264 thoughts on “STOP IS UPDATED

  1. Driver

    Thanks, Gary.

    One of the things I appreciate about your service is that you post your daily updates in the late afternoon rather than in the evening.

  2. Hack

    Thanks for the update Gary. With an 80 point runup in eight days we could be in for a hold on and close your eyes choppy July / August.

  3. Marty


    I pray that Christ will give comfort to your friends family, loved ones and Paula during this time of sorrow.

  4. William Wallace


    I stand with Marty in that prayer to Jesus Christ our Lord for your friend Paula, may she indentify herself with the Crucified Christ in her suffering.

  5. Chris

    Sorry in advance for the ignorance, but I’m relatively new to this blog. Can you point me to previous posts where the “left translated” and “right translated” cycles are explained?

  6. Gary

    Right and left translated cycles are explained in the terminology document on the premium website.

  7. Gary

    The last dollar cycle was left translated but still held above the prior cycle low because it formed is a triangle consolidation.

  8. Jayhawk

    Hey Gary, hope all is well. I’ve been keeping close tabs on your posts and nightly report. I got so burned out this Spring that I can barely look at a chart these days. (even thought I did quite well) I had my own surgery and business is keeping me on my toes. I plan on adding soon, but not currently long much of anything. Nice to see the blog is still humming along.

    Take care.

  9. Elaine


    Thanks as always for the good report, but the jobs number was hardly spectacular. If it had been double the 115k, maybe, but new unemployment claims numbers are still 400k + for 13 consecutive weeks, so we are a long way from good job numbers.


  10. Felix

    Fubsy C. – thank you for your kind and detailed comments, you are tops.

    Rapper – sorry, I realized I was unclear, I only really meant to inquire about the absolute dangers of broken silver, you’re right, I knew that AGQ magnified silver both ways.

    Is the underwater trader the explanation for the danger, or is it observation from other broken parabolae, or more? Do you hate these “why” questions?

    LV downtown is like Times Square on steroids (mostly testosterone) without The City around it. But I’m told NV or local is a haven for residential property taxes etc.

  11. rapper

    I agree with Gary that it is broken and therefore dangerous as it will probably behave erratically. Trapped longs could certainly be part of it and the overall mindset of traders will be extra vigilant causing crazy swings etc.. That said, I still think it has a decent run ahead of it but I am just playing it with smaller position and on a tighter leash. With all this caution it will probably double top or go higher just to tease.

    I have a million why questions.

  12. Michael

    Flipping through charts:

    This gold upmove was conceived in a big way on 17 June – have a look at the big, huge, and sometimes massive out of proportion, volumes that traded that day in GBG, AZK, NXG, RGLD, GSS, ANV, NGD, HMY, GOLD, IAG, IVN, GFI, BVN. It’s particularly marked in smaller companies.

    This was a concerted bank/institutional sector buy (or short-covering) which took out all the stock overhang right after the HUI had been driven down marginally below its 490 support pivots.

    This all occurred before news of the Greek bailout on 23rd June and before gold was driven below 1500 from 23rd June to 1st July.

    Leopards don’t change their spots – would not be surprised to see HUI 600 marginal new highs on the upside as a target now.

  13. Christian

    my condolences as well to your friend. I hope that her end is as peaceful as possible.
    (Speaking as someone who lost a parent fairly recently.)

  14. 23t870

    great chart on oil v. SLV

    Oil was the secular driver during it’s run up where gold is the secular driver for slv.

    I think the slv will follow gold higher, for the time being

    still, once they start heading for the door, it will be a stampede.

  15. Poly


    Good post, agree. Alex was also seeing this in real time a few weeks ago and a few others were talking about miners showing all the signs of a major bottom.

    I’m sensing that miners could finally steel the show here. They tend to do best at the tail end of big gold runs.

  16. Poly


    To me the current setup its looking more and more like your T1 pattern, have you given this any thought?

    The past c wave tops (06 & 08) were T1’s and the INT low before the last cycle top (consolidation area) never dropped down sharply, just like this one.

  17. ALEX

    Jobs report is out


    private sector

    57,000 June vs 73,000 May

    June unemployment rate highest since Dec 2010


  18. flaunt

    Jobs… +18. Wasn’t expecting such horrendously bad numbers. Gary, does this mean you’ll be deploying the rest of the model portfolio on the open?

  19. flaunt

    I think this means QE3 is coming in August. If we can hold through any drawdowns between now and then, post-August should be fun.

  20. Patrick

    Gary, I know you had changed the stops ahead of NFP report, at what point will stops be moved back to what they orginially were?


  21. Wav_ridah

    I’ve been watching your post since you were Vuvvy and you’ve been right on with gold too. Do you also get buy signals on stocks and etfs?

  22. ALEX

    Looks like its back to “surprises will come to the upside” mode again…

    I can DEFINITELY live with that!!


  23. Gary

    I will replace the stops now as it has become abundantly clear that we do have an intermediate bottom in place.

  24. Veronica

    9 day deferred ma broken decisively, and there will be resistance at low 1550’s.A correction if it happens there may be a good add point.

  25. Veronica

    Wave, I really have not gotten involved in stocks since 2002 but have been riding this gold bull since then. I have a couple systems for GDX/HUI but I prefer the lower stress of trading gold futures. Being able to get in and out around the clock is very important to me.

  26. wmp

    Hard to believe a miss of this magnitude only produces a 100 point drop in the dow. As you say Gary, the market does what the market wants to do.

  27. MBS

    Looking at the SPX intermediate cycle, it seems like we have to take a stand and call the previous cycle either 30 weeks or 13 weeks. If it was in fact 30 weeks (which seems more likely due to many stretched cycles as of late), wont a very short cycle generally follow a long one? Could this cycle be 10-15 weeks and top in sub-4 to make it left translated?


  28. Clarkatroid

    Very Nice call on the entry point Gary . Do as Gary does not what he says is the lesson I’ve learnt here.He has super Fantastic instincts

  29. David


    This is the long way around, but if your system is not supper high teck, this is a way to see how any stock is trading pre-market.

    Go to bigchartsmarket watch.

    Type in a STOCK symbol.

    Go to: Advanced Chart.

    Now you can go to any ETF.


  30. Gary

    I’ve been considering the theory that the previous cycle that bottomed in March was 36 weeks long and we now had a short cycle to even that out.

    If that’s the case then the current cycle should run a normal duration.

  31. E

    Gary,Did I miss anything, did you bought the 3 items in the model portfolio or you are going to wait for next week?

  32. Dave

    Gary, do you still feel SLW is one of the best companies in the world? Do you think the strength of its model insulates it from volatility in the price of silver to make it a worthwhile exception to your current no-silver position?

    Thanks for your thoughts.

  33. DG

    I covered all my shorts (OIH, DUG, JCP, EPV). I was just looking for a scalp and we got it. Go PM’s! I am hoping for a dip to add on. Some on the first sharp dip and more on the next DCL wherever that ends.

  34. Poly

    Looks like the boys are using the strength in gold here to take their profits on the miners, after this big run up. Miners due for some consolidation, we might get our 2nd bite at the miners soon enough.

  35. Poly

    We’re on DAY 4 of a new Gold IT cycle that should run 4+ months!

    Already in this new cycle the miners up 20% in many cases. They will consolidate and form a little base to spring through the 200, a retest of it’s lower 50dma likely.

    Some perspective helps.

  36. Michael


    The Open Interest on that far-dated GDX option is 89 contracts vs 10’s of thousands in other more liquid at-the-money strikes. It will just be you versus the computer, and they like to move the goalposts on you a bit here and there. In-the-money options like this not traded as much as ATM and slightly out-of-the-money because they lose much of the characteristics of an option and other reasons. All this Dec deep-ITM option gives you is leverage, which you can find in DGP or futures to your heart’s content. Plain vanilla options to use if you really want to go down that path are roughly 1-4 months out on the expiry and ATM or 5-15% OTM. Ofcourse, theoretically, you could still be totally right on the direction of gold with these but still lose money because of time decay and changes in the underlying volatility.

  37. gold silver troll

    Silver lagging gold big time…last time this happened (a Friday again), silver crashed the next 4 days…if silver doesn’t catch up before close, I will close 50% of my positions…will buy back at next dcl

  38. fubsy_cooter

    Gold will tag the 10 sms In the next few days. That should give a good entry for new positions. Then it depends how early we are in the daily cycle whether a breakout will offer another chance to add, or if one should wait for the next dcl.


  39. MrMiyagi

    January 2012 GDX 45 calls is what you’re asking about?
    My opinion is that you’re going too far and too deep for your money. Personally, I would go with December 49 or 50 if you want to go that far. At this time the open interest is low but as time goes on it should go higher.
    Just my opinion.

    Have you read the Options Delta tutorial that I posted the link to some time ago?

  40. David

    Michael, thank you for your response! I understand what you are saying and will incorporate it in my planing.


  41. Poly

    Besides the financial crises when the dollar rallied and all assets were dumped, gold has managed to put in strong and consistent IT cycles. There have been gold IT cycles with a rising dollar that have done well too.

    I also like to keep reminding myself that a bull market of this size and age (11+ years) is going to get crazier by the cycle and believe it the rally’s more vertical.

    Even if the dollar does OK for say a year out of a new 3yr cycle, it’s going to be window dressing. It will primarily do well on a Dollar Index basis, as the Euro accounts for 55%, weakness there will give us the illusion of a strong dollar. However against Gold, Swiss, Yes, Aussie/Canadian, the dollar got killed recently. Dollar index is a flawed measure of the dollar, IMO, especially when used to view possible gold performance.

  42. Edwin

    Gold right at the top of resistance IMO at 1542.

    A pullback to 1520 wouldn’t be surprising however a surge higher would be welcomed!

  43. David

    Mr. Miyagi

    Yes, I read the Options Delta tutorial. I thought one of his points was to go out 2-5 series so that delta was near .8 and not very close to 1. That is why I was exploring the (yes, call) I suggested.

    Thank you for your response. I know I am low on the learning curve, but wish to progress!


  44. MrMiyagi

    That call option for January 45 gives you a delta of .94 or so, quite high I think. As well, the timeframe is long in concurrence with analysis expectations.
    In other words, you are paying extra premium for a timeframe you are not going to benefit from.

  45. 86d4life

    So far there hasn`t been hardly any suffering so how could they start to institute qe3 already? But then, maybe what do logic and reason have to do with it? Of course not saying it`s not coming, but in what form? Did anybody hear anything more on Obamas job stimulus? I`ve been keeping an eye out but haven`t seen anything.

  46. 86d4life

    agreed, but that`s the way the man wants it. The more the people suffer, the more the man likes it and the more power and control they gain.

  47. MrMiyagi

    Ultimately it is your decision but that is my opinion as well as most others on this board.
    Glad you’re asking questions though!

  48. gold silver troll

    and the USD is rallying as well…it tanked on the employment report and now back nicely in the green…was the morning tanking a fake out?

    this has been once confusing daily cycle to figure out for the USD, gold, and stocks

  49. William Wallace


    doing good brother, just watching and waiting, most likely going to start initial positions on a pullback. If no pullback I want to see how gold deals with 1550 resistance. Im still not competely convinced that the Intermediate cycle low is in. Reason being, all other intermediate cycles of this C-wave were 25 weeks or better, among other things I dont want to get into now because if the bottom is in it wont matter.

    Other then that im watching birds hit my window!

  50. Sandy

    This market is crazily confusing!

    Dollar refusing to give up and continuing to rise from the dead every time I think we have it figured out.

  51. Gary

    I doubt we would have a big down day this soon after an intermediate bottom, but it is conceivable that gold could form a bull flag or sideways consolidation to allow the 10 day moving average to catch up a little bit.

  52. wallofworry

    I understand your strategy in playing the gold ETFs, I’ve listened to your interviews on Contrary Investors Cafe, so I know you don’t like the risk associated with miners.
    But, have you looked at Sandstorm Gold? They are a gold streaming company and the CEO is the former CFO of SLW. The stock has been doing really well recently and I’m sitting on a pile of the 2014 warrants (SNXXF.PK) and am up 50%.
    Just wanted to know if you are aware of this company and if you are what you thought about them.

  53. David

    The dollar’s direction is not at all clear.

    If we are headed into recession — and the employment numbers seem to indicate that — the dollar will strengthen. This will put pressure on stocks and gold. Sentiment has been reset in both, clearing the way for future declines in risk assets.

    The miners may have bottomed ahead of gold, but I would proceed with caution.

  54. wmp

    Mr M,

    As soon as I hit the button it went up!

    Let’s try again..do we think the SPX will finish big and pull pm’s with it?

    Now we can prepare for the sell off..

  55. Gary

    Here’s the thing. With ETF’s I have no company specific risk so I can take larger positions.

    Trying to pick individual mining stocks and outperform and ETF’s is exciting, like gambling. But I’m not in this to gamble, I’m in this to make money. I want to do that with as little risk as possible. That means I will leave the individual mining companies to others.

  56. Gary

    I will add when we get some kind of pull back. I already have a large enough position that I don’t have to chase.

    I’m hoping that those gaps on GLD will fill next week. That may give us the opportunity were looking for.

    Patience my friend.

  57. Gary

    AAPL, AMZN & IBM are threatening to turn positive.

    There’s probably a decent chance the market recovers all losses by the close.

  58. Gary

    All I’m looking for is a regression to the mean back to the 10 day moving average. That can come as a pullback or a sideways consolidation.

  59. Bruce


    no way the market recovers all losses by EOD. No way, Jose Gary Savage … NO WAY!

    If it does, I’ll buy you a burrito or three.

  60. Gary

    Quite often when AAPL is up on a day the market is down it’s a sign that buying pressure is coming in.

    Since I have nothing to risk I’ll take you up on the Burrito 🙂

  61. DG

    If the mkt recovers the losses by the close I will be reshorting what I covered this morning. Too juicy to pass up.

  62. fubsy_cooter

    I’m liking the looks if the pm complex more all the time. The 50 and10 dmas are ready to converge on the gdx which will likely line Up with Golds move to the 10 Low risk entry on a swing low near there.

  63. DG

    I believe silver will double top near $50. It will rally with gold and then when the next gold correction comes will probably make new lows while gold may not. I agree with Gary that it is very unlikely to make new highs, but a rally to 48 is a nice percentage from here. It will not go down while gold rallies.

  64. Felix


    Do you let strange bloggers who can’t pop over to Suisse buy you chicken burritos at Frank & Fionas? Doubt I’ll ever get back here, though heaven knows.

  65. fg100

    SLV will close with a black hanging man candle just under the 50d moving average. There’s no way this is positive…..

  66. Felix

    Hey that’s ok – if you’d said yes I’d say you really were a daredevil… However your loss! LOL

    [ouch! smackdown!]

  67. Poly

    SLV is just a proxy for an instrument that is traded 24 hours.

    Candlesticks are based exclusively off opening/closing/high/low prices. Thus the candlestick reading on such securities are flawed, IMO.

  68. Poly

    For each day of this new IT cycle in gold, it has been closing very near or at the high of the day.

    Gold’s normal behavior in bull runs, IMO, is to spike early in the day and fade out by the afternoon giving back 25-50% of the days gains, but still staying positive.

    I know 4 days don’t make a trend.

  69. Shalom Bernanke

    EXK up close to 22% on the week, SVM over 18%, after 2 up weeks prior.

    I did not add today, but did keep all current positions. Seems like we should be due for some sort of pullback, but I’m happy to keep shares instead of confetti.

  70. Poly

    Flawed is not the best word, but “distorted” for sure.
    Certainly for gaps, this past holiday weekend is a good example.

  71. LowTax

    Once again, Gary has proven himself to be well ahead of the game. Excellent work spotting the bottom G-man. I can’t wait to recoup some of the profits from silver’s collapse so I can come to Vegas and buy you a few burritos! Hell, I’ll even throw in a beer or two! 🙂

  72. SF Giants Fan

    Jobs jobs jobs

    Big surprise today? Not really

    Bay area CA where I’m at is laying off police, firemen and city employees.
    Last shuttle today, Florida, Utah, and other subcontractors will be (already started) cleaning house.

    I’m glad to be employed.

    What will it take to turn the jobs situation around?

  73. Éamonn

    SF Giants Fan, seems like the system is broken. With all the money thrown at the system and still no jobs. Seems incredible. And a booming stock market

  74. Gary

    It will take a new industry.

    Until we have one they can throw away all the money they like all it will accomplish is to put us deeper in debt.

    That means higher taxes or higher inflation or both. And both of those are a net destroyer of jobs.

    And now you know why all the work programs in the 30s only lengthened the depression and didn’t cured it.

  75. Ben

    Éamonn, throwing money at the system helps prevent the formation of industries which will create jobs. Instead, it encourages malinvestment of capital, misallocation of resources, encourages speculation in the wrong crap; further, the ZIRP destroys the ability for retirees to supplement their income safely and drives many into risk assets which eventually will crater (ala ’08) etc.

    In other words, you can’t print your way to prosperity. Iceland is a good example of an economy which is trying to avoid bailouts and is regaining it’s footing the old fashioned, legitimate way.

  76. Ben

    Gary, that new industry SHOULD have been windmills; or solar (the little we have is starting to be offshored); or genuine cures for productivity sapping diseases like Parkinson’s or MS (my brother has Parkinson’s, and I’ve become aware that a cure will never be found in the US because of the incredible money made by treating symptoms). How about super efficient autos, using lightweight alloys? How about leading the world in LED technology?

  77. Éamonn

    Ben, the words you mentioned “old fashioned, legitimate way” ring true. This idea of printing money is patently crooked. Its a con job. It seems really obvious to me. Why don’t the smart people know this?

  78. David

    It’s deflation. I’m amazed that anyone is surprised given the two historical precedents — the great depression and Japan in the 1990’s. The world is awash in bad debt that acts like a black hole sucking up all the world’s productive capital.

    Until the debt is destroyed through repayment or (more likely) default, nothing is going to change.

  79. Gary

    The auto industry and the energy industry are already mature industries. They may supply incremental job growth but they aren’t going to pull us out of this.

    What we need is a completely new industry. Something like the Internet or personal computer, electronics and plastics, automobile and mass production.

    My best guess is that will come from the biotech industry, but it’s not ready yet and won’t be for a while.

  80. SF Giants Fan


    That has always been the case. Aerospace in the 80’s, dot com and Internet in the 90’s-00’s. Real estate and finance last ten years.

    Now we have been spending on war, bail outs, QE1 QE2…

    Let the system fail, then let fix it instead if the constant bandaids.

  81. Éamonn

    The fault is in the political system. Letting the system fail is the correct thing to do but it has very negative political consequences.

  82. ...at ease

    Until we clean house and cut back their salaries and outrageous benefits, political system won’t get fixed. It needs to start with the current administration to lead the way if it is going to happen.

  83. ...at ease

    Transportation, healthcare, early retirement benefits, security, and perks we don’t even know about. Most industries and jobs have no retirement benefits other than your own IRA or 401 that you pay into. Not the politicians, they vote themselves raises and approve their own benefits. Where on earth does anyone do that other than a dictator? We need to start with them.

  84. Ben

    Gary, yes, new industry, like all my examples except auto. The auto part would be super efficient components of the industry perhaps.

    Éamonn, the elite know that printing money doesn’t help the general economy. They don’t give a rat’s ass about that — it helps THEM, and that’s all that matters. The elite get the freshly counterfeited FED monies, e.g. the military industrial complex, the bankers, the TBTF institutions which have their losses transferred to taxpayers.

    The mistake people make is in thinking they are stupid; they aren’t — they just don’t work for US. Follow the money and the transfer of wealth. It’s not an accident that the elite have possession of more of the national income and a greater share of the national wealth than at any other time in US history. Bernanke works for THEM, not us.

    So… we are all here because a side effect of their egregious monetary policy is to fan the flames of the gold bull. We are some of the few who will be spared (assuming we don’t screw up with a million dollars of out-of-the-money options that go the other way…).

  85. Gary

    James Altucher had a very intriguing idea the other day. His suggestion was to do away with Congress. They don’t actually represent the will of their constituents anymore. They are bought by lobbyists.

    With the Internet nowadays the population could easily vote on any new laws and the will of the people would prevail. There are too many of us for the lobbyists to buy our votes.

  86. ...at ease

    Before they start messing with SS or Medicaid, start with their benefits first, set the example for self sacrifice. Aren’t they public servants?

  87. Ben

    In California, they have police captains earning nearly 1/4 million per year, fire and police able to retire at > 100% of their earned income when they are just 52-55 years old.

    Those sorts of things must, and will end.

    In private industry, just look at CEO salaries. Those few individuals rob a company of future prospects. In the past 10 years, maintaining the CEO rocket trajectory of increases and literally required jobs to be offshored.

    Lack of employment opportunities for millions of Americans should come as no surprise to anybody.

  88. ...at ease

    Yes, I agree Gary, what started out as part time positions, they manuevered themselves into full time paying jobs and benefits instead of serving the people who elected them. They serve who stuffs their pockets with cash. Funny how they all write books now. Must be nice to have so much time on your hands, that you can write a book?

  89. Ben

    Gary, the one thing I would change about the constitution is to declare that people must be carbon based life forms — corporations etc. are not people.

    Then we can start passing laws to restrict the bastards and allow our gov’t to return to representing the people instead of being run by, and for, corporations.

  90. Ben

    at ease,

    I make it a point never to buy a book from anybody who used to be an elected official. My way of helping to stop that trend.

  91. SF Giants Fan

    Riots in the streets and vote the bum’s out I say.

    Most politicians don’t have a clue. All they care about is their next election.

    On that subject, All politicians shouldn’t get paid with public money during their re-election campaigns. Let’s see how long Obama spends traveling the country during his campain like many past presidents. They have a country to run.

    I’ve got a hundred more, but I’m going out to dinner to fill my belly and spur the economy.

  92. High 5

    The following is from Bill Bonner at The Daily Reckoning:

    We are sitting in our favorite café in Paris…listening to the Beach Boys and reflecting on the decline of the US Empire. Back in the ’60s, the Beach Boys celebrated a country that was young, growing, optimistic…and a winner. Now, what we see is the whole kit-and- kaboodle of life in the US giving way to desperation, delusion and an irresistible impulse to commit imperial suicide. The economy turns sour. The military becomes malignant. Households are corrupt, bankrupt and dependent. Even the churches sing their hallelujahs to Caesar now.

    What’s “imperial suicide?” It’s what empires do. If no other empire arises to kill them…they kill themselves. China will probably eventually crush the US militarily. But that is far in the future. The US can’t wait. It lets the zombies run wild.

    At home, Congress debates a “debt ceiling” measure, as if it made any difference. They’ve raised the ceiling 93 times since they first imposed a debt ceiling 94 years ago. What are the odds that they will hold the line this time?

    Zilch. Instead, they’ll continue borrowing and spending until the nation goes broke. Count on it.

    The US economy was a free-market success story for a hundred years…from the end of the US War Between the States to the end of the Vietnam War. It was the richest, fastest-growing, most innovative, most competitive, and most admired economy in the world. But then, in 1971, Richard Nixon replaced a more-or-less solid dollar, vaguely backed by gold, with a pure paper dollar, backed by nothing but the good intentions of government employees.

  93. Éamonn

    Is it possible that the US government could stop people from transferring money out of the country? I read somewhere too that they could force a percentage of your brokerage account into US Treasuries if they are stuck for money…

  94. ...at ease

    SF G fan, I have to agree with you, however Obama has been running for next election since his last election. It’s a joke. I love how the families travel around the 3rd and 4th years in office on our dimes. (Oh yeah, good will).

  95. ...at ease

    Eamonn, they can do whatever they want, and it will start with govt employees, since they fund and manage the accounts. Main reason I had my hubby transfer his govt funds to Fidelity. One step further away from their hands.

  96. SF Giants Fan


    Chuck reed mayor of San Jose is doing just that. If police and fire don’t take benefit cuts he will reduce head count. It make me sick to pay a fireman to sleep on the job. Work them 8 hrs and sent em home just like cops. They get 3% per year in retirement. So after 30 years = 90% of pay. Then they get a 3% increase per year. So after 3 years they are making 100% of their salary an then they work part time for the department they retired from.

    Double dip…

  97. Russell

    Take a look a Jim Sinclairs mindset website. Scroll down a way and he has a great video segment of David Stockman making a great case against Fed actions and policy. He argues that he was just looking after the elite of Wall Street, not the US economy.

  98. Ben

    They way they have retired at >100% is by cashing out vacation days (and sick days?) and getting the lump sum to factor into the equation.

    Worse, if you are a fireman or cop where the pay is 40k a year for 25 years and transfer e.g. to Orange county to 150-240k a year, your retirement is computed based on the highest years and hence you could retire at 135-250k per year even though most of your life you earned 40k in podunkville.

  99. David

    In California we have a ballot initiative system that works much as you describe, Gary.

    Unfortunately, the citizenry here is no different from politicians — they may say they oppose spending in surveys, but they routinely vote for expensive ballot initiatives that are to be paid for through “bond issuance”, i.e. more debt.

    Then they vote to cap the property taxes that would actually pay the bills they’re incurring.

    The reality is that politicians borrow and spend because voters like it that way. People love government spending — Social Security and Medicare are the most popular programs in existence, and they represent the majority of the federal budget (discretionary spending only accounts for 13% of the budget).

    In this country we have become like children. We expect the state and federal government to maintain roads, the national defense, the USDA to keep our food from being poisoned, to pay for our health care in our old age — we just don’t want to pay the bill. In this sense we are much like Greece, where nobody pays taxes but everyone expects to retire with a pension at 50.

    This was not how it was in our grandparents’ generation. They understood that nothing comes for free, and that bills must be paid.

    Until the culture changes where we are willing to pay for the services government provides or do without those services, nothing will change, regardless of what system of government we have.

    The only thing that will change things is when our debt burden forces us to make these choices, much as Greece is being forced to right now.

  100. SF Giants Fan

    Typical schedule is 3 days on and 4 days off. Then they reverse it. On their off days they will work part time. How many full time employers allow holding multiple jobs?

    Then the retirement calculation percentage is on the salary during the last 5 years. So during that time they work tons of overtime and take banked sick time and vacation to boost the average salary.

    What a system.

  101. Ben


    What you refer to is known as currency controls. Just review how Argentina screwed it’s citizens over and over for the playbook that might come to the US. Marc Faber has said he believes the end game in the US will involve currency controls (to trap you in US dollars) and in the confiscation of gold (although I really don’t know WHY they would do that unless a gold standard were considered anyway).

    Other stuff in Argentina though — confiscating retirement funds (401k, IRA type stuff). They would do that “for our own good” and they’d give us credits in a privatized SS system. In short, you’d be screwed, and they would force you to buy the debt that they are defaulting on via monetary inflation.

    If I hear substantial rumbling about currency controls, I will be taking a trip to Canada.

  102. ...at ease

    Ben, Why do you think we are here. I certainly don’t want to have to depend on anyone. Especially the govt. However, whatever we make here, they will figure out a way to take it from us also. So who knows who will be better off.

  103. High 5

    More from Bill Bonner:

    And every time we look at it, we see more evidence. California, the West Coast Greece, is going broke. Any guess why? From Bloomberg:

    California Prison Psychiatrist Paid $838,706, Data Shows

    July 5 (Bloomberg) – A chief psychiatrist for California’s overcrowded prison system was paid $838,706 in 2010, more than any other state employee that year, according to payroll figures released today.

    The doctor, whose name wasn’t released, had a salary range of $261,408 to $308,640, according to data released by Controller John Chiang. The total compensation was raised either by bonuses or payout of unused vacation time or sick days, according to the controller’s office.

    The 10 highest-paid state employees each earned more than $500,000 in the 2010 calendar year, for a total of $6.2 million, the figures show. All except three were a prison doctor or dentist. The most-populous US state runs the nation’s largest correctional system, with about 163,000 inmates, and is at 175 percent of capacity, according to the Corrections and Rehabilitation Department.

    And here’s a headline from The Financial Times:

    “The state is now the dominant force in US capital markets.”

    The article goes on to explain that American capitalism is now dominated by credit provided by the US government. For the first time ever, the feds are the “biggest source of outstanding home mortgage and consumer credit loans in the US.”

    What do you call a free market economy where the major source of financing comes from the government?


  104. Éamonn

    If I had a gross salary of $100,000 in the USA, what percentage of it would be deducted for taxes etc for the government?

  105. ...at ease

    And they tax our phones, our tvs, our cars, our gas, anything you purchase, is taxed. So not sure how they can say we need a VAT tax??? We already are taxed on everything.

  106. High 5

    At Ease

    I wouldn’t be surprised to find that the 7/14 newsmax thing is a big sales event similar to what NIA pulls with their scare tactics. Pay $1000 to get their option recommendations (huh, sounds familiar for some reason).

  107. Gary

    Actually the tax rate increases as your earnings increase the first $8500 is taxed at 10%. from 8500 to 34,500 is taxed at 15% and so on.

    And income of $100,000 would pay a final Federal tax bill of $22,372.

    That of course doesn’t include Social Security.

  108. Elaine

    Yes, our property taxes have almost doubled in the last 6 years. After 2006 our property value has done nothing but decline. We live in Scottsdale, AZ. I call the assessor’s office every year to appeal. The problem is that property taxes can be raised without a public vote.

  109. Russell

    The tax bracket for 100K is 25%. That is before standard deductions. In SC, the state tax on income is approx 8%.

  110. Elaine

    Gary is correct and the tax on self-employed is 13.5% for SS and Medicare. If you are employed you pay 7.6% and so does the company you work for.

  111. ...at ease

    High 5.
    They don’t make you buy anything, But they will give you information as to what is happening in the economy and what to do to prepare. Such as what we are doing here. 🙂

  112. Éamonn

    If there is a debt crisis, and you have physical gold, cant the government force you to give it to them at a particular price, and they they sell it at a much higher price?

  113. ...at ease

    High 5,
    I am a member of Aftershock group and they dont’ give options recommendations. If you have a $500k portofolio, they do have a broker who can manage your investments in bonds, gold, etc. They just discuss the economy and what you can do to secure your finances. What steps to take, where we are in the turmoil and what to expect next. I believe this is a gathering of like minded people to figure out how to approach our leaders to respond to what is needed.

  114. High 5

    at ease

    they want to have 1 million potential customers to sell to, can’t blame them. I just tire of constant sales pitches and joining “groups” through commercial enterprises when all the information needed is freely available.

  115. ...at ease

    High 5, I hear you. I just remove myself from all the mailing lists now for those selling something. However, the economists, I listen too, they are what lead me here.

  116. ...at ease

    I laugh, my husband used to ask me what I did with all his money after every payday while raising 4 boys.
    He used to say, I make this much money, why can’t you make it last? My response was, when I see that much coming through the checking account I will.

  117. Gary

    There are some things that governments won’t do. It’s very unlikely they will confiscate gold. It’s also very unlikely they will force you to buy government debt.

    For starters no one would comply. Any Congress that passed that law would immediately be voted out of office at the next election. And if taxes and living conditions become too onerous it leads to revolutions. No government will willingly create conditions that will cause a revolution.

    Now you know why China is so reluctant to let the Juan float freely. It would severely impact their export business which would put millions and millions of Chinese out of work. A hungry population is a militant population.

  118. ...at ease

    I dont know Gary, I wonder how some of these people ever got elected. What lies did they tell or did people just not listen to what they were saying?

  119. daniele

    hi gary,
    on week end report you told one can expect about 24% rally on gold.But from this level it means 1915 more or less on top.Don’t you think it is a little bit too much?On previus report you told about 1800 on gold as final target.
    thank you so much.
    Have a great week end.

  120. gough

    Good morning..Do you think the dip down on Friday constituted half cycle low? Also, any new sentiment readings that look interesting?

    Have a great weekend everyone.


  121. Gary

    I wouldn’t pay much attention to the silver COT data. It was flashing a buy signal at $50.

    I do however put a lot of stock in the buy signal on gold.

  122. Rebecca

    Hi Gary,

    Thanks for the comment. Although I agree with you that in this IT cycle gold and miner may outperform, I don’t want to ignor the potential silver may offer. As a result I have also taken a small position in AGQ along with DGP, GDX and GDXJ. Thanks for the great cycle work.

  123. gough

    So realistically we could be looking at Gold cycle lasting to November. How long did the last cycle run?

  124. aviat72


    For us long-timers, your interpretation of the COT data and the spreadsheet used to be a feature I loved. Could you add a section at the end of the Weekend report which lists the highlights from the COT data, on a regular basis?

    I know you look at the data, but only mention it when you see something is of interest. However, purely as an archival and tracking mechanism, it would be great if you make it a permanent feature of the weekend news letter.

    Also what is your take on the equity cycle? While price has moved up substantially the actual quality of move (as measured by bullish PnF charts) is quite poor. In the discretionary sector while the market has moved up to new highs, the bullish PnF charts are below the prior swing low

    $BPDISC vs XLY

    Same story for tech
    $BPINFO vs XLK

  125. TC

    Hi Gary and all,
    Are you sure the bottom of gold is in?Is it possible that when gold on the way of the correction often affected by economic news? I mean investor smelled the bad news from economic so gold was pushed higher before the news released.In fact, the bad economic news makes metal up in short-term(days- already happened)but in long-term(weeks) goods, oil, metal will cheaper because of getting harder to earn money . That why when the news released as they expected the price of gold not up more and gold will continue to finish the correction wave ?

  126. diana

    From the above Jim Willie commentary (9:15 am): “Lawsuits against the tainted SLV and GLD funds are in progress.”

    Should this be of concern to those of us who are buying positions in GLD or SLV? Thanks in advance.

  127. Gary

    What does the stock market have to do with gold.

    I also think one has to accept the fact that this kind of momentum move isn’t going to roll over quickly. The S&P isn’t going to be tagging the 200 day moving average any time real soon.

  128. Gary

    The gold cycle will run until the dollar forms its intermediate bottom. The last couple of years that yearly cycle low for the dollar has occurred in late November or early December. That would entail a slightly stretched cycle this year if it were to bottom in the same time. But that’s not out of the question.

  129. Gary

    Most of the time the COT reports are meaningless. It’s when they get to bullish extremes that I want to take notice.

    I commented on the Blees rating on gold last week. It got slightly more bullish this week.

    It takes time for anything to work from extreme oversold conditions to extreme overbought and that includes the bullish percentage chart.

    Realistically the rally is only two weeks old. You can’t expect the bullish percentage chart to rocket into overbought conditions in only two weeks.

  130. ALEX

    I know most here are avoiding silver , and I can respect that, but just figured I’d say HI and mention this.

    I’ve been looking at charts of AG and EXK as “miners”( they are basically twins on a wkly)…I see a move that is just starting and has Plenty of upside.


  131. Gold Lion

    I am very bullish on silver. Silver has a huge industrial use unlike gold….Solar panels have a lot of silver and every missile has a lot of silver. I only bought AGQ after the crash from 50 to the low 30’s, but I think in the short term we could see silver in the 40’s again and in the long term we could see silver in $300 to $500 range.

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