THE REAL STOCK MARKET AIN’T SO PRETTY

When priced in something that has real value and cannot be debased (gold), one can clearly see that stocks have been in a severe bear market since 2000. (If one were to look at PE valuations during the same period they would see the same bear market.)

In the chart below I have marked the final phase of several gold C-waves. These highly speculative periods tend to end as a parabolic blowoff rally with gold stretched quite far above the 200 day moving average. The final phase of a C wave rally also tends to correspond with another leg down in the Dow:gold ratio.

After an extended two year consolidation I think we are now due for that final explosive move that should drive the next repricing of stocks against gold.

I expect we will see a combination of gold rallying wildly higher while stocks rollover into the next cyclical bear market. I’m looking for a Dow:gold ratio somewhere around 6 to 1 later this fall. If gold rallies to $1800 (my best guess) then we can look for the Dow to drop down around 10,000.

As many of you may have noticed stocks tend to put in major intermediate lows in November and March. The dollar often forms it’s yearly cycle low in November. If the dollars three-year cycle bottom is still ahead of us, and it’s starting to appear that it is, then the currency crisis that we avoided in May should come in late October or November this year.

That currency crisis should drive the final parabolic C-wave move in gold and the first major leg down in the stock market.



We should then see a relief rally in stocks as the dollar crisis comes to an end and gold will enter a severe D-wave, regression to the mean, profit-taking event.

The relief rally in stocks unfortunately will be short-lived. With no true productivity to drive it the stock market is not going to be able to fight a rising dollar.

Now that the last true period of productivity has ended (the personal computer and Internet boom) the only way stocks can resist the forces of the secular bear is through expansion of the money supply. That becomes painfully obvious when one looks at a 10 year chart of the Dow priced in gold.

The problem of course is that printing money is not true productivity. Printing money has consequences, as we found out in 2008.

It won’t be long before we begin to suffer the consequences of Bernanke churning out trillions of dollars to save the financial system.

But who’s gonna save us from Bernanke!

726 thoughts on “THE REAL STOCK MARKET AIN’T SO PRETTY

  1. catbird

    Nice post, Gary.

    Maybe this is a “Captain Obvious” moment, but if people who still have dry powder want to buy gold, the $1607 area would seem a natural buy point–assuming of course we get there tomorrow. What was once stiff resistance should become firm support, right? I wouldn’t expect the next daily cycle low to get below there.

    Gold has already dropped about $10 from its high tonight. We might just get there.

  2. MrMiyagi

    I have a feeling that the Big Boys will let the market drop for 2-3 days and then do a show of “We’re gonna save A-M-E-R-I-C-A” in comes the cavalry with horns blowing and guns blasting putting the next fifty generations into an insurmountable debt.

    I think that this won’t drag past Wednesday night into Thursday morning time frame.

    Then again, what do I know?

  3. sophia

    Miyagi-sensei,

    it seems a very likely scenario indeed .
    The market is lower than on Friday but pretty nicely up from the lows one week or so ago… Those politicians are full of BS and the traders know it.

    Gary, very interesting post. Are you playing at one point to show us how to short S&P and add to long Gold for the same $$$ amount?

  4. Bullion Baron

    Gary, you think that precious metal stocks will follow the metal rather than the general stock market? A drop to 10k DOW could see some major margin calls being made and perhaps some forced sales even in the PM stock sector…

  5. Bullion Baron

    Also what effect do you think this currency crisis will have on commodities? Will other resources hold up against the panic or only the monetary metals?

  6. JEFFtheFLEA

    off topic

    i found it interesting that the swiss franc is doing well and has good fundimentals. Now they have a problem, they cant export and be compeditive. So what do the swiss companys want to do to their employees? they want to start paying them in euros. their currency is to strong and they cant keep up ( or down as the case is). i guess they may be forced to join the race to the bottom with the rest of us.
    i just throw this out there because i dont fully understand it and thought someone might add

  7. 23t870

    Gary,

    If Gold is headed for a parabolic C-wave top I would think that either 1800 may be a tad conservative or the time frame for the parabolic move may be more accelerated than you suggest.

    Gold has put in 200 point legs. The past rally from March to May added almost 200 points without it being a parbolic top.

    The March 2008 C-wave top saw gold stretched about 33% above the 200 MA.

    Right now gold is about 11.5% above the 200 MA.

    To get to 30% above the 200 MA, gold would need to get to about 1864 from the current 200 MA.

    From this past May to June 1st, the 200 MA for gold rose about 63 points.

    Assuming a 63 point rise in the 200 MA from the current level of 1434 brings the 200 MA to roughly 1500.

    30% above 1500 would have gold at 1950.

    Now that would be a parabolic rise!

  8. Slumdog

    So, instead of SI being on the backside of the parabola, this is like I’ve been saying, the frontside, with the recent dip being analogous to 1980’s frontside of the parabola.

    SI to 130 would max it out in terms of being co-equal in even buying power to the 1980 high of $50.

    But you’re looking for 1800 when 1800-2100 is the equivalent of GC’s 1980 high of 850.

    Both in SI and GC, in real, equivalent-to-1980 buying power, we can expect a “double top”.

    Then the D wave would be appropriate, and thereafter, the serious blow off tops in the PM’s, spelling the failure of the USD and probably most if not all fiat.

  9. Slumdog

    However, today, the markets will open with breakaway gaps, NY Pit vs NY Pit. These gaps most of the time, fill. We just saw the last gap fill and get stomped on for some days.

    It’s not unreasonable to see a quick flash drop to Friday’s high and then take off. That’s the highest probability direction, down, at the moment. Once Fri’s high is touched, then the concept of gap filling is no longer in force.

  10. Michael

    Marginal failed move to new highs by SI continuous at $41 – these can be ominous in terms of follow through. Stop-take and run by the burglars …

  11. MBS

    Gary-
    Why cant the SPX 4 year cycle low due in mid 2012- early 2013 run long? Is this due to the previous cycle running past its normal timing band?

  12. Gary

    Sophia,
    I don’t expect to be shorting the stock market anytime soon.

    Bernanke and his printing press are too dangerous.

  13. sophia

    Got it! I learned my lesson from few months ago and I agree with you!
    I was just trying to apply your idea of Dow vs Gold ratio

  14. Gary

    In case you haven’t figured it out every time something gaps up big hedge funds sell trying to fill the gap.

    Once the gap fills the hedge funds cover and usually the asset recovers.

  15. Gary

    If you want to figure out what everybody else is thinking just look into your own mind. What is your first inclination when you see a huge gap up in the morning?

    That’s right you’re nervous and you want to sell and take your profits. Do you think everybody else thinks different than you do?

  16. NJ

    Gary:

    Newbie question: Aren’t Hedge Funds smart money? If so, why would they short a Bull by shorting gaps and picking pennies in front of the Big Bull?

  17. Shalom Bernanke

    catbird,

    I’ll buy dips, but am not too concerned about a gap fill as my spot to add.

    In fact, if prices just go sideways for awhile I don’t have a problem adding at these levels. Other than that, it doesn’t seem like there is much need for action today.

  18. TheBookGuy

    Wow, what a nice move up! I guess I now expect the new debt deal to allow gold to rest for a bit probably into the daily cycle low…

  19. Gary

    They aren’t going to post their positions for you.

    Switch your charts from daily to weekly and stop stressing about every little wiggle.

  20. Michael

    WW, not many disclose their intellectual capital extensively even in their monthly reports to clients. Marketfolly.com post reports from Merrill Lynch etc that tracks what can be gleaned from the delayed regulatory filings of – relevant more for the stock pickers than the market timers.

  21. William Wallace

    Michael,

    Reason I asked is because I just read below on MarketWatch, and was trying to confirm that data but can’t find those numbers on the CFTC site:

    “Net long positions on gold futures, or bets prices will go higher, increased 7% on the week, data from the Commodity Futures Trading Commission released late Friday showed. Net long positions for the week ending July 19 reached a little over 238,000. That compares to little over 222,000 the previous reported week. Gold hit a record $1,602.40 an ounce on Monday, and ended higher Friday at $1,601.50 an ounce. Open interest this week reached 854,141, compared to 775,360 the previous week.”

  22. catbird

    Shalom,

    I could easily see gold bouncing around about where it is here until the resolution to the debt ceiling hits the wires.

    Or, it could take off any time now but put in a sharp and scary dip on the debt news to flush out the chasers. Too bad my crystal ball is in the shop : )

  23. William Wallace

    Troll,

    The smack down hasn’t even occured yet, a $10-15 drop on the debt ceiling news. The pop last night was on the “no deal yet” news, this $10-15 pullback today from the highs is in preparation for the “we got a deal” $10-15 smack.

  24. ร‰amonn

    looks to me that there wont be any “deal”. both parties will attempt to pass legislation through the US Congress. I wouldn’t be surprised if Obama will be cornered & forced to sign the Republican bill, or else risk default.

  25. Gary

    Look at the big picture folks. Gold has now broken out of the consolidation and so far is still holding the breakout.

    The miners are struggling to break through stiff resistance at 580. Once they do I expect it will be a rocket shot straight to 600.

  26. Gary

    Not to mention the dollar is forming a bear flag and still has 5 to 10 days before the next cycle low is due.

    Does anyone really think gold is going to drop sharply if the dollar is collapsing?

    When the debt deal gets done gold will use that as an excuse to move down into its daily cycle low. The conspiracy nuts will go crazy pointing out that raising the debt ceiling means more money printing and gold should be going higher.

    Most people won’t be able to buy into the dip and they will miss another golden opportunity because they made the mistake thinking that the debt ceiling debate has anything at all to do with gold.

  27. Rob L.

    LowTax,

    We have just started the move in gold and silver – with probably over 2 months of rising prices left. You aren’t planning on selling here and trying to buy back on a dip, are you?

  28. Slumdog

    Per my post at July 25, 2011 3:49 AM, the daily NY Pit gap’s filled.

    That sets up a lower probability for filling a gap that will occur four or five more out in time.

    Every trader knows the game now. So, that game ain’t gonna work very well for a while.

    GSTroll, it’s not a key reversal, but there are a lotta latecomers with weakhands who now are to be slaughtered. Give it a while here. There’s no rush. The parabola is not on an hourly or daily. So, give it time to get those who just got in and those who dunno what to do except get anxious to get out. A scary drop into the prior gap which filled last week will be a buying oppty, maybe, if it sets up right. Remember, there are still a lotta newbie positions here. Very few have taken positions when BB did.

    A low before a high makes a lotta strategic profit sense at this time.

  29. LowTax

    Gary, RobL, I agree with you. I didn’t make it clear that I was referring to my leverage. I will trim it if gold acts weak beyond a certain point, regardless of the outlook. I will maintain my 100% baseline however ๐Ÿ™‚

  30. William Wallace

    I can see us easily tagging the 10 day again today on the debt ceiling news crap, then rebounding back to the 1610-1615 level. Thats if its a headliner today.

  31. Harry

    Gary, what’s a typical DMA tag on a daily cycle low? Any particular level you’ll be looking for us to bounce off of?

  32. jhnewman

    I believe we started a new set of “5-waves-up” for spot gold on Friday morning at 1585. We may’ve put in the wave 1 top at 1623 Sunday night (if so = +$38 Wave 1). If so, I wouldn’t be at all surprised to see a wave 2 down into 5:15 P.M. Eastern (options expiration) that “miraculously” dips under 1600 — with wave 3 up to start thereafter.

    I have no idea if this is going to happen, but it will be very interesting to watch and see what actually does happen.

  33. aviat72

    For those monitoring GC options, I presume the options expire at 5:15PM (Eastern) tomorrow?

    tajir:
    Regarding your questions about which option strategy to use: I think it would be best if you plot them in TOS. That way you will make a decision you are comfortable with. Everyone has their own risk tolerance and trading style and what works for one may not work for someone else. Ratio spreads and OTM options are both high gamma plays with slightly different characteristics; more important is to get the big picture right. (Thanks Gary).

  34. MrMiyagi

    I’ve thought about this many times but never said it,
    The REAL reason for the high unemployment is too many people.
    The job market is saturated and with present-day automation the workforce can remain steady even with increased output. The government can’t create jobs out of thin air without the workers paying for them.
    That is my take, I’m not the first to think it I’m sure.

  35. LowTax

    Mr.M, I work for a company that specializes in putting people out of work through automation. I can also say that this is not only good for the economy as a whole but also ultimately good for those laid off. Generally speaking, automation results in higher quality and lower costs. Consumers benefit by having more disposable income. More disposable income means other things can be purchased, things that CANNOT be done by machines.

    For instance, with more money in my pocket, I might buy more fine wine and liquor. The unemployed are generally free to move into those fields where there is no compentition from machines. The most obvious path would be health care – machines cannot care for the elderly and we will have to pay more and more for them as they age.

    So no, there are not too many people.

  36. Ivan G

    Gary,

    do you expect miners to bottom before GLD. Today is the 26th day from their daily cycle (if counted them correctly).

  37. pimaCanyon

    DP,

    You’re right, I just looked at the Cycles section of the Terminology doc on the premium site and I don’t find a definition there.

    A failed cycle occurs when the low of the current cycle drops below the low of the previous cycle.

  38. DP

    pimaCanyon —

    What’s wrong with the situation when low of the current cycle goes below the low of the previous cycle?

    Is this bull-market specific situation?

    BTW, are you from Tucson? I lived in there from 1990 through 1996.

  39. William Wallace

    Right now im watching gold trade on teirs, the tiers are from the 1621.90 top to the 1609.40 bottom with a midpoint pivot between that high and low….gold just hit resistance at that midpoint pivot…the teirs are created three hours apart (making new lows every three hours), so if this pattern holds gold will drop to below 1604.90 within the next 20minutes

  40. pimaCanyon

    DP,

    Yes, I live in Tucson. Used to live near Pima Canyon.

    A failed cycle generally means the trend is down.

    In a bullish trend, each daily cycle low within an IT cycle should come in higher than the last. Likewise in a bullish trend, each IT cycle low should be higher than the last.

    When a daily cycle “fails” (makes a low lower than the last daily cycle) it usually results in prices moving down into an IT low, so DC failure would indicate IT has topped and IT low lies ahead. You can extrapolate the same thing for IT cycles and the next larger cycle, etc.

  41. DP

    pimaCanyon —

    Thank you, that’s clear now for me.

    BTW, all these concepts of left, right translated and failed cycles become very clear from simple mathematical exercise.

    Let’s take two sinus functions with periods different by factor say, 10 and faster oscillating function having the amplitude 1/10 of slow one.

    Then sum them up, and you will see that resulting function wiggles exhibit all those properties of left, right translated and failed cycles.

    The trend direction in this case will be slowly oscillating function.

    That’s that easy — we just deciphering, roughly speaking, superpositions of oscillations of different scales.

  42. DP

    Probably the last words

    “You never made ten dollars yet,
    You say you can balance the national debt
    If you’re so smart,
    How come you ain’t rich? “

    sound very special today ๐Ÿ™‚

  43. Rob L.

    Harry,

    I think you have a point.

    WW, I have been with Gary for a few months and what I quickly discovered is that one can get an amazing return with Gary and Cycle Analysis by doing barely anything.

    If you buy when Gary buys and sell when he sells I bet you a burrito smothered in sour cream and hot sauce that your return will be better than you could have ever imagined.

  44. Gann360

    AAPL Observation

    AAPL Flash Crash Low was $200 Bucks. Since May 6th ,2010 AAPL Doubled today ,When it Tagged $400.00 Lots of Vibrations in Price Here.

  45. William Wallace

    If I didnt trade daily besides my old turkey account I get real bored and start to feel too old, and like Gary my neck starts to hurt sitting here at my desk.

  46. fubsy_cooter

    The miners underperforming today is a bit auspicious, but there are many ways to read it. Perhaps the miners are signaling an impending top to the daily cycle. Or..Hedge funds taking profits due to projected S&P weakness as a result of fears regarding the delay of a debt deal/debt burden potentially putting pressure on equities; or fear that a completed debt deal would lead to a drop in the PMs and associated mining stocks (only temporary IMO). One possibility from the latter two is that without a debt deal gold rocks higher and the miners end up following gold.

    Whichever it is, we are in the middle of the first daily cycle in a new int cycle (likely the finale of a powerful C-Wave) that has shown extreme strength in gold, is now rt translated and is occurring at a time in which a parabolic rise is due. Not to mention mounting sovereign debt issues that will continue to resurface and counteract any good news that may pressure gold for a day or two.

    I suspect that the top of this daily cycle has not yet been reached. At day 15 we likey have 8to 10 more till a cycle bottom. Any sideways to slightly downward consolidation is healthy at this point, in my view.

  47. Harry

    August GC contract finished at 1612.2. I was the closest without going over (per Price is Right rules), so I declare myself the winner.

  48. David

    Miyagi,

    The problem with the “too many people” thesis is that people consume goods and services. Less people = less consumption.

    If anything, the problem in the developed world is too few people. Europe and Japan are experiencing negative population growth as a result of low birthrates and restrictive immigration, and flatlining economies. By contrast, China, India, and Brazil truly have “too many people” and are forced to worry about overheating growth.

    The problem is too much debt, not too many people.

  49. MrMiyagi

    sophia, David,
    When I say too many people, it is in relation to employment.
    Now granted, this is not from a scientific paper or research but it is evident to me.
    Let’s say Wal-Mart employs 200 people at one megastore somewhere with a population of 100,000. These cashiers and stockers and managers, drivers, cleaners and what have you can serve that populace or less. If your population goes to 150,000 then you may need more cash registers, more frequent deliveries and general staff but it is not going to be a thousand people! They might add 30 more to their staff.
    Multiply this by a few more stores,openings, factor in some bankrupcies and figure out that some businesses won’t need to increase their workforce and you have less jobs than job seekers.
    In fact if you had 50,000 people added to your existing population you would need around 12,000 new jobs at the least.

    That’s the way I see it, might not be 100% accurate but it seems pretty good.

  50. Gary

    It’s not that we have too many people, it’s that we need a new industry to create jobs that were lost when the tech bubble and housing bubble burst.

    The personal computer and the Internet created millions and millions of jobs worldwide. Unfortunately like any new industry it over expanded. Once the bubble burst the market killed off the weak companies taking with it a big chunk of the workforce.

    Greenspan and Bernanke temporarily brought those jobs back by creating a real estate bubble. Unfortunately that bubble was short-lived and we lost the jobs again.

    If we would just let the market cleanse the debt bubble then capital that is now flowing to support an insolvent financial system would instead flow into research and development and we would get through this much much faster.

  51. jhnewman

    William:

    Day 16 on spot and, I believe, futures. (May be wrong on futures.) Day 15 on GLD.

    I go with Day 16, since spot traded on July 4.

  52. MrMiyagi

    Gary,
    That is a different way of looking at it, the need to have a new industry to employ people.
    It’s not farming.
    It’s not computers.
    It’s not automotive.
    It’s not fishing.

    What will it be?
    Until then, too many people for the existing job market.

  53. MrMiyagi

    WW,
    Biotech needs educated researchers and dumb test subjects and both numbers are limited.
    Unfortunately biotech will also extend the lives of many unproductive leeches… just can’t win..

    Global thermonuclear war maybe?

  54. William Wallace

    As new industries come, and old ones go, so will employees. I think there will forever be a cycle of low unemployment, high unemployment… as the rotations continue throughout history.

  55. traderlady

    Good report Gary, as usual. It sounds like 1578 or 1600 may be levels to add with extra powder:) I really appreciate the simplicity of your approach.

  56. Romeo Bravo

    Mr. Miyagi, I don’t think to many people is ever the problem. In fact, the world is going to suffer from underpopulation in a much worse way than overpopulation. Malthus had it wrong and the so called “population bomb” believers do as well.

    In the end when you don’t have enough bodies, you can’t continue to produce wealth and your society dies. This is what is going to kill China. The one child policy will make them old and poor sooner than they can make their society rich. Bet on it!

  57. Poly

    IMO, we’re not ready for a move down towards a cycle low, this daily cycle has not been satisfied.

    I’m looking for a 4 day run right here that will leave many speechless.

    It shouldn’t matter either way, this IT cycle is a monster and will correct all timing.

  58. rose

    Would someone please interpret very simply the current commercial net short position in gold?

    With sincerest thanks and kindest regards,

    Rose

  59. Gary

    You can find the COT positions in the COT spreadsheet link. Until it gets to extremes (Blees rating of +90 or -10) the COT’s are mostly meaningless.

  60. Gary

    I would further add that a Blees rating of 0 isn’t necessarily bearish as gold can continue higher for many months while the commercials are heavily net short.

    Commercial traders aren’t any better at picking tops than anyone else.

    Really all I ever use COT reports for is spotting bottoms.

  61. SF Giants Fan

    Gary

    What bullits does the fed, Ben have left to use? What trick do they have up there sleeve to try to turn the economy around? See my chart above and it looks like dooms day. Can there be any good news in the next employment report?

  62. Gary

    All the Fed can do is make the problem worse.

    They tried printing money to stop the recession in 2000 and it caused a housing and debt bubble which ultimately led to the second-worst bear market in history and the most severe recession since the Great Depression.

    Instead of learning his lesson Bernanke made the same mistake again only on a much larger scale.

    The rubber band theory, action/reaction works not only in the stock market but in the economy. The bigger the economic boom the larger the collapse is once the boom is over. Basically we’re just talking about regression to the mean.

    Greenspan and Bernanke printed trillions of dollars, it gave us one hell of a party, and one hell of a hangover.

    Instead of learning from his mistakes Bernanke is making them again.

    We’ve had the party for two years now, it’s about time for the hangover.

  63. Hack

    EXK’s reluctance to hold above 11 and SLW above 40 is not a good sign. I will sell on any further weakness, book my gains and move on.

  64. Dan

    This action just seems like gold is sitting around waiting for positive news on the debt ceiling to get slammed down. There should of been big gains today but half of them were gone by the end of the trading day and here we are sitting at the same levels as last week. With the options expiry tomorrow, I can only imagine big money will try to push this thing under $1600 into the close tomorrow. If that happens, we are right back in the consolidation range.

  65. Poly

    Both were full of shit.

    It’s all over red rover, just a matter of some years now.

    People should not be suffering like this, they both went them to suffer more. Amazing ignorance.

  66. Poly

    Dan, gold is at ALL time high’s,

    It’s not like this event is new or that you really expect a default……some perspective.

  67. SF Giants Fan

    Let’s all pull together and help this great country get out of the deep hole they have dug by paying our fair share of capital gains next April.

    Thanks again Gary…

  68. Gary

    Dan,
    The longer it takes the better for gold. We all saw what happened to sentiment after 10 up days in a row. At that rate the rally would be over in a month.

  69. aviat72

    1615.2 They are absorbing almost 500 contracts here. I think the op-ex games have started. 1600 seems to be the number being talked about. Even that break in DX could not get through that level. The thing is that if it breaks 1600 it will trigger a bunch of sell stops for the late comers….

  70. Gary

    I think way too many people are way too focused on a meaningless options expiration. There have been plenty of times when gold soared during an options expiration.

    Of course the manipulation bugs conveniently overlook those times.

  71. Keys

    I am wondering if we don’t get another bail out type event….fail then a quick return to the table for the pro vote….wondering if both parties take this to a default, which isn’t a real default, just to blame the other party….then both parties play the hero game…

  72. William Wallace

    Looking at the previous rallies out of intermediate bottoms and how gold pulled back to the 50dma, right now gold is stretched much further above the 50dma than previous daily cycles.

  73. aviat72

    Gary:
    Some one is trying hard to hold the price at 1615. They absorbed almost 700 contracts refreshing the offers (never more than 20-25) on the DOM.

    The bulls were defending the VWAP at 1614.2. Then that JPY spike happened and we had a long liquidation spike down to 1610 which has since recovered as we are back at 1614…

    So they are definitely sellers at that 1615 level with deep pockets. There are a lot of scared longs who panicked at the first DX spike (the shorts at 1615 did not). Note that 1615 area was being defended in the afternoon also.

  74. William Wallace

    Aviat,

    I see that right now in futures, they just took it from over 1615 to 1611 in a 5 minute candle, but buyers stepped right in and took it back up to 1614

  75. Gary

    William,
    I don’t think you’re looking at the right intermediate bottoms. I think we are coming out of the last consolidation before a final parabolic C-wave rally.

    Look what happened as gold exited the final consolidation during the last two C-waves

  76. Gary

    Aviat,
    What difference does it make?

    Do you think that sellers can stop the intermediate cycle?

    Like I’ve said many times in the past, in a true bull market anything that suppresses price below true market levels will only increase demand.

    This is why the manipulation theory simply cannot work. If the government or Federal Reserve is trying to suppress price, then they are the reason that gold is at $1600 an ounce instead of $1200.

  77. Gary

    William,
    This intermediate bottom is not the same as the last four or five intermediate bottoms. As I illustrated in the link I think this is a final consolidation before the parabolic phase of this C wave.

    Look what happened as gold exited the last two consolidations before a final parabolic move.

  78. Gary

    William,
    I think you need to take a step back and look at the big picture.

    All other intermediate declines took gold back to the 150 day simple moving average. At the recent intermediate cycle low gold was so strong that sellers were barely able to take it under the 50 day moving average. It never even got close to the 150 day moving average.

    Gold is showing incredible strength and has been since last fall. I think you are getting sidetracked by the daily wiggles and are missing the big picture.

  79. William Wallace

    Gary,

    Thats not true gary, im right with you my friend…are you forgetting that I was the one who pointed out that gold would bounce off the 75sma and then the 100sma before the 150sma bottom (which never happened in this Intermediate cycle)?

    Im just trying to understand exactly what your thinking and looking at at all times ๐Ÿ™‚

  80. Rob L.

    If I calculated with accuracy, the last two C-wave cycles topped roughly 20% above the breakout ( where Gary circled). If gold did the same thing this C-wave, $gold would be at $1900.

  81. Jerred

    Aviat,

    Here is some food for thought. How do you know they are really sellers?? It comes across the time and sales but you really don’t know if they are true sellers.

    We are a day before expiration. They could buy cheap ATM Puts or slight OTM Put options. Push the futures lower and expand Volatility in the options.

    Sell the puts back and cover the shorts via futures.

    They trade these setups all the time. That is one problem with depending on the DOM for trades.

    Just a thought

  82. William Wallace

    Gary,

    “At the recent intermediate cycle low gold was so strong that sellers were barely able to take it under the 50 day moving average.”

    Gary we were below the 50sma…we bounced off the 75sma and 100sma exactly as previous cycles, just no bottom on the 150sma as previously.

  83. Gary

    Don’t forget that the average leg up is roughly 24% from an intermediate bottom. So far gold has only rallied 10%. And if this is the final parabolic phase we should probably see more than 24%.

  84. William Wallace

    Gary,

    Now…why are you and everyone ganging up on me today telling me to step back and look at the big picture? What the hell did I say or do to deserve these vicious attacks….lol????

  85. Gary

    Gold only spent 7 days below the 50 DMA. And other than one day most of that time it was $20 or less below the 50.

  86. William Wallace

    Yeah it was short lived below the 50sma (as I was pointing out in real-time)but we did tag the 75sma for a short bounce and then dropped to the 100sma where we bounced out of the intermediate bottom. and already we have rallied $146, and thats not even off the 150sma.

  87. William Wallace

    Gary,

    One day when I finally meet you in a country on the other side of the planet, im going to give you a big hug for all you have taught me…then im going to snatch you and body slam ya for giving me a hard time doing it ๐Ÿ™‚

  88. ร‰amonn

    WW, I wouldn’t try any funny stuff with Gary. I don’t think he would be found wanting in taking care of himself. That’s my sense

  89. William Wallace

    Gary,

    I may be going to Vegas (if not Michigan) to see a specialist in amputations to get another revision on my leg…maybe we can meet and climb a cliff together, what do you think?

  90. William Wallace

    Gary,

    Why do you hold positions through daily cycle corrections but not intermediate corrections, I assume it is because an intermediate may become a D-wave?

  91. aviat72

    They seem to have put a lid at 1615. Completely decoupled from the DX.

    Incidentally Goldman is saying that the bar for QE3 is very low. This might explain some of the O/N DX weakness apart from the “Deal or No Deal” fetish.

  92. Gary

    Picking daily cycle tops is next to impossible.

    Spotting intermediate declines is much easier. When a daily cycle low is violated the odds are very high that an intermediate decline has begun.

  93. aviat72

    Why would some one want to cap Gold on a night when the first whiffs of QE3 are out is beyond me..

    Mainstream media calls for QE3

    It got through 1615ish only to find another wall of offers at 1616.5. They have been hitting the offer like there is no tomorrow but price is not moving at all.

  94. Harry

    I’ve seen this movie before… Gold always does this – the dollar takes a big hit, gold mills about for a few hours/days, everyone screams about the ‘forces of evil’ manipulating the market, and then gold rallies $30 and everyone’s mouth is all of a sudden so full of money you can’t hear them whining anymore.

  95. Elaine

    Gary, thank you for the chart. Sure wish I had found your blog in 2006. But, I wonder why we are trading, and not just staying Old Turkey?

    I know there will be ups and downs, but if the end game isn’t for another 4-5 years, wouldn’t we be better off holding?

  96. Sasa

    Mr Miyagi,

    regarding unemployment and population.

    The answer might be actually in shorter work week to lower unemployment. It’s been a trend through last couple of centuries that work hours/week dropped as technology took over jobs.

    There’s a really interesting article on Bullion Bulls Canada that discusses this:
    Where is 4 day work-week

  97. Sasa

    The article also explains why high unemployment could be a policy of some to lower inflation, and permament percentage of unemployment a generally desired component of economy (to some).

    One might not agree with it all, but it gets you thinking.

  98. Gary

    Elaine,
    I prefer to avoid an intermediate decline if possible. Most investors aren’t emotionally equipped to hold through an intermediate decline and will end up selling at the bottom.

    Also we haven’t gone to anything like a true D wave yet. Trust me you do not want to hold through D wave.

  99. Michael

    While I’m in the “it could be a moonshot, so you’re betting poorly to not be pretty long” camp, there continue to be glaring non-confirmations of this move into the 1600s from silver, miners and many sensitive small caps in sector.

  100. Gary

    So do you think the intermediate cycle is finished after only three weeks?

    If not I don’t see that there’s anything to do. Just turn off your computer and go do something else for a couple weeks.

  101. sophia

    That sounds like a great advice Gary… Currently at my prarents on the seaside with the kids, quite a nice way to wait for the parabolic move… Enjoy your climb. ( don’t forget Toby’s water bowl, it must be excruciating hot in Vegas)

  102. Michael

    That’s one alternative and a good one. Another is trimming some into this move so that 1560 is not particularly painful. Yet another prudent one, and I don’t want to beat a dead horse here, is selling options that have gone way in the money and taken your exposure levels much higher than when the move started e.g. 15% long a call option calculated correctly using no shares * delta * underlying share price + $ exposure could mean easily 60% exposure alone, and coupled with futures/DGP could mean 250%+ effective long and a pending drawdown disproportionate to the gain from the upmove.

  103. Gary

    If you have 250% exposure and you have not been paying attention when I say massive leverage always ends up in a blown out account.

  104. Michael

    True, and I certainly don’t as have been through declines that make 2008 in US look like a mosquito bite. I’m saying 70% DGP is 140% exposure to an underlying asset + options that have gone far ITM gets you about there exposure-wise. That sort of horsepower needs active management.

  105. Rob L.

    Gary,

    I’m confused – we had a lot of our money invested in HZU during January’s IT cycle (which is 200% exposure). When you talk about leverage, you have always spoken about options and margin.

  106. William Wallace

    Felix,

    Thanks…I have been through this about 10 times already, hopefully this trip will be the last, this is a special procedure that should eliminate anymore complications…hopefully ๐Ÿ™‚

  107. Poly

    Just about every comex options expiration days end up being a none event, nothing ever happens. Sure there is a flurry of activity 1-2 hours before closing.

  108. sophia

    WW, I probably will add a bit as I have been trading in and out of short dates options recently….
    Still long, but far from all in as I am on holiday since July 1st and far from a PC

  109. William Wallace

    Poly,

    If we close below 1600 today, that will shorten your 4 day run that will leave people speechless to a 3day run that will leave people speechless ๐Ÿ™‚

  110. High 5

    Unemployment isn’t caused by too many people any more than being caused by too few jobs. The main cause of unemployment is too much government. Obama are alone will put the usg in charge of another sixth of the economy.

    Over half of the US economy is controlled by the governments now. The us banking industry is a government monopoly. The US is bombing people in seven different countries and has military bases in over seventy countries.

    We thought the Soviet collapse meant victory for the forces of capitalism but it was just a signal of what was in store for the west. Too much government means failure just as too much cancer causes death.

  111. Poly

    WW,

    It’s a short term call on my expectations of the current cycle. I’m only right about 50% of the time, but I stand by it and trade accordingly, its called having a plan and executing! Good luck on your manipulation to under $1,600 trade.

    Michael,

    Most of those are actually very tame in terms of price movement and volume. I like Jessie, but he loves to push the manipulation points just a little too much. Every up day is solid investor demand, but every down day is the evil bankers defrauding the little guy.

  112. William Wallace

    Poly,

    I hear you…just playing with you ๐Ÿ˜‰ What do you think about what Gary said in last nights report as far as 1600 becoming support if we get a hard rally and 1578 if a mild one? Your input is always appreciated…I think you know that!

  113. Michael

    Gary, we’re still talking a possible 25% or so equity curve peak to trough drawdown into the DCL with that sort of positioning. Different risk appetites for different folks obviously. But that’s tough to handle mentally for most people and can lead to stress-induced mistakes when way down in the depths of the correction.

  114. Gary

    Michael,
    If you know yourself, and you know you will make a mistake at a cycle bottom then by all means get rid of your options.

  115. Michael

    I sure hope it’s not me but one can never be sure. Plenty of opinion out there that you are best to limit drawdowns to single-digits and effective exposure to 130% or so as sometimes the market throws us a curve-ball. I understand that you have coached people well here though.

  116. pimaCanyon

    Sasa,

    For years now (decades actually), I’ve been saying we need to reduce the work week and spread the work around. The work week has not been reduced for more than 150 years. Why not have everyone work fewer hours each week which will require more people to do the same job. Unemployment problem solved.

    I suggested this to my company: Instead of layoffs, how about a reduction in hours? First ask for volunteers. If you don’t get enough people to voluntarily reduce their work week to take care of the reduction in expenses they are trying to achieve, then resort to mandatory reduction in hours.

    Didn’t fly. Corporate execs don’t give a sh*t about doing the right thing for the country, about reducing unemployment overall, about improving quality of life for all. They care about one and only one thing: how big their bonus is gonna be this quarter.

  117. Russell

    Pima,
    I like your idea, but is there not a fixed cost to having an employee on the books eg matching retirement, health care etc. This would make it more costly to keep 500 employees on the books, when 400 could do the job full time.

  118. High 5

    A one-time limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act has uncovered some eye-popping corruption at the Fed and the mainstream media is barely even covering it. It turns out that the Federal Reserve made $16.1 trillion in secret loans to their bankster friends during the financial crisis. You can read a copy of the GAO investigation for yourself right here. These loans only went to the “too big to fail” banks and to foreign financial institutions. Not a penny of these loans went to small banks or to ordinary Americans.

    Not only did the banksters get trillions in nearly interest-free loans, but the Fed actually paid them over 600 million dollars to help run the emergency lending program. The GAO investigation revealed some absolutely stunning conflicts of interest, and yet the mainstream media does not even seem interested. Solid evidence of the looting of America has been put right in front of us, and yet hardly anyone wants to talk about it. Many Americans have a hard time grasping just how large 16.1 trillion dollars is. It is an amount of money that is almost inconceivable. It is more than the GDP of the United States for an entire year. It is more than the U.S. government has spent over the last four years combined.

    The above is from an article about the fed audit report, just released, and the absence of coverage.

    http://www.thedailybell.com/2729/GAO-Fed-Issued-US16-Trillion-During-2008-Crisis

  119. Rick 4779

    Pima, your idea of reducing the work week was actually done during the “great” depression. Steel workers were forced to work less hours so that others could have some of their work. The effect of this was that the original workers took home less money, and the new workers were not as productive. Yet, the same gross wages were paid out without an increase in production. It had no effect on the economy.

  120. Edwin

    i still hold to my thoughts i made a month ago that an intermediate decline in gold bullion is still ahead of us after July 25.

    Will be back in the game going long after second week in Aug.

    Something is not working completely right when you see the USD drop like a stone, the USD is full intermediate decline now and gold is not moving out like a rocket.

    Bullion banks control the price action. I’ve seen it for myself for so many years.

  121. Romeo Bravo

    Pima, see the example of France. They reduced the work week to 35 hours, hoping to force multiple people needed for same job. Etc. Result. Less overall employment.

    Ideas like this never work because the more restrictions you put on employers regarding employees, the fewer employees companies will want to hire.

  122. marksomething

    pimaCanyon

    shorter work week was an idea Of Kellogs (cereal guy) during the depression.

    His idea was for the employees to spend more time with their families. Paid them the same amount but work 4 days, off for three.

    but in this day where the employer pays 1/2 of employment insurance and other costs, it is prudent to keep as few employees as possible to keep costs low. (Even though expenses are tax deductible.)

    France did it a few years ago. Shortened the work week by 6 hours (approx) in hopes of raising employment numbers

  123. William Wallace

    Edwin,

    “Something is not working completely right when you see the USD drop like a stone, the USD is full intermediate decline now and gold is not moving out like a rocket.”

    I think your computer is not working completely right. Gold just made a $146 move out of the intermediate bottom, what do you consider gold rocketing, it blowing through your screen and raining gold bars down on you??

  124. High 5

    Why not just reduce the work week to 20 hours, or how about 10? That’d really solve the problem. Better yet, why not just put all the unemployed to work for the government.

  125. marksomething

    Might be a little early in the day to write this but it seems gold will trade sideways today. gonna change some oil, cut some grass, educate my son, not necessarily in that order. see you all in a couple of hours. ๐Ÿ™‚

  126. MrMiyagi

    Problem with reducing workweek in the USA is that people are for the most part so used to living beyond their means and deep in debt that they’d fall further behind.
    Kinda like the country itself…

  127. MrMiyagi

    Gann,
    If you’re around, a couple of weeks ago you posted a S&P chart with the 21 day count, any chance you can do that again at this time?

  128. CMT

    I can’t believe you guys think we can improve the underlying employment problems in our economy by mandating or even voluntarily observing a shorter work week. Are you kidding?

    Higher productivity = higher returns = higher employment opportunity.

    You don’t get that by asking everyone to be LESS productive. You guys should go work for the Fed or Congress.

  129. LowTax

    I second CMT’s sentiment. It’s amazing to me how often people grasp at top-down solutions from government. The same government that has brought us to where we are today? Are you kidding me?

  130. ...at ease

    What’s wrong with creating your own job? It’s still possible, especially in America. Just takes some thought; ingenuity, planning and follow through. Where there is a will, there is a way.

  131. jhnewman

    High 5:

    THANKS very much for posting that about the Fed and the lack of media coverage. Since the media doesn’t cover this stuff, we need to rely on each other and the Internet to spread the real news.

    Thanks again.

  132. Movax2

    The reason there is so much unemployment? Some reasons:

    Huge government that tries to centrally manage the economy and encourages the lower classes to stay home with social programs. they spend more than they get, so:

    Corrupt banking system with artificial interest rates, always trending lower to keep the debt in control. This discouraging savings (you need savings to invest in the future properly). Along with that ever increasing inflation. (Theft of savings)

    Huge financial system were a lot of people just gamble and don’t produce anything. I see Wall Street mostly as a leech attached to the real economy (the economy that produces goods) and it’s killing it.

    An economy that was based on ever increasing housing prices and never ending increases in credit expansion. It was all imaginary and reality came along. An economy needs a core of real longer term sustainable jobs that produce things that will always be of value.

    It makes me angry when I hear government talk about creating jobs. They have no ability to create jobs unless they are going to sell some kind of product for profit or at least break even. All they can do is take $X from the economy and target a group or area with $X-(government waste).

  133. jhnewman

    Yes, I’ve heard a lot about ANOTHER and FRIEND OF ANOTHER. Could you please post that link so that I can copy it and start following those 2 guys?

    THANKS in advance.

  134. aviat72

    CMT:

    All the productivity mantra etc. are meaningless in a structural recession. The US simply does not create enough jobs due to the loss of the manufacturing base. The shortfall is being made up by government payments (unemployment etc.). This situation can not last for too long.

    If everyone’s work week goes down by 5%, you could in principle employ 5% more people. The problem is that the overhead cost of benefits etc has become so high that employers hate to hire full-time.

    If the marginal cost of hiring more people was bought down, Mr. Miyagi’s idea will have some legs.

    However, one big area of caution is the skill-set of the unemployed. The college educated have an unemployment rate around 4% while those without degrees have it in the teens. While retraining can help some, it can not help 5% of the population.

    I personally feel that the a 35 hour work week will be better for Americans. They will have more time with their families. They can exercise more, and focus on the joys of living instead of just trying to pay bills. For those who can afford it the extra five-ten hours a week can lead to a much more happy lifestyle.

    But this would require a reduction in per-household expenses which many indebted can not afford.

    However I will not dismiss the idea completely. We need to make it easier for workers to be hired, and businesses to grow. Obamacare is a step in the opposite direction. Though the intentions may have been noble, thanks to the partisan gridlock what we have is ridiculous.

    Many local governments are avoiding layoffs by cutting hours. The workers are grateful that they still have jobs. Though perhaps a bit inconvenient, in the internet age, most people have the tools to adjust their schedule based on the smaller work hours.

  135. David

    A shorter workweek would not make sense because it assumes that all workers are equally productive. This is obviously not true. A shorter workweek would force businesses to cut the hours of it’s most productive workers in order to give jobs to those it would normally lay off, i.e. the least productive.

    The problem is one of overcapacity — the housing sector, which was a huge employer during the bubble years, has too much capacity and will for at least a decade. Those jobs are gone.

    If you want government to intervene (a big if), it should do so not by interfering in businesses hiring practices but by upgrading the infrastructure businesses rely on to be productive. Our highways and rail systems are not up to the standards of China’s, and this costs the US in terms of productivity and competitiveness.

  136. High 5

    Another problem is that many of the incentives are wrong. It makes no sense to tax production and reward consumption. Maybe it did after the big one but not in this highly competitive world.

    On top of that, elimination of income taxes would allow the IRS to be abolished and along with it all the invasion of privacy issues.

    Just taxing consumption would close down all the walmarts and big box stores that mostly sell garbage from overseas.
    The west needs to increase productivity (get people off their lazy asses and working as many hours as possible) and reduce consumption (dumps are filling to the brims with wasted resources).

    Let the emerging economies consume like fools for awhile.

  137. David

    Eliminating the income tax is a nice fantasy, but you would have to raise consumption taxes to astronomical levels in order to make up for the shortfall.

    Moreover, consumption taxes fall disproportionately on the poor and middle-class. The tax regime you’re advocating would be very kind to hedge fund managers and very unkind to people who spend a large proportion of their income on food, shelter and clothing.

    Of course, we could always institute a luxury tax on consumption — a 5000% tax on Porsches, beach houses and Bordeaux, and an ordinary sales tax on baby food. That would do wonders for our trade deficit, but don’t be surprised if the hedge-fund managers whine about it.

  138. pimaCanyon

    Russell,

    Those are the very excuses my company gave to nix the idea.

    IMHO those are just excuses. Details. And those details can be worked out.

    You reduce the cost of everything across the board when an employee reduces his hours. If he goes to 80 percent (32 hour work week), then his salary AND all of his benefits get cut 20 percent. That means he has to pay more of his health insurance out of his own pocket. Any other bennies, same thing. It can be done, it’s just that things are currently not set up to do these adjustments easily. So change the freaking systems!

    As we continue to automate, we end up being able to produce more goods and services with fewer people. Sooner or later we’re going to need to spread the work around –IF– we want full employment. IMO it’s ridiculous that we have 16 percent unemployment, all those folks drawing unemployment checks, while those who are employed are working overtime!

  139. Farm Girl

    Look at FairTax.org. 23% consumption tax replaces ALL taxes based on income or assets. Monthly advance on 23% of the monthly poverty level income means the poor pay NO taxes.

  140. David

    Shalom,

    I believe both the President and Congress’ debt-ceiling proposals are predicated on phasing out both Iraq and Afghanistan. Inevitably we will be forced to scale back our military footprint around the world, as well.

    Unfortunately, none of this will make much of a dent, since Social Security and Medicare entitlements make up a majority of the federal budget.

  141. gold silver troll

    The USD is behaving just like it did back in 2008 (Mar thru July)…eerily similar

    the 73.5-72.7 level is key for the USD…I really hope we break it

    If not, it’s gonna get very interesting ๐Ÿ™‚

  142. gold silver troll

    if gold does close below 1600, we will get a very ugly candlestick and odds become very high that we’re headed to a daily cycle low

    Also, USD bounced of its first support at 73.5

    The next one is at 72.7

    The nest few days/weeks will be very interesting

  143. High 5

    Who consumes more, the rich or the poor? Everybody is different but generally speaking the rich spend far more.

    Anyway, if some person, that employs 200 people, consumes less than any of his employees, I see no reason that person should pay more. If anything, they should probably pay less. They employ 200 people and work their ass off while their employees put in their eight then go home and watch the idiot box with a six pack and pack of cigarettes, or a couple joints.

    The lowest 50 percent of earners only pay 3 percent of total income tax. They should pay much more and do without the three flat screens or eating fast food every meal.

  144. Russell

    Poly,
    We had a plant nearby, that has hourly employees working 16-20 hours overtime each during a lengthy high demand. The company would not hire new employees as it was cheaper to pay overtime than to hire new employees. I suspect that Obamacare, workman comp, insurance and other uncertainty is a barrier to hiring. There is no allowance for 80% coverage in Obamacare.

  145. Shalom Bernanke

    Troll and William,

    If you don’t mind me sharing an observation, you’re far too concerned about every wiggle for the timeframe “we’re” trading. You’re reading too much into an inactive market, IMO. I hope it doesn’t catch you off guard once things heat up again, so that you can stay with positions.

    Nobody likes riding any sort of pullback, but it’s necessary in the bigger picture.

  146. William Wallace

    Shalom,

    Let me say this again…I have TWO accounts, one I trade with daily and one I am old turkey with!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  147. David

    “Who consumes more, the rich or the poor? Everybody is different but generally speaking the rich spend far more.”

    The rich spend more on an absolute basis, but less relative to their incomes.

    If you make $25,000 per year, you are probably spending most of your paycheck on food, rent, and necessities.

    If you make $2.5 million a year, you may spend a lot on vacations, cars, houses, etc., but it still won’t represent as great a proportion of your income.

    Therefore, in a sales-tax-only environment, the burden would fall disproportionately on the poor. If the poor become exempt, as Farm Girl suggests, the tax burden will simply shift up a notch to the middle class.

    Make no mistake: in every tax regime, there are winners and losers. There is no scenario in which everyone pays lower taxes, gets everything they expect from the government, and the budget gets balanced.

    I would personally love a 23% consumption tax, because my taxes would drop dramatically. But someone else is going to have to pay more in taxes to make up for that, or we are going to have to borrow more, or Social Security and Medicare are going to have to be cut to balance the budget. There is no free lunch.

  148. William Wallace

    Shalom,

    The old turkey one definitely makes more money, the trading one is just supplemental and mental ๐Ÿ™‚

    You will never hear me say going old turkey is less rewarding and more strenuous than trading daily…I just need the action also..lol

  149. coolkevs

    Alrighty then, we just took out the DXY Jun 7 low. 1.3% off the target I’ve been going on about forever:72.5. Could the “solving” of the debt ceiling crisis be the long-term buy of the DXY I have been looking for??? But then, that would be good news…ha ha ha!

  150. High 5

    If by rich we are talking about people who earn over 200 k per year then I would beg to differ. I would wager that over 90% of them live hand to mouth, spending every penny they “earn” and then some.

    But, as I said, everyone is obviously different. If a person produces more than 99% of everyone else in the population but consumes less than 99%, why should they pay more to the government. If anything they should pay less.

  151. Cory

    Put all your money in the Old Turkey one and paper trade for the fun. Give yourself 100 Million and buy all out of the money options to get it out of your system. Old Turkey is up 10-20% right now since Gary’s call depending on what you bought and how much. Way more fun worrying less and being up more. My NUGT, AGQ, and AG have been rocket ships, no options necessary.

  152. David

    “If a person produces more than 99% of everyone else in the population but consumes less than 99%, why should they pay more to the government. If anything they should pay less.”

    Who produces more? A schoolteacher, a research scientist, or a hedge fund manager?

    You seem to be equating a person’s value to society with their income. I’m sure we can all think of someone with a lot of money who produces little of value, and we can all think of people who earn less who produce great value.

    Should a great schoolteacher who trains dozens of future leaders and innovators pay more tax than Lloyd Blankfein? Because that’s the system we have now, and if anything, it creates incentives for the brightest young minds to go to work packaging trick mortgages instead of helping their country.

  153. Michael

    WW, being engaged with the market on a short-term basis while keeping a long-term account and bias keeps you fit, committed and active, improves your reaction time when key events come along, often allows you to spot emerging themes before others and is far better than the alternative.

  154. William Wallace

    The market is popping…dollar is puking…gold is chilling out watching these two drunking fools….see this is why I need to trade, I get bored and have to join the party ๐Ÿ™‚

  155. Movax2

    “Who produces more? A schoolteacher, a research scientist, or a hedge fund manager?”

    Bad examples. School teachers and scientists don’t directly contribute anything as far as wealth creation. They are investments, much like savings. The immediate effect is actually negative to the wealth as you spend money on their wages and don’t see anything in return for some time. Hedge funds, if they actually invest with expectation of future growth of a company, are contributing to that company’s growth (though they aren’t usually investing this way it is possible).

  156. samppa_nyman

    So. Palladium. Anybody like it, or have thoughts on North American Palladium? South Africa isn’t that stable, neither is Russia, so Palladium prices could easily explode. Demand should steadily go up with the EV era. How’s that for speculation… PDL also has some gold reserves, which is nice.

  157. MrMiyagi

    There’s always talk of markets being manipulated financially, with money flow, what few realize is that it is much easier to manipulate with information, or disinformation.
    It doesn’t take much more than a cough or a sneeze to change the “investors'” moods.

  158. D

    Any thoughts on gold not blasting higher with the dollar breaking down so hard today? Are we still just consolidating? Or should we just ignore the wiggles.

  159. David

    Your argument might have some merit if applied to venture capitalists, but applying it to hedge fund managers is a bit of a stretch.

    Traders are agents of liquidity. In the aggregate they have some value, but individually their actions mean very little to society.

    “Their immediate effect is actually negative to the wealth as you spend money on their wages and don’t see anything in return for some time.”

    This mentality — wherein anything that doesn’t produce an immediate short-term payoff is a negative — neatly encapsulates what has happened to American business culture over the last thirty years.

  160. TheBookGuy

    http://www.jsmineset.com/wp-content/uploads/2011/07/clip_image00214.jpg

    Look at this and tell me that we are heavily manipulated…

    People expect the inflation adjusted numbers for the absolute high in 1980 because the Kool-Aide sellers of Gold say that is where gold should be. Why would we have the blow off top gold numbers now? That would be silly. We are no where near the bubble top and that is a good thing for us investors. Gold is acting just as it should act.

    Look at the chart.

  161. ...at ease

    WW,
    From your daily observations and watch notes, I believe you answered my question on the expected GLD bounce which turned out to be the daily and intermediate cycle bottom that I set up my sell triggers on my GLD Puts, so I could position myself for going long on GLD the following Tuesday. So I do thank you for your daily updates as I am always on the move and can’t keep up with the daily fluctuations. I think it helps the learning curve to watch the wiggles and reactions of the market, if you can just sit on your hands and control your emotions. ๐Ÿ™‚

  162. TheBookGuy

    D

    Ignore the wiggles. Nothing moves in a straight line up and down.

    David,

    I don’t like the teacher as an example because unfortunately most teachers are not good. Few are good, but most are there for a pay check. Despite the popular thought that they are underpaid, they work 3/4 of a year and make a decent wage with great benefits. Most put very little effort into their profession and don’t really need to know much. Anyone with an average IQ can follow a syllabus.

    A few teachers are great, not many.

  163. ...at ease

    WW,
    “Your” emotions, should have been control one’s emotions, wasn’t directed at you. Thanks again for helping me on that sell trigger. ๐Ÿ™‚

  164. pimaCanyon

    Russell,

    Obamacare is a travesty, basically it amounts to “here you go Mr. Insurance Company CEO and top execs, fatten your bank accounts with this deal. We will make it mandatory that EVERYONE must buy insurance!” What a freaking joke! And we live in a “free” country. More like corporate fascism to me.

    Health care plans need to allow for any and all percentage amounts to be paid by the employee. That way it would be simple to adjust how much the employee pays, based on what percentage of a full work week he works, and how much the employer pays.

    But I think I’m preaching to the choir here. The beast that is known as the Federal Government is this god-awful monster whose tentacles reach out into every aspect of life here in the USA. And the beast turns very very slowly, like a supertanker, so we’re not likely to see any changes in O-care anytime soon. Unless it gets repealed which would be a good thing IMO.

    We need health care systems that have incentives build into them to reduce cost, and that means the individual needs to have incentives to reduce usage. The way it’s set up now there’s no incentive for the individual to reduce usage. Or even to take care of himself–you know, things like good diet, exercise, enough rest, ways to reduce and relieve stress.

    This is morphing into a rant, so I better STFU now!

  165. High 5

    David

    You totally miss the point. “Who produces more? A schoolteacher, a research scientist, or a hedge fund manager?”

    That is a different subject and has nothing to do with choosing between a consumption or production tax.

    Would you have government agencies, empowered by some congressional bill, deciding who is more valuable to society? You would have fit right into the Soviet Union. Maybe you could have been a political officer.

  166. William Wallace

    at ease,

    I remember you asking me twice to confirm where the next bounce would occur because you were going to be traveling or something like that…I told you at the 100sma…then you told me you were going to take profits there, then you thanked me after we bounced and you took profits. I remember being happy for you ๐Ÿ™‚

  167. pimaCanyon

    TheBookGuy,

    I have the same impression re teachers, but… how do you actually know that “most” are there only for the paycheck and don’t do a very good job? Seems like the only way you could say that would be to have looked at a large cross section of teachers all across the country and had some way of rating their performance. I know I haven’t done that, so I really don’t know how many teachers are doing a great job and how many are not.

  168. Alex in Montana

    samppa nyman

    Buy palladium itself.

    The largest American based company – Stillwater – just lost 1/3rd of its value by buying a copper miner. I live in Montana e few hundred mileds from their mines (2) and visited them once.

    In 2000 palladium was at $1,200. In 2002 it was at $200. Now it’s $850 or so.

    North American Palladium was at $6.00 10 years ago and now it is $4.75.

    Palladium will take you for a ride, but I would buy the metal. You just have to hope the auto industry doesn’t find a cheaper solution to using palladium and platinum in their catalytic converters.

  169. Ryan

    I put in 50% more of my portfolio when gold was around 1585, so I have 30% in nice strong hand status. I’m not touching the 30% but I’m starting to wondering if I should reduce the 50% exposure for the upcoming DCL or should I just sit tight old turkey and deploy the 20% I have left when we do get our pullback?

  170. William Wallace

    at ease,

    I will be looking to add on the 30sma where I will be expecting the DCL to bounce, it looks like the majority of DCL’s bounce off the 30sma, if not slightly lower off the 50sma.

  171. David

    Book Guy,

    By definition, the majority of people in every profession are mediocre. That’s why I used the word “great”.

    My larger point is that the tax code shouldn’t be used to try to selectively punish or reward people in certain professions, or certain income levels.

    Behind these arguments lie certain biases — rich people are evil, poor people are lazy, schoolteachers are overpaid — that amount to nothing more than gross generalizations.

  172. High 5

    When you get down to it who values people more based on income? Is it the person that argues for a production tax (based on income) or one who prefers a consumption tax?

    Personally I prefer to value people based on their consumption. You can learn a great deal from a persons consumption habits.

  173. TheBookGuy

    PC,

    What High 5 said. Part of that is parents. It is society as a whole. Teachers are not an exception to the rest of our society, but somehow they are honored and I believe it is undue honor for the most part.

    Also, I have a lot of kids. ๐Ÿ™‚

  174. William Wallace

    Miyagi,

    Yeah! Exactly 10 cents from where I bought ๐Ÿ™‚ Yesterday at the open they were up about 15 cents then faded, I almost sold but figured it was still too early. I guess I should try to dump them before we enter a DCL and then try to buy back somewhere near the bottom?

  175. wmp

    WW:
    the 30sma takes /gc back to 1550..do you really expect that?

    Also,

    a week or so ago you expected a bounce off resistance at the midpoint of SLV weekly candle for the first week in May..I calculated that to be 39.90. You were wrong.. bounced off 39.91..could you try for a little more accuracy next time?? ๐Ÿ™‚

  176. William Wallace

    at ease,

    As for the high…I would say if we haven’t seen it already at 1624.30 probably 1650 area, which would probably place the 50sma around the breakout, 1578 area.

  177. ...at ease

    WW, I agree, have my sell orders in for right above that area, hoping we get back up there or a bit higher. If not…. far enough out I can ride out the next daily cycle.

  178. Allenupl

    For Strat81:

    Can you send me an e-mail by clicking on my name (allenupl) to get to my profile and I’ll respond with some questions I have about the VSA study that you use from the Thinkscripter website.

    I read through the PDF of the Tradeguider book you posted last week and it is real interesting.
    Thanks.

  179. William Wallace

    Allenupl,

    If possible maybe you can share with me what strat81 and you discuss abount the VSA indicator, seems only me and you took any interest in that…I already started using some of the scripts.

  180. High 5

    DP

    If you believe, as I do, that we are headed for a period of extreme inflation then real estate will do OK but not nearly as good as gold.

    Unless of course you pull the same trick the federal government is. That is, borrow as much as possible at this ridiculously low rate and after the inflationary period pay off your mortgages for the price of a good bottle of Malbec.

  181. ALEX

    Blogger traderlady said…

    Anybody buy Alex’s REE? I did and up over 9% today:)

    July 26, 2011 11:10 AM

    Traderlady…YAY!!! I’m glad for you!

    I did too!! ๐Ÿ™‚ well, because I added more @ $11.30 after lunch today

    ELAINE

    I posted this July 21 or 22nd, but I am expecting much more upside

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

    (and AVL is the almost exactly the same pattern by the way)

  182. William Wallace

    Alex,

    Now I know why you post quick and run right out of the blog…because it is packed with old turkey’s who despise day traders…lol I have been under heavy attack lately…help!!

  183. pimaCanyon

    High 5,

    And that’s the teachers’ fault?? Seems to me that there could be other causes at play here like lower of standards, both by the “authorities” and by the students themselves.

    Also, just how bad is it? How do SAT scores compare today with those of 30 or 40 years ago? How much of a loss has there been over the last 3 or 4 decades?

  184. Allenupl

    WW re: VSA & Strat81,

    I sure will let you know if I hear from Strat. You can send me an e-mail and I’ll respond.

    I wanted to read the book first before investing time and money in the VSA study so that I would have some idea what was going on. I found it very worthwhile to read.

  185. pimaCanyon

    David,

    You wrote “This mentality — wherein anything that doesn’t produce an immediate short-term payoff is a negative — neatly encapsulates what has happened to American business culture over the last thirty years.”

    Well said, I could not agree more.

  186. ...at ease

    PC and David, I have to agree.
    I personally was appalled at the antics of middle management feeding upper management what they wanted to hear up to the top. All to satiate the stockholders.

  187. Allenupl

    RE: AVL & REE
    I’ve also been in and out of AVL and REE since last summer (also QRM) — stayed in most of the time on AVL and kept adding. I’ve been out for a while and just bought a little of AVL this afternoon. I have another order in for AVL above the 20 and 200 DMAs if it tests those again.

    My only concern is the dollar. If it rallies – and/or economic indicators continue to weaken – then I think these could get hurt so I am very cautious here.

  188. MrMiyagi

    WW,
    No, no futures here my friend.

    Concerning the 165 calls, maybe think about selling them because if a deal is announced sometime in the next few days you will lose all that is up and then some with no recovery timeline.
    There’s always a next lottery.
    Unless you want to take a chance and are willing to lose it all on the small bet that there won’t be a deal and it will go up substantially.

  189. Clarkatroid

    I can’t believe some folks here are still trying to trade around the DCL.

    I know less ( a lot less )than most here, but it’s pretty easy to make money.

    Buy when Gary buys, with your own opinion on how much to risk, get out when he gets out.

    resist all urges to Trade other times nonmatter how tempting=$$$$

  190. ...at ease

    Clarkatroid,
    You are absolutely correct, to listen to Gary when to get in and out and to hold.
    I personally have one account that I trade in. All others are buy and hold per Gary.

  191. David

    “When you get down to it who values people more based on income? Is it the person that argues for a production tax (based on income) or one who prefers a consumption tax?

    Personally I prefer to value people based on their consumption. You can learn a great deal from a persons consumption habits.”

    What I am saying is that it is impossible to “value” people generically.

    Moreover, the point of the tax code isn’t to allocate punishments and rewards. It’s to raise revenues for the basic functioning of the government.

  192. MrMiyagi

    WW,
    Another approach is to sell as many clls as it takes to cover your purchase price plus commissions.
    You would have some calls (20-25%?) left over and let these ride good or bad.
    In this scenario, you won’t lose money at all (unless the option drops to the commission or less) and if it goes up you will make money but not as much.

  193. DP

    High5 —

    It’s not possible to borrow these days as much as you can.

    The bank will consider your credit history under the microscope, asking for any possible evidence of your credibility.

    The time of unlimited borrowing ended with bubble pop.

    Nevertheless, in three “disaster” areas (Phoenix, Las-Vegas and Miami) you can find unbelievable bargains.

    What’s about new 2000 sqf house for $80K in Phoenix suburb, for example?

  194. DG

    Well I bought Alex’s REE last week (twice), and it is up even so (which just shows what a remarkable stock-picker he is!) If my buying can’t knock ’em down nothing can. For a modest fee I’d be willing to sell my stake.

  195. ALEX

    I am thinking that I bought REE and DG piled in with his HEAVY cash flow and HE pushed it up!

    Thank you DG

    Is 10% fee enough?

  196. High 5

    David

    “Moreover, the point of the tax code isn’t to allocate punishments and rewards. It’s to raise revenues for the basic functioning of the government.”

    That’s my point. Tell it to the IRS.

  197. William Wallace

    at ease,

    Ah…im not alone, I have been trying to fend everyone off for days as they attack me for trading, as I have tried to explain many times that I have two accounts, one per Gary, and one I use to trade with…but still the attacks do not cease (clarkatroid…lol)!! See everyone…now get off my back, im not the only one, get at ease!! ๐Ÿ™‚

  198. William Wallace

    Miyagi,

    Im confused about the whole sell some calls thing…maybe you can explain it like your talking to a moron please? Thanks

    Remember I know basically nothing about options right now.

  199. MrMiyagi

    If you got 100 calls at 50 cents, that’s 5000$ plus 25$ commissions.
    Now the calls are 70 cents, so 7000$. By selling 72 calls, you will net 5040$ covering your expenses.

    Now, you can’t lose money no matter what price you sell the rest of the 28 calls.

  200. wolf33

    Is it Alex that is from montana. Safest State in Usa. Igrew up in North Eastern Montana. Went to college in Missoula eons ago!

  201. William Wallace

    Miyagi,

    Oh you mean sell some of the calls I own, I thought you meant sell some more calls. But what if price drops on the 28 calls you still own after you sell 72, aren’t you going to start eating away at your covered expense?

  202. MrMiyagi

    WW,
    Because you have already covered your expenses, those remaining calls are in fact FREE. Even if you sell them for 20 cents you will make money. The worst that can happen is they expire worthless and you are where you started; even.
    It is similar to playing with house money in Las Vegas.

  203. DG

    Alex: No. 10% is not nearly enough. My selling ought to be worth 2-3 points upside in the stock. And I can’t believe my buying a couple of million shares is what pushed it up.

  204. wolf33

    I have sveral portfolios. i find it interesting that small juniors/explorers won the race today by a wide margin. Virtually all stocks up with largest gain RG:CA up 35%.

  205. William Wallace

    Miyagi,

    Now I understand 100%…thank you my friend for explaining that to me, im very grateful. Well I guess im stuck with them until tomorrow, if a deal is announced and we see a pullback I will sell (if not announced during the close), or try to sell near the daily cycle top. This is fun, after I sell you can give me another pick….lol

  206. Clarkatroid

    Tbh I’ve learnt the hard way trying, and failing, to navigate the wiggles last year

    The only place I deviate from Gary at the moment is I add 25% to what the model portfolio does, so when garys went 35% I went 60% and so on . I also save 5% to play with and that’s currently in african barrick gold

  207. Alex in Montana

    Wolf 33,

    When I joined the blog there was confusion as there were two Alex’s, so I changed my name to “Alex in Montana”.

    You from Wolfpoint? My wife’s family lived in Plentywood.

    I’m in the Flathead.

  208. funmike

    Haggerty,
    I’ve been wondering about that myself. Looked at the GDX, GDXJ charts this morning. I wonder if they are telling a story like the silver miners did before the waterfall or if they are being held back by the general stock market.

  209. MrMiyagi

    WW,
    I put up a calculation but forgot one equation.

    So here it is;

    Bought 35 calls 0.51$ = 1785$
    Sold 26 calls 0.70$ = 1820$ to cover

    Remaining 9 calls are in essence paid for and your profit at this point is 35$ minus 30$ in commissions (guess).

    Now, what you have left on the table is 171$ in profits that the remaining 9 calls would have brought you but no matter what you sell these at, you can’t lose money.

  210. ...at ease

    Clarkatroid,
    I think everyone has unique circumstances for trading or investing, whether it be amounts, percentages, stocks, ETFs, Options following Gary’s model. It’s all up to the individual.

    And I agree with you on following Gary. I have made much more than I ever had before following Gary. Once you understand how to ride cycles and ignore what he calls the daily wiggles, and you don’t hesitate to buy when Gary’s says buy! (cause he can sure nail ’em) you will do great.

  211. sgp1313

    Bunch of MT folks, I have relatives outside Plentywood, parents live in Helena, one of my sons is in Billings. Small world and shrinking

  212. MrMiyagi

    WW,
    Of course, if you sell all you will net a 665$ gain but this method allows you to dream it is going up to 4$ (3600$ gain).
    If it goes to 0.10$ then it is 90$ more in your pocket plus the 35$ minus commissions is 100$ that you get paid for trying something.

  213. wolf33

    I loved Montana but never got back after College graduation—-Went to
    Calif—-Japan—-Minn.—Neb.—Minn.—and ended up in Iowa. I was in the Investment world.

  214. Ivan G

    Men…it hasnt been that long time I am here. One thing I found – making money here is damn hard. Losing money – like that ..pugh..

  215. wolf33

    Why like Silver—So I diversify between Gold and Silver.

    New trading on Hong Kong Exchange is very important, IMO.

    41 on silver important short term number.

  216. Harry

    Short-term trading is fine, but I think you’re all nuts to be playing with options at this point in an intermediate cycle. If you know gold is going up why not play with a delta of 1 all the time? The day-trading margin on a 100 oz gold contract is about $3,000. You do the math.

    I’m up about 38% in the last two weeks with significantly more sleep at night. Yes, WW, I know this is just your play account and you have a safe, Old Turkey-style one in addition, but even still I don’t see the appeal of options on Week 3 of an intermediate cycle. On Week 20 it might be getting dangerous to be long ten or twelve contracts and I’ll start worrying about my deltas, but until then I’m just going to sit on my futures. The most adventurous I’ll get is easing back on a few contracts near a daily cycle decline.

  217. Shalom Bernanke

    funmike and Haggerty,

    I don’t feel the relative underperformance of miners right now is similar to when the silver miners flashed a huge warning sign a few months ago.

    Back then it was glaringly obvious, with miners getting clobbered while silver screamed higher. If the miners are now foretelling of a move lower, which they might be, it would likely not be much.

    I’ll stick with what I have.

  218. Sky

    sgp1313,
    just to add to your 6 degrees of Montana, I grew up in Billings and had a cabin in Red Lodge, MT up until last year.

  219. royboy1979

    Harry,
    I was born in Renton and live in Eastern Washington. Just making a move from Yakima to Spokane-area in August. Where are you located?

  220. hamvestor

    Harry, I’m in the Seattle area, across the water in the North Kitsap area to be more exact. Are you the gentleman in Shanghai whom I was needling a few weeks back? ;>)

  221. 86d4life

    W2,
    I learned this from Caseys and they call it the Casey Free Ride. These are my numbers so follow along; you buy a stock at $35 and you are thinking of selling at $55. You originally bought 500 shares. Divide 35 by 55 = .636 x 500=318. Sell the 318 shares and the rest of your shares are free. This is without expenses.

  222. aubug

    The Aussie dollar POG was DOWN five bucks last night while the US Peso POG was UP six bucks. The AUD is going up faster than gold! Sure makes a trrip to the US nice and cheap but will cut the number of US visitors to Oz.

    That helps to explain the morbidity of Aussie gold shares, though many of mine are still up 20-30% in the last few weeks.

    The best of both worlds. Both my currency and shares are going up!

    Usually when I feel this good I am about to get whacked! We’ll see.

  223. Alex in Montana

    aubug,

    Same deal for last few years with Loonie. Mor egold companies in Canada than any other country. That is one of the reasons gold equities have lagged.

  224. aubug

    I have a sneaky feeling that there are so many people whom have missed the gold freight train and are waiting for a ‘correction’ to get in that the correction, when it comes, may be shallow and over faster than you can blink.

    For most of you, your ‘dry powder’ may get moldy AND devalue as Ben throws HIS dry powder out of a helicopter.

  225. MrMiyagi

    WW,
    The 171$ you leave on the table (meaning you don’t get) would be yours IF you were to sell all 35 calls.
    Assuming the option price of 0.70$, if you keep 9 calls then you miss out on 0.19$ (the gain) x900 (9 calls)=171$.
    The gain you make on the sale of 26 calls covers all your expenses; you got 9 calls for nothing and your only expense will be selling commission.
    So, to recap, you either
    1) sell all and take the profit,
    2) sell enough to cover all costs and have free bunch of call options that tat the very least will net you some cash,
    3) hold all and either gain big or lose most/all.

    By the way, if the option price goes up, the less you have to sell cover your costs, ie, at 0.90$, you’d need to sell 20 calls to cover and can keep 15 calls for free.

  226. hamvestor

    Harry, that will be good timing on your part, as the weather is finally due to return to normal soon after a wet, cold 12 months or so here (e.g., today was showery, with a temp. in the low 60’s). We used to live in the Bellevue/Newcastle area until we moved across the water a few years ago.

    I’d love to compare notes with you sometime, as I’ve spent a lot of time in Asia, have an advanced degree in East Asian studies, and was an East Asia specialist in the U.S. Government until I changed careers some years ago. You can reach me at jhs(at)post.harvard.edu if you’re interested.

  227. JEFFtheFLEA

    gary

    is there a chance that this intermidiate cycle is really just a continueation of the previous cycle and we have not started a new one? it was mentioned on docs sight. also he still thinks this is a perfectly normal behaveior for the dollar comeing out of a 3 year low.

  228. Bill

    hamvestor,how much time in Asia? and where exactly? and what did you study and do? And why did you move back? Thanks.

    – Bill in Tokyo, a long time ago from Seattle

  229. wolf33

    Yes—One rule I have—Never touch physical. It is underground on a farm in Minn. Started buying both gold/silver right after 9-11-01. Think silver arround 4.50 and gold 260 or so.

  230. Gary

    Jeff,
    If the May low gets breached we will have our answer.

    Gold is about to move into the most bullish time of the year. We got a weekly swing right in the timing band for an intermediate bottom.

    I’m going to go with the odds and assume that we did get an intermediate low. And that gold has formed a consolidation over the last two months in preparation for a final parabolic C wave finish.

  231. hamvestor

    Bill in Tokyo, I’ve been traveling to East and Southeast Asia since the early 70’s, with Japan the main focus (been there over 50 times), China secondarily, and a lesser amount of time in Southeast Asia and Micronesia. The academic focus way back when was in Asian government/history, with language focus on Chinese and Malay/Indonesian (so of course I ended up focusing on Japan, lol). I left government work to go to law school and become a lawyer, with a continuing focus on Japan.

    Have traveled pretty much everywhere in Japan, from Hokkaido to the southern tip of Kyushu, but mainly I’ve been in Tokyo and Osaka. Because of the nature of the work, however, I’ve never spent more than several months in a single stay.

    What are you doing over there?

  232. Poly

    Good report Gary.
    My expectations exactly too. We should see a very impressive 3 days here, although I will be taking little leverage into the weekend.
    A great first daily cycle is wrapping up, we might be saving the best of the cycle for last ๐Ÿ™‚

  233. George

    Gary,

    Your last few reports you mention a crisis or mini crisis for the dollar. Can you elaborate as to what that would actually entail with regard to the general (US) population?

  234. 86d4life

    Good report Gary. If the hooligans come out with the debt ceiling deal let`s say, Thursday(just picking a day), since gold and the dollar are fairly close to turning points in their respective daily cycles, is it reasonable that that could be the catalyst for the turn? Thanks.

  235. DG

    Sophia: Thanks for the kind thoughts. I have not posted much because I am just sitting with a ton of DGP and don’t really have much to say or words to add. I will go back to core if we spurt much from here. My entire net worth is cash, so when I am heavy it’s relative to everything I own. I can’t afford to have an “oops” with my entire life of trading profits and savings.

    BTW, I also am studying for my Series 65 test to be a registered Investment Adviser. People are always asking me for advice and I am afraid to tell them as I may not see them again for a long time (I have a huge network of friends around the globe). This way I can say, “Open an account and let me manage it.” Hopefully there will be lots of gold bull market left by the time I open my doors.

  236. William Wallace

    Miyagi,

    I will see what tomorrow brings, I dont see any reason to sell them yet, except if I get even the slightest news on this debt ceiling crap, but even then gold will only drop a bit and then rebound in a heartbeat, so maybe I will hold out until a swing high.

  237. wolf33

    Rest assured( IMO) there will be a deal. These yo yos’ have their planned summer vacations in the wings.

    Whatever happens it will be like fissing against the wind.

    The $ falling is same old game—Inflation is worst of all taxes. And we have that going 7 to 9% a year.

    The system is broken and will take many years to fix. Just hope somehow more people are getting what Ron Paul has echoed for years.

    Do not forget that for now oil is priced in $.

  238. DG

    Rob: It’s 80% in DGP. I have a little GDX, AGQ, and a couple of small items I don’t want Alex to find out about ๐Ÿ™‚

    WW: I own my own business and asked myself if I could take time to study and I unanimously said “Yes!”

  239. DG

    WW: DGP gives me the option to put up less cash is all. I sometimes make large SPY 2-3 day trades and don’t want to borrow if I don’t need to.

  240. Duuuuuude

    WW, yes, I have Profit charts but prefer to do most of my charting in the TOS Charts. I just don’t have the flexibility to show what I would like to in Profit Charts.

  241. Rob L.

    DG,

    If you don’t mind me asking, why so heavily weighted in the metal vs miners? Are miner’s riskier and/or too volatile, in your opinion?

  242. DG

    Rob: It'[s just that I am sure gold is going to go up. That means the miners will too…ALMOST for sure. It’s the “almost” that gets me. I can wind up with 2 times my net worth in DGP, which is 4 times me NW in gold. That’s enough. Why do miners? They outperform DGP, but I can just put more money into DGP and it cannot go down if gold goes up. even if we have another credit crisis.

  243. William Wallace

    DG,

    I made the same point a week or so ago…I just dont understand why even invest in the miner ETf’s if you can just invest that capital in gold , which moves the miners. Was there ever a time in this bull market that miners rallied hard while gold was going down?

  244. Rob L.

    DG,

    Thanks for your candor.

    When you say that you could end up with 2x your net worth in DGP, do you believe it will double this IT cycle or are you referring to a different time period?

  245. ร‰amonn

    seems the US politicians are shooting themselves in the foot really as they will have to pay for this intransigence with a ratings agency downgrade

  246. Harry

    Eamonn, you’re not joking – I actually have one sitting under the bed in my parents’ house back in Philadelphia.

  247. William Wallace

    at ease,

    You missed 86 too huh?

    I think it may be beaver trapping season, or maybe he is just mad at me because I haven’t sent him pictures yet or called him!!

  248. Harry

    Do you really think the ratings agencies matter anymore? They have no credibility, especially after the MBS debacle. Everyone knows how badly pressured they are by governments, and it shows up in the product. Greece was something like B++ until last week when they got cut to junk just like that. Did things really change that quickly? Is a rating like that really helpful?

  249. 86d4life

    Eamonn,
    It`s the US taxpayers and citizens of the world that pay, the real crooks don`t pay shit. They get paid to do this to the rest of us.

  250. William Wallace

    Eamonn,

    Yeah me too, im all ammo’ed up, extended extra clips, hollow points with exploding tips, laser sights with flashlight, im ready for war. One man army!

  251. Brian

    WW, The miners bottomed well before the metal did and most of them are up 30% this month alone vs 16% for DGP. You can choose your own math. Many people like to equate one period of under-performance (the spring silver run) to a lifetime of under-performance. Facts don’t bear that out.

  252. ร‰amonn

    I know that the ratings agencies have credibility issues. Looks at some of the mortgage debt they branded as AAA before the sub prime crisis.
    My understanding, however, is that if they downgrade the USA, US debt interest rates will rise and the US Government will have to pay more every year

  253. Harry

    Eamonn, the Fed will not allow rates to rise. Just rolling over the treasuries sitting on their massively bloated balance sheet will be enough to keep a cap on interest rates.

  254. Rob L.

    Harry and WW,

    From now on I’m going to refer to you as ‘Dirty Harry’, And you WW???? I’m just going to refer to you as ‘Dirty’. ๐Ÿ˜‰

  255. Rob L.

    WW,

    Great, you guessed my real identity. I didn’t know she was underage, with regards to that whole political convention crap back in ’88.

    Damn you, Dirty!

  256. William Wallace

    Dirty Harry,

    You mentioned easing back on some of your futures contracts during the DCL, I think I will do the same, I was planning on selling all and then buy back near the bottom like I did with the Intermediate decline, but I think I will be a bit less adventurous with you since I think this DCL may be less severe as was the case with the IT low.

  257. Slumdog

    SB wrote: “Shalom Bernanke said…

    Consumption taxes would not have to be raised if we cut out the “wars” in Israel’s backyard for it’s protection.”

    SB, just stick to the topic here. Write your stupidity elsewhere. You’ve been warned before, but you can’t stop baiting people.

    You’re alleging intervention in Syria where they’re shooting citizens is for Israel’s protection. Same with Libya. You are off your meds.

    Just stick to calling the market. You do quite well there. Your politics is rabid and blind.

    Democracy functions on fairness towards each citizen. Your political scorecard in this area is quite lacking. But that’s your issue, not the this blog’s.

  258. royboy1979

    WW,
    Oh baby…episodes 20-22 if memory serves are at the top of my list. I’ve watched too much of that stuff on my Netflix stream. Out govt. could really use a dose of Jack Bauer to straighten up this corruption bro. Enjoy the episode!

    Roy

  259. wolf33

    The big place where rating agencies would make a difference is a handful of AAA rated states. They would have no choice but to be downgraded. That would have some severe market implications.

    They will end up IMO kicking can further down the road, per usual. Soon someone needs to startbkicking can back!

  260. Hack

    I don’t know what the infatuation is with the debt ceiling and I don’t think it will be raised just because that’s what everyone expects “at the last minute”. It really doesn’t matter whether it is raised or not moreover credit ratings are overblown as well. I will treat this as a minor blow to the market, a buying opportunity…

  261. Gary

    The debt ceiling isn’t like the stock market. Just because everyone knows it’s gonna happen doesn’t mean it won’t. We’re talking about politicians, not traders trying to game the next move in the market.

    Do you really think that after 200 years of making the wrong decision politicians will all of a sudden do the right thing? (Not raise the debt ceiling.)

    After grandstanding as long as possible politicians will strike some kind of short-term deal causing a brief flurry of activity, then the markets will get back to doing what they were doing before this whole mess started.

    Actually everyone knows that the market is going to rally as soon as the deal is struck. More than likely that means the market will either not rally or the rally will quickly fail. I tend to think it will be the latter because we are starting to get deep into the current daily cycle.

    Not to mention once the debt ceiling is raised we will probably see a short-term bottom in the dollar. At this stage of a very mature cyclical bull market I don’t think stocks are going to be able to fight a rising dollar.

  262. MrMiyagi

    Can someone explain why S&P and Moody’s would downgrade the USA?
    Those to agencies are American, to me it seems idle threats and scare tactics towards the masses.

  263. sophia

    DG,

    went to bed before your answer. Glad to hear that you are taking care of yourself with a bunch of DGP.
    I just woke up and we are at 1626, so quite a nice trade today.

  264. Harry

    WW, I actually lightened up just now at 1625. When I buy back in it will be the October contracts. I’m not as short-term bullish as Gary and I’d like to be careful here. I really have no idea what’s going to happen with this debt ceiling crap.

    I should point out that with ‘only’ two contracts I’m still more highly leveraged than if I were to go 200% on a leveraged ETF (i.e. on margin from my broker).

  265. Robert Thrane

    Gary,

    As Doc pointed out (u may have already addressed this), after the dollar’s 3 y-c-l, the dollar’s IT-cycle tends to run really short, around 10-13 weeks or something like that.

    This should be the case now shouldn’t it?

    Or is everyone looking at the 08 chart vs. now and going to expect the dollar to explode soon and it will do the opposite? Doc argues everyone is now expecting a dollar collapse so he’s going to take the side of 08 and enter a small dollar long.

  266. Robert Thrane

    Gary,

    I tried to argue with him that it is not a wise trade, but in his case, hedging, it actually appears very wise, but on the surface, not so much.

    Is the argument that gold is only on week 3 of its intermediate cycle the nail in the coffin for the reasoning that the dollar has more room to slide come this fall? You may say gold can rise with a rising dollar, but would you say that for Gold’s parabolic C-wave finale?

  267. Robert Thrane

    MrM,

    Moody’s could face future lawsuits if it doesn’t start rating OBJECTIVELY. They lost all their credibility from their ratings before on MBS’s in 2008, so they need to start giving more proper ratings otherwise they’ll be out of business or in court all day long.

  268. Gary

    Robert,
    With dollar sentiment still neutral I don’t think I would be willing to take the long side of the dollar trade at the moment or bet on a short intermediate cycle.

    It may come down to how much spending cuts are in the new debt ceiling deal. Over 4 trillion and the dollar could very well hold above the May low.

    If instead we get a short-term fix with nothing really accomplished then I think we probably get a dead cat bounce and an aggressive move down into a three-year cycle low later this fall.

  269. Bill

    hamvestor, sorry for the delay in my reply as I was out all day.

    This is my 3rd time living in Japan – 1st time 6 mos, then 4 yrs, and now 13 yrs (10 of which I was director of IT for a large s/w company, so I too traveled Asia a bit, w/staff all over). The ships are burned so to speak, so I’m not sure I’ll be back State-side. If I did it would be Bremerton as I love the Olympic mtns, yet also have access to Seattle. My wife is Japanese, and after 30 yrs of marriage I’m letting her call the shots now as to where we live, so here I sit in Fuchu-shi, Tokyo, aka Gilligans Island. S.O.S. ๐Ÿ˜‰

    I’m a beginner trader, using only charts. I’ve spent 6 yrs discounting stuff that doesn’t work, and now have 2 things that seem to work most of the time. I don’t believe in cycles yet, but I see it works for many here that are obviously much more successful than I’ve been using just charts, so I’m hanging out learning.

    My hobbies are powerlifting (for strength) and road cycling (for lungs) – an advanced beginner in both. Age 52, feel like 90, but have the mind of a kindgardener – I never grew up.

  270. Silverhound

    Just an observation on the gold chart with cycles in mind this time. Now that the mid cycle dip is in place and we can draw the trendline. Looking back over the last two years, there are only two other daily cycles that had a similar accelerated uptrend.

    One which topped in Feb ’09 and one topped in Dec ’09. Both were long at 36 & 38 days, both topped at 24 & 25 days and both had a large pullback similar to T1 pattern. Both daily cycles were also the top of their intermediate cycles, occurring past the mid point.

    Keep in mind that if the current cycle count is correct, we are only at the start of the intermediate cycle.

  271. TheBookGuy

    Silverhound,

    Thank you for that analysis. I have a feeling you are right.

    Think of how our minds work. Everyone and their mother expected last IT to be the C-wave blow off. We got wrecked. This time it was hard to get folks to buy and many are still standing on the sidelines. They will get left behind and buy near the top.

    I’m thankful I believe in following what I’ve paid for. When I made the decision to pay for SMT, did it because I felt Gary was an expert in an area I’m an amateur in. I’m going to follow the expert.

  272. Keys

    I know I am without words…everything is 50-50…debt ceiling seems like the big timing issue though…no kidding!

    Dollar taking out the low…should happen, may not….so much just waiting on…

  273. notGreedIsGood

    gary, or others…

    given that gold made a record high a few days ago, the dollar continues to tank badly, but gold is hardly budging, and the fact that gdx went down a bit, isn’t this telling us that a daily cycle low is very close?

    eg. despite the push up i don’t think we should add to positions at this point in time…

  274. hamvestor

    Bill, thanks for the CV. Kyomi-bukai desu. I envy all that time in Japan, as I love the place. Ironically, I left the government when I was up for a 3-year tour at the Embassy in Tokyo, figuring if I didn’t leave then to pursue a legal career, I would miss my window. Still, I’ve been able to travel to Japan, usually several times a year since then, so no complaints.

    Like you, my style has been mainly chart-based investing, having followed a number of market timing systems that crashed and burned, etc. For me the jury is still out on cycle analysis, but that said, I’ve had an enormous run as a result of following Gary’s lead since I discovered him a year ago, so I am prepared to give cycle analysis a long leash for the time being.

    The age here is 65, but I feel more like 45, and besides following my calling as a political junkie, my therapy is vegetable gardening, clearing (our) land, and splitting wood.

    You’d love Bremerton – it’s had a real makeover along the waterfront – but Fuchu-shi ain’t a bad way to go either.

    Oyasuminasai.

  275. CMT

    Just sold my Sept. 145 GLD Calls. I’m still heavily invested in DGP, NUGT, GLD, GDX and GDXJ among a few others, but I use the calls to satisfy my urge to trade in and out.

  276. pimaCanyon

    RT,

    Regarding the ratings agencies, you wrote: “They lost all their credibility from their ratings before on MBS’s in 2008…”

    Totally agree. IMO their ratings mean very little. After blowing it so bad in the years leading up to 2008, why would investors give any credence to their ratings now?

    Moreover, since the US debt is denominated in US dollars and the US government can print as many of those as they damn well please, a rating of anything other than AAA doesn’t make sense.

  277. MarkMarin

    Sold positions in Aug gold futures in this rally. Rolled 1/2 into Dec. to bring down leverage a bit. Still holding core positions in DGP, NUGT, GDX, GDXJ and a touch of individual miners.

  278. MikeStiller

    Gary-
    With the daily cycle on day 28, do you feel like we are running out of time to rally? It seems like if we are shooting for a normal 40 day cycle, we need a week to work into that low and thus the rally has about a week to prove itself. Thoughts?

    Thanks

  279. ALEX

    JUST A THOUGHT-

    IF YOU ARE HOLDING OPTIONS I UNDERSTAND THE NEED TO SELL-

    AS A TRADER, I OFTEN ROTATE and SELL ONE MINER AS IT LOOKS ‘OVERBOUGHT’ TO BUY ANOTHER JUST ‘BREAKING OUT’–

    -BUT-
    I WAS LOOKING BACK AT LAST YR HOWEVER,AND IF YOU ARE HOLDING GDXJ, GDX, OR OTHER ETF’S…TRYING TO TIME YOUR SELLING MAY NOT BE WORTH IT. SEE CHART:

    http://www.screencast.com/t/e1JSMYNu

  280. Poly

    There still should be juice left in the this daily cycle. This environment has the potential to be extremely explosive, like $75-150 move explosive.

    Sure a DCT will come and offloading some towards the top will be one goal, but I prefer to leave plenty of chips in play in to catch any monster move this political game throws my way.
    If I get partially caught in a $50 drop off a top, oh well, that would be $50 off the already $140 move and still fairly early in the IT cycle.

  281. notGreedIsGood

    well if you are holding 100% double leveraged etfs like NUGT and DGP, perhaps it is prudent to take some positions off the table if you are going into a daily cycle low… otherwise you might be whipped into doing something stupid…

    even holding 50% double leveraged holdings, you are holding the equivalent of almost a full position

  282. Shalom Bernanke

    I agree with Alex, and can easily hold through any pullback so won’t sell anything. If people wanted to avoid the daily cycle pullback, they should have sold the last few days but note into this.

    I’m sitting tight, and waiting to buy more.

  283. ALEX

    Mitchell

    I look at it this way. look at the miners and they bottomed Mid June, so they led the way up. and 3 examples
    1) Exk still up 35%
    2) SVM still up 35%
    3)GDXJ up 25%

    Gold bottomed in July, so followed Miners.

    Gold was (july 1) $1480 + 10% = $1628 (today)

    Miners consolidating, but still leaders

  284. Mark

    An Orchestrated criminal move was launched after today’s strong open. Even CEF, which just holds metals was hit, even though the metals were way up.

    Gary can’t see it, but it’s as obvious as the nose on your face. Write to the SEC, and ask if they are being run by the Casey Anthony jury. Maybe that’s why they can’t see anything wrong.

  285. DG

    Someone posted just yesterday asking why I was just in DGP and AGQ…days like today is why. I don’t need this. If another credit crunch comes due to European debt failures and money freezing up (printing doesn’t make money *velocity* increase), I do not want to be long miners. Plenty of leverage can be had with DGP and AGQ.

  286. chrisb

    sold my GDX calls this morning for a small profit, and holding core position is DGP and GLD. The miners are not following the trend, making me nervous.

  287. Michael

    They’re coming at trend longs under the guise of general market weakness as they often do, NUGT off 10% from highs here already.

  288. Gary

    Poly,
    Sentiment is too bullish on gold to see a $75 pop. That never happens at the end of a cycle. The end of a cycle is almost always a creeper trend as more and more sellers get nervous and sell into the rally.

    That’s exactly what we are seeing here. Everyone knows that gold is going to take a short term hit when the debt deal is done and everyone also knows that a deal will get done.

    Now traders are just playing chicken with the market trying to time the exact top.

  289. DG

    Cool. First down day and “they” are at fault. Neat how “they” were powerless as gold had one of its most persistent rallies in history. Wonder why “they” can move it down now and couldn’t last week, or the week before, or the week before… Maybe it’s late in the cycle and the buying has temporarily dried up like it has done in every market (gold or not) for the entire history of trading? Nope, must be something mysterious as opposed to the simple laws of trading physics.

  290. Shalom Bernanke

    If one is worried about miners accessing credit into a deflationary event, they could always buy the miners that are sitting on piles of cash already.

    The reason to own miners is they own the metal in the ground.

  291. Shalom Bernanke

    Another consideration is that etn’s like DGP have risk in a deflation, in that they are backed by banks.

    These banks are the first to go up in smoke if deflation takes hold.

  292. Duuuuuude

    Right Gary….. just hearing people sounding as if they are ready to throw in the towel. If they have held miners this long, they don’t want to bail out now.

  293. LowTax

    Sold all leverage, back to core. Like Gary says, when the market doesn’t do what you think it should be doing, time to change tactics!

  294. Gary

    DG,
    LOL I always get a good laugh at the conspiracy nuts that come out of the woodwork every time we have a daily cycle correction. Even though they happen like clockwork every 20 to 25 days and have for the last 30 years somehow this is proof of an evil cartel.

    Never mind that the evil cartel also props up the dollar to bring about this “takedown”, which of course is impossible to do unless Bernanke was selling assets, which he’s not.

    Barring that, all Bernanke can do is print money, which is dollar negative.

  295. Farm Girl

    Dude – why? I sold NUGT this morning at $36.36. Gary’s good at identifying daily cycle lows, so I’ll just wait for him to ring the bell to get back in. I don’t mind buying back higher, but the odds of that seem small.

  296. DG

    SB: having cash will not save miners. In a deflationary environment people sell whatever they can, whether it is a stock, another asset, or whatever. No one is looking at balance sheets during a panic. That[‘s why great bargains are to be had as good stuff is sold off to feed the cash-starved.

    And we are a long way from ETF’s failing IMO. A deflationary environment will ultimately lead to such failures, but that will not happen for years; at the final gold top. If the ETF backing banks were about to fail, the SPX would not be double where it was in 2008. We may get there, but we are nowhere near such a meltdown (yet)

  297. Robert Thrane

    Farm Girl,

    The problem is, is that a swing high in the miners might and easily could exceed today’s current prices, if the rally out of the DCL is powerful, which they usually are.

  298. Robert Thrane

    DG,

    If you look at the GLD:GDX ratio, prior to April/May, this ratio hasn’t seen the highs they’re at now since January 2010, and before that it was April 2009!

    I agree with Gary that miners are where to be for this end of this C-wave.

    Also I expect stocks to exceed their May highs if we’re going to see the dollar’s true 3-y-c-l.

  299. Michael

    For people who have seen a few Prime Brokerage presentations from the major houses, they know it’s basically one huge statistical exercise where bigger players know exactly how long the market is (aka sentiment), a rough distribution of how much public involvement is there (clicks from TD, IB etc; smaller lots traded etc) and roughly how far a momentum market can be pushed to get a bit of a domino effect and make a few dollars. Good clients/ funds join in. Gold breakout and debt talk sucked in a lot of momentum money. Sovereign funds can ruin the game if they show up unexpectedly. Exactly how it’s always worked.

  300. Shalom Bernanke

    DG,

    I also don’t believe etfs or etn’s will fail, mostly because I don’t think we’ll see anything like ’08 for awhile. My point on DGP is that it’s only a note backed by a bank, and banks can easily fail in deflation.
    I can even see a day where gold and funds like PHYS rocket higher while derivatives linked to gold get smashed. Not likely, but there is a slight possibility. I don’t have anything against DGP, in fact I like it, I’m just pointing out that they’re not the same as being gold only.

    To those looking to sell miners into this decline, it’s a mistake IMO, especially with many of their earnings coming out next week. Of course we could take more pain before then, but that’s how it works. ๐Ÿ™‚

  301. Gary

    I’m sure a gap fill is a good place to add, but if one wants to try and avoid a drawdown they would probably be better off waiting for gold to form a swing low.

  302. ร‰amonn

    Gary, DG, Alex: Is it best to hold my money in gold shares right now given the outside chance of a US default? Please advice. Thank you

  303. Gary

    E,
    I like both, but you have to be prepared to weather a draw down during the daily cycle correction. It will almost always be larger in miners than it is in gold.

  304. Robert Thrane

    Eamonn,

    There is a 0% chance at default, lol.

    If you want to bet, we can set up a secure online bet, I’ll give you 100:1 odds against a default, with your minimum bet having to be $1000.

    LOL, seriously let me know if you’re interested!

  305. Robert Thrane

    I don’t think it will be an easy DCHigh to trade. I think tomorrow we’ll get an up day in miners and PMs so that some of those who sold today get whipsawed.

    My IWM put this morning was a great hedge with my miners, it was up double what my miners were down.

  306. ร‰amonn

    There is a chance of default. I think John Boehner has a lot of crazies backing him. I know this, and they are deadly serious. I agree, its likely that there will not be a default, but I’m not prepared to risk my capital in US dollars

  307. DG

    SB: Fair points and I agree with you about the ultimate risk of ETN’s (and even ETF’s). At some point I believe we will all need to consider getting out of the standard investment markets and vehicles and buy a ton of physical (even PHYS is at a brokerage house somewhere). I really don’t want $1 million of physical where I live or buried in the back yard, so have no idea what I will do. Hopefully I will know when the time comes…?

  308. Mark

    Gary,

    You’re wrong. Bernake is buying assets. According to Jim Rickards, he has $750 billion/year, from reinvestment. It’s just that it won’t be enough to last all year. But you are wrong, Bernake still has clout.

  309. High 5

    Eamonn

    Not raising the debt ceiling does not equal default. Payments on debt will continue to be made. Don’t believe the media hype.

  310. Robert Thrane

    DG,

    It stokes me a little, that you of all people are promoting eventually buying physical whereas months ago you weren’t’ really even into PMs!

    I wouldn’t even talk about it now to be honest. It is far down the road. That said, I’m trying to convince my parents to sell their house and buy PMs (as I’ve been trying to do since 08!), and once they do (after they see all the money I’ve made), I’m going to put them mostly in Sprott Physical Gold and Silver funds, and some miners. I will have them trade the IT cycles with probably somewhere around like 60% of their portfolio.

  311. Hack

    An order has to be given to default. What President in his right mind would give this order unless he wants to purposely destruct this country?

  312. ร‰amonn

    funmike, if you are talking to me then: of course not. You are 100% correct. But a default is not the answer here, it is counter productive, no matter how (understandably) frustrated Republicans are with the US budget situation. I think anyone who proposes this course of action, i.e. a default, needs to have their head examined

  313. Vodni

    I might be wrong, but it looks like there could be one more push up to the DCT in the next hours (and that includes tomorrow).

    We have just hit the trendline of the last 4 day lows, the 60-min RSI and stochastics also have lots of room to the upside.

    Let’s see what happens.

  314. Gary

    Mark,
    I said “selling assets”. In order to drain liquidity and strengthen the dollar Bernanke would have to sell assets.

  315. Robert Thrane

    WW<

    I had AUG 81’s, and yes I did sell them. I didn’t like that SPX bounce off the 50. I still think we’ll see a higher market soon (not getting too greedy with those puts with debt ceiling being raised probably close around the corner).

  316. Silverhound

    This may not happen but here is an aggressive chart on silver showing the penant forming. I think Poly aluded to this in a previous post as well.

    Has anyone considered the possibility of a larger Cup n Handle forming on the silver chart over the next few months as the C wave unfolds?

    silver penant

  317. Ryan

    DG,
    I think you mentioned last night you were thinking of selling some of your DGP and go back to core, are you still thinking that or just holding on? I’m in 80% in DGP and GLD. When Gary calls the DCL, I’m contemplating if miners puke enough in this DCL maybe just throw it in miners. What are you thoughts? Sticking primarily DGP?

  318. ร‰amonn

    Shalom Bernanke, I’m not a smart bloke like you so I’m just guessing if the US defaulted then the dollar would tank and gold would rise to compensate. But I’m not sure

  319. Shalom Bernanke

    man I love days like this! In fact, if this weakness holds into the close and we open a good jolt lower tomorrow morning, I’ll start nibbling then.

    Let’s see how it shakes out.

  320. ALEX

    Blogger Éamonn said…

    Gary, DG, Alex: Is it best to hold my money in gold shares right now given the outside chance of a US default? Please advice. Thank you

    I just think that Gold shares are going higher period longer term, so I am invested in them at this point regardless of the debt ceiling issue and if things change drastically in the future…I would just be prepared to make adjustments.

    You could always sell completely before the wkend, and get back in when you feel its safe to. you will miss a move one direction or another ( up or down )…who knows, really. Sorry thats not very insightful

  321. Gary

    Gold does have to correct long enough to dampen sentiment. It has started to get extreme. I’ll include a chart in tonight’s report.

  322. High 5

    SB

    Righton. Plus, I think the main debate is how far down the road the can will be kicked, not whether it will be kicked. BO definitely wants it kicked past the next election and it seems the pubs want it kicked to just before the election.

    Too bad we don’t have term limits.

  323. Shalom Bernanke

    Eamonn,

    I don’t know either, though i suspect you’re correct.

    Too many times we’ve seen the dollar an unreliable indicator of direction in metals, so I’ll continue to focus on my trade only.

    It’s also possible they pass the budget and the dollar rises. ๐Ÿ™‚

  324. Poly

    Judging by the flurry of posts a fair few puked some shares on that shakeout, fearing a cycle top was in.
    I see little volume and a statlemate yet be resolved, I want front row seats to that show, of curse with an eye on my exit signs ๐Ÿ™‚

  325. gold silver troll

    As much as i think that this is a shakeout before another push up, miners are clearing sending a message.

    time to be careful though…i’m sure we all agree that the DCL will come below this level as sentiment is too bullish

  326. Gann360

    Mr M

    No, with my Gann software, i have to start each chart over again,was it a 21 Trading-day Cycle Pivot Chart on SPX ?

  327. MrMiyagi

    Gann,
    Yes that was it. If it’s too much trouble, then don’t bother.
    I was just trying to recall the interval, I think it pointed to a downturn about now.

  328. William Wallace

    Miyagi,

    I understood you 100% yesterday…Thank you for teaching me how to fish, I am eternally greatful. I will take my father out of my will and put you in…lol!

    I hear you with the house reno’s, putting a beaten on me lately also.

    Let me know when your ready for the next lotto pick.

  329. funmike

    E.
    Perhaps I am one who needs to have my head examined but at some point someone needs to say enough is enough. Continually giving the government a blank check without demanding any accountability is a better cause to have one’s head examined. There are always consequences to every action and until the consequences are faced the enabling continues.

  330. Gary

    The transports have reversed the pattern of higher lows.

    If the S&P also makes a lower low I’ll start to wonder if this intermediate cycle didn’t form a top on week three.

  331. Russell

    Can anyone clarify for me the effect that an S&P downgrade of the US credit rating will have on the US dx?
    I understand that treasury bond yields will increase, but is there an effect on the value of the US dollar? Sorry,I majored in Biology, not Economics.

  332. Gann360

    SLV Silver Weekly Chart

    I started a short in SILVER Yesterday ,Call me Crazy, But usually a 50% Retrace of a Big Bearish Candle,Turns out to be Big Resistance.of course i took a small position, Cause i could get Killed here Shorting Silver, But i have a Pivot in Time that Hits this Week, so i am thinking it has to be a High , and a nice Pullback of some kind Should Happen.Very Risky Trade

    http://screencast.com/t/21BVQwmQ

  333. Michael

    Shalom,

    You have a great feel for the miners…you started posting about buying in late May/June… well done…I agree with you that tomorrow A.M. will be a good time if we get the right move.. Miners lead on the way up, seems they will lead on the way out of the DCL too…

  334. William Wallace

    Miyagi,

    I was thinking maybe something that takes into consideration a daily cycle decline that will last around a week or so. I couldnt see GLD hitting 165 with a DCL ahead of us, thats what made me sell today.

  335. Duuuuuude

    Farm Girl, the point of my charts was to say that if you did not sell mining stocks a couple points ago, it made no sense to sell them out now when another point would fill the gap. Is it really worth losing a strong hand to try picking up a point or two at this juncture?

    http://screencast.com/t/SI27jkvoo

  336. Michael

    Since the start of this IT cycle, this 2-hour bar is by far the highest gold futures downside volumes and forced bid-hitting, this is for real (co-incidentally day after option expiration).

  337. Gann360

    Silver Hound

    Yes ,yesterday was the first Hit of 50% and this Morning we Tagged 50% of the Whole drop from the April Pivot high , to the recent low.

    90 degree’s in Time from such an important pivot April.28. Could very well mean another High,,i have seen this over and over again, Of course nothing is 100%.i’m just going with a few thing pointing to a Possible top! of some kind.

    I could be wrong , and if i am i will cover my short in Silver, I f GOLD closes the Month above 1577 i will cover my Short !

  338. funmike

    Just for fun, with a short term trade intended, I bought a little ZSL this morning at 12.72. Put in a stop if it goes below 12.00 and a sell if AGQ goes below 200.

  339. MrMiyagi

    GLD has a gap all the way to 155$. As gold trades around the clock, I don’t give this gap that much importance but it’s there.

  340. aviat72

    The upward auction seems to have run out of steam a bit. It is still a balanced profile for the last three days but today it went from the top to the bottom in a few hours. 1603 is a naked VPOC and should attract buyers. However as I had noted yesterday, there were a lot being offered and today we had some long liquidation trades.

    Time to buy some down side protection. If you do not want to lose your position, this is perhaps a time where a high gamma strategy might work. You maintain the upside while your downside reduces if the price moves away from you.

    The real demand for Gold will come from the happenings in Europe and China. The US drama is just a distraction.

  341. MrMiyagi

    I’ve been of the mind that the debt ceiling thingy would be announced after two-three day hard selloff starting Monday but the seloff didn’t really start until yesterday afternoon.
    I wonder if they will “reach an agreement” late tonight or tomorrow night as odds are this won’t drag into the weekend.

  342. MrMiyagi

    WW,
    The politicos are sucking the blood out of the people, not eachother.
    I was a teenager in the early 80s (1980s..), WWF wrestling was like that; enemies on camera, buddies off.

  343. DG

    Ryan: I sold a small chunk of DGP when GDX reversed lower this morning. I don;t want to sell too much because it will be much higher in August, and someone somewhere once said “In a bull market surprises come to the upside!”, but I was super-heavy and now can sleep through a DC decline. I will try to load up again at the next bottom ($1580?)

  344. funmike

    WW
    I took a very small position and will be watching it closely knowing that there is always the possibility it could work against me. Gary doesn’t recommend shorting.

  345. MrMiyagi

    WW,
    If you’re thinking of shorting silver or SLV, Gann is with you by his earlier post. He’s a scalper though, quick moves usually.
    I was tempted with GLD/SLV puts but I won’t. I’ll let it do its thing and wait for the low, can’t concentrate on this as much as if I had free time.

  346. MrMiyagi

    WW,
    We’re all expecting a decline and the carts are screaming it but just keep in mind that it may not come and buy accordingly, don’t blow all my inhertance away!

  347. Gann360

    Remember there is no Confirmation here of a short Term Top,I use these tools to help Determine a Possible Top,Before it’s official ,So Please if your going to short a Monster Like Silver ,,, go Slow and Small, with Money you could afford to lose.

    Or wait for confirmation than Short, i could be wrong here and Silver Pops back up another 3 bucks.

    Go slow and small

  348. High 5

    DP

    Yes I did. 1935 there hadn’t been a housing construction boom/buuble that popped and also the population was increasing rapidly. 1980 baby boomers having children and no previous housing bubble. Both times the economy had better sailing ahead.

    It looks to me as if we are headed for some very hard times. The US must compete with third world countries and the welfare state/socialism/big government era is suffocating the private sector, where job/gdp/housing catches a solid breeze.

  349. William Wallace

    funmike,

    I know Gary doesn’t recommend we short, and with my old turkey account I obey my fearless leader…but with my trading account I am a prodigal son.

  350. MrMiyagi

    WW,
    Not sure where the next one is, maybe a miner? SLW seems to have big moves, maybe wait for it to drop a couple more bucks and see?
    Until then, don’t spend all my money!

    Alright.. to the basement and then mow the lawn.

  351. Harry

    I closed all my futures positions and am now 40% in GDX, GXDJ, and DGP. Bull markets have surprises to the upside and frankly I don’t care if I lose a thousand bucks with these positions during a daily cycle decline. I’m not going to get caught short or miss out on a sudden reversal. When there’s a clear swing on the daily chart I’ll go right back to futures – five contracts, Old Turkey-style.

  352. TheBookGuy

    The only thing that makes me think we are not building a base to push higher one last time is the miners. Either way I’ll be happy. Either happy to build the base for a push higher or happy to get through the DCL.

  353. funmike

    Here is the email text directions:

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

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

    All I had to do was type

    follow garysavage1

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

  354. funmike

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

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

    All I had to do was type

    follow garysavage1

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

  355. wolf33

    Going on the basis as of now, that max downside for S & P 1270s’.

    Very defensive portfolios but was a buyer of Juniors/Explorers where saw good weakness. I tend to buy these when they are being dumped and are my favorites. Not big amounts. These are segregated in a seperate portfolio. Sophisticated name is Portfolio #1.

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