551 thoughts on “PORTFOLIO UPDATE”

  1. Gary

    People we can discount the divergence in the miners if you want. But we made that same mistake in April and look what happened at the beginning of May.

  6. Patrick

    Gary, thanks for the update. Will you deploy capital at the DCL? Still seems like a decent play from a risk/reward standpoint.

  7. Hack

    I agree on your new post. The only caveat is that once the debt ceiling is raised then it’s the Euro crises again….

  8. Sasa

    WW,

    oh no, not going long, it was meant to be a quick intraday trade as i saw clear entry with tight risk stop. It seems to have played out exactly as i expected. But without me on board 🙂

    For the rest of my portfolio, this week i shifted gld call options from august to sept and halved my positions. So very defensive.

  10. Cory

    I wonder if the emergency primary dealer meeting in NY is about Bank of America going down. The timing and irony of that is incredible.

    The market is all about bank liquidity, if that goes, everything goes with it, no matter the fundamentals.

  13. Cory

    The $VIX got above the June highs as well, some serious fear creeping into the market. Nothing compared to the flash crash or 8 year low, but risk is going up.

  20. wmp

    Gary,

    At this point then, which way do the miners pull…with changes in the equities or changes in gold? Or does it follow whichever is declining without regard?

  21. Keys

    I hate to say it, but I like the change to the model portfolio. I think the best risk/reward right now is cash and wait. By tuesday this market is going to blow in either direction…the way gold is acting, it seems that the deal is just the timing or the excuse gold needs to do what it wants to do…looking at miners and silver too, they are telling us we want to fall, but we need to wait until the debt issue vote.

    I as an opinion, and could be wrong, don’t think this will be a nice mild correction…if i am wrong so be it.

    We may see silver finish it’s parabolic dive down…

    I will say again…I HATE GOLD…bloody worse investment possible…not that I ain’t a gold bull, just that I hate being one!

  22. Sasa

    Personally i’m still not convinced of C wave blowoff scenario ahead of us. Havent been not for one day ever since 4th of july no matter the amazing rally.

    There’s just so much headwind gold would have to go against to go to $1750+.

    And i dont think gold is ready to act as a true safe-haven bid yet, even though it’s being mentioned alot.

    But i have an open mind. Hard to judge character right now with all the debt limit ‘panic’ anyway. Hence very defensive.

  26. Gary

    WMP,
    The fact that the miners are threatening to lose the 200 day moving average again even as gold is making all time highs is a very very serious warning sign.

    We know that Gold is due for a move down into a daily cycle low. The miners are already taking a beating. Once gold starts to move down also the odds are very high that the miners are going to move to new lows.

    Keep in mind we don’t have confirmation of this yet, but this is how bear markets begin. You get an initial move below the 200 day moving average. A recovery and then a failed rally that moves back below the 200 day moving average.

    Folks I think you better pay attention to what’s happening in the miners. Something is seriously wrong.

  27. wmp

    Given that trend lines can be drawn different ways, by my drawing the assending long term /GC trendline was tagged this morning.

  31. Sasa

    What would be the actual logic behind miners (traders trading miners) having a sort of fore-knowledge of future gold price?

  33. Shalom Bernanke

    I benefited from exiting miners when they diverged from the metals before the silver collapse, and recall vividly what happened. The difference between now and then is that not only was silver rocketing higher (several %/day), but so was the general stock market, which made the miners a stand alone indicator.

    This time we have stocks off close to 4% in one week, and miners will be affected by this we all agree. Where I feel diverge from others here is that miners will be influenced by the metals prices even more than stocks going lower. Not every day, of course, but over time the miners will have to choose a direction, and my bet is the fundamentals win out (higher metals=more profits as well as more value in the ground), eventually shedding their link with the general market.

    Somebody here pointed out the low correlation between miners and stocks over time, although I agree that on any day or week they can be linked.

  34. Rob L.

    So the current cycle’s high is in fact the top of the current intermediate cycle – July low was a head-fake and gold may still drop to the 150 DMA? Is this our latest interpretation?

  38. Gary

    Sasa,
    Sure, many of the traders in the mining stocks are people in the industry. I would have to think they know more about gold and where it’s headed than anybody else.

    Obviously insiders were selling in May ahead of the crash and that’s why the miners were diverging.

    The divergence now in mining stocks is screaming loud and clear that another hard correction is coming. Maybe this time it would be best to listen.

  41. Keys

    Gary you said
    “Keep in mind we don’t have confirmation of this yet, but this is how bear markets begin. You get an initial move below the 200 day moving average. A recovery and then a failed rally that moves back below the 200 day moving average.”

    Are you implying a a potential scenerio that gold goes bear here?

  42. notGreedIsGood

    Gary

    can you comment on the BB crash trade on the miners? we were suppose to enter this morning, and wait until the first profitable day?

    or are you worried about the health of the miners, and will not wait for 15 days to pass?

    not

  43. Gary

    Gold is almost as stretched above the 200 day moving average as it was at the May peak. It’s 19 days into a daily cycle that usually lasts 20 to 25 days.

    Once the debt deal gets done money is going to flee the gold market.

    This late in the cycle is it really worth playing chicken with the politicians? We found out three months ago that it wasn’t worth playing chicken with the $50 level in silver.

    Do you really want to make the same mistake twice?

  45. Shalom Bernanke

    “Gold is almost as stretched above the 200 day moving average as it was at the May peak.”-Gary

    That’s a great point, and the thing that has me most concerned of all.

  47. William Wallace

    If you pull up a daily chart for gold and take a look at this entire C-wave, you see that gold is acting perfectly normal, the only deviation was the intermediate bottom being early (obviously causing a massive rally out of that low)..and I made the case for why that occured in an earlier post. If the 20sma acts as short term support during this daily cycle correction, the 50sma will most likely holdup and get a bounce higher from there. We may not see a parabolic intermediate cycle because of a rallying dollar, just a normal intermediate cycle like the last 5. Then the D-wave?

  49. ALEX

    TRADERLADY! How are you!

    I am of a different opinion than many here (until I see proof).

    I am in my Miners (yes to REE) and I see todays sell off retesting yesterdays lows (SO FAR).

    So I posted this range earlier, we are at the 50% point-half way- and until I see a breakdown in Miners ,

    We could still break UP 🙂

    http://www.screencast.com/t/XwnpVh48WgHM

    I feel MINERS led the way UP in MID JUNE , Some of my picks gained 40 to 60%…thats not “ugly” …now they are 50% of those moves ‘highs’…that is “normal” to me. So far I am in Miners, until my chart says we will revisit the bottom. Then I would sell and reload later.

  50. FSR

    Gary,
    OK, selling GLD, but uncomfortable with so many USD. Would you recommend a position in another currency?

  51. Le Fou

    sasa,

    I’ve made mistakes entering my orders. Most recently, I bought some slv puts, and after the price went up, I wanted to set a trigger to sell them before the price got back to my purchase price. As it happened, I omitted a decimal point when I set the trigger price. Boom! the trade executed immediately, fortunately for a profit. I try to be careful, but

    I am,
    Le Fou

  52. Russell

    As someone who watches wiggles, it seemed that Londons close was associated with a sell off. I have a feeling that the same thing is going to happen between 3 and 4pm today.

  53. Gary

    SB,
    We can’t have a D-wave until we have a parabolic move.

    This all depends on the dollar. If it moves below the May bottom then we will get our parabolic finish and then our D-wave.

  55. Gary

    Not greed,
    If you are going to take the BB trade then you have to follow the rules exactly or the positive expectancy collapses.

    You would have to have bought this morning and be willing to hold 15 days or on the first profitable close which ever comes first.

  56. traderlady

    Hi ALEX, I understand both you and SB
    still being in the miners and you both
    picked them up at nice low levels. I do not have that “wood” so I am on the sidelines. I have picked up a few great companies like CMI and CAT.
    Hopefully a nice bounce for REE too!
    Stay cool!

  59. William Wallace

    Alex,

    I think the miners will bottom before gold as they have done before. Its not unusual to see the miners well below the 150sma during Daily Cycle corrections.

  60. TZ(8155)

    >Once the debt deal gets done money is going to flee the gold market.

    The recent events have shown something to the idiot masses that they never conceived of for the last decade of the gold bull.

    That SUPERMAN IS VULNERABLE and can (and will) be TAKEN DOWN eventually.

    You can’t put that back in a bottle just cause a budget ‘deal’ (used loosely) is made in a week or so by the guys driving this train wreck.

    The realization has now spread and some clueless people are waking up to where we are headed – BK’s all around the dance floor. Defaults for everybody as parting gifts.

    Long 4x and holding. If wrong I have my stop as described earlier, but I think the difficulty and resistance to fixing our finances has changed things fundamentally for the world as this point. Yes, it can shift temporarily back to europe, but people will now not forget that the US is next in line and has just as few answers as greece, spain, and the rest of the clown crew.

  62. TZ(8155)

    Repeating, like I said I think that triangle arround 1600 (1580) holds and we don’t go below it. A $35 dollar drop from here or so doesn’t change or break that and I will be adding at least once with my assumptions in place.

  63. TZ(8155)

    I’m NOT adding here and I AM aware of some good chance of gold decline on a ‘deal’, but I’m saying I don’t think it is going to be nightmareish, won’t break 1580, and will hold/recover faster than in past or as some people think because the reality of the US and world is starting to hit home.

  64. Blindweb

    I’m holding my , now, 15% in miners. I think at major inflection points TA is a going to be increasingly a contrary indicator

  66. Duuuuuude

    So on the BB Crash trade, you sell your miners positions on the next day after today that miners would be profitable. So we would sell on any bounce or wait 15 days? That would be a good time to exit out of miners if you had been holding a position and wanted to exit, correct?

  67. TommyD

    I got on the sideline 100% yesterday. With all the politicing and trouble with the Euro countries I see August 2008 repeat — where the dollar climbed up near .90. If the Euro gets in trouble, I feel,the people will run for the dollar as last man standing…
    Sidelines is my comfort zone for now. with maybe a partial day shorting if I see it coming.
    Mostly wait for Gary to see some clear signs on the road ahead…

  70. ALEX

    TRADERLADY

    Sidelines is the perfect place to be right now. If Miners drop to the lower level of that teading range on my GDX chart, you can scoop them up and we probably rally in the fall.

    Even if they ran up now they may only retest that top then fall away.

    I too , have traded other stocks with various set ups ( and talked to DG and NIKE BOY if one needed verification) like JVA , RENN,FEED, GLNG, etc

    recently I sold some miners when we reached the top of that range…sold my AG to trade other set ups too.

    I am MAYBE looking to lighten up today on this bounce and see how this plays out ‘from the sidelines’. I feel so 50/50 right now,

    You stay cooool ,go to Siesta Key!! I enjoyed it there quite a bit! 🙂

  72. ALEX

    William said,

    “I think the miners will bottom before gold as they have done before. “

    I agree, and if it happens to be in a week or two and we hit the bottom of that trading range on GDX,

    I wouldnt mind buying again a bit lower 🙂

  74. Brian

    NEM delivered $1.04 vs $0.99 street expectations on continuing ops basis. They beat the number, but sold off anyway. Sentiment ain’t bullish on the miners.

  75. Billy

    For anyone playing the downside in this DCL, as this daily cycle continues to stretch it becomes easier and easier to buy puts as you know the correction is nigh. I have taken a small position in GLD and SLV puts this morning and will add more at the end of the day if we are still at these levels. On Monday I think I will probably add a little more and possibly take some calls on the S&P for bounce that is a reasonable probability once the debt deal is announced. These will be small positions, as there is some risk that the politicians completely blow this and can’t reach an agreement, but I continue to believe that the build up to the 2nd has been all for show and the politicians will come to an agreement on Monday night, equities will rally and PMs will fall. Not looking to hold these long, will most likely be out by the end of next week.

    Willy Walls still holding your puts? Adding any here?

  76. TZ(8155)

    To ANYBODY holding miners I throw down the following challenge. Go to stockcharts and create a weekly chart of $hui:cef starting from 2001 to present. (Cef is essentially 50/50 gold and silver. “straight metal”)

    After you do that post it here and tell us your thoughts.

    If you still want to hold miners I will question your reasoning ability in face of inarguable facts. (“Eventually” something will happen is not a valid reason in investing AS LONG AS whenever that “Eventualy” happens it will encompass a long shift which is easily detected and caught without missing much upside).

    If you hold miners and aren’t even willing to spend $10 to see such a chart on stockcharts then you deserve what you get.

  78. TZ(8155)

    stockcharts is now $15/mo; my mistake; (I have no interest in the company, I’m simply not aware of another ratio charting service.)

  80. TZ(8155)

    Cause:
    1) I don’t have a stockcharts subscription.
    2) I already know the answer and posted it last year when I did. Nothing has changed.

  81. Shalom Bernanke

    TZ,
    An analysis from ’01 until now only applies if you bought and held for that time period.

    Since I bought in June, that is what I use to measure, and my miners have far outperformed my gold. Don’t need stockcharts to tell me that. 🙂

  82. TZ(8155)

    Shalom,

    That’s BS.
    The analysis shows continued underperformance since the middle of LAST DECADE with NO EVIDENCE OF A CHANGE. Prove me wrong.

  84. Gary

    William,
    Actually most of the time miners bottom at the same time as gold. The most recent bottom was the exception not the rule.

  85. Mikey

    Gary,

    So are we trading around the daily cycle on GLD? Or do you think this intermediate cycle is topping along with the daily cycle?

  86. Shalom Bernanke

    TZ,

    I didn’t say miners outperformed the last decade, I’m only referring to this round, and my miners have spanked the metal. You go look at stockcharts if you don’t believe me, but Alex’s analysis is correct.

    Miners surged while gold crept. I never said they will always outperform, I’m only interested in the outperformance when I’m in them.

  88. William Wallace

    Gold popped I believe (actually I know for sure because I watched it happen in real time) solely on news on the 25th and today..you can see this in taking a look at both candles, both have long selling wicks that occur after the news..I notice that this obviously spawns some residual buying that carried into the next day. I think that if gold didnt pop on the news both of those days that we would have already been well below the 10sma and into the decline, a shorter daily cycle, and sentiment wouldnt be so extreme as this just added to it.

  89. TZ(8155)

    Shalom, please note that I carefully made my arguement.

    You said “MY miners have outperformed GOLD”.

    I said CEF (50/50 gold silver…which ostensibly is a safer bet for various reasons.)

    I also said HUI and not “YOUR miners”. I have NO idea what YOU picked for miners and have already addressed this issue in the past.

    The act of picking is FRAUGHT with numerous problems including the need to diversify (which kills the outperformance of a single stock) and, of course, the OBVIOUS problem that each person ends up with a different pick. Thus the only valid discussion is to use an index in this case since the picking of stocks is clearly not an act of continual outperformance by the masses as a whole.

  90. Robert Thrane

    TZ,

    You don’t know what you’re talking about. Just plug in three big miners, the first three I plugged in vs. CEF since 2000 are all up minimum TRIPLE what CEF is up. I plugged in GG, AEM, and SLW.

    CEF may outperform other similar FUNDS because of it’s Canadian status. We all know the Canadian dollar has been one of the best performing currencies the last decade.

    I agree with Wav Ridah, that this fall will be the best buying opp. for miners for the rest of the bull. As for now I wouldn’t touch the miners with a 10′ pole.

  91. Brian

    TZ,
    The HUI:CEF ratio bottomed at 18.50 in 2001, peaked at 48x in 2003, in 2004, 43x in 2005, 43x in 2006, 41x in 2007 and 41x in 2008 before a plunge to 19x later that year. We are at 23x today. All this tell me is gold, silver stocks were cheap vs metal in 2001, 2008 and today.

  92. William Wallace

    Gary,

    I know your right, they usually do follow gold perfectly…but like you said there was this last exception, and I believe this drop ahead of gold and bottoming before will be another exception.

  93. Shalom Bernanke

    TZ,

    Since we can’t buy HUI, look at GDX vs GLD then.

    I did not buy GDX, but it’s a reasonable substitute for HUI, and it’s up roughly 16.5% from the date I bought miners (not GDX), while gold is up 7.25% in the same time. What don’t you get about it?

  94. Gary

    Mikey,
    I am not trying to trade around a daily cycle low. I am trying to avoid a possible intermediate cycle top.

    Despite what some would like to believe a parabolic C-wave rally is totally dependent on the dollar continuing down into a three-year cycle low this fall. If May marked the three-year cycle low then we are going to see gold move down into an intermediate degree correction soon to clear the extreme bullish sentiment.

  95. Robert Thrane

    I still agree with you right now that if you’re PM bullish, avoid miners, as their actions speak for themselves.

    That said the setup for the PMs right now is not very clean, and I prefer just to sit in cleaner setups right now.

    The upside in the dollar is maybe 8 points in a few short months, with a stop only what a percentage or so below. Pretty good risk/reward.

  99. TZ(8155)

    ROBERT,

    You are looking at COMPARISON charts, not RATIO charts. Try it again.

    SHALOM,

    I use the $hui in my comments since GDX doesn’t go back that far. Would if I could.

    Also, I’m not going to argue a outperformance of a month or two here or there. I would think that would be self evidently meaningless in the scheme of things.

  100. Gary

    The simple fact is that the miners exaggerate the moves in gold similar to silver.

    For some reason they have failed to participate in the last $200 point rally in gold. I now think that is a strong warning sign.

    I’ll say it again. For the parabolic phase to unfold the dollar has to have another move down. I think we need to see QE3 announced before we can be confident of that.

    No QE3 and deflation takes hold again. Last year the brief deflationary period knocked gold down $150. In 08 it took gold down over 30%.

    If we are about to suffer another deflationary period because QE2 has ended then gold is going to take a hit. Add to that the stretched condition above the 200 DMA, extreme bullish sentiment, late in the daily cycle, severe divergence in mining stocks and you have the conditions in place for gold bugs to get the crap kicked out of them.

  101. MrMiyagi

    I’m awake WW, my wife was making a racket at breakfast this morning.
    I’m not sure about adding, sometimes it’s best to limit exposure. See what happens closer to the end of day, I still believe that the debt solution may creep up in an overnight setting.

  102. TZ(8155)

    Robert,

    A COMPARISON chart will show you outperformance of something over the entire period. A RATIO chart will show you that ALL the outperformance was in 2001-2004 and NONE of it since.

    I would think that distinction would mean something.

  104. Shalom Bernanke

    TZ,

    What is meaningless is applying a 10 yr chart to an expected hold time of around 2 months, give or take.

    I focus on the best risk/reward at the time I take the trade, and for my expected hold time. Still, I bought gold, but the miners outperformed. That’s the fact.

    Anyway, to each his own. Good luck.

  105. Robert Thrane

    TZ,

    All the ratios are doing right now is hinting at deflation.

    Also we know the hedges since 2008 have gone long the metal and short miners. They will probably ride this into the fall (at least the short miner part).

    I wouldn’t completely ignore miners for the rest of the bull- that could be one of your greatest regrets.

  106. TZ(8155)

    >I wouldn’t completely ignore miners for the rest of the bull- that could be one of your greatest regrets.

    I won’t. As soon as they start outperforming.

    You have chosen to guess and hope along with everyone else since 2004. I will wait for the $15 chart to simply show me the money.

    And if it never happens then what becomes of your plan?

  107. Brian

    TZ,
    The HUI:CEF ratio also tells you that, if HUI falls another 10% from here, it reached the same relative valuation vs gold and silver at the 2 best time to buy the PM stocks, namely 2001 and 2008. Something worth paying attention to.

  108. TZ(8155)

    I’ll stop now and need to do other things. If someone actually cares and posts the 2001-present $hui:cef chart then I will comment further.

    We’ll see what happens.

  109. William Wallace

    Miyagi,

    Yes Sensei (is that how you spell it?) I mentioned earlier to Billy, if adding I will wait to close. See I am a well trained student of Miyagido options school…maybe options tournament soon? 🙂

  110. Cool_Loser

    Looking at the cycle count chart, why is it that some intermediate cycles for gold contain 4 daily cycles and some contain 5? Or is this just normal?

    What I’m wondering is this: Is it possible that the low we had July 5was just a daily cycle and this cycle we’re in now is the 5th one and now we might be moving into the the true intermediate low?

  111. Gary

    TZ,
    The miners should not be played as a long term hold. They should be bought at intermediate bottoms and sold at intermediate tops. During these periods they will outperform gold.

  113. Robert Thrane

    TZ,

    I’m’ not an idiot I do know the correspondence of comparisons to ratios. A 3yo can conceptualize that.

    Anyways, I’d be careful of getting too confident in this current “metals outperform miners” trend, for that I guarantee this will reverse within a year or so.

    What you should look for before you get in miners if you were to wait for CONFIRMATION is a ratio greater than .44 for $HUI/$GOLD weekly. I will be getting in much earlier though.

  115. Gary

    Cool,
    Because some intermediate cycles run short and some run long. An intermediate cycle has to go up long enough and far enough to turn sentiment extremely bullish and stretch gold far enough above the mean to trigger a profit taking event.

    Sometimes that occurs in only 4 daily cycles and sometimes it take 6.

  116. TZ(8155)

    >The miners should not be played as a long term hold. They should be bought at intermediate bottoms and sold at intermediate tops. During these periods they will outperform gold.

    I would think the logic and problems with this statement are clear to those who think it through.

  118. MrMiyagi

    WW,
    Haiii… sniff out the news although a downward trend like that would be a good start.
    If you don’t add and it keeps going down, you just won’t make as much. If it goes up, you won’t lose as much. Even staying put is not a bad place.
    Is that you in your profile?

  119. Brian

    My plan stays the same. All I am saying is that the pm stocks are approaching similar valuations vs gold and silver as they did in 2001 and 2008, assuming pm’s dont take a bath here. If Gary is right, the stocks are heading lower also, but at the next good low in Gold, PM stocks might set up very nicely for a trade.

    Incidently, I have the chart, but through another service so I cant / dont know how to post here for everyone to see.

  122. Gary

    WW,
    That is exactly what should play out if we don’t get another leg down in the dollar.

    We see gold suffer through a normal intermediate correction and then another leg up.

    We can’t get a D-wave until we get a parabolic move. One triggers the other.

  127. Gary

    Robert,
    Yes I have been saying all along that the dollar will put in a cycle low either on a resolution of the debt ceiling or on the employment report.

    This is another reason why I think any rally in stocks is doomed to fail. It will have to fight a rising dollar. This late in a cyclical bull market with economic indicators starting to roll over I don’t believe the market can do that for more than a couple of days.

  128. Movax2

    RE: Stock Market

    “We’ve had a big move, and government resolution is likely to come, but it feels like that is a crowded trade. No one seems really afraid, and everyone seems to expect a bounce. Just because everyone expects it, doesn’t make it wrong, but I’m concerned that all the longs will pop out of their holes the second a deal is announced. They will look around for someone to panic and take them out of their positions on the debt ceiling news. Then they will look some more, and then realize that no one is caught short or surprised and they will scurry to get out of their positions. Well, I just convinced myself to go back to putting on a small short.”

    http://www.zerohedge.com/news/guest-post-whack-mole

  129. Gary

    The original story was about a stock operator in a bull market. It never said what kind of bull market, although I assume it was in stocks.

  130. TZ(8155)

    That linked chart is against gold.
    It still proves my point roughly, but I made my argument using 50/50 gold and silver which is a superior mix cause it keeps you in metal, but provides diversification for higher return, but less volatility.

    A chart against CEF is preferable and I still hope someone will post.

  131. Robert Thrane

    Gary, it’s also possible the dollar entered a new cycle two days ago and now it is just meandering near the bottom.

    This could be the first cycle in a new intermediate cycle.

  132. Gary

    Robert,
    Not likely. I think the dollar is just doing what I’ve said all along, trying to find a bottom on either the debt deal or the employment report.

    I said in the nightly report the other day that the swing was early and that we could see one more move down before bottoming.

    The swing was just the Nervous Nellies getting out of the trade early.

    Ah if only we had been Nervous Nellies at the silver top ;~)

  133. Robert Thrane

    Gold could easily reach $1650 next week on a market decline. Recently it has been acting inversely to the markets.

    It could end up that today is day 1 of a new cycle and it enters a left translated cycle next week or the week after. We’ll see soon enough.

    Silver not following as with the miners is telling us that significant declines in gold are probably shortly ahead IMO.

  136. Gary

    Robert,
    Gold has not put in a daily cycle correction yet. Of that there is no doubt. Every day it continues higher the closer it gets to that correction and the more it stretches above the 200 DMA the more severe the correction will be.

    Action and reaction. The rubber band theory.

  137. William Wallace

    Gary,

    The silver parabola collapse has made you like nervous nelly’s father…what exactly happen, I wasn’t here for that?

    What positions were you in.

  138. Gary

    Robert,
    I don’t know about two weeks since it’s due for a cycle low soon.

    I really have no idea whether it will take out the May low or not. Before it does that it has to put in a cycle bottom and then take out that cycle bottom.

    If it does, that will be our clue that the parabolic move is on.

  139. Robert Thrane

    I don’t think it is a new cycle yet either Gary, but I think you have to leave open the possibility that it “could” be because of the brief cycle trend line break yesterday.

    Just trying to play devils advocate and keep cool heads here.

  140. Gary

    The only way gold can fight this kind of sentiment extreme is if the dollar is still moving down into a three year cycle low.

  141. Gary

    Robert,
    Gold would need to close below that trend line decisively. Now that gold has made a higher high we have to redraw the trend line.

  142. Robert Thrane

    I am just trying to add things up and with the looks of the miners, bonds, overall market, and dollars comparison to 08′ things look optimistic for the dollar surging almost immediately.

    That’s coupled with the expectation of a int. low in stocks, and a DCL upcoming in metals.

    I mean geez this seems to be a pretty clean setup!

    Add onto that the expectation of the bankers announcing QE3 in august at JH, would mean that the next few weeks should be harsh!

  148. MBS

    Gary-
    So gold could be on week 27 of its intermediate cycle, which needs to work down into its low. So that low could run alongside the SPX intermediate cycle which isn’t due for appox. 14 weeks. That would place golds intermediate cycle at 41 weeks, very stretched. I guess it could bottom before in the 30-33 week range.

    How about this scenario- the intermediate gold cycle is actually on week 12 as the previous cycle bottomed the week of 5/2. That would give us 14 weeks to run alongside SPX cycle, bottoming on week 30, stretched but not that far out the normal timing band.

    Appreciate your input

  153. Gary

    MBS,
    Stocks are potentially in week 19 if we take away the phony manufactured rally at the end of June. They should have about three more weeks to bottom. In that scenario gold would put in a daily cycle low then violate it with one more daily cycle down into a final bottom.

  155. Jayhawk

    Who knows William, those H&S don’t seem to work too often. I’d love to be there ready to buy some if we do reach those lows! (Easier said than done as Gary will point out.)

  157. William Wallace

    MBS,

    The 5/2 bottom looks like nothing more than a regression to the 10 week moving average, being it was stretched far above it prior to that. Is it possible an intermediate cycle can bottom with no real correction?

  159. 86d4life

    Anybody have enough confidence in $up to take on some EUO? It looks like the time to drive the dagger home. W2, this almost looks like a `Give me an option Friday` option.

  164. MikeStiller

    Gary-
    Thanks for the response. So if we are on week 19, that would indicate the last two intermediate cycles were 19 weeks and 17 weeks (or one long cycle that was 36 weeks). Would it make sense to have 3 cycles all of which are on the shorter end of the timing band?

    By my count, the dollar is on week 12 of its intermediate cycle so it has about 8-13 weeks to run as well. How does this line up?

    Thanks for clearing things up.

  166. Blake

    Anyone going to play the SPX or QQQ’s with puts?

    It seems this would be a great way to play the initial phase of the bear market cycle down to at least below the March low?

  167. Silverhound

    One of my mentors told me that the market moves in repeating ranges in TIME and PRICE. It’s a Gann thing. I haven’t seen anything that tells me different. Sometimes it’s uncanny how the fundamentals coincide to make this so.

    The cycle tool helps us identify the repeating ranges in TIME. I use my “old faithful” gold chart below to try and track the repeating ranges in PRICE. You’ve all seen it before but I’m dragging it out again as we are near completion of the current price range.

    You can see that at the completion of each range, price has either corrected or moved into choppy sideways consolidation until the MACD has drifted back to the lows to work off over bought sentiment. If you zoom in on the tops you can see that price reversed bang on the tip of the arrow. A couple of times it went on to make a slightly higher high. This is seen more clearly on a weekly chart.

    Gold Ranges

    Spooky how this is occuring around the time we are expecting a daily cycle top. I’ll be watching for a reversal/topping candle next week to see if the pattern repeats.

  170. Gary

    Mike,
    I have 20 weeks and 17 weeks. The second one is a little short. The last daily cycle in stocks was also very short. Perhaps we get a slightly long daily cycle here as the market bounces on the debt deal and then fades.

    If that happens it would probably take more than 10 days. (The market is now on day 30 of it’s daily cycle.) 40-45 is about average for a daily cycle.

    Another three weeks would give us an intermediate bottom right in the normal timing band if we throw out the manufactured rally.

  171. Poly

    When one views gold soley trough a $US prism, one will or can only reflect (see) Gold through the dollars performance. In dollar demolished assets, this thought is often a safe bet.

    However the flaw is that it ignores the underlying demand for the asset. By saying gold can only go significantly higher with a collapsing dollar is to take the position that you can not have soaring bullion demand that greatly exceeds the drag a rising dollar has on that asset.
    The recent historical gold rally was on a rising dollar. You will also notice that Gold prices in all other major currencies are at all time highs, does that tell you this is a dollar inspired gold bull market? In fact gold recently broke to new highs in Euro’s before it did in dollars. Dont discount Gold’s late bull market status and it’s ability to defy sentiment, cycles, TA etc for long periods for time. Mature bull markets evoke beasts! I still think believe major fireworks are ahead in 2011. Lastly, you’re ignoring the possible QE3 type event. Would that be another “the Fed averted or stretched the 3rd dollar cycle” type event?

    All of this switching of sentiment and ideas on the current setup is similar to the emotional trading made at many past cycle highs that were not ideal. IMO a well defined and thought out trading plan was in place, which to date is still meeting expectations. Why not let the plan run it’s course and let your risk Mgmt protect you in the event the plan was incorrect? Alternative theories at the cycle high juncture are prone to error. If you believe your original trade may break down due to a new scenario, why not tighten up the trade, but at least give it the benefit of the doubt.

    This has zero to so with being right or debating points. I like forumatling plans with their highest probability and executing. If they don’t pan out, then there is a plan in place to handle that.
    Good luck. (iPhone typed)

  172. William Wallace

    Gary,

    I dont understand… how(or why)would two intermediate cycles that have both bottomed on the 150sma be combined, as Mike Stiller just mentioned??

    Is there any method to this cycle madness, or can anything just be combined, shortened, lengthened. etc….basically whatever we want to make it?

    In that case why not combine all the intermediate cycles of this c-wave into one and make it one big cycle, making the july bottom the beginning of a new huge cycle!

  173. Gary

    Poly,
    I’m not saying gold can’t rise along with a rising dollar. What I’m saying is that gold can’t put in a parabolic move along with a rising dollar.

    You are kidding yourself if you think gold is going to go to $1800 along with the dollar rallying hard.

    We absolutely must see the dollar take out the May pivot if our parabolic scenario is to play out.

  178. MikeStiller

    Thanks Gary. We could really see a replay of the last 3 year cycle low and have the dollar go sideways for a number of months. Although, that is what is playing out now and we are already on week 12.

    Honestly, right now, cycle work seem to be somewhat backward looking because we wont know how many weeks they will have run until the intermediate bottoms have ultimately been made. That is what makes this environment so tough to difficult to gauge.

  179. Poly

    Gary, I disagree. We just did $150 in mere weeks on a rising dollar. You only need $175 for $1,800! That was on the back of little Greece, try a bank run on $3T of Spanish and Italian debt and you have he ingredients for a gold 2 handle.

  180. Gary

    Mike,
    Yes this is a very confusing period as the fundamentals battle with Fed interventions. It tends to short circuit all of our tools to some degree.

  181. pimaCanyon

    Regarding TZ’s statement that metals have outperformed miners for years: I’m having trouble getting the ratio chart that he suggests.

    However, a simple glance at weekly charts of HUI and gold tells us this: HUI made a significant high in early 2008 at approx 520. Today it’s trading at 545. That’s 3 1/2 years to appreciate a whopping 5 percent!

    Gold, on the other hand, made a high in early 2008 of 1034. Today it’s trading at 1628. That’s an appreciation of 59 percent over the same 3 1/2 year period.

    So which do you want, a gain of 5 percent or a gain of 59 percent?

  182. William Wallace

    “I just calculated if we take an average gold price of say around $350 in the 1980s and then we compare that to the average monetary base in the 1980s and to the average US government debt in the 1980s… but if I compare this to the price of gold to these government debts and monetary base, then gold hasn’t gone up at all. It’s gone actually against these monetary aggregates and against debt it has actually gone down. So I could make the case that probably gold is today very inexpensive.’

    -Faber

  183. Felix

    Why is a debt deal bullish for the dollar and bearish for PMs? Doesn’t it mean more confetti money flowing a la QE?

  185. Gary

    Poly,
    Show me that rising dollar you’re talking about.

    Gold went nowhere until the dollar started to drop. I’m sorry but your kidding yourself if you think gold is going to $1800 along with a rising dollar.

  186. Silverhound

    Mike

    You have to remember that the cycle tool is similar to a swing trading tool. It works a lot more clearly in a trending market. When we move into sideways consolidation it’s a lot harder to clearly pick the swings until we break into a new trend.

  187. Poly

    WW, DC correction is just a ripple, we can’t avoid them, were talking IT cycles, that’s all that really matters in cycle analysis.

  188. High 5

    Looking at historical hui/gold ratio it seems pretty obvious that the direction reversed close to when GLD started up. It’s just easier to invest in gold now than it was before gold etf’s and that is probably why the miners have underperformed gold since 2004.

  190. Poly

    Gary, What’s that? Why didn’t you draw it from July 1st when it all started? and try using a 30 day daily.

  192. William Wallace

    Poly,

    I hear you, IT cycles are all that really matter. I was just asking being that early in the week it didnt seem that you thought one one (daily cycle correction) would even occur…I cant find one instance of gold putting in a $150 rally without the dollar dropping…can you point me to a date so I can find it on my charts?

  193. Ben

    Poly, you are right, fully 1/2 the current rise in gold came on the heels of a strongly rallying dollar.

  195. MrMiyagi

    You kids are bickering too much today.
    Time for me to go do electrical wiring downstairs,
    WW,
    Keep a close watch on the debt gabbing, I would say don’t add any, just see what happens with what you have.

  196. Gary

    Poly,
    The entire period is there. It’s clear that gold went into consolidation mode when the dollar went into consolidation mode. For us to have another run like we had last fall we have to have the dollar go into another decline like it did last fall.

    BTW sovereign defaults are not going to be bullish for gold. That would be a massive deflationary scenario the same 2008. If something like that were to happen it doesn’t lead to buying… anything. It causes panic selling in everything.

    You better hope that we don’t start seeing sovereign defaults. It would be much better for gold if we continue to see bailouts. Bailouts mean continued money printing.

  198. ALEX

    Gary,
    It did happen in the 2005 -2006 Parabolic run…Both the Dollar and Gold and HUI rallied strongly together Sept through Nov.

    the beginning of Golds Parabolic run 2005 to 2006 began with $USD in Rally Mode

    DOLLAR 2005…SEPT – NOV = pretty much STRAIGHT UP

    http://www.screencast.com/t/2S2Mk6UGnhIn

    HUI (ESP. during SEPT 2005) Also UP

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

    and GOLD wkly, UP every week of SEPT too

    http://www.screencast.com/t/mRGqlcfl8O

    So I also was thinking that it could happen again. no?

  199. MrMiyagi

    WW,
    I hate to say this but because we’re selling the house I’m going with 14/2 which is adequate.
    Had we decided to stick around, I would have put 14/2 on the regular wiring but fed a sub-panel to the audio/video setup with 8/3, branching out to 5 12/2 circuits, one each for the TV, main amps, surround amps & sub-woofer, preamp & surround decoder & satellite decoder , DVD player & turntable & active crossover. In the last house this is what I had done PLUS I had a 5KW isolation transformer before the sub-panel.

  200. Gary

    When one looks at a longer term chart the recent two-week dip just doesn’t look like an intermediate correction.

    I think gold is about to throw us a major curveball. In order to hit this curve we are going to need help from the dollar.

  202. William Wallace

    Alex,

    Gold was just coming out of a B-wave decline when the dollar was rallying in 05, gold came out of its first Intermediate Cycle decline of the C-wave right as the dollar began its decline.

  203. William Wallace

    I cant find anywhere gold putting in a parabolic rally with the dollar rising…if someone can please point me to it because this is a big deal at this point in time!

  204. High 5

    I can’t think of a POTUS in history that would be stupid enough to tell the world the US may very will default on government debt. Any President with even half a brain would guarantee that irregardless of debt ceiling increase, the US will pay it’s debt principal and interest.

  205. Poly

    Gary, careful thinking so authoritarian like and thinking everybody else is always “being fooled”. It’s never been a successful trait.

    I’ve put up sound alternative arguments, respect them, like others respect you.

  206. Gary

    High,
    Of course we will, but that would require the Fed to start buying our debt again.

    That would be the impetus for the dollar to break the May bottom by the way.

  207. ALEX

    OH!

    So you are just strictly applying the FINAL part of the parabolic move to a dollar drop/ gold top.

    I missed that point.

    But they definitely have run up together for periods of time. On your chart …2010 Feb to July , both ran together also , and thats quite a bit of time…

    I was thinking that they could start out together now and the dollar drops off later.

  208. Silverhound

    That last chart Gary posted makes it pretty clear. It needed the capitulation selloff in the dollar for gold to blow off in it’s C wave.

    Focusing too much on the daily wiggles during consolidation only makes the water murky.

  209. Gary

    Poly,
    I’m just giving you the reasons why I am making changes in the model portfolio. Everyone is free to listen to me or ignore me. I’ll be wrong about as often as I’m right.

    At the moment there are just too many negatives starting to line up against the parabolic scenario, until we see the dollar break that May low.

    This is why I warned everybody the other day about using heavy leverage and assuming that we had put in an intermediate bottom.

    It’s entirely possible that we haven’t even put in an intermediate top yet. If one is heavily leveraged and Gold throws us a curveball it could take you out of the game altogether.

  210. William Wallace

    Poly,

    I think I have made it clear that I respect you and your arguments, please show me the respect in responding to my earlier post where I asked if you can point me to any other instances of gold putting in a C-wave top or even an intermediate cycle top while the dollar was rallying…I would appreciate it.

  211. 86d4life

    W2,
    I am leaving now for the rest of the day. Not zipping around like some shit house rat. I will not be taking the EUO trade until we have further confirmation. I have liquidated most pm positions, taken some spy puts but believe we need to be extremely vigilante in either direction. I`ll check in later. Everyone have a good weekend and thanks to everybody for their contributions.

  212. Gary

    Alex,
    Yes this whole discussion is about whether or not Gold is going to put in a parabolic move. My contention is that it’s not possible unless the dollar still has another move down into a three-year cycle low.

    Without that then I think gold enters an intermediate degree correction and then consolidates for a long period of time as the dollar rallies.

  213. High 5

    Gary

    There are plenty of options. Spending could be temporarily stopped on wasteful programs, such as seven hundred military bases and bombing seven countries.

    The gold in Fort Knox could easily be marked to market, quickly increasing the balance sheets.

    But even W, who wasn’t the sharpest knife in the drawer, would have had the sense to not threaten a DEFAULT!

  214. Gary

    high,
    I think we all know that the threat of default is nothing more than political posturing.

    Obama just wants to curry popular opinion and force the Republicans to do a long-term deal so he doesn’t have to deal with this again before the election.

  215. Shalom Bernanke

    Not that I care about where the dollar goes, but it looks more likely to me that we get new lows in USD in short order, possibly even as early as next week.

  217. FSR

    The perverse nature of markets and the number of times I have seen and heard 1800 and 2000 makes me think Gary may be right.

  218. Poly

    WW,

    I’m on my iPhone traveling back from a golf outing, I do not have access to charting and software. Later tonight I will see if i can draw you some pretty pictures.

    But more to your point, I couldn’t care less what has been done in all of TWO C-Wave tops. If one feels a collapsing dollar is a requirement of rallying gold then they will not see it.

    But to be very clear on a position, I’m not even suggesting the dollar will rally! I’m simply stating that gold demand will drive gold higher, with or without that flawed dollar tracking index. If we get an “extended dollar 3yr” watch out.

  226. William Wallace

    Poly,

    I have been of the mindset that This C-wave is clearly not like the proceeding ones, its clear on a chart. I have said before it looks very extended and due for a serious correction. Lets hope that correction comes after a serious blowoff. Right now I’ll treat this intermediate cycle like the last five, as of now the only difference I see is the early july bottom.

  227. ALEX

    So I guess I was thinking more in line with POLY of a Possibility that (even if the dollar bounces now) the dollar drops this fall (not rally), and gold still goes parabolic. Another daily cycle.

    I was looking at the Miners and posted that trading range they’ve been in…Its a massive consolidation ..even another leg down to the bottom of that range could bottom in late Aug, and then a run Upward in the Fall.

    http://www.screencast.com/t/XwnpVh48WgHM

  229. Gary

    I absolutely think gold will see a rally in the high demand fall season. The only question is will it be parabolic.

    I think it needs help from the dollar for that to happen.

  232. RJ

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show%5Bs162592494%5D&disp=P

    Notice on this chart of GDX intraday that the full STO is under 10. Notice the prior times it made it under 10, looked like good buying opportunities or at least a bottom was near.

    At the same time, GLD has some negative divergence on the CCI

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show%5Bs162592053%5D&disp=P

    Is there such thing as negative divergence with CCI or is that primarily for MACD or RSI?

  233. Hack

    We should get a nice rally after the debt increase. Today tells me that it will be a powerful rally and hopefully will last 2 -3 days at which time I will exit my longs…

  234. pimaCanyon

    Dollar’s fate is still uncertain IMO. All the drop today has done is backtest the breakout of the Daily Cycle trendline that it broke above a couple days ago.

    We need to see it break below that TL which would indicate it’s on the way to much lower prices –OR– it needs to pull significantly above that TL which would indicate a continued rally lies ahead. Until it does one of those two things, it’s in no man’s land.

  238. RJ

    W2,

    I am no expert. The cots timer guy gives weight to large specs an open interest. You can poke around on his site for the specifics.

  239. William Wallace

    Miyagi,

    The 5 12/2 circuits are what 15amp or 20? You think seperate circuits are necessary for those audio/video components? One 20 amp circuit using 12/2 wont handle it?

  240. William Wallace

    RJ,

    I ask because before this gold rally out of the intermediate bottom there was the second largest in history net short covering positions by commercials. They knew what was going to happen ahead of time, how I wonder.

  242. ...at ease

    POLY,
    I am thinking I agree with you on the GOLD buying going on after hours now, not just tied to the $.
    I watch a lot of after hours buying in GLD. This whole rally every day has broken out at open higher and fluxes up/down NY trade time and ends where it opened, then after hours moves up a little further.

  245. RJ

    W2,

    This guy went to a bullish call on July 5th due to the extreme bearishness by the large specs, it was his best call I’ve seen him make. He went to cash on the open this week in gold. If you remember, we are prettymuch flat on the week from the spike on Sunday night to the close today.

    I’m waiting for him to post this weekend, I suspect the amount that the large specs covered may trigger him to fade that an go bearish gold on the open next week.

    We’ll see..

  246. Gary

    Just had a look at the COT and they too confirm that gold is due for a rest.

    Those trying to suck every last penny out of this daily and possibly intermediate cycle are now asking to get kicked in the teeth again just like we did in May.

  254. William Wallace

    Gary,

    Is it possible you can link me to that on their website so I can take a look at it, if thats not too much to ask…right now I cant open the reports through your site because I dont have excel or anything installed yet on this computer (new computer)?

  255. Gary

    I don’t think the website is even active anymore. I have the formula programed into the COT spreadsheets though.

    I’ll update them later this evening.

  256. Cory

    I sold completely out of my AGQ today at 214 for a 12% gain on it. It’s tough giving up on the parabola idea for gold, and I’m dying for some Old Turkey again, but there is a lot of risk and choppiness right now. My silver miners are still up, and I feel crazy but I’m holding on to them because I think NEM and AEM are dragging everyone down and we will have a dead cat bounce/backtest/relief rally that I will sell into on the debt ceiling news. That’s where I’m at, not really comfortable shorting right now either. Old Turkey cash pretty soon.

  258. DG

    I think the whole discussion is slightly odd. Who cares whether gold goes parabolic or not. If I make 20% because it rallies, the profits are not marked “parabola-made” or “non-parabola-made.” If gold can rally in the face of a rising dollar, but can’t go parabolic, I just don’t care. It just rallied $150 and the dollar hasn’t done anything. It can certainly do that again. From 7/1-7/11 gold rallied $100/ounce and the dollar rallied 2%. A short time-frame, to bee sure, but $100/ounce is pretty good considering $1800 is only twice that distance away. The $100 was not a parabolic rise either.

    Different subject: I had thought the COT reports are useless at tops. Do i have that wrong?

  259. aklaunch

    Last time the debt ceiling was raised Silver went through 40 and did not blink. Here we are again at 40. The problem is the markets a crashing. Last time in April they where in the middle of a rally if my memory serves me right? I took a very small put option trade on GLD first thing this morning. My best guess is silver will rally a bit more Monday morning and maybe until Tuesday while gold trades sideways to down. If that is the case i will buy some SLV puts. If not i will sell my GLD puts.

    This weekend report should be good. Glad to hear everbody’s input today. I have been in cash for a long time and missed golds last run. It has been the learning experiance of a life time to just sit, watch and read with no emotion or opinion.

  260. Cory

    It’s so frustrating because I look at my SIL/AG/GPL/SVM etc and they look like perfect daily cycle retraces and are gainers at this point despite being based on a metal in a broken parabola. My NUGT is down 1% and most of the GDX big caps are puking all over themselves and look terrible while gold is at all time highs. Go figure.

  262. ...at ease

    DG, I am with you, don’t care what you call it, if you can make money on it! It was a nice unexpected run up with GLD. Now will have to see what next week brings and hopefully we can get back to expectations for planning purposes.

  263. Gary

    DG,
    The COT report tonight is just confirming sentiment, miner divergence, regression to the mean and daily cycle top due.

    By itself the COT report is meaningless for calling tops.

  264. Gary

    The real question is whether gold is just putting in a daily cycle top or an intermediate degree top.

    If gold is just putting in a daily cycle top and is going much much higher, then this is the opportunity for the mining stocks to break out the consolidation and make huge gains.

    If that’s the case, then why in the hell are they closing below their 200 day moving average? They should be following gold and even diverging from gold on the upside as gold corrects. They are doing the opposite.

  265. Clarkatroid

    gary is it possible that we are witnessing a relationship change between gold price and the miners.

    My instinct is suggesting there might be a disconnect developing as more people start favouring physical possession of the stuff, but avoid buying equity related investments.

    At the moment its hard for me to envisage a scenario where the gold price continues to steadily rise, the stock market bear bites hard, but miners head north

  266. Bill

    Cycles magic aside, something else might be happening here. In the past, the relationships between $GOLD and $USD was reliable, as was $GOLD and $HUI.

    But that’s all in the context of when things were normal.

    Maybe now folks are done w/the markets, and are buying physical gold, and that’s why it’s going up, nothing more.

    Fact is, gold is going up. Longs should just put in stops.

    No one can predict the future. Maybe gold will fall because the $HUI did – fyi on charts I’m now seeing reason why the $HUI would rally next week.

  267. Gary

    Folks we made this mistake in May when the and miners tried to warn us that gold was getting too stretched above the mean.

    The miners are again screaming at the top of their lungs that gold is too stretched above the mean. It’s also in the timing band for a cycle top. And sentiment has reached bullish extremes.

    Quite simply this is going to boil down to what happens in the dollar index. If the dollar puts in a low next week and that low gets violated, then yes we are going to have our parabolic rally and yes we are on week three of a new intermediate cycle.

    If on the other hand Doc is right and the dollar is ready to put in a shortened intermediate cycle then we are going to see another period of deflation. In 2010 the brief whiff of deflation took gold down $150.

    If the dollar rallies hard next week out of that bottom then gold is going to suffer a regression to the mean profit-taking event into an intermediate degree bottom, stocks are going to get hit hard, and the miners are going to get the crap kicked out of them.

    Honestly I have no idea which way the dollar is going to go. When I am uncertain of direction I’ve always found the best course is to move to the sidelines and protect my capital.

    Losing money because one is too stubborn to change their mind is simply unacceptable.

  268. Bill

    So Gary, good points all. Probably things will unfold as you say. But I still think it’s a good idea to be open to other ideas, in case they pan out. The divergence between GLD and GDX could play out w/GDX rising. History says no, but it’s possible.

    At some point, all these fiat currenncies are going to be twirling around one another down the toilet, and the only way out of the Matrix is to swallow the red pill, and WAKE UP, and see that man’s design of money was that dollars and euro’s and yen are just IOU’s that represent gold in the bank – and if gold’s not in the bank – then pitch the paper and buy gold. If I had 2 billion, I’d have NO PROBLEM buying 1 billion in gold bullion here/now. How long before the billionnaires wake up and see the matrix? Can’t be long. We’re near the end, folks. Debt up to our eyeballs, Europe and the US in freefall. We have to reboot.

  269. Bill

    Sorry for the sad story – I just finished heavy squats, and after downing a couple of eggs, I’m bursting w/testosterone. Will chill out now. 😉

  270. Gary

    Don’t get me wrong I will have no trouble whatsoever jumping right back on the gold bandwagon if conditions call for it. Just like I had no trouble jumping off the bandwagon when the warning bells started to ring.

  272. Bill

    Gary, what would you need to see for that to happen?

    And, will you be running another special subscription soon, as I’m one of the guys still on the fence as to whether cycles work or not. When I subscribed earlier, sometimes I could see them and sometimes not. Further, I still wonder if cycles work w/quant computers churning all day long – meaning, it’s not trader sentiment that turns the market now – 80% of all trades are done by computers, I read.

    I do see your overall TA/fundamental analysis are great though, so I hang out and learn.

  273. Russell

    Gary,
    It’s great to be a part of your service and blog. No one will be able to say that they were not warned about your fear of a HUGE PM decline. I don’t like to hear that we need to go to the sidelines, but I know I will have another chance at this PM bull later. I follow your advise, but am especially convinced when you and Doc send out the same warning.

  274. Bill

    aklaunch, only since 1970 was gold not considered money. How old are you? Did you know that quarters and dimes used to be made out of silver? I remember seeing the 1st dime change from silver to silver and alloy mix – what a shock – and seeing the US $1 bill writing change from “redeemable in gold” to whatever it says now. For 2000 yrs, mankind all over the planet have used gold (the rock) as money. Same for silver. The last 40 are an arberration.

    If debt was under control, I wouldn’t care if we used gold or paper as money. But people’s nature is to print money, so w/out the discipline of tying it to something (like gold), we overspend, and overprint, and thus devalue. You know the story. It’s all just human nature. Just like we eat too much and get fat. In times of plenty, we indulge.

  275. Gary

    Bill,
    I think what launch was implying is that gold will never be money in the sense that we are never going to mint gold and silver coins, carry them around in our pocket, and use them to make purchases.

    I seriously doubt any country will ever lock themselves into a gold standard again.

    In the sense that gold is a store of value, and if you are using that as your definition of money, then yes gold is money as it is clearly a store of value.

    We will just never be able to take it into Walmart and exchange it for groceries.

  276. Bill

    Hi Gary. Oh, thanks for explaining. Sorry for my misunderstanding aklaunch.

    While there most likely won’t be physical gold and siver coins anymore, there could be digital gold money someday. I don’t know. If folks would just live withing their means, using paper works.

    One last babble if I may. 😉 I play chess, and though I suck at it, I win enough to realize that deception is a key tactic to win. If I were at GS and programming a comp computer, I would certainly have a deception program as part of my pallate of stuff to run each day. I am a bit too parenoid I admit, but it wouldn’t surprise me at all if GS was pulling $HUI down via comp computers, just so that folks start to sell their gold. It’s far flung, but if you play chess like me, the way to win is to attack, defend, and attack again. GS et al are out to win, so I am on guard.

    Have a nice weekend everyone.

  279. 86d4life

    Bill,
    Just because your paranoid, doesn`t mean your wrong. Those savages get by with this stuff because most people are too complacent.

  280. Bill

    Hi WW – thanks for the tip – it’s amazing how that stuff works – I was on whey for a few months, and wow did my bench and squat go up – problem is, so did the weight (in muscle) – I’m trying to find the right balance between strength and weight, because in addition to doing amateur powerlifting, I cycle as well, a sport that I love slightly more than lifting. To get my sorry butt over those mountains I need lightweight more than muscle. Thanks though.

  281. Bill

    Hi 86 – thanks. I do think that Gary’s right – that the HUI diverging from gold is a red flag – which way it plays out I don’t know. I just know that playing “fair” in chess gets one killed. One has to done the Star Wars Darth Vador helmet to win at chess, and I’m finding the same in trading. Kill or be killed, or get out of the game.

    Gary’s right though that in the past, nearly if not every time, when the HUI went down, gold soon collapsed.

    I just have one eye on the possibility of a fakeout here though, just because the fundamentals just flat out suck. Massivee unemployment. Massive debt. A rook or even a queen sacrifice can look easy to counter, but often times that leads to checkmate.

    The more I think about this I should move 1/2 of our savings into gold bullion, and trade the rest. So now I hope for Gary’s correction in gold, so I can execute.

  282. Gary

    Bill,
    I have the same problem. Lifting made me put on about 20 pounds, which is great for lifting weights but sucks for rockclimbing.

  283. 86d4life

    Bill,
    Agreed. Wish I would have secured my physical stash sooner, but it`s already proved to be the right move. A lot of way more knowlegable people than myself say physical comes first. Good luck to you.

  284. Free gold? Yes please!

    Hello all,
    I’m usually a silent participant here on Gary’s blog, but there are two technical analysis red flags regarding $HUI that are turning VERY BEARISH, and I feel that I must share them with you before things potentially get ugly.

    1) A “Death Cross” formed on the daily chart of $HUI on 6/24/2011. This occured when the 50 day sma crossed below the 200 day sma. The last time a $HUI Death Cross took place was on 6/17/08 when $HUI was trading at around 410. By 10/27/08, just four months later, $HUI had fallen to a low of 151. NOT GOOD!

    2) On the weekly $HUI chart, there is another scary issue developing that is basically identical to the bearish setup from 4/21/08-7/21/08. What happened during that three month period in 2008 was that $HUI experienced 3 closes below the lower Bollinger Band (Standard Deviation: 1). The third time was the charm as $HUI collapsed to the aforementioned 151 level. As of right now, we have had 2 closes below the lower Bollinger Band and we are headed straight for a third close either next week or the week after. If this third close occurs, then I guarantee you won’t hear from me again for many months as I hide from the hungry gold bear.

    Food for thought so to speak…

  285. 86d4life

    How do you guys(Bill, Gary) feel about diet? I`ve got the tapes of Randy Coture when he unified the UFC heavyweight title and to watch the guy was just amazing. They were making a really big deal about the change of diet that he had. Aparently heavy towards fish and green leafy vegetables. At over 40, he was totally dominating.

  288. William Wallace

    All I eat is chicken, turkey and vegetables…drink protein shakes three times a day and have a crazy vitamin regimen (ex. for one 15000 mg Vitamin C daily) Lift weights and maintain about 180lbs of lean mass at 5 11″

  300. William Wallace

    Sleep with the windows open in Sept/Oct in your beaver quilt, when its 5 degrees over there. If I were you I would keep those windows closed at night, the beavers are going to smell thier dead family members wrapped around you start nibbling on ya parts bro.

  305. Bill

    I eat huge salads, and lots of chicken and fish, and a lot of fruit (figs, grapefruit). Try grapefruits – the gorilla’s eat ’em.

    Oh, and when I’m visiting in the US, I eat steak 3X/day. Can’t get enough beef. I swear I’m growing a 3rd .

  308. 86d4life

    Bill,
    I was down in tx this past winter for a month and a half and found one of the best citrus stands around and ate grapefruit almost everyday. Really felt good. Ate a Lot of fish too, alot twice a day. Really made a difference.

  310. Bill

    86, I eat a huge slab of tuna every day, right after lifting or riding. Makes a huge diff in recovery. Grapefruits also help the mind – mine’s mostly gone, but after eating I play better chess.

  311. 86d4life

    Wouldn`t you expect with the clobbering the miners have been getting, it would be a lot lower than that? I mean I`m wondering(I didn`t do the background yet)if that means we have quite a ways to go. Could be significant. I`m out, we`ll catch you tomorrow(later today).

  313. 86d4life

    Bill,
    is the mercury in the tuna throwing off your chess game? LOL. I suppose the tuna is a big deal for the iron and protein?

  315. Bill

    86, true about lead/mercury. Tuna are smaller nowadays, so are caught before they live too long, but yes it’s a concern. But I’m over the hill at 52 now, and for some reason my body responds to fish. I also eat a lot of salmon.

  318. Bill

    86, me too. I’m also eating huge salads now, every day. I used to hate eating salads, but now I love them. I am definitely faster on the bike now the past few years, focusing on fish and salads. Part of that is my position though, as the more flexible I get, the lower I can pedal and hold it.

    One of Lance Armstrong’s sports/nutrition doctors was Dr. Gabe Mirkin. He’s Harvard, and then worked at Johns Hopkins. He’s a former worldclass marathon runner, turned cyclist (for his knees). He has great stuff on all health issues – I highly recommend a peek.

    http://www.drmirkin.com/

    I learned about salads from him and made the plunge. I also learned a lot about strength training, endurance training, etc.

  319. Wav_ridah

    Everyone at work knows I’m the PM investor. I make it known I’m the PM investor. By doing so it helped me create my personal sentiment gauge. So when someone new gets bullish I’m usually the first to hear about it. There are many new weak long here now. I’m talking silver, gold bullion buying talking about it in the OR weak longs. A shakeout is imminent.

  324. High 5

    Gary

    Thoughtful report and appreciated the preamble. You’re the best even if you don’t know that gold is money ; )

  325. fubsy_cooter

    Excellent report this morning Gary. I think one if the most valuable tactics in investing is getting small when one lacks an edge, and large when one has an edge. Clearly there are several variables that have clouded the landscape.

    I have a feeling the response to the debt ceiling will be muted and the dollar will weaken after a short rally which will allow hold to continue higher. But the divergence in the miners is confounding. It is possible that they’re just working off an overbought condition in prep for a brief correction in gold, although the break if the 200 dma is a bit extreme.

    I’m in agreement that getting small now and waiting for the dollar’s reaction to the debt agreement makes sense.

    f

  326. Gary

    High,
    We are just using different definitions of the word money.

    When I say money I mean something I carry around in my wallet to purchase things. Gold will never serve that function again in my opinion. There just isn’t enough of it in the world, and it’s not easily divisible to where we could use gold and silver coins as currency.

    Your definition of money, and a perfectly valid one, is as a store of value. In that sense gold is certainly money. It is clearly a store of value.

    The only difference between us how we define the word money.

    In order to avoid this misunderstanding from now on I will use the word currency instead of money.

    Gold will never be used as currency again.

  327. Felix

    Why is the debt deal anything but bearish for the dollar and bullish for gold? Doesn’t it indicate more bail-outs and more printing?

  328. Gary

    Felix,
    The debt ceiling is meaningless. If the dollar rallies it will be because the global economy is rolling over into recession. Recessions, especially after a financial crisis, are massively deflationary.

    In a deflation the value of currency rises.

  330. Rob L.

    GAry,

    Would the CRB finding its 2 1/2 year low support the case for the dollar breaking higher from here?

    As I do not have a subscription to sentimenttrader.com, what is the current sentiment of silver?

  331. Gary

    Sentiment on silver has rocketed back to the top of its range. And yes the CRB should put in its three-year cycle low during the next deflationary period.

  332. Unknown

    Great report Gary,

    I am so fortunate to have found someone who is willing to put out a site like this, and also understand you can be wrong half the time and still make a lot of money.

    If you are ever in Virginia Beach, burritos are on me.

  333. Gold Lion

    If you look at the Dollar on a weekly chart it looks to be that it’ll continue to roll over. And politically, a lower dollar is what the government and the Fed wants. I would still rather own gold, silver and the metals in the ground than sell them hand have to scramble to buy them back in a few day. Call me a gold perma bull but I think trading in and out is a waste of energy.

  334. High 5

    Gary

    I understand you now. Howe er, most of the purchases I make, guessing over 95 percent, do not involve paper currency.

    Take your brokerage account for instance. You are probably transacting several million dollars a year and not one piece of paper trades hands.

    Very little cash is used nowadays and very little actually exists in the world as a percentage of money existing. FRN’s are actually debt instruments. They are IOU nothings. They represent value owed while gold is value paid. Gold does not rely on another’s obligation to pay value, it is value.

    Just because USD didn’t collapse during the last gold bull doesn’t mean they won’t this go around. Gold is the only real competition the USD has right now.

  335. Russell

    Gary,
    From what I read a downgrade in US credit rating is almost guaranteed. This along with a QE response to the recent revision of last quarters GDP from 1.9 to 0.4. The Fed is in Jackson Hole.
    Also clarify for me what would happen if the Euro implodes. This would send the dollar higher, but would not those Euro holders seek Gold as wealth preservation. This could be an argument for a rally in gold, if not parabolic, with arising US dollar.

  336. Gary

    The Euro isn’t going to implode anytime soon, anymore than the dollar is going to hyperinflate in the near future.

  338. Russell

    I agree with the wait and see stance, but there does seem to be a lot of factors that could force the dollar into a break of the May low.
    US credit downgrade, Fed knows QE is it’s only option left. You stated Bernanke was going to fight deflation with whatever he has left. How long will equities go down with unemployment going up, GDP being revised down, before he begins printing again.

  339. Robert Thrane

    Gary,

    So let’s say that gold does do an intermediate correction in the very near term, do you plan on buying at when it nears the 200 DMA even if your expectation is a sideways consolidation for sometime?

    Do you plan on playing the broken silver parabola to the downside?

    Do you plan on playing the potential 4 year cycle low in commodities and equities?

    Thanks.

  340. Gary

    One can try and second-guess the dollar all they want. I’ve shown 100 examples of why technical analysis fails at major turning points.

    The simple fact is that at bottoms the market is going to look like it’s going down and at tops the market is going to look like it’s going up.

    At this point the direction of the dollar is probably dependent on the fundamentals. Depending on how close the economy is to diving down into the next recession will determine whether the dollar can continue down or whether the forces of deflation takeover and the dollar heads higher.

    Technicals, at this point, are irrelevant.

  341. Gary

    Robert,
    In answer to your questions.

    “do you plan on buying at when it nears the 200 DMA even if your expectation is a sideways consolidation for sometime?”

    I will buy when sentiment gets corrected and when I think the daily in intermediate bottom has formed. That could be above or below the 200 day moving average.

    “Do you plan on playing the broken silver parabola to the downside?”

    Not in the model portfolio I won’t.

    “Do you plan on playing the potential 4 year cycle low in commodities and equities?”

    Absolutely! A four year cycle low is one of the best buying opportunities we ever get.

  342. n1tro

    Take this for what it’s worth. All this talk if gold correcting in its IT or daily had me wanting to test the waters on the “manic” sentiment usually associated with parabolic moves in real time. So I listed on fleabay 25oz of silver and 20g of gold for exactly the same price. The silver was snatched up within the hour while the gold is still active. Keep in mind the silver was priced at a $6 premium to spot while the gold is at spot. Food for thought.

  343. marksomething

    i occasionally look and reread previous threads…

    Gary, you mentioned you had a publisher(?). are you an author? have you published beyond the prem site and this blog.

    Book in the works? I would be glad to buy an advanced copy if so! Would love to teach my kid(s) this, system if you will.

  344. Gary

    N,
    I don’t think anybody is under the delusion that gold is even vaguely close to a bubble top.

    That won’t occur until half the neighbors on your block are buying gold.

    However in order to prevent that from happening in the next six months gold must go through periodic corrective phases. That almost always occurs as a regression to the mean event when gold starts to get a little too stretched above the 200 day moving average.

  345. Gary

    Mark,
    I have no ambition at all to write a book. The newsletter already takes up vastly more of my time than I had originally planned. I’m supposed to be retired.

    My publisher, John Townsend of the TSI trader, just publishes my articles in places like Minyanville, the Daily Reckoning, Gold-Eagle, etc.

  346. Blindweb

    90% physical
    8.5% fall ugl OTMs
    1.5% fall gdx, and gdxj OTMS

    Safe haven buyers will drive the gold price higher, and then the speculators caught in confusion, as their models based on times of stability fail, will pile in driving the miners higher. (Maybe on the miners) Several ‘never happens’ will happen. The problem with models, like say a Sentiment Indicator, is that from the first moment you start using it, every moment after that moment it diverges more and more from reality. Reality changes, the model stays the same. Kinda like how the abstract model of physical wealth the dollar has diverged from the reality of the physical wealth that underlies it.

    You people need to go check your models against reality. I know safe haven investors don’t exist…millions of Alex Jones listeners, peak oil people, WWIII people, Japanese people, 100s of millions who grew up under totalitarian regimes.

    I would say gold bull chart data from 2001-2008 is irrelevant. We’re talking about the default of Western Civ, and the end of US and dollar hegemony. You all think this is going to play out all nice and neat. Saying this never happens or that never happens when you’re using only 10 years of data, 7 of which is before 2008, does not seem very sound to me.

    And oh, grass fed beef, wild fish, veggies. Make sure to eat all the fat. The low fat diet has been thoroughly destroyed over the last decade. Chicken is low quality meat, especially if its being fed GMO corn. If you’re going to eat birds eat wild game. Farm raised animals are fed massive amounts of corn. Corn overload, Omega 6 overload.

  348. Gary

    There is no such thing as a safe haven buyer. I can pretty much guarantee you that not one single person in the world buys gold because they think it’s safe.

    People buy gold because it is rising and they think they will be able to sell it for a higher price.

    Answer this question. During the financial collapse of 08 was gold a safe haven? I guess only if you consider a 30% decline safe.

    If these sovereign defaults start a domino effect it will be massively deflationary. In a deflationary environment the value of currency rises.

    That will mean the price of your gold in dollars will go down. However the purchasing power of your gold will probably remain the same or increase because all other assets will tend to devalue quicker.

    A classic example of this is the gold:oil ratio during the market collapse. At the start of the crash 1 ounce of gold would only buy six barrels of oil. At the bottom of the crash 1 ounce of gold would buy 28 barrels of oil.

    In nominal terms gold took a 30% beating. But in real purchasing power the value of gold increased dramatically.

  349. n1tro

    Gary,

    I’m just surprised of silver’s strong demand with the $ premium on it. Doesn’t seem characteristic of a broken parabola.

  350. Gary

    By the way the reason sentiment works is that it tells us when we are in jeopardy of running out of buyers or sellers. This isn’t a technical tool that the market can discount.

    Once an asset has gone up long enough and far enough, everyone that is going to buy has bought and there’s no one left to push the asset higher.

    Sentiment extremes just tell you when you are getting close to that exhaustion point. Gold is there now.

  351. High 5

    Blindweb

    I agree, even with the diet part. Grains are poison. I still am not sure of the best storage options on gold. Can you give me some pointers?

  352. Ivan G

    The dollar here resembles the stock market in July 2010…Just when everyone thought it will collapse it turned back. With vengeance 🙂

  353. Gary

    N,
    That’s a sign that traders or investors are still too bullish. Stubborn and persistent bullishness during a down trending market is what causes severe corrections.

    It means that the asset has to go much lower before these people will finally puke up their positions.

  354. Blindweb

    Everyone knows Greece will default. Everyone knows the debt ceiling will be raised.

    If everyone knows that stuff, why do they not know that gold is going to $5000? Why do they not know that we’ve been in a depression this whole time, and the green shoots were an illusion? That the banks are insolvent, and housing will continue to fall without government intervention.

    This will be my last post.

  355. Ivan G

    Blindweb,

    not everyone. Far far from everyone. I tell you a box of orange juice will cost you 37$ eventually. Have you stocked your basement with cans and food.

  356. Blindweb

    All indicators rest on certain assumptions. Your sentiment indicator rests on a certain group of gold buyers. Increasingly there are buyers outside that system. Under extreme circumstances it will be pushed further and further towards its upper bound

    You need to explore the internet more Gary. I don’t think you’ve ever listened to Alex Jones. He has millions of followers who think martial law is coming and the government is going to confiscate everything they have. They are buying gold and ammo and burying it. I suspect people who lived through WWII and the communist takeovers are doing the same.

  357. ...at ease

    Blindweb,
    Not everyone thinks what you think. Some people are still in the stock market long and holding old turkey like always. Despite what you tell them, they just think others that worry about the state of economies are like the little chicken in the book, spouting the sky is falling.

  358. Blindweb

    I have a 1000sq ft garden. Next step is to learn to can.

    If you believe the government is going to confiscate everything you have $1600 and $40 is very cheap for piece of mind.

  359. Blindweb

    I was just pointing out that Gary always says everyone knows this or that. I have no doubt that Gary’s models made him rich. I just don’t think he’s taken the time to check to see if the underlying assumptions behind his system have changed. All systems and models have underlying assumptions. All scientific experiments have underlying assumptions

  360. Elaine

    “I’m supposed to be retired.” LOL it must be that extravagant life style of Toby’s that’s keeping you working.

    😉

  361. ...at ease

    Elaine, ROFLOL, that was a funny one.
    I think Gary enjoys working, as it’s play for him. I don’t know a lot of people who go out rock climbing and lifting in retirement. Following the market and trading/investing helps to keep his mind sharp (Gary’s childs play). Just happy he likes to come out and play everyday. 🙂

  362. marksomething

    Blind,

    Alex jones does exactly what the Gov’t(s) do, uses fear (of whatever) to amass a following. Fear keeps people at home in front of the tv, in front of the computer (radio when it was new).

    Glen beck, Bitch Oreilly (‘scuse me, Bill) whole damn network. Fear keeps the masses subdued. Love Noam Chomsky for his observations in the regard.

  363. Elaine

    at ease,

    Yes, I agree. And frankly, although I am far away from retirement, I couldn’t conceive of living a typical retirement. The world is simply too fascinating to sit around doing nothing.

  365. High 5

    You know what happens to old turkeys?

    Every day reinforces their belief that things will be fine indefinitely. Regular food and shelter proves the farmer loves them.

    Then comes one day like all the rest, except their whole world is turned upside down. A black swan event.

  366. ...at ease

    Elaine,
    I agree, life is too short to just vegetate and the internet has opened up a whole new world to us, that our parents and grandparents never envisioned was possible for retirement.

  367. flaunt

    Gary, I appreciated the weekend report and your candor. It’s actually the kind of analysis I like — Perma anything is much less informative.

    You described the potential scenarios according to cycles, but it seems to me another way of saying it is that it depends on how this debt ceiling debate goes. If the politicians don’t come to an agreement then gold is going to continue going up, and the dollar down. If they come to an agreement then the reverse trend will get underway. So what we’re really saying is that we don’t know what the hell those jokers are going to do so let’s just avoid it altogether. I may be oversimplifying things, but does that sound about right?

    Maybe what we’re seeing with the miners is their attempt to discount a resolution to the debt ceiling debacle.

  368. ...at ease

    High 5,
    There are a lot of folks, who don’t want change, or variety in their routines, so don’t plan for change. They like life, just like it is, simple, no expectations other than their routines.

  369. Ivan G

    Speaking of SP500 lows in 2010. Is this making sense? Gold made low on 1155 late July 2010 and high in December ~ 1430. That’s 275. Then left consolidated end of January at 1350. The next 275 up bring us where we are…now.

  371. High 5

    at ease

    Old turkeys don’t like change either. Probably all but the insane don’t want their house to burn down but buy insurance just in case it does, especially if insurance is inexpensive.

  373. ND

    Gary,

    a things I’ve been wondering about. After this secular bull market in gold, which will probably last until 2016-2018, what will happen? (after the gold bubble then bursts) Is the dollar gonna rise again or are we gonna se a whole new economy?

    Please explain briefly.

  374. Le Fou

    Gary,

    This sentence from the weekend report made me laugh:

    “My only goal is to make you, and more importantly me, money.”

    This is why I trust you. You give us a window on your own thoughts and plans for your own investments. You are not shameless, refusing to admit your mistakes. When you’re wrong, you promptly admit it, and make another plan. You always state the basis for what you’re doing, allowing us to evaluate that and decide for ourselves whether or not to follow your advice. I admit that I don’t always follow your advice, but that’s on me. HOWEVER, when I do follow your advice, THAT’S ALSO ON ME.

    Nobody’s forcing me to do anything here. I make all of my investment decisions, whether or not I follow your advice. I have never found better advice, and I’ve made a lot of money on it this year. In fact, most of my big losses have come from NOT following your advice. The one exception is that I evaluated what other posters were saying right before the silver fiasco, and I made the switch out of silver before you did. My new gold position got hit, just not as badly.

    Right now, I’m out. I actually got completely out before you did, but I’m looking for an opportunity to buy some SLV puts. I’d love to hear your thoughts about that.

    Looking for an opportunity,
    Le Fou

  375. William Wallace

    Blindweb,

    I eat mostly organic, not that it really even matters though because like me you also will die one day, and eating wild game gives me no guarantee that it will make me live any longer than someone who eats purdue chickens all day long!

    A 1000sq ft. garden and ship loads of canned food is not going to save you from death, and to think you will live longer because of it is pure presumption. Reminds me of a story I once heard, told to me by what I believe without a doubt to be one of the smartest men to walk the planet… The main character of the story died young, while living his short life in preparation for a presumably long one.

    No fearmongering to the extreme, no survivalist mentality to the extreme, just balanced realism…be prepared for death, not to live forever.

  376. ...at ease

    WW, well said.
    All we can do is live a good life and help others around us who allows us to as best we can. That’s why we like Gary. He provides simple solutions in a complicated world. Doesn’t try to make things harder than they have to be. Leave that to our elected officials out for themselves to keep trying to make life harder for the rest of us, so they can enjoy easy life.

  379. High 5

    “There is no such thing as a safe haven buyer. I can pretty much guarantee you that not one single person in the world buys gold because they think it’s safe. People buy gold because it is rising and they think they will be able to sell it for a higher price.”

    You must think everyone sees the world as you do concerning gold. The very richest families and the very poorest third worlders think very differently from westerners concerning gold. I know it’s a difficult concept but they actually value something that is hard to get (gold) over something that is essentially ubiquitous (paper and electronic digits).

    “Answer this question. During the financial collapse of 08 was gold a safe haven? I guess only if you consider a 30% decline safe.”

    You value something real (gold) based on something unreal (USD). Gold did not go down in value, USD went up in value (temporarily).

    “If these sovereign defaults start a domino effect it will be massively deflationary. In a deflationary environment the value of currency rises.”

    When has a sovereign debt crisis, in modern history, ever been deflationary? Sovereigns just create currencies from thin air when needed.

    “That will mean the price of your gold in dollars will go down.”

    Temporarily maybe but in the long term I would have more fear of dollars becoming worth less than of gold becoming worth less. Look at Weimar Republic and Zimbabwe for two examples of sovereign debt crisis.

    Also, if hyperinflation happens you won’t have time to buy gold. It will not be for sale at any price unless you can find a fool that has gold. This is unlikely as most fools will trust their cherished paper and electronic digits (monopoly money).

  380. William Wallace

    Gary,

    This weekend report was one of a kind…if you didn’t say what you said, I was going to say it for you this weekend, after what I had witnessed this week on the blog. Thank you…because I really dont have the time this weekend to write that much…lol

    I want to give one example of how on point your thinking really is pertaining to market change…Your calling on the gold July bottom. Im sure many great traders and technicians were not expecting that to be the bottom.

    Let me say one thing though about you, your personality and how and what you say, and how the way you say it causes people to react negatively towards you sometimes (not that it matters in all reality). You need to always be who you were in this weekend report, and not the guru who makes people feel and think that they “found someone who knew what he was talking about”. A person will only know that a “guru” knows what he is talking about after they learn that MARKETS CHANGE! Until then any newsletter guru who presents themself as someone who knows exactly what is going to happen, which I would say your confidence and experience tends to project at times, will cause certain people (unlearned in market change reality) to compel you to explain yourself like you did in this weekend report.

  382. 86d4life

    Here`s the thing; It seems in this day in age, if one is prepared for the future, one must be a lunatic. Get real! The era that lived through the last depression knew what it was to be without and lived accordingly, but today, common sentiment in western society is to just blow the wad with reckless abandon so we have nothing if things go to shit. Unbelievable how short memories truly are. Does it matter if your eating orgasmic chickens or if you have something to eat. Warehouses of gold, ammo and food mean nothing if it can`t be acessed. Somebody just mentioned balance; why not prepared for the worst and if we get better, Great. No sweat.

  385. Cool_Loser

    Gary,
    Is it fair to say that if the dollar rallies and it’s clear that May was indeed it’s 3-3.5 year low, would gold more or less adhere to the same daily and intermediate cycles and continue to rise just without a parabolic top?

  386. High 5

    Viewpoints continuously change because reality has no angles.

    If a “poor” American thinks they are disadvantaged a one day trip to India or Somalia will radically alter their viewpoint.

    Life is a journey and the trail offers many views along the way.

  387. TheBookGuy

    High5 said,
    “Viewpoints continuously change because reality has no angles.

    If a “poor” American thinks they are disadvantaged a one day trip to India or Somalia will radically alter their viewpoint.

    Life is a journey and the trail offers many views along the way.”

    Well said my friend. I’ve been to several third world countries and I am blessed!

  388. Le Fou

    Ivan G,

    “Why buy puts?”

    I’m out and waiting to see if Gold will put in an IT low. A small put position (5%) keeps me focused. Lately, they’ve just been day trades as I’m reluctant to hold overnight/over the weekend.

    Best,
    Le Fou

  389. High 5

    BG

    I feel blessed too but mainly for my good health, because without health all the wealth of Solomon is worthless.

    I would rather live in Somalia healthy and poor than in Shangri La with disease and riches.

  391. High 5

    Enough of this philosophizing. I see Gary doesn’t want to debate gold and I have stunning weather for enjoying the outdoors.

  395. Bill

    Gary, about sentiment, I have 2 quesetions please.

    1st is, is sentiment more important than cycles, in your book? Or is it vice-versa? A few months back you explained this, but sorry I forgot.

    2nd is, do you keep track of sentiment on a chart of gold somewheres, the same way you keep track of cycles on gold and the S&P?

    Thanks.

  398. Gary

    Flaunt,
    The debt ceiling has nothing at all to do with the price of gold. No one is buying gold because of the political show going on in Washington. People are buying gold for their same reasons that people buy any asset, they think it is likely to rise.

    I think this all comes down to what happens in the dollar index. If we are already moving down into the next recession then deflation is going to take hold and the dollar is going to rally sharply. In that scenario gold is going to correct and then consolidate for a lengthy period.

    If the economy hasn’t quite driven off the cliff yet then it’s possible that the dollar still has one more move down into a three year cycle low later this fall. In that scenario we should get our parabolic rally.

    I just really have no idea at this time which one it will be.

  399. Gary

    ND,
    The secular bull market in gold and the secular bear market in stocks will end like they always do with one asset rising to absurd overvaluation while the other asset drops to ridiculous levels of undervaluation.

    As I have said many times in the past liquidity will always eventually find its way into undervalued assets.

    At the top of the secular bull market in gold money will start to leak into an extremely undervalued stock market. At that point the large macro cycles will reverse again.

  400. Bill

    Gary, I can’t tell what the dollar is doing either; but the Euro looks to be bull flagging since May 1. Is this how it looks to you? If so, this could be your 3 yr cycle low in the dollar this fall. Check out $XEU.

  402. Gary

    Le Fou,
    Shorting a bull market is not going to be part of the model portfolio. However I am considering a strategy for the aggressive portfolio. If I’m not mistaken you are a subscriber.

  403. Gary

    High5,
    The last time we had a sovereign debt crisis was in the 30s. I’m pretty sure that was deflationary.

    But let me be clear, because all money is fiat nowadays the deflation will be temporary.

    We aren’t just going to one day wake up and have hyperinflation. There will be plenty of warning signs if one is willing to pay attention.

    As an example the stock market has been in trouble since May it’s clearly telling anyone willing to listen that the global economy is rolling over again. One has had plenty of time to prepare. As a matter of fact I was warning people in April to get their money out of the stock market.

    These things move in large cycles. The forces that were unleashed when the tech, housing, and credit bubble burst are massively deflationary. Central banks are responding by printing unimaginable amounts of paper currency. That is highly inflationary.

    The result is going to be multi-decade roller coaster ride of inflationary and deflationary periods.

  404. Bruce

    Gary,

    throw us poor subscribers a bone for what your contemplating for your next trade in the aggressive portfolio; so we can see if we want to pony up the big shrinking $$$$$$! .. please

  405. Gary

    Cool,
    The last chart in the weekend report pretty much sums up my view of what will happen if the dollar rallies.

    Yes we will still have daily and intermediate cycles, but they will be very choppy. It’s pretty tough to make money in a choppy market. Who

  407. Gary

    William,
    The confidence thing that was brought up after the silver crash also. It was suggested that I should probably temper my comments.

    But here’s the thing if at an intermediate bottom I sound like I’m indecisive and not sure no one is going to buy. If during a strongly trending market I am constantly wishy-washy about positions, then no one will hold.

    If you want someone who is constantly hedging their bets there are plenty of analysts out there that fit that mold.

    I am not going to try and fit into someone else’s image of what I should be, especially after the fact. I am just going to be me.

    If I’m confident in a bottom or a move I’m going to say so, and I’m going to do it without hedging my bets. If the market tells me I’m wrong then I will reverse course on a dime and not think twice about it.

  408. Gary

    Bill,
    I tend to weight sentiment and cycles pretty much evenly.

    I did include a chart in the weekend report of the current sentiment in gold.

  409. High 5

    Gary

    This chart indicates that FDR was able to eliminate deflation immediately upon taking office and throwing out the gold standard (1933).

    http://visualizingeconomics.com/2009/08/02/prices-inflation-and-deflation-great-depression-vs-great-recession/

    It looks to me like hyper inflation is a panic event so I will try to have enough physical gold stored safely overseas just in case it occurs.

    A global currency collapse would be uncharted territory and I would hate to chance ending up with wheel barrows full of worthless fiat monopoly money.

  410. Éamonn

    Q1 GDP was 0.4%, how come estimated Q2 is 1.3%? Seems to me things got worse in Q2, not better. Anyone any thoughts? Thanks…

  411. ND

    Thanks for the answer Gary,

    so the dollar will still be alive and act as a “world currency” like today, will people regain trust in it and once again go back to “paper” ?

  412. Gary

    Yes FDR halted deflation when he effectively took us off the gold standard. It didn’t fix the economy and it didn’t result in hyperinflation though.

    A hyperinflation is a political event. If a country allows a debt bubble to grow past the point of no return then there comes a time where a decision has to be made to either default honestly and renege on debts or de facto default by inflating the money supply.

    If the debt bubble reached critical mass then the printing efforts become so massive that the population loses all confidence in the currency resulting in a hyperinflation.

    Obviously we aren’t at that stage yet, but we are certainly heading down that path.

    The million-dollar question is whether or not we will get somebody in leadership that has the guts to make the hard but right decisions and avoid the hyperinflationary outcome.

  414. Gary

    ND,
    Every reserve currency in history has eventually been destroyed and replaced. The dollar is now in that process.

    This started as a tech bubble, morphed into a real estate and credit bubble, which resulted in a financial crisis, that is now morphing into a sovereign debt crisis, which will ultimately end as a massive currency crisis.

  415. William Wallace

    Gary,

    That “you just being yourself” was in this weekend report…I dont see that Gary in all the reports though is what I was basically trying to say. If you had the same tone in all the reports, I believe noboby will ever have grounds to come at you in a negative way…but then again I know you cant make everyone happy, there will always be the kooks looking to rip your heart out and feed it to you. Just my humble opinion, hope you didnt take offense to anything I said, but if you did, then so be it, hopefully you can take it up with me in September…lol!

    I want to subscribe to the aggressive portfolio…please email me with the details.

    [email protected]

  416. ND

    Gary,

    only thing i’ve got a problem grasping is, why would we end there.. usually politicians are blamed and we say history repeats itself, but wont guys like Ron Paul (correct me if i’m wrong) get more attention before we end up there? are we always going to repeat the same mistakes?

  417. Gary

    Unfortunately because we are human we do make the same mistakes over and over. We generally have a depression about every 80 years.

    By the way the politicians won’t be blamed. Invariably what happens is that when the politicians figure out that the problem can’t be solved they use the media to blame the problem on someone else. Then we usually have a major global conflict.

  420. High 5

    “Yes FDR halted deflation when he effectively took us off the gold standard. It didn’t fix the economy and it didn’t result in hyperinflation though.”

    Good point. Since then the USD has become the reserve currency of the world. I wouldn’t expect hyper inflation after just coming off the gold standard, but after 80 years of inflating the currency?

    You see, the currency has already been created. It just hasn’t been printed yet. The printing will come if people lose trust in the financial institutions that handle electronic transactions. People will want their physical cash rather than electronic proof of digital money in failing institutions. The worlds USD reserves will come flooding back into the US like a tsunami.

    “A hyperinflation is a political event. If a country allows a debt bubble to grow past the point of no return then there comes a time where a decision has to be made to either default honestly and renege on debts or de facto default by inflating the money supply.”

    It’s a psychological event. People first want physical cash and then, as they see the value dropping precipitously, they want to unload it for real things. Hot potatoes.

    “If the debt bubble reached critical mass then the printing efforts become so massive that the population loses all confidence in the currency resulting in a hyperinflation.”

    The printing comes with a bank holiday while they try to get enough cash to the banks for the people who are in a panic.

    “The million-dollar question is whether or not we will get somebody in leadership that has the guts to make the hard but right decisions and avoid the hyperinflationary outcome.”

    What are the odds of that happening?

  421. basil

    Gary,

    the intro to your weekend report makes a neat story, but unfortunately there is a big misconception.

    The ability to change your mind in a second is not a winning proposition by itself. Neither flip flopping nor being married to trades usually is a good investment strategy. You make it sound though as if the fact that you are currently changing a lot your opinion is a great strategy. It’s not.

    Also, when people say that the market ‘tells me something’ it usually means nothing, because if you listen short term, the markets tells you all sorts of stories, and that is the proverbial ‘noise’, and if anything, it gets you confused. Confusion leads to changing positions way too often. That’s a beginner’s mistake, if you ask me.

  422. Gary

    When have I ever changed positions often?

    Do you think I’m a beginner? Most long term subscribers have made more money with me than the best hedge funds in the world. Does that sound like a beginner?

  423. basil

    Gary,

    people have made money on one trade here, that’s the PM trade. PMs are in a secular bull. People have been making money on that PM market no matter whether they followed this blog or whether they followed the perma gold bugs on Kingworldnews of Financialsense and dozens of other gold blogs and sites. So it’s a little less of you, it’s much more the PM bull, which has made people money.

    Also, I am not calling you a beginner. I said that suggesting the strategy of quickly changing your mind is in itself a great winning strategy is false, and it is more of a beginner’s strategy (vs. old turkey)

  424. Nike Boy2008

    hey guys,

    As I was driving today, there was this guy at the corner of my street (first time ever) who was waving a big “We buy gold” poster. Never ever seen this in my neighborhood before. And I never thought this would happen in my neighborhood. Wow…

    This might certainly play into the sentiment that Gary is talking about.

    First signs that public are slowly beginning to get into gold.

  425. Gary

    Basil,
    I have found that the vast majority can’t hold Old Turkey through an intermediate decline. They tend to buy at tops and sell at bottoms.

    I’m trying to do the opposite. Get people in at bottoms and sell at tops. I think there’s a good chance we may be at one of those tops.

    To say that most people have made money during this bull is absolutely false. I guarantee that the vast majority of people have made nothing or lost money during the bull. If it was easy to ride a bull market everyone would do it and everyone would get rich.

    If you prefer not to avoid intermediate corrections then by all means just ride your trade. Maybe it will even turn out to be another huge trending trade. If it is I will have no problem jumping back on again after the daily cycle low has been put in.

    If it does turn out to be an intermediate top then I will have a lot of cash available to buy at bargain prices, plus I won’t have suffered the mental drain of weathering a large draw down.

    Actually I’m not affected by a draw down but probably 90% of subscribers are. They would not be able to hold through a severe draw down and certainly wouldn’t be able to buy after taking a beating.

    I’m doing the best I can to help those people ride the bull market and avoid major draw downs as much as possible so they can stick with the bull.

    We already got kicked in the teeth in May because we tried to catch every last penny. I would prefer not to make that same mistake again.

  426. High 5

    From what research I’ve done it seems that the best indication of a possible impending hyperinflation is a tendency for businesses to begin giving discounts for cash payments.

    Once you see this you have a short window of opportunity to exit paper money before it begins a free fall in value.

    January 1919 1 oz of gold cost 170 Reichsmark.

    November 1923 1 oz of gold cost 87,000,000,000,000 Reichsmark.

    http://www.prudentinvestor.com/2010/07/was-your-grandpa-so-unlucky-to-sell.html

  429. wolf33

    Being a very old timer, when giving a presentation, I always started out that my investment style could be based on this concept:

    YOU PREDICT FOR SHOW
    BUT REACT FOR DOUGH!

    Thougt weekend report was superb!

  432. Gary

    The aggressive portfolio has more risk. If you aren’t experienced enough to know how to control risk the aggressive portfolio will make sure you lose everything.

  434. Ivan G

    High5,

    I witnessed myself hyperinflation in the 90s. I don’t need a 700$ book to know what is like. It’s a lifetime event. I was in college then. At the hyperinflation peak my tuition for the semester cost 6$ (six us dollars).

  438. Bill

    Like Driver I think that Gary’s 3:02 post summarizes Gary’s strategy well. I myself can’t take drawdowns. I wish I could, but I honestly can’t.

    I also diagree w/the suggestion that changing one’s mind is a beginner’s mistake. Decisiveness is leadership. In my experience, waiting in indecisiveness leads to overanalysis and ultimately a wrong decision.

    In the bit that I’ve been watching, Gary’s response to market changes is always correct, including silver. Where I get hung up is, when there is a change, I want or need or wish to know that it’s because of the cycles. Often times it looks like it’s based on chart action.

    I myself don’t believe in cycles yet, but I’m trying.

    But in the end, like Coffee said, making money is they key, and Gary’s great at that.

  439. ...at ease

    Wolf, I like your statement.
    Sums it up well. For sure Gary has it right, save and preserve to fight another day (bottom cycle runups). The big money is made on those run ups, not trading in and out.

  440. Coffee

    Bill,
    I took a small long position on the gap fill on GDX last week, tight stop in and out. Technicals are not working very well right now, cycles although a bit skewed seem to have a better edge.

  445. William Wallace

    The week of 4/13/09 and the next week 4/20/09 both had a low of 865.60…so im counting the first week as the bottom…which makes it 12 weeks.

    Second week 30
    Third week 25
    Fourth week 26
    Fifth either 22 (which is short) or what may be to come…33?

  447. Hack

    One Thing I don’t understand is why the “Old Turkey” strategy has been thrown overboard. I have held on to EXK since March and I am up 22%. Plus I paid one $7 broker fee and have no taxable events. Why has this strategy been abandoned? To touch on what Basil said earlier about strategic moves, part of the reason I am successful is that I write a plan each year and stick to it. Even it it means holding on to a stock longer in order to hit a particular target. I am willing to hold EXK thinking they will be bought my a major mining company and / or hit my target of $15. There are many more small miners that can be held like this with little downside if bought on dips…

  448. Keys

    One needs to over-analyze the now in order to predict the future that once moves one day ahead uses the same over-analyzes to short the same move.

    Ben has f-uped everything…good luck with a long term strategy….this game has turned into a nightmare…anyways, my feel for the market is the same in April…don’t like it…really don’t like it…

    Those shorting the market, I have a feeling that sometime in the future QE3 is on its way…Ben is just waiting for the dollar to jump, which it will by tuesday, and within a short period of time, as things tank, QE3 of some sort will be given…

    cash is king…a couple days to go short at most….best risk/reward is simply cash though

    All is just an opinion of course…right or wrong…whatever! I simply don’t like what I see, and will not go full long here.

  449. Coffee

    Keys,
    With all of the divergences and the VIX, as well as the politics, it’s wise to err on the side of caution and preserve capitol.

  450. ejoys

    Hi Gary,

    BDI says you are right. Huge divergence and already breaking deep below the June low and approaching the May low. Global economy rolling over. Do you take BDI seriously when gauging general market conditions?

  451. Gary

    Hack,
    I can tell you why I’m deviating from the original plan. As to anyone else it would be up to them whether they want to exit or hold.

    My original plan would have been to just hold through a daily cycle correction.

    The miners aborted that plan when they crashed back down through the 200 day moving average despite gold making new all-time highs. In my opinion that is a warning that something is seriously wrong.

    Even if this only turns out to be a daily cycle low, gold is still going to have to suffer a severe enough correction to clear that sentiment extreme. What is going to happen to miners that are already under the 200 day moving average if gold drops $100 over the next week and a half. I can tell you what I think is going to happen. They are going to get absolutely slaughtered.

    In my opinion, if gold was about ready to take off on a parabolic move then the miners would not be diverging on the downside they would be diverging to the upside.

    Making a plan at the beginning of the year is all well and good but as conditions change one has to make adaptions to their plan.

    At the beginning of 2008 one could have made a plan to hold mining stocks Old Turkey. If one didn’t adapt to unfolding conditions they would have ridden many of their mining stocks down 70-90%.

    With QE2 coming to an end, the economy clearly rolling over, the stock market looking like it is entering a new bear market, and the specter of deflation rearing its ugly head again, I think it’s time to make adaptions. Failing to do so could result in getting caught in another bear market.

    Yes one could always say that gold will resist the next bear market. And while I agree gold may be able to resist a climax selling event to some degree, mining stocks will not.

    If last week’s behavior is any indication then the miners are going to take a severe beating when gold moves down into a cycle low, especially if it is accompanied by the stock market rolling over into an intermediate degree selling climax.

    Massive margin calls will cause literally everything to be thrown out the window. I would rather be in a position to buy that kind of panic than weather it.

  454. pimaCanyon

    Great weekend report, Gary!

    However, I have to take issue with the “two week correction” you show on the gold weekly chart that led to the July 1 low.

    From the May 2 high to the July 1 low was just a bit longer than 2 weeks! In fact, it was almost 9 weeks, well within the timing band that is typical for IT corrections.

    I understand why you labeled it two weeks–you’re counting from the June 22 high. But that was a lower high than the May high. The correction needs to be measured from the May high.

  455. aklaunch

    Originally posted by the G&S Troll.

    Blog Cycles:

    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

  457. Keys

    Coffee,

    Thanks for the input! Already done! 100% Cash in either cash or hedge out! And I mean solid hedges too!

    Cheers!

  458. Keys

    great 8:59 post Gary…FWIW I see the same…great post because you express my worry..

    When i say I am 100% out and in cash… I mean cash or 100% hedged…Ie in my hedges I make nothing on the upside or lose on the downside…

    happy to be on the blog and apart of SMT…..time to go to bed…but I figure big times ahead! Anxious, I guess…

  460. Jonas

    I think that sentiment is even more positive for miners than for the bullion. Pretty much every blogger and analyst points to the imminent miner rally. Which makes it a bit wierd that they’re so weak.

    Anyway, here’s a voice (Ed Stear’s daily PM analysis) with the same conclusion as Gary’s, only arrived at with totally different tools. I pretty much always follow Gary’s conviction, but it gets even easier when you see the same thoughts from others with a decent predictive track record.

    Ed said (slightly edited for brevity) yesterday:

    “I was not all happy with yesterday’s Commitment of Traders Report…for positions held at the close of trading on Tuesday, July 26th. In both gold and silver, JPMorgan et al continued to pile in against all the new longs…taking the short side of virtually every trade.

    The Commercial net short position in silver is back over 200 million ounces at 213.9 million ounces. Of that amount, the ‘8 or less’ bullion banks are short 229.6 million ounces…which is more than the entire Commercial net short position of 213.9 million ounces! Now that’s concentration!!!

    In gold, the bullion banks went short another 19,159 contracts…or a whisker under two million ounces. The Commercial net short position has now blown out to 28.3 million ounces, which I’m sure Ted Butler will say is getting into the ‘high risk’ zone.

    Could we power higher in price from here? Sure, but the warning flags are now flying in gold…and it’s only a matter of when, not if, the bullion banks put their heads together and engineer a sell-off. I’m guessing they’ll do it when there’s a resolution to the debt ceiling issue, which could come this weekend. If it does, I wouldn’t be entirely surprised to see JPMorgan et al hit the price in the New York Access Market on Sunday night…just like they did in the ‘drive by shooting’ in silver on Sunday night, May 1st.

    I’m speculating as to the timing…but not the event itself. That’s pretty much baked in the cake at this point.”

  461. Gary

    William,
    A bunch of us from Vegas have rented a house somewhere in the area. My buddy is planning the trip so I don’t really know where it’s at.

  462. Greggy_M

    Everyone,

    Does anyone know of a good newsletter writer that covers QUALITY junior mining companies. Any suggestions?

    After miners correct, I will be looking to put a small portion into individual companies that have the potential to become “ten baggers”.

    Thanks

  463. 86d4life

    Greggy M,
    Caseys International Speculator deals strictly with junior miners and they are exceedingly thorough;highly recommend.A bit pricey but that`s really relative in this business, you can make up the fee in minutes. Good luck.

  466. Greggy_M

    86d4life,

    Thanks, Mostly I’m looking for well managed companies that are in production or going into production. Does his service cover those? What I don’t want is a list of very illiquid pink sheet stocks.

    Have you had success with his service? Could you give examples of stock they may have recommended or are currently recommended?

    Appreciate your time;-)

  467. Ivan

    Gary,I have read weekend report again.Let say if dollar starts rising rapidly and Gold move to intermediate correction that break 200 MA.In this way are we in D wave,or you still will consider such move as intermediate correction?

  469. aklaunch

    A guy would think there would be a rally when the debt ceiling is lifted. With that scenario the buck could go down even more as all money goes into stocks big time. But…. Seems last weeks plunge was more related to poor GDP and poor earnings and not so much the debt ceiling. If that is the case then the dollar should rally as most of the markets tank.

  471. Gary

    FTW,
    The 50 DMA is at $1541 and the 200 DMA is at $1441.

    The cycles are working just fine. As I’ve said for the 100th time cycles are worthless for spotting tops but great for telling us when to step on the gas and when to apply the brakes.

    It’s late enough in the daily cycle and we have enough warning signs that now is the time to tap on the brakes.

    And I’ll say for the 1000th time that a D-Wave is a regression to the mean profit-taking event triggered by a parabolic C-wave top. One causes the other.

    Until we get that kind of parabolic move we will continue to just get normal intermediate corrections. If a gold corrects from this level it should just be a typical intermediate decline.

    If you must be a Dipshit at least get your facts right.

  473. Ivan

    Thank you Gary!I understand what you mean.
    FTW check your data. Yes I am a subscriber,thank god I meet Gary service almost one year ago.

  474. ftw?

    akl in other words, 77 is in the bag for the $USD, once again??! Play it again, Sam. If the dollar slides further that would be the scenario that is positive for gold too. Sentiment says that ain’t going to happen. Not really, it never says anything, but we listen anywise. Kind of like that telephone game where the message keeps getting garbled with every retell.

    $USD weekly is saying we will move back to the top of it’s trading range. Possibly taking another shot at 77. Forex markets in immense so they stick to a trading range better that the spx..

    $SPX is overdue for the bounce you are suggesting, but could still go a little lower.

    $SPX:$USD suggests that spx can move 2-3% without dollar support.

  477. ...at ease

    Looked at those Gunks. Sorry Gary, you can’t go! Unless we get a team of SMT’rs to put a saftey net under you. Too precious of cargo to let you out there alone.

  479. abc

    Gary,
    Just want to thank you for last repot. It’s so in-depth and detailed that I’m really impressed. You just see things in so many dimensions…

    If some see things differently let them put their money where their mouth is. Don’t get tired trying to out-talk them.

    Great job.

  480. Hack

    Gary;

    Don’t get me wrong, I follow your advice. I sold GDX and GDXJ because they lost thier mojo. However some of the juniors have been beaten down and so I don’t have a problem with buying a position and adding on dips. For instance if EXK hits $15 by the end of the year I’ll be up about 90%, so I am willing to take lumps on the way up.

  481. Gary

    Hack,
    Invariably I have found that it is a mistake to try and run back to what worked really well in the past.

    There is simply no way to deny that silver is a broken parabola. If gold suffers an intermediate decline, say back to 1450ish, silver is going to get annihilated. Silver Mining stocks are going to get annihilated.

    It is a very common trait for humans to run back to what worked in the past expecting it to work again. Just look at how many people tried to buy tech stocks all the way down as the bubble burst and continued to buy during the next bull up even though the NASDAQ barely even recovered 50% of its losses. It’s been 10 years and the NASDAQ still isn’t even close to its old highs.

    The same thing is happening with housing. I’m constantly being bombarded by friends and acquaintances wanting to know if now is a good time to buy a house. These people think that the housing market is going to come back and they want to make sure they get in at the bottom. Housing is never coming back, not for 20 or 30 years.

    Millions of energy bulls, same mistake, expecting $150 oil. It ain’t going to happen, the fundamentals for energy are now broken. The world is going to be locked into an on-again off-again recession for years. The demand side of the oil story as been taken away.

    Now we’re going to see the silver bulls continuously looking for the next parabolic spike.

    It ain’t going to happen. It’s going to take at least one to three years for silver to consolidate that monster move before it can have any hope of breaking and holding above $50.

    I know it’s tough to do, but once something has had its run you’re better off looking for the next big thing instead of expecting the old thing to come back.

  484. pimaCanyon

    Gary,

    Yes, that’s what made me laugh out loud–because that kind of response from you is so unexpected.

    You are the master of cool and calm. It seems no matter how irritating some commenters try to be, you usually shrug it off. I’d say the fact that even your patience has its limits is probably a good thing–it shows you’re human!

  485. sophia

    Gary,

    Sorry one more question: as you told us for the last few days, the miners are acting weirdly so you are becoming cautious…what do you think will happen to Silver if gold starts to correct? Is the broken parabola going to put more pressure on Silver or do you think that it is too dangerous to touch anything linked to Silver for the next 2-3 years?

  487. MrMiyagi

    Gary,
    In regards to the housing market, people need shelter and someone has to own the house they live in, be it themselves or a landlord. In terms of pricing, they won’t go up like they did back a few years ago but as materials rise because of inflation, so will the building costs and existing home prices; those that are reasonably priced at least, not the shacks that sold for 600,000$.
    As for NASDAQ, eerily similar to the housing market. People were paying 1000-2000$ for shares of companies that hadn’t even put out a product. Companies were gobbling up others at insane prices and driving share prices up that way as well. NASDAQ is heavily tech-loaded so it flew up. And crashed. There were a bunch of pharma-tech companies that joined the foray near the tail end only to dive faster than the rise.

    One of the reasons I suggested to William Wallace here he go with SLV puts instead of the GLD ones is the same reason you’ve been mentioning; volatility from itchy trigger fingers.

  491. JEFFtheFLEA

    mr M

    what do you think is going to happen the seceond they raise intrest rates 1%.
    Prices got sooo streached. they will not streach up as high as they were for a very long time

  494. Gold Lion

    Gary,
    I keep thinking about your thesis and you got me feeling a little more conservative. I’m not 100% convinced that we’re heading into a deflationary spiral, but you make some good points. Maybe I’ll at least take profits on my gold contracts and go to 25% cash. Gold is reaching the top 1/4th of it’s upward channel. Thanks for your opinions, even if I don’t always listen 🙂

  497. Ivan G

    DP,

    until gold rises house will be crawling and digging down. I thinki in context like this charts and technicals are rather irrelevant. USA needs new industry to boost production and export. After that real estate will start coming back to life. House may cost 50 ounces at some point. I am sure many will be quite amazed.

  498. Ivan G

    And I am quite sure that the cheapest housing will be the day right after the PM bubble crash. However, at that point lending money and getting mortgage will be the toughest. But those who buy then will enjoy their investment doubles soon.

  500. High 5

    DP

    From the chart the ratio would need to drop another third to equal the lowest ratio in the time period shown. If you add the fact that neither record period was preceded by a housing bubble, biggest in the history of mankind and worldwide, and credit bubble, also biggest in history worldwide, and both periods were followed by quickly increasing population and better economic conditions as opposed to level population and worsening economy, then the logical conclusion is that gold will continue to outperform housing at least through the end of the gold bull market.

    Personally I still believe that maximizing of low interest fixed rate mortgages on real estate will put me in a position to pay off the loans for a song in ten years. Rather than pay off loans people should refinance and use the cash to invest in PM. But then I believe we will see major inflation if not hyperinflation.

  501. Poly

    Hi Gary,

    In your report, a big part of the rephrasing is based on sentiment. The very high sentiment level is a tip off that an IT cycle top could be at hand.

    By calling for this as a stretched IT cycle and ignoring the July 1st low, you are now placing the previous May high sentiment reading and the 2.5 year record low sentiment reading on July 1st in the middle of an existing IT cycle that do not mark any IT cycle top/bottom, but rather just daily cycle tops and bottoms!
    Maybe I’m missing something, but you’re marking a cycle top call on a sentiment level but by doing so, almost ignoring two previous extreme sentiment levels and the effect they had on the “old” IT cycle.

    I see the need to be cautious and on guard, it’s obviously far from clear. I personally feel the previous cycle counts are defiently more true to the “rules”, IMO.
    As a suggestions or possible trading strategy, why not play the coming DCL as it being the first daily low and get back positions, then just use the cycle low/pivot as the stop? It provides almost zero risk and has you in the game for a possible continuation of a July 1st low IT cycle and any surprising strength. If gold just took off from the next DCL while you work u der a stretched IT cycle framework, it would take a very long time to buy the strength and may never chase it, it would be way gone. This way if the IT cycle low is some weeks away, you get safely stopped, but if we go ahead on a July 1st cycle, you’re deep in the game.

  503. Gary

    DP,
    Homes aren’t paid for with gold. The reason they look affordable when priced in gold is because gold has been in an 11 year bull market while housing has been in a five year bear market.

    The correct way to look at this is in terms of regression to the mean and supply and demand.

    During the bubble housing stretched much much further above the mean than it ever has in history. At the present time it still hasn’t even returned to the mean, and as we all know bubbles don’t tend to drop back down to average and stop. They tend to fall considerably below the mean before bottoming.

    There is also the problem of too much supply. The government is prolonging and intensifying the process by trying to abort the normal cleansing process. By artificially propping up the price of housing the government is making sure we continue to have massive oversupply. Until that oversupply problem gets corrected housing will continue to decline.

    Action and reaction. The rubber band theory plus basic supply and demand suggest that housing has a long way to drop yet.

    The best time to buy a house will be right in the middle of the next recession. I suspect they will be 15 to 20% cheaper than they are now.

  504. Éamonn

    Gary, I have a question for you. Say over the next few months the dollar strengthens to 85 or so. Would the announcement of QEIII stop it from rising and force it back down slowly again? Might be a dumb ass question but I’d like your feeling on it anyway. Thanks :o)
    P.S. bout time you put your foot down with the monkeys on the blog rising you

  506. William Wallace

    Poly,

    You said…

    “why not play the coming DCL as it being the first daily low and get back positions”

    We may bounce off the 20sma, 30sma, and 50sma, which will most likely give us all swing lows, but if this does turn out to be an Intermediate we will continue lower…so what are you going to do, keep putting stops at each pivot that may very well just get taken out? Give me some perspective…thanks poly.

  507. Veronica

    I agree with Gary and Doc that it’s a dangerous time for gold right now. Am out of 90% of my positions even though my system has not sold yet.Like I said last week the biggest gain my system has ever registered is 120.00 in gold so it’s close enough:)

  508. Gary

    Poly,
    As I said in the report this is all going to boil down to what happens to the dollar index. If the dollar breaks below the May bottom then yes we are on week four of a new intermediate cycle.

    If the dollar rallies violently as a response to deflationary forces being unleashed as the economy slips back into recession than we are at the top of an intermediate cycle.

    Let’s be realistic here folks. We know damn good and well what drove this incredible rally. QE1 and QE2.

    Now that those have come to an end gold is just running on momentum, the fuel has been removed from the fire.

    I think basic demand can keep gold at roughly these levels in a large consolidation box. But without QE3 we’re not going to get a parabolic move.

    I think the market has to become convinced that QE3 is right around the corner in order for gold to take off on another 200 point rally.

    And by the way it doesn’t matter if you and I are convinced QE3 is coming, we need the market to be convinced that QE3 is coming.

    Personally I think it’s going to take a much larger decline in the stock market before the Fed freaks out and starts printing again, especially since it is glaringly apparent that quantitative easing had no real sustainable effect on the economy.

    Politically, at this point it’s going to be almost impossible to justify another round of QE. We need to have real pain, and people screaming at the politicians to do something, before we can get the green light on another round of QE.

  511. Poly

    WW, your going to need a clear DCL which will need to the be LT if we want to take out those $1,400 lows to mark a IT low.
    This would be no different to trading countless other DCL with stops.

    Gary,

    Thanks for the reply, I’m just suggesting a way to play both outcomes, not just one of them.

  513. Gary

    Jonus,
    This is not a “take down”. This is a normal profit-taking event. It happens like clockwork every 20 to 30 days.

    I’ve been warning everyone that it was coming.

    I even said the conspiracy nuts would freak out and blame it on the evil banking cartel.

    There is nothing mysterious about this. Gold is just stretched far above its 200 day moving average. Too many people are on the long side of the trade. And now that it appears that we will get a settlement to the debt ceiling Money is going to come out of the stretched gold trade and go into the oversold stock market.

    Just normal market dynamics.

    People if you will learn how markets work you’ll have a lot better chance of making money than if you listen to the manipulation fruitcakes.

  515. Gary

    Poly,
    I think we will know the correct way to play it when we see how violently the dollar rallies out of its daily cycle low.

  517. Gary

    WW,
    Most intermediate degree corrections retrace 50% to 62% of the preceding rally.

    That would suggest a pullback to $1473 to $1434.

  521. Gary

    At some point we are going to see a correction that bounces on the 150 and then violates it.

    That violation will cause traders to panic because they aren’t expecting it.

    I’m expecting it.

  522. William Wallace

    Gary,

    You think thats why we didnt bottom on the 150 July 1st, because it was expected?

    I know it was definitely expected by commercial traders, they covered short positions like crazy right before.

  523. William Wallace

    Right now…since we had a $10-15 drop twice already on the debt ceiling news and continued higher afterwards, tonight being the third time, buyers are stepping in again and are going to take a beaten when we begin this DC correction, which might begin tonight or tomorrow.

  524. Gary

    No, I think we didn’t reach it because it wasn’t an intermediate degree correction.

    It only lasted 7 days.

    We had the chance to put in the parabolic run in May but dollar sentiment got too extreme too fast. The dollar rally, along with the margin increases cut the move short.

    Gold consolidated while the dollar rallied.

    Now the only question is will the May low in the dollar be violated or not.

    I suspect we will know when we see how violently the dollar rallies out of the coming bottom.

  525. Gary

    The persistent buying is actually a bad sign. Gold would be more likely to go up if everyone is panicky.

    Persistent buying at these stretched levels is a sign of extreme complacency. That usually results in a deeper more prolonged decline as overconfident traders hang on too long and finally panic out at much lower levels.

    The rubber band theory. The greater the stretch the harder the fall.

  527. William Wallace

    Gary,

    This is what put a hault on this intermediate degree correction:

    “Gold down 2.9% – commercials get the heck out of nearly 17% of their short exposure – a very hot pace of short reduction.

    That is the largest nominal one-week reduction in commercial net short positioning in New York Gold Futures since August 12, 2008 – during the depths of the Great 2008 Panic. With gold then off a huge $60.50 or 6.9% in a single reporting week to $813.85, the commercial traders then reduced their net short bets by 43,104 contracts or 21.7%. (See the graph above for that period.)

    The relative commercial net short positioning (the commercial net short position as a percentage of the total open interest or the LCNS:TO) dropped by a very large 6.7 percentage points from 48.8% to 42.1%.

    That is the largest one-week drop in the LCNS:TO since August 21, 2007, with gold then trading at $657.78 and staging for a major bull move higher that wouldn’t peak until the following April above $1,000 for the first time ever.”

    Commercials obviously knew something, doesn’t this suggest that the early intermediate low and proceeding rally was manufactured?

  528. Bill

    FYI spot gold is down $13 at Asia’s market open.

    wave ridah, really nice charts – I’m keeping this link as I think these are the nicest TL’s I’ve seen.

    Gary, I’m starting to get cycles a bit. I accept now that they are dynamic, and I also get now that cycles are excellent for timing bottoms but not tops. It took me a while because I’m a cave-dweller Cro-Magnon. See my latest x-ray at…

    http://en.wikipedia.org/wiki/File:Cro-Magnon.jpg

  529. Bill

    Gary, I know that your last cycle bottom for gold was on July 1st, nailing the exact bottom. That was incredible.

    What were the 2 or 3 cycle bottoms you called before that? I’m checking for the precision of cycle bottom calling. I mean, does this stuff really work? Are there times when cycle bottoms are called for but price goes up, or vice-versa the price bottoms but the cycles don’t call for it yet?

    I should probably re-subscribe for another couple of months and re-read all your material. Sorry for the many q’s. Thanks.

  531. Jonas

    Gary,

    Let me get this straight. Uncle Benny blatantly manipulates stocks upwards – as recently as late July. He clearly shoots for lower bond prices as well. And there’s no doubt that the President did his level best to push oil prices down using the strategic oil reserves. Goldman Sachs has almost single handedly decoupled agri commodities from the realities of the underlying business. JPM and Goldman are causing Coca-Cola and other can makers to go crazy by using arcane warehousing rules to build huge stockpiles of aluminum and artificially driving prices higher.

    But anyone who thinks there’s something fishy about the bullion banks incessant shorting of PMs is a fruitcake? In this specific case, I guess we simply have differing views. And that’s fine as long as we’re making money regardless. 🙂

  532. 86d4life

    Greggy M,
    I subscribed to IS last October and do you remember how unrelenting PMs were starting in August. So I found I was waiting for better entrys that never came. I will testify to the fact a bunch of their reccos did very well and they have a buy/hold/sell rating system. Nobody nails them all, but their track record is pretty impressive, close to 100% winners. They research explorers and producers so both bases are covered and they have a 3 month money back guarantee. I don`t think Gary even has that! BTW, firefighters are the Real heros. Talk about brass nuts. I spent 2 weeks in a burn unit when I was a kid. Special perspective.

  534. Gary

    WW,
    Contrary to what the conspiracy people would like to believe most of the commercial traders are miners hedging forward production.

    I have to think that of all the people in the world they’ve got to know their business better than anyone.

    If gold pulls back close to the 200 and moving average they are going to close their hedges. If gold gets stretched above the 200 date moving average and is at new all time highs they are going to lock in gigantic profit margins.

  535. Jonas

    I really don’t have to, Gary. It’s a reported fact that they are short – in a massive way. At least from what’s openly shown in the Comex statistics.

    They might be doing things in the dark on the OTC market, however, so it’s not clear what’s actually going on behind the scenes. Or JPM might be hedging their silver short via the huge copper long position that they been builing up.

    Anyway, same thing with miners, if I’m not mistaken, the short interest on miners is pretty heavy as well. For sure, there are players who take major short positions. No one can argue that, although one can have opinions about the reasons.

  536. Gary

    Jonus,
    Ben has clearly stated he wants to inflate asset prices. He’s trying to generate a wealth effect by inflating the stock market. So there is a very logical reason for what he’s doing.

    Bernanke is trying to hold interest rates down in order to support the housing market. Again a very logical reason for intervention.

    High oil prices are crippling the economy. The president is obviously trying to scare speculators. Again another very logical reason for the actions taken.

    I can’t speak intelligently about aluminum, but it doesn’t make a lot of sense for the bullion banks who you claim are trying to force down the price of gold to force up the price of aluminum.

    Nixon took us off of the gold standard in 71. There are no limits to the amount of money the Fed can print. Gold is irrelevant.

    Gold is not a commodity that will impact economic health. So there is no logical reason for the Fed or the government to waste billions and billions of dollars trying to suppress a secular bull market. I’ve got to think that if there is no logical reason to do it then nobody is going to waste money on it.

  537. Jonas

    If it was all miners that were still hedging, how can seemingly intelligent people who have spent a great part of their life studying this, like Ted Butler, James Turk, Doug Casey and Richard Russell not have this knowledge?

  538. Gary

    It’s not a reported fact in the COT reports. All positions are anonymous.

    Let me point out that position sizes follow a normal regression to the mean strategy.

    As gold gets further and further stretched above the 200 day moving average short positions increase. Has gold corrects the closer it gets to the 200 day moving average but more short positions are covered.

    What I am describing is one of the most successful trading strategies in the world. For some reason the conspiracy nuts seem to think that there is something evil about a successful investing strategy.

  539. Gary

    Richard Russell doesn’t think that gold is manipulated. As a matter of fact he’s stated many times that gold cannot be manipulated because buyers in China and India cannot be controlled.

    The others are running one of the oldest scams in the book. They have a scapegoat to cover any and all missed calls.

  540. Jonas

    I can’t claim to know what convoluted plans are hatched by the interconnected central banks that rule the economy that we all live in. But I do know this:

    The US empire, like the British before it, rests on two pillars: i) Military superiority and ii) Owning the reserve currency.

    All the countries vying for supremacy, like China, Russia and India are hoarding gold – both on a central bank level and on a citizen level. It’s pretty obvious that it’s somehow seen as a strategic holding – even though it lacks the usefulness of rare earth metals or oil.

    So why keep the prices down? Beats me to be honest. Maybe it’s just to avoid having the dollar look totally worthless. Do note that even though gold has been in a secular bull market, it still hasn’t beat inflation since the 80s.

  541. Gary

    Before the bull market is over gold will more than make up for all the inflation from 1980.

    Of course the reason it hasn’t kept up with inflation is that it was in a bear market from 1980 until 2000.

  544. Gary

    I remember seeing Russell get frustrated as gold tried to clear $1500. But that isn’t proof of manipulation.

    A big round number like that is usually hard to break through. Buyers that bought the breakout at $1400 look to take profits at the next round number. The selling isn’t because of a cartel, it’s just people with big profits taking money off the table.

    $1500 is an even more significant number than most as it is halfway to 2000. Understandably it was hard to break through that level.

    I read Richard’s report every night and he has clearly said that gold cannot be manipulated because no one can control buyers in India and China.

  545. Gary

    If the market loses all of these early gains by the close tomorrow it’s going to get ugly quick.

    Either way it won’t be long before the market forgets all about the debt ceiling and gets back to what it was doing before the media pumped this up, and that is discounting a crumbling economy.

  550. wolf33

    All I know is bought on close some at the money calls on DIA. Whatever happens they are out the door on open. Mkt may even be down by than.

    Will be interesting to seeb what DUST does in the morning.

  551. Brian

    Excluding the 2008 plunge in the miners, which corresponded to the 8-year cycle low in gold, miners are now the cheapest they have ever been vs gold at any point since the 1980’s. (Gold vs XAU).
    A consolidation above $1,600 for a week or two and the miners are set for a possibly significant rally. A meaningful close below $1,600 in terms of price and time, and we will have to be a little more patient 🙂 Note, USD is trading lower this morning vs EUR, though early days yet.

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