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test
Repost from the end of the last post
________________________________
Alex-
I have that we already are in the 4th Intermediate cycle of this C Wave.
I show them starting in (roughly:
April 09
Feb 10
July 10
Jan 11
It seems to me that most of the discussion is on the resolution of this cycle, which is only in its 15th week. And so I assume that you are suggesting that we might add a 5th intermediate cycle to this C-Wave?
beep
Wiggled around a swing, big deal.
TJ could post. This cycle is still relatively young, no reason not to expect a fully daily RT, even in light of the dollar
Gary,
Do yo still think the BB crash trade is still valid?
Bullion,
The BB trade rules require holding for 15 days or until a profitable close which ever comes first.
So yes it’s still active but that doesn’t guarantee it will close profitable. If there was any pattern that would reduce the odds of a BB trade I would think it would be a collapsing parabola. That’s why I’m not willing to take the trade at this time.
At this point I don’t feel like I have an edge. Whenever that happens I’m usually better off to just exit and wait for a better setup.
And so the bear flag starts to play out. Crude off as well. Some excellent set ups short on the 15M chart this morning on both silver and crude.
T.J.
I see what you are saying ( I relly thought that Gary had said we had 3 , not 4 at this point)..but like I said- I see the lows that you pointed out.
I also liked the chart that you reposted that Jayhawk had posted …thx.
I think that what Gary has decided to do, is probably best for most of his subscribers.
Good call Gary.
Gold should find support in the 1490s if it makes it that far before reversing to continue up.
This comment has been removed by the author.
Alex-
Yeah, the chart is interesting, and provides a great deal of perspective. I could easily see testing the bottom of the channel in the D-wave, then the question is whether we break below it like in 2008 (which was a pretty unusual event) or hold it as in the other D-Waves.
On the Intermediate cycle count…I was not trying to poke at your count – rather, I’m working to really understand cycles and so am testing my charts/counts.
This comment has been removed by the author.
“And so the bear flag starts to play out.”
Wish people wouldn’t just re-hash poor information they hear others post.
If that’s a bear flag then people need serious help. A one day small increase after two big days does not make a bear flag people. Give it 3 or 4 days then maybe, but one day, seriously!
Anybody take a look at that BIG bear flag from Jan 28h-Feb2nd….go take a look!
New cycle, new stops, great risk/reward.
This comment has been removed by the author.
Poly, are you anticipating Gold tests its lows, or straight up from here. If thats the case where would you set stops …. 146 on the GLD ? Its probably is a nice time to go into DGP right now … good risk/reward ratio
poly …you remind me of a previous mentor …you wouldnt happen to live near the gate way to the west would you?
Poly
Are you fully invested 100% of portfolio?
What are you holding here?
Dr Copper is singing to us.
http://www.finviz.com/futures_charts.ashx?t=HG&p=d1
Poly – depends on your TF – I trade daily and above but look for a tight entry on the H4.
Silver is dead. A 30% sell off is not going to be recovered in my view.
The USD will no doubt rally as it becomes the new carry currency in place of the yen. City institutions will be dumping the yen and Jap bonds and Jap Eq’s will rally. The yen will weaken and people will need a new carry trade – the Feds will not be raising rates any time soon… so people will be borrowing in USD..
This is only my ‘forecast’ and could be worth diddly as we all know humans are crap at predicting the future.
Just trade the trend. Go with what the market is telling you – and currently its positioning for a USD rally..
Shalom
I know your out there, when you become convinced we are in a D wave are you going to play that? If so what are you going to do? I want to play it with 2-3 % of portfolio on SLV puts maybe.
Was hoping to keep adding to my short positions today…guess I’ll have stick with what I already have. Very curious to see how the PM stocks react to this. Thye couldn’t stay green when gold/silver were up so let’s see how they react when they’re down.
No I am very far from fully invested, but have enough skin in long gold to profit. No silver here. Stops should be the cycle low, but looking at a test of $1,500 would be reasonable.
Haggerty,
No, I will not short metals for a D-wave, and I especially would not try to catch it with options.
The fundamentals are too strong for the metals. There will be easier fish to fry, IMO.
Gary
at one time you mentioned playing a sector that you thought was over stretched during the Dwave. Is there anything out there your thinking of playing?
I might even play the long side in a D-wave, just with shortened hold times.
The last thing I want is to wake up one morning after shorting silver to find it up $5-6/oz, sitting on losses AND not in position for the re-emerging uptrend in the secular bull.
Heck, we might even be in the D-wave already!
I would say plenty of holders of Silver who rode it down to $33 are dumping today, getting back some of those losses or paper profits. Could be a couple of days of this. Maybe we form a bull flag 🙂
Shalom,
Unlikely, the IT cycle is young and that would be some 2.5 months of declines into the IT lows.
Sold out this morning
Will now wait on the sidelines to see what transpires
: (
(Though I am glad I took some profits before the close)
David,
You need a bumper sticker for your car that reads: “What would Beanie do?”
LOL @ Poly – Bull Flag!! 😉
Confidence in long Silver has gone – the gold silver ratio showed that silver was way out of kilter with gold. The question is how long will the usd bounce be?
Long USD is such a contrarian trade it must work!!
“to wake up one morning after shorting silver to find it up $5-6/oz,”
At this stage of the game, i think there’s a greater possibility of a 5-6 dollar gap down in Silver than up. There are simply too much overhead resistance.
LOL @ pimaCanyon “What would Beanie do?”
Gary,
2nd time in 2 weeks you’re decide to SELL the next day only to see another big gap down in the morning. Ever thought about having a futures account? One could had hedged their position last night instead of waiting for the open.
The IT cycle is not young. It’s 15 weeks into a cycle that normally last 20 weeks.
At the 4/1/10 (end of QE1) to 7/1/10
gold up 13%
dollar up 7%
S&P down 6%
Gold/Euro up 22%
@grimweasel
I knew you would like that one 🙂
Gary in your previous post you mention the BB trade having 90+% success rate. Have you back-tested it to come up with that figure, if so how extensively?
beep
My point is that I’m not overly bearish on silver, just that I see no reason to be positioned long yet.
beep.
Gary 20 weeks may have been the norm before 2008. The last three cycles were 26, 25, and 30 weeks each.
Relatively new subscriber, just sold all positions. Hugely disappointed given the months of build up for “the biggest profit making potential of the decade” that leaves me in the red. Mind boggling. Am I allowed to whine? I think I paid enough to. 🙂 If I’ve learned one thing it’s to discount the apparent certainty of predictions and read in more risk into every position I take.
Aaron,
Yes but I’m allowing enough time for a D-wave to run it’s course. I really doubt gold would be able to correct the largest and longest D-wave of the entire bull market in only 4-5 weeks. More likely would be 8-10 weeks.
If that’s the case then it needs to get started soon. Silver and the miners are saying it’s already started. Gold’s weekly chart is saying it’s begun.
Gold’s daily chart is not saying either way.
What the heck was that..in slv
Sorry I meant to say C-wave in the above comment.
Gary,
Thanks to you and your report, I got out overnight 🙂
Dave,
Sorry to hear you ended up in the red, but welcome to the blog anyway.
There was a lot of exuberance and certainty in these comments as silver and gold were going up over the past couple of months. That in itself should have been a warning flag to us all (and will be for me in the future!).
You’re right, there are no “sure things” in this field, and one should always be cautious and consider that the forecast could be wrong. However, cycle analysis does give us an edge if we use it correctly. As a result of what happened here last week, I will use the following guidelines re cycles:
1) The time to be aggressive is at the intermediate cycle lows.
2) As we move later into an IT cycle, that is NOT the time to be sitting with 100 percent position, or worse, a leveraged position.
3) Runaway moves are rare to non-existent. Don’t bet on one being in place. What’s more likely is that the current daily cycle is just stretched.
Dave
I’m also relatively new who waited for the biggest C wave.
You want to whine? What did you do? You invested in options? You were leveraged with no risk control?
Great. That’s how you lose money. Now you know.
In anticipation of the C wave I’m down 15%. That’s what I was willing to risk. That’s what I lost. Simple.
Gary,
If this is the D-wave, any other ideas to play this other than put options on SLV?
Shorting energy, industrial commodities?
XLF/DUG has been brought up by you in the past.
Errr…typo. I meant XLE and not XLF.
Gary,
Stating the D-Wave needs to get started soon is pure contradiction and fits the bias we all debated last night. 10 days ago we had a full daily ahead before any D-Wave began. The fact is the cycle can run from 20 to 30 weeks, that is 2.5 months, there is absolutely no basis or reason why it must start now.
I would be reluctant to short anything before getting confirmation that the bear has returned. I don’t really see an edge anywhere at this time, at least not an edge that is appropriate for most people.
For those willing to take on large risk I did suggest a play last night in the aggressive portfolio but I will not discuss that here.
Im expecting a peak into week 19/20, then an 8 week downdraft, putting this cycle at 28 weeks or so when its done.
Poly,
Any daily cycle can be right or left translated. We got a swing low this morning and it reversed. It’s entirely possible that the cycle has now topped and is heading down into a failed and extreme left translated cycle.
That is what we should expect if a D-wave has begun. We won’t know for sure unless last Thursday’s low is taken out.
But like I said I don’t feel like I have an edge right now so I’m going to take my ball and go home. 🙂
ON VACATION AND SHUTTING DOWN!
Commods selling off now. Short Wheat as well based on daily shooting star yesterday. I think we will be off to new lows. Can’t see any buyers being brave enough to step into the train heading south now…
Just logged on to find that my favorite topic was being discussed last night. Interesting how many different views there still are regarding QE, inflation and the money supply. I’m not going to get into a back and forth on this topic, but I think some basics need to be clarified so that there is not misinformation out there.
For starters, I think it helps to understand the role of the Fed and basic monetary policy. The Fed is an independent body which is responsible for conducting monetary policy in the US. The Fed does not issue government debt or print money (that power lies solely with the treasury dept), but instead they are responsible for interest rate policy and controlling the money supply. In terms of their interest rate policy, the fed sets the discount rate (rate that the Fed lends to banks) as well as influences the fed funds rate target (rate which banks lend to one another). Contrary to popular belief, they can’t set a definitive fed funds rate, but instead have a target rate (currently 0-0.25%) which they achieve by buying and selling treasuries – a topic for another discussion. In terms of Monetary Policy, the fed controls the money supply using several different policy tools – discount rate changes, changes in reserve requirements and buying/selling treasuries. For the purpose of this post, I will only discuss the last one as it is the most relevant to QE.
In the course of basic monetary policy, the Fed engages in buying and selling treasuries (not issuing – again only the treasury does that) to control the money supply. Its pretty straight forward, they use their balance sheet to inject or remove “money” by buying (give cash to the banks for treasuries that the banks own) or selling (get cash from banks in exchange for the treasuries that the Fed holds in inventory) government securities. Again, let me reiterate, they do not issue any government debt at all. They simply buy and sell securities to increase and decrease the money supply. Buy treasuries=increase money supply, Sell treasuries=decrease money supply. This is a basic function that they do all the time through their Permanent Open Market Operations (POMO) and has nothing to do with the recent QE.
Now comes the QE part. The Fed wants to inject MORE capital into the system. All they need to do is increase the amount of treasuries (or other securities during QE1) that they are purchasing. How do they increase the size of their balance sheet and where do they get the additional money to do it? They simply create it out of thin air. They do not print it (again, only a treasury function). They simply credit the bank’s account for the amount of the treasury that they are purchasing. Poof……electronic cash is created. Only 10% of our money is in the form of printed dollars and coins and the rest is just debits and credits in all of our accounts. That’s why if there is ever a run on all the banks, the money doesn’t exist.
Now just a couple of other clarifications. QE1 was focused more on agencies and MBS securities. During QE1, the Fed “sanitized” their purchases. What this means is that for every security that they purchased, they would sell a comparable amount so that their balance sheet size did not change. As an example, they would buy $100M in toxic MBS crap from the banks (increase money supply), but they would sell $100M of treasuries from their own inventory (decrease money supply). By doing so, the net money supply would not change. During QE2, however, the Fed stopped sanitizing their purchases, and discontinued selling comparable securities. For this reason, their balance sheet continued to grow and so too did the money supply.
This post is running long, so I’ll stop right here unless anyone wants to dispute what I’ve written. I can do a part II if people are interested to talk about lending trends, inflation, and how the money gets from the banks to the economy. It is this last point which is causing all the confusion as to whether we have more liquidity system or not.
Silver down 4.5%.
AGQ down over 9.5%.
Pennies in front of a steamroller folks.
DG and Silverhound:
I appreciate reading all analysis and interpretation of Gary’s posts. I am learning a lot from all the discussion, so please keep them coming!
I am a newbie for a few months, and in my mind, I am already reading Gary as Gary the Investor and Gary the Trader. Gary the Investor presents cycle analysis and calls for approximate tops and bottoms with an uncanny accuracy. I am still trying to figure out the style of Gary the Trader, since most of the time, I still can’t reconcile the short term calls with the long term analysis.
Once I go through a few daily cycles, and see how the calls are made, and learning from everyone on the blog, I am hoping to develop my own set of “Rules to play PMs”, including a journal of the moves from the experienced traders on the blog!
This round was disappointing, but I chalked it up to learning experience!!!
I did sell out this morning. Seemed to be the best move under the circumstances. Still up 9% since joining SMT in Feb and have preserved cash for next move.
hkc
very insightful
Enjoy your break, traderlady.:)
I bought a small position in DUG this morning due to break down on the bear flag in XLE. The position size was 10% of my account.
I’m going very small here because the trend is in transition, and I find that starting small during trend changes allows me to get a better rhythm.
The way I see it, the dollar is close to or already has put in a bottom. When that happens, trends that have been in place for the past two years will reverse as the major theme of the past two years has been the weakening dollar. So, we are near the extreme end of the pendulum being stretched to one side. This suggests that there will be a sustained move counter to what we are used to.
Commodities and stocks will go down, the Euro will weaken, the dollar will go up.
For me, just opening a position to this regard helps shift my perspective. If I’m right, I’m in and can build from there. If I’m wrong, the loss is inconsequential.
I do think there is a strong possibility of tests of the bottoms. New moves begin with lots of uncertainty which translates to weak hands. If gold goes down near its bottom and reverses, I’ll close this trade, and go long DGP for a possible run up.
On a dollar test of its lows and reversal, i’ll be hoping to open a position to ride a sustainable trend.
f
Poly,
I must have missed it, i assume you are playing gold with DGP?
gary shot you a quick email
Sitting in cash; dumb and happy. Will wait for higher probability setup. I’ve never shorted anything with success. I will avoid that like the plague.
I do have a few thousand shares of a biotech I like, NNVC, as a long term (5-10yrs) play. They’ve essentially created the first anti-viral similar to the first antibiotics created in the 1940’s (think penicillin). I imagine finding a cure for AIDS, bird flu, the common flu, dengue, etc. might bode well for the stock price in the long run. At least in the triple digits 😉
Gary,
GLD topped in mid March 2008 and bottomed in mid Oct 2008, a 7 month D wave, correct?
Fubsy,
Thanks for the update
RLK
The last D-wave included the move down into the 8 year cycle low. Explains why it was so long and complex.
I am out of all positions having sold the last of my DGP today (I was waiting for the first down day). I am having a solid if unspectacular year and am content to wait for clarity. I have learned not to try to swing at every pitch. Here’s too the A wave. I will post other trades as I see them. Good luck everybody!
A number of you have mentioned Richard Russell. I became one of his subscribers shortly after the 2008 crash. He has been a long time proponent of Gold.
He did not advise his subscribers to sell in 2008, which he later apologized. And he advised his subscribers to stay away from the stock market throughout 2009. He did knowledge he was wrong. Further, he knowledged that he ignored the buy signals.
This is a quote from last night’s letter, “I like the gold action and feel 55/45 that the gold correction is over.”
Just info for you to consider. Good luck.
I don’t know how many shares SMT represents but I would think that there is enough here to move the market at least temporarily.
Gary,
The Dow-gold ratio is about 8.4, the same as late May 2009. When will gold start outperforming the DOW?
HKC: It’s not so much that there is a Trader Gary and an Investor Gary. Every investor must pick a time to place an order. At that time, he is a trader, trying to do the best he can (though some ignore timing completely, very few do). I am just trying to make a distinction between a trading call (very difficult and often wrong) and an investing call (longer term and with much more certainty usually). We are all a bit of both I think, and the percentage of which we are varies at different times. Even Gary’s comment today “I don’t like selling into gaps down” is a traders call, though the investor is saying “I will be out by the close because I see no edge.” The former can be said with confidence, the latter is a best guess as to the short term.
Gary: What are some of the signs we will be looking at for the D wave to end? Since we are expecting Silver to go much below its 200dMA, buying again at a tag of the 200dMA might be too early, correct?
Fubsy: I also take pilot positions sometimes. Sort of breaks the ice and keeps it on my radar screen. Why do you buy DUG instead of just shorting XLE? I try to avoid the inverse leveraged ETF’s when possible. You probably have lots of cash most of the time like i do, so suspect it’s not to get extra leverage, so…?
Guys, FWIW, the $$$ looks to be ‘crawling’ along its 50 dMA. I belive somewhere in the past Gary has mentioned that such crawls will break up (or down) powerfully. The $$$ crawl in this case will break up most likely.
anyone:
how far can/will miners go down in this D-wave? we are already on the 200 DMA that was support in the past 2 years…
the question is selling with a loss or sitting it out?
pima,
appreciate your thoughts.
NJ,
I’m going to go over it in tonight’s report.
I’ve been a big fan of Tim Knight’s trading. As much as some of you don’t like him, he’s a very good trader. Check out his performance over the past few weeks:
Buy ZSL 18.83 current price 20.53
Short GDX 57.14 current price 55.90
Buy ZSL 19.76 19.74 sold (loss)
Short GGB 10.98 10.88 sold (profit)
Buy GDX 56.66 57.23 sold (profit)
Buy SLV 35.29 35.64 sold (profit)
Buy SLV 38.36 38.51 sold (profit)
Buy GDX 57.09 58.01 sold (profit)
Buy GLD 149.43 149.75 sold (profit)
Buy GDX 57.77 58.29 sold (profit)
Short EWJ 10.55 10.48 sold (profit)
Short AGQ 367.00 332.65 sold (profit)
Short GDX 61.48 57.76 sold (profit)
Short GLD 149.63 149.19 sold (profit)
Short SLV 47.37 45.04 sold (profit)
Buy TLT 93.59 93.94 sold (profit)
Short GLD 146.76 147.52 sold (loss)
Short FXE 142.86 145.57 sold (loss)
Short AAPL 321.80 350.63 sold (loss)
Buy TLT 91.93 92.76 sold (profit)
Short SLV 41.51 46.96 sold (loss)
Short GDX 61.54 60.95 sold (profit)
Short FXE 144.28 142.41 sold (profit)
Buy TLT 90.02 89.97 sold (loss)
Short GDX 63.61 64.05 sold (loss)
Short SLV 38.66 39.63 sold (loss)
Short GLD 142.55 143.62 sold (loss)
Short GDX 63.63 62.54 sold (profit)
Buy TYP 20.99 21.29 sold (profit)
Short URRE 2.23 1.96 sold (profit)
Buy ZSL 23.20 24.18 sold (profit)
Buy GDX 58.59 59.31 sold (profit)
Short TBT 36.66 36.23 sold (profit)
Short INFY 64.72 65.88 sold (loss)
Short EGO 15.91 15.85 sold (profit)
Short EK 3.27 3.22 sold (profit)
Short RTH 103.49 102.96 sold (profit)
Short EFA 57.95 60.48 sold (loss)
Short GLD 138.40 138.21 sold (profit)
Short OIH 154.03 164.22 sold (loss)
Short FXE 138.92 141.69 sold (loss)
Short GLD 136.10 139.62 sold (loss)
Short GDX 55.72 56.49 sold (loss)
Short OIH 156.18 153.79 sold (profit)
Short IWM 80.15 79.36 sold (profit)
Short FXE 137.67 139.27 sold (loss)
Buy GDX 57.34 57.96 sold (profit)
Buy GDX 57.00 57.61 sold (profit)
Buy GLD 137.12 137.70 sold (profit)
Short GDX 58.66 57.25 sold (profit)
Short XLE 77.12 74.60 sold (profit)
Short TYH 51.72 47.73 sold (profit)
Short GDX 60.87 59.24 sold (profit)
Buy GLD 140.36 140.37 sold (profit)
Buy GDXJ 39.44 39.76 sold (profit)
Short FXE 137.54 137.35 sold (profit)
Buy IAG 21.84 22.00 sold (profit)
Short GDX 59.54 60.98 sold (loss)
Short SPY 131.16 131.17 sold (loss)
Short SLV 32.58 32.39 sold (profit)
Short GDX 59.31 59.09 sold (profit)
Short SPY 131.52 130.77 sold (profit)
Short SLV 29.95 32.02 sold (loss)
Short GDX 57.36 59.47 sold (loss)
Buy TLT 88.93 89.23 sold (profit)
Buy ARM 18.91 19.77 sold (profit)
Buy SBAC 42.78 43.47 sold (profit)
Short GDX 56.25 56.12 sold (profit)
Short GLD 130.37 135.77 sold (loss)
Short GDX 55.40 55.16 sold (profit)
Short IWM 79.75 79.48 sold (profit)
Short SPY 130.68 130.56 sold (profit)
Short GLD 130.91 129.75 sold (profit)
Short SLV 27.91 27.75 sold (profit)
Buy ZSL 11.48 11.21 sold (loss)
Short MUB 99.06 98.94 sold (profit)
Short SLV 27.57 27.39 sold (profit)
Short GLD 130.11 129.93 sold (profit)
Short GDX 53.92 53.61 sold (profit)
Short DBA 33.81 33.92 sold (loss)
Buy TZA 15.70 15.65 sold (loss)
Short USO 37.42 37.40 sold (profit)
Buy ZSL 11.56 11.72 sold (profit)
Knife,
Probably during the next bear market like it did during the last one. The Dow got hit hard but gold held up relatively well.
Normal “parabola analysis” works in normal, liquid markets. In normal, liquid markets, the chances of a parabola “magically rebuilding itself” are pretty much 0.
Silver is an INCREDIBLY illiquid market, by the standards of world capital flows. And, on top of that, it is “joined at the hip” to a larger, more liquid market (gold), that is the real driver of the sector. Normal “parabola analysis” doesn’t NECESSARILY work in incredibly illiquid markets — especially ones that are attached to a larger, more liquid market that is the real driver of the sector.
As I’ve mentioned before, I think what we just went through is roughly analagous to the “end events” of the 2006 C-wave. The swings are MUCH more extreme this time, because this has been a much bigger, longer C-wave. But I think the same general dynamics for gold and silver, and the same gold/silver interrelationship are in play. I don’t think the recent plunge in silver has “busted” the overall dynamics of this sector, or the gold/silver interrelationship.
You could argue that silver was in a “smaller parabola” in 2006, and that that parabola was broken in that one day 20% crash. And yet, by the end of that C-wave, that silver parabola had been “magically rebuilt”, and silver reached a marginal new high.
I think the same will happen this time. As gold powers higher into the end of June, the silver parabola will be “magically rebuilt” — because, as 2006 has “proved”, this can happen in extremely illiquid markets that are “attached at the hip” to larger, more liquid markets that are the real driver of the sector. (Even though I know gold itself is, by the standards of world capital flows, a relatively illiquid market.)
By the logic of this rough analysis, by the end of June, silver could “roughly double top” (as it did in 2006) in the $49 – $52 range.
All this also points out that it’s very hard to get good “TA signals” for the entire PM sector from an unnatural, illiquid market that is attached to a larger, more liquid market that is the real driver of the sector.
I think Gary’s approach all along has been the correct one — the truest “TA signals” for what is REALLY going on in this sector come from watching gold. After what just happened in silver, it can be extremely hard to believe this. The tendency is: “Oh my God, look at the silver chart! It’s GOTTA be giving us the correct signals for the PMs!” But I believe the truest signals still come from the more liquid, bigger market that is typically the real driver for the sector. And I think the underlying relationship between gold and silver is still intact, even after this big drop in silver.
I’m afraid I can’t stick around to defend my repetitious “conceptual thesis”, or to argue whether “2006 silver” was REALLY in a parabola, etc. I gotta run back to my real job. I just wanted to suggest these thoughts — which others have suggested as well — to the group.
Good luck today!
That’s a very high winning % for a trader.
Timmy is batting .788.
http://comments.socialtrade.com/profile/?uname=tknight
He might not be great trading under cycles and fundamentals, but the guy understands setups and risks extremely well.
Thanks Gary! One last question: In the past you have mentioned after the A wave, it is going to be difficult to make money till the next C wave. So whats the plan for the B wave? All cash or play the intermediate cycles? Sorry, am thinking way ahead…Would really love to recover and more than make up for all the lost paper profits! I am all cash now, up about 10%, after being up close to 100%. Small account around 80K. Thanks DJ, Fubsy, Poly and others – been a very valuable learning experience. Hopefully we don’t repeat these mistakes again!
For anyone wondering whether silver is being traded by hedge funds, you just need to draw some fibs. We literally nailed the 38.2% retracement to one or two ticks. For something as thin as silver that is amazing. There were about 100-150 offered around 39.50 earlier today.
The initial sell off stopped at DS1, retraced 38.2% and moved down again to the 38.2% retracement of the move up (yup, 38% retracement of 4 days in 2 hours). A small rebound and down to DS2 which was almost the 50% retracement of the rally. Unlike the earlier collapse, which was helped along by HEAVY long liquidation, this is likely to be more grindy.
Gold has behaved much better with the 1505 high value area providing solid support.
One big problem with commodities is that the big moves start during London time and the ETF option markets are not open.
Perhaps we need to find the equivalent ETF products listed in London and trade options on them or at least use them to hedge.
I haven’t actually tried to track him but what’s Tim’s long term record?
I’ve noticed he seems to try to short bull markets a lot.
Mike,
I see you are interested in BioTech… Did you happen to see the paper “The Coming BioTech Bubble” by Maudlin? If not, you can see it on InvestorsInsight.com. Let me know if you have trouble finding it (if you are interested). Some great stuff and links to some very smart people in biotech field..
….It is almost unbelievable to me that the market can make a mispricing mistake of this magnitude right before the greatest parabolic move of the decade but it has….
Silver tagged the 50 DMA. I was pretty confident the sellers would return at that level.
EricH:
Thanks for posting the links. What all the doubters forget is that he is what is called a Professional Loser; i.e. is he cuts his losses quickly (term I learnt @DOCs). He constantly updates his stops. So he has been wrong about the larger time-frame moves but in the time-frame he trades, he still is able to make it.
Burton,
Apparently the market wasn’t making a mistake at all 🙂
That being said the market is making a mistake as miners are still way too cheap. If this continues I know where I will play the A-wave at.
Gary, so do we have some more room for the downside, or is this a good place for short bounce?
Eric: I have never fully understood the TK bashing here. I believe it is because he controls what is said on his blog and people are put off by that, so they say he’s a lousy trader. If you have a tight stop in place it really makes no difference whether you are shorting a bull market or not—your risk is to the stop point and if the item doubles because it is a bull market it makes no difference to you. Risk control is the key, IMO That’s a very good track record.
NJ,
once the A-wave tops it’s going to be tough to make money. I suppose I’ll try to use a combination of overbought and oversold oscillators along with cycles to trade that presumably choppy period.
Gary,
Have you ever read Jim Stack’s work at Investec? He seems to have terrific indicators for the start of bear markets. Been reading him for a few years now, and I would not short the stock market without confirmation from him…
I just wish that the silver/gold prices would fall through a hole and bottom out so that the next phase can begin.
Gary,
TK has his ups and downs over the past 5 years but he did make a killing in the 2008 meltdown.
The reason why i brought this up is because TK does a tremendous job of risk management. It’s something we can all learn from. To him, it doesn’t’ matter if it’s a bull or bear market. It’s all about setups and exiting when the trade goes against him.
Eric: The problem with trading is it’s hard to make big money. If you use tight “risk management” you get kicked out of winners all the time. If you know something is going from 30 to 60, why sell at 28? That’s where Gary’s cycle timing-band idea has changed my approach and allowed me to make much more money. Risk management prevents big drawdowns and also (often) prevent big wins.
Michael,
I used to read Jim Stack till about ayear ago. From then on, focused on Gary exclusively.
What does he say about start of bear market at this point in time.
Eric,
Tim is a very short term trader. One will have to use strict risk management to play that game but its a very hard game to make money at consistently.
I’ve tried the short term game a few times and I can’t do it.
A 5 year track record would probably be more instructive as to whether Tim is making it work or not.
I think we can definitively say those were bear flags at this point.
Gary, just a rough idea, A wave timeframe?
DG: Agreed. Another way of saying it is that, with Gary’s system, you can swing-trade the big pivots using cycle-timing, position sizing, an leverage-sizing to manage risk. It is a FANTASTIC way to do it. Plus, you don’t have to be wedded to the computer like the “day-trading” approach.
Should start once this intermediate cycle bottoms.
Wow, as soon as that? No consolidation period?
Gary, hope you dont mind 2 quick questions.
1 – re the bear flags, can we measure the move downward the same way we would upwards ? So, SLV went from 48$ to 33$ (15$) .. consolidated (Bear Flag ) can we assume it goes from the top of the flag down another 15$ , so 20$ SLV ?
2- Also you have often said Bull Markets rarely repeat .. why do you think Silver will ?
Added to silver calls. Will know by next week if this thing has legs or not.
GDX putting in what I think is a double-bottom.
Interesting action today. Will remain on the sidelines for now.
Thanks Michael, got it.
Gary,
Yes, TK is a very very short term trader, he’s method works great for those willing to step in front of this D wave train.
The consolidation comes as the next C-wave gets started. The D-wave takes gold to extreme oversold conditions. The A-wave snaps back violently to relieve those conditions. The B-wave drifts down to relieve the overbought conditions created during the A-wave and then gold moves into a long consolidation after all the violent moves have run their course.
Peter,
This bull market isn’t over. So there’s nothing to repeat. It will just continue.
Gary,
Thanks for the explanation, I’m sure you get tired of repeating it….
Anybody taking the EUO trade to make a little money, while we wait?
Pay attention to whats going on here folks. The dollar is rallying, the silver parabola is collapsing, everything is getting hit.
Are you sure you want to fight this when we know we are in the timing band for the D-wave.
If you get caught you are going to damage to your account and not be able to play the A-wave.
Thanks Gary. Any thoughts on the measured move ? SLV down to 20$ ?
I think that just maybe, finally, this move will make the last of the holders throw in the towel.
I was expecting the bounce to go to 42$ but it didn’t even cross 40$.
Dr. Copper continues to sing to us.
http://www.finviz.com/futures_charts.ashx?t=HG&p=h1
New lows for the year.
🙂
Gary,
Does the low in the current D-Wave ever gets broken in the next ABCD cycle?
What I am trying to say if this is the D-Wave and lets say we go down to $21 in Silver, will this be the new low for the next ABCD cycle.
Thanks
Peter,
If gold goes down to $1300 or maybe a little lower I expect we will see silver test the breakout at $21.
Dallas,
Yes the D-wave low will be the low for the cycle and the starting point for the next cycle up.
Gary
Does a bear flag confirmation confirm the D Wave?
MrM,
Silver tagged the 50 DMA yesterday. That is where one should expect to see the sellers come back and apparently they did.
I think we need to face reality here. This is a busted parabola. The odds of one of those recovering are very very slim. You would have better odds on the blackjack table I think.
I think we just have to accept that silver got us this time and move on.
It is time to get the hell out of dodge. If we get a whiff of deflation almost everything is going to get slaughtered. I think Gary is dead on: save your capital for the bottom of this thing.
Gary, is this not what you were seeking immediately after the silver crash, i.e., a swing low followed by a retest of the lows, followed by a (possible) climb to new highs?
Jinks,
No but a move below $1462 will at this point.
That was obviously the cycle low. Breaking it now would confirm an intermediate decline has begun and the odds would be high that would also be a D-wave decline.
i’m just licking my chops thinking of buying SLW in the 20s again.
Huge volume on the crash last week then low volume for the past few days on counter bounce and now were back to huge volume on decline again. PM stocs could not stay green on counter bounce and now that we’ve rolled over they are down huge again. Good luck to those holding calls.
E,
I wanted to see a test fairly quickly. Something where it was obvious the cycle HAD NOT bottomed yet.
Now it has become pretty clear the cycle did bottom and gold is now at risk of a left translated cycle.
Gary,
Thanks a lot for getting us out this Morning!
Did I make amends (a little bit) for getting caught in the silver crash? 🙂
Dan,
I’m with you and so did many here…
What is pushing the US$ up, just the cycle off the low?
what is the estimated timeframe of gold going to 1300 and slv to 21? by july or october?
Yes Gary. Thanks for getting us out.
Yes good call getting out Gary. I got out of all my positions first thing this morning after reading your report. Saved me quite a bit of money.
Gary, on Monday you said, (for those who kept their all positions):
“So if you are looking for an exit price you might want to at least wait till silver closes above that level (BB) before you exit. Personally I would wait and see what gold does before exiting.”
Did you change your mind about that?
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E,
I’ll cover it in tonight’s report.
Technical Analysis and price action always wins combined with cycles makes it very powerful. I feel guilty at the sums I have made shorting crude, wheat, cable and silver this afternoon all with trailing stops. Scary. I just hope all the longs took heed last night. It goes to show the power of reducing volumes – big money was not interested in higher prices in silver or crude. I’m not bragging as that is destructive but I’m just pointing out that good risk management and trading your plan can bring great rewards.
ABC,
I did. Once I saw those bear flags forming I started to get nervous.
Gary, you have made great calls throughout this bull. You called the 3 legs, called the 50$ silver price when the darn thing was trading at 14$. Seriously, i have the greatest respect for you and of course, my thanks again, for getting me out a very precarious financial situation !
Look forward to the next run
Alright time to go train. I do have a tournament in two weeks so I better get off my butt and get to work.
Gary,
1. You gave us an idea to switch from AGQ to DGP at the top. Some of us used this strategy.
2. Without you I would have been caught in this down draft this Morning.
I am all cash with 117% profit since February thanks to you!
Great call on last evening’s premium update, Gary.
Silver is now down over 8%. Wow!!
I am so glad that I stayed out after reading your update!!! Thank you.
Nice move exiting positions into the bounce, Gary. 🙂
for people buying silver or SLV puts which ones are you buying? I’m thinking the july 25 would be a good candidate…
Sandy,
Stack’s indicators still strong for bull market to continue… He now has a new bellweather index in addition to his Negative Leadership Composite Index.. well worth the sub cost…
Not,
I put 2.5% of my portfolio into the July 25’s. At this point of accumulated losses, I’ll hardly miss the funds should the trade go sour . . . totally worth the chance for some recovery.
Good luck!
OTM SLV puts, btw, not SIL
Poly,
What’s your uncle point? Is your stop way down at the low (1462 gold)?
Right now gold is at the 50 percent retracement level of the recent move up which could be a normal retrace. However, the dollar has punched its way to new highs.
I sold half my gold calls at the open, so I’m down to a small position – the equivalent in GLD shares would be about 30 percent of my account. But considering the fact that the delta on the calls is .67, it’s more like 20 percent.
Good call on today report Gary. Thanks
DG,
Yes, I’m 90% cash right now with a 10% position in DUG.
Why didn’t I just short the XLE? I’ve seen DUG/DIG perform really well in trending markets. I did well with DUG in 08. I guess its like meeting up with an old friend. Also, the stops are close, so I don’t risk time and reversal decay on the 2x inverse.
Plus, in the past, when the market was tanking, my brokers often lent shares with the stipulation that they could be taken away. i don;t see that as a risk at this time, but if the market starts tanking, i don’t trust the powers that be, and could easily see my borrowed shares stripped. And..I like controlling more position with less cash as the 2x ETFs allow, but I’m always leary of their potential for decay so only buy them for a trending market, and with a concrete stop.
f
For me personally…
I sold out of all my last weeks purchases yesterday, because I was seeing indecision and resistance being met with slow volume…so I expected a pullback.
I do NOT at this point see a resumption of the 2nd half of a d-Wave ( could be, but may just be a little shaking out nervous buyers and filling gaps here too?). Maybe even a Re-test of our recent bottoms.
Its too early for me to know , so I am not going long here or short…yet.
exited all gold and silver postions this morning, before the pain got excessive.
JUST so you see how quickly things can change…
Monday Gary said you would not have to make a decision this week, a rally here would last into next week, and bollinger band trade was in effect too.
So its too early HERE to know whats next for me. 🙂
Can anyone please explain why it has become clear that the cycle has bottomed already and this is not just a retest of the prior lows? Thank you.
Notgreedisgood,
Aren’t you the one that asked that same question late last week? You’ve got on these things on the way up not after they’ve gone down huge like today and late last week. Although I do expect we will still hit the 200dmva eventually.
Mike,
I’ve also got some NNVC. Did you hear about the company thru Allan?
A 60 point rally in my opinion is a cycle low and yes how quickly things can change.
The bear flags really started to make me nervous. If this is a daily cycle that has topped in only three days then this is going to get very ugly and there should probably be another daily cycle down after this one.
Off my UUP chart, it still looks to me like the dollar is going to roll over.
If it doesn’t, I’ve got my Guinea Pig Stops under my “long gold” positions. If they’e hit, my computer is programmed to repeatedly blare out the “HAha!!!!!!!” sound from “The Simpsons”, and then on screen will flash over and over: “You’re not just a Guinea Pig, you’re a Dumb Ass!!!!!”
;^)
It happened again! The silver reached almost 40 overnight, then of course, you know what happens then! From what I see, I tend to think the 2nd leg down started today.
FYI, the dollar index breaks out its bull flag, while eur breaks down from its bear flag.
Be prepared!
Rachel,
At least we didn’t let the gap down catch us twice.
Gary,
i gave up on my 4 positions. I see your point save money for the A wave.
AUY was not bad, but as soon as GLD got hit everything fell apart.
Out and waiting
Gary,
So in this case it’s the magnitude of the rally and not that it broke $1521 and then failed?
I’m a newbie at this cycle stuff, so still trying to take it all in.
If that is true (Gary)
Cash is KING , or downside gains will be huge.
DG (DWIGHT) haha
I believe you said we’d be shorting the crap out of the D-Wave. Where are ya Buddy ? You shortin with out us?? 🙂
In the nightly report two or three days ago Gary said that IF the dollar were to find it’s way back to the trendline he would expect a sell off once tagging the 50dma. The 50 day SMA was tagged a few minutes ago.
Is this still a consideration as a POSSIBLE reversal in the dollar? I realize all bets are off..just curious.
PST,
Thanks for the post re the workings of the Fed. I still don’t completely grok it all, but jlinks posted a couple of charts last night that gave some insight into where most of the increase in money supply from QE has gone.
If I’m reading the charts correctly, most of the QE money has gone into increased bank reserves. However, there’s about 300 billion that has not gone into reserves, so can we assume that that ended up in the stock and commodities markets? If so, how much of an impact would that actually have. (We need to know the total dollar amount that is invested in stocks and dollar amount invested in commodity futures and I haven’t been able to find those figures.)
I believe that Wes believes most of the inflationary moves we’ve seen in the markets since QE II was announced was due to the expectation of inflation and not due to the newly created money (increase in money supply) making its way into those markets.
Where do you stand on this? Is it your opinion that some of the increase in the money supply actually did make it into the markets and is therefore responsible for the big move up in stocks and commodities since last fall? Or did NONE of that money actually make it into those markets, and therefore the big move up in the markets must the result of nothing more than expectation of inflation?
jhnewman,
That’s funny. I want a copy of those sound files so I can get my computer to chastise me too!
WMP,
I said the 50 would be the first place I would expect the trend followers to try and re-establish the trend. I also said the dollar could penetrate the 50 and if it did it would be another check mark in the “three year cycle bottom” box.
Another good call Gary, you are back on track.
Pima: Will do!
You’ll find it can be very beneficial to be chastised by your computer. (Until you smash the damn thing.)
I think there can be no doubt at this point: The dollar has definitively broken its downtrend line drawn off the January and April highs. It MAY come back and retest that line (after going up for a couple of days or so), but if it does, it seems very unlikely that it would break back below it.
If we do get a retest, that would be a very low risk entry for a dollar long.
Pima,
“What’s your uncle point? Is your stop way down at the low (1462 gold)?”
I like $1,474 as my stop, will play it off that. It’s off 0.9% at this point, doing rather well considering.
Alex: The “one more dollar drop” call cost me on my shorts. I am not short, but will post when i do. I’m a little frosted about missing EUO so far. I got a buy on the damn thing at 16.25, but we were supposed to have one more euro rally (dollar drop) so didn’t take it. Oh well. If this move is to last a month or more I will get some chunk of it. I will post when I do.
Dan
Nice call are you adding to your puts today?
PC
Read this for a different opinion on the effect of ending QE2
http://www.minyanville.com/businessmarkets/articles/quantitative-easing-qe2-treasury-bond-treasury/5/11/2011/id/34469
Read point 6 twice.
Gary,
Then you pegged it again 🙂 The 50 might not hold for long, but gottem thinkin’!
Double bottom on silver just above last Thursday’s closing low. Watching…
jlinks – My novice interpretation (as valuable as any economist) QE2 simply balanced the deflationary forces if you define inflation/deflation as movements in overall credit instead of price action.
If deflationary forces pick up (more credit destruction), more QE will be deployed. Otherwise, they are trying to hold steady the credit destruction so it won’t convert into direct deflation. IMHO
Yep,
I closed my 3 day old longs this morning. Downside risks carry the day.
http://speculativemeasures.wordpress.com/2011/05/11/153/
Gold is holding very well, as expected in the 1490s.
Still holding.
If the USD can rally past 75.50, Id get worried.
jlinks,
thanks!
So are you in the camp of “the increase in commodity inflation during QE 2 was NOT due to the QE funds making into those markets, but instead due to the EXPECTATION of inflation” ??
What is the US$ index at?
I have a site showing 75.55 and another 75.32.
Gary:
How you do what you do is beyond me. If I had gone through the AGQ crash, I’d still be rolled up in a ball, sucking my thumb. And yet, the whole time, you’ve been analyzing rationally and answering all our questions.
It must be your rock-climbing training or something.
Mr.M you have a spot and a futures contract pricing.
funmike,
Regarding SMT subs moving the market, I believe if we were all trading gold and silver futures, then yes, we would have an impact. But I think only a very small fraction of the subs trade futures. Gold and silver prices are determined in the futures markets. SLV, AGQ, GLD–they all FOLLOW what the futures are doing, and it’s those etf’s that I believe most subs are trading.
Aaron.
Ah thanks, spot is lower I guess.
Boy oh boy, this freaking blows. 100% cash now.
I can’t believe I ignored the many, many warnings the miners were giving us. Tough lessons, but we will get em next time.
FWIW, I see massive H&S on the daily charts for EXK & SLW. (target 3.50 for EXK, teens for SLW) They need to form RT shoulders a bit more, but if silver heads for 20 eventually, those targets will be hit. Silver does now look like a bear flag now to me. Big one too. Target-20
jhn: It’s a lot easier when you have tripled your money and then lost a chunk off the top. I know for myself I am disappointed to have a smaller profit, but it feels very different than when I have taken a big hit to my capital. And yes, Gary does stay even-minded very well.
Mr. Miyagison – 75.337 as of 1:49pm EST
Mr T,
I pity the fool who doesn’t thank you.
Maybe someone can explain to me how the stock market could rally like it has, how commodities could gain hundreds of percent and how the Fed’s balance sheet can expand by over a trillion dollars, and government debt by several trillion dollars yet the money supply hasn’t expanded
Both Jim Rogers, Marc Faber and many others seem to think the Fed did pump trillions of dollars into the banking system. I’ve got to think these are incredibly savvy investors who know exactly what they are talking about and they both think the Fed has printed massive amounts of money.
So despite all the evidence to the contrary and opinions of people who probably know what they are talking about how can the money supply have not increased?
PST/Jlinks:
Thanks very much for the econ lesson. Any good book you’d recommend? I totally missed this area of education! (100% nerd scientist!)
Mr M:
$DXY high 75.366, now 75.33
DG: very good point.
But I’m still going to look into rock-climbing. ;^)
SLW buy order@ 33 (200 sma)
DG:
It’s not the on the moment trading that I mind, it’s the “throwing the cycle out” that kept me baffled…
In the ’80’s Mr.T’s chains around his neck were valued at $300K!!!!!
In today’s dollars it would be in the millions…
One day people… One day… I will have chains like Mr.T. That’s my trading goal that Gary is helping me with.
92000,
Why would you try to catch a falling knife at this point. We saw what happened with that strategy last week, unless it’s just for a quick day trade?
Mr. T: make sure you take a picture and make it your avatar.
Pima,
This will be a bit convoluted because there are a lot of forces at play. There’s no question that inflation expectations and speculation are part of it, but there is also much more liquidity in the system that needs to find a home.
When the Fed purchases treasuries, that cash goes into the banks in the form of reserves. This is why Bernanke often refers to it as just an asset swap (cash for marketable security on their balance sheet). Now normally the transmission mechanism that moves that money from the banks into the economy comes in the form of lending. Those that claim that the debt is not being monetized believe it is because this transmission mechanism is broken and that lending is not happening. This is only partially true.
If you look at lending statistics, there has definitely been a slowdown in some forms of lending, primarily consumer, real estate and small business. However, lending in the aggregate is very strong and it consists of government, business and consumer. State and local government borrowing is up, corporate lending is strong and even within consumer lending, some areas are performing quite well. Non-revolving consumer credit (auto loans, student loans, etc) are at all time highs right now exceeding where they were in 2008. Take a look at the Fed’s Flow of Funds report (Z1) and you can see which areas are growing and contracting.
Also, not all lending is the same in terms of their impact on stocks and commodities. Right now margin debt for investors like hedge funds are at all time highs, even higher than in 2007/2008. Hedge funds borrow on margin from their Prime Brokers, which are basically divisions of the large money center banks. In addition, large corporations are borrowing like crazy to take advantage of record low rates and are simply keeping the cash on their balance sheets for a rainy day. Most CEOs/CFOs now see a freeze up of the commercial paper market as a possibility after the financial crisis in 2008, and are not going to be unprepared if it happens again. Believe me, investment bankers are now trying to convince their corporate clients to borrow or issue debt rather than equity to take advantage of the government’s zero interest rate policies (ZIRP). As you can probable guess, this type of lending has a much more dramatic impact on stocks and commodity prices than does lending to you or I to purchase another non-productive asset.
Getting long….so 2nd part will follow shortly.
Gary,
Just curious, what, if anything, could cause a turnaround and huge up for silver or gold in the coming days, not longer than a week. A bounce is not what I’m talking about.
If nothing then nothing!
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PST,
If you break those long posts up it probably won’t get caught by the spam filters.
I added a decent sum of gold calls right here, but these will be on a very short leash, wont risk much.
My thinking on this trade is:
a) gold has held up very well today.
b) a sell off has stabilized, for now.
c) often in new cycles, the swing point can get bumpy, people exiting who missed the past cycle low, so it often serves as a consolidation point before launching into the bulk of the daily cycle.
d) we’re at a cross roads in this cycle, this does have characteristics of a ELT cycle (with dollar rally), but its also at the swing point. This means we should be moving up nicely from here or we drop and fail, so the trade is stopped out.
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gary ,
i am looking SLW at 2006.
92000,
This is 2011.
If the HUI closes here it will be the first close under the 200 DMA in almost a year.
If this is a D-wave I’m really staring to lick my lips thinking about the bargains that are going to be had in miners this summer. This is the kind of thing that can spawn 100-200% gains.
DG
I remember you mentioned the EUO call…I was going to take it.
I got left behind too. But looking at it today, it gapped up on light volume, this could come back and fill that gap.
I sold positions yesterday and wanted to buy SCO , but really thought it would gap down and fill the big gap at $40 and the 20 SMA.
Missed it , now $45 🙁
Do Post when you do see something and hopefully I am on the blog. I am off and on a lot these days.
Dear Gary,
Thanks for your post last night. It helped me a lot today. Clear, precise, clinical, and accurate..
We all need that at the moment!
DG,
If I may…Made a huge mistake ( same disaster as you in the 80s, same kind of amount). Can I ask you how long it took you to recover?
Holy shit. What happened?
Re-asking, lost in posts…
Gary,
Just curious, what, if anything, could cause a turnaround and huge up for silver or gold in the coming days, not longer than a week. A bounce is not what I’m talking about.
PC
Yes.
Could become a double bottom or a further drop.
Holding cash dry powder here, but my physical silver bags and bars just got a lot lighter again.
In addition to QE, the Fed has also ratcheted up its POMO schedule, which are additional purchases above and beyond the $600B QE2 program. Also, in terms of the banks, don’t just look at the amount of treasury purchases (balance sheet data) but you also need to look at gains and interest income (income statement) that the banks are receiving from the Fed as a result of these transactions. Banks purchase government securities from the US Treasury and then sell to the Fed at a premium. This is recorded as a gain and is not reflected in the aggregate QE dollar totals. Also, the banks will park their reserves back at the Fed overnight and receive interest on these deposits from the Fed. This interest income is not put back in reserves, but is either paid out in compensation, reinvested or lent back out. There are these kinds of income streams that go virtually undetected and unreported in the media, but there are many back-door bailouts that noone ever talks about.
Anyways, I know I’m all over the map now and don’t even remember what your original question was. Why don’t I stop here and you can ask anything that I didn’t already address.
hkc
Read mises.org
All the books by Murray Rothbard
(available on the above site free)
MrM,
I don’t know but if you are trying to rationalize reasons to keep holding (so you don’t have to take a loss) you might want to consider just biting the bullet and taking the loss. The important thing at this point is to just get to the bottom of the D-wave with your stash intact.
Anyone notice we just went above the 50dmva on the USD?
Gary,
I have sold everything already, just curious as to the reason, if any, of a unsuspected, surprising return short of a terrorist attack or nuclear war.
Sophia .. if I may offer an opinion. I lost about 200% of my savings in ’06/’07 ( i was heavily margined, re-mortgaged , re-invested and lost that too .. )
I started investing with Gary in ’09 … earlier this year I was breakeven … I am guessing I gained about 200% – 250% riding this C wave. As a matter of fact, if I would have done what Gary said, bought, turned off the computer until 2 weeks ago, I would have done much better.
So .. my thoughts is you could ride the next A and C wave into profitability.
Gary
Jim Rogers say’s he will be shorting Bonds very soon. Do you think that will have a negative effect on the dollar?
nice call today gary
Folks the A-wave has the potential to be even more violent than the C-wave finale and if miners really get clobbered we could be looking at an opportunity later this summer that could recover all the losses from last week and then some.
Watch the dollar over the next 2 days. Looking at my charts, I still think it’s going to roll over. And if it gets below yesterday’s intraday low on UUP (I gotta get better charts soon), it’s going to start triggering all those fresh long “stop losses”, and would tend to start to snowballing lower.
As for what might do this fundamentally, I don’t know. But this seems to have been more of a “weak Euro” than “strong dollar” bounce, so I’d guess it’d be something coming from the Euro zone — stabilizing the Greek situation or something.
The only other thing I can think of, is if some Fed official makes some “dovish” comments.
Of course, the other plausible possibility, is that everything I’ve just said is wishful thinking.
H,
If the dollar has put in the three year cycle low it should rally for about a year and probably penetrate and turn the 200 DMA up.
EUO anyone?
Currencies tend to stay trending longer than other asset classes– (at least that has been my experience and what i have read from technical analysis)
Although I am not much of a trader– But this looks good to me — and way less volatile than shorting PM’s or miners.
EUO anyone—
bought some ery 16.02.
One last thing in terms of the impact on stock and commodity markets. The government’s zero interest rate policies impact alot of investors and, like I said in my last post, are driving investors out on the risk spectrum. Two examples:
1. By influencing companies to issue debt rather than equity, there is actually less equity securities available in the market (less secondaries). Due to the reduced supply, equity prices are rising similar to the effect that you would see if any other asset had it’s supply and demand equilibrium manipulated.
2. Typical fixed income investors like pension funds and insurance companies are being forced to chase returns elsewhere in an effort to match their assets and liabilities. They guarantee a fixed annuity stream to their recipients and cannot generate the returns necessary by investing in fixed income securities now.
OK, that’s it for me.
PST – incredible synopsis – thanks for the insight/summary – very well framed!
Sophia: Turned out to be great for me. Left my job as a broker, moved to CA, and started a new life. Best thing that ever happened to me. Had no interest in making money (I was younger!) for a long time. I recovered emotionally in about a year, financially when I decided to start making money again. Now I feel like I have the best of both worlds: a sense of balance and priorities, and money in the bank (o.k. in my brokerage accounts). That experience and having what was supposed to be a fatal brain tumor when i was 18 kind of re-orients your thinking a bit.
Gary
QE2 prevents the economy from crashing, so the stock market rises.
Another reason is that interest rates are kept low, so people are looking for a better return.
Commodities rise to the moon because everyone expects inflation, because the FED prints money.
The FED did print the money. Trillions of it.
But it’s at the banks as excess reserves.
Check the following 5 year charts and their similarities:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=BASE&s%5B1%5D%5Brange%5D=5yrs
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=EXCRESNS&s%5B1%5D%5Brange%5D=5yrs
So the money supply did increase. But only M2, which counts all the investment/savings/reserve money.
M1 on the other hand, spendable money/checking account money, did not increase.
M1 increases is what causes real inflation.
These people are all great investors but one needs to study currencies, banking, macro economics and Austrian economics to get the big picture.
Jim Rogers is a very rich man and smart investor, but doesn’t have much knowledge in Austrian economic theory.
Marc Faber’s forecasts are better though.
Gary: The dollar rallying for a year? But the metals dropping for just a couple of months? Please explain. Dollar and Gold up together for most of a year?
Alex: I will surely post if/when I start shorting. I still have a bull’s-eye drawn on shorting FXE!
Follow the yellow brick road…….
Hey Pima,
Yes, learned about NNVC through Allan initially a few years back when he was pounding his fist about it (one of the many times he did that ;). Did my due diligence on the technology behind it and have been in it ever since at sub $1 prices.
My only concern is the threat of big pharma coming in and ruining it somehow, but it is worth the risk IMO.
jlinks: I’ve read every book Rogers has ever written and have seen/read nearly every interview with him. One in particular that stands out is his encounter with the staff of the DailyBell (free newsletter with an Austrian/Libertarian slant). Mr. Rogers displayed an astounding knowledge of the Austrian school. I would not question that man’s understanding of any facet of economic theory; I’m just aware that he’s ALWAYS talking his book.
DG,
The dollar won’t rally in a straight line and don’t forget as the dollar rallies the Euro and other currencies drop. Holders of other countries will be buying gold to protect against devaluation of their currency.
Thanks Gary.
jlinks
The part bothers me is that those “excess” reserves only last as long as the housing collapse can be kicked down the road. Just as has happened over more than two years now the housing mess is causing wealth to evaporate and the banks are holding much of that bag. Just try to figure how much in reserves have disappeared in the last couple years….and we are in a double dip for housing now…
DG, how did be told you had a fatal brain tumour, and then discovering that it was not fatal at all change your outlook?
Thanks Peter for your answer. It gives me hope that if I work hard, I can make it back…
all the best Sophia :o)
W
Hence the reason for so much excess reserves, much more loans will default, without reserves they will bankrupt.
Thanks Mr. T.
I can’t add any value when it comes to cycle analysis or options, so I can only contribute here.
gold bumping up nicely. Up $10 from this mornings low.
Wow DG, brain tumor? That must be something that teaches you so much at such a young age! No wonder you seem so relax even when you lose money!!
As for the financial side of things, between you and Peter, it gives me hope and help me out of my hole!
ok, so I guess the point is they are bankrupt shortly after QE ends and reserves can’t be replaced…soooo, no end to QE or whatever it’s called next time.
Sophia: If I may, how old are you?
Eamonn: Too long a story for here.
Gary,
Do you think the USD has bottomed or is there one more test of the lows? Thanks.
POLY:
you’re too funny. You’re becoming a munchkin now. But I’m with ya!
P.S. Good action!
Checking in
Sophia: You’ll make it back, and then a lot more, absolutely no doubt, if you follow Gary’s approach to this Great Gold Bull.
Good luck to you. Be optimistic.
Don’t follow jhnewman.
Poly: I’m not following. From where I sit, I’m leading.
Until I’m proven wrong, I’ve got faith in my charts and my analysis. And I’ve got my stops in to tell me if I’m wrong.
Eamonn, thanks
DG: 46 – why?
Jhn: sweet thanks
Poly, you crack me up
So are pm’s up tomorrow or do we continue heading south?
@jhnewman
I was saying, i don;t follow you, regarding your post about munchkins.
Sold nearly everything yesterday before Gary made his call. Another newsletter analyst I follow predicted gold tagging 1520 and silver tagging 39 before retracing. He was right on the money, and I sold into those highs yesterday. So, now I’m 92% cash. Holding a few SLV July calls because there just isn’t that much more I can lose on them. If silver should do the unexpected and run up into mid- June then maybe I’ll end up breaking even on my initial capital investment. Only down now about 3K, so it’s not the end of the world, but since I trade for a living, the loss of profits is a blow.
DG, I agree with you about the nature of Gary’s form of communicating. Delivering advice in the form of “absolutes” makes readers question their own internal cues to be cautious. We were expecting, and waiting for, a deep, scary pullback, which Gary painted quite vividly. It was his “runaway move” call that negated our intuitive sense of caution to wait. Some, such as myself, were on the sidelines, safely in cash, waiting to get back in after the correction had bottomed. Others, like Steven, were intuitively questioning whether they should go ahead and exit. I believe that many here would have substantially avoided the blood bath had the “runaway move” call not been made. If I remember correctly, either you or Poly asked Gary the next morning why he had been in such a hurry to call a runaway move, since we were still within the parameters of the cycle.
To this day, I still do not understand that runaway move call. In my book Gary will have to do more than just get THIS call right to redeem himself from that huge mistake in judgment. He led us to the slaughter with that call.
Despite the attack you’ve received DG, I feel that the discussion you’ve launched is very helpful, and I agree with the points you’ve made so far. If it is just Gary’s nature to make declarative, black & white statements, then at least I have learned to adjust my filter for receiving his commentary, which at times does seem pretty dogmatic. At any rate, the ability to discuss this in an adult manner will only help Gary and all of us here in our future success. Many thanks to you for bringing this up in such a mature way.
would you guys suggest moving my canadian funds into Us funds to trade now that the dollar has put in a 3yr bottom?
Gary,
My understanding is we are not shorting or using PUTs in the D wave per your recommendation.
How long are we sitting on the sidelines before reinvesting any funds for the A wave/bottom of D wave?
Are we just going to be using Miner ETFs or should we start looking for good Miners for the bottom of D wave buys?
Oh! Sorry, Poly. I thought you were saying “don’t follow me” (long gold, etc).
My (obviously obscure) munchkin reference was to your “Follow the yellow brick road……” post.
My guess is we go lower and test the lows….But do they hold?
Con,
Correction gold was already long past the time for when it should have topped when I made the call for a runaway move and silver was clearly in a runaway move at the time. All corrections up to that point fell within the definition of a runaway move.
I’m getting a little tired of this Monday morning quarterbacking.
At ease,
We’ll wait till I think the intermediate cycle has bottomed I’ll go over it in tonight’s report.
No problem, jhnewman.
Yellow metal showing some real strength, “relative”.
Kyle Bass – Hayman
John Burbank -Passport
CNBC – Strategy Session w/D. Faber
Thursday, May 12th
Noon – EST
10:00am – Mountain
Two very smart gold bulls. Don’t miss this.
cannot remember who bought ERY at 16.09…careful, Oil went down lot already since last week and it is not like Silver, so anything wrong in the Middle East and you are fried…
Conhart: I never felt attacked, really. Silverhound posted his thoughts and I believe I responded to each of them. I wanted the story laid out for all to see and it was. Everyone can use their own filters going forward. My whole professional life revolves around trying to help people be aware of their biases and trying that are so deep and natural they are usually not even seen. I will always post when I think I see something important that will affect people going forward. I will never “Monday morning quarterback” without a learning-oriented reason. Attacking my reasoning and motives never bothers me. I know what they are. If others don’t, so what?
Thanks Gary.
I got out all out this afternoon with GLD back up to this mornings open range.
True Polly. Gold is showing some strenght.
Soon we must see a bounce in the euro and the dollar cant go up like this everyday.
Im in cash thanks to Gary. Nice call today!
Are there any possibility that we will test the low in the dollar.
In that case we will se a rally in gold and silver. Anyone?
I will be really happy to start at the bottom this time. 🙂
Poly: exactly. A good day, and I think pointing the way forward. Maybe sideways for a day or 2.
Sophia: the reason I ask is that, in my view at least, investing style is affected by age. I was a cowboy when younger and now at 55 am much more cautious about losing my stake. You are hopefully in peak earning years and can grow your stake that way as well. We will have a big opportunity in the late summer as the metals rebound from the carnage to come. Hang in there and build capital until then. Good luck. We’ll all be here rooting for you!
Hi Sophia- I did. Closed it out. Didn’t like what they did after I bought a breakout, lol. I am done until the A train. Thanks!!
Gary,
Doesn’t the swiss franc track dollar weakness better than the dollar index? The franc is 13% above it’s 2008 high.
Gary,
Please do not let the criticism get under your skin. You are doing a great job and I appreciate having you as a part of my trading/investing team.
I worry about you throwing up your hands and saying “I’m done, I don’t need this s*it”.
Just my two cents.
great to hear Rapper,I was getting worried for you!
DG and all of you guys who cheered me up, thank you so much for that, what a great blog!
Bill no 2:
I’m worried about that too. And to me, after finding this site, that would be the biggest disaster possible.
“I worry about you throwing up your hands and saying “I’m done, I don’t need this s*it”. “
It’s his business, he isn’t doing it for charity!
Gary
Thanks for boosting our spirits looking toward the summer upwave. It will surely be here before we know it and last week long behind us. And important lessons taken all around.
An early heads up: Another sharp up day in the dollar may well give me another short dollar/buy euro signal. The last one worked for only two days, which is not surprising given the dollar vaulting off horrible sentiment. This next one (if I get it) might give us a rally in some items I will be looking to short. I will post here as it unfolds.
MrMiyagi,
Do you have any knowledge or experience with CEF?
Poly:
Even so, I’ll bet he could live just fine on his trading income.
I am with you Bill 2 and JhNewman… I follow the blog and the post everyday since October and if I lost money it is because I didn’t listen to all the good advice given by a very smart bunch of people!
Gary, if some subs are feeling that it is their rights to give you such a hard time, give give them a refund and let them loose..There is really no point for you to get hurt everyday like that!!
jhn,
I think you have a little further to go also, but I just can’t lose anymore trying to get there. I need to preserve to start again.
But hoping it gets there for you.
…at ease…
No, this is the first time I’ve heard of CEF.
Gary is not a wimp. The criticism all around the blog has been either constructive, or someone moaning because they just got slaughtered (understandable, actually). IMO, you don’t become a world class athlete and risk death climbing rocks if you’re the type who shrivels when someone looks at you crooked. I’d be stunned if even overtly negative comments on this blog (which we haven’t had) would shake him significantly.
DG
When you get another sell dollar signal buy Euro will you buy gold then or silver..Short term..Or wait for a brief rally in silver or gold and then short?
What I make off this newsletter is inconsequential to me.
My intent was to try and help people ride this bull market. I think I have a system that works pretty good, despite a mis-step every once in a while.
If it gets to the point where I just don’t want the hassle anymore then I will go to once or twice a week reports.
Sophia: I was wondering the other day what it must be like for him to do his own trading so publicly, and to feel you had 100 beginners and intermediate traders often mimicking your moves. I could NEVER do it. It would be like climbing a “10 difficulty” cliff with 50 beginners and intermediates roped to you. That’s GOT to affect how well you climb that cliff.
I think it was a very smart move to change the way he releases his own portfolio, though I didn’t think so at first.
@ at ease, Mr. M
CEF is a bullion fund that has about half its assets in silver bullion and half its assets in gold bullion…
i don’t know what else you want to know?
for me it was a nice starter vehicle for playing with PM before I graduated to AGQ, and thankfully pulled out 2/3 before the big crash…
Oh come on kids, we all know Gary does not exist in reality, he’s a robot, a computer…
Moneyman: I will not play the long side, but will use the bounce to short Q’s, FXE, and oil, I suspect.
I’m reading on CEF, I got the outline of it.
New to me, I had not heard of it before but will keep an eye on it for next time!
Gary,
The money supply HAS increased. But most of that increase in the money supply is sitting in bank vaults as increased bank reserves. That money (that’s sitting in the vault) is having no effect whatsoever on the markets or on inflation.
The way I read the charts that jlinks posted last night is that there’s about 300 billion that did not end up as bank reserves, so that 300 bill very likely made it into stocks and commodities.
Regarding total money supply, isn’t it possible that even though the Fed increased the money supply with their QE and other POMO operations, the money supply in other areas could have contracted MORE than the Fed’s increases? As in, debt default, paying off debt (and not taking on new debt), etc.
MrMiyagi,
Thanks, thought you might be, came through an advisement service.
DG
Oki thanks! 🙂
Gary,
You might be able to claim a tax deduction for all the work you put in. 🙂
…AT EASE: Thanks very much. All I can do is see how it plays out. I’ve got my downside limited, and if it gets hit, it gets hit. I avoided — through luck mainly — the AGQ crash.
I think everyone here is probably doing what’s right for them, and that’s the most important thing. THERE’S ***TONS*** of money to be made going forward in this GoldSilver Bull. Nobody should “press” now thinking they need to take risks because this Cash Cow is almost over.
This Cash Cow should be mooing into 2017 at least.
I’m a new subscriber and have been trading my account for a little over a year although have been following the markets from some 20 years now…
One of the first things I learned was that no one can predict the future with absolute certainty, which has also been mentioned on this site a number of times just in the last week or so. As such, when Gary was making “absolute-type” statements he was merely expressing his conviction at the opportunity at hand and his reaction to what was transpiring in the gold and silver markets. Those with some experience (and even those with very little) know that Gary does not have a crystal ball and that his calls were not absolute nor infallable. It is up to each individual to take the advice and filter it.
Gary came so close to making a perfect call for himself, the rest of us made our own calls based on his and perhaps other traders’ advice. Who would have guessed that silver would not have blown through 50 bucks considering all the money printing the Fed has undertaken and the rate of decent of the dollar?
I hope that Gary will continue to provide the excellent service that he has up until now and I look forward to riding the gold wave with SMT as far as it will carry us.
Thanks notGreedIsGood.
You have answered what I needed to know. So no go. Thanks.
DBA just showed up on my buy screen. testing the low of a few days ago? I bought some for a trade.
MrMiyagi:
LOL! That hadn’t occurred to me.
Maybe like “HAL” in “2001: A Space Odyssey”.
Gary:
There’s an Irish saying: “God blesses those with the best intentions.”
So, expect to win your weight class for the next 20 years straight.
(Actually, that’s not an Irish saying, but I’m gonna make it one.)
35$ a technical support area for silver or psychological?
DG
When you speak of buying something for a trade, what time frame are you considering?
DG
the same analysis you just used works for GDX and GDXJ.
hmmm, could get intersting 🙂
jhm,
I so wanted to play until it got dark. But have to agree. Games over for me. I have bagged up all my marbles and pulled the pouch string tight and tied.
I WILL be ready for next game on!
Why would banks take money that they are going to have to pay interest on (not much granted) and then stick it in a bank vault so it can lose money?
Just use a little common sense, they have to put that money to work doing something or it is just another liability. They are obviously putting it to work in asset markets.
…at ease:
Very well put. And I know you’ll be very ready.
It sure seems to be a warning sign when the miners are disconnected from the metals. They warned us twice. This time we took heed.
DG,
I wonder if the agricultural market is affected by the same forces as pm’s
FunMike, I think Corn is supposed to be up. But I kind of like the shiny yellow better to play with.
Whether I continue in my positions or get knocked out, the “improvements” I plan to make by the start of the A Wave:
1. Learn how to use the TSI, which looks like it’s an absolute killer momentum indicator. And it has a very good, generous teacher in John;
2. Play an option or two with very little money, and learn how to use for hedging;
3. Switch to trading mini or full gold futures. I think that’s where the “best solution” lies for this Great Gold Bull.
P.S. I’m gonna swing trade the gold futures around the daily and intermediate cycles, with very controlled leverage. Not that day-trading BS with full leverage (which I think might be something like 20 or 22 to 1), but very small leverage to begin with (1.5 or 2 to 1), to be increased slowly overall as (if) I get good at it.
P.P.S. Assuming my “adjusting leverage idea” will work. I believe it will, but haven’t looked into it yet to know that for sure.
The trouble with ag is weather, bugs and a multitude of other unknowns.
http://www.apeakunderthehood.blogspot.com/
Parchment Paper Thin Walls
Gary,
At the bottom of the d-wave, would that be considered an IT low?
Trader H,
I’m contemplating the same thing, I think I may move the bulk of my CND to USD to prepare for the a-wave.
Ryan,
Yes it will be an intermediate and daily cycle low.
Funmike: A trade means a quick pop and then I’m out, or at least place a break-even stop. It’s a function of behavior not time, thought generally it’s a week or so. Yes, at this point a rallying dollar kills everything: ag, gold, oil, stocks, etc. As it is a trade I don’t worry about macro concerns.
Things really are looking damned if you do, damned if you don’t. Why is it so hard to just sit and watch? When the picture is fuzzy, it always gets clearer over time.
Now I’m thinking I’ll sell my DUG in the morning and wait for the longer term setups to arise. I’d really like to see a more pronounced consolidation in the dollar as its rise has been really steep over the last week. Also, Gold could easily be setting up for an ABC reversal out of the daily cycle low.
Push me Pull You. They went that away (pointing opposite directions. : )
f
Gary
They receive interest on those reserves (very little)
http://www.federalreserve.gov/monetarypolicy/reqresbalances.htm
The money is an asset to the bank. They expect much more defaults coming from the housing sector. The excess reserves will keep them from bankrupting, unlike 2008 where they lent so much, that when everything fell apart their balance sheet went negative.
well said Michael, I am also a new subscriber. I have never seen my accounts balloon to the levels they were before the crash. I had already made up my mind at the time that once Gary announced he was getting out, I was going to stick it out for another day using the analogy that Gary was always early to ensure subs didn’t get burned. My fault and greed, lesson learned the hard way. got out this am on his advice! Will play it as he calls it, now I have all this time until the IT low to read up on trading educational material I have so I can engage with the DGs, Cooters, jhnewmans, Alex, PMT, Poly, Basils etc etc of this blog. As a footnote this blog is one of the best I have read. I read every single message, I know, I need to get a life.
Keep up the good work!
Why would they need to let it sit in a vault when the Fed will give them all the money they want.
This just makes no sense to me. Usually if something makes no sense then it’s not true.
I really doubt banks are just taking money from the Fed and sticking it under the mattress for a rainy day when all they have to do is make a phone call when it starts raining and get as many umbrellas delivered as they want.
PC
The answer tyo your last question is “yes”. We are so used to wealth building through the markets that the wealth destruction of the housing market is hard to grasp. Bank reserves are disappearing into a dark hole about as fast as the Fed can creat them (out of thin air). One small problem, the hugh negative numbers still show up on the Fed balance sheet (that most don’t get to see) or in the national debt. Many wealth creaters are already broke or scared to put anything more on the line…thus no money flow (velosity?) and for some that means no inflation too…unless you have experienced stagflation…
Gary
Did you read my previous posts? It’s all explained their.
This money is not from the FED directly. The FED does not just give money to banks (not yet), in the worst case they will swap bad debt for fresh money. That was TARP. QE2 is not like that.
QE2 buys bonds from the government which is used to pay employees/contractors which deposit their money into the bank.
The bank can use this money as a reserve for new loans, but then they take on risk, because if the loan if not repaid they lose money, if they lose enough money they will bankrupt.
PST,
Thank you for that info!
My original question was whether the money that’s going to the banks as a result of the Fed buying treasuries (QE), whether some of that money actually makes it into the stock and commodities markets. And if so, how much of that money? And, is the amount that IS actually getting into the markets actually having an impact in terms of driving up stock and commodities prices.
Uncle Ben says it is. Well, sort of. He says it’s working in the stock market (keeping prices up), but it has nothing to do with commodity inflation. Seems to me he can’t have it both ways. Either it’s affecting the prices in all the markets or in none of them.
I guess what I’m trying to get a handle on is how much of the effect of QE is real (that is, due to money actually hitting the markets) and how much is psychological (markets going up because traders and investors BELIEVE they’re going to go up).
Just saw your last post (with numbers 1 and 2). Number 2 is something I hadn’t considered, but it makes sense. thanks!
And if they go bankrupt the Fed will just save them again.
They’ve made it very clear that the banks will not be allowed to go bankrupt. As long as that’s the case then banks might as well take the money and speculate in asset markets instead of making loans that they know will go bad.
Banks profits have soared over the last two years. Do you think that was achieved by sticking money in a vault?
jlinks,
that seems amazing to me, but you’re not the only one who believes that. Wes is in your camp.
Are you also in the longer term deflation camp?
If so, how do you reconcile that view (that we’re gonna have deflation for many years to come) with the PM bull? How long do you think the PM bull has left in it before it too succumbs to deflation?
Gary,
Would you say the BB crash is off the table at this point?
Gary,
I didn’t see your earlier question until just now. I believe it was hypothetical, but I’ll give you my view for what it is worth.
Like Pima recently said, the money supply HAS grown. The extent to which it has grown all depends on your definition of money. I think we all agree that M0 (measured as bank deposits and reserves) has skyrocketed. The disagreement comes over the extent to which it has translated into an increased M1 figure (leveraged and lent out). Regardless of what the exact figure is, M1 has grown as well, just not at the same rate. We have not seen rampant inflation yet (although we certainly have inflation) because as M1 has grown, the velocity of money has simultaneously slowed.
Now bank’s reserves have grown dramatically, but banks are also investing a portion of that money in other assets as you stated to generate returns. A good portion goes back to the Fed for a riskless overnight return, but much of it also finds its way into other assets as well. Let’s not forget that many of these “banks” are the Goldmans and Morgans of the world (got their bank charters in 2008 for this reason) who reinvest these proceeds and also use some of the capital to fund their own prop trading operations. All you need to do is look at bank’s balance sheets (look at tradable securities and investments held for sale) to see how they’ve changed over the last 3 years. The Fed/treasury has flooded the banks with much more capital than just the advertised ~$1.2T QE1 and $600B QE2 in bailout funds. Also, as I stated before, the areas to which the money is being lent has changed, with corporate and margin borrowing increasing at the expense of consumer borrowing. This lent money is now going into capital and investments (hedge fund and corporate borrowing) rather than into savings and non-productive assets (consumer borrowing).
Also, let’s not forget that we are not alone in our pump priming policies. The Japanese continue their easy money policies and QE operations. The EU only recently has discontinued their stimulative policies, although the IMF (effectively the US) continues to flood the European banking system and sovereigns with capital. And the Chinese economy is effectively a centrally planned stimulative exercise (plus large amounts of exports).
So the short answer is the money supply has grown in the US and the world is awash in liquidity. It’s the reason why the rest of the world is starting to see escalating inflation in the form of increased asset and food prices…it’s just common sense.
I have carpal tunnel syndrome from hitting the sell button so hard today. Nonetheless, I still hold a few scraps of gold miners, because I couldn’t bring myself to sell them all at these prices.
The GOLD/XAU ratio is now 7.63:1. The XAU is trading at the same level it was at in late 2007, when gold was $800 an ounce.
I am having flashbacks to 2008. Back then, I saw these ratios and bought with both hands. Now I am selling.
Seems to me the ratio is telling us two things:
1) We are about to enter some kind of deflationary vortex. This is going to be an ugly summer.
2) Gold is going to $1150 or lower. It may even break $1000. Silver is going lower than anyone here thinks is possible. It may go back to the teens.
The fact that the stock market is only a little bit off its highs right now tells you that, as in 2008, the metals are sniffing it out before the market does.
My feeling is that we are going to have a crash this summer.
Thanks, Mike.
I sold some of my NNVC during and after the big runup last year. Repurchased at lower prices.
But the dang thing has not done doodly for a long time now, trading range between $1.00 and $1.50. Good to see you haven’t given up on it.
There’s been a lot of noise here lately, so I didnt want to add to it. But since you’re here Gary, I just wanted to say you’ve changed my life. I’ve been trying to buy/trade gold since 2006 and have only managed to do it profitably with you (and lately Doc).
I consider myself to be in a good place mentally to trade, which is why I didnt feel the need to mimick you exactly. Which was lucky as I switched from Silver to Gold when it was $48.
I am disappointed that you won’t be posting about options anymore because even though I am inexperience with them, I was hoping to learn. But I imagine I can still do that on the blog & on Doc’s site. In fact I dipped my toe in for the first time today with some SLV puts (I’m only planning on risking 1% of my capital whilst I learn). Let’s see.
I have a question for you Gary. Since you don’t seem materialistic in any way, what motivates you to invest & also to run this newsletter?
-Vish
Were margins for silver raised today?
BTrader,
Monday I believe.
Did anybody notice the SOS on the SPY back on April 28? Stocks topped out on April 29.
http://screencast.com/t/nHQ7gZslqUhd
Interesting juxtaposition seeing PST’s post just above David’s.
PST: “money supply has grown in the US and the world is awash in liquidity. It’s the reason why the rest of the world is starting to see escalating inflation in the form of increased asset and food prices”.
David: “We are about to enter some kind of deflationary vortex. This is going to be an ugly summer.
Gold is going to $1150 or lower. It may even break $1000. Silver is going lower than anyone here thinks is possible. It may go back to the teens.”
How to reconcile these apparently opposing views…
Gary
The banks made free money from brokering all the bonds that QE2 buys.
Vish,
To be honest its just the allure of winning the game and to help people protect themselves during a period that is going to be very dangerous both financially and otherwise.
GLD on BoW list today, and the block trades number is larger than the total.
Still, they are small numbers compared to actual $$$ traded today.
(But maybe it’s a tiny bit bullish 🙂
The jury is still out on where we’re headed from here, but after today’s action I am beginning to lean towards Gary’s recommendation to lean back and wait for the A wave. It might go either way from here, indeed I agree that there is no edge in trading this right now, and I therefore rather conserve my capital until I feel conviction.
PC
Short term minor inflation (end QE2) long term high inflation.
PM bull is inversely correlated to inflation/deflation cycle.
It seems easy to reconcile to me. A credit bubble creates a massive deflationary environment. Central banks are fighting it by printing money. That massive printing creates commodity inflation. Inflation eventually strangles the economy. In steps the deflationary forces again and back down we go.
Rinse and repeat.
It why we’ve been on this gigantic roller coaster ride for the last 11 years.
*minor deflation
Pima,
Last post and then I need to go get my kids.
The Fed is waging a war on deflation right now and is trying to spur inflation in the US. Its funny because the US is trying to avoid its largest policy blunder, deflation during the depression, while Europe is trying to avoid their biggest policy error which was rampant inflation. I actually agree with David that deflation is the bigger threat right now in the short term.
Oops gotta run…quickly…facing debt deflation spiral as asset prices deflate and legacy debt remains in place. Anything purchased with credit (homes, stocks, etc.) will likely see deflation while necessities like food could see continued inflation.
Gary
You’re missing one detail. The Deficit is meantime growing and growing.
That’s why it’ll end with
massive inflation/hyperinflation.
I believe that Jim Sinclair calls this stagflation, where you have deflation and inflation at the same time.
jlinks,
I don’t believe for an instant that there is anyone above a rock that doesn’t know the deficit is growing.
Yes hyperinflation is the path we are traveling. In the 30’s debt destruction was accomplished through deflation. That led to all kinds of bad stuff including WWII.
I think this time we will error in the other direction and accomplish debt destruction by destroying global currencies.
I tend to agree with David…I think we are due for another vortex moment…
The FED won’t get away with printing trillions, as the roller coaster ride gets big and bigger….if it affects the economy in a big way, we may get another credit crunch, since the banks are basically on life support…and the depression continues
QE-perpetual most likely after that…hyper-inflation a real possibility as the FED trys to fight the needed purge…
If oil tanks below, 70, I will be looking into this area as a value play..below $70 is not sustainable. Tank to $35 and back in…
Anyways not much to do, cash is king right now…so the direction is pretty simple even if my hunch on the magnitude is wrong.
So many ominous signs in the market…
Okay back to sleep! 🙂
BTW great call today Gary!
diana:
Very true. Just like the 70s, only much, much worse. Stagflation = weak to negative economic growth + high and increasing inflation of price of necessities, which causes a big push to increase wages, all of which increases cost to businesses, which squeezes profit margins, which will cause the stock market to go down big as it did in the mid-70s.
Up ahead we have have: crashing Treasury bonds (“but they’re a safe haven!”), crashing stock market & crashing dollar, which will be the worst of all for most folks because it steals your wealth in a very hidden way.
The Lifeboat in this hurricane: skyrocketing gold/silver/gold & silver stocks, which are skyrocketing BECAUSE OF this monumental crisis.
I’m looking for short candidates.
Originally, I was looking at EUO, but it’s already rallied hard and may reverse on me. So could DUG.
Now I’m looking at the stock market instead. I may go for a non-ultrashort option, so that I don’t have to worry about erosion.
The small-caps look like a good option to me.
TJ Rand, Newman, Brian from MI (Mach from Doc’s blog) shoot me an email on my profile.
If we get another BB crash is that a viable set up for a trade? Or is that pushing my luck?
David-
I agree…This is not some intermediate sell off in the miners, this has been “were smelling something really bad” kind of sell off.
Fill me in with your short ideas.
I’m thinking of cashing in my physical after this day. Yikes. What on earth is coming…
(PS-can you drop me a quick line via my email in the profile?)
>>>Maybe someone can explain to me how the stock market could rally like it has, how commodities could gain hundreds of percent and how the Fed’s balance sheet can expand by over a trillion dollars, and government debt by several trillion dollars yet the money supply hasn’t expanded <<<
Gary,
The short answer to this is that since 2007, loans have declined. That takes money back out of the system.
When we think of money supply, we think “wad of money”. The “wad of money” has increased modestly, but the velocity of money, how fast it’s circulating in the economy, has declined dramatically since 2007.
Thus there has been little inflationary pressure on the economy.
Now the money added (about a trillion dollars) is not a lot for a 14 trillion dollar economy, but it is a lot if used to buy assets.
Loans are bring devoured in the housing industry almost as fast as new loans in the general economy are being made.
Until the money base is turned into fractional banking loans, they represent potential, not actual, inflation.
who is the doc person being referenced over and over?
I’m thinking RWM. Or PSQ.
They’re not leveraged, so the erosion factor is not as great as with the ultrashorts.
The danger of a blow-off in stocks remains, though. As we’ve all seen, it’s easy to get the concept right, but the timing is what’s key.
I may scale into them slowly.
Wes,
In order to make that statement one has to modify the definition of inflation so it doesn’t include commodities. I’m not willing to modify my definition of inflation so that I can justify no inflation because in the real world I have to pay those soaring commodity prices.
You can discount them if you want but the truth is $4.00 gasoline puts a big dent in discretionary spending. Eventually it will collapse the economy.
If it costs you twice as much at the grocery store that is real price inflation that real people have to overcome even if there is no wage spiral.
Actually it’s much worse because wages can’t keep up with inflation this time like they did in the 70’s. So this time commodity inflation is considerably more painful than it was in the 70’s.
http://www.thedocument.com/
Gary
What you describe is an old problem with how the CPI is calculated. Food and gasoline are left out.
But the truth is that inflation is a monetary phenomenon, meaning all prices rise together because the currency is devalued.
Currently only commodities are rising, that means it’s not due to actual inflation, but due to speculation.
Gary,
You said some posts back that the way to play the forthcoming A wave profitably would be in the miners.
I just looked at a daily chart of $HUI:$SPX and $HUI:$GOLD. They both look like King Kong jumping off the Empire State Building. I read that hedge funds buy gold/silver and simultaneously short the pm stocks. If so, it sure has been profitabke for them.
Why won’t this underperformance repeat? Maybe at the A wave start they will outperform, but then crap out like they’ve done this last few months.
I had nice profits in SIL and SLW (sold today so thanks for that), but got hammered in a few others, like that piece of shit HL. I’m very wary of the miners now, been cut up too many times.
Why not just buy physical or GLD, at least you would get a 20% plus gain? (Though buying a non-pm stock at $13 and selling at $16 is equivalent to gold going from $1300 to $1600.)
I can’t think of anything more frustrating than buying miners and only breaking even while the metal shoots up. Is it not possible that the miners are in a long-term downtrend vs gold and that that will continue?
You do realize that for every speculator buying there is one selling and commodities across the board have skyrocketed.
So are you kidding me with the speculator excuse? That sounds like something some ignorant politician would dream up, not something from someone who understands how markets really work.
Although I understand the sad atmosphere that we are breathing, I would like to point out that gold is not making anything differrent at this time from what it did make the last intermediate cycle. The first Seasonal half of the intermediate has been close with a retracement less than 50% of the upmove. It barely touched the 32 day SMA, that the last intermediate half-close instead passed like butter for 4-5 days.
Regression to the mean. As Gary always said. That was all, maybe. Stronger upmove, steeper downmove.
I may of course be wrong, nobody has the crystal ball to foresee future, but to me what happened today was just a normal small cycle close, one that happens every 4-5 days, that retraced less than 50% upmove of the last 3 days.
Is that bearish looking at the big picture? A new cycle start is an opportunity, because stop loss can be placed very near. To me, today is a buy opportunity with stop loss just placed on today’s lows.
We may just gap down tomorrow and stop will be hit, but risk/reward here is good. Risk is less than 0,5%.
G.
http://www.ellipsetrading.com
Mam,
You are describing exactly why I want to play miners because no one will want to touch them. They will be so terribly undervalued that they will explode higher. I’m actually going to talk a bit about this in tonight’s report.
GGuy,
When there’s an important trend change, the most speculative sectors always get hit first. In 2011, that sector was silver. Silver is the canary in the coalmine for the entire risk trade. I expect to see gold, stocks and oil all follow silver down in a matter of days/weeks.
Looking only at gold is deceptive. The gold stocks are telling us that gold is going to get taken down hard, and soon.
Goodmorning DG!
Nice to see you found my post, I thought you may have glossed over it. Take it as you will, my comments still stand. Sometimes we need to hear the spoken word before we stop and think.
Great that you are championing the cause for us helpless bloggers against our evil leader. Make sure you take it up with Mr Market while you are at it. Oh and all the hedgies and day traders and Mr Soro’s who were apparrently taking advantage of the rise to sell to our helpless bloggers.
Allow me to quote something from one of the SMT letters, I hope Gary doesn’t mind. January 26 intermediate low.
“In the morning you can re-enter full PM positions (with leverage if one desires). Again let me stress that one only use as much leverage as they are comfortable with if the stops get hit. This does not mean go all in with call options. If your stops get hit and you are maxed out with calls you will take a huge loss. This means you need to get out your calculator and determine what your loss will be if the stop is triggered.”
Not the only time Gary drew subs attention to risk management with options and leveraged ETF’s. I would ask the question, how many people had their calculators out during the run up to $50 silver.
I also seem to remember Gary saying several times that his cycle work is excellent at picking bottoms but not very good at picking tops but he would “try” his best to get out near the top. How many people chose not to listen to that bit and only hear “ride the glorious C wave”
I notice several subs took his advice to exit silver before $50 and switch to gold. What was stopping others from doing this.
So once again thanks for championing the cause to save us bloggers from oursleves but Gary has already tried. In vain it would seem……..
How about benefiting from erosion in ultra funds by shorting the double LONG equity etfs, like SSO or QLD?
When I short, these are on the list.
No need to worry about my portfolio as I had my entries and targets in place before I signed up to SMT. Unfortunately I didn’t have any option strategies or leveraged ETF’s so I didn’t have any stellar gains to keep me awake at night. cest la vive’
Maybe they will be in my future.
There are some great strategies on the blog here, when applied with a bit of common sense.
Anyhow, I’ve been up for going on 23 hours now and sleep beckons. I’ll catch up on the posts when I’m back on international time.
Some nice testing on low volume on the PM’s at the moment.
SB,
I think you will find it hard to borrow shares in these ETF’s. I tried to short a few shares once just to see if it could be done and I couldn’t get the shares.
Silver came bach to the 16 weeks average, exactly like it did on january.
Look at a weekly chart. I can see no hit taken, if one plays the bull from at least one year.
It is of course different if one started on April 2011.
Sorry i meant “back”, not “bach”.
Gary,
High prices and inflation are two entirely different things.
I doubt that in your entire lifetime you have ever experienced inflation, certainly not in the US.
With inflation, the most common though among the population is that you always want to be in debt and never in cash. This was how it was in the US in the mid to late 1970’s.
The idea was to pay back loans with less valuable dollars (and those dollars were significantly less valuable). Higher prices of a few percent a year just don’t motivate inflation fears.
Gary,
High prices and inflation are two entirely different things.
I doubt that in your entire lifetime you have ever experienced inflation, certainly not in the US.
With inflation, the most common though among the population is that you always want to be in debt and never in cash. This was how it was in the US in the mid to late 1970’s.
The idea was to pay back loans with less valuable dollars (and those dollars were significantly less valuable). Higher prices of a few percent a year just don’t motivate inflation fears.
Silverhound: That was a weird response. You addressed nothing I said, and your start about my championing “the helpless bloggers against our evil leader” is obnoxious and childish. I thought better of you and your first response warranted a response. Frankly, I skipped most of your recent post after that start. If you want to have an adult back-and-forth let me know, otherwise no need to respond. And if you do respond your response would need to be to the points I made. It’s too easy on a blog to have someone make a good response and then just ignore it as if it had not been said. No point just repeatedly restating our positions and going past each other. I owe you nothing. If you would ever like to dialogue about something you will have to make it attractive to me (by being both civil and responsive so we can have a reasoned back and forth.) After all the time I have spent trying to help people on this blog I think I have at least earned that.
Gary,thanks for the guidance for this latest gold run.I’m out of all gold futures;been a great run:)I’m sure it will now rally but so be it. The divergence in the miners put me over the edge today.I was hoping to get a more recognizable top where I could use my system to short but it just didn’t happen that way.
Gary
It’s an auction, there will always be people who think it’s a top or bottom.
Why isn’t everything else rising? Why is real estate falling.
I’ve shorted SSO and QLD on many occasions in the past. That doesn’t gaurantee they’ll lend them in the future but I’ll try them and if not, I’ll sell futures.
That one is easy. Huge oversupply and no demand.
35$ a support line for silver? I can fit a 3 month MA in there but nothing else works. Psychological (“I’m buyin’ at 35!”)?
Can someone please send me a link to explain to this rookie the ‘erosion’ of the inverse ETFs? ZSL seemed to be a great trade for today’s drop. Shorting AGQ was also a winner. So why are they unsuitable picks for the pronounced fall of the D-wave? I don’t want to miss an average 62% retrace, and as instructed am staying away from puts as it’s all gibberish, oh, and my UK broker doesn’t offer EUO. Thanks in advance.
If this is a D-wave You might want to fore-go these technical buy points. They will just get run over like $42 support in silver got run over last week.
In a D-wave we just wait for the intermediate cycle to bottom and the COT to flash a buy signal.
no demand because of no jobs, and more of the same tonite:
CSCO is looking to lay off contract and full time workers. This move is a sign of soft demand.
SB, if you are there: why dont you buy the reverse etf’s if you want to short the market?
Gary,
Is there anyway that since the silver miners didn’t participate in the parabolic push with silver that they actually might end up not participating with silvers move down in the D wave?
doubtful
I took a quick look at some past relationships between an Ultra Short ETF and the underlying Fund/Commidity. I chose the SKF specifically, because as we all know, the Financials took a severe beating in late in ’06 into ’07.
From Oct ’07 to July ’08 the DJ US Financial Services Fund dropped around 55% , the SKF, the Ultra Inverse went up 160%. If you waited until Nov ’08 a 70% decrease in the USFin. = 230% increase in the SKF.
Just trying to draw a parallel between a 38$ Silver this morning, and the potential of its Ultra inverse buddy if Silver drops to 21$ as has been suggested it might.
Gary,
I’m considering simultaneously going long USD and gold. My thinking is that the “No QE3” effect would lead to a trading wash (given well balanced positions from a size or leverage perspective), while a “Euro crisis” effect could potentially lead to strength in both dollar and gold. So worst case a wash and best case a win.
Any thoughts on that kind of trade?
If you want to stay even just go to cash and keep the brokerage fees for yourself.
It may be a lousy trading idea, but the broekrage fees aren’t what’s gonna kill it. I pay ca 0.05% commission on a decent sized order. 🙂
Let me put it this way. i never take two trades when one will do.
If you want to go long the dollar then just buy UUP.
If you want to go long gold then buy gold but you would again be trying to catch the last little spurt in the C-wave that may or may not happen. Is it really worth getting caught in the D-wave if you are wrong?
Gary,
In your opinion, has the USD put in its 3 year cycle low? Also, you are looking at the A cycle beginning in September or there abouts?
Gary,
I know in the newsletter you stated to exit positions in order to preserve capital. I took some rather large hits today. Do you think we may have a small reversal this week to exit a little higher, or is it a lost cause and its time to cut and run.
Thanks for your ideas…
Nestie
In my opinion yes it probably has.
The A-wave should begin when the current intermediate cycle bottoms. It’s in the nightly report.
I guess I’m trying to find a way to stay on the gold train while hedging out a large portion of the risk associated with a runaway dollar.
I do think that the technical cycles analysis provides a great basis for analysis, but in this case, where gold hasn’t really been parabolic, I’m thinking maybe the potential financial turbulence during the summer will lead to more than just a little additional spurt in gold.
It really seems to me like there’s a major political game going on with all kinds of countries are trying to hoard gold as a kind of financial power play.
Gary, any chance you can discuss energy for the D-wave?
Aaron
Not that it’s gonna help you in making your decision, but for what it’s worth, silver does look rather perky in Asian trading right now. It has risen almost a dollar from when trading started.
Good night all, hitting the sack now.
Trade safely!
Usually when the alligator has your leg it’s better to just sacrifice the leg before he drags the whole body under.
The goal is to get to the A-wave intact. If you get there bankrupt your out of the game.
Jonas,
It did that last night too and it was a trap to get longs in and then dump to them.
I believe Hong Kong starts futures in Gold with settlement in physical next Wednesday. Considering there is more physical demand in Asia, it will be interesting to see how this influences NY and London. I think they are also extending trading electronic to coincide with London closing and NY AM session. just maybe the Asian players have had enough of the western shenanigans.
Nat, I have been trying to understand this myself. I would think that the exchange would have gold in vaults to match the demand, and demand they will get. We will know in a week.
folks you are trying to rationalize reasons for why there won’t be a D-wave. How many times have we seen these cycles play out despite going against every logical reason that they shouldn’t.
Then sometime after the fact we find out there actually was a fundamental reason for the cycle to work.
At some point the truth is going to come out that $50 silver brought an avalanche of supply onto the market.
Gary,
You are now pushing that we are in the D wave. Really?
I offer…you were right originally
when you said we had another leg of the c wave up. Is it possible you’re tech analysis is being distorted by central bank/PM bank manipulation?
The BOT action of the declines are striking and possibly distorting to the process??
What do you think??
We are still in the denial phase.
Gary,,
Possible the trap was today to get you to sell?
I think the dollar, silver and miners are very clearly telling us that the D-wave has begun. You can choose to ignore them if you want.
Even if I’m wrong and gold does have another spurt higher I have no desire to try and catch it. It’s too dangerous. The profit potential is too small. It’s too late in the intermediate cycle. We have a weekly swing and it’s more important to me to just get to the bottom of the D-wave with my capital intact.
Very interesting post over on TSI Trader.
The True Strength Index today gave a bullish divergence buy signal on HUI. And it’s close to giving a similar bullish divergence buy signal on SLV. John seemed to forget to talk about what TSI had to say about gold.
http://thetsitrader.blogspot.com/
Gary, in case that is directed to me, I am working strictly off of the original, now revised pivot for gold.
I am simply curious as the center of axis for gold will shift after the 18th.
I am long gold until that pivot is breached with weekly sold calls reducing my basis. (151’s this week)
P.S. My (limited) understanding is that TSI can give a number of different buy or sell signals. You’d have to ask John where “the bullish divergence buy signal” ranks in the pantheon of TSI buy signals. He’s the expert.
jhnewman, for what its worth, I think its quite possible we get another run higher in the metals, peaking when the stock market peaks maybe 4 weeks from now. I feel its too risky now to participate in this. We are too near the precipice. I think if you preserve your capital there will be plenty of money to be made when the stock market falls over (e.g. in NYSE:TZA). I feel the coming collapse approaching the end of QE2 will make up for my lost profits in the silver crash and set me up nicely for the A-wave :o)
couple thoughts on the “d wave”.
doing nothing (in cash) is a perfectly acceptable position.
If you have to ask Gary what to “play” for the d wave, you should probably stay in cash.
I fear too many folks might be trying to recuperate lost profits or lost capital in a possible Gold/PM sell off and not really having a clue what they are doing.
Don’t make the same mistake twice. If and when Gold sells off there will be plenty of time get in.
Followed Gary out, am all cash and happy to take a little breather with my capital intact.
That said, don’t really want to sit on my hands for a few months. Seems to me that once we’re sure we’re in the D-wave, why not play 1x or 2x inverse gold & silver ETFs, or miners like DUST.
Shorting the bull has risks, but there ought to be a good chunk of time within the D-wave when the risk/reward is very favourable I’d think.
Thanks, Nat, you’re right. I would gladly wait in cash through a risky period to experience the kind of profit I got between September and December of 2010 after I joined Gary’s service.
Eamonn: I appreciate your thoughts. I think there’s decent upside in gold, and not much downside right now, and I’ve got stops in, so I’ve defined what I’m willing to risk — and I’m not going to move them.
I’ve been to this precipice twice before (in 2006 and 2008), and feel comfortable doing what I’m doing. I think your plan is a very good one, but I’m going to see how my hand plays out. If my stops get hit, I’m out and waiting for the A-wave. If they don’t, I’m in.
Kiss the Blarney Stone for me! I need some of that Irish eloquence!!! ;^)
It seems to me that there need be no more fundamental reason for the D-Wave then the dollar reversing from weakness due to excessively negative sentiment and all sellers having already sold. The dollar is ready to reverse, if not now then very soon. Thus, D-Wave.
My chosen vehicle for the D-Wave at this point is DUG. If the dollar manages sustained strength, then commodities go down. The energy sector looks like its breaking down. DUG is like an old friend that I haven’t visited since early 2009. At least it treated me well when the whole world was falling apart. Perhaps it will again.
f
P.S. I wouldn’t do this without stops in, and the promise not to move them (which I’ve done in the past).
And I was lucky enough to dodge the AGQ crash. Strangely enough, my SLW saved my ass. I was so pissed at losing a lot of paper profits as GDX and SLW “went down early” in this daily cycle, that I decided to sell all my AGQ before the daily cycle correction started, to lock in a bunch of profits and then buy back everything at a lower price. So I sold all my AGQ at 330, with the idea of buying it back at the daily cycle low, and then watched things unfold and never did it.
Again, SLW’s poor performance saved my ass on AGQ. Pretty lucky.
jhnewman
It feels like there’s something not true of the movements in the dollar and precious metals. Cant explain it!
Its to easy for the D-wave to come right now. The setup is to easy.
Where are you stopp in gold?
Interesting info from TSI trader also today.
G man…I have been on this ride for three years. I have been cautious (compared to 06-08) and am super strong hands. I took lots of profits long before 49 on silver..yes still have Gold and silver, If get stopped out, so be it. It will have been an awesome run to that point. I look forward to the next big Cycle.
jhnewman, I’m sure your eloquence is quite perfect. I went through a personal “lessons learnt” exercise after the silver crash. The most fundamental realisation that I came to was that opportunities will be so great in the metals and in shorting the stock market in the coming years that it is ok to miss a trade, or to get out early. Above all, capital preservation is king for the coming opportunities in the years ahead. I feel a lot of money is there to be taken for those that can be deliberate and patient.
“Today the markets came as close as they ever do to ringing the proverbial bell that signifies things have changed. Suddenly commodities are collapsing, equities are declining, the dollar is rising and high quality long rates are dropping. In our view this constitutes a new trend that will persist for some time to come.”
http://www.comstockfunds.com/default.aspx?act=Newsletter.aspx&category=MarketCommentary&newsletterid=1583&menugroup=Home
Nothing new here. Just a good read about what Gary has already told us.
Moneyman: I have “loosish” stops:
On DGP: 44.80
On NUGT: 29.40
Eamonn: Agree with everything you say.
And in this Financial Hurricane, capital preservation is paramount.
Elaine wait until you catch the d wave bottom…a year or so later $20-$50.00 dollar swings in gold don’t mean much.
Gotta run. Good luck!
Gary … is SLW one of the Miners you will go with in the A Wave. I am still holding some shares in my retirement account, and dont feel a strong need to move them, unless you feel that Silver AND Silver Miners wont be the right play for an A Wave
I doubt I will buy anything silver related during the A-wave. Probably GDX and GDXJ.
interesting. Thanks Gary.
Gary: NUGT would be the miner equivalent of AGQ correct? Thoughts on it during the A wave?
Yes, thank you, Gary. GDXJ treated me well last fall.
Thanks Gary, good report, lots of information and time to put the thinking cap back on. For now, going to have some fun for the last week and half. Get caught up on some reading. 🙂
Fidelity Folks, if you didn’t see my post on A wave miner fund, check out FSAGX. I made a lot of money in just that fund last year fall A cycle timeframe, prior to knowing about cycles pre Gary. It is what got me excited about Gold investing. And found Gary right after the bottom for the C Wave.
Ok, too many margaritas, I am beginning to speak Gary lingo… “folks” LOL.
There’s not much volume in NUGT. I would probably just stick with GDX and GDXJ.
I’ve never had a margarita. Maybe I should try one
NJ,
I traded some NUGT during the C wave, easy to buy, but sold off in piecemeal (small amounts by broker). so I wouldn’t load up, if the time came you had to off load quickly.
I’ll have one for you tonight Eamonn. Now that I don’t have to be up sharp early in the morning to trade, I can now be
… at ease. 😉
David,
That is what kept me in GLD. Thinking they were trying to get me to sell.
But had to finally realize, the amount being made wasn’t worth my time on the computer. I would rather put the coins away and wait for the dollars to come.
Response was meant for Glen, but David too. 🙂
Eamonn,
Can you get good Reposado Tequila in Ireland?
…at ease, I’m one of these people who doesn’t give a damn about alcohol. Dont care if I ever drink alcohol again, so I have no idea if we have Reposado Tequila here. I cant live without tea and an open fire though
Gary, how is you Platelet-rich plasma
therapy going?
My brother (40) is having is knee replaced next week. They don’t do PRP here. Would be interested to know how you are getting on with it as we have arthritis in the family and I have knee aches
So, is Vonda the only put-buyer on here right now, or the only one posting about it? Looking at a very small SLV put. 1% of my cash. I can replace that if necessary before the C wave of course, but it would definitely be some nice payback from silver headed into the A wave if I could get some love there. July seems to be an appropriate expiration based on Gary’s insight. Why pay for August expiration if the D-wave is 10 weeks max? Thanks. PS, if you don’t want to post about puts, emailing me at kevandem at yahoo.com would be outstanding.
Kal, I am thinking about a few in my business trading account, just to be active and maintain my fee free status on my trading platform. I was looking at some today. But not sure what I want to get into yet.
Kal, Just not sure if timing is right yet, but probably cheaper now than later.
Kal – bought some SLV July 30’s today – went up 40% in a matter of hours. If we’re in the D wave, I would think 30 will be taken out with ease. Just my thoughts though…However, I got rid of them and made my first “day trade” ever. I’m a little sell-trigger happy after being burned recently and with all the uncertainty currently in the air.
Hey at ease. That was kinda my thought. I figured SLV might pop up a little tomorrow, since silver is up right now. That may bring the price down a few cents. No telling when the bottom will fall out, but cheaper now than SLV at 33, 32, etc.
The PRP treatments are still working wonderfully. My left knee actually feels better than my right.
Thank you, Gary. I’ll keep that in mind for when my knees give up
FYI for those asking about CEF earlier. It seems to track gold quite well. I bought some in the fall of ’08, well it was my son’s savings from his summer job. We bought at 9.50. So it has little more than doubled, about the same percent as gold. he has added a few times over last couple years. It is not a trading vehicle for us. We use that instead of savings account.
Even though I sold all gold futures I will post system trades. Gold will go to a buy at 1531.
Gold system long trades are 65% winners. We’ve just had 2 consecutive winning trades.
Veronica, when does gold go to a sell? Thanks.
Veronica!
“Gold system long trades are 65% winners”
So if you buy gold you got a nice setup or what?
It went to a sell a couple days off the top at 1527. I ignored that sell anticapating another move higher that now looks like it may not materialize to much, so I sold everything today.
kal
i bought put contracts of SLV July 25s sinking about $1k… i don’t plan to keep an eye on these ones… i’ll either leave with a nice profit at the end of the D wave, or I will end up paying $1K tuition fee for my first foray into options 🙂
based on gary’s projection of silver, it seems possible this trade can be handsomely profitable, and july giving ample time for the D wave to play out.
Hey, not. Sounds good. I’ll be putting in less, but I see your point. If we get to $21, you’ve got a nice pickup there.
article on zerohedge about US G reaching debt limit Monday. That should help strengthen the dollar.
http://www.zerohedge.com/article/us-treasury-winning-future-one-math-failure-time
Gary,
Does the PRP work for Tendonitis? I’d love to throw a baseball again someday.
FWIW, I loaded SLV June 30 and July 25 puts. Hope we get a good correction part of D-wave and will be then ready for a a-wave ride up.
When do we think A-wave starts? Does it coincide with QE3 announcement sometime in August?
I think it probably works best on cartilage.
JHNewman,
You seem like you are looking for anything that may support your thesis. I went to John’s site, and read the writeup. I like John and believe he is a sincere man, but I picked some of the stocks listed at random to check.
None of them had a positive divergence I would look for to signal a buy. Specifically, MACD, MFI (money flow index), CMF (Chaikin Money Flow), RSI, Stochastics. They all look due for an oversold bounce, but Gary has this market pretty well wired, and that is not my play. I will wait for the next intermediate low that Gary thinks is a go. In the meantime I will monitor the stocks I want to own.
I could be wrong, but I view John as a trader, and I am not because of my job. I will engage at intermediate lows only.
One thing Gary brought up back in late 08 early 09 was to watch the weekly for a big volume spike as the stock was still at its lows. That is when you will start seeing divergences.
100% confetti as of this AM. Feels good to be emotionally stable. If silver gets to 21, I’m maxing out the credit cards.
The bottom line here for everybody is that we are due for yearly cycle lows in most every asset and higher level lows in some. It is a very dangerous time to be chasing risk assets. Sell in May and enjoy the summer.
DG
Please spare me, your ego is insufferable. I didn’t address your “dot points” because there was no need. I clearly stated that I stand by my original comments. Justify your actions however you need to.
I couldn’t have worded my response any more simply. People are selective about what they want to hear, no matter how many times you urge caution, and are quick to shift blame when things go wrong. It is human nature.
You obviously have control issues. Trying to advise people how they should address you and structure their response. Backed up by the fact that you are trying to suggest (read “tell”) the SMT letter writer how he should write his letters and address his subscribers. (Or is it a thinly veiled attempt to apportion blame for a recent trading loss, maybe you should apply some capital and risk management practices in the future). I didn’t sign up to SMT to receive your edited version of analysis, I signed up to hear Gary Savages take on the market, whichever way he chooses to word it.
Please don’t bother continuing this discussion. I’d rather walk outside and hit my head against a wall. I come to the blog to share market analysis not waste my time with highschool debate about how to structure a response.
I wish you well in youe endeavours.
Someone asked about the decaying effects of AGQ, et. al. Here is a link that might help:
http://seekingalpha.com/article/119316-double-and-triple-etfs-decay-their-value-faster-by-design
Kal,
I put in orders for SLV25JUL
and SLV30JUN and Gary’s fill the gap trade. Less than 1% of total portfolio. This helps me keep trading in my business account so I can keep my fees down on trading platform and hopefully make back some $ lost. I like these, Play em and walk away.
…at ease,
Eamonn says he doesn’t give a damn about “Reposado Tequila,” well, that is just a damn inhumane statement, if I’ve ever heard one!
100% Blue Agave Baby, a Gift from God!
here’s a fact, you don’t know the future.
i’m in for the long haul this is a bull market. i’ll continue to buy the metals on any significant pull back. (intermediate moves)
guess everyone, the pull back is here at least for silver and platinum.
i’m buying
as for us dollar, it’s at a critical junction 75.5 no breaky please :), want it to die there and continue onto destruction…
Wouldn’t you know it, semi’s are stronger than both gold and silver:
http://finviz.com/quote.ashx?t=smh&ty=c&ta=1&p=d
It is where the bull market will be at, though most will refuse to see it.
Precious metals will likely be sideways for a few years, while tech (green tech, internet 2.0, mobile tech) takes us to Dow 36,000.
Edwin,
Too soon, there’s more downside in gold and silver. Dollar rise extremely damaging to the pair.
Also, the exchanges can easily knock them silly by raising margins should they rally again. Whack-a-mole.
Perma-Pm-bulls huddle. All of the gurus (the chapmans, weirs, zerohegies, jesses, norcinis,etc) still very positive. That means more downside until somebody throws in the towel.
“Gold timers finally throw in the towel”
http://www.marketwatch.com/story/gold-timers-finally-throw-in-the-towel-2011-05-11
Average recommended gold exposure last week = 73.7%
Average recommended gold exposure this week = 7.0%
“I don’t think the heavy stuff is gonna come down for quite a while.”
Hmmm, what I do not understand is the idea that the USD moves by some mysterious cyclical force, the USD can and will be manipulated by its issuers as they see fit and right now a weak $ is what they want!
Strange how it works isn’t it. But the dollar has already decided to start discounting the end of QE. We’re about to get a preview of what will happen once the punch bowl is taken away.
There is no real fundamentals behind the economy, it’s just running on free money. Take that away and the forces of deflation slam back down.
avnx_rocks – i’m not one of the 100% go in type of folks. put your eggs into one basket and watch it carefully sort of investor.
for my pm portfolio i have been good at market timing.
i scale my positions and know my limits.
end of the week i’m buying my pms.
i don’t know if tech 2.0 will lead? maybe.. but i decided to avoid a pure play exposure to tech. just whatever the s&p index deals me.
Look at the premarket volume on SLV. It is dwarfing everything else, including SPY.
Wow blogger just altered my name.
Just want to share how stupid I am. I bought some puts on SLV yesterday and sold at the end of the day to break even. Could of double that money this morning.
If we get a bounce out Silver tomorrow I will re enter those puts.
Blogger was down for a few hours.
TEST
Bamster,
Check out prolozone or ‘prolotherapy’
Thanks New York.
Interesting-
C.P.I. #’s (inflation) came out today at 8:30 a.m. Eastern time.
Gold was down around $20 pre-market , Silver close to $3 down…now have recovered quite a bit.
We are up to 6 million shares traded on SLV, premarket, nearly twice the SPY. Who bought all of those shares?
Buyers will try to pick the bottom all the way down just like sellers tried to pick the top all the way up.
It’s what will keep everyone holding all the way to the bottom.
buying gold at 1488
but watching like a hawk…
Haggerty, did the same as you yesterday, but as they say, ” pigs get slaughtered”!
Gary,
Great report last night. Point well taken about broken parabolas.
I’m thinking about the A-wave this summer. The miners topped in early April, while gold didn’t hit its high until almost a month later. Do you think they may anticipate a low in gold and start basing while gold is still dropping? If so, would it make sense to scale into some of the undervalued miners before the D-wave is complete?
Guys also have to remember…we are a select group of nuts looking at PM’s as the main trade…the amount of work Gary, DOC, and others on this blog, put into this field is immense…if something only represents 2% of your portfolio, you might buy more at these levels, thinking who cares if it is not the exact bottom…In fact weirdly, people are taught to hedge with gold and silver due to its slightly negative correlation with the market…people getting out the market and blindly putting their money into PM’s may also take place.
Anyways there will be plenty of buyers on the way down…many may argue that they will buy due to diversification issues…stupid, so you get burnt by more than one investment instead of one…much better.
sophia
If we get a bounce here, I will jump in at the end of the day. I will post if I do and what.
Silverhound: I saw your post was a personal attack in the first sentence and skipped the whole thing. Who needs to read that stuff? What’s the point? As Gary said to me once: “Just ignore the cranks.” Good advice. All I asked for is for you to say anything at all you want but say it kindly. That’s perhaps too much to ask of you. Each post has gotten more hostile.
at ease
do you consider those home run buys?
Thanks Haggerty…I bought some little calls 36.00 Jun when the amrket was around 33.00, nice pop, will sell before the endof the day as well…
@ Silverhound – I couldnt have put it better myself. I got so tired of seeing his relentless critiquing of how Gary words his reports – thanks. Hey, Gary have you tried HA (hyaluronic acid) – it too is good for cartilage – provided you still have cartilage. It has helped me.
Haggerty, don’t jump the gun on shorting. Gold/silver is usually strong Friday through Tuesday.
I would set a price below the market, and follow it up all day.
Volume was huge, and we may get a snapback.
Or at least scale in over a few days so you do not need to jump out on wiggles higher.
I did get a buy signal in GDX and GDXJ at yesterdays close, but didnt act on it, because of where we are in ‘time’..I will be watching today however, for more confirmation or less.
It was mentioned yesterday when DG said he got a buy set up in…( I forget? What did you mention DG, and I posted right after that it looked like the same set up as GDX and GDXJ.
I am too lazy to search yesterdays blog 🙂
Well that’s a blog for you. There have been several posts of “this is an important distinction. Thanks for pointing it out and pursuing it” and now the “What a jerk. Get off Gary’s back” ones are coming out. If the distinction between trading tactics and cycle theory is helpful for a few people, I’m satisfied, whatever others think. Don’t expect a change—if I see something I think is important I will pursue that too. That’s the whole point of the blog IMO.
It was DBA Alex.
Thanks DG
I know we’re on a new blog thread, but in case you look…your DBA may just drop a tad and fill that gap from March and turn.
I will watch that too.
These power dives are tough on my signals. During times like this everything gets overwhelmed, so I will have limited patience when something goes against me. Still holding DBA for now, though.
Be careful with ETF’s! There is no guarantee that they will perform as expected. ZSL is currently way off… should be roughly equal but inverse of AGQ. Currently ZSL is (+3.78%) AGQ (-11.59%) SLV (-4.45%)
Those investors in ZSL are feeling ripped off. http://messages.finance.yahoo.com/mb/ZSL
hello
Blogger sucks
test
uup needs a break here
anybody plays AGQ here??
what is the connection to Gold Scents, Toby Connor? It’s the exact same posts.
Mark,
Same guy.
Mark,
Toby Connor is Gary. It’s a second site he set up in conjunction with someone who does marketing for him.
From Kevin Depew at Minyanville:
DAILY: S&P TD 13 sequential SELL signal recorded Wednesday. This will be confirmed by a bearish price flip today below 1342.70 S&P futures.
MONTHLY: TD Sell Setup recorded this month, good for 1-4 bars. May-September
Depew, however, is long-term bullish on the stock market, as he is seeing signs of dispersion – i.e. it is currently not all one stock market. Indices are not the way to go, but individual stocks.
Silver DAILY has qualified a break of 36.90, meaning it has more downside to go before a Sequential BUY occurs. SLV ETF also confirmed this the other day at 36.07. Those levels are resistance now. No signs of selling exhaustion yet with downside Silver target of 28.99.
DXY – well, lots of BUY signals on QUARTERLY, WEEKLY, MONTHLY, DAILY, etc. But we still did not hit that 72.5 level needed to indicate full MONTHLY exhaustion. Gary sez we have hit the 3-year-cycle low. Looks like we have to go through another deflationary bout before 72.5 is finally hit. Or maybe it might never be hit…who knows…
Could this be a waterfall drop in SLV/Silver with a midpoint consolidation right in this area? If it drops more of less an equal amount from here, that would give us our $ 21 target.
NEW POST
Test
As a subscriber, I have not done well since November 2010, so I am now taking a counter – SMT position and see how it plays…
Mr Savage is 100% cash, my portfolio is 50% invested….
When Mr Savage is in the market, I will be out and of course, vice-versa…