MONEY FLOW DIVERGENCE

I often keep tabs on the weekly Chakin money flow indicator, especially when I’m expecting an intermediate degree correction. More often than not there will be a divergence in money flow at intermediate tops as smart money exits ahead of a correction.

This indicator also diverged at the last two bull market tops. It is now showing  a huge divergence that I think is probably indicative of a third cyclical bull market top forming.

900 thoughts on “MONEY FLOW DIVERGENCE

  1. NJ

    Gary:

    Congrats on the awesome performance by your team @ the tournament.

    Quick question: Does the sharp drop in COT in just one week concern you?

  2. Le Fou

    Gary,

    Who is “smart money,” and what do they have that we don’t? For instance, how are they able to keep the market going up while they exit? When I see those stock touts on CNBC telling us what to buy, it occurs to me that they are telling me to buy what they are ready to sell?

    BTW, I noticed that George Soros is 75% cash because the market looks to confusing to him without the “Bernanke Put.” Gave me a chuckle.

    Best,
    Le Fou

  3. basil

    Le Fou,

    that is a good question. I personally think that ‘smart money’ is an urban legend. Smart money (big money, big investors) is all over the place and often betting against each other. There is no concerted action and no back-room conspiracy of some smart money club. Nevertheless I would be keen to hear Gary’s explanation too.

  4. basil

    Gary,

    have you considered the following:

    Dollar in sideways trading range for another 2.5 months until late September (equal to 2008), but then a downward thrust of 15% (equal to exactly that same action of bouncing agains resistance and then a downward thrust in 1979) before turning around.
    That particular dollar action could then be accompanied by firstly another 2.5 months of upward action in the precious metals, followed by a blow off top in gold (and silver), then followed by a sharp D wave correction ( I still don’t believe in low 20s silver though)?
    As for stocks, I think there might be more topping action for that time period as well. I don’t think the markets are ready to break down yet. There is quite the cup and handle in all the US indices and I don’t think that is likely to resolve to the downside. I think the market might break only in the fall and / or the winter, with more QE perhaps in the first or second quarter of 2012 instead of in the fall of 2011.
    Would love to read your thoughts on this. Thanks.

  5. Gary

    Smart money isn’t necessarily specific individual traders or funds. It just means that institutions are starting to sell stock into rallies.

    That steady selling pressure shows up on the weekly money flow chart as a divergence.

  6. Allenupl

    Strat81,
    Which charting system are you using for your VSA indicator (you posted a chart earlier today at 2:38pm) and what are the parameters for your VSA indicator?
    Thanks.

  7. Gary

    Basil,
    I have to admit I have no idea what the dollar is going to do at this point. If the recent daily cycle low gets penetrated though that would be an indication of a lower low to come. Possibly below the May bottom.

  8. ALEX

    F.W.I.W. ( something to take notice of)-

    I’m not sure if any were looking to short the markets here? I wouldnt!

    I have been long P.M. stocks since MID JUNE…but today I saw interesting set ups in the Markets.

    Equities to keep an eye on…equities I AM WATCHING for gains …(see a 6 month chart)

    SGY-
    AVD
    HDY

    I bought FEED at $1.10 due to high volume interest- I sold early $ 1.30ish…it hit $1.71 at the high of today (and is still looking very good)

    Today-

    PDC was a HUGE breakout I.M.H.O. on a 6 or 3 month yr chart.

    Its crazy, but the market looks to be gaining traction today??? I.M.H.O.

    AAPL looks great-

    DELL = broke out today-
    CMG = Broke out with STRONG volume today…$380 target FAST

    UA= Break out of cup/handle = $97 target fast!

    Its not that ugly for some equities…I have a HUGE list of good set ups really …(PDC, PQ, SGY, etc etc etc ) but Time will tell

  9. ALEX

    GARY

    Congrats on the good results from your coaching!! ‘Pass the Torch’…’teach a man to fish’…so on. Nice work ๐Ÿ™‚

  10. ALEX

    TRADERLLADY

    I was away from my laptop and it ‘auto’ logs me into this site…(remembers my password ) so I tried to post to you from the hotel p.c., but I couldnt remember my log in! I havent needed it for about 8 months-

    Last wk I was at Siesta Key Beach, The Marina in Sarasota , Armand Circle, Anna Maria Island’s SAND BAR to eat, etc etc -places you and JEFF mentioned to go to. My wife and I were wanting to meet up with you if possible for a drink or whatever…very frustrating.

    Very nice area..a bit steamy this time of year though!! How You golf in that weather is beyond me!! ๐Ÿ™‚

  11. HolyAFK

    We have a trading range between 1593 and 1583. My bet is we are going to hang around here and move higher when when 10 DMA catches up.

  12. Bill

    AFK, if you don’t mind my asking, when you say you bought gold, did you buy physical, or GLD, or UGL or what? And I’d appreciate a bit on learning your reasoning, if you don’t mind. Thanks much.

  13. HolyAFK

    Bill, I use 2 ways to trade gold/silver. First i have my “Low” Risk long term account. There i use ETN with a X4 Lever (sorry i dont know the exact english word) . The ETN Follows the price of Physical gold and with that account i only trade around the big ABCD Waves.

    Next i have my high risk CFD trading account. On it i trade physical gold price with 200X Lever. In this account i trade around the Intermediate cycles but not the daily. I am (almost) never invested more then 10 % of my total trading balance. (note that my trading balance and my long term account is not the same)

    I have never cared much for miners or anything other then physical price in dollar. Why? Companies can fuck up. Gold price can not. Simple as that. I trust a metal more then a committee running a company. I also with my Lever on gold, dont need the extra potential that the miners have.

    Regarding why i bought now that is also simple. Right now i see 2 likely scenario happening. I have already told the first one were we have some sideways movement until we get the 10 DMA up. My next scenario is a panic sell off and we might get down to around 1550 in price. I doubt we will get a bounce of the 1576 top and the back up. Why not? To many people are looking at just that and if this is the last phase of the C-wave we have been talking about i doubt that trading it will be that easy.

    I made the decision to rather hold on trough a sell off that might end around 1550 rather then miss it completely. If I miss this low then the only place i can add next in my CFD account is Daily cycle swing low. And with the strength gold has been showing who know were that will be.

  14. HolyAFK

    Side note: I still have some to add on my trading account. I normally am 10 % Invested but right now i only got 6%. The last 4 % i will add 1580 and if we dont hit that then the next Daily cycle swing low. My add on 1586 was from 2% invested to 6%.

  15. kmisak

    HolyAFK, very reassuring to me to read your intelligent posts. Yesterday I loaded up my remaining cash during the late afternoon correction, knowing gold could drop lower, but afraid of it rising like the Phoenix without me. We invest differently (I am all-in with miners for this wave), but I agree that this will not be easy to trade. I am now going to hold Old Turkey.

  16. Slumdog

    holyafk and kmisak

    A question to you each.

    Why have you waited for weeks after Gary not only sent out notice to his subscribers but posted here afterwards and has been repeatedly saying he sees a low risk point of entry?

    It appears that you are waiting until the move is convincing to you.

    But that’s the top of the move, short term.

    It’s as if you’re on a rubberband stretched and you get in, just as the rubberband is snapping back, financially hurting the latecomers.

    My apologies, but I just don’t follow the logic of reading Gary’s descriptions of quite highly probable outcomes and then ignoring them.

    Are you each new to “investing”? Are you each very long to act and each old turkeys?

  17. HolyAFK

    BookGuy, this is how it works. Lets just work with one fact first, you can never go below 0 on your CFD account and if that would happen the broker would automatically terminate all your open positions.

    Now let us asume that i have 10 000 dollars in my CFD account. And lets say that i would invest all of that! I am now 100 % invested in my trading account. A simple move down of 0.5 % in gold would completely wipe out all the money on my account and all my positions would be automatically closed. (x200 remember) Now that would not be very good at all.

    Only 10% max of my current balance on my account. Now that gives us space for corrective moves down without losing my position. Of course if gold drops 5 % from my entry point i have lost everything on my account.

    That is why i currently only have invested 6 % and not 10% I am not 100 % Sure gold will not drop 5 % from here.

    I hope this answers your question. Maybe I understood you wrong. Let me know ๐Ÿ™‚

  18. kmisak

    Slumdog, I was camping sans internet when Gary made the initial call. As soon as I read it, I bought heavily (it was the Monday, and Gary had called the bottom on the previous Thursday). As for my actions yesterday, I was merely bringing my portfolio up to 140%, adding the final 10+% yesterday on the correction.

    As for my investing experience, I am a total novice! Took out all my stupid mutual funds after the 2008 debacle and began investing on my own; was drawn to silver in 2009; found Gary a year ago; he helped me turn my negligible gains into stellar ones. Year over year I am up 130%, despite losing bigtime in the four days it took me to exit when silver crashed.

    I am an avid reader of this blog, but comment rarely.

  19. HolyAFK

    Slumdog, You take make a lot of assumptions in one post. First off all let me tell you that each trader has his own way off trading. This summer i have been going under the assumption that USD had its 3 year low in may.

    When Gary made his call of a intermediate button in gold i was skeptical. But since he is who he is and i trust him enough with my money I invested 100 % in my long term low risk account. However i considered the trade high risk (my personal opinion at the time) and only entered 2 % in my trading account. Since i trade after the cycle analysis i made a plan to add more on middle daily low. How much i would add would depend on several factors. (i have gone over them in my previous posts)

    Now we are here and I decided to add 4% to my already 2% existing portfolio.

    What rubberband are you talking about? do you expect gold to drop like a rubber band from here? I dont follow the rubberband analysis.

    Also i think you hade quite the hars tone in your post. Almost like we made some sort of misstake or what not. No one can know what the market will do before hand. You need to have a strategy and follow it. Without a strategy no one will be successful in trading. I followed mine.

  20. MBS

    Gary-
    compare 08 3-year cycle low sideways dollar action to current. Seems very similar where it traded in a 4 point range for 4 months.

  21. Gary

    Hell if I was in silver I would have sold a couple of million myself.

    Seriously people is every drop in silver caused by manipulation? There are a lot of trapped longs that bought at the top that are nervous and going to sell on any pullback.

    I think the run this spring was proof enough that there is absolutely no manipulation in the silver market. If there was there’s no way silver goes to $50.

    This manipulation nonsense is now bordering on the absurd.

  22. Shalom Bernanke

    Dollar index analysis is a distraction, as it’s a measure against other flawed paper currencies.

    Instead, focus on the gold price measured in dollars when trading gold, which is near all time highs. Comparing how the dollar is faring against the Euro or Yen is a mistake, IMO.

    Do I think the dollar could go higher against other confetti? Sure, but my only concern is that the dollar goes lower vs. gold.

  23. traderlady

    ALEX, So sorry I missed you. I was looking forward to meeting you both with some great conversation. Make it
    next time when you come back with your friends. With the exception of the heat, didn’t you think this a lovely area? Yes, I am fading on golf, too steamy! (thinner blood helps here)

    Thanks for your stock postings. It
    is always interesting to research.

    Kerry

  24. catbird

    I’m torn on whether to add a little more gold at the open, or see if we’re still down at the close and add it all then.

  25. High 5

    silver was manipulated by the Hunts and they wanted to get it up to fifty dollars. silver is very thin market and is heavily manipulated both up and down.

  26. Shalom Bernanke

    I won’t be buying anything on the open, possibly not even today at all. It might turn out to be the lowest price we see on the pullback, but patience is usually rewarded. ๐Ÿ™‚

  27. catbird

    SB: Today’s not going to be the daily cycle low, for sure. The thing is, the daily cycle “low,” so to speak, could be a little higher than we are this morning when it arrives.

    Somehow, that smiling visage in your avatar has a quite calming effect on me.

  28. Duuuuuude

    It is entirely possible that Beanie will not post today, so I am sticking with probabilities. Gold is almost certainly going to go higher, but it might not go much lower. It looks like we could very well touch the 10 dma quickly on gold futures. If that happens, I feel pretty certain I will get my money back if I buy here. I will be fully invested at that point. http://screencast.com/t/08OIkzjZ1eLz

  29. ALEX

    KERRY

    Yes, we debated looking at property for timeshare ๐Ÿ™‚

    When our friends can make it, we will be back . She lived in Sarasota for yrs and WILL move back there soon. ๐Ÿ™‚ Very nice area. (stayed at the Hyatt with the Marina).

  30. TheBookGuy

    Duuuuuude,

    That was basically my thinking yesterday and today. I added a few calls both days and I’ll be happy with that decision. Like we constantly remind each other, no one can hit the exact bottom or top.

    I also feel that it is early in the cycle so how can I lose? I would not add at all if we were anywhere close to being finished in the cycle.

  31. DG

    I know Gary keeps posting that the stock market has topped out. I believe it has not. There have been many convincing bullish studies indicating higher prices. That said I am neither long nor short stocks. The money is to be made in PM. I am just suggesting people not short except for a trade. Your odds of success are at best very weak.

  32. traderlady

    ALEX, Nice spot to visit at that Hyatt!
    I just got the Hyatt credit card that gives 2 free nights at any Hyatt in the world. I plan to stay on Clearwater Beach($319/night)free for 2 nights. Love a bargain:) Esp in metals! LOL

    K

  33. Strat81

    Allenupl,

    It’s just the ThinkorSwim platform, with the VSA study created by “Perfect Hedges” using the default settings. It is available with a membership at:

    http://www.thinkscripter.com/

    There are some other great studies available their, worth every penny of the $75 lifetime membership IMHO.

  34. Felix

    marketing04,

    I think your risk is considered less with GLD since the miners are still and always plugged into the stock market as well.

  35. pimaCanyon

    Gary,

    You wrote “The model portfolio is fully invested. I won’t go above 75% in the model portfolio any more.”

    Not sure I understand… Are you saying that even though the model portfolio is currently 100 percent invested, in the future you will not invest above 75 percent?

  36. Felix

    marketing04,

    You’re welcome – I should add that per G the miners should be the hot sector for this intermediate cycle. I finally bought into NUGT (with DGP), both +2X ETFs. NUGT has too low a liquidity for all the millionaires on this board but is fine for small-timers like me.

  37. Strat81

    WW,

    Not really, you need to be a little familiar with ThinkorSwim though. You just import the studies into the ThinkorSwim library and then add the study to your screen as you would any other native ThinkorSwim study. Of course learning to interrupt the study itself takes a little know-how. For VSA the following book is usually recommended:

    http://www.tradeguider.com/mtm_251058.pdf

  38. Felix

    Say, I didn’t mean I added today; like all’o’you’s I’m waiting for at least swing low, if not a drop to/thru the recommended levels to add the rest.

    However, gold’s strength right now is something to see.

  39. Hack

    I’m liking this action, strong across the board on all miners especially SLW, which I find to be the best indicator of things to come.

  40. Dan

    Eeelove8,

    I think gary’s opinion was that if we break above 1600 then you can probably consider this correction over.

  41. Poly

    It’s just a half cycle low guys, we don’t get greedy on a couple of bucks, a roaring bull market we buy any decent dip and wait. If you didn’t buy i have no idea what you were waiting for, but to prey for another move below the lows is probably wishful thinking, IMO.

  42. Strat81

    WW,

    Yes, futures are about the only thing I trade on ThinkorSwim. I actually want to move to a more appropriate Futures broker, but none of the “big boy” brokerages data feeds can get through my corporate firewall ๐Ÿ™‚

  43. Felix

    …just going by the recommended probabilities in last night’s report, for myself, and am ok adding above 16 on confirmed swing for final positioning

  44. William Wallace

    Strat,

    I trade futures through Interactive Brokers, because I get a popup on ThinkorSwim saying that futures trading is not yet available on this version of the platform until the third quarter…I updated the platform and still have this problem..what version is yours??

  45. Matt

    Strat,

    I use PFGBEST for my futures account and was considering moving to ThinkorSwim just to sync my charting with my account. Why do you say they are not an “appropriate” futures broker? Is it because of the fills.

    Thanks in advance.

  46. William Wallace

    Strat,

    I noticed that your charts have the “buy mkt” and “sell mkt” buttons, etc. on top, where you can trade futures right from the chart…how do I set that up, if you dont mind explaining. Appreciate it!

  47. Strat81

    WW,

    I have been trading futures on the platform for about a year. Are you a native ThinkorSwim customer or a TD Ameritrade customer? I have been with ToS before they were bought up by TD.

    Matt,

    No, I think the fills are not bad, the data though is filtered and not the most accurate and there is no API to write studies on the Bid/Ask Tick data (aka T&S). Its only really an issue if you are trying to write/use complex studies that require very accurate tick data. If you are just position, swing or light/casual daytrading though, it should be fine.

  48. Strat81

    WW,

    You probably need to have a futures account open, but to have those buttons above the chart you simply click on the “Trade” button that is written vertically on the upper right hand portion of the chart right under the main price readout. From there you click on the wrench icon and you can add a bunch of different trade action buttons above the chart.

  49. thedocument

    Despite the fact we are still early in gold’s intermediate cycle, I would be careful about getting too aggressive. Public sentiment under gold and silver has screamed higher. For example, in only 3 weeks bullishness for silver has run from about 33% (quite bearish) to 76% (almost exuberant).

    These figures are far from a perfect timing tool, but such rapid enthusiasm tells me this ride is going to be quite volatile. Personally, I may choose to sit with smaller-than-usual positions through this cycle.

  50. Felix

    Used to live in Omaha – it’s grown a lot since – very nice downtown riverfront park near a vibrant outdoor Old Market district, hope the G-team had a chance to enjoy. Congrats to you.

  51. Felix

    “How low would stocks have to go to bring Ben Bernanke off the sidelines?

    A 17% drop in the U.S. blue chips would probably suffice, say big fund managers surveyed this month by Bank of America Merrill Lynch.
    Bernanke

    About that wealth effect…

    The S&P 500 would have to hit 1100 to get the Fed buying more bonds to prop up domestic demand for goods and services, according to the survey of 265 managers overseeing nearly $800 billion in assets.”

    http://finance.fortune.cnn.com/2011/07/20/bernankes-pain-point-a-17-stock-drop/?section=magazines_fortune

  52. catbird

    Let’s see if gold can break $1600 again–and stay there into the close.

    If so I may cave and buy more. As long as we’re just bouncing around in the 1590s, I see no compelling reason to add here.

  53. Strat81

    thedocument,

    I share your sentiment. This has been a WAAAAY to easy ride for PM Bulls, there has to be tonnes of weak hands just ready to dive.

  54. Poly

    Doc,
    These numbers are typically good bottom timing tools, but once the cycle gets going they rocket up quickly, not sure if anything is different this time around.
    It should be expected after a run of $120. We’re not going to get an extraordinary or blow off IT cycle without extreme speculative interest, we’re nowhere near there yet.

  55. YesLetsDiscuss

    I highly doubt 1600 will be breached at this attempt. If it is, it would show incredible strength.

    It might need another trip down to the 1590 area at least if not the 1582 area to break out above 1600.

  56. HolyAFK

    Strat81, What do you mean easy to ride? How many people in the world managed to buy when gary made the call for intermediate bottom?

    I remember all the way from around 1550 people on this very forum has been waiting for a pullback. But surely 1600 must be the point of the pullback. Ohh my god we are on our way to 1610 guess i should buy now.

    I think there was many weak hands (not necessarily on this forum) that bought over 1600 and then sold when we dipped down to 1580. Now the very same hands are waiting for a pullback to 1575 or more and guess what. They might have to chase again.

  57. thedocument

    I meant the intermediate cycle, but I may change my mind as the action progresses. Keep in mind I dumped all my silver in mid-April due to exuberant sentiment and then watched silver go up another $5 before it crashed. Maybe silver still runs to $50 here. I don’t know. I still own the stuff. All I’m saying is I’m not getting super aggressive.

  58. LowTax

    Doc, do you have any indication of what sentiment did at previous C-wave tops? I’m just wondering if this final interim cycle (if that’s what it is) is really any different… Thanks.

  59. YesLetsDiscuss

    While its true that the sentiment is quite high, a lot of people who were unwilling to chase are still on the sidelines waiting to get in right above the breakout region. They will provide support in that region.

    If Gold does not return there, they will be forced to chase here and all the way up to the top. However, they will be weak hands and will bail out on any weakness leading to the daily cycle low. Thats not due any time soon.

    If Gold does not test the breakout level here, it may go high very fast and then lead a severe decline into the DCL.

  60. Strat81

    HolyAFK,

    I agree with what you said, the “dis-belief” effect of the rally has likely kept a lot of people off than there otherwise could be. Its just the succession of consecutive up days has cleansed very few riders to this point; however, there may be enough sustained buying pressure to avert any sort of substantial correction at this point.

  61. Allenupl

    Srat,
    Thanks for the referral to
    http://www.thinkscripter.com/

    I am looking for the VSA study under the Indicators tab ()http://www.thinkscripter.com/indicators/) but can’t seem to find it there. Is it listed under a different name?

    I did find the Sinewavecycle indicator that you referred to.
    Thanks.

  62. Michael

    Yesterday gold changed character as couldn’t take out the 1601-02 point of control zone from the previous day for the 1st time during this run. Today also.

    There’s no absolutes – you risk missing some of the move if it gallops above 1610 waiting for better prices to add on the one hand, but, you’re opening yourself up for the possibility of adding significantly bigger size at great prices with lower risk / tighter stop if can get the wholesale entry below through the breakout zone. Average risk:reward, higher than average probability of happening coming into option expiration after sentiment surge.

  63. samppa_nyman

    There went that 10 dollar correction… Didn’t even have time to buy. Is buying at the moment just really stupid chasing? Of course it’s a raging bull market so corrections should be temporary, but is there a good buying opportunity ahead?

  64. LowTax

    samppa_nyman, I think you just said what Poly warned he didn’t want to hear again yesterday! You just got a buying opportunity and now you’re asking for another one? Good grief dude! Once we get an official swing-low (tomorrow?), buy it and sit tight!

  65. DG

    sentimentrader recently did a study on “What happens when Hulbert’s gold sentiment index goes from below 10% to over 67% in less than 60 days.” He is the best number cruncher/analyst in the business. His conclusion was “nothing—no predictive value beyond short term dip (which we just had)—gold acts in line with random after such sentiment spikes. I highly recommend his service. See link below:

    http://i54.tinypic.com/2wd1st0.png

  66. YesLetsDiscuss

    samppa,

    If you have no position, buy some immediately.

    If you are just looking to add, you can do that either in the 1582 area OR at a break above 1600 when the half cycle dip would probably have ended according to Gary, OR when there is a swing low (no guarantee we will get one).

  67. basil

    Doc,

    not that I am saying it will, but if this is a C wave top in gold with a potential blow off at north of $2000, then silver might as well go above $50. Again, I am certainly not banking on that, but at this point it is everybody’s guess what silver is doing. The blow off in silver might be at $60 or $70 for all we know. Then I think we could call a parabola in silver. Of course, silver might stop short of $45 or at $50, but for the remainder of the silver bull it would be a much better sign if silver ends this C wave top above the 30 year high, not beneath it.

  68. Harry

    I went AFK for a few hours and set a buy order for 1581. Guess what we got down to? 1581.1. FML…

    I’m not going to chase here. We did peak above 1600 but I think a tag of the 10 DMA will come tomorrow (or later today US time). I’ll be happy to go all-in at that time, but for now I’m sticking with my three long contracts.

  69. YesLetsDiscuss

    Harry,

    Same here…I eventually added at 1585. However more frustrating are my GDX options…they were so close and then just blasted off. I haven’t added those.

  70. William Wallace

    Is Hulbert not comparing the 10-11 day run before the previous IT high to this 11 day run from the new IT low?

    “For now, though, the important thing for short-term traders to know is that excitement has grown markedly over the last couple of sessions, and now stands at close to the fever pitch that prevailed in late April. Soon after that previous crescendo of bullish enthusiasm, of course, gold encountered a stunning air pocket and fell more than $100 per ounce.”

  71. William Wallace

    YesLets,

    True, but anyone who just took a look at a weekly chart would have seen how stretched gold was above the 10sma at the april high. And at that point Gary was calling for a move higher into a parabolic top. So in april Hulbert would have been right in calling for a hard correction like we seen, and Gary was wrong because we weren’t in the timing band for an intermediate correction. But my point is…no matter how you look at things today whether through Gary’s eyes or Hulbert’s, again just taking a look at a chart it seems extremely unlikely that gold would correct $100 now instead of just a regression to the 10sma, so I cant see how Hulbert could compare the move out of this IT low to the huge move preceding the previous IT top.

  72. William Wallace

    If we close in the 1580’s today we will probably see a pullback tomorrow to the 10sma, gold tried to break above 1600 three times since 12:00, this may bring some selling pressure into the close and tomorrow.

  73. Steve

    Dear SMT Crew:

    After buying per Gary (same ETF’s except I added some DGP), I put 20% DPG in my regular brokerage account, and 20% GLD in my IRA not thinking about taxes (duh). In the hope of all ending well and DGP bringing in more profits over GLD, should I swap them now (sell DGP in the regular account and immediately rebuy in the opposite account and vice versa) so that I’ll have less taxes to pay in the non-IRA account? Also, could anyone confirm that DPG is taxed at the same rate as GLD, and that it’s just that you may have more $ to tax if it makes more?

    With much appreciation,

    Kate

  74. Michael

    Just a footnote, not criticism given it was a whacky time, but Sentimentrader calls would have blown you up nuke-style in 2008 when he couldn’t put a foot right.

  75. Ben

    Steve, when I want 1x gold, I use CEF, not GLD. CEF has some silver, backs with bullion, and is not treated as a collectible as far as I know, so better for IRAs too.

  76. Gary

    I just got back from climbing. If anybody had a question for me ask it again as I’m not going to try and browse through all of the recent comments.

  77. Steve

    Hi Gary:

    After buying per your calls (same ETF’s except I added some DGP), I put 20% DPG in my regular brokerage account, and 20% GLD in my IRA not thinking about taxes (duh). In the hope of all ending well and DGP bringing in more profits over GLD, should I swap them now (sell DGP in the regular account and immediately rebuy in the opposite account and vice versa) so that I’ll have less taxes to pay in the non-IRA account? Also, could anyone confirm that DPG is taxed at the same rate as GLD, and that it’s just that you may have more $ to tax if it makes more?

    With much appreciation,

    Kate

  78. Gary

    For what it’s worth Hulbert’s sentiment poll is mostly worthless coming out of intermediate bottoms.

    Sentiment traders public opinion poll, in my opinion, is much more predictive. That is still in neutral territory.

    One more push higher into the latter part of the daily cycle timing band should push the public sentiment poll into overbought conditions triggering a normal corrective move into a daily cycle low.

    That will usually ease sentiment extremes and set gold up for the next push higher.

  79. Gary

    Kate,

    It’s my understanding that derivatives, which DGP is, are taxed at a 23% rate.

    You should check with your accountant though to make sure that is correct.

  80. HolyAFK

    I remember someone asking how you could have a leverage of x200. Google CFD, If you wanna get in to it then i recommend AvaFx as broker.

  81. Le Fou

    HolyAFK,

    “CFDs are currently available in the United Kingdom, The Netherlands, Poland, Portugal, Germany, Switzerland, Italy, Singapore, South Africa, Australia, Canada, New Zealand, Sweden, Norway, France, Ireland, Japan and Spain. Some other securities markets, such as Hong Kong, have plans to issue CFDs in the near future.

    CFDs are not permitted in the United States, due to restrictions by the U.S. Securities and Exchange Commission on over-the-counter (OTC) financial instruments.

    http://en.wikipedia.org/wiki/Contract_for_difference

    Best,
    Le Fou

  82. Gary

    I put the most weight on the public opinion poll. But the Rydex traders will tend to get over invested at tops. As you can tell those traders have a long way to go before reaching the over invested stage.

  83. Dan

    Guys dont forget it’s futures and options expiry early next week. Big money will do all they can to keep this under 1600$. Also a debt ceiling announcement can’t be far away with the legislative deadline this friday, look at how PMs reacted on news that we MAY we be getting closer to an agreement.

  84. Steve

    Thank you Gary & SB. Now I’m thinking if I do any swapping, maybe I should just swap the GLD for DGP and leave it – or SB, do you know of an appropriate ETN instead?

    Regards,

    Kate

  85. ALEX

    If anyone is buying miners…

    MACH9 mentioned to me last week that he thought BAA was looking ready to break out from it’s consolidation and he owned it.
    Looking at it on a 1 yr chart , I noticed a fairly reliable pattern , it had a giant inverse Head and Shoulders, so I bought it too.

    Today it broke out HUGE, but could come back and retest that break out later…so one might put this on their watch list and buy a pullback.

    http://www.screencast.com/t/CITsxyjZuLE

  86. Le Fou

    Gold, Silver Surge After John Taylor Predicts Gold To Hit $1,900 By October

    Submitted by Tyler Durden on 07/20/2011 11:29 -0400

    In the past few minutes both gold and silver have seen a dramatic rally of buying on seemingly no news. The reason for this rally are remarks from a Bloomberg TV interview with FX Concepts’ John Taylor, who just predicted that Gold will extend its rally to $1,900 by October, or in three months, coupled with a rally in the Assuie and Loonie as the EU debt crisis eases. But not for long: this record price will be promptly followed by a plunge down to $1,100 following liquidations as the latest and greatest recession grips the world, which he believes will be worse than the 2008 one due to the US running out of “gimmicks” to avert a slowdown. He believes the EU will slow as well, and the euro will drop to $1.15, and may hit parity next year (not a new call for Taylor).

    CHART AND VIDEO HERE:

    http://bit.ly/okpZWb

  87. MrMiyagi

    Does anyone else get that feeling that we are just perched on the edge of a turning point and one word is going to shoot respective equities and commodities one way or the other?

  88. ALEX

    WILLIAM

    I actually sold it ( I sold it a bit too early). I was trading the miners for a week or two and I got out right about where it is now, so I missed all the extra upside and heart break ๐Ÿ™‚

  89. William Wallace

    Alex,

    I remember when you got out, at first you mentioned you were looking to get out at 13 but got out earlier..if I remember correct. Then I watched it keep going up and said to myself, Alex must be grinding his teeth right now missing this upside! Then one of the members mentioned it crashing the other day and asked if anyone knew why..I said ask Alex!

  90. ALEX

    You remember correctly , I was buying each dip to the 20sma & I was targeting $13 and volume started dying end of June, so I sold.

    I was trading other Miners from Mid June lows to July 1st,then
    I switched out and started ‘buy and hold’ positions in Ag and SVM and EXK and NG july 1st.

    Then added BAA, AAU and UXG as possible trades

  91. Poly

    Miyagi,

    My money is banking on a further breakdown of the sovereign debt talks that are going on in Europe right now which will again spike rates sovereign paper. The situation in Europe is so extremely tenuous that risks are not being adequately priced, IMO. Of course the move in gold is reflecting this, if you really want to know what is driving the dollar index and gold.

    Why anybody wants to doubt the most impressive (10 day) rally of this entire 11 year bull market right here is beyond me. I’ve said all along this will explode, if I’m wrong I get stopped out for a profit. Opportunity knocks, IMO.

  92. MrMiyagi

    Poly,
    I don’t think that people here are doubting here that much but it is the apprehension that it might drop like a rock that might be keeping most from investing all in.

  93. Ryan

    Larry,
    I added a nice chunk yesterday and have a bit more USD so added a smaller chunk earlier in the morning. I still have more cash to deploy so will wait to see if we’re lower tomorrow or get a swing and add the rest.

  94. DG

    Ben: $BPGDM is not sentiment. It’s more overbought/oversold. They tend to go together, of course (overbought markets tend to have a lot of bullishness), but are different things.

  95. Shalom Bernanke

    ” it is the apprehension that it might drop like a rock that might be keeping most from investing all in.”

    -Miyagi

    That’s not the case with me. I’m not all in due to risk-control. 100% into anything will catch one with his pants down sooner or later.

  96. Bill

    Does anyone here follow gaps in GLD and SLV? For instance, today’s up could be a gap fill. And if so, what about the many gaps riddled below since July 1? Possibly implies a full backtest before powering up? I always thought GLD in particular filled gaps before proceeding upwards. Comments? Thanks.

  97. MrMiyagi

    SB,
    That’s why I mentioned “some”.

    Bill,
    Since SLV/GLD follow global prices, the gaps, in my opinion, aren’t as fillable as a stock that gets 9:30-4:00 action. Just my opinion.

  98. catbird

    Felix,

    I bought another slug of DGP at 3:59. If this wasn’t the early innings of an intermediate cycle in a secular bull, I probably wouldn’t have. Furthermore, I’m in “topping off” mode. I did most of my buying a week ago. If gold drops like a rock tonight, I’ll shrug and probably buy a little more tomorrow a.m. : )

    Currently I hold a pile of GLD and a side portion of DGP for extra juice.

    I’m leveraging on gold instead of buying miners or silver.

  99. ALEX

    Didnt Someone say about Bull markets ( cant remember who)…?

    “When the wind blows hard enough, all turkeys fly.”

    or

    “When the tide rises, even small boats will float.”

    well, some small miners breaking out trying to make up for lost ground

    BAA and CDY today

  100. Avann

    Poly, you saved my ass on the last cycle … I got out just a little after you did.

    No need to post your stops because as you say they are fluid … but it would be much appreciated if you would post when you abandon ship again.

    Please and thanks …

    I added quite a bit today near the bottom … even bought some HBU

  101. Bill

    FYI a follow-up on Le Fou’s q about why StockCharts listed gold’s closing price at 1601.

    Stockcharts (fyi the guy meant Gold instead of Silver below):

    “We get our futures data from the CME website. That website shows that the most actual Silver contract today was the Aug 11 contract which settled at 1601.1. Here’s the link:
    http://www.cmegroup.com/trading/metals/precious/gold_quotes_settlements_futures.html

    That’s the source for our $GOLD index. If you are an active silver trader, you may want to look at the individual silver contracts instead. Here’s a list of the ones we track:

    http://stockcharts.com/symsearch/index.html?^GC “

  102. Bill

    … but I’m still not satisfied w/that answer, as the description of the $GOLD ticker says “Gold – Spot Price (EOD)”, and gold spot was $1585 or so, as Le Fou pointed out.

  103. ALEX

    AVANN

    If you dont mind me saying so…on HBU there have been days when Volume is only 20,000 ALL DAY.
    Try not to ride this one too close to the top…if we have a flush down day, it can be really difficult to get out as everyone heads for the door.

  104. Harry

    Alex, it’s originally from a Chinese proverb, but there are equivalents in other languages. The original is, ‘when a typhoon hits, even pigs can fly.’

  105. deshy

    Alex: Do you suggest playing anything else on the TSX? I’m in the same boat. Although the theory is a falling dollar and rising PMs would be a ‘double’ win in $CDN–I would lie to separate those investments if possible.

  106. Avann

    Thanks Alex … I do notice the low volume on that but I’m not aware of any other Canadian ETF that has the same exposure to gold.
    Hoping to get out before there’s any rush …

  107. ALEX

    Thanks Harry

    Deshy- I’m not familiar with whats available on the TSX, sorry. I know someone on here will have a good idea though.

    As for low volume equities,

    We’re not ‘big players’ with huge positions here, but I got caught in a low volume stock once during a sell off and I put in a Market order to sell , and it sat there for a bit and the price ( bid / ask) just dropped rapidly while all the other mkt orders ahead of me triggered I guess.

  108. Avann

    Alex … I play guitar in a classic rock cover band up here in Toronto … we play a couple of their tunes :).
    One of the few Canadian Bands that made it in the US.

  109. ALEX

    AVANN

    Gotta know what your doing to play almost any of their music…quite complex ( especially the drums). I see the the real band whenever they come through- they put a lot into the shows.

    You should name your band on here, maybe some fellow Canadians would turn out to watch you guys play ( I would if I lived closer) ๐Ÿ™‚

    Ok, going to dinner now…good night all!

  110. Ryan

    Alex/Avann,
    I’m going to have to agree with Alex on HBU. I just don’t like the anemic volume. HZU was ok but HBU is just way too low for my liking. Unfortunately that means I changed almost my entire portfolio over to USD so I could buy DGP. If the USD does come roaring back out of the 3 year low set in May (or a new low to come?) I can change back to CND and it’ll be a double win!

  111. wallofworry

    Gary,
    Do you see the recent earnings surge, and subsequent run up in the stock price, of Apple and Google as harbinger of another ’08 style decline in the stock market?
    I’m looking at the charts for both stocks and seeing similarities in what happened in late ’07 and early ’08 to what’s going on today.
    Only difference is that gold is much higher today than what it was back in ’08 ๐Ÿ™‚

  112. Bill

    I’m looking to reinnvest in gold, as I missed the July 1 bottomm (I didn’t believe it would go up, due to seasonality – boy was I wrong – shows what preconceptions can do).

    Today’s action does not convince me that this small correction is over. Volume on GLD was weak, and the short term momentum indicators (RSI and MACD on 60 min charts) look weak.

    So I think that GLD goes down another day or 2 here. But if GLD breaks above Monday’s high I’d get in.

    Is anyone else thinking like this?

  113. YesLetsDiscuss

    LowTax,

    “Tommorrow” has already started in the futures market, and Gold is very close to making a swing low.

    HolyAFK,

    A swing low or swing high can occur any time. Whether it has any real significance depends on where it is placed in the cycle.

  114. Strat81

    Allenupl,

    Both studies I mentioned are actaully not in the official site indicator list, they can be found in the member section of the forums, see the links I posted earlier.

    The Sinewave cycle study in the forums is actually better than the site listed study, it automatically calculates the dominant cycle length.

  115. Gary

    Bill,
    I think you may be a little too worried about a 1% or 2% draw down.

    The fear of draw downs has already cost you a huge move in gold and miners.

    Remember in a bull market timing mistakes get corrected.

  116. Strat81

    Gary,

    I saw you comment earlier on tax issues concerning the PM ETFs and from my research if the ETFs underlying instrument is Futures or Forwards contracts, then the gains on the ETF can be taxed at the much more advantageous futures tax rate of 50% LTG and 50% STG. For this reason I avoid trading GLD and only trade either futures or futures holding ETFs. I am not an accountant, but this is my understanding based on my own research.

  117. Dave

    Ain’t it great to be invested in this bull and ready to ride Old Turkey?! I was getting so tired of trading and going down as much as up over the last two months. It is much more relaxing to take the long view.

  118. Bill

    Hi Gary. Dang it all, that’s a good point. I’m once again letting my emmotios (in this case, worry) interfere w/reason. Thanks.

  119. wallofworry

    Gary,
    So you think Bernanke and the Fed will pump liquidity into the market to prevent any kind of credit crisis from ever happening again? That assumes they simply do not want anything close to what happened in 2008 to ever happen again.
    In other words, perpetual, unrestrained and non-stop QE.

  120. Gary

    The powers that be have made it abundantly clear that the banks will be protected at all costs.

    So yes I think we’ve probably seen the last credit market implosion for a while.

    The next crisis will be in the currency markets.

  121. JEFFtheFLEA

    Alex!!!

    Glad you had a good time and got to eat at the sandbar. I hope you had a nice sunset on the deck. Big shame you didn’t meet up with traderlady
    I guess we might try to shoot for oct now not to sure.

  122. JEFFtheFLEA

    gary

    the high on gold at this point would be left translated if we were to move on down into the cycle. Although if we were to have a short cycle say 18 days that would still qualify for a right translated cycle correct? ( i dont think any of this is probable. I am simply asking for the nature of cycles and just useing the current situation )

  123. Gary

    I think the Fed can and does print money and that money has to land somewhere. The quickest outlet is in the stock and commodity markets.

    So in that sense yes the Fed attempts to manipulate the market.

    However the secular trends are too large for anyone to manipulate other than short-term. The secular bear market will continue until stocks reach ridiculously low valuation levels.

    Printing money may briefly levitate asset markets but it can’t fix the economy. As a matter of fact ultimately it will hurt the economy because it will spiked commodity prices.

    The Fed can print all the money they want but if the economy is rolling over into recession the stock market is going to head down.

  124. kmisak

    Avann, Deshi, I decided not to buy HBU for the reason Alex warned about (low volume). Since Gary’s hunch is miners, why not load up on HGU? It has huge volume. Also, I like Gary’s hunches!

  125. Gary

    You can’t be serious?

    Just because 250,000,000 ounces of silver were sold doesn’t mean that J.P. Morgan sold them. Hell, gold had been up 10 days in a row. Silver had gained 20% in the same period.

    Don’t you think the market is entitled to take some profits after that kind of the move? Silver is a broken parabola and there are plenty of nervous longs, just like I said there would be. You got to expect these traders are going to hit the sell button at the slightest provocation. this is why I’m not trading silver at the moment.

    I’ll say this again. Anyone that can look at that move in silver from last fall till May and seriously think that the silver market is manipulated needs to have their head examined.

    Seriously people this is just getting silly.

  126. Blake

    Open question to the more experienced option traders:

    I have been buying DITM GLD call options and rolling them into less DITM Options (i.e. back into .75-.8 Delta Options) when the Delta reaches around .95 or so. Is this good practice or should I just roll the options over right before expiry regardless of a Delta > .95?

    Thanks in advance…

  127. Sky

    Mark, I read the comments under the video and found a comment that may explain why the numbers are so skewed.

    BJF, I checked other sites, and the spike you showed here doesn’t appear. Looks like it was a data error. That explains why $10B didn’t even move the market.

    By the way, you said it was proof of COMEX manipulation, but the COMEX was closed when it occurred. Or rather, when it didn’t occur. ๐Ÿ™‚

  128. Rebecca

    Food for thoughts.
    “Before we conclude, we need to make some distinctions between today and 2008. Today’s credit stress is primarily with governments. The stress and liquidation from the private sector dominated the landscape in 2007 and 2008. Governments have absorbed many of those losses and now it is the credit quality and creditworthiness of governments that is come into question. Remember, when you or I have credit problems, it is deflationary as we have to sell things to raise cash. For governments, it is inflationary as debt crisis always become currency crisis.”
    Quoted from
    http://www.financialsense.com/contributors/trendsman/2011/07/20/precious-metals-ready-for-big-time-run-as-global-breakdown-begins

  129. Ohio Rob

    Guys, you all have a lot of experience in Gold… what about Diamonds? I am looking at engagement rings, any advice? With the pending deflationary event should I wait or just take the plunge now?

  130. Rob L.

    My advice, Ohio Rob, never get married.

    Just walk across the street to your local bullion dealer and pick up a few ounces of gold. ๐Ÿ˜‰

  131. Steve

    Ohio Rob,

    Congratulations to you! As a married female, if I were to do it again, I’d get a cubic zarconia and invest in gold with the savings. No way anyone would know but you two, and would be a gift to your future. It’s one of my pet peeves that we’re brainwashed into thinking one must have a diamond ring to make a proper marriage/image thus making the diamond companies rich. Heck of a powerful marketing job. But if you both are set on it (as I was), you might research a fair trade diamond (e.g. http://www.arcticsparkle.com/). Best wishes to you both in any case, KP

  132. MrMiyagi

    Ohio Rob,
    We’ve been married 8.25 years now and it is fantastic. It might just be a paper (I’m no religious dude) but it’s the feeling that matters.
    I got my wife a 3/4 carat round cut solitaire that I picked out personally from my friend’s dad’s jewelery shop, He then set it for me overnight in white gold. It is a VS1, D color with a tiny inclusion that neatly is tucked under a prong. Still looks great.
    A few years later I got her a pair of 1/2 carat earrings of similar clarity and color to match. Since then I just take her out on our anniversaries.

  133. Shalom Bernanke

    Kate aka Steve,

    Well said about the diamonds. I’m fortunate to have a wife that realized diamonds are mostly a marketing phenomenon. I think it clicked when they suggested I spend 3 months salary. LOL!

    Ever ask yourself why diamonds don’t trade on the futures exchanges? My hunch is the racket is so tight they have no desire to find true price discovery.

  134. Duuuuuude

    Blake, I am not going to say that rolling your options are a bad idea, but every time you reduce your delta, you are eating away at your strong hand status. I would not do it. Eventually, a sharp market correction will wipe out weeks worth of gains. When owning an option, even deep in the money, you still own a lot of leverage. I would contend that the delta increasing is a good thing unless you are good at spotting tops. I am looking forward to the reward that comes with a stronger hand after surviving a few daily cycles.

  135. manicmonday

    Hi all!
    I’m new here and this is my first time writing. All new to trading, and trying to learn ๐Ÿ™‚

    I was wondering if anyone knows anything about this new Pan Asia Gold Exchange? I heard somewhere that a lot of chineese people will be able to buy 10oz mini contracts of gold, starting tomorrow. Is that correct?

    Thanks everyone for sharing your wisdom, I’ve learned so much on this board in just a month.

    Lina in Sweden

  136. Duuuuuude

    You never really get a strong hand with options, so you don’t keep giving up any advantage you get because in the end, you could get wiped out in a hurry.

  137. MBS

    Gary-
    Correct me if I am wrong here. We are on day 13 of the dollar daily cycle, which, normally runs 20 days. From what I can see it topped on day 6, making it left translated. Unless this happens to be a short cycle that bottomed yesterday, we have to assume this takes out 74.40 and the previous daily cycle low due to its left translated nature.

    thanks

  138. Gary

    MBS,
    So far the dollar cycle is looking left translated but if we get a rally here in the next few days that makes a higher high that would revert to a right translated cycle.

  139. donald

    Could someone explain how the data is processed for the Chakin Money flow indicator and where it can be found. Are the selling on strength, data drawn from this also. thxs

  140. Gary

    So far this is been more of a sideways consolidation to allow the 10 day moving average to catch up than a real correction.

  141. sophia

    Yes Gary, it is amazing how Gold refuses to go down…impossible to buy unless you spend your day n front of a PC!
    Great plan that you set up for all of us!
    Once again, thank you

  142. sa

    Gary, any concern that we are near the top of the RSI range for the miners and it has been a reliable predictor of price movement in the past? Thanks!

  143. Gary

    The miners will follow gold. If gold continues higher then the RSI on the miners will continue to get more overbought.

    That being said we should get a cycle top for gold probably sometime by middle or late next week.

  144. sa

    Thanks and agreed though GLD also near the high end of it’s RSI range. How much weight do you give RSI as you look for entry and exit points within the cycle analysis?

  145. Poly

    Forget the dollar index, it’s tracking two worthless currencies and Euro weakness is masking the true weakness of the dollar. Both are down against all others and down against gold. Gold making new highs in both currencies is what we should focus on.

  146. Gary

    If it’s still early in a cycle I don’t worry too much about our RSI levels.

    That is the case right now as gold should still have one more push up into a cycle top, plus the last couple days have eased the short term RSI levels.

  147. MBS

    Gary-
    Do you think 24 days into an SPX daily cycle is late to be pushing the long side? Looks like we got our mid-cycle low right on time at 21 days and we are bouncing out of it.

    Thanks

  148. Ollie

    Do you guys think Gold not moving higher in light of the massive drop in the DX?

    As per Kitco gold is down $20 due to selling…

  149. Russell

    Thanks Larry.

    Gary,
    USdx broke the trend line at 74.20. Is an intraday break considered significant or does it have to close below 74,20?

  150. Gary

    Yes the dollar did break below the prior cycle low this morning. We now have a failed and left translated daily cycle in progress, which should also mean the intermediate decline has begun in the dollar.

    The May lows are now in jeopardy.

  151. Sasa

    Europe Said to Accept Temporary Greek Default in Rescue – Reuters

    from finance.yahoo.com

    And eur/usd goes vertical.

  152. Michael

    This from Trendsman at http://www.financialsense.com

    In analyzing bull markets lasting 15-20 years, we’ve noted that an acceleration in trend usually begins in the 11th or 12th year and is obvious by the end of the 12th year. Gold is in its 12th year while the 12th year for gold stocks would begin in Q4 of this year. Note that Gold has broken to a new high ahead of the typical breakout in September. That is another hint at what is to come. The next 18 to 24 months figure to be quite exciting and extremely profitable for those invested in this bull market.
    Poly, based on your previous remark about the character of the bull market changing as time progresses, do you have any idea how that may effect the cycles? ie. extending cycles, IM declines being less severe etc…
    thanks for your insight, it is much appreciated!

  153. Sang

    Left translated cycle for dollar, with its previous lows now in the game for being taken out in this cycle…

    If so, it would be very hard for me to believe that a new low in the dollar will not result in gold and silver going up.

    Could happen, but the opposite is much more likely and where you should position yourself if you haven’t already.

  154. Ollie

    Sang, that’s my problem if something is too obvious it usually doesn’t work

    In my view the uncertainty around Greece drove a lot of Euro holders to find safe haven in gold

    Now the uncertainty is over people will move back to the euro which will drive gold down but gold could go with it

  155. Russell

    Ollie,
    Are you saying that Euro holders have nothing else to concern them re their currency besides Greece? Seems there are a few other letters in P-I-G-S.

  156. Poly

    “Now the uncertainty is over people will move back to the euro which will drive gold down but gold could go with it”

    Yeah gold should collapse now, Europe is fixed, all solved.

  157. Michael

    Poly,

    Perhaps you did not see my previous post so if you don’t mind, I will repeat the question.

    based on your previous remark about the character of the bull market changing as time progresses, do you have any idea how that may effect the cycles? ie. extending cycles, IM declines being less severe etc…
    thanks for your insight, it is much appreciated!

  158. Peter

    Gary, what are the odds that this cycle is just a continuation of the June Daily, , which is therefore RT. This would give the dollar to 73.51$ as a bottoming target. We could then also assume that this is actually a starting point for the USD rally ?

  159. Poly

    Michael,

    It would appear that the cycle lengths towards the later parts of a bull do not deviate from the averages, so the timing should not be affected.

    What needs to change, IMO, are our expectations on the gyrations within a cycle, meaning that volatility should increase with each passing cycle and the moves will become quicker and sharper. We should be surprised less with what gold throws our way.

    Riding a bull in it’s last 1/3 lifespan will not be easy. Going old turkey is an option too, I would guess it probably beats out many who try to time it.

  160. Gary

    Peter,
    It doesn’t fit in the average timing band. And since we have an obvious bottom in that timing band I’m going to go with this being a normal cycle.

  161. Gary

    This notion that gold is a “safe haven” is completely absurd.

    How many of you have ever hit the buy button on gold thinking that you purchased something safe?

    Safe haven buying is just a made-up phrase that the media uses to explain why gold is rising. The real reason is that all countries are debasing the currency.

  162. Ben

    Since Bernanke works for the elite, you’d have to ask yourself how that maximizes the transfer of wealth to the elite?

    Socializing tens of trillions of toxic waste on the Fed [im]balance sheet did wonders, because it socialized the fraud and bad bets of the bankers. Printing money and targeting equities allows manipulation that buys time — to transfer more propped up assets to the sheeple. Stock options are worth more, and the transfer game lasts longer. Note that the elite own a higher percentage of assets in the US than ever before. They also have a higher cut of total profits than ever before.

    Sounds like the game plan between the Feds, Congress, and the Prez has been working very well, don’t you think?

    My dad informed me yesterday that if Obama’s budget plan gets through (the gang of thugs), then his and my mom’s SS will decrease nearly 10% right away, and will not go up again. I’d estimate that since they retired, it has already declined 45% in purchasing power (largely due to understated CPI). This would essentially force through what Bush tried to accomplish (water down SS).

    It’s become clear to me the budget battle is simply to create fear and then at the eleventh hour, retirees will be stuck with the bill and the stock market will rally like it’s 1999.

  163. Ivan G

    Éamonn,

    I know. But print money and pay doesn’t prevent the debt to reappear the next day. At least you still need to pay to many many people who work and do not produce values that can be exchanged for other peoples’ values – food, oil, clothes…

  164. Robert Thrane

    Thought I’d share Bob Chapman’s, usually spot-on view:

    “The national debt will not be touched and the wild spending will continue including $4 trillion to continue more wars. That means $1.5 trillion annual deficits forever. The climbing debt is 80% consumed by the Federal Reserve, which creates money out of thin air. Are we to believe that the Fed will create $2.5 trillion a year for the next three years and perhaps longer? The answer is yes, and the result will be hyperinflation, which will ruin the value of the US dollar. It is obvious the elites are not really looking for a solution; they simply want to destroy the value of the dollar to extinguish economic and financial stability, thereby forcing Americans, Brits and Europeans to accept World Government.”

  165. Ben

    Éamonn, for a look at how printing your way out of debt worked, check out Zimbabwe in the past ten years. We’re still doing it of course, but it’s a big leak, not a burst dike. So far…

  166. Michael

    Thanks for the explanation Poly.

    Gary, do you have an opinion on how we may expect the cycles to change during this stage of the bull mkt?

  167. Robert Thrane

    Eamonn, the problem we’re in is here for a reason, it was not accidental.

    People who think our problems were created by ignorance or incompetence are being fleeced.

  168. MrMiyagi

    As Ben said,
    I also believe that this debt ceiling deal is already done. I think that it is in the crooked politicians’ best interests to pretend that this is a hard decision but they had to do it in the end “For the Great of Our Country”.
    Indentured servitude is what the middle class is being bound to, the welfare bums and rich folk need not worry.

  169. Harry

    E, because it’s against the law. I agree with you, it’s absolutely silly to say that the US is ‘out of money’ considering we’ve printed $5 TRILLION or so in the past few years. In light of the recent Harry Potter movie, I’ve been saying that people must be imagining worried-looking goblins running around the Treasury building looking for spare change between couch cushions.

    It’s also ridiculous becuase Congress is in charge of both spending and setting the debt ceiling, and now they’ve simply contradicted themselves. The whole situation is ludicrous.

  170. Gary

    I don’t really expect the cycles to change. They may link then the debt in the next round of quantitative easing begins.

    The only real change I expect is that when we come out of the next eight year cycle low in 2016 I expect that A-wave to just morph into the bubble phase.

    At that point, so to speak, the ABCD wave pattern will break down.

  171. sophia

    Wow, Gold punters are really fighting around 1600.
    Once again, Gary will be right, it is not the price of Gold moving to the 10DMA, but indeed the 10DMA moving towards the current price of Gold!!

  172. Ivan G

    Actually I’ve been reading about the inflation in the third Roman Empire these days. They did not have paper currency there but mined gold and silver coins. Once the government couldn’t catch up with the silver mining to pay the legions their wages, they ordered to mint the coins with the same face value but instead of pure silver meshed them with a little copper and bronze. Year after year silver decrease and bronze coppe increased in the coin. And even that the Emperor ruled that this new coin equalled the old coin (of pure silver) people knew that it was not true…2000 years ago.

  173. ร‰amonn

    Ben, Ivan, thanks for your comments. To be honest, I find economics to be an unpleasant, incorrigible subject. Ask any person with common sense, and I think they would say creating money out of thin air is not honest because in a white collar way it removes value from dollars from the existing possessors of dollars. Its in-your-face obvious to me, and given there are so many smart economics people around, I just have to assume its my ignorance of economics and I am wrong.
    Give me science or engineering any day

  174. High 5

    I heard a great explanation yesterday that sums up the nature of the coming crisis.

    The 08 crash was the result mainly of too much private debt. Now that the governments have taken on those debts, with bailouts, the next crisis will be different.

    When the problem is private debt the result is deflation, since things need to be sold. When the problem is public debt the result is inflation because it becomes a currency crisis.

    The governments will create currency units, from thin air, until they reach the end of the road.

  175. Alex in Montana

    Social Security – For what it’s worth.

    I get social security and for the last two years, I have not received a cost of living adjustment.

    The reason and this is from my social security annual award letter:

    “Your social security benefits are protected against inflation. By law, they increase where there is a rise in the cost of living. The government measures changes in the cost of living through the Department of Labor’s Consumer Price Inde(CPI). The CPI has not risen since the last cost-of -living adjustment was determined in 2008. As a result, your benefits will not increase in 2011”.

    Yup folks, the Obama administration says there is no inflation.

    I call B.S. Anyone out there not paying more for things?

  176. William Wallace

    Robert,

    “Eamonn, the problem we’re in is here for a reason, it was not accidental.

    People who think our problems were created by ignorance or incompetence are being fleeced.”

    Ahh…im not alone!
    Whats sad is that most people would just see such things as conspiracy theories…thats why so many are fleeced!

  177. Michael

    Gary,

    Thanks for your reply. What do you mean by, “They may link then the debt in the next round of quantitative easing begins.”?

  178. High 5

    “How many of you have ever hit the buy button on gold thinking that you purchased something safe?”

    It depends on whether I’m buying paper gold or physical. The physical is comforting, like a warm Navajo blanket when compared to a threadbare sheet.

  179. hamvestor

    “…thereby forcing Americans, Brits and Europeans to accept World Government.” Chapman “spot-on” with this kind of nonsense? You’re kidding, right?

  180. Gary

    The Dragon voice recognition software has been a lifesaver for me. To begin with I’m a pretty slow typist. I can now put together the nightly report in a quarter of the time it used to take me.

    I’m also starting to get arthritis in my neck and setting up my desk typing aggravates it.

    I’m debating on whether I want to get the wireless microphone so I can write the nightly reports while I’m walking around the house.

  181. MrMiyagi

    Huh… I thought you were kidding Gary, the voice recognition software I have is the one between my ears that detect’s the wife’s tonality. Saved my neck a few times..

  182. Blindweb

    I’m not really sure what the word safe haven means in the way it’s being used to adequately argue. I also don’t know if you can clearly separate the words safe haven and money printing. The money printing happens for the same reasons one might seek safe haven. I do know that the Tunisian president fled with gold, Hitler paid his bills with gold, people fled the communist take overs using gold to bribe, and that millions are hoarding and hiding gold and silver bullion. War is coming, it’s an only question of when.

    Linear cause-effect analysis, a is caused by b, of a complex system like the economy will always end in sorrow. That’s why I don’t read dopes like Karl Denninger, Mish, and Nicole Foss; very linear thinkers make great psychophants

  183. wmp

    Gary,

    So Greece is solved for now, the dollar is crushed and gold is kept in check…given all that’s going on here and abroad.. would the expectation of gold dropping with a debt ceiling agreement still be a probability given all the time it’s taking?

  184. Robert Thrane

    It’s extremely simple. The corporation that creates the medium-of-exchange that you use adjusts its value and circulation at will.

    Unfortunately you need to rely on this medium-of-exchange to bring in food, provide shelter, mobilize, etc.

    You are dependent, 100%, without argument, upon this corporation. You cannot vote for this corporation’s members, nor audit it. You are its slave, 100%.

  185. Michael

    Gary,

    You mention arthritis in your neck.. I am getting it too from all the hours at the computer. Have you (or any one else on the blog) come up with a way to treat it or to lessen the pain?

    Thanks

  186. Robert Thrane

    Libya was one of the last countries on Earth without a central bank, well look what happened a few months ago.

    Iraq was in the same boat.

    “Libya has been one of the last nations in the world that had its own state run banking system, and control over its own money supply. By having this system in place, they could demand oil purchases from their oil fields to be made in Lybyan Dinar, and not the US Dollar. It also means that Libya has ensured themselves a stable economy, with little inflation and currency devaluing as most of the industrialized world has under private central banks.

    The parallels for both European and US intervention now in Libya is very reminiscent to why the United States attacked Iraq in 2003. Six months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept Euro’s instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar.”

    http://www.examiner.com/finance-examiner-in-national/america-s-true-reason-for-attacking-libya-becomes-clear-with-new-central-bank

  187. Ben

    Gary, a lot of people buying physical and taking possession with long term intent are using gold as a safe haven — it will pass through the dollar worm hole.

    I agree that very few are doing that right now, and yeah, it is a stupid term — it’s more like insurance against being robbed by one’s own gov’t.

    Everything “analysts” say on a day to day basis is just recycled nothing.

  188. Ivan G

    Greece had not defaulted. They must do it the old skool way by running out of cash, not by swapping debt for more debt.

  189. Shalom Bernanke

    Just as long as Gary’s voice recognition software doesn’t confuse “buy” with “sell”, subscribers should be alright with a few errors. ๐Ÿ™‚

  190. Farm Girl

    Ivan G – If the credit rating agencies call it a default, then all the CDS written by the big US banks have to be paid to the Greek debtholders.

  191. Robert Thrane

    Call me a loony, I really don’t care one bit. Disagree without doing any homework, expected. React without doing any research or critical thinking, expected. That is what you have been trained to do through you television set, and other means.

    Take advantage of this information if you are interested.

  192. JEFFtheFLEA

    Parents still have gold and silver from the 70’s
    That would be SAFEHAVEN

    I’m trading this stuff because I can’t go out and work harder and do more . There is NO out working the printing. I need the cash so I can then buy gold for the safehaven play

  193. Farm Girl

    http://www.investmentpostcards.com/2011/07/21/technical-talk-daily-update-wednesday-july-20-2011

    Adam Hewison, charting strategist of INO.TV, brings you another edition of his invaluable service of daily technical updates on the ups and downs of various markets. This short analysis is a great tool for keeping one’s finger on the pulse and timing the markets.

    Here is a summary of his technical outlook:

    SP 500 Index:

    Monthly Trade Triangles for Long-Term Trends = Positive
    Weekly Trade Triangles for Intermediate Term Trends = Positive
    Daily Trade Triangles for Short-Term Trends = Positive
    Combined Strength of Trend Score = + 90

    A 61.8% Fibonacci retracement level comes in at 1,332.97. I suspect that there will be professional selling between the 1,330 and 1,333 levels should we get to that area. All of our Trade Triangles are positive, indicating that we are in an uptrend. However, the market does show some negatives: the PSAR is negative and the MACD is somewhat mixed. A lower close today in this Index will signal more of a trading range than a trend change. Look for support around the 1,315 area extending down to 1,310.

    Silver:

    Monthly Trade Triangles for Long-Term Trends = Positive
    Weekly Trade Triangles for Intermediate Term Trends = Positive
    Daily Trade Triangles for Short-Term Trends = Negative
    Combined Strength of Trend Score = + 85

    The silver market bounced back dramatically today after almost touching the $38 an ounce level earlier in the day. Currently silver is down about $.40 for the week and we still have the rest of the day and Thursday and Friday to go. Near-term resistance comes in around the $40 level and support is at $38. We are expecting this market to reach its highs towards the latter part of Q3 and early Q4. The intermediate target for silver based on the Fibonacci count of 61.8% is $42.98.

    Gold:

    Monthly Trade Triangles for Long-Term Trends = Positive
    Weekly Trade Triangles for Intermediate Term Trends = Positive
    Daily Trade Triangles for Short-Term Trends = Positive
    Combined Strength of Trend Score = + 100

    Despite what looked like a sharp pullback for the gold market, gold remains higher for the week. One key level we see in this market right now is $1,580, which should act as support. The next level of support is at $1,566. We continue to like this market from the long side and are looking for gold to move higher until the end of Q3 and possibly into Q4. Intermediate targets for gold are $1,640 and $1,650.

  194. Farm Girl

    Crude oil:

    Monthly Trade Triangles for Long-Term Trends = Negative
    Weekly Trade Triangles for Intermediate Term Trends = Negative
    Daily Trade Triangles for Short-Term Trends = Positive
    Combined Strength of Trend Score = – 65

    The crude oil market continues to move in a sideways pattern and this is reflected in our -65 Chart Analysis Score, indicating that a trading range is at hand. Resistance comes in at $99.00 and must be taken out if this market is to move higher. Support has now moved to the center of the Donchian trading channel which comes in around $95.00. Presently the best strategy in this market is to be on the sidelines waiting for the breakout one way or the other. Our Trade Triangle technology indicates that that is going to happen on the downside. We will see.

    US Dollar Index:

    Monthly Trade Triangles for Long-Term Trends = Positive
    Weekly Trade Triangles for Intermediate Term Trends = Positive
    Daily Trade Triangles for Short-Term Trends = Negative
    Combined Strength of Trend Score = + 65

    The relentless sideways activity in the Dollar Index continues with no real movement either on the upside or the downside. The Index remains below its 200-day moving average. The longer-term trend is positive based on our Trade Triangle technology. Resistance remains between 75.50 and 76.50, with support at 74.00.

    CRB Commodity Index:

    Monthly Trade Triangles for Long-Term Trends = Negative
    Weekly Trade Triangles for Intermediate Term Trends = Positive
    Daily Trade Triangles for Short-Term Trends = Negative
    Combined Strength of Trend Score = + 55

    There is no change in this Index or our analysis for this market. The +55 Chart Analysis Score indicates that this market remains in a trading range in the near term, with our Trade Triangle technology giving a mixed signal. Resistance is between 349 and 350; support at 342.

  195. Robert Thrane

    I know this is a financial board, and I do respect that, and I apologize for posting OT info.

    It’s just sometimes I get some pent up about what is going on that for some reason, I’m still dumb enough to think trying to educate people through internet interaction is useful. I know I am wrong in this regard, but if somehow, luckily, one of you looks into this, it could change your life for good completely.

    I won’t post related to this again. Good day.

  196. Robert Thrane

    Farm Girl, why wouldn’t you just summarize whatever information you are posting and then anyone further interested can follow a link you provide?

    I know I’ve done this too, but two posts with those lengths, c’mon now!

  197. Robert Thrane

    As you can see blogger won’t let those sites be linked. I tried it twice, I have programmed thousands of pages of HTML, I did not make a mistake. I have never seen links rejected before, but then again I haven’t used blogger (Google owned) much, and I’ve never tried posting controversial links.

    All the more power to you if you can successfully get to those pages!

  198. Robert Thrane

    Blogger for whatever reason, I guess when it has a blacklisted site, will recreate the link as part of blogger.com, which obviously then doesn’t exist and you get an Not Found” error.

  199. McBryde

    Copy and paste still works, Robert.

    Re the OT stuff: It might be better if people didn’t believe it. Especially the aerosol salt spraying of bromide, aluminium, etc.
    I’m satisfied that it’s true [after quite a lot of study] .. but it’s not nice stuff.
    Humans can be pretty weird!

  200. ...at ease

    Arthritis in your Neck:
    Get a good posture sitting chair, makes a world of difference. Herman Miller makes the best web chair, fully adjustable. Good back posture will help the neck. I used to get high amount of pressure in my neck and shoulders working long hours at my desk until I switched to the Herman Miller Webbed chair. It made such a differene at work, that I bought one for my home office.

  201. William Wallace

    Robert Thrane,

    Thats pretty crazy how it you cant link those sites in Blogger, but not suprising…sounds like what happen recently with AOL, members who use AOL are no longer receiving emails from certain websites.

  202. hamvestor

    Thrane, thanks for trying to educate us. But since you profess to believe that anyone who disagrees with you obviously hasn’t done any “critical thinking”, “research” or “homework”, I guess you’re here only to give and not receive. A true altruist!

  203. Robert Thrane

    WW,

    Of course man, it’s not crazy at all to me, we live under a rogue tyrannical system governed by the major corps.

    Remember the Google vehicles? Yeah you remember that controversy! Those bastards had those cars ridged up and drove down every street in the US and Europe. Those devices that spun on the top noted every wireless network in US and Europe and hacked the passwords. They still have all that data! Those crazy bastards, as with most crazy companies only after more money and control, just got slapped on the wrist and it was only talked about for like a week, barely!

  204. Robert Thrane

    Haminvestor, I do appreciate the feedback, I really do, and you have a good point, no doubt.

    It’s just that I have 1000s of hours of research or close to, and it is challenging to begin to level with people that have 0 hours of research about topics that are potentially so crucial.

    I should slow down when introducing things like this I agree, fear mongering is not a successful tactic in actually teaching anyone anything.

  205. William Wallace

    Well we see how even a hint of a deal drops gold, now they say no deal up we go…whats the deadline??

    I want to be ready to buy some more when they finally come to an agreement.

  206. Harry

    sophia, we’ll see how well it turns out. I’m no oracle and there could be more downside, but I’ve been riding it for a while and can take quite a beating before I get myself in trouble. If we get a real tag of the 10 DMA later I will be happy to add another.

  207. Robert Thrane

    The deal is going to kill the dollar once again as all the global market participants will realize we’re doing nothing to maintain a strong currency and everything to destroy it. Cuts, are you kidding me, what cuts?

  208. Robert Thrane

    The dollar is already pricing in a budget deal. It gave some nasty head-fakes and now we’re breaking to the downside of the triangle consolidation.

  209. pimaCanyon

    Gold appears to be in consolidation mode, and this could go on till next Tuesday. Yesterday’s low came within a hair of tagging the 23.6 retracement level of the move up from the July 1 low. 38 percent is a common retracement level, but that would take gold down to 1560. Seems unlikely, especially if this is a HALF cycle low. However, price returning to the recent low of 1581 is certainly a possibility and could turn out to be an excellent place to add to positions.

  210. Robert Thrane

    For whatever reason, the last few weeks, gold has been getting stronger only when the market is in a decline. Miners and gold are not pushing up when the market is going up.

    May we see the market top in the next week or two as the budget deal is passed and gold hold steady near this area, then when there is no more upside for the market and it recedes, gold will continue it’s C-wave?

  211. Dan

    Golds hovering just under 1600$, you guys really think the big money wont do everything in their power to keep it that way till wednesay with the options expiry?

    News wise, I can’t see anything coming out with respect to the debt ceiling or euro situation that would cause gold to rise. Only potential for news are resolutions and thus gold negative.

    All in all it seems the risk until early next week is to the downside. Still holding positions but have been take profits.

  212. Robert Thrane

    I just don’t see how GDX is going to fall 4% to fill its gap. I also don’t see how we’re going to continue from here without GDX filling the gap?

    Anyone have statistics, percentages of gaps being filled in major indexes, GDX, or GLD? From eyeballing many charts the odds look almost 90% (that’s giving it abotu 2 months to do though)!

    I think we’ll need gold at 1570 or 1560 for GDX to fill.

    That would relive sentiment nicely as well.

  213. Gary

    I really doubt the debt ceiling debate has anything to do with gold today or tomorrow.

    This just looks like gold is consolidating the huge move off of the intermediate bottom.

    It still early enough in the daily cycle that we should have another push up before a move down into a daily cycle low.

    The fact that the dollar has broken below 74.19 is also suggesting gold should have another leg up as the dollar drops down into its daily cycle low. Since it’s only day 14 we could still have another one to two weeks before the dollar bottoms.

  214. Dan

    Gary the past few days you can pretty much identify evey swing in gold with breaking “news” regarding rumors about them getting closer to making a deal or not. Gang of six news-gold went down then republicans came out and said no and gold shot back up and now news just came out they may be getting closer and again gold dropped. So considering this action, if they officially make an agreement you don’t think gold will have a big drop?

  215. Robert Thrane

    What’s gong to happen at 2 AM tonight when there is no US news?

    From my experience, it is a shady deal, the price movement is determined before by traders/funds, then the news comes out afterwards to move that price their way.

  216. Gary

    No I do not think it will have a big drop, not with the dollar moving down into its daily cycle low.

    Unless this happens to be another short cycle gold should still have another leg up before putting in a short term top.

  217. Sang

    Agree 100% that news is not driving the price of Gold.

    It’s a great excuse (or cover) to use to explain away price movements to the mass public.

    But true traders know, it’s not the cause of price movements.

    And this is true of the many trading disciplines I have encountered, not just Gary’s cycle analysis.

  218. thedocument

    Silver is currently back-testing its basing pattern breakout (third day in a row). As I noted yesterday, sentiment got too hot, too quickly, so I didn’t expect PMs to just take a day off and go running away again. In any case, I suspect this back-test will hold, so most of today’s damage has likely been done for today.

  219. William Wallace

    Watch gold drop again when the news comes out that a deal was reached. Gold drops about $10 everytime debt ceiling deal is mentioned…then its up up and away after that

  220. Dan

    For those you claiming gold is not reacting to the debt ceiling news I would suggest tracking down exactly when news came out the past few days and you will find gold would have huge swings that same minute.

    It just happened less than an hour ago too.

  221. Gary

    This just looks like a normal consolidation after a huge leg up to me.

    Gold could trade all the way back down to $1550 and it would still just be a normal corrective move.

  222. LowTax

    SB, exactly. The argument is over short term trading. Most of us here don’t care as we only trade IT cycles. The ‘news’, and related price movements, is actually just ‘noise’.

  223. ร‰amonn

    Shalom Bernanke, I am always truly impressed by your patience and waiting. I am sure it is a major weapon in your armoury. I wish I could acquire it

  224. Dan

    SB,

    Of course not but playing your odds here, do you think we are gettingcloser to reaching an agreement? Legislative deadline is tomorrow with the officially deadline aug 2. In the past, these guys have always waited to the last second. Considering how gold has been reacting to RUMOURS regarding debt ceiling, I would imagine it will have quite the swing when they officially reach an agreement.

    Just something to keep in mind. Along with the options expiry next week too ๐Ÿ™‚

  225. William Wallace

    Gary,

    Thats because your just standing back looking at the big picture…dont get me wrong, im going old turkey right with ya my friend…but also trading the moves on this news that are certain if your looking at the small pictures.

  226. Shalom Bernanke

    WW,

    Maybe, maybe not. That remains to be determined at the end of the move. it’s far too soon to tell.

    All I can say is my trading results exploded to the upside when I realized the tv, media, politics are worse than distractions, they’re meant to part us from our money. An added plus from “tuning out” is that one has much more free time combined with very low stress.

  227. William Wallace

    I watch the S&P futures trade side by side with gold futures, when the news on the debt ceiling comes out you see gold drop hard and the market blast off at the same exact time.

  228. Shalom Bernanke

    Dan,

    Of course I think we’ll get an agreement. My point is that is doesn’t matter for my trade. It’ll juke things around a bit, either giving me a chance to buy more if we dip, or ride what I have to much higher levels.

    In order to prove that news gives an edge, one also has to know whether it’s already priced in or not, AND to what degree. These are unknowable, IMO, so cannot be factored into my trading.

  229. Shalom Bernanke

    Robert Thane,

    Same to you, especially your observation about all this being theater. Couldn’t agree more.

    Btw, we shot our tv’s full of buckshot (so it wouldn’t poison anybody else if they picked it up at the curb) just under 3 years ago. Haven’t missed it once. ๐Ÿ™‚

  230. Gary

    In a month ago everyone thought that the miners couldn’t go up unless the stock market was rising.

    It just goes to show you what can happen when you become convinced that something is a sure thing.

    This is why it I tend to trade mostly off of cycles and ignore the news.

    The gold cycle is still early enough that it should have one more push higher.

  231. Shalom Bernanke

    Bernanke and gang have been giving us the finger since 1913, when the latest “Fed” was created.

    If you could print money, what would you do? ๐Ÿ™‚

  232. Sang

    To clarify:

    News can cause wiggles but the market peaks and troughs on other factors, and then mainstream media and the general public explain the peaks and troughs using news a la monday football quarterbacking.

    By the time you are reading that BBerg news flash on the terminal, trust me, the hedgies and institutionals have already telegraphed your anticipated response and will make money off you.

    Leave the news-based trading to the HFT algos that can actually turn a profit in super short time frame based trading windows.

  233. William Wallace

    The news, cycles, its all human nature taking its course.

    There is nothing mystical about the markets. Their movements can be analyzed and understood by anyone who understands the basic concepts of energy.

    TREND gives us the direction of the market
    MOMENTUM gives us the strength of the trend
    CYCLES give us the timing for a change in energy
    SUPPORT and RESISTANCE levels are barriers to energy.
    FRACTALS are forces of energy at work on different scales.

  234. TZ(8155)

    ADDED. I’m at 6x now on gold futures with stops mostly near the low of yesterday (on what I added today). Betting we had a low yesterday and this is just a retest coming close (which allowed me to get a larger add with small risk).

    I’m not too sure this hold although it is worth the attempt. If we go below yesterday’s low then it sets up a H&S projecting near 1550. I would assume the guys in charge see that to and will push for it.

  235. Sang

    Most of the successful and/or professional traders I’ve crossed paths with agree that news does not influence their investing decisions.

    This includes Gary who runs this board.

    Only the HFT algos that match key text tags in news headlines to trading algos, generally speaking, make money off news from my experience. And that’s because they excel at executing a lot of transactions in a short time frame to profit off “wiggles” caused by news.

  236. Robert Thrane

    We need a new name for the Fed it is deceiving. Why not we either call it JPM, whom is speculated to be one of the largest shareholders of the Fed, or why not just call it the Rothschild’s?

    When the original man himself, JP Morgan died in 1913 it was thought he was one of the richest if not the richest man in the world. Then upon investigation, it was realized he was an agent for the Rothschild banking family!

    The Rothschilds are so special, Evelyn Rothschild, guess where he got to spend his 2000 honeymoon (?), not Aruba, the White House!

  237. Sang

    William,

    If you have found a way to make money off hedgies’ moves, more power to you.

    Personally, I suck at either trying to anticipate hedgies, or game the hedgies to turn a profit. They always seem to be beat me to it, perhaps because they have access to info I don’t have, or they are collectively smarter than me.

  238. Robert Thrane

    SB,

    I of course know that my man. I just get fed up with everyone over and over again using and citing the Fed and it’s actions without really discerning or representing who they are.

    I think it would be cool if we substituted a new name for them here on this board which would be more clear as to what they are.

  239. Robert Thrane

    WW,

    Excuse my french, but when someone keeps f*kcing you over again time and time again round the clock I’m not the type of person that just looks the other way to something more merry because it’s easier.

  240. Hack

    All I can add to this thread is that I ignored all the noise on the silver crash, kept my miners and am making money.

  241. Robert

    from dan Norcici–he says it all
    Here we go again! Tuesday it was comments from the President that some progress was being made on the debt ceiling negotiations that derailed gold and send the US equity markets in a tizzy to the upside. Yesterday, that was walked back as things were once again at an impasse. Today another story hits the newswires that a deal is in the works again. Down goes gold; up go the equity markets and down goes the Dollar.

    Only in America in the age of hedge fund computer algorithms could we get an upside reaction in stocks and a downside reaction in gold on news that the US could get the greenlight to plunge itself ever deeper into a morass of indebtedness as its financial condition further deteriorates and works closer to looking more and more like that of a banana republic.

    Apparently in this brave new age of unlimited indebtedness, safe havens are only needed when it appears as if a country might actually attempt to hold the line on its spending problems and work towards balancing its budget like the rest of us ignorant clods who still attempt to run our family budgets in a responsible manner. Excuse me for not becoming part of the cheerleading crowd who equate more indebtedness with a good thing.

    “The borrower becomes the lender’s slave” was written by someone far wiser than the current group of debt-addicted politicians who are sending this nation down the roads towards financial oblivion.”

    Either way, gold, after staging a titanic struggle revolving around the $1600 level, was knocked lower once that news story broke which gave the day’s victory to the bears who managed to keep the metal from holding firm above $1600. Solid Asian-based buying last evening had pushed it further to the upside from yesterday’s pit session close in New York and set the stage for the push above $1600 so we will have to see if those buyers come back in this evening. It does appear that as I write this commentary, buyers have appeared in the $1580’s again.

    More to come later if time permits…

    The Dollar has gotten trashed today as it broke below 75 and then continued to plummet right through a critical support level at 74.50 without even a pause. It’s weakness is providing even more volatility to an already volatile trading session as the algorithms generate buying across the commodity complex when the Dollar is weaker and risk trades are back on. That is what has pushed crude oil back to the $100 level again for WTI. However, several of the commodity markets are currently experiencing some bearish fundamental factors which is setting up some wild price swings across the sector in general as some of the algos buy while commercial accounts are providing the selling.

    Remember that insanely weird 1 1/2 point rally in the long bond that I commented upon the other day? It never happened! Yep, bonds have erased the totality of those gains and have dropped as low as a full point in today’s session. I am of the opinion that the best thing traders can do in these volatile market conditions is to sleep in late and upon waking, indulge heavily in video games. If you miss a couple of trading sessions, not to worry, as prices will eventually go right back to where they were before you took your extended nap. Madness, insanity and idiocy are too mild of a choice of words to describe what our financial markets are being reduced to by these damn computer algorithms.

  242. Robert Thrane

    WW,

    Whatever dude, I hope you envision a merry life when your kids grow up, the dollar is worthless, all our industries are overseas, food consumes 50% of your spending, crime rates skyrocket, there are no jobs for you kids after you pay their tuition’s, etc etc. Sounds like you should continue ignoring reality!

    So what if you make enough so that you can afford to live well and your kids as well. The problem is that than after you die, you have done nothing directly to help solve the problem, you just side-stepped it, so if your kids aren’t as savvy as you (also note there will be no Gary Savage at that point), then the Fed or similar institution down the road will just take everything from you kids that you gave to them.

    That’s why addressing problems head-on and immediately is key.

  243. Michael

    Robert,

    Thanks for the links, they are very informative. Due to slow internet, I am not able to watch videos… Do you have any printed info on the Rothchilds?

    Read the book, The Creature from Jekyll Island?

  244. TheBookGuy

    Robert Thrane,

    You are on a save the world campaign. You are right about many things, but you have no power to change them. The key is not to focus on the enemy and face them head on. Read Art of War. Find holes in the enemies plans and use them to your advantage. The successful people don’t see the “news” and fear. They see the “news” and react accordingly. They react in a way that is going to make them profit.

    It is great that you care but honestly your sudden campaign on this board to save us all is quiet annoying.

  245. TheBookGuy

    WW,

    I fight the battles that are ready to be fought. The Fed is defeating themselves. Why fight a battle that is already won?

    Besides the America or I think you mean the U.S.A. that you speak of doesn’t exist anymore. What we are seeing is not the rise of socialism but the failure of socialism. Just because people are just now recognizing it as socialism doesn’t mean it just started. The failure of the USA is what is needed to restore the USA.

  246. Robert Thrane

    I guess I’m just stubborn, and am trying to make people as pissed off as I am/was when this all came to me.

    WW, you da man as always.

    Michael, Creature From Jekyll Island is a awesome book. It’s amazing it predicted the bailouts way before they happened, and that’s because when the Fed (criminal) founders created the Fed one of their key points was infinite risk with zero liability- they can do what they want and the taxpayers will always bailout their losses. FYI, we bailout Greece through our taxes too if you didn’t know. 80% of bailout went overseas, hahaha, you f’in shills (that’s their mind)!

    Michael, I suggest you save that youtube link and watch it another time when you have enough bandwidth. There are three parts all can be found on that same youtube page, and they are probably the best videos I’ve ever seen on current monetary schemes.

    The book guy. That’s fine. thought I’d give it one shot- I truly hope you enjoy the 47th chromosome.

  247. pimaCanyon

    RT,

    Okay, so what do you DO about it that will make a difference? Belly-aching about something without at least having a plan to change that something–that is a waste of time and energy IMHO.

    The way I see it is there are some things that I can change (mostly having to do with myself) and other things I cannot change. Knowing the difference is key because what I want to focus on is those things that I can change.

  248. Robert Thrane

    PC,

    The point was to make enough people agree we’re being screwed, and then once that is resolved to move on to solutions.

    It doesn’t seem that plan A was a success at all I think I maybe had WW agree, SB agree but not really care, a random guy agree about his research of the aerosol operations but said he likes to ignore it cause it pisses him off, and then a bunch of people attack me.

    So it looks like I’ll just move on to my original plan of not sharing any of this info anymore with anyone, moving out of the US (avoiding Europe), and living outside of USA Inc’s barriers.

    May God protect each and everyone of you from the poisons.

  249. William Wallace

    TheBookGuy,

    Your right about socialism failing in America, but socialism would have never even gained any traction if everyone were of the mindset that we could change things.

  250. William Wallace

    TheBookGuy,

    I agree that the US must fail to be restored, only if nothing is done to restore it. Its like a drug addict who hits rockbottom, they either do something to restore themself or they die.

  251. pimaCanyon

    RT,

    So I’m back to my original question: What do YOU do about it that will make a difference?

    You just confirmed that sharing the information won’t make a difference because only a very few will take the time to look into it, and of those who do, many of them will just blow it off as some internet hoax. And most of those few those who believe it’s true will not know what to do about it.

    Sharing information is useful IF it can result in enough people to create change. Or IF the information you’re sharing can really help people in their own lives.

    The trouble with the information about the Rothchild’s is that there’s nowhere to go with it. How can we change it?

    I’m not saying to stop sharing information. But you might consider that most people will not be interested, and of those who are, most will not do anything with it. So expecting people to take what you’re sharing and run with it–that expectation is just setting you up for disappointment which results in your taking your marbles and going home. How will THAT change anything?

    Keep sharing. Just don’t expect everyone to be as excited about it as you are. There WILL be a few who do get excited, but most won’t.

  252. Michael

    Robert Thrane,

    Agreed, will keep the link… thx.

    Only way the USA will return to what it was is if people are educated to what is going on. Ron Paul is the only one trying to educate and he has less than 10% approval among the Republican Candidates for President in 2012. If you don’t understand the problem, you cannot fix it. The country has a long way to go to understand the problem and even longer to fix it… Your rants on the blog are welcome…

  253. William Wallace

    Pima,

    Yes….not all will run with it. That is to be expected, or learned…and once one realizes that, they will be glad enlighten even one. Change begins with oneself…simple as that.

  254. MrMiyagi

    There’s not much an individual can do to cause change.
    Only when the masses awaken from their bullshit-induced coma will that happen but the instant one brain cell activates they are showered with “good news” or stimulus money.
    Stimulus money = zombie powder.

    Tea party’s over.

  255. High 5

    On agreement to redefine CPI in order to default on SS payments, again:

    Of course, they don’t call it a stealth default. They call it “chained CPI.”

    This stealth default has occurred before. When Social Security was in trouble in 1983, one of the Greenspan Commission’s fixes included an adjustment to the consumer price index known as “substitution.”

    It works like this: If steak gets too expensive and you start buying hamburger instead… well, your price of beef hasn’t really gone up and your cost of living is unchanged. This is one of the reasons official CPI is running 3.6%, but if it were still calculated the way it was before the Greenspan Commission went to work, it would be 11.1%.

    Because Social Security benefits are keyed to CPI, this has resulted in a substantial savings for Uncle Sam. But fast-forward 28 years and Uncle Sam has burned through all the trust fund money just to pay his bills, and “substitution” alone isn’t good enough. Hence, “chained CPI.”

    Under “chained CPI,” if your hamburger gets too expensive and you start buying beans instead… well, your price of protein hasn’t really gone up and your cost of living is unchanged.

    Regards,
    Addison Wiggin,

    Obama and the Repubs have agreed to another redefinition of CPI.

  256. Robert Thrane

    It’s a lot easier to make productive changes than one thinks. You just need a small group of dedicated men. Throughout history that is all that has ever changed the world.

    WW,

    It’s too late man. You won’t feel the suffering. Transhumanism is already 12 years in the making. Public law 105—85 in 1997 was the first domino. I was 10 years old at that time, obv couldn’t do anything.

  257. William Wallace

    Robert,

    Its not too late…you said it yourself when you laid it on me before when you misunderstood my stance.

    The suffering has begun for many, when it begins for all then it will be too late obviously, but not too late to change things, suffering forces change.

  258. Alex in Montana

    Social Security

    As I said earlier. No increase in social security in two years for me. The governement says there is no inflation.

    It’s only going get worse.

    Watch for “means testing”
    next.

  259. ร‰amonn

    I just noticed that the packets of noodles I eat are about 20% smaller…Before, they just about fitted into the pot. Now, no problem with space to spare

  260. Bill

    Le Fou,

    How about this?

    The most powerful weapon on earth is my wife’s soul on fire.

    — Anonomous

    My 2 yen

    ๐Ÿ˜‰

  261. Bill

    Gary, just woke up here in Japan.

    Lucky for me gold is down, so I’m FINALLY buying. Technically it looks like a consolidation flag to me, too, likely with another leg up equal to the leg we already had from July 1.

    Will put in a stop though just in case.

  262. Le Fou

    LOL Bill!

    Where in Japan do you live?

    I lived there in the fifties as a second and third grader. We lived in military housing in a place in Tokyo called Grant Heights. I’d be surprised if it was still there.

    Best,
    Le Fou

  263. Gary

    Bill,
    Good for you. Just don’t put your stop so close that you get whipsawed out of a winning position.

    Gold could trade all the way down to $1550 and still just be consolidating the huge move up off of the intermediate bottom.

  264. Hack

    Heavy selling on strength is occuring. I’m shorting the market right here but keeping some longs that are performing well…

  265. Gary

    Hack,
    I don’t see anything unusual, and I don’t see any negative money flows on the SPYDER’s.

    Now that the dollar has formed a left translated cycle shorting anything has become even more dangerous.

  266. Bill

    Le Fou, I live in Tokyo, in Fuchu-shi, 1 hr west of downtown.

    Grand Heights is gone now – turned into a park I just read.

    Every night I sleep on a bamboo rack as it’s so hot.

  267. sophia

    Hack,

    i sold back my Cac40 today but Nsq and S&p still look ok to me… Do you see something that triggers your negativeness?

  268. Hack

    When I look at the end of day candles I see indecision which can be interpreted as a top (if it occurs in the evening).

  269. Le Fou

    Bill,

    I googled it, and a bunch of memories came flooding back. I had a lot of fun there, except when I was in school. Nothing against Naramasu Elementary, I just didn’t like school.

    Best,
    Le Fou

  270. MBS

    Gary-

    If dollar intermediate cycles usually last 20 weeks and we started this cycle on 5/4 that means this cycle topped in 10 weeks. Neither left or right translated. What are the odds that this move down just tests the lows or the 73 level? If I’m not mistaken, only left translated cycles break the previous intermediate lows.

    Thanks

    Mike

  271. Gary

    It isn’t written in stone that a left translated cycle has to move below the prior cycle low, nor is it accurate to say that every right translated cycle will hold above the prior cycle low.

    The odds favor that but there are always exceptions to the rule.

    Since it still fairly early in the intermediate cycle, and the dollar is quite close to the May lows my intuition says that we will see the dollar go considerably below the May lows sometime this fall.

  272. MBS

    20 weeks in the correct duration to start looking for a cycle low? of course these can run short or long, but that is the normal timing band, correct?

  273. coolkevs

    Oops… DXY took out its little uptrend today and then some. In DeMark land, Kevin Depew at Minyanville pointed out that the DAILY is working on a TD Sequential 13 BUY signal, currently on bar 11 down after today – will most likely record on Monday, so 12 trading days after that should see some upside. Active TD Propulsion DOWN target is at DXY 73.63. Longer term time frames for the DXY are bullish with that little bit of MONTHLY exhaustion down at 72.5. Once again, we are only 2% away here at 74…
    Depew continues to point out the divergences between the general market and individual stocks. AAPL is particularly bearish – it has WEEKLY sell signals active. Also, the MONTHLY time frame will most likely record a TD Sequential SELL signal in August – 1 year (12 months) of bad luck coming up for AAPL???

  274. JEFFtheFLEA

    gary

    on the cycles

    you said LT and RT are not writen in stone, but i thought a while back you were saying ( refering to gold) ‘you had never seen a daily cycle fail’ . i dont remember exactly what the situation was but, i would assume you would have a much higher expectaion for a daily to hold with gold and if a daily did not hold with the dollar ( as now ) that wouldnt shake you so much

  275. Sibek

    Hi Gary,

    I’m sure this has been asked here a million times but I dont usually check into the blog often since I am a member. Anyway, Gary (or anyone else)… if the market were to aggresively sell off but gold pushed further upwards, will GDX be able to withstand any overall downward market pressure. More specifically, do we have instances in the past where this has occured (meaning GDX continues higher with gold as the overall market sells off). Any insight would be appreciated. Thanks

  276. Strat81

    Yeah I think the dollar retraces a little bit of this move today, check out the /6E (euro) chart, it stopped dead on its descending upper trend line. I think the euro chart is more technically valid than /DX or DXY.

  277. Gary

    Jeff,
    I’m not really sure what you mean. Daily cycles fail quite often. As a matter of fact a failed daily cycle is a sign that gold has entered an intermediate decline.

  278. Gary

    Sibek,
    You can find the answer to your question by just looking at the recent action. The stock market was heading down while miners were rallying aggressively following gold higher.

    Miners will follow gold 90% of the time. Occasionally an intermediate degree bottom in the stock market will pressure mining stocks. Once that selling pressure is released though the miners quickly get back to following gold.

  279. TZ(8155)

    Increased gold futures position to 8x (i.e…doubled it today) and have stop for the added amount near the low of the day a few hours ago betting it will hold.

  280. Gary

    A better sign is that the dollar has violated its previous daily cycle low.

    I’m going to discuss the ramifications of that in tonight’s report.

  281. TZ(8155)

    I’m risking 2% net worth with my various plays today (I already got stopped out for some trying to position this add). Usually I aim to keep risk of stopout about 1%, but I think this has a good reward potential.

    Gold is in a triangle for the last 4 days (see an intraday chart like 60min) and we are back near the bottom of it. I don’t suspect it will break lower and instead think it’s a tight congestion to break above 1600 – maybe (against past odds) to overrun the calls.

    We’ll see.

  282. TZ(8155)

    Conversely gold intraday last 4 days also looks like a H&S formation which I suspect ‘da boys’ will gun for if they can.

    Lotta cross current. I’m just taking a bet that looks reasonable to me and seeing what happens.

  283. Alex in Montana

    Strat 81

    John Taylor who runs the largest Forex hedge fund thinks the Euro is toast (dollar positive by inference) and gold will hit $1,900by October. The R squared on gold/dollar is -0.60 over last 5 years. Silver/gold is +.920. So gold can and does go up with rising dollar.

  284. TommyD

    Gary,
    Do you expect a gold “D” wave will come after the dollar puts in a 3 year bottom? I know this could be a relatively short ways off, from now, based on your premium reports, but wondering if a new game-face will be needed soon.

    Belated congratulations of your coaching over this past weekend.

  285. Gary

    Yes at some point gold needs to enter a true D wave decline in order to keep the public from getting interested.

    I suspect that will happen as the dollar surges out of the three-year cycle low, which after today’s action, appears to be ahead of us instead of behind us.

  286. Strat81

    Alex,

    Somthing I’ve always been very intrested in is pairs trading. Especially when you see an oputunity for a correlation breakdown, such as what has occurrd the last few weeks in Gold/Dollar. It gives you the opportunity to be long both Dollar & Gold (a traditional dollar hedge) and make money on both sides, while potentially protecting your downside to a limited degree. I need to read up on proper position ratio sizing and whatnot. If any one knows of any good pairs trading resources, let me know.

  287. Blake

    Duuuuuuuude

    Belated thanks for your your reply. My only argument against a Delta > .95 is that at that point you are getting too much movement with the underlying security (i.e. no cushion if the underlying stock starts to move against you). Rolling back into a Delta around .75 or so gives you a better cushion if the stock starts to go against you.

    Also, I read that closing out your options 7-8 prior to expiry is good practice to avoid the Delta decay in the last week or so which can tend to eat away a lot of gains.

    I’d appreciate your or anyone else thoughts!

  288. aviat72

    Gold in Euros

    Notice the blast off from the 200 SMA. Also notice the strong potential of an Island top forming. Gold has lost its 10 Day SMA and the RSI and MACD are turning down. It also has a large Wedgish shape as it has made marginally higher highs followed by deep down swings over the past 18 months. In the past a break below the 10 Day SMA have typically tested the 50 or the 200 Day SMAs.

    As I noted @DOC, DX will generate a DeMark Weekly TD Sequential 13 Buy Signal this Friday. Given the fact that the EuroZone has started a massive QE program, and Ben has forced to hold his hand on QE3, the relief pop in Euro is unlikely to last more than a few days. @DOC has also noticed that the first intermediate cycle in DX is typically very choppy. This seems to be consistent with what has happened since May.

    Chinese PMI has fallen below 50. Gary has a hypothesis that we are entering a deflationary phase. How that will affect PM is open though Gold being a hedge against uncertainty has risen higher with dollar strengthening before. Inflation in China has been ramping up while growth is slowing and if property prices start going down then they might rush to PMs.

  289. Gary

    The dollar has now broken its intermediate trend line. That’s not a particularly positive sign on the 11th week of an intermediate cycle.

    Not to mention that virtually all of these DeMark signals have been worthless. This appears to be one of those tools that the market has completely discounted to the point where it doesn’t work anymore.

  290. Driver

    The USD also closed below its support level marked by the 6/13/08 high and the 11/25/09 low, and other less significant points along the way.

  291. aviat72

    Gary:
    DeMark worthless? That is a strong statement to make when almost all major prior tops/bottoms have been hit to the tee.

    The mid-June bottom in the SPX was exact to the day the Daily Buy Setup hit 9. Last year’s summer bottom was exactly when 9-13-9 Buy Signal hit.

    And what is so special about the Euro that when they do QE, their currency will become stronger? With peripheral growth slowing the ECB rate hikes will start biting them and like 2008 they will do a U-Turn having been behind the curve. This time it will be easier for them since the malaise is not being imported from across the pond but local.

    And if you were pricing Gold in Euros will you jump in and buy that chart?

  292. Gary

    William,
    I’m not sure I understand your question. Gold formed a swing low today, although I don’t know if we should attach any significance to that. Swings are formed all the time.

    The only time I’m really mindful of a swing is when we are in the timing band for a cycle bottom, and sometimes if we are very late in the cycle a swing high may mark a cycle top.

    As we all know though, cycles aren’t very useful for spotting tops most of the time.

  293. gold silver troll

    Gary,

    When I look at USD action Mar-Jul 2008 and the action now, they look eerily similar. And they’re both 3 year cycle lows.

    Just like what happened today, back in July 2008, the USD broke the trendline, retested the low and then rallied super hard.

    Not sure what this means for gold/silver?

    can you please comment on the USD action between 2008 and 2011 and what this mean for gold?

  294. Gary

    After the fact it’s easy to say that DeMark signals spotted tops or bottoms but the fact is in real time I’ve seen multiple calls for a DeMark turn that failed.

    Show me where a call was made prior to the turn.

    It appears that this is more or less and overbought/oversold type tool. The problem is in strongly trending markets overbought and oversold conditions can persist for a long time.

  295. Gary

    Troll,
    Sure it’s possible that the dollar is forming an extended basing pattern similar to 2008. That has been my assumption for a couple of months now.

    However breaking below the prior daily cycle bottom today, and especially since it’s still fairly early in the intermediate cycle, calls into question that assumption.

    I suppose we won’t know for sure unless the May low gets violated.

    I know I certainly wouldn’t be buying dollars right now no matter how many DeMark buy signals are generated.

  296. Duuuuuude

    Blake, I wanted plenty of time with my options, and did not want to have to do a lot of trading through out this Intermediate cycle. I used Dec options for GLD and GDX, and Jan on GDXJ. This was done expecting a top in late November, but none of us really know for sure. I just did not want to have to deal with the time decay and the trading. The time decay really starts eating away at you 3-4 weeks prior to expiration.

  297. Gary

    I go to the chiropractor every week or so to get an adjustment.

    Usually lifting weights doesn’t bother it. It’s mostly belaying when I’m rock climbing that aggravates it. It also gets tight if I said at my computer typing for extended periods.

  298. William Wallace

    Gary,

    Yeah sitting at my desk on the computer really aggravates it. hang your head to each side for a few minutes everyday, you’ll see the difference right away.

  299. Veronica

    Strat81, a very good software trading program for spread trading is Genesis Trade Navigator.The program puts pair trades into a line chart in any time frame and any position size, for example:long 2 contracts silver and short 1 contract gold, or short 1 contract ES and long 1 contract NQ. You can also chart pair trades with regular equities.GL

  300. MrMiyagi

    Just looking around and almost all PM related ETF and stocks are quite pegged in the overbought area.
    In contrast, UUP, SPX/QQQ and the like as well as most commodities are getting there but even with the past weeks’ rally they are not overbought at this time.
    Reverse ETF DUST is nailed to oversold.

  301. Gary

    William,
    Pretty unlikely. That was a monster surge out of the intermediate bottom.

    I think the best gold will do is maybe 1625 to 1650.

    There is always the chance that gold will move down into its daily cycle low a little early also.

    So be prepared to hold positions if gold does move back below the breakout level.

  302. Farm Girl

    Analysis: Asian investors stricken by gold fever on record price
    By Manolo Serapio Jr and Rujun Shen
    SINGAPORE | Thu Jul 21, 2011 12:47am EDT
    (Reuters) – Gold fever is gripping Asian investors and could spread to central banks as global growth uncertainties tarnish the appeal of other assets, putting bullion on course for more gains but also provoking fears about supply….

    http://www.reuters.com/article/2011/07/21/businesspro-us-asia-gold-idUSTRE76K0RO20110721

  303. Gary

    My current best guess is that gold has one more push higher in this daily cycle.

    How deeply gold corrects will probably be determined by how far it stretches above the 50 day moving average. It’s not unusual to see a daily cycle low bring gold back down to, or close to, the 50 day moving average.

  304. aviat72

    Weekly DX Futures

    This is what the chart looked like a few weeks ago. We should hit 13 tomorrow. Note there has been a price flip and another buy setup has started.

    DeMark signals are trend exhaustion signals. They are based on extensive studies and have origins based on Fibonacci numbers.

    As you have noted some time the trend is so strong that the signals fail. Paul Tudor Jones is supposed to use a failed signal to press the trend.

    However given the larger context (Euro crisis, slowing growth, deflationary fears, the multi-week chop), I do not think the signal should be ignored, since clearly the downtrend has paused.

    Anyway, PMs and the USD can be positively correlated also.

  305. Wav_ridah

    Found this on Seeking Alpha Tonight:
    Check this stunning visualization of the various types and layers of U.S. debt, including a $114T skyscraper of unfunded liabilities. “If you still think the government are the best people to manage your money after [seeing] this, please come and see me about some magic beans I have to offer you.”

    http://www.wtfnoway.com/

  306. ALEX

    HACK

    I hope you dont mind my 2 cents here…

    I am pretty heavily invested in P.M. miners ( I was 100%). I posted earlier this week that I was seeing some nice ‘set ups’ in the regular markets and so “I wouldnt be shorting this market”.

    I saw you say you were going to go short today, so may I show you the other side of the coin.

    http://www.screencast.com/t/pinCaSlCU

    I have been trading the regular markets and some are showing signs of strength. Our recent consolidation has formed cup/handles and other bases that are breaking out (upside with conviction).

    If UR short-Keep a TIGHT stop, if SPX breaks above Julys highs with volume, we could run to 1400 area.

    (Even some banks look bottomed..look at MS and JPM and USB)

  307. HolyAFK

    Its nice to hear that sentiment has dropped for gold on the forum now. Makes me more certain we will get one more leg up ๐Ÿ˜‰

    Imo if gold were to make a larger correction it would have done that right away. Not after a 4 day consolidation.

  308. 86d4life

    SF,
    Great video! Thanks. The heavy ounce refers to the coin having one full ounce of gold(or whatever pm) but they are stamped as .999 purity. The remaining .001 oz is added alloy to strengthen the pm resulting in a coin total weight over 1 oz.

  309. Poly

    That GLD pennant is a thing of beauty.

    A 4 Day sentiment reset and consolidation into a half cycle low, a kiss of the 10sma, a favorable daily cycle count and the Euro “news” behind us. I like it.

    We should look forward to a strong 5-10 day rally into a cycle top, what we add on here is a guess.

    Of course there are no certainties, but this one sure is a sweet setup and has a high probability, IMO. I would be concerned if we start re-visiting the $1,580-85 level again in the next 1-3 days.

  310. Harry

    Happy days! THIS time my overnight order did get filled: GCV @ 1585 (the low was 1584.3). Steak again tonight!

    (earlier post was accidentally deleted)

  311. Gary

    I suspect one will have a lot more success counting the cycles than worrying about the debt ceiling.

    Everyone knows that there will be a deal made. There’s no surprise there.

  312. Poly

    “Any news on the debt ceailing deal drops gold $10, we may see the 1585level again”

    Maybe William, but we had a debt ceiling drop yesterday, it’s priced in. The next announcement gets twisted around to the negative, news can so easily go both ways.

  313. Robert

    From zero hedge today

    That said, expect another tumble in gold following an imminent announcement of a debt ceiling deal. After that, the euphoria will be about 1 hour, 2 tops, at which point the reality of a global economic contraction will once again have to be faced only this time coupled with [X] trillions in fiscal cuts over the next several years. And that will be it for the upside catalysts.

    Gold

  314. Gary

    I will expect the pullback in gold once it gets into the timing band for the move down into its daily cycle bottom.

    I also expect that will be driven by the dollar rallying out of its daily cycle bottom.

    It’s still a bit too early for either one of those things to happen. The dollar could even fall for another two weeks into the jobs report before hitting the next short-term bottom.

  315. Hack

    No debt agreement just announced – the stock market plunges, gold advances. Who said news doesn’t count?

  316. Gary

    Folks I have news for you. If it was early in gold’s daily cycle then any news of a debt agreement would have the exact opposite effect and make gold rally.

    Gold is just using the debt debate as an excuse to work off the extreme short-term overbought conditions. The reality is that everybody knows what’s going happen. So the debt debate is completely meaningless to the direction of gold.

  317. William Wallace

    Poly,

    All I know for certain is that I traded gold on the debt ceiling news twice already, gold dropped $10 immediately after the news both times. Shorted immediately after the news, covered after a $10drop.

  318. DG

    News is not relevant. What is relevant is how a stock reacts to the news. At the end of a bear market a company announces lousy earnings and cuts their dividend, and the stock rallies (because the coming news is why it went down in the first place). News cannot be discounted twice. If a stock stays firm on bad news, buy it. If it weakens on good news all the positives are priced in, so sell it. The news in and of itself is irrelevant, but the reaction is usually not.

  319. DG

    And regarding the short and cover..anything can work on occasion. The question is playing the odds and finding consistent tells. The next time on “news” gold may dip for a moment then skyrocket. This happens all the time on FOMC releases. The first reaction to the “news” traps everyone who trades on news.

  320. Poly

    William,

    It’s really not arguing point, it’s a very well established fact that “expected” news means zero.

  321. Duuuuuude

    I see two scenarios on the debt ceiling debate….both with the same outcome as far as gold is concerned.

    1. They vote to increase the debt ceiling, resulting in more money printing, devaluing the dollar, and a surge in gold buying to preserve wealth.

    2. They fail to raise the debt ceiling, causing a rally in the dollar, but plunging the economy into the awaited recession, causing the stock market to stumble, and a transfer of funds into gold to preserve wealth.

    I like being long gold in either scenario.

  322. William Wallace

    DG,

    A sharp drop and then a drastic bounce is whats to be expected with gold, thats exactly what happen the last two times. I was expecting that as I was watching it drop, because I knew it was only dropping for 5-10 minutes on the news that just came out, it happened exactly the same both times…market popped and gold dropped, then they reveresed.

  323. Robert

    News does count — but only on the very short term —– and they can “spin” it.

    News is important — chart and cycles are most important.

  324. William Wallace

    Shalom,

    Its as simple as this…as soon as the debt ceiling news is announced short gold, then cover $10 later…lol. Lets see if I can do it three times ๐Ÿ™‚

  325. Gary

    I’ve said it before that if one could resist the temptation of shorting a bull market they would probably add 10% to 15% to their lifetime average.

    Can you imagine how much money 10% to 15% more winning trades would be over a lifetime of trading?

  326. William Wallace

    Everyone,

    Today is “Give me an Option” Friday!

    Anyone wish to throw a lottery play at me, I will take the position and see how it goes.

    Last week I took Miyagi’s play on Aug 165 GLD calls…at break even right now. I was going to initially take Michael’s play to buy NUGT calls and sell NUGT puts…but talk of the low volume made me back out.

  327. MrMiyagi

    WW,
    When it is profitable and you feel that you’ve had enough.

    Once a short-date option is in the money, it is not affected by time decay but if it is not in the money, any drop in the price will bring it down and any rise in the price that still keeps it out of money won’t affect it.

    So…. if you’re up and happy and you start looking for the Ferrari dealer’s phone number, it’s time to sell.

  328. Gary

    What invariably happens is that you win two or three times, become over confident, and then lose the next four.

    Is picking up pennies in front of the steamroller really necessary?

  329. MrMiyagi

    WW,
    If it hits the strike and stays there it should be worth in the 3.60$ range, after that for every dollar GLD goes up, it would go up I’m guessing 60 cents.
    Hence the term lottery.

  330. William Wallace

    Miyagi,

    How do you figure it will be in the $3.60 range, and then go up .60 after every dollar rise in GLD…just give me a breif summary if you dont mind…if thats too much to ask dont bother.

    Did you finish the basement yet? I have been doing elecctric throughout the whole house for the last few days, need to get to the sheetrock phase.

  331. Sang

    Trading based on news is reactionary and is what n00bs do, with the exception of HFT algos that are linked to keyword meta data feeds.

    Those who trade based on news are the prey that the pros who have access to more info and before anyone else like to target.

    Any news headline can be spun either way. It can be both good or bad. There will be an immediate reaction. There will be a delayed reaction. But both could go either way, depending on the “spin”.

    But the “spin” is really not created by the mainstream media that always try to explain away price movements based on some news tidbit.

    The “spin” is what the pros who have better and faster quality info decide to do with the n00bs to take their money away.

    Consistently trying to trade on news is a n00b move that will eventually lead to your face getting ripped off by the pros.

  332. MrMiyagi

    WW,
    You can plug it into a Delta Options calculator and adjust for today’s value.
    Or you can look at an August option at today’s price (156) and guess from there.
    As I said, sooner it hits, the better.

  333. Sang

    I don’t deny the existence of news based traders.

    I do doubt the general profitability %-wise over time following that strategy compared to other strategies.

    Speaking of other strategies, something I’ve been monitoring for weeks now is this person’s alternate view:

    http://bit.ly/oUbcpa

    Currently still long AGQ but keeping an open mind as to what may transpire.

  334. MrMiyagi

    WW,
    Yes, and if the price hits 165, the 165 call would be slightly higher.
    Keep a close watch on the cycles and if you are in the green as we’re teetering on a downturn (or stupid news events), then just take a profit.

  335. William Wallace

    Miyagi,

    Ok.

    Explain something to me, someone mentioned the other day (I think Dan)for everyone not to forget that the 1600 calls are expiring on tuesday and that the big boys will want to keep gold below 1600…I dont understand why, will those calls not be more profitable by tuesday if gold is higher than 1600?

  336. gold silver troll

    WW,

    Yes, those calls will be profitable if gold is over 1600.

    That’s the points though.

    The aim is to screw you not and not reward you. When gold is below 1600, all those people owing 1600 options are screwed.

  337. Gary

    GLD is equivalent of owning one 10th of an ounce of gold. So a $10 rise in gold should equal a one dollar rise in GLD.

  338. ALEX

    F.W.I.W. I am mostly invested in miners, but…there are some decent set ups that I have been trading also…

    yesterday I bought ‘REE’ for these reasons. When this stock moves, it really moves. I will be watching for increasing volume

    http://www.screencast.com/t/zJeP3qVJ

    I also Bought ‘IO’ today..it ran from $3 to $14 and did a normal (roughly 50%) correction and now formed a reverse head and shoulder…which it is breaking up from now. Bought IO at $10.75

    http://www.screencast.com/t/f85y8Qx6

    Added to SVM this morning also.

  339. William Wallace

    Miyagi,

    I see…so basically there is someone who has to make a payout to the owners of those 1600 calls that doesn’t want to have to payout the increase on those options above 1600…correct?

    You option traders amaze me right now…when I understand everything you all wont amaze me so much anymore…lol But for now you guys are amazing, and I thank you! ๐Ÿ™‚

  340. MrMiyagi

    WW,
    It’s the futures writers that don’t wan the price over 1600$, the options writers I believe are small potatoes compared to that.

  341. William Wallace

    If these 1600 calls will expire worthless on tuesday if gold is below, is it not diligent to have sold them when gold was above ahead of expiration? I assume some will, and some will not?

  342. Gary

    Gold and Silver Troll,
    Nobody’s arguing about short-term manipulation of this type. It happens in virtually all markets.

    What I take exception to is this ridiculous notion that the government is somehow suppressing the price of gold and that gold would be much higher were it not for this suppression.

    Only someone completely ignorant of how markets work could even come up with such a harebrained idea.

    In a true bull market with true fundamental demand any attempt to force price below real market levels will only cause a surge in demand and shortages. Shortages lead to higher prices.

    The truth is if the government or Fed is trying to hold down the price of gold then they are the reason gold is at $1600 an ounce instead of $1200 an ounce.

  343. MrMiyagi

    WW,
    The expiration date for all listed stock options in the U.S. is the third Friday of the expiration month (except when it falls on a holiday, in which case it is on Thursday).
    August 19 it is.

  344. Russell

    Watching Gold at the $1600 is like watching an arm wrestling contest.
    It will be interesting to see what happens when options expiration ends. For future trader, Is this close of market Tues? 1:30pm? 4pm?

  345. High 5

    Look at Fort Knox. The gold is held as an asset of the United States at book value of $42.22 per ounce. .

    Why do you think they don’t mark it to market every so often like the ECB does?

  346. High 5

    Maybe it’s because the ECB would like the euro to challenge the USD as the worlds reserve currency (gold backing)and the USG wants the USD to remain the worlds reserve currency (dollar backing).

  347. 86d4life

    Gary,
    If there is a sucessful supression of price, what would the price be without the supression? But how would we know? But how could there possibly even be two sides to an issue?

  348. Shalom Bernanke

    Exactly! The scam is built on lies and deception. Can’t have people look to gold because they can’t print it.

    I do agree with Gary in that I don’t believe there is some gold cartel focusing specifically on the metal per se, but Bernanke telling a bald-faced lie to all Americans does show us they’ll lie outright to keep in power.

  349. Shalom Bernanke

    As far as pegging gold to $1600 fro options expiration, I don’t subscribe to that idea.

    Options are a very small part of the markets overall. An option market maker has an interest in keeping it close to the strike, but every other participant (lots of them) has made directional bets and want to see it move.

  350. Gary

    Do we really want to get into the definition of money again?

    Gold is a store of value. But you can’t take a gold coin into Walmart and buy anything. For that need paper currency (money).

    In order to use your gold coin you first have to exchange it for paper.

    As time goes on your 1 ounce gold coin will exchange for more and more paper. Hence the term store of value.

    So technically Bernanke is correct, gold is not money.

  351. Shalom Bernanke

    Gold is money, and you’d take it from me if I were buying a car from you, Gary. At least I hope.

    It’s just not in circulation anymore. Heck, some 7-11’s out west are already accepting silver coins for purchases, with metals quotes posted behind the counter.

    You’ll see, gold (and especially silver) will be used as money again. It’s primarily the dumbed down Americans that don’t realize the value of metal, and that’s why the people on the street wouldn’t pay $20 for a one ounce coin.

  352. High 5

    If tomorrow the tax placed on imaginary capital gains of gold were eliminated, worldwide, what would happen to the price of gold?

    If the legal tender laws were eliminated or changed to accommodate gold, what would happen to the price?

    Are these government edicts, and many others, equivalent to gold price manipulation? It’s debatable.

  353. Shalom Bernanke

    Besides, even a paper dollar is a store of value, albeit a poor one because they can make as many as they like.

    The money in your wallet is expected to have value this weekend when you go to a restaurant, hence stores value.

  354. High 5

    WW

    Gold is infinitely divisible, you just end up with a higher value. So the problem isn’t adequate supply, the problem is deflation. But, slow deflation is no problem at all and unnecessary if fiat paper money is also circulated.

  355. Gary

    In Rome gold coins were minted to be used as money.

    If the United States wanted to mint multiple values of gold and silver coins then yes we could use them as money.

    They are never going to do it though. The politicians will never give up their paper currencies that they can print at will.

  356. High 5

    Gold and silver certificates, or their digital equivalents, would allow gold to be used as currency. It’s already used as money (money isn’t always currency).

  357. High 5

    Politicians do whatever they can to stay in office. If the people stop accepting paper (fiat) currencies, they will have no choice.

    Once everyone watches their accumulated wealth get flushed down the toilet they will be sick of fiat money and demand something more tangible (hopefully).

  358. Shalom Bernanke

    Well Bernanke told us gold isn’t money, so that’s the final word. It must be true!

    Anyway, I’m off to take a nap and will check in before the close. Good luck to all.

  359. William Wallace

    Does everyone want to know why gold is hovering at $1600??

    Its because it is waiting for the money I transfered into my Brokerage account to clear so I can buy more before it blasts off!

  360. High 5

    Anything is infinitely divisible in the digital world. Even one atom of gold is infinitely divisible, mathematically.

    People mine gold to make a living, why would that stop?

  361. Gary

    Folks the truth is that gold is just a shiny yellow metal with virtually no industrial use. It has worth only because we say it does, exactly the same as paper money.

    If all of the gold were to suddenly disappear the world wouldn’t even blink an eye.

    If on the other hand all of the oil, or copper, or cotton, or virtually any other commodity were to evaporate the world would come to a grinding halt.

    Gold only has value because we say it does. At some point during the bubble phase of this bull market, when prices have reached ridiculously stupid levels, people will start to come to their senses and realize that gold really is just a shiny yellow metal with virtually no real use other than jewelry.

    That will be the beginning of the end of the bull market.

    I caution people against buying in to deeply to the gold bug nonsense. It could very well cause you to get caught at the bull market top and end up riding the inevitable crash.

  362. MrMiyagi

    Gary,
    Everything that has value is because we say so.
    Why is my house worth 525k? Because someone is willing to pay that for it.
    Why is a tomato worth 1.29$/lbs? That’s what it’s worth.

  363. Adam

    If you give me a Honus Wagner baseball card I’d be happy to fork over all kinds of 5hit to you. Does that mean it’s money? Of course not. It’s worth something, but it’s not money.

  364. MrMiyagi

    On the other hand I wouldn’t pay a cent for a Wagner baseball card for myself but would pay slightly less if I knew someone would buy it for slightly more.

  365. Sang

    Gold and Fiat paper are much more alike than people think. Two very important things to remember.

    I. The value of both are completely based on human psychology and belief that they retain value and are a medium of exchange.
    (i) why this paper and not that piece of paper? because the gov’t promises it?
    (ii) why this metal and not that metal or commodity? because we’re used used to the yellow metal and not some other rare metal or commodity?

    II. One can be manufactured out of thin air, and the other can’t.

    Given those two important facts, the laws of supply and demand still play out. So if supply of Dollars diminishes, its “value” goes up. But supply is only part of the equation. Demand is the other half. And that’s where the wild card lies, because demand for money, is affected by our faith and trust in it.

    As such, it is no wonder that in the ENTIRE history of human civilization, going back to the Han dynasty and the Roman empire all the way up to Weimar, Argentina, Japan and Zimbabwe, there has not been a SINGLE instance where money printing lead to a favorable outcome.

    Not a SINGLE time where the money printing experiment lead to eventual prosperity.

    I have challenged economists, financial advisors, historians to come up with even ONE time in our entire human history where money printing has “worked” to resolve our problems, and not one of them have been able to identify even a single instance.

    I have challenged people online to find one case where it has “worked” and to this day, nobody can come up with one case.

    With that kind of a track record, the odds are very much against us here- to think that this time, it will work, for the first time in human history. We have finally found a way to create something out of nothing, defied the laws of nature and economics, and manufactured prosperity at will.

    Chances are, with all the financial machinations and technical innovations we have come up with, we still are not God and we cannot create something out of nothing.

    It’s the first thing they teach you in economics or even physics. You can’t create something out of nothing. There is no such thing as a “free lunch”. You can’t create or destroy matter or energy, only change its state.

    Who knows, maybe these “leaders” have finally found a way to do it and defy the laws of nature.

    Guess what? That’s what they all said before – our history is littered with countless of failed attempts as each civilization thinks that it has finally “figured it out”.

    Personally, I don’t buy it.

  366. High 5

    From wikipedia:

    On August 15, 1971, the United States pulled out of the Bretton Woods Accord taking the US off the Gold Exchange Standard (whereby only the value of the US dollar had been pegged to the price of gold and all other currencies were pegged to the US dollar), allowing the dollar to “float”. Shortly thereafter, Britain followed, floating the pound sterling. The industrialized nations followed suit with their respective currencies. In anticipation of the fluctuation of currencies as they stabilized against each other, the industrialized nations also increased their reserves (printing money) in amounts far greater than ever before. The result was a depreciation of the value of the US dollar, as well as the other currencies of the world. Because oil was priced in dollars, this meant that oil producers were receiving less real income for the same price. The OPEC cartel issued a joint communique stating that, from then on, they would price a barrel of oil against gold.

    This led to the “Oil Shock” of the mid-seventies. In the years after 1971, OPEC was slow to readjust prices to reflect this depreciation. From 1947-1967 the price of oil in U.S. dollars had risen by less than two percent per year. Until the Oil Shock, the price remained fairly stable versus other currencies and commodities, but suddenly became extremely volatile thereafter. OPEC ministers had not developed the institutional mechanisms to update prices rapidly enough to keep up with changing market conditions, so their real incomes lagged for several years. The substantial price increases of 1973-74 largely caught up their incomes to Bretton Woods levels in terms of other commodities such as gold.[4]

  367. MarkMarin

    ALEX,

    I almost mentioned the REE stocks on the blog on Wednesday, but it seemed to be a distraction to the gold bull market. I continue to hold REE, MCP, and AVL, but added QRM and TSM on the Canadian exchanges. All that said, it’s only a 4% holding, with metals and miners at 80%.

  368. MrMiyagi

    Possible exhaustion candle forming on SPY and Doji on GLD if my old-man-lasered eyes don’t deceive me.
    Could mean nothing…

  369. Hack

    If and when EXK hits 12, I’m out of all of my miners. I used to use SLW at $46 but it has underperformed since the CEO stepped down…Comments?

  370. David

    Gold has traditionally been used as money because it has no practical utility.

    If we used items that have utility, such as oil, as a store of value and a mode of exchange, that would be a barter system.

    So Gary is correct in that gold’s value is social. It has value because we agree that it has value. Food or oil have utility value regardless of what anyone says they’re worth.

    If Gold traded strictly based on its utility value — fillings in teeth, electronic connections — it would trade for far less than it does now.

  371. pimaCanyon

    Regarding how much gold there is in the world…

    If you watched the You Tube videos about the Rothschilds that RT posted yesterday, they claim that that family owns 50 percent of the world’s wealth, much of it in gold stored in their underground vaults.

    Maybe it’s true, maybe not. Still, it’s a scary thought just from the perspective of the gold market. If one family has that much gold stored away, surely they have figured out how to move prices up or down whenever they want.

  372. MrMiyagi

    “Senate rejects House GOP budget-cutting plan”

    Yet the markets don’t plunge.
    If the opposite, or even a hint, happened, the markets would have shot upwards.
    Brainwashing?

  373. pimaCanyon

    Regarding in-the-money (ITM) options and time decay:

    The price of an ITM option can decay with time as its expiration date approaches. The reason: Even ITM options have premium that is part of their price. Here’s an example:

    August 153 calls in GLD are currently priced at 4.40.

    The current price of GLD is 156 (roughly), so the intrinsic value of the call is only 3.00. The additional 1.40 is the “extrinsic” value or “premium”.

    If GLD goes sideways till expiration, that option will be worth exactly 3.00, the difference between the strike price and the price of GLD. So what happened to the 1.40? I will have “decayed” (disappeared) over the last 2 or 3 weeks prior to expiration.

    It’s only when the option moves very deep ITM that the premium goes to near zero even weeks prior to expiration. Those options will lose very little value (only the “extrinsic” value of the option) as time moves toward expiration.

    An example: August 143 GLD call. Very deep ITM, it has an extrinsic value of only 14 cents! So that’s all that will be lost on that option between now and expiration if GLD price does not change.

  374. High 5

    David

    Gold actually has more utility than most things.

    Once you have one refrigerator, every extra refrigerator has less utility for you. You can stick one in the garage for beer and another for meat but each extra fridge has less utility. So refrigerators have very low marginal utility.

    Even oil has a pretty low marginal utility, since you only use a certain amount, any further storage is a hassle.

    Gold has infinite marginal utility. Every extra ounce serves a purpose and what more important purpose (utility) for something than to store wealth?

    Gold is just the best element in existence, so far, for storing wealth. It stores wealth like a refrigerator stores beer or hydrogen stores energy.

  375. Gary

    Directions from a subscriber on how to set up phone notification any time I tweet. Which the website does automatically anytime anything is posted.

    “I am now subscribed to your twitter feed, but in an alternative way to tweetymail. I will get SMS (text) messages to my cell phone. Although my twitter account “follows” many people, I am able to have just the tweets from garysavage1 get texted to my cell phone.

    All I had to do was type

    follow garysavage1

    and send that text message to 40404. This tells twitter to send all tweets from garysavage1 to my cell phone. You don’t even have to have a twitter account, so anyone can do this. International subscribers will have to use a different code. Please refer them to your twitter page: http://twitter.com/#!/garysavage1 and have them touch the link that says “Text follow garysavage1 to your carrier’s shortcode”
    I hope this is useful info. It was inspired by your blurb on your welcome email which talks about tweetymail.”

  376. High 5

    It’s funny how some people say those who didn’t sell their gold during the 1980 run up to $850 got burned by the subsequent collapse in price.

    I’m sure many people did get burned, especially if they bought at 850. Trying to perfectly time markets can be painful, as we recently discovered with silver.

    How about if they bought in 1970?

    It was priced at $35 in 70 and has gained roughly 4,700% since. So 4700 in 41 years averages out to over 100%/year. Doesn’t sound so bad compared with paper investments.

  377. Rosabarba

    Doesn’t look like a H&S to me (though it did last night on the 60min /GC chart before today’s trade above the RS).

    The head on a H&S top should be the highest price for the period you’re examining. For the time being, it looks like sideways consolidation to me.

  378. Jerred

    The reason for the sustained run up in gold and silver is based on the fact that retail money can now access the commodity markets via ETF’s. Look at the money flows into these ETF’s.

    If you went back to the 70’s and 80’s and looked at volume, I think you would be very surprised.

    I think that is why gold will not go below 1,000 per ounce and silver will probably never see sub 10 per ounce.

  379. Le Fou

    Looks like even “the Big Boys” weren’t able to hold Gold under $1600.

    Re: value of Gold. One thing I haven’t heard mentioned. We’re not the only ones who have assigned value to gold. It’s a social thing, and it has been valuable in virtually every society around the world throughout history.

    Confederate money and tulips have become worth as a medium of exchange, but no one in history has ever had to cry, “Save your gold, the South will rise again! (or the Roman Empire or whatever substitute you want to name.)

    Gold, precious metals and jewels have always carried a premium value, and people have always regarded them as precious and valuable. Even after the bubble bursts, they’ll be worth less, but they won’t be worthless.

    Best,
    Le Fou

  380. Alex in Montana

    William Wallace – Arithmetic

    1 cubic meter of gold is 19,300 kg
    so 1 cubic meter is 19.3 long tons

    Olympic pool is 50x25x2 meters or 2500 cubic meters.

    One pool of gold is 2500 cu meters x 19.3 tons or 48,250 tons of gold

    165,000 tons of gold mined (World Gold Council) and above ground.

    165,000 tons mined divided by 48,250 tons in a pool equals 3.41
    olympic swimming pools.

    We mine 2,650 tons of new gold a year so it will take another 18.21
    years to fill another pool.

    That was fun.

  381. High 5

    Jerred

    Good point. It was difficult to invest in physical back then so people turned to mining shares.

    Another reason that mining shares may not perform nearly as well, relatively, this go around.

    Also, the USD may not look nearly as good as back then. It could very well be down for the count.

  382. Natanarchist

    Gary says:

    “Do we really want to get into the definition of money again?”

    yes. First though we need to clear up the fallacies so that we can discuss intelligently.

    The Standard definition of Money is:

    1. Store of value
    2. Medium of exchange
    3. Divisable

    “Gold is a store of value.”

    I do not think there is any disagreement on this character of gold.

    “But you can’t take a gold coin into Walmart and buy anything.”

    true statement. However, whether anything can be spent at Walmart or not, does not influence or change the definition of Money. For a Gold coin to be considered Money it must act as a medium of exchange. I am quite sure I can exchange a gold coin for things, including currencies, very easily.

    A gold coin, specifically a US Eagle coins of Gold and Silver is also Legal Tender in the USA. Of course legal tender does not guarantee something is money, only that it can act as a money substitute, like currency, due to government privilege. It still must meet the three characteristics of money.

    “For that need paper currency (money).”

    Ambigious. Paper Currency is not money. Currency is a medium of exchange. A coupon from a manufacturer entitle me to a free box of laundry soap means that piece of paper is currency. I can use that at Walmart. I exchange the coupon for Box of soap. But it is NOT a store of value, nor is it divisible, therefore will NOT meet the definition of money. As well I can use debit and credit cards at walmart. They are not paper. Does that make those cards Money? Does it make them a currency? A money substitute? Is there any physical exchange of currency in such a transaction or is it all digital?

    now the last common fallacy.

    “William Wallace said…

    Shalom,

    There’s not enough gold in the world for it to be used as money. All the gold mined couldnt even fill an olympic sized swimming pool.

    July 22, 2011 10:09 AM”

    This statement means nothing. It has been used as an attempt to deceive the masses. Whether all the gold in the world will fit into a swimming pool is irrelevant. Whether all the physical dollars in the would will fit into same swimming pool is irrelevant. But for this exercise, lets say all the gold that exists in the world fits into a swimming pool.

    How many units of currency would you like backed by that gold William. Give me any number you want and it can happen instantly. Using simple mathematics, one can divide that gold into infinite number of units. In fact like dollars, we won’t even have to produce the actual paper unit. it can be done all digitally. It is happening now.

    @high5..re your question about notational value of gold at Fort Knox. The US treasury could re value that gold tomorrow at any number it wants and immediately produce the currency and spend it into the economy. Only that would mean that Gold is money. That would make Bernanke and every other banker and 95% of politicians since 1971 Liars. Not even the puppets in the media could spin away the truth from the people. Unfortunately, they won’t admit it, so they will continue the lie until it collapses on them. it is coming sooner than most think.

  383. Blake

    Open to the forum:

    What options (if any) are you using to play this final C Wave Advance. I had posted previously that I am buying DITM GLD Calls with one front month and just rolling them over but some others here went further out to Dec./January.

    I thought these were too pricey relative to the front months but I always like to here other traders strategies.

    I rolled out of my Aug GLD Calls that were approaching a .99 Delta into an option with less parity so I picked up the 152 Aug GLD DITM Calls a couple days prior.

    Wondering if I should just buy the Dec GLD’s and not hassle the roll overs… any thoughts would be appreciated!

  384. Natanarchist

    @Alex in Montana re: SS and means testing. I think it is coming to the US for sure. it is too easy a target for politicians to ignore. can be easily spun to get the required votes for any legislation. Of course it will be another piece of legislation where honest people have their savings stolen from them, but don’t count on the mainstream of this country to understand the implications of such a policy.

  385. Poly

    Blake,

    There is a small cost to rolling options each month that do add up and the longer months provide some time insurance.

    But in general, you want to at least stay within the expected trade window. As we are playing the IT cycle, for which we could reasonably expect a top to occur 75%-80% of the way through the cycle, it would make no sense in playing anything beyond Oct, IMO. The Leap options are more for your buy and hold type or when you have no reasonable expectation on when the move will occur in the shorter term. Or they are used as simply as stated, an “option” to accumulate more of the underlying security later on without outlaying needed capital today.

    For the FIRST daily cycle of a new IT cycle I like to pay some premium (not much as sentiment/volatility is low) and get longer dated options, just in case we were wrong on the timing of the cycle and to avoid or to hold through a draw-down. But once confirmations (like we have now) on a legitimate IT cycle is in play, a good front month DITM strategy should work out just fine.

    Just watch the leverage, “MOST” people get carried away and many don’t even bother calculating the actual impact/effect underlying price movement has on their positions.

  386. Alex in Montana

    Natanarchist,

    Totally agree on SS. That is why I took it when I turned 62. At least I will get something.

    Also, In Barron’s (July16) Stephanie Pomboy argues that the government is likely to force us to buy Treasuries.

    1)We have have to buy a percentage in Treasuries in our retiremnet accounts or lose tax deduction in our 401k’s.

    2)Force state and local pensions funds to allocate a percentage to Treasuries.

    3) In exchange for other tax breaks (repatriation of foreign earned income), “entice” corporations to buy them in their cash portion of current assets.

    BOTTOM LINE: as the government gets more desperate, they will will become more dirigiste about needing money as well as being outright ruthless about it.

  387. Ben

    High5,

    If you start with $35 and gain 100% every year for 41 years…

    at the end of year 1, you have $70
    at the end of year 2, you have $140
    at the end of year 3, you have $280

    do you see where this is going?

    At the end of 41 years, you have $76,965,813,944,320.

  388. Driver

    Harry, OK, I see what you’re seeing now. The prior comment from Rosa is technically correct, but if you want to stretch it to your own intrepretation, you might get a little lucky. The neckline is where your L & R are located. It would have to break below that to be meaningful.

    Alex, I also took my SS at 62. Your other statement re. 401K accounts I’ve heard before. I no longer have a 401K as I rolled it into an IRA upon retirement. I haven’t heard anyone talk about those IRA accounts being raped in the same manner. I wonder if anyone else has. If that looked like it would come to pass, I might have to pull all my money out and pay the tax up front. That might actually be to my advantage, depending on what future taxes may be.

  389. Blake

    Thanks for the considered response Poly!

    If I may ask, how are you playing this IT cycle with options?

    Are you using the front month strategy now that the IT Cycle is confirmed?

  390. Ben

    Hi5,

    (1.09771)^41 = 45.71

    and 45.71 * 35 = 1600

    ==> rate of return of gold versus $US is 9.771% per year for the past 41 years.

    I realize you were ignoring compounding, but it’s completely meaningless to do so.

  391. Ben

    Well… *nearly* completely meaningless.

    Still… amazing to see > 9.7% per year for 41 years. You can really go all the way back to 1913 when the Fed was founded in order to dilute the dollar to see how effective they have been.

    In the 80 or so years PRIOR to the Fed’s creation, the dollar went UP against gold. Since then, the dollar has gone down 97% or so.

  392. High 5

    Ben

    And by the time the USD is worthless who knows what the relative returns will be. I’m just saying that if history is any guide, one should be very careful before casually dismissing the possibility of a complete or partial currency collapse.

  393. aviat72

    A quick word about options:

    Gary focuses on DITM options primarily to prevent people from blowing their accounts. However their risk profile is very similar to actually owning the underlying. They work well when you are very confident of direction. However, they carry the risk of significant draw-down if the trade moves against you.

    Options have this property called Gamma. What this means is that the delta of the option moves in your favor when the price also moves in your favor. What this implies is that the rate of your profit growth increases as the price moves in your favor, and decreases when it moves against.

    For the same amount invested, OTM options have significantly better gamma characteristics than ITM options, especially DITM options. So you profit more if the move happens in your direction, but loose less if the price moves in the other direction.

    The problem with OTM options is that there is no intrinsic value so if the price does not move in your favor, you lose the money invested. DITM still retain their intrinsic value and do not become worthless.

    However, for people who trade actively like most who follow Gary, OTM options may provide a much better risk/reward profile. If you use the stops Gary provides, your losses are going to be limited, and in fact likely less than DITM options. OTOH if the move happens as Garry predicts, then your gains will be more.

    ThinkOrSwim (TOS) has very good analysis tools which can help you compare different option strategies. Do consider your options before investing using them.

  394. Hooloovoo

    My first post here.
    I just wanted to add something to the discussion of “What is Money”;

    Money has some things to live up to:

    It should be fungible.
    It should have intrinsic value in itself – meaning that it should be rare – if You used leaves as a currency for example, You would end up with hyperinflation each autumn.

    Furthermore money needs to be a store of value.
    Here our paper money is lacking due to them being worth less and less due to inflation.

    Furthermore money shouldn’t corrode.

    It is not just Gold that lives up to these demands:
    Helium, neon, argon, krypton, cenon & radon are perfect in so far as they are non reactive.

    Helium could be dismissed though as it is the 2nd most common gas in the universe and constitutes 24% of our galaxy, so hardly rare at all.
    Furthermore as it is the second element of the periodic table, the atom is very small and even if to keep it in a metal container it will still manage to diffuse through the walls – so hardly a good store of value either.

    Come to think of it all these elements are gasses, so they would evaporate as soon as You opened Your wallet.

    A few other elements fulfill the criteria for money – the only drawback is that they will kill You.
    Even though this is not mentioned among the definition of money, most people would agree that it’s preferable if carrying money is not lethal.

    So all in all the precious metals fulfill the criteria for money the best.

    Copper has been used as coins, but it is really to abundant.
    Sweden tried to implement a “Copper Standard”, but the biggest coin (they were not really coins but more like plates) weighed 43 pounds, so not that practical to carry around really.

    Osmium is a nice rare element, and it doesn’t kill You and basically fulfills the demand for money – except that it is too rare, it almost doesn’t appear on earth – is mostly found in meteorites, so if something is to rare it is just not practical.

    The only really useful elements to use as money are:
    Rhodium, Palladium, Silver, Platinum and Gold.

    A big reason that Rhodium and Palladium don’t have a history for being used as money is that they were not discovered until the early 1800’s.

    The reason that Gold has managed to become the ultimate currency, is only because it has a much lower melting point than Platinum – meaning that prehistoric civilizations where able to melt Gold into coins (and Silver), but where unable to achieve high enough temperatures to melt Platinum.

    Gold is in no way better than Platinum as a currency, it only became the “Currency of Kings” due to lack of technology to melt Platinum.

    Now we are just stuck in habits, and people argue that Gold is the real deal because of history, ignoring that Platinum never had a chance because of its high melting point.

    Nowadays melting point is obviously not an issue, and I see no point that Platinum couldn’t be the new money standard – except for the facts that most Western Central Banks still have an abundance of GOLD (and political influence), so from this point alone they would prefer a Gold standard in favor of a Platinum standard – IF they eventually are forced to abandon the paper standard which obviously is their ultimate favorite.

  395. Gary

    Actually that isn’t exactly true. An out of the money option will very quickly lose 50 to 75% of its value with any move against it.

    There are only two times that I would ever consider buying an out of the money option. One is if I’m confident that an intermediate degree rally has just begun. And even then it would only be one or at most two strikes out of the money. Note that this intermediate advanced is already well underway so an out of the money option at this point is not advisable.

    The only other time I would even consider buying an out of the money option would be late in a parabolic advance.

  396. Nike Boy2008

    Mr Miyagi showed a few weeks back on how to play options and how only to get DITM options expiring 3 months after the date you intend to sell all your options – this way the decay due to time is very small.

    The time decay increases very fast in the last 90 days and is worst in the last 30 days

  397. Shalom Bernanke

    “There’s not enough gold in the world for it to be used as money. All the gold mined couldnt even fill an olympic sized swimming pool.”-Natanarchist

    I never said there was enough, or even argued for a gold standard. My thought was simply “gold is money”, as are many other things. If somebody will accept it as payment, it’s money.

  398. aviat72

    Gary:

    It is true that a DITM will have a somewhat lower time decay factor compared to an OTM option. Also for the same deltas, you will have to buy more OTM options. As a result your net theta position will be more than a DITM option.

    GLD Option Greeks

    Notice that theta decay is primarily a function of time to expiry (the right most column). If you go DITM it will reduce but not a huge amount.

    However you can not ignore the gamma factor. While you are convinced right now that we are parabolic move of the C-wave, on June 30 you were expecting Gold to be much lower. The market may not perform the way we expect it to. Gamma allows you to risk less but at a higher time-decay cost (nothing is free).

    In the time frames we trade (daily cycles of a few weeks), the theta perhaps becomes less important especially if you go out a few months. When you are trying to time your entry at the daily cycle low, a set of OTM options provide you with a better risk-reward potential. As the price moves up, the gamma increases the delta. If however for some reason, the price goes down much further (it can for a variety of reasons), you lose less assuming you honor your stops.

    Once you are convinced that the cycle lows are in, you can always move back to DITM options since you have higher confidence in the trade location. But while you are trying to catch the bottoms, try the OTM options.

  399. Shalom Bernanke

    Baby boomers that think they’re going to get their SS, and/or that it’ll have anything close to today’s purchasing power are delusional.

    Alex is Montana is right to be concerned. I believe the youth in this country will vote to dump the boomers. Further, the kids don’t have the numbers OR the income levels to cover the prior generation’s SS, even if they wanted to pay.

  400. Gary

    If one is sure they are going to catch the bottom of a cycle and that the move will be large enough to push OTM options into the money then yes by all means buy one or two strikes out. But catching cycle bottoms isn’t a sure thing. I miss as much as I hit and I’m pretty good at it.

    If you miss and the cycle has one more push down you’re out of the money option will expire worthless or lose money.

    But let’s be honest here. Almost no one chooses an out of the money option to control risk. They choose them to leverage.

    I will be willing to bet less than 1% of all the people here on the blog that are discussing options are using them properly for risk control.

    I dare say that probably every single person here is using options for leverage because they believe that cycles are infallible and they have a sure thing.

    The problems start if they happen win. When you win a leveraged bet it feels great and then you start thinking that you’re smart. You aren’t smart, you’re just lucky.

    So what do you do? You make that same leveraged bet at the next daily or intermediate cycle bottom.

    Eventually another 2009 scenario happens and you get caught on the wrong side of a heavily leveraged position. Then you lose everything.

    Now you’re out of the game and the bull continues on without you because you lost your stake.

  401. Gary

    E,
    Why this preoccupation with the debt ceiling debate?

    Everyone already knows the outcome. It has no bearing whatsoever on gold’s intermediate cycle.

  402. Poly

    “If you miss and the cycle has one more push down you’re out of the money option will expire worthless or lose money.”

    Agree, that’s why on the first cycle I normally buy later months, time to miss a daily cycle lower but still catch the next IT cycle. Required nerve and patience.

    “But let’s be honest here. Almost no one chooses an out of the money option to control risk. They choose them to leverage.”

    Agree again, you buy OTM for leverage, but I will say, if you’re confident on the time frame (cycles) and expect price movement, a well planned OTM can be a huge gainer. It carries risk, plenty of it, but if you have a good sense of the price and time frame it can dramatically alter the risk/reward makeup and spice up your gains. Not for the novice/first timer.
    In any event, little capital should be risked on OTM, if any at all. The potential loss or the huge payoff demands a small OTM stake.

  403. Poly

    Good post Avait72 @ 4:30 PM, especially the 2nd half, easy to understand for most.

    I get a chunk of ATM/OTM right at that cycle low, the early bird. You only need to put a small amount up on the block and they quickly turn a sizable profit once the speculators start frothing at the month.

  404. Gary

    Poly,
    If traders would listen to reason and keep OTM positions small then yes the risk is worth the reward.

    If I remember correctly though you said you were up something like 500 or 600%.

    You appear not to be following your own advice. If that is the case, let this be your wake-up call so that the next time we mistime a bottom you don’t incur a devastating loss and give away all of those juicy gains.

  405. Harry

    When I was 18 I blew out my account with options. I learned all of the lessons Gary’s trying to impart here the hard way. Admittedly this was well before I discovered cycle theory, but the lessons about OTM options are still relevant.

    So let me ask this of the options traders: if you’re determined to use a highly leveraged instrument, why not just by futures at this stage of the intermediate cycle? We know gold has a ways to run – we don’t know timing exactly. Options for 12+ weeks out have so much time value left on them that they’re not such a great deal. Why not get in early with futures and ride the intermediate cycle with strong hand status? That’s what I did. I’m up about 30% already and I didn’t jump in until after we crossed 1550.

  406. Poly

    Gary,

    600% gain when I nailed 2 complete IT cycles from day 1 (your help) to the top without any drawdown and I’m not following my advice? I doubt it ๐Ÿ™‚
    For example in my non option 401k account I played your calls on AGQ and got in at $60 and out around $280 or so, over 400%.

  407. Gary

    You are talking about perfectly timing trades and I’m talking about excessive leverage.

    I can tell just by the nature of your comments over the last several months that you are growing more and more confident in your ability.

    I tend to be the exact opposite. The more often I win the closer I am to hitting a losing streak so the more nervous I become. Hopefully it won’t be during this intermediate cycle.

  408. Poly

    You made the judgment of my leverage(without knowing my positions) based on my 600% returns alone. I’ve clearly shown that with 100% invested I got 400% with AGQ, through timing mainly. You even went 140% invested which was way over 300% leveraged with AGQ and SLW calls. I’ve always warned and never advertised anything but conservative options on this board, i’ve tried to focus on this board around the timing the cycles here and knowing which options work best at which points in the cycle. Yes I’m confident when I think I have an edge, but don’t confuse confidence for reckless!

  409. High 5

    Ron Paul:

    The U.S. government defaulted at least three times on its obligations during the 20th century.

    — In 1934, the government banned ownership of gold and eliminated the right to exchange gold certificates for gold coins. It then immediately revalued gold from $20.67 per troy ounce to $35, thus devaluing the dollar holdings of all Americans by 40 percent.

    — From 1934 to 1968, the federal government continued to issue and redeem silver certificates, notes that circulated as legal tender that could be redeemed for silver coins or silver bars. In 1968, Congress unilaterally reneged on this obligation, too.

    — From 1934 to 1971, foreign governments were permitted by the U.S. government to exchange their dollars for gold through the gold window. In 1971, President Richard Nixon severed this final link between the dollar and gold by closing the gold window, thus in effect defaulting once again on a debt obligation of the U.S. government.

    http://www.thedailycrux.com/content/8238/End_of_America/eml

  410. Gary

    Poly,
    My mistake then. I was under the impression that you made 600% during the last cycle alone and all the talk of out of the money options options suggested you were using way more leverage than you should be.

    If that’s not the case then you don’t need a wake up call.

  411. Poly

    No problem.

    I really don’t ever “publicly” recommend or endorse them. When or if I do, I always preface it with them being Lottery plays and very little money should be risked. Another reason why I don’t mention positions anymore.

    Good weekend to you.

  412. Natanarchist

    Shalom bernanke…just to clarify…I did not attribute the quote to you or anything you said. Read my post again. It was in reference to a William Wallace post to you about how he felt there was not enough gold in the world to use as money, never mind not enough to fill a swimming pool.

  413. aviat72

    Gary:

    I do not buy OTM options with the expectation of holding them till they get in to the money (i.e. to hold them till they actually become ITM). I am looking for is specific delta/gamma/theta profile; different profiles are appropriate at different times.

    When you buy stocks without any leverage, you are essentially buying 1x Delta. I can buy 4x OTM contracts with a delta of 0.25 to get the effective delta of 1. If I get it right my position delta continues to accelerate higher. If I get it wrong I lose less as it goes down.

    Last week I was short ES but with a healthy bag of OTM calls to become almost delta neutral. Market broke in the other direction and the option gamma kicked in to keep my in the green giving me time to reverse.

    You could develop a strategy where you keeping on rolling up your OTM options as the price moves in your favor. You still get the same delta but lower risk, especially on those elevator down days with PMs. This would obviously not be appropriate for range bound markets. But the markets have hardly been range bound for quite some time now. Big moves either way.

    GLD options have reasonably low spreads and you can send combo orders to split the spread when you roll up.

    Most people here are reasonably active traders and can manage their positions. Of course if you are a once a week kind of person this does not work.

  414. Gary

    Aviat,
    I’m more of a once every three or four months kind of guy.

    BTW gold has been range bound for 2 1/2 months until just last week.

    It appears you are trying to pick very short term moves for your OTM options. That’s not my cup of tea. I have no desire to sit in front of a computer all day trying to pick short term market moves.

    I just want to get in as close to the bottom of the intermediate cycle and ride it until I think it has topped.

  415. Silverhound

    aviat

    Your screen capture above looks like an IB TWS options screen. I’m in the process of signing up with IB at the moment. When I look at the options screen it has nowhere near that much info (only bid/offer/last), granted I’ve only looked at the free data so far. Do you mind if I ask how you are getting the option beta and greeks info to display?

    Thanks

  416. aviat72

    SilverHound: You can configure the columns you want to see using the small spanner button on the top right. TWS has a zillion columns to chose from.

    Gary:

    You are quite right that if you are a once in a few months kind of person, then your strategy of DITM approach may be the best fit.

    If you do trade the daily cycle then of course OTM options can help you trade that in a relatively safer manner. BTW, by trading the daily cycle, I do not mean going short but adding/reducing exposure.

    Further for those who missed out on the cycle lows, the OTM options provide the potential for reduced draw-down with similar upside potentials when you enter/add a meaningful amount away from the cycle low. Once you are in the clear you can always roll them into DITM or pure stock strategy.

  417. Tajir

    aviat72,

    Back in May you mentioned that you prefer reverse back ratio spreads over OTM options due to their less cost. Or it depends on context to choose OTM or back ratio spreads.

    Also, is buying OTM/back ratio spread more suitable to time the intermediate bottoms?

    Thanks

  418. AgAuPbBrass

    So it is starting again. A couple of months back as silver rose from the 20’s into the 30’s and upper 40’s the board became awash in talk of options and leverage. Following the silver crunch some of the most active posters of this type disappeared never to be heard from again. For the past 6 weeks a handful of option posts and now the cycle starts again with fresh meat.

    Leverage will kill your investing account period. Maybe not today, but it will. You are not that smart or that lucky. You are up against teams of folks that have decades of experience, training, support and some inside knowledge of order flow and such. If you want to gamble, go to the riverboat and play roulette, at least you know the odds and better yet there are no commissions and they give you free drinks.

    I blew my account out in the dot com meltdown. I used margin, options with spreads and straddles. I thought I was hot. For the past 10 years I have rebuilt and done well all without options or leverage. In the Ag rise and fall 3 months ago I walked away 6 weeks ago with 37% ROI using just the standard etfs. Leverage is a fools game.

    I see it starting again here. When it all blows up this time don’t blame gary. Get a jumbo picture of yourself and put a clown hat on it. Goldman, Morgan and BOA all thank you for playing and hope you come again.

  419. TommyD

    Gary,
    I don’t want to confuse your forecast and direction but would like to contribute my thoughts — the break in the dollar parabola reminds me of 2008. March 24s low was broken July 7th only to head from .76sh up to almost .89. If the Euro money continues on it’s way to puking/collapsing/dying, then the dollar will be the go-to currency for the free, Keynesian-following world, imho.

    This could be the “D” wave about to hit the fan soooon…

    You said they will protect the banks,,, I say they want the euro to dye and the dollar to take over. This may allow the stalling of business with Iran because of their opening of a new Borrus.

    I see my Pennsylvania state is turning into Nevada-like…

  420. Gary

    Tommy,
    How can we have a D-wave without first having the parabolic C-wave?

    Action and reaction. A D-wave is created by the excesses of a final speculative C-wave blowoff.

  421. TommyD

    Gary,
    thanks for hearing me at least,,, didn’t you state that what happened in 2008 crash of gold and silver, from the bull, was Bens’ stop-gap to save the banks? I think the next faze is here to save the dollar is my gut feeling.. Maybe the game was to print the money and then cause a condition that everyone LOVES it all of a sudden. This would sure up the banks and maybe allow them to lend again??

  422. Gary

    You are making the mistake of thinking that someone is controlling what is happening. Forces have been unleashed and mistakes made that are so large that no one can control the outcome.

    We created a debt bubble. That has serious consequences. The cleansing process is going to eventually cause a depression. We are now just deciding whether it will be hyperinflationary or deflationary.

  423. Rob L.

    AgAuPbBrass,

    After your experiences over the last 10 years, do you fear leveraged ETFs as much as you fear margin and options?

  424. High 5

    The chances of deflation are near zero. The greatest fear of Keynesians is deflation and they are running the show. It’s very easy to debase the currency and easily prevent it.

    Any hint of deflation leads to immediate money creation. This period is very different from the last gold bull market. The main difference, and only one that really matters, is that the US government is bankrupt and unable to deal with increasing deficits and debt.

    As inflation hits the governments costs will skyrocket further, including higher servicing costs on it’s debts. It looks like an irreversible spiral into an awful inflationary depression.

    US dollars will eventually come flooding back into the US from overseas, financial institutions will begin failing, cash will become king (doesn’t exist yet), run on banks to get cash, bank holiday while cash is actually printed/delivered to the banks, panic out of physical cash, hyperinflation.

    The only alternative is a deflationary depression and that is probably politically impossible. The great depression had very little deflation before FDR defaulted on debts (usd is a debt instrument) and expanded the money supply, resulting in inflation. Same with Japan (very little deflation).

    I know many eyes are rolling with this rant. Sorry but I believe it’s one of the most important questions that needs answering. If one reaches the wrong conclusion, the coming events could rapidly result in crushing poverty. Personally, I see nothing crazy about keeping some physical gold, overseas, as insurance. All out paper investments can become worthless overnight, especially since the investments recommended here are mainly derivatives. Does anyone truly believe that the estimated 600 trillion in outstanding derivatives is safe?

  425. AgAuPbBrass

    Leveraged ETFs are refined heroin instead of raw. Look at how many folks lost their shirts on AGQ. It is all about position size limits and taking some off the table.

    In the last run folks were buying more as the price rose. When they wanted even more they turned to options because they are “cheaper”. Then they bought both on margin. Black sunday came and they were broke before the market opened.

    Coincidence? I think not.

    They are going to trap you when the market is not open and slaughter the sheep. Everyone talks about how the price of silver is manipulated. If you believe that, how can you even think about leverage? You are saying that you know game is somewhat rigged and so you want to jack your risk level up even more? WTF??

    The 37% I made is not in the market. It is off the table.

    Gary is excellent. He will get you in at or near the bottom. I put on my full position size over the following 3 days of his swing low calls. As my gains accrue I begin to sell pre-set amounts at pre-set points and I do not buy more with that capital over the cycle. Currently I am fully invested, but 10% comes off when gold hits 1610 and so on.

    If you can make 20% every year, you are a frickin genius. I made 42% year to date. I don’t need more risk. I could go to cash today and beat 80% of funds with zero risk. It is not about reward, it is about risk.

    The other thing folks talk about is to use options for insurance, i.e. downside protection. If that is truly what they are doing, then why were the same folks dead or mortally wounded when the black sunday event took place. It was clearly the time to have downside protection, but how many did? Options and leverage are heroin. The first taste is free and after that you are hooked until the day you overdose and you have to look at your wife and talk about public school for your kids next year.

  426. Blindweb

    -Precious Metals are the best known substances across time and civilizations to create monetary stability. If they disappeared I do not think the world would be the same. If you take the sum total of productive advantage given by gold (transaction liquidity) throughout history and compared it to oil, I suspect in the end gold will win.

    -People forget the other property of PMs. They are also a displayer of wealth. Like the peacock has feathers, the display of wealth is very important in human society; anything connected to species reproduction is of the utmost importance. Is it rational to like rare shiny things? It seems to make sense to have that evolve. Anyways, it isn’t going to change any time soon.

    -Gary warns of playing OTM options because of a blackswan market event. I personally worry about a black swan event in the institution chain needed to extract wealth from the market and etfs: Rule changes and capital controls, bank holiday and 50% currency devaluation, how safe is my broker?, etc, etc. I keep 90% in physical, and use portions of the other 10% to buy otm options. If I leverage to make 3x-10x my money I can make many mistakes and still make money

  427. Sang

    High 5,

    Totally on the same page with you.

    We’ve gone past the point of no return. The only option they have is to print more money to service the debt in an on-going inflationary death spiral.

    The debt is so large that it simply can’t be paid off. And forget about it when it comes to the derivatives market, which is still, to this day, after the near-death blowup a couple of years ago, IS STILL UNREGULATED!!!! CFTC? what?

  428. TheBookGuy

    AuAgPbBrass,

    Thank you for the rant. I actually buy a core position on the buy signal from Gary. After that I buy a few options for leverage, but I use money that I can live with loosing. I think that is acceptable risk. I know many folks don’t do this.

  429. AgAuPbBrass

    Every one is different. If I had 90% in physical in my back yard, then 10% in options is not going to kill you. The reason for my comments were the flood of option related talk over the past couple of days. I think it is a great indicator of continued upward bias in the market. It just really ticked me off when the crunch came and folks that were some of the biggest option junkies ended up ripping gary for missing the top and moaning how much they lost. Different verse, same song. Gary is a gem and I can’t afford idiots to end up driving him off the web or loading a whole lot of extra baggage on him so that he changes his style / technique and stops making the right calls.

  430. Rob L.

    In the last IT rise, the one that started in January, we had a mental target of $50 silver – we were essentially correct.

    What is our mental target for this IT rise, $1800 gold$?

  431. catbird

    I hope Gary never changes. It’s up to us to make trolls unwelcome in his community.

    It ticked me off that a parade of whiners came out of the woodwork on this blog after the 4-day May massacre in silver.

    Gary is right most of the time, more often than anyone I’m aware of. You keep your leverage under control and you keep your stake in the game and he WILL make you more money over the long haul than anyone else. Is that so hard?

  432. gold silver troll

    I’ve been on this board since August and it’s the same story every time for every daily cycle…

    1) Gary calls a bottom (week 1)
    2) Lot of folks are suspicious and doubtful and start questioning Gary’s call (week 2)
    3) More people are finally buying in and option talk start(week 3)
    4) More options buying posts and the bragging starts (week 4-5)
    5) Ugly Daily Cycle Correction(week 5-6)

    and the back to 1)again

    rinse and repeat

    Guys like Poly, DG and Alex are really smart and see this happen everytime and time their entries and exit.

    This board is the best buy or sell signal of them all.

    I agree with all the options talk last week, we maybe are a week away from the top of this daily cycle…and based on all the options talk and buying, I’m sure that we’re gonna get an ugly daily cycle correction

  433. SF Giants Fan

    Agaupbbrass

    You made some great points earlier and sounds like you have the scares to prove it. Unfortunately many think they are “smarter” with options and won’t get caught.
    Gary has changed from the May meltdown. We don’t have the privilege to see how he is trading now. We now have the model portfolio.
    I and many others would be out for blood if the cry babies drove Gary to throw his hands up and end it.

    Gary keep your cry baby filter on and great week- end report!

  434. Alex in Montana

    Not enough gold/GOLD STANDARD

    1) There is certainly enough gold to go back on a gold standard. Just maybe not at $1,600/oz. Currently there is $5 trillion in paper and coin money outstanding that is issued by all the nations in the world – Source: Bank of International Settlements in Switzerland. At $1,600/oz of gold the above stock of gold of 165,000 tons is worth $8.44 trillion.

    Per Jim Rickards:

    Central Banks one day announce they will pay $2,500 an oz for gold and sell at $2,575 an oz. They will find a market real fast. If that price doesn’t work, they raise the price they will buy gold at until the market reaches an equilibrium. That will not take a very long time.

    After that we know we know there is 2,650 tons of gold mined per annum. That is $210 billion a year in gold @ $2,500/oz. That is a 2.50% increase in base money supply which is adequate.

    Will we go back on a gold standard?

    Jim Grant (Grant’s Interest Rate Observer):

    “We have a saying in Brooklyn, “This is not a threat. This is not a promise. This is going to happen. We will go back on a gold standard”.

  435. Hack

    Good report Gary, I’m making money in the miners as you predicted. But we may not see a debt ceiling agreement which means the market will tank, briefly, then resume upward as participants find out that they can still drive to work, get paid, pump gas and eat dinner. The market will be just fine this year which is good for our miners…S&P 1450 in Q4.

  436. sophia

    Gary,

    sorry to ask thus question if you have already answered it somewhere, but why is the daily cycle on the DX starting on the 04/07 and not 06/06? I don’t find this obvious on the charts while I understand the days count for the SPY..
    Thanks in advance for your reply

  437. platy

    The dollar will die along with other fiat currencies (which is nearly every currency in the world). They are all being inflated. Eventually they will all be replaced by a world currency. Count on it.

  438. Elaine

    Gary, thank you for the weekend report. Is it actually possible to buy a fund based strictly on the HUI? Or are you using GDX as a surrogate?

    Thank you.

    Elaine

  439. GP

    Hey Thank you Sink, i googled on that earlier and have been comparing them, i was however looking for a first hand experience. Frankly i find them all on similar lines and way too expensive as compared to India where i have migrated from. Maybe someone in Canada and using one of those would be able to recommend.

  440. ALEX

    I didnt read Garys report yet, was at an afternoon wedding and then studied the dollar?Gold, GDX etc a bit just to see if anything stood out.

    So I just thought I’d share what I possibly see in the dollar.We’ll see.

    http://www.screencast.com/t/XkEKEVB2I

    GOLDSILVERTROLL-If you meant me in your post,thats kind-thanks. Your observations that were listed are pretty good ( and proof that …YOUR Experience here has taught you much. Along with ‘cycle timing’ and healthy fear as tops approach – you’ re probably doing alright too ) ๐Ÿ™‚

  441. aviat72

    Tajir:

    Ratio spreads and OTM options are close cousins. RS have a more exponential looking gamma/delta curve compared to OTM options. So they are better used for lower probability, high move events.

    A blow-off type environment where the risk of a major downside move is as high as a major upside move is a good example; the parabola can collapse at any time but continue to run way longer.

    With Gold right now, we are in confirmed strong uptrend, and we have not yet reached the parabolic stage, so OTMs at daily cycle lows will probably be more appropriate than Ratio Spreads.

    Many people use ratio spreads for instruments with assymtric price movements (e.g.VIX). So a 25/27.5 bullish ratio spread was a popular choice. The probability of that event is low hence they want a steep gamma curve. However if the black swan occurs, then the VIX could easily trade-up to 40-50. Many portfolio managers use VIX options as portfolio insurance putting a small single digit percentage in it to hedge against the black swan risk.

    As I have written earlier, use TOS to plot different strategies to understand the risk rewards better.

  442. aviat72

    Regarding Gold/Cycles etc.

    The biggest demand catalyst for Gold is Asia, especially China.

    China is a unique society where capitalism runs rampant under a communist umbrella. Inflation is rampant and government deposits interest rates offer a negative real rate of returns. Chinese bond auctions have failed in the past and recently because no sophisticated investor wants to lend at negative real rates. As a result a lot of the excess savings and capital have been finding their way into the real-estate market where speculative demand is rampant.

    IF and WHEN the Chinese real estate bubble starts bursting, there will be a mad rush into PMs, as the only time-tested store of value which hedges against inflation.

    While most Gold-Bugs focus on US profligacy we are in a much better shape compared to the rest of the developed world. The discussion right now is the degree to which entitlement programs will be cut or how to cut defense spending or how to restructure the tax code etc. We are not short of land or other natural resources (including hydrocarbons). We have the luxury of debasing our currency. China does not have any such advantages. They are desperately trying to keep the system afloat, supporting the Euro, buying Greek Bonds and what not. They will very likely end up holding the bag.

    The real demand driver will be the breakdown in China. It is the world’s second largest economy with a very restive population. I wish there was a way we could incorporate China in our decision framework.

  443. marksomething

    gp,

    questrade is inexpensive and reliable. I use it. you can open a tfsa (tax free savings account) with a min of 1000.00. fees range from 4.95 – 9.95.

    the banks offer a good product but gets expensive with fees

  444. Rob L.

    marksomething,

    I have seen some pretty bad reviews for questrade, which is why I have avoided it. You haven’t had any bad experiences with them?

    I might have to seriously reconsider them.

  445. Keys

    Time for my Frankenstein speech.
    The truth is, as we all know it….the US, as an economy, is crap. We either believe this fate or we hide from it. Gold is the navigator around this destruction….Although I have painful sidelined from the old fart approach…I am 100% sure, that the old fart that buys gold, buries it, and sells it once he realises he can retire off of it , will be the best finance guru we have…..
    I do relent!!! Parabolic moves cannot be enjoyed! I enjoy no happiness off of profiting from the US demise, but I have no regret either.

  446. Haggerty

    Gary
    There is no way I can go back to see what I missed on the blog so if someone has already asked this please bear with me. I believe the Doc mentioned a few weeks ago that the first intermediate cycle for the dollar coming out of a three year low has a history of being very choppy….the 74.20 level was broken which is one good sign that the 3 year low is in front of us….what would seal the deal….a break of the low on 5/4/11? If so do you think there is much profit potential once that level is breached?

  447. Tajir

    aviat72/Poly,

    With regards to recent discussion on gamma strategies, I had some questions that I hope you don’t mind answering;

    1- Do you scale in and out to manage risk further in addition to playing the gamma strategies? Or is it more like all in at/near intermediate bottom and all out near intermediate top.

    2- You mentioned that you keep rolling the options to keep delta in control and also take advantage of gamma. Does slippage (due to spreads) and commissions any concern for the cost buildup? How do you control those costs?

    3- How often do you roll the option from one contract to the other? Do you manage this around daily cycle turns are just around expiration dates (week before expiration etc?)

    4- Strategy would be to buy OTM calls near intermediate bottom and then switch to DITM once the cycle bottom is confirmed. Or do you keep rolling with OTM calls.

    Thanks for your insights on the strategies you shared.

  448. MrMiyagi

    Nearly 3000 NASA employees laid off (terminated more likely..) after last Shuttle flight.

    All is well folks!!! Return to your government-induced comas.

  449. Gary

    E,
    Why are you so worried about what the dollar does?

    Gold has clearly shown that it can rally despite a rising dollar.

    Besides we have our stops in place. If they get hit one would only lose a very minor amount of capital, if they are following the model portfolio. On top of that I’m pretty sure I would recognize a problem long before our stops are hit and get out with at least some of our gains intact.

    That being said, once the next daily cycle low is in we will move our stops up and guarantee that the current trades will be profitable.

  450. Wav_ridah

    It’s looking like a debt deal is not going to get done. I wonder what way the pennant on golds hourly chart is going to break.

  451. Gary

    I kind of doubt you are going to get any kind of edge by watching intraday patterns.

    There just aren’t enough players in such a short time period to where intraday patterns have any meaning at all.

    You are probably looking at the market movements of one hundred players or less.

  452. ร‰amonn

    Latest on the debt ceiling, from fox news:
    “Back-channel talks have been rocky all day, and a Senate Democratic aide told Fox News that while those talks continue, Reid is now working on his own fallback proposal. The plan would call for at least $2.5 trillion in deficit reduction — without revenue increases — and would extend U.S. borrowing authority until 2013. This would fulfill a White House demand that the debt ceiling be increased to last through the next election.
    However, Boehner said Sunday that he wants a two-stage process — and he’s looking for a plan modeled after the controversial “cut, cap and balance” bill that passed the House but died in the Senate last week. Despite anticipation that he would outline a plan by the time Asian markets open Sunday evening Washington time, he said on the conference call that he’s now looking to have a bill out Monday afternoon. In an indication that it will not be something Democrats like, one source said Boehner was getting a lot of “atta-boys” on the GOP conference call as conservatives applauded his stance.
    While Boehner would not publicly detail what the GOP approach entails, others have said it involves roughly a $1 trillion debt-ceiling increase now, coupled with commensurate spending cuts, and another set of votes early next year.”

    Could this drama last several days?

  453. Veronica

    We have our RT daily cycle in gold now:)If I have my cycle theory correct this means that usually the next cycle will bring new highs.

  454. Gary

    It just means that the odds are very high that the cycle low when it comes will hold above the last cycle low. The pattern of higher highs and higher lows should remain intact.

  455. Samson

    Well, it seems to have taken about less than 45 minutes for the lower range of Gary’s estimate on gold to be hit.

    Wow.

  456. Gary

    I expect silver will get crushed when gold dips down into the next daily cycle correction.

    Without fail investors always try to go back to what treated them the best during the last run. It almost never works.

    Like I said, I’ll look at silver again after it’s consolidated for 1-3 years. Until it does that I want no part of it.

  457. Wes

    I doubt many people will believe “reassurance” given in panic by Congress.

    I think the party of dumb and the party of evil have outdone themselves this time.

  458. TZ(8155)

    I got cute on my bump of gold futures thur/fri from 4x->8x by raising my stop above wed low (which is what I said I believed would hold).

    The wed low DID hold, but my aggressive stop higher didn’t and I’m back to 4x – missing the ramp up on fri afternoon (and the open tonight.)

    4x isn’t bad, but I clearly made a mistake on my trade and could be holding more now. Oh well.

    All those gold call options are still sitting at 1600 for tuesday and I am highly doubtful this sun night ramp up will hold. 1600 or lower midweek for option ex and futures rollover. THEN we can go higher. If wrong I have 4x and will look to add probably at daily cycle low.

  459. TZ(8155)

    Despite losing my extra 4x and thinking we will come back down first, if I DID have those extra contracts I would be HOLDING right now and not betting on a pullback. Stop around 1595 perhaps seems right.

    This thing is simply strong and surprises happen to the upside. But since I don’t have that extra 4x now I’m not gonna buy it at this point.

  460. JEFFtheFLEA

    russell

    i remember watching the 1300 level and just waiting for the washout that never came. it just calmly rose over a few days and i finally bought a something like 1340. it wasnt a battle, they just snuck away
    this time they just jumped on our side

  461. TZ(8155)

    Jeff, a washout doesn’t come just cause something is a round number. Actions up or down happen for reasons like in this case.

    There are HUGE bets on that 1600 number by tues close and the contract rollover mid-week. I’ve never seen larger. I can’t speak to the same situation at 1300 and frankly don’t remember it.

  462. TZ(8155)

    PS: I’m not advocating a ‘washout’. I’m saying there is big money on keeping gold down below 1600 until 5:15pm eastern on tuesday. And on trying to get it as low as possible to hinder deliveries as the contract rolls over wed/thurs.

  463. Gary

    That looks like a strong breakout from the consolidation. I doubt gold is going back to 1600 until after the daily cycle tops.

  464. TZ(8155)

    If they can’t keep gold below 1600 for tuesday then you will likely see the mother-of-all scrambles as the options writers buy futures to hedge themselves. It could be the panic rally of short covering that Turk has been predicting. (Writing a call is a manner of being short).

    (But hopeful speculations of this nature over the years almost invariably end up with the big guys winning. So it is nice to dream, but not the way to bet. My opinion of course.)

  465. jeff

    TZ did people cover the future contracts during the drop in gold/silver July 19? Or is the open interest still high?

  466. TZ(8155)

    Like I said, I’m long 4x and holding and if I had more (from lower levels) I wouldn’t be selling. But as it is here I’ll just sit and watch.

    NOTE and WARNING that if they do indeed think it will be hard to push it down to 1600, then it is very possible the comex RAISES MARGINS monday for some extra juice on the downside. They have an excuse with gold hitting a new high here and can do it anytime they want.

  467. William Wallace

    Futures closed below 1600 friday, gapped up tonight opening at 1607.90, Obviously because of this debt ceiling news earlier that there will be no deal today, market futures dropped 100 points. Tomorrow there will be news on a deal, gold will drop to 1600 or below and the market will rally. Come tuesday, gold starts heading toward 1650. At that point the 50sma should be around 1580 for a bounce. Lets see what happens ๐Ÿ™‚

  468. JEFFtheFLEA

    had to put the kids to bed
    ok i tried putting the dot here but could not get it to come up, but i get the point. my stops are at 1548 and i still have puts under half of my contracts until the daily cycle low. i rolled my puts up once so i am at break even at worst and can ride for months if i have to . as soon as the daily cycle low is in ill sell the other puts. all in all they cost me about 26 dollars on the move but i can ride out anything and not get stopped out.