and you will figure it out.
Nice interview Gary. So far good on the SPY. 🙂
Crazy crazy wild swings..
Hey Gang,
I was in the Trinity Alps yesterday, took a little toke of one of my favorite herbs, and had a little epipheny regarding the markets, and a low risk, high reward way to play what looks like what is turning out to be a major trend reversal in the dollar.
So, if you’re interested in the ramblings of an infrequent stoner, read on…
Here it is. As most of us here agree, the dollar is trying to put in a bottom. Since almost all asset classes have been driven by a weak dollar over the past two years, this is a significant event, and offers a sweet spot for getting into position for the counter trend which will likely last until sentiment on the dollar swings to the polar end of the spectrum, and the masses believe we need renewed intervention to weaken it again.
A low risk, high return tactic for trading this shift….
The dollar has put in a reversal at 72.69. If it puts in a right translated cycle, and corrects into a new daily cycle bottom that stays above 72.69, then a reversal off the correction should be bought with stops appx 1% below the bottom. Its low risk only if one chooses a position size that restricts their losses if the stop is hit.
A hypothetical portfolio of 100k (nice even number) that uses DUG to play the trend, and is willing to risk 2% of portfolio value on an initial position could buy appx 300 shares of DUG. My asumption being that DUG will be at appx 32.00 at a dialy cycle bottom on right translated cycle, and that the stop would be at appx 25.00 if the dollar drops 1% below 72.69.
300 shares x 7.00 (32-25) is a 2100dollar loss (2.1%). With this tactic, one controls for risk, and gets positioned at the beginning of what has high odds to be a multi-month move. Positions can be added to at daily cycle low reversals on the dollar, and breakouts following DCLs.
Hope this is helpful. Its how I’m playing it. The key is waiting for the setup to occur, and not try to guess what is happening before it happens.
f
do anybody know what the 2008 top was for gold (right translated or left translated)
Fusby,
You should have played this last week.
BTW,
I’m not defining this market turn as the beginning of a D-Wave, but reframing it as a sea change from dollar weak to dollar strong.
With that said, I do see the D-Wave as creating an epic oppty in the next few months, but I think the oppty to play a strong dollar is perhaps equal to playing an A-wave, and if one plays with capital preservation in mind (which I always do), one can make a nice chunk of change at the unwinding of positions that have relied on or benefitted from a weak dollar.
The key is being patient and waiting for a high probability setup to unfold, and to control risk with position size in case the trade goes against me.
f
Damn Fubs,
Maybe I should have stayed on the weed. 🙂
Fubsy: Yep, that’s just how I plan to play it, but with EUO not DUG, since we will always need oil and the euro will not exist in five years IMO.
Interesting idea fubsy…so will you wait for the next confirmed dollar cycle low as your entry or a test of 72.69 and perhaps take a small draw down?
Miyagi, T
The setup wasn’t there last week. Too much uncertainty. To limit risk, I have to be willing to give up a little ooomph at the very bottom, and wait for the trend change to be verified by seeing the daily cycle low hold on a correction. Anyway, giving up a little here is a pittance compared to what will unfold if the dollar puts in a bottom.
f
DG,
EUO is the second position I plan to establish. Its a good way to diversify the play. And you make a good point re the long term trends in each.
Nat
I plan to wait for a correction of the dollar after the cycle becomes right translated. I’ll buy the first daily swing reversal during the correction and put in my mental stops. If the cycle is right translated I’m going to assume that it s high odds play.
f
All,
Is anyone else seeing a descending wedge in gold?
Gary,
What are your thoughts on the recent chart damage action in gold (last 24 hours)? 1500 may be an “imaginary” barrier but it looks like today’s violent cross below it might be the final nail.
Its funny, just the other day it looked like gold had the strength to get easilly back to 1575. Today, 1575 looks to be a really long way there – I’m having trouble finding a possible way it can do that at this point.
Disclaimer – All in cash.
Gary etc:
ZSL and AGQ reset at 7:00AM the noon London Mark. They are tracking SI/SLV exactly.
Problem is that people are using the 4:00PM stock market cash close which is meaningless when it comes to compounding.
I have been tracking and trading them intra-day and they are within a few ticks of the calculated value. Not surprising since the PM trade is one of the hottest right now and any arb is quickly taken away by the HFT computers.
FWIW, the 7:00AM Wed to 7:00Thursday saw silver fall more than $6 (17%). AGQ and ZSL moved 34% in NAV during that 24 hour period. Unless the market is strongly trending these are not the be held overnight.
I think this is going to be a very complex D-wave that is going to do everything it can to keep people on for the full ride down.
I wonder what the longest timeframe was for a D-wave.
“I think this is going to be a very complex D-wave that is going to do everything it can to keep people on for the full ride down.”
Isn’t that one of the beauties of D Wave? C Wave on the other hand tries to keep everyone out.
Aviat .. could you elaborate a little on ZSL. I noted this AMs NAV on it was 24.51$ .. so, “theoretically” if Bouillon was off 5% during the course of its trading day ( and I realize its London Spot ) it should theortically be up 10% correct. Which means hte next days NAV should be 24.51+2.45=26.96$ So “theoretically” it should open at 26.96$ and how it trades after depends on supply and demand of shares? Or am I totally off ?
Gary;
I was listening to someone on the radio this morning making the point that the dollar index/euro would be bouncing in a range for the next 4-6 weeks..76-73..that would keep everyone in stocks, pm’s. etc..while grinding lower (market). I guess the volatility will be good for fast finger traders’
Peter:
That 24 something mark was on 7:00AM Thursday. That was pretty much the low in silver and high in ZSL.
ZSL had gone up about 34% from the NAV on 7:00 Wednesday, just about the time the crash in silver started.
So if you had bought ZSL on 7:00 on Wednesday and sold it on 7:00 on Thursday you would have been up a cool 34%.
I really wish I was living in Europe instead of the West Coast. In the PM space often the overnight action seem to have the excess which marks the top and bottoms. If anything you should be at your desk by 5:00AM East Coast time. I think that is about the time that US traders also start becoming active.
This is true of ES also. You can often get the best prices over night.
Worth listening to for background: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/5/12_James_Turk.html
aviat: But since SLV and AGQ and ZSL all close at the same time, shouldn’t they at least track each other? I get why the different closing times has them vary against the London fixings for silver itself, but…? Sorry if I am being dense, but what am I missing?
Oh wait…it just occurs to me. SLV probably keys off yet another closing time so they won’t even track each other. I wish these mutual fund companies would play nice together and coordinate this stuff. It all should work out in the wash though, I suppose.
Thanks Aviat. DG>> ZSL doesnt track SLV .. it tracks Silver Bouillon Spot, but you are right about the variation in trading times, it sure makes things complex. I am guessing though, f Silver goes down to some expeted levels, this should mirror AGQ as it picks up speed.
Nice to see everyone.
Bought some July GLD puts at 140 at the open.
SLV is not levered. So the closing time does not matter. It will essentially track silver futures 24 hours.
ZSL/AGQ are levered with their base NAV reset every 24 hours. So the time is important.
If you take the 7AM price of SI/SLV as the base and then calculate the percentage change, you will find that ZSL/AGQ will be 2x that change based on their 7:00AM price (when the NAV is published). You can trade them after hours and it pretty much trades near NAV. Very easy to arb away anything significant since AGQ/ZSL just hold a bunch of long/short futures with the total nominal value equal to 2x the cash invested in them.
https://accounts.profunds.com/etfdata/PFA_DailyHoldingsSilver_web.csv
Yesterday at 10:48 PST
AGQ -3.4%
ZSL -7.2%
silver +0.5%
Lot of boo hooing on the yahoo ZSL measage boards
is anyone else considering TZA for the summer ahead? don’t stocks typically head south during the summer?
I agree with Fusby. I bought a July Dollar Index contract Wednesday. Not looking to make a killing, just to add to the cash reserve for the A wave. I think it’s a more conservative way to go than SLV or GLD puts where the premiums are huge and your timing has to be almost perfect.
The dollar index contract is 1000x the index so less risky than shorting the euro or cable due to the larger contract size there. Just hope margin requirements aren’t raised!
I still refuse to sell one of my silver miners. Great earnings announced yesterday and I think resource estimates are going to be vastly increased. I’ll just ride it down if necessary. It’s a long-term investment for me.
Just drew the fib levels twice. Using 1. the 1575 top and the 5/5 bottom at 1460 and 2. 5/11 top at 1527 and 5/12 bottom at 1477.
Interesting similarity.
Both 23.6 retracement lines are identical at 1488.
Haggerty,
You got some cahones over there.
What are all the put positions you have in play now. I saw you did SLV on the close yesterday.
Thanks.
Gary,
What was the Dollar 3yr low before the 2005 low, was it that 2002 or 2001 low?
Thanks.
With all due respect to all the D-Wavers, it sure looks to me like we’re still in the C-Wave. I think that will become clear next week. I had what I thought was a decent post on this at the close yesterday (Thursday), but it appears to have gotten chewed up in the Blogger Mishap.
Big Picture: At the beginning of last week, money fled the “Risk On” Trade for the “Risk Off” Trade. This happened apparently because of perceived problems with Greece and rumors that Greece was going to ditch the Euro.
“Risk On”: Euro, stocks, commodities, gold/silver/miners.
“Risk Off”: dollar, Treasuries.
[My understanding is that gold/silver/miners can either be part of Risk On or Risk Off. Lately they’ve been part of Risk On.]
So, the problems is Euroloand is what caused the Euro to tank, which is what caused the dolllar to bounce.
At the same time, the Powers that Be raised silver margins 5 times in 2 weeks to slow the silver and gold locomotives, which also added to the fall of commodities.
But as I mentioned yesterday, it sure looks to me like the “Risk On” Trade has price basing action. It sure looks like gold/silver/miners are basing, as are stocks, commodities and the Euro.
And my charts say the dollar is still, at this point, a big head fake. For instance, a very-long-period momentum indicator I use shows that, so far, this dollar bounce isn’t even as strong as the bounce into mid-February.
Anyway, overall, it looks to me like the “Risk On” Trade is basing for a move higher, and that the “Risk Off” Trade is going to be the head fake, and is going to be lower.
And as for the “fundamental fact” that might bring the dollar down, apparently we will be over our federal debt limit on Monday, and the fight over that might turn the dollar.
Anyway, just wanted to mention these possibilities. With my usual caveat: I MAY BE ABSOLUTELY WRONG.
But I think we’re still in the C-Wave, and that gold will hit 1720 – 1750 by the end of June, with the miners breaking out and silver dragged to new highs.
I offer all these thoughts in the same spirit that Gary started his service: to help one another make money.
Again, I may be entirely wrong, but it looks to me like, next week, GLD will be closing the “147 gap” and then moving above this week’s “short-sellers’ covering bounce”. And then it will eventually keep moving above that.
All the best to everyone. I gotta run.
At this point, everything is 50-50.
P.S. I’m just asking people to keep on open mind on both scenarios, and to try to look at the charts with “unbiased eyes” (if it’s possible to do such a thing).
I guess what I’m saying overall, is I think Gary’s “pre-AGQ crash” analysis was — and still is — absolutely dead on. And, to me, the price action and my charts are confirming this.
But: I may be wrong.
Regarding a BB crash trade, either hold for 15 days or sell on any positive close so are we suppose to sell on open the next day? Just curious, no positions.
Nothing in my cycles understanding dictates that the 3yr dollar cycle must have occurred. Obviously, a new IT cycle has begun, but it by no means disqualifies another LT dollar cycle from occuring here. It would be within the 3yr cycle timing band.
Chartists – Is there a way to use StockCharts.com to track the relationship between price and the value of its moving average?
So that it will visually display (for example) that the price of $GOLD is 1.20% of its 200DMA?
jhnewman,
Do you mind shooting me an email? It’s in my profile. Cheers.
HR
I bought very small position in July SLV 25 puts. Much larger position in GLD 140 puts. Overall I will play 5% of portfolio. Leaving a little on the side for now if Gold goes higher or if it breaks the 1460 level, then I will add the rest. Whatever comes first.
The C-wave may not be over but there are red flags everywhere it could be. Not worth the risk to me, especially since being in cash is safe while the dollar is surging (gaining purchasing power).
If Silver moves down soon and fast I will probably cash those in. Lower than 25 on Silver might be a stretch.
Gary,
So the D-Wave tries to keep people on so they lose money, and the C-Wave tries to kick people off so they don’t make as much money as they could. But then you have to worry that you’ve overstayed your welcome in the C-Wave, running the risk of seeing all your profits evaporate in a sudden and sharp reversal. It’s a wonder anyone makes money playing the waves.
Risk? The cycle low is $30 away, that’s the stop.
jhnewman, I too tend to believe we are still in the C-wave. However, I am in all cash, waiting to see how things develop. My strategy, however, is not to go long gold, but to wait to see if gold will actually rise to new highs, and they buy out of the money Puts. If I am wrong, I am waiting for the A-wave :o)
I’d be out at the 27.50$ level on a SLV put.
Poly, may I ask, did you buy OTM Puts near the recent silver top? Thank you
No I did not. Thought we had more time, still do.
Poly, I would like to ask you a question: at what silver price would you begin buying OTM Puts on silver, and how far OTM would you buy?
Hey,
I’m holding a small position in miners that are down slightly. I have never experienced a parabolic move in a commodity in which the producers did not outperform. For that reason, I do not think the C-Wave is completed.
Silver has held above its recent lows on declining volume. I expect the weakness in the stock market to continue exerting downward pressure on precious metals and producers. Once, the market bottoms we should see miners go parabolic.
For those who look at Ichimoku clouds, both Gold price and conversion line crossed below base line, indicating momentum. They are still above the cloud which is green.
The last time this happened was January 4th and did not cross over above the base line until February 15th.
Also, Silver predated gold’s move by one wek on both events.
wek… wEEk.
In case it’s not clear, the momentum is downwards….
Does anyone have data or price charts links that give a conclusion how long the previous PM bull actually lasted?
Thx
Miyagi oyy
I feel the same way as far as momentum, If we break hard down below 30 one day I will probably exit that position.
jhnewman
I am also inclined towards resumption of upward move in gold & silver..why..because gold has shown a relative strength in all the strength shown by dollar…if dollar really starts to go down or consolidate in downward fashion then gold should go up…now whether it will go to 1575 or to 1675 or to 1800 is anybody’s guess….what is missing is a strong up day from here…
Poly
coming to the dollar, i too think we have seen an IT low but would be surprized if this turn out to be a 3 yrs cycle low…
“I think this is going to be a very complex D-wave that is going to do everything it can to keep people on for the full ride down.”
Gary
can you tell me which wave was simple and not complex so far?
Quick refresh on the calls for this cycle’s top in silver from about a month back. Cycle is still in play, so we will wait and see…But here were the calls back then.
Me-55
Rob L-60.05
Vonda-60
Iveeatensilver-58.80
Bookguy-53
Clarkatoid-55 (he put 55-58, so I gave him the lower #)
Haggerty-52
Moondoggie-56
Catbird-52.09
Gottahaveit-67
TJ Rand-53
And my handwriting was sloppy here, I can’t figure out what I wrote for this user name.
RQ or PQ?? They guessed 49.50. Looking good there.
jhnewman:
It is best not to argue with the market. What looks like basing may turn out to be a bear flag. What you need to look at is whether higher prices are being sold. So far all rebounds have been sold.
In all the excitement of the run we forget that the bubbles happen because the hot money is willing to chase things higher and higher. Right now there is no incentive for the hot money to do that. The silver smackdown, has seriously hurt the willingness of punters to keep on pyramiding up like they were doing for the past few months. There is also the question of the end of QE. There is also the issue of seasonal weakness.
Do note that the fundamentals that drive the move have not changed. Perhaps they have even worsened as inflation is rising and the economic news is not all that great. But price movements in the short term do not follow fundamentals; in the longer time frame they do.
and silver is too thin market to follow on its entirity…i feel we have to see a parabola in gold to end everything…an ideal finish
You can feel free to void that one Jayhawk. JK
Hey man are you going to wait for a failed cycle confirmation before you buy some puts? Break Of 1460?
jhnewman
care to share more insight on your chart, which are confirming your bullish bias…i hope you won’t mind sharing them
[email protected]
Aviat-
Yea, this is not looking so good. HUI just a few points away from the Jan launch point and gold has not even started to correct hard yet.
Miners will give a little tease I suspect, before ripping some more hearts out.
Haggery-I don’t know if I will be shorting silver or gold via puts. I seem to recall a wise old man mentioning never short a bull.
I may do the short euro or some other index thing with a small %. Right now, just waiting for the next cycle to get back on the pm train.
For those who follow E Wave:
The first move down was in 5 waves:
(1) 49.75 – 44.61
(2) 44.61 – 49.47
(3) 49.47 – 33.15
(4) 33.15 – 39.46
(5) 39.46 – 32.31
The corrective wave up should retrace to one of the following:
38.2% Fib 39.09
50% Fib 41.17
61.8% Fib 43.24
This should be the last chance to exit longs before the plunge into the 20s. I would’nt advise trying to catch this bounce – just use it to exit longs…..
Jayhawk,
Just goes to show you herd mentality loses time and time again. I’m speaking of all the high silver forecasts of course.
I agree that with jhnewman that the c wave is not over…Gary was right that we should see a retrace to 41.33 in silver before downturn.
Believe the charts are being driven by the BOTS programmed to misrepresent. It would be easy to program…if you intention was to mislead.
Holding postions till low 40’s in silver as predicted…time will tell.
I guess a counter-trend rally is very possible in the metals and miners. But I wouldn’t expect the high’s to be taken out.
What I expect to see is some kind of head-n-shoulder topping patten in the metals and miners.
James
Moving from Blogger to WordPress – http://lifehacker.com/5357742/move-from-blogger-to-wordpress-without-losing-google-rank
Flaunt,
Let me remind you that we were all making huge money. We just got caught in a very unusual set of circumstances. No gap down on that Monday and we all would have converted to gold and just taken a very miner draw down.
Don,
The C-wave was more or less straight up since last July other than a norm intermediate cycle low in Jan.
We all made unheard of profits until the unfortunate events on that Monday trapped us in the trade we were trying to exit.
What was complex about that?
Not that the unexpected can’t happen but let’s be realistic. Silver is broken, it’s not coming back.
The dollar has put in an intermediate cycle low. Even if it isn’t the three year cycle low it’s certainly an intermediate low and it’s going to rally for at least 6-8 weeks. And if it is the three year cycle low then it should rally for a year or more.
Gold has shown very little ability to resist the dollar other than a brief oversold bounce. If the dollar is up gold is down.
If the C-wave was intact then miners would be rallying. They have dropped below the 200 DMA. Many of the majors are perilously close to seeing the 50 DMA move below the 200. I think we all know this would not be the case if gold had another leg up.
Now gold has fallen back below $1500.
At 15 weeks it’s apparent gold and the rest of the sector has begun an intermediate degree correction.
If gold is going to make a higher high it isn’t going to be during this intermediate cycle. It will have to be during the next cycle which would require the dollar to have another leg down in the fall.
Folks you need to accept that you are denial and just can’t bring yourself to take the loss. At some point the market will force you to face reality and when that happens it’s going to be a lot more expensive.
At this point there are just way too many negatives stacking up to sit and hope for a low probability outcome to save you from a bad trade.
I’ve said it before if the alligator has your leg it’s always better to sacrifice the leg before he takes the whole body under.
gary
i was looking to go long the dollar. Did i miss the entry? should i had bought the swing, or the tag of the 50 MA? did i just miss the boat? you have said it would be a nice safe play, but were is the playground entry
If this is a three year cycle low then the rally should last a year or more. Today was day 7.
Even if this is only an intermediate degree bounce even that should rally for 4 to 8 weeks.
You tell me, do you think you missed the boat?
May I ask you, Gary, how you plan to advise making money for the year when the A-wave ceases and before the C-wave begins? Have you any ideas for this time period?
gary, just buy it if i want to go long, got it. thankyou . sorry for being so lame
For example, I was thinking of using ProShares UltraPro Short Russell2000 ETF for when the stock market is expected to contract at the end of QEII.
I do but I think everyone needs to resign themselves to the fact that once the A-wave is over gains are going to be very meager for a while and we could just end up spinning our wheels till the next C-wave really catches fire.
Not lame at all. Most people just think it way too small of time frames.
Gary, or anyone,
Bear with me but I don’t understand that in a rising dollar situation, why would the general market decline?
Is it not perceived as a stengthening economy situation?
I doubt that anyone is fooled into thinking the economy is really strengthening. It is being driven by currency debasement.
A strengthening dollar at this stage of the game is signaling deflation is returning.
…dumb it down for me buddy..
If the US dolar buys more outside, then is it not perceived as a “stronger dollar”?
Maybe if QEIII is introduced within 6 months it will jump start the next C-wave? No….?
MrMiyagi, if the US dollar becomes stronger US exports are more expensive to other nations
I really doubt we are going to see the next C-wave for at least a year or more. A move as massive as what gold went through over the last two years will need to consolidate for quite a while.
Eamonn,
I see, so a balance is what would work or an eternal see-saw action is what happens as long as I’m alive at least.
Jeff, what are you investing in to go long the dollar?
Jayhawk,so the last person at 49.50so far is ahead on the top in silver bet.
MrMiyagi, I’m scratching my head here wondering how I will make money. I’m thinking of NYSE:SRTY. My understanding is that the stock market is due a nose dive beginning sometime in June due to the ending of QEII
Gary,
You did say before that the energy sector is impaired and it was a good short candidate during the D wave. Will you be following the cycles of crude oil soon on a regular basis throughout the D wave?
That’s a tough one. My main goal is to get to the A-wave with the model portfolio intact.
Shorting is tough. I generally only short when stocks are in a confirmed bear market.
I’m not really sure what I’m going to do with the model portfolio at the moment.
Eamonn,
Casino stocks seem to go down in economic crisis times…
Gary, you can short energy using a reverse ETF eg NYSE:DUG
Seems a better way than using/borrowing to short individual stocks
Sold all my remaining physical and pm funds as of yesterday – 100% cash.
Funny; it actually feels pretty good at the moment to see that much worthless paper in my account. 😉 Thanks, Gary!
Gary,
Would we not experience a C Wave around the same time next year? A wave through late summer early fall, B wave down consolidate and then another C wave in the late winter to spring again?
It would be nice but I think gold will probably have to consolidate for at least a year after the B-wave before it will be ready for the next big move up.
So do you think the Miners are definately the play for the A wave this summer through fall? Gold maybe? Silver, No?
Unless something changes I will be looking at miners.
Gary, can you recommend Richard Russell and Tim Woods?
Why Bill Gross is Wrong…In the Short Term
By Chris Puplava
http://www.financialsense.com/contributors/chris-puplava/why-bill-gross-is-wrong-in-the-short-term
An excellent article. Numerous long term economic indicators are predicting slowing growth/deflation in the second half of 2011. Goes along well with Gary’s cycle analysis.
Russell is not going to help you time the market. Tim Woods maybe.
Ya know there are times when the right thing to do is to do nothing.
I’m amazed that some folks still think we’re in a C wave. Silver have already corrected more than 33% from the peak to the recent lows and Gold about 7.5%. I see folks throwing in the towel at price points where the leg down might be more than 50% done. For example, 28 for Silver and 1460 for Gold. At 28, Silver would probably be below the 200dma and 44% off the peak. If you’re a believer of this commodity bull, silver at 28 and below the 200 dma is a BUY not a sell.
What i’m trying to say is, by the time everyone is absolutely convinced that gold & silver is in the D Wave it might technically be starting to bottom out.
EricH, interesting point
The Currency Wars are ON:
Shanghai CUTS silver margins:
http://www.sharenet.co.za/news/Shanghai_gold_exchange_to_cut_silver_margin_requirements_/3221517685e72110809b7bf7b70b2b37
Gary,
A while back you listed a couple keys for shorting. Was it price under the 50 with the 200 turning down on the chart?
Dow Theory sell signal, violate an intermediate cycle low and the 50 DMA under the 200 DMA and the 200 turned down.
eamonn – if you are thinking of a late June stockmarket tank, take a look at TZA, EDZ, or FAZ. All are inverse funds that seek returns of 300% of various sectors of the stock market. TZA is small cap inverse fund that i like the most right now. small caps always seem to outperform the general market in bulls, but way underperform in bears
Again on Fukushima and the nuclear damage that will keep on coming.
I said it was worse than was reported. Here’s another report. This ratifies it is worse than was reported.
And what’s coming next will be even worse. The ocean is poisoned. It will get worse over time. The people have been exposed. Wait til the next major windstorm and rainstorm. Microscopic particles of this nuke material will cause cancer and will kill ALL living things exposed to them.
Cute, eh?
“TOKYO/NEW YORK, May 12 (Reuters) – One of the reactors at Japan’s crippled Fukushima nuclear power plant has a hole in its main vessel following a meltdown of fuel rods, leading to a leakage of radioactive water, its operator said on Thursday.
The disclosure by Tokyo Electric Power Co (TEPCO) (9501.T) is the latest indication that the disaster was worse than previously disclosed, making it more difficult to stabilize the plant.”
What’s up Eamonn? Something tells me (Gary’s posts?) to wait for that 1460 point in gold before you move into a 3x inverse ETF… Those ETF’s bleed you of your money when they go down or sideways. Also, remember you’ll be going against a bull. Take proper care to protect your Euros for that A wave dude! We all need to do well in the A.
bigfrase, thank you, much appreciated.
Are you expecting a stock market roll over too?
summer is almost always a weak stock season and paired with a rebounding dollar, i am expecting a roll over. but like KAL said, maybe best to wait for that confirmation. those are just a few ETF’s i’m keeping my eye on and thought you may be interested.
Hi KAL :o)
I’m just planning ahead. I reckon the S&P has another leg up yet. Just want to be ready for when the bear returns.
Hey Eamonn. How’s it going in Ireland? I’m totally with you, I’m making some D wave plans myself. Picked up about 3% of my portfolio’s worth of July SLV puts. That’s all I’m gonna put out there, and I’m in EUO and UUP for the dollar play. I will probably put a % in an inverse gold ETF and an inverse S&P-ish ETF when the 1460 dam breaks. I don’t think I want to mess with an inverse oil ETF. Energy seems more dangerous and unpredictable to me… For instance, let’s say oil is tanking as part of the D wave. Then, there is unrest in Nigeria or Venezuela or some other place, and the oil price goes up and you lose $. Doesn’t sound fun to me…
KAL, everything is fine here. I’m not convinced the dollar will keep going stronger, so I’m keeping out of currencies.
Just curious how you guys are thing entry into the SLV puts with the insane whipsaw action.
Do you just use an overbought signal on a certain chart timeframe?
Are you buying in stages?
Haggerty seems to be able to have decent timing.
I meant “timing entries”
Eamonn,
Jameson 18, middleton and redbreast are some tasty vintages.
EricH said…
What i’m trying to say is, by the time everyone is absolutely convinced that gold & silver is in the D Wave it might technically be starting to bottom out.
MAY 13, 2011 8:07 PM
EricH, That is the whole point of D wave action. To shake people off who absolutely can’t believe that the C Wave ended. You will consistently see them here. Once they are removed from the picture (money and shares gone), we can rinse and repeat, but not before.
I would bet here and now that at the D Wave bottom there will be few posts on this blog, other than trolls telling Gary he is crazy if he thinks gold can ever go up again.
Thanks Gary
Hot Rod, believe it or not I don’t drink!!
Brian, I think you will be correct on that
Gary said…
Ya know there are times when the right thing to do is to do nothing.
In my post early this week, I termed them “action junkies”.
Their dilemma: They don’t have other income. They “need” the build of their portfolios from their market gambles. So, they are by definition caught in a desperate need to win, without a high probability outcome known to them.
Most of those folks will blow out their accounts.
I speak from experience of some decades past. My advice: If you need to get the money from this effort, stop. Flat out, stop. Spend the money on a vacation or a trading psychologist. Just stop placing your bets in the market.
Get a life. Join GA. Focus on volunteering or collecting trash or risk taking on bungee cords. Just stop playing the desperate, needful king without a dominion.
As a buddy said to my graduating classmates back in xx, “What I’ve learned is worth twice the price.” Get out. Stand back. Come back later; the game will always be here.
Eamonn:
“I’m scratching my head here wondering how I will make money. I’m thinking of NYSE:SRTY.”
Don’t forget Direxion Small Cap Bear 3X Shares (ETF) NYSE:TZA which tracks NYSE:SRTY and has been around longer. Be careful with either, I’ve lost my shirt with TZA. Both of these stocks will bleed you dry in short order.
You might also consider NYSE:SKF. I’ve made money with this stock before and works better in a choppy down market.
Thanks Richard, great advice
Brian: “I would bet here and now that at the D Wave bottom there will be few posts on this blog, other than trolls telling Gary he is crazy if he thinks gold can ever go up again.”
1981 to 2001, 20 years to the bottom, last time, a drop of 80-90%. 4 years to go up 100% from the bottom. 4-5 years more to double again. 2 years to rise 50% to the high.
Many will be dead or engaged in other activities before this game plays again.
The backside of the parabola is steep and terminates every gambler, bar none. Only those who bought, now lost, and hold for a helluva long time will see their money back and a profit to boot. That’s well under 5% of those here.
Eamonn:
Also, NYSE:SKF (2X inverse Dow Jones U.S. Financials) appears to have made a bottom. For higher leverage use NYSE:FAZ (3X).
I will probably be heavy in SKF this coming week.
Richard, my analysis also sees the S&P bottomed for the moment at ~1440. May I ask you how you came to this analysis too? :o)
Oooops, you are short financials. I think the S&P is heading higher from here, actually!
Hulbert Sentiment Index shows (HGSNI) has collapsed to 7% for gold from ~74% a week ago.
http://news.tradingcharts.com/futures/4/2/158477424.html
Hmmm….combine the above contrarian indicator with some of the folks (Poly, Jhnewman) talking about a possible resumption in gold – almost tempted to try some limited Gold calls next week.
But I do agree with rest that risk is just too high- especially if we have a broad market sell off (?):
1) “Sell in May, go away”
2) Recall the RUPPERT guy saying that only in Q2 will impact of the Japan Earthquake will be reflected finally in earnings and will cause market selloff.
Eamonn:
In 2007 the Dow Jones U.S. Financials rolled over before the Dow & S&P 500. It looks to be doing the same now.
Good article: http://www.moneyandmarkets.com/it%E2%80%99s-200708-all-over-again-44559
DG, I sent you a question on email per EUO. I know you mentioned this prior and I had a question. Thanks!
Richard, could I drop you a mail? Mine is [email protected] I would be interested in connecting with you. Thank you for the link to the article
Eamonn:
The Dow Jones U.S. Financials peaked on Feb 18, 2011. If you would have purchased SKF (2X) then, you would be up 11.4% or FAZ (3X) up by 16.3%.
The Dow Jones U.S. Financials Index is my crystal ball.
http://www.google.com/finance?q=INDEXDJX:DJUSFN
Just add INDEXSP:.INX (S&P) and/or INDEXDJX:.DJI (Dow Jones) to the graph and scroll back to 2007. You’ll see how the Dow Jones U.S. Financials started crashing before either the S&P or the Dow.
Good night all.
There are some very nice put prospects out there. I think I will be focusing on the sectors that were punished last summer when QE was over.
Wav_ridah, would you list the sectors you refer to? Thanks!
http://www.zerohedge.com/article/goldman-fires-second-shot-across-qe3-bow-successful-fiscal-consolidation-needs-monetary-poli
It is starting already. Talks of QE3 and not just QE2.5.
gary
things are always simple till one makes profit…its that one moment always which throw the curveball and make you fall hard…if u think c wave is/was non-complex then may i ask you what ur final tally on profit in % terms (including the last curve ball)…and if you feel the last curve ball is non complex then u need to look in mirror ask the question to ur self
i m not saying that c wave is still on…what i m saying is i am biased towards the c wave because gold chart is sill no broken and given the tendancy of dollar to consolidate at the 3 yr cycle low or if this is not 3 yr cycle low then anyway the current IT cycle will roll over as we already have jumped 3.5 points from bottom
may be what happened in 2006 is happening now but on wider scale on price & time axis…If gold can form a convincing swing low here (no gurantee) then there is very good chance of an good upside potential and then many buyers might be left behind and will chase in the ending move..
Gary
u only said once that human mind has tendency to project the past moves into the future…what is that differentiate your call on d wave and not projecting silver price action slaughter…can u justify your d wave call by showing me it on gold chart
HR
I’m really am not a timer. I just waited for a day where the bull fought back and the puts I wanted would be down in price.
In my head I think the trend is down for now, so I just bought puts far enough out(July) where I think I would be in the money by the time we get close to expiration. If Gold goes down to the 1300 level that should put GLD at roughly 128, so my 140’s should be about 10 dollars each.
That’s one of the reasons I still have a little cash on the side for this trade, if it decides to move against me at first I will buy more on the cheap. But if it(Gold) starts to fall like a rock at least I have some skin in the game
Don’t let the Hulbert poll fool you, the public sentiment opinion poll for gold is still on the high side of neutral. No intermediate decline has ever bottomed until sentiment reached excessive bearish readings and a D-wave will reach an excessive bearish level, bounce, and then dive again at least once and sometimes twice.
Don,
Still up over 100% for the last year.
I think we all recognize that the dollar has begun an intermediate degree rally. Those have a tendency to go at least to the 200 DMA. Gold has shown little to no ability to fight a rising dollar other than a two day oversold bounce.
We’ve got weekly swings in silver and miners and a bearish engulfing candle on the weekly gold chart going on week 16.
If this was going to turn into the parabolic move gold would be surging higher by now not dropping back below $1500. And the miners would be leading, not trading below the 200 DMA.
There is some hope that this is only an intermediate degree correction and that the true top might happen in the fall during the next intermediate cycle. It would require QE3 though.
At this point there is little doubt gold has begun the move down into, at the very least, an intermediate degree correction. If one wants to hang on hoping for QE3 and another intermediate cycle up they will do so knowing that the risk is very great that this intermediate correction will turn into a D-wave.
Doesn’t seem worth the risk of holding hoping for only an intermediate degree correction. We usually try to avoid those anyway, with at least part of our capital. And this late in the game I would avoid it with all my capital because of the D-wave risk.
Gary
Is the D wave part of a new intermediate downward cycle, or is the D wave part of the previous intermediate cycle?
does this mean that the start of the A wave will be the start of a new intermediate cycle? following the D wave?
Gold is still in the current intermediate cycle. Cycles are measured trough to trough, not top to top.
It should be the ending phase of this intermediate cycle.
Gary
Is the thinking now that we are in a new intermediate cycle as far as the dollar?
And that we have two more daily cycles left in the gold cycle?
Then the A wave will start the new intermediate cycle for Gold?
That’s my best guess at this time.
Cool
Enjoy the weekend everyone
Great report Gary. Thanks!
Gary, can you give us a symbols you will be buying for shorting SPX and QQQ
It’s right there in the portfolio.
BTW you don’t buy to sell short. You borrow and sell.
If you don’t understand short sales You might want to just pass this trade by.
Anybody have any past issues, good or bad experiences with PSQ and SH or QID and SDS? That would be for IRA purposes. Thanks.
Ok. Borrow. You got it. Now can I traded it? 🙂
gary
would you consider buying qid and sds, or puts instead of doing real shorting?
may i ask why you would prefer to do real shorting versus buying an inverse ETF, or buying puts?
Gary, BTW,, that is what i meant when i said buying – buying inverse profunds, etc…
Gary,
Regarding your new portfolio, as written on the bottom of your w/e report: is that the watered down version? and if it is, may I ask how many times that exposure is your real personal portfolio?
Hey, Bruce. From my perspective, I am surprised that Gary even mentioned shorting the D wave. He was very adamant recently about holding cash during this period in preparation for the A wave so we don’t mess up our capital positions. I have a feeling his portfolio is a “bit” more aggressive but we won’t be privy to it, so he won’t get flak about being blamed for our mistakes going forward.
I am cool with my EUO/UUP setup for now. Making a little off deflation is nice (or am I?), waiting for the “for sure” D wave announcement and avoiding settlement issues with my IRAs. I’ve got small put positions but that’s all for aggressiveness for now. Waiting for those cycle lows to broken on gold and the S&P in this freaky market to give us more reliable indicators seems prudent considering our recent emotional losses… Any thoughts?
Eammon,
Yeah I will. Busy all day but will get at it tonight.
Gary, You speak of being “done with silver” and if I understand from your interview, you don’t think it is “coming back” for years. I’d be interested to hear in more detail how you think gold will rise and leave silver behind. Doesn’t seem to add up to me. Do you have a GSR number in mind?
Thanx
Silver is not done for years, IMO. A smashing like we’ve seen does take time to recoup, but don’t forget the monster run +300% in just one year, either.
Do not underestimate the bull even if it’s been temporarily broken. I don’t expect the metal bull to rocket higher yet, but they have far more upside than down from here.
Happy to be flat for now.
Anyone who has fallen in love with silver should take a good look at this chart.
It’s what happened to silver after the 1974 parabolic top:
http://www.sharelynx.com/chartsfixed/SI1974.gif
Its best days were ahead of it, but anyone who sat in silver for 4 years had to endure a lot of opportunity cost as it consolidated.
Ask yourself if you want to wait 4 years as silver languishes in the 30s-40s.
Not,
To begin with this is a very small test trade to see if the bear has returned. I won’t put real money behind this trade until I have confirmation. So forget about the double inverse funds.
Bruce,
Yes it is the watered down version and no you may not.
My portfolio looks nothing like the model portfolio anyway.
Visitor.
Pull up a long term chart of gold and look at long the consolidation was before the 08 C-wave top was broken.
Gold and silver both will have a long period ahead of them before the next breakout IMO. The only difference is that gold will hold up much better during the D-wave.
Silver should get completely hammered during the D-wave.
David,
Interesting historical silver chart. I noticed there was almost a double top after the parabolic rise in 1974.
Suggests to me, if anything like 1974 were to repeat again, that people buying puts here on SLV are certain to lose their capital. On the other hand, people who take long positions at higher prices will likely also lose unless they are very nimble.
Looking at the chart confirms to me Gary’s approach of staying away from silver for the rest of the year makes sense.
Gary-
Report says if the miners take out the Japan lows, the D wave is confirmed.
They already did take out the Japan lows which was in March. They are about to take out the intermediate cycle starting point in Jan if that’s what you meant?
Jay,
You are right. I will correct that.
Does anybody here use ThinkOrSwim? If so, what do you think about it? I’d especially like to know how reliable it is, and how problem-free.
And if I get it, do I have to use Ameritrade as my broker? If so, how good are they as a broker?
I’D BE GRATEFUL FOR ANY FEEDBACK ANYBODY COULD GIVE ME. THANKS IN ADVANCE!
Gary, do you think the silver pattern will look more like this
http://www.sharelynx.com/chartsfixed/SI1974.gif
or will look like 1981?
In 1974, the rise was only 1.5 to 6.0, 400%. Now, it’s 800%+.
In 1981, silver ran to about 400%, retraced to about 250% and then blew straight up to its $50 parabolic high.
Do you even view the market in this way, tying it to cycles?
I don’t necessarily think that this silver run has to match any prior run. It just is what it is.
Do I think silver has topped for good? No I think that’s still a ways down the road. But I do think this parabola is done and will be done for at least a couple of years.
Silver is going to need a long consolidation period for people to forget this and to get it into strong hands again. That’s just going to take time.
Ultimately this bull will end like all secular bulls do with a massive bubble. Every Tom, Dick and Harry will be buying gold and silver. The Dow:gold ratio will drop to 1:1 and we will see a year of unbelievable gains in the entire sector not just silver.
Yours is counter to some of the mainstream buy and hold guys, like Sinclair and Dines.
But I’ve been on their ferris wheel and I don’t like the drawdowns.
When gold dropped from 500 to 350 and from 1000 to 650, those were painful.
Hammy thinks I am nuts for liquidating the physical positions I’ve held for 10 and 30 yrs. But I’m glad I left gold, and due to the way I hold silver, I’ll be shorting the futures or shorting SIL, so I can lock in profits while I distribute the pile of fabricated physical which I sure hope won’t get melted. Silver is what’s called “ephemera” in any society. In the old days, the royalty would melt their “plate” to use as money during war times. That’s why the silversmiths were so busy all the time.
But I wish to return to substantial PM positions, later, after the newbies and weak hands let go, if just out of boredom, but most probably out of continuing defeat as the market slips lower.
In 1981, the drop was 50 to 36 range for a while (which left many in hope of a bounce back), a creeping decline into the low 30’s and then it declined into the mid 20’s and low 20’s. When that happened, my collecting stopped. Few who still held the plate would sell.
What you’ve just said is that this is not the front side of a daily or weekly parabola, but instead, a parabola on its own, which means the backside will be one of continuing defeat for those who hope.
If we see a similarity of defeat, we would see within the next 60 days a drop down to the mid and low 20’s. I’ll be hedged this week.
Slumdog,
I do expect a much bigger parabola at the final bull market top but as of right now I’m pretty certain the D-wave has begun.
The only thing that I think could abort it would be another round of QE.
Bernanke has been very clear that QE would end in June though, not to mention I don’t think it’s politically feasible at this time.
Neither QE1 nor 2 accomplished their goal of suppressing rates or creating jobs. It’s going to be pretty hard to justify another round when the first two clearly didn’t work.
At this point I think it would take a crisis or at least a semi crisis to justify another round of QE.
FWIW my local bullion dealer has a sign in the window stating that he is out of silver maple leafs and silver 1oz rounds. I haven’t seen that sign in his window for about a month or so.
This may explain some of the division in our ranks and offer some concession to both sides.
http://www.sunshineprofits.com/commentary/13-may
Gary said:
“Ultimately this bull will end like all secular bulls do with a massive bubble. Every Tom, Dick and Harry will be buying gold and silver. The Dow:gold ratio will drop to 1:1 and we will see a year of unbelievable gains in the entire sector not just silver.’
If you’ll stick around for that one last hurrah (in fact, just the next one!), I’ll be a subscriber.
I trust your ability to have seen three times the turn around windows, two on the way up, and this landing area, on the way down.
Steven is sour grapes, and understandably so. But he ignored your conservative approach and imo didn’t manage his portfolio well.
How could he not have set stops, irrespective of what you were thinking or saying, when he had such a large profit %?
A trailing stop at 40 would have been reasonable, given he was looking at exiting within hours.
And with his position, the fact that he did not have an open futures account is CRAZY. He couldn’t trade 22.5×5, even if just to place trailing stop loss orders.
Steven is smart. But he must struggle with the superior/inferior issue and individuation. This experience will change him. It certainly changed a bunch of posters here.
You’re doing a great job.
So, btw, is Hammy who backed away from both gold and silver around the same time Poly first left the trade. Hammy never re-entered until recently, and now trying to scalp a few points. I
Gary,
I like your short choices. But these are long term plays, many INT cycles out right? being the bear has many months to move down into the equities 4 yr low.
Will you ride these positions and just go into the A wave with 15% less or flip?
I may increase the position size if the bear is confirmed but most of the portfolio will be allocated to the A-wave because the gains will be much larger.
I will attempt to exit shorts at intermediate cycle lows also in order to avoid the violent counter trend rallies in bear markets.
Gary, in terms of cycles where is the stock market at the moment? Have you an opinion of the depth and duration of the correction?
As I’ve said many times in the past cycles are mostly worthless for spotting tops. If the market forms a weekly swing it will be a warning sign.
The first real confirmation that the market is in serious trouble won’t come unless the Japan low is violated.
A little “heads up” to everyone.
The main thing that precipitated this dollar bounce was the big fall in the Euro. That was mainly caused, as I understand it, by worries that Greece was in trouble again, and rumors that Greece might even “leave the Euro”.
Currency expert Ashraf Laidi is pointing out that European officials (finance ministers) are getting together this weekend (actually, I believe Monday night), to discuss restructuring Greek debt.
Here’s part of Ashraf’s comment. Notice particularly paragraph 2 and the end of that paragraph:
**********
Intraday Market Thoughts
Dollar and Yen Finish Strong, Euro Plunges
May 14, 2011 02:58 ET : The dollar and yen were easily the top forex performers on Friday while the euro limped to a second consecutive weekly drop despite better-than-expected GDP numbers. Risk aversion was the dominant theme in the market as European officials struggled to find solutions for Greece.
In European trading, the euro gained nearly 150 pips on strong GDP data but worries about Greece reversed that trade, sending EUR/USD down nearly 250 pips from its highs. Die Welt reported on a rift among European policymakers on how to deal with Greece’s debt burden. The European Commission, IMF and Germany are said to back a debt extension with the ECB and France opposed. Meetings are scheduled for the weekend and uncertainty led to position squaring.
Aside from continuing eurozone debt fears, there was no catalyst for the risk off environment. This suggests positioning and seasonality were drivers in the move that sent stocks about 1% lower. Economic data was benign to positive. US CPI was in line with the consensus at 3.1% y/y and core at 1.3%. The U of Michigan sentiment survey rose to 72.4 from 69.8 (exp: 70.0). Inflation expectations fell to 4.4% from 4.6%………
**********
Germany, as the Strong Woman of Europe (Angela Merkel), usually wins these battles. So if Germany wants a debt extension for Greece, it’s likely to happen.
And if it does happen, that could possibly send the Euro back up, and, therefore, the dollar back down.
So, news on this could maybe hit on Sunday before the markets open, or on Monday, or Monday night (which is when I believe the meeting actually is taking place).
Just a head’s up on the possibilities.
All the best to everyone.
P.S. You can find the complete “Ashraf comment” here:
http://www.ashraflaidi.com/forex-news/
Gary, for the “C” wave it appeared asset selection was extremely important. Silver metal was pretty much it, at least for the blow off phase. How will this effect our “A” wave selection. Could only the one sector you identified be it?
From the 1974 chart above, it looks like silver should rally hard in the A-wave, for those brave or stupid enough to play it.
Just make sure you get out at the top…
The reason the dollar has rallied is because sentiment reached bearish extremes not seen in years. The dollar simply ran out of sellers.
Like always the media seeks to find a reason for why the market did what it did.
Greece has been in trouble for a year. Everyone knows Greece is going to default. They’ve known it since last summer.
Only now the media has decided to use that as an excuse for why the dollar did what it did.
The dollar rallied because its due for a major three year cycle low.
RB,
One can play gold or miners but I think the gains will be better in the undervalued sector because I think liquidity will find it’s way into that area just like it did out of the 08 bottom.
Given that miners didn’t play in this c-wave maybe they wont either in the A-wave….
I’m betting they will but no one will have the courage to bet on them until most of the move is already over.
If I ever become a millionaire from following Gary I’ll send him on an all expenses paid trip to Mount Everest
Actually the miners increased 140% during golds C-wave. Granted not as much as I would have liked but they definitely rallied nicely. Much better than semis, tech, energy or virtually any other sector.
If the US stops the QE (+ not raises the debt ceiling) they’re going to default. So either more dilution of the dollar or default. With the exploding debt and reduced trust from bondholders and creditors, the luxury of ‘business as usual’ don’t seem to exist. Both of the above alternatives should be beneficient for gold.
I subscribed to http://www.cyclesman.net for a month to see if I was missing anything. Turns out I wasn’t.
Does anyone seriously think that any politician will vote to default?
If you do then I have some seaside property I’d like to sell you here in Vegas.
I remember Eric King whining about how the fundamentals couldn’t possibly support gold below $700 during the crash.
The fact is the market can do any damn thing it wants fundamentals or no fundamentals. That’s why I use cycles analysis because it gives me a timing band for when to expect something to change and they do change no matter what the fundamentals are saying.
There is no fundamental reason for the dollar to rally but the three year cycle low says it will do it anyway and sure enough we now have a very powerful rally in progress in the dollar index.
Gary: while buying @ the bottom of the D wave will be tough given the annihilation in Gold, Silver and miners, how difficult will it be holding during the A wave?
In the A wave, do you see Gold rising with a rising $$$?
And roughly how long will the A wave last?
Lastly, since you are looking @the A wave retracing almost the entire D wave, am guessing you are looking at the retrace for Gold and expect Silver to lag massively and not make it anywhere near 50?
Many thanks and here’s to recouping most / all the lost profits in Silver, during the A wave!
Precious metals are a volatile market. It’s never easy to hold on in a volatile market.
I do expect silver to lag badly during the A-wave.
The other questions I can’t answer until they happen.
Gary,
For those of us not into options, would UUP or EUO work be a good position for the next 8 – 12 weeks, or should cash be the best?
Thank you, as always.
I don’t think you will make much in UUP but I guess that would be one way to play the dollar rally.
ok, well a few percent is better than no percent, which is what the mmi pays.
thx
Currently sitting in cash.
I’ll play the rally in the dollar once it has given confirmation through a right translated daily cycle.
Once it does this, I will buy the swing low of the first correction in the dollar. By buy, I mean DUG, EUO, SH, maybe some others as sectors show their relative weakness.
f
fubsy_cooter, do you not feel vulnerable to exogenous events e.g. trouble in the Middle East, when using DUG?
Looks like Gary has laid out a couple good choices for shorting. XLE is another target for me. I looked into semiconductor puts but the volume isn’t there. I like Gary’s choices and I like Fubsy’s play in DUG. I’m far from done researching. I plan to buy something before Wal Mart reports on Tues. I think they will beat (gut feeling) helped by a weak dollar. Thats when I want to have a position.
Eamonn,
I spent 30 days hiking Nepal, did a small “trekking” peak and spend two weeks between 14k and 18k ft. Great time, I’m sure Gary would appreciate it, though I hear the “coca-cola” trail will be paved by 2020, I can’t imagine that. I went there at 20 year old in 1998.
Can anybody reach DOC’s website ?
Heres to the I.M.F. meeting
http://www.nytimes.com/2011/05/16/business/16fund.html
Gary,
What if one can’t short SPY/QQQQ? Would you consider CFDs?
If you can’t short you could accomplish the same thing buying PSQ or SH.
Thx Gary! Indeed, I can buy them. Sorry to bother.
Does anyone know of a tool where you can enter in forward daily closing prices of gold/silver, etc. to be able to see the resulting curvature and trends of the RSI, MACD, SAR, etc?
Kind of like “what if” analysis.
Thanks.
Gary,
Does PSQ have the same volatility as AGQ? Also, I could not find anything matching SH?
thx
PSQ is an inverse fund. If the NDX moves down 1% PSQ should gain 1%.
SH does the same thing for the S&P.
BookGuy, I’d say Nepal is a fascinating country. Would like to spend some time there
so with debt limit discussions heating up, ME heating up, and do we still think gold/silver will go down?
i have slv puts and will be happy but still not sure about it.
The metals are now in the timing band for an intermediate degree correction. Silver and miners have both confirmed this. Gold will do so this week if it trades below $1462.
HotRod, call Trade Station, an 800 number, and speak to one of their sales people. Don’t settle for one of their regular guys. They have a tech support desk. Get to those guys/gals. They will be familiar with the many options they’ve built in.
That may be a tool they have.
For those who like to handicap the economy, thus the SPX, QQQ, etc. this is going to be an important earnings week. Obviously probably best not to play the earnings themselves but the reaction by Mr. Market will be telling: http://tinyurl.com/3kmw33j
Gary,
I am thrilled you have mentioned some ways to stay “in the game” during the D wave in your report, but are your recommendation less “risky” in your opinion than buying puts on slv? Given your strong belief that silver was heading south, it just seems like the obvious play is shorting slv.
Much less risky. Especially since most people have no idea what they are doing with options.
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