DOW: GOLD RATIO & THE SECULAR BEAR MARKET

As I have been warning investors for many months, stocks have now entered stage III of the secular bear market. Gold on the other hand is now in the final parabolic phase of a 2 1/2 year C wave advance. 

My best guess was that we would see a Dow:gold ratio of between 5-6 before this C wave ended. The ratio was at 5.71 as of today. For reasons explained in the nightly reports I think we may still have a little further to go on the downside for stocks and a little further upside in gold. So it’s entirely possible that we could see a Dow gold ratio of 1:5 before the trends reverse.

However the low risk, large potential trade is now in the stock market, not playing chicken with the gold parabola (also explained in the nightly newsletter).

Cyclically the stock market is now in the middle of the timing band for an intermediate bottom. Presumably a sharp bear market rally in stocks will trigger a regression to the mean, profit-taking event in the precious metals market (the D-wave).

D-Wave’s almost always test, and sometimes marginally penetrate the 200 day moving average. I’ve illustrated in the chart above a rough guess as to where I expect the countertrend  rally in stocks and the D-Wave correction in gold to retrace.

Keep in mind that the fundamentals for gold have not changed. A D-Wave is simply a profit-taking event triggered by an unsustainable parabolic rally. It has nothing to do with fundamentals. Once the D-Wave has run its course gold will enter a sharp snapback rally (the A-wave), after which it should consolidate for the remainder of the bear market in stocks.

Stocks on the other hand, after what should be a very convincing bear market rally, will roll over and continue down into a final four year cycle low, probably in the late summer or early fall of 2012. 

Depending on whether or not the Fed tries to fight the cleansing process stocks should either test the March 09 lows, or if Bernanke tries to stop the bear market with another round of quantitative easing, we could see the March 09 lows breached.

Either way I expect that 2012 will go down as one of the worst years in human history. Certainly in the same category as 1932 if not worse.

282 thoughts on “DOW: GOLD RATIO & THE SECULAR BEAR MARKET

  1. Éamonn

    Gary, you say:
    “Either way I expect that 2012 will go down as one of the worst years in human history. Certainly in the same category as 1932 if not worse”.
    Could you describe what you think will happen? Thanks…

  2. Gary

    We are entering a recession/depression much worse than what happened in 2008. If the Fed spikes commodity prices with another round of quantitative easing it will only intensify economic collapse.

  3. Ben

    Amazing that Dow/gold is below 6, after watching it climb for years and years to some huge value before I started to take a few positions.

    For those that worry about the silver parabola victims selling off early, there aren’t that many of us. Not compared to the next C wave finale, when everybody you know will be talking gold and silver.

    I *still* have not had anybody come out of the woodwork and start talking about PMs. Just one guy who’s been investing along with me for several years now.

    It will be the next C wave (assuming this one stops before 3000 anyway…) when that happens, or perhaps the one after that (if we are lucky).

  4. Ben

    Gary, my daughter had a routine gall bladder surgery last month — total bills reached $80,000. Thanks to insurance, it was written down to about $16k. But with fewer and fewer people with insurance, we are so farked…

    Her tuition is going up 44% over the next two years. My homeowners went up 13% this year. I just had a plumber fix a plugged drain. 25 years ago, that was $39. Yesterday it was $275.

  5. Gary

    This C wave has gone much further than I originally anticipated. I suspect the next C-wave will be the final bubble phase.

  6. Gary

    That’s the million dollar question isn’t it?

    Most breakouts fail, so I wouldn’t put a lot of faith on a breakout leading to a sustainable rally. Look what happened when the HUI broke out above 600.

    The big question is whether miners will follow gold down or stocks up.

  7. Mike

    2012. The end of the world. According to the Mayans anyway…

    If Gary’s prediction is correct the 2012er’s are really going to go wild next year. A “2012 End of the World bubble” if you like. Are there any stocks in these guys that we can buy?

  8. jeff

    RJ: What is the big deal with the FX pair AUD/JPY?

    JPY pays 0% and AUD pays 3% or more so many people borrow JPY and buys AUD for interest and any appreciation.

  9. Gold Lion

    AUY and NGD may be giving indications of the breakout. HUI is knocking on the door too. I guess we’ll see. Many of the stronger jr. miners are giving me buy signals.

  10. Ben

    MrM, if/when I become one of the uninsured, they’ll be looking for that 80 thousand. Maybe they’ll give a 5% cash discount like my dentist did to my dear ol’ dad.

  11. Ben

    Mike, I’d rather not spoil the myth, but the Mayans I’ve listened to in interviews say that 2012 stuff is a gross reinterpretation, they say nothing of a sort. But that doesn’t sell movie tickets or books, does it? Hysteria sells…

  12. Slumdog

    Third time is a charm… Down she goes.

    Hammy’s chart top intersections called for gold market top at 1900 area. Bottom of the channel is 1845, this week. He’s the most outstanding TA guy out there, but trades in such short time frames, I can’t track him.

    Shorted near the top and will exit probably in the next couple of hours at 1850. Will wait for the bounce and then short it again.

    As I’ve pointed out on the NY Pit, there are break out, exhaustion, exhaustion and yesterday, exhaustion gaps again on the daily basis. There are a lotta holes to be filled.

  13. Beanie

    2012 is gonna be just fine for equities.

    Remember the equities market was supposed to roll over and continue the secualr bear in late 2009, mid 2010, and now 2011.

    Bull markets average about 4years. We’re only on the 2nd year.

  14. Bill

    Gary, after the D wave is past, for the subsequent A wave, given how you’re thinking it’s the mother of all gold runs, will you buy physical, or still do ETF’s? Thanks.

  15. Danno

    Ben,
    By now most people realize the Mayans never said the world would end in 2012. They only said the current stage would end (and a new period of life would begin). Biblical predictions suggest this will be the final period and it could be short. Issac Newton predicted the Battle of Armageddon would take place in the year 2060 or later, but not before. So we are definitely getting close.

  16. SF Giants Fan

    Deven Sharma to step down as Standard & Poor’s president

    Sharma will be replaced by Douglas Peterson, a top executive at Citigroup, the company said.

    US will get its AAA status back. Just have to figure out a story that will stick. The banks are back in control

  17. mikezza

    beanie
    spain was already downgraded by all three rating agencies. they are already several ratings down from the top rating that the US had.

  18. Beanie

    Bears are a spoiled lot. Is there anywhere else in the world that you would rather live than in the USA? Not a handful I bet.

    Ironic that foreigners who live here (after their ancestors have risked their lives to come here) wants America to be downgraded.

    Bear blogs doing a good number on people’s brains, I’d say.

  19. Shalom Bernanke

    Any new money I put in metals will go towards silver (and miners), as this article suggests. I’m not counting on it, but I would not be surprised if some of the money we expect to come out of gold just switches to silver, giving it relative strength. A gold smash will definitely bring silver lower, but it might hang in better than many think:

    http://www.zerohedge.com/news/gold-reaches-191350-%E2%80%93-smart-money-moving-silver-ubs-says-50-silver-3-months

  20. Le Fou

    Where Will Gold Be in 5 Years?

    Gold’s parabolic move. In less than two weeks, it has climbed almost $1000 an ounce. At this rate, it would gain $26,000 an ounce per year. In five years it would gain $130,000 an ounce. While no one is putting that type of target on the precious metal, demand for it is soaring.

    Where do you see the price of gold five years from now?

    Share your opinion:

    http://www.cnbc.com/id/44231587

  21. Le Fou

    Irene continues on its destructive path
    Turks and Caicos Islands as well as the Bahamas prepare for first hurricane of the season.

    Hey Gann, aren’t you in the Turks and Caicos?

    Take care. I’ll be praying for you.

    Blessings,
    Le Fou

  22. Gann360

    Bonjour

    LE Fou, Ca va

    Ma Famille est moi sont a Floride,Est tout va bien ,

    Merci

    Please excuse my Spelling, it’s been a while.

    But keeping a close eye on the Hurricane.

  23. Shalom Bernanke

    I added another 2% to my original position sizes on my silver miners this morning. Would’ve added 5%, but they look like they could, or want, to go lower if metals pull back.

    We’ll see, but I have too much confetti and I want to put it to work over the next few weeks.

  24. Danno

    I hated to load up on silver the other day but…

    I would rather suffer through a pullback that lasts 3 months than miss out on a silver blast off. The chart is impressive IMO.

  25. Harry

    Oversold reading on 60m GC chart. If anyone has the balls to play chicken with the gold parabola now would be the time to step on the gas.

  26. wolf33

    in investment account i have used 30% margin for past 6 weeks.

    it was a risk that paid off. on these bounces i have sold enough to be off margin and have some cash.

  27. Gann360

    Talk about Fib Cycle Hitting 144

    For u Fib Fans:GOLD IS 144 Months in Time from 1999 Low/ 144 Weeks from 2008 Low and Finally ,144 Days Jan/2011 Low.All hit this week,

    Thats Crazy.

  28. Ken

    The badly beat n’ up solar stocks seem to have priced in the lack of government subsidies and may now be sniffing out much higher energy prices based on QE3 dollar devaluation going forward. I wonder if the ETF: TAN wouldn’t be a bad idea should the price of oil rise back above $100 longer-term. Anyone have any thoughts on the solar business models being benefited in a 1970’s stagflation type environment?

  29. auger

    /GC isn’t oversold, on the hourly. I wouldn’t place a lot of faith in oversold readings. IMHO, you’ll get whipsawed trading like that, unless you’re day trading. Look at GLD’s hourly, for example, looks like it may be rolling over.

    Gold may not be correcting here, but what if it’s beginning to? A brief oversold reading, alone, is not necessarily a buy signal.

  30. Feel

    Good Morning!

    Still stalking the GLD short trade at 181 or 187, whichever comes first. On the other hand it could be stalking me 😉

  31. St. Deluise

    one thing about this blog is that you’re going to get some original thinking at least. and the bonus is that it’s usually right.

    i think too many people have forgotten about the dollar at this point though. i’m starting to get suspicious it’s about to blow through the roof. bought a march’12 UUP 23 call for $21 just as a lotto ticket, thinking it’ll tap its 1597 day MA before then which is a little above there.

    SPY and QQQ’s effective volume point towards a new low here as of yesterday.. similarly the rug / constant bid in gold has yet to abate. gold puts surprisingly expensive here.

  32. MrMiyagi

    Yes, this decline today in gold is a small profit-taking from the looks of it, I imagine many people selling because it hit 1900$ and many, many more still holding because it will go “to da mooon!”.

  33. lelio

    gary, hi. I have been a subscriber on and off, currently I am not.

    when do you recommend selling some silver that I have owned for a while, I am trying to get rid of all of my physycal inventory.

    thanks

  34. Gann360

    Thx Mr M

    So far today the TA seems easy ,Fell to lower channel .pop back up to tag 20 sma, and now Maybe rolling over ?

    of course these charts are for active traders (scalpers )Glad u get a use for them.

  35. Gann360

    Love to see another Spike Lower First ,in the Major indices ( on SPX Lower than 1102 ),and get a Positive divergence on the $NYHL INDEX ,at the same time.

  36. Le Fou

    Gann,

    Je suis Americain, et J’habite en Amerique au Spearfish, SD.

    In May, I went to France for the first time. I called it my “bucket list” trip, because I got to check off quite a few things I wanted to do before I die. It would take too long to give details, but the moniker “Le Fou” just came to me after that trip, and it sort of fit with my philosophy of life as un jongleur de Dieu.

    http://www.cin.org/saints/jongleur.html

    Best,
    Le Fou

  37. Gann360

    I was in Canne/Nice /St-tropez/Monaco and San Remo/ last October,

    We had a Great Time,Cannes was my Favorite.

    Lots of Great Food and Wine’s.
    You French ,Really Have

    La joie de vivre

  38. Driver

    The SPX has formed a daily swing low but not the NDX (yet.)

    In looking at the weekly swing low potential, which is a ways off, I noticed that the SPX has just kissed the underside of its 200 week MA. In April, ’10, it turned down when that happened after weeks of trending up.

  39. Feel

    Thanks Miyagi,

    I am watching close. This trade may not work before I get stopped.

    If it does start to work I am targeting the 1740-1780 zone.

  40. TZ(8155)

    Bought gold futures around 1855. 4x.

    We are pulling back, but I don’t think gold is at high yet. This is just a congestion before we resume up. 1 or 2 more weeks of gains like we’ve seen lately, I think.

    buyer beware.

  41. St. Deluise

    farrr less money in SPY now than at last friday’s pop at similar levels around the 115.9 level.

    which is not to say they’re not about to run a hell of a lot of stops right now..

  42. sophia

    Beanie,

    Re your comment at 4.53 AM, I am a foreigner but I don’t live in the US. Hubby is American , your country is beautiful and full of wonderful people, but please admit it, you have been living above your means for too long.
    While Europeans have been tightening their belts for 30 years, you were using your credit cards up to your ears

  43. Éamonn

    I have a sneaky feeling that we may have a pop in the S&P this Friday, but ultimately it will be short-lived. I believe anything short of the Federal Reserve expanding its balance sheet significantly (which I believe is unlikely this Friday) will lead to a test of S&P 1000.

  44. oa92000

    “Driver said…
    The SPX has formed a daily swing low but not the NDX (yet.)”

    what is the number you are looking at?? SPX & nDX

  45. TZ(8155)

    Despite being right a few weeks ago about us continuing higher, I was stopped out and unable to regain my gold position around 1660.

    My only gains since then have been on a moderate core position.

    It is clear to me until further evidence that we have NOT peaked yet. So my trading here is attempt to get in on a final spike higher into the top as I see it.

  46. Driver

    oa,

    SPX = 1145.49 (Monday’s high)
    NDX = 2102.90 (Friday’s high)

    These numbers could be off a few one-hundredths.

    The NDX has also made its daily swing low now.

  47. Hack

    aklaunch: Yes on AAPL but the buys outweighed the sells by 2:1. Here is the updated list

    Buys orders
    BAC – 4700
    AAPL – 2700
    GLD – 2100
    GE – 1100

    Sell orders
    GLD – 3600
    AAPL – 2000
    BAC – 1900
    SLV – 1600

  48. Hack

    Someone ordered 300k shares of GLD yesterday with mismatched puts underneath. Inflow into GLD today $1B for a total of $77B. This makes it the largest ETF fund.

  49. St. Deluise

    think the juicing/stop run is on today for SPY. target 116.37.

    gotta see how the day closes as to whether or not this sticks.. leaning on no. they’ll probably use the pop to get short. and if it pukes again from here i think that will do the sufficient amount of damage to the bull psyche to get a legit rally rolling soon.

  50. Dan

    TZ,

    Thanks for the posts, youve predictions in recent weeks have obviously been some of the most accurate here so the ongoing input is appreciated.

  51. Rob L.

    Éamonn

    By the sounds of your comment at TZ, you seem to not realize the amount of useless information you post with frequency – and no one has said a word. Respect everyone, Éamonn I for one appreciate TZ’s post, all of them.

  52. MarkMarin

    TZ,

    What makes you think that $1850 will hold without a retest and running of likely stops beneath that level?

    Postions: out of gold/silver futures, waiting for a confirmed SPY swing low.

  53. TZ(8155)

    Stopped out when it went lower.

    Since we didn’t get what I would call a blowoff yet (maybe I’m wrong), I’ve been trying to figure out and pick (with small stops) a level where gold will pull back and then start congesting (usually a channel or a triangle or something) before finally making a final move up (as I see it).

    The drop down to the previous support and congestion zone of 1850 looked like a good risk/reward bet, but didn’t pan out.

    So back to watching and see how this plays out. I could be wrong about it going higher and maybe the D has begun. Unsure all around lately but that’s pretty common at a parabolic peak. We are still vertical and a single day selloff like now doesn’t mean this is over by any means. (But it continues to drop as I type this.)

  54. hamvestor

    Rob L.,amen to that. Best comment of the day. TZ, I look forward to your posts, which are all too infrequent.

    As for your detractor’s posts, well….

  55. corporatewarrior

    If the Fed wont help us out with a rally, mother nature sure will!

    Tony,

    I thought I was done with Earthquakes when I left Afghanistan. About one a month, usually in the 5’s.

  56. corporatewarrior

    With the impending global catastrophe looming…

    Can anyone give me any help on where to put my 401K? My options are limited to fidelity mutual funds unfortunately…or would 100% mmkt be good for a couple years.

    Thanks all, appreciate the insight in your trading methods. Good luck!

  57. St. Deluise

    big SPY sells coming in but price ain’t dropping. suspect these are demand tests.

    next hour could be pretty epic.

    (i know i post mostly bs but this right here is exciting! epic bull/bear cage match right now)

  58. Shalom Bernanke

    SF Giants fan,

    Thanks.

    I’ve got very manageable size so can ride it out. However, that’s not to say that if charts start getting broken all over the place that it won’t cloud my senses. 🙂

  59. EricH

    All parabolic moves always end the same in every asset. With a crash.

    It’s not a matter of if, but when.
    Would anyone be surprise if we woke up with -100 gold overnight?

  60. Alex in Montana

    GOLD

    Ross Clark (CIBC Wood Gundy) who pretty much nailed this rise, sees a 6 to 9 day correction back to the 50 day moving average if we have two down days in a row.

    Correction will be vicious and last 6 to 9 trading days.

    The 50 day is currently at $1,616 today and rising at $5/6 per day or so.

    Ther is a huge gap at the 161-167 level in GLD. Should easily hit that and so that could be an entry point.

    Ouch!

  61. Gary

    So far the miners are not holding up well like I would like them to during a correction in gold. If this continues I would be more and more inclined to believe that the divergence in miners was predictive.

  62. TZ(8155)

    A single sharp down day does NOT (historically) kill a parabola. If if we get a sharp rebound tomorrow things are still in play possibly. If, however, there are multiple days down the odds get worse.

    I took a shot at a bounce point today, but it kept going. The low NOW at 1833 may be it instead. We’ll know in the next 24hrs.

    If this recovers mostly then the game is still on.

  63. Shalom Bernanke

    The bigger miners that ran up the most are taking the brunt of today’s selloff.

    Better get your buy lists ready to deploy over the next couple weeks into September.

  64. Gary

    The big money for the time being is going to be in the stock market. Why anyone would play chicken with the gold parabola at this point is beyond me.

    Hammer/finger.

    Then if you still need more pain go ahead and keep trying to buy dips in gold.

  65. TZ(8155)

    WARNING: admittedly my attempt to try and get in to gold and score a few remaining bucks is likely prompted, in part, by missing out on much of the recent rise and just trying to make up for it.

    I THINK there might be more upside left and I MIGHT be able to catch it, but it could all just be a useless action that will result in losses. So keep that in mind for anybody using my comments to go long or hold onto things unnecessarily.

  66. Feel

    Will be adding to GLD short @ 176 and updating stop. Low confidence still…

    But I am conflicted b/c I like the gold story and what it represents.

  67. TZ(8155)

    >Then if you still need more pain go ahead and keep trying to buy dips in gold.

    I’m down 3-4% net worth just from monday/tuesday doing exactly that. I won’t keep trying, but I still think we might not have peaked yet.

  68. Dan

    Golds already almost down $100 from it’s peak in the last 24hrs. I think odds are now that the parabola is donzo.

  69. St. Deluise

    gold dip buyers still haven’t been screwed yet. want to see a test near the highs without any big money following along.

    just bailed on my SPY daytrade, price a little ahead of itself here. of course now’s when it gaps tomorrow and leaves me in the dust..

    out for today good luck everyone.

  70. Feel

    Dan and all,

    The other day I had wondered aloud at what level would gold be considered in a parabola?

    Is there consensus? Did it make up far enough to be considered parabolic?

    FWIW, using silver as an example (since everyone agreed it did go parabolic) I overlaid the GLD with SLV and compared the moves. Gold would need to move up like 20% more starting now to mimic the silver parabola…

  71. Alex in Montana

    samppa_nyman

    Right on!!!!!

    Buying opportunity when the washout is over. Gold down $250/$300 should build up some bearish sentiment numbers.

    This could be like 1978.

  72. Avann

    The last couple times this happened gold bounced off the 10 day. I have it marked around 1807 … let’s see what happens at that level.
    If it doesn’t get there today tomorrow the 10 day should be around 1820.

  73. Shalom Bernanke

    I’m not sure when it starts, but there will be a time when the ONLY place to hide will be miners and metal. Sitting in cash on the sidelines will be the worst of all, everything will be lost.

  74. Michael (Hulk)

    TZ, Congrats on squeezing more than most out of it and with less risk (to your stop-loss) – but with more sleepless nights sounds like! I did the same with the Aussie dollar in 2003 when I was younger and hungrier – tried to stay in the trend till I was dirty and bloody – it kept redefining “parabola” for me in the process – but was proud of the fortune I had made at the end.

  75. Blindweb

    I believe we’ll hold $1800… One more move up… likely launched by Bernanke. Not sure any more if I think we’ll double top or break $2000. My position will be very small. Might even short the market for one more move down.

    Sold all my positions at the open today. Had to clear my head. All my buys from July were profitable except GDXJ. I lost money on a second slv buy a couple days ago.

  76. rose

    Dear Shalom,

    re your post: “I’m not sure when it starts, but there will be a time when the ONLY place to hide will be miners and metal. Sitting in cash on the sidelines will be the worst of all, everything will be lost.”

    Would you please elaborate a bit as simply as possible? 🙂

    With sincere thanks in advance and with kind regards,

    Rose

  77. Shalom Bernanke

    rose,

    That’s what happened in in the last Great Depression. Started in 1929 and the general market worked lower for 3 years before getting close to a bottom. During the same time, miners didn’t go down much, but only went sideways. Three years after the start of the Depression, miners began to scream higher for the next five years.

    Cash that savers hold to be “safe” get the worst results as confidence is lost. This time we are an entirely fiat economy, which suggests it could be worse than last. We can’t know when exactly, but I think technology with the instant spreading of information/news, etc could exacerbate the situation. It might normally take years to play out like it did in the 1930’s, but only take 1-2 yrs this time.

    History does repeat, even if not exactly the same each time. We’ll see.

  78. Shalom Bernanke

    rose,

    Even if one is not comfortable in miners, the lesson is that at some point in the future anything is better than cash.

    It isn’t just my opinion, many people more knowledgeable than me agree that cash holders will get stung.

    Look into Marc Faber videos on youtube. He explains things simply.

    Good luck.

  79. Dan

    Alex in Montana,

    Where did you find the Ross Clark interview? Howestreet doesnt seem to have it up yet, did you hear it somewhere else?

    You are correct though, Ross Clark really did nail this gold move.

  80. TZ(8155)

    You always have to ask yourself “what if i’m wrong”, so a few thoughts:

    On reflection today and yesterday and all kinds of information I think I would now say the odds are 50/50 we’ve peaked in gold as of last night.

    One of the clues of a peak is that you are only looking in one direction (up) and keep trying to get in cause you feel emotional like you are missing something.

    Not only have I behaved that way in the last week (mostly to losses, but not horrible), but I have noticed other investors doing the same.

    I also had a target of this peaking out about a week or two from now, but I can also see a variation which allows the peak this week. Perhaps already last night.

    The volume today was very high and that itself can be a bad sign.

    There is still an argument that we are going to continue up for another $100-200 dollars, but I would say gold and silver HAVE to retake much of the losses today within the next 24hrs. If the parabola is still alive then today would just be an emotional shakeout and smart money would still jump in. If we are dead flat and dont’ recover, then my odds get worse.

    I don’t have any futures positions and I have lightened up my ‘core’ which I likewise had grown out of fear last week. I’m gonna watch for a recovery or signs of mania buying to return, but I might hunker down if not and call this a peak otherwise.

  81. Shalom Bernanke

    SF Giants fan,

    I don’t look too hard at the little moves. GPL was the strongest of the bunch a week ago, the weakest yesterday, weakest this morning and strongest this afternoon. 🙂

    The bigger picture is my focus, and I believe they’ll all be worth 3x (at least) what I paid but if I can stay on for the ride. I’m determined to do this correctly, and proper sizing is the key.

  82. Shalom Bernanke

    Although EXK has been strong throughout all the turbulence, each and every day.

    Still, it didn’t make me buy or sell EXK today, but it is the standout. I also don’t know what to make of the juniors being not only stronger than the metals but the big miners too. Seems like rotation from outperforming to underperforming while maintaining a “long metals” bias. It will be interesting to see how far silver pulls back the next few days as we anticipate gold’s move down.

  83. Gary

    I don’t want to own miners when it feels “safe”.

    I want to buy them when everyone is convinced that the gold bubble has popped. I would say we are a long long way from that right now.

    Folks perma anything is bad for your portfolio and that includes gold.

    The big money now is in the stock market. I would suggest traders not let a perma-bull view on gold prevent you from seeing the opportunity that is unfolding in the stock market.

  84. Shalom Bernanke

    Gary,

    I’m prepared for a decline through proper sizing. The answer is not on the call of up or down, but being long the bull with size that lets you take advantage of pullbacks and get paid decently enough when correct (or lucky).

    The directional call is least important or all factors, IMO. Even you want back in eventually, and that’s what bull markets are made of. After all, anything one trades can only go up, down, or sideways.

    Here’s my last thought before I’m out of here for the evening. While everybody tries to sidestep another ’08 disaster, they might consider that the had they stayed in miners they’d be worth more today even riding through a total collapse. If you believe in the secular bull, then know it will bail you out if wrong and pay handsomely if correct.

  85. gold silver troll

    We can all agree that 90% of the blogs out there would laugh if I said we’re gonna make new highs. And most are waiting for that plunge to 1000 and then the bounce to 1260-1330 to short into.

    When 90% of the people out there are not expecting new highs, I would gladly take the other side.

    I think that this plunge from 1370 has flipped this game upside down…we were supposed to go on a 18 month bear market…now instead, we go higher to make new highs because of the fear the media has spread

  86. Shalom Bernanke

    Neo,

    I’ve been logged out for hours, but can tell you that out of 5-6 positions, I’m up on 3.

    When I checked on my positions at 4pm, although not nearly as much had I cashed in on the most recent rally a couple weeks ago, was still in the green.

    I wasn’t interested in selling back then for the same reasons I’ve shared here before. Trying to sidestep declines is how people lose focus from the prize.

    That doesn’t mean I don’t trim things that start looking vertical, I did sell 70% of my PHYS last week, but hold all my miners and a little more.

    Have a good night, see you guys tomorrow.

  87. Shalom Bernanke

    To Gary,

    had you bought miners at the ’07 tippy top, napped all through 2008 till now, you’d have zero effort, strong hand status, and profits.

    Nice! Old Turkey.

  88. Gary

    Easier said than done. How many people can watch as their account loses 70% of it’s value? Not to mention if a D-wave has begun that person is about to lose all of his small gains from the last 4 years…again.

    Much better to sidestep the D-wave and re-enter at the lows and make another 200-300%.

    I do have a pretty good record at spotting bottoms :~)

  89. Neo

    SB,

    Dont you think when, next year, markets make their 4 years cycle low and Gold his B Wave, that would be an oportunity too make your old turkey miners portofolio for the rest of the bull ?

  90. Shalom Bernanke

    Gary,

    That’s my point, proper sizing means their account doesn’t lose 70%, just the positions they hold.

    Whether I win or lose, the proper trade is to be long metals, miners, or both, full well knowing I’ll get sideswiped a few times but that it pays. The only way to do that is proper sizing.

    Who’s right, me who sold gold just last week or the guy who sold it $300-$400 ago because he had too much and got nervous? I have to trade it the way I know, and even though you’ll be a superstar (or broke) more often than me and depending on the day, I’ll get paid satisfactorily in the end.

    I do come to Gary for his directional calls as they’re better than mine, but I trust myself on execution. That’s why I’m never whining around here and blaming the G-man for anything. I hope you can see my point, even if I didn’t explain it as you would.

    Have a good night, and we can pick up the conversation tomorrow if you or others are interested.

    Good night.

  91. Alex in Montana

    Dan,

    The Ross Clark interview(s) are really a composite of his last 4 or 5 going back a month. He really has said the same thing over and over that when this ended we will go back to the 50 day M.A. etc etc. in 6 to 9 trading days based on other July rises going back 40 years.

    Alex

  92. Shalom Bernanke

    Neo,

    Sure, if you can promise that is what will happen. So far I’ve been on for the ride, and that’s necessary if one wants to make money.

    To pat oneself on the back if gold pukes 20% from here is a mistake, if they sold 30% ago they are still behind the game.

  93. E

    Wondering why gold dropped by almost $100 today? Wonder no more: today the Shanghai Gold Exchange lifted gold margins for forward contracts the second time this month to 12% beginning on Friday, in a move that is starting to resemble the CME’s vendetta with silver back from May.

  94. Gary

    You don’t think that maybe the gold parabola being stretched 30% above the 200 day moving average and a daily cycle that was stretched to 35 days might have had something to do with gold correcting?

    Yeah, I guess it’s about time for the manipulation crowd to crawl back out of the woodwork. Now if gold doesn’t get to their target of 2000/2100/5000 or whatever goofy prediction they made it won’t be their fault that you got trapped in your long positions because the evil cartel took down gold.

    Blaming some mysterious “others” for why the market didn’t do what you expect it to do is one of the oldest scams in the book.

  95. 86d4life

    Gann,
    The last chart just amazes me. Thanks for sharing that. This may sound stupid but I gotta ask; how do you plot out the 282 days? Are you using some kind of length tool or doing it on a calendar or what? I have to know! Thinking your sitting there with a pencil, counting days on a chart seems kind of thin 🙂 Thanks again.

  96. Michael

    Gann.

    Thanks for the terrific charts all day long… they really are super guides to understanding these pivots and short term moves.. You are very kind to to post them after all the work you do.. Thanks again!

  97. Blindweb

    I’m buying a small gold position tomorrow if the price stays $50 below the high. I had my finger at $1830, but was out all day and had no time to think it through. I think we have one more $150 leg left. Maybe two. So $1975, and then when the pattern becomes too obvious we rise almost another $150, around $2100, and drop precipitously from there. If I’m wrong I may hold through a D wave and sell into an A wave.

    Whatever the reason for the $100 drop in gold, the margin increase now gives an excuse to everyone who believed it was the cause to buy back in.

    I agree with Shalom wholeheartedly about the flow of information. This seems like too obvious of a place for gold to plummet from.

  98. Michael

    Gary,

    I had been on a monthly membership and would like to make it longer term.. do you have a special running at the moment?

    Thx

  99. jabalong

    Hoho, this is exactly the kind of euphoric, pie-in-the-sky mainstream-media article that’s usually a sign gold’s getting ready for a major reversal.

    “Where Will Gold Be in 5 Years?

    Gold’s parabolic move. In less than two weeks, it has climbed almost $1000 an ounce. At this rate, it would gain $26,000 an ounce per year. In five years it would gain $130,000 an ounce. While no one is putting that type of target on the precious metal, demand for it is soaring.

    Where do you see the price of gold five years from now?

    Share your opinion:

    http://www.cnbc.com/id/44231587

  100. Natanarchist

    Monsieur. le Fou
    spearfish? J’etait dans voted ville la dernier fin semaine

    Stopped in at mt Rushmore, Deadwood and Sturgis. Very interesting. 92 degrees blue sky no clouds in Rapid City. Soon as we entered hills, clouds, rain and hail..and all in 20 minutes. By the time we got to your Town, back to 90 plus and no clouds. Also liked the fact after driving over the speed limit through whole State, never saw one cop. Shoot it felt like a private highway at times. Seems the economy must be ok in SD, as they are not using the cops as tax collectors like most other places in the country. I think I could live in your area, although western Montana is
    attractive.

  101. Dubbelito

    Gann360,
    I agree with the rest of the gang and say BIG thanks for your hard work with the charts. They are very creative and I myself are really into the Fibonacci figures and patterns so your work is much appreciated.

    Do you think there is any reason as to why the magic number is 282?

  102. Danno

    My account is down about -5% due to PMs pulling back on 08/23 but my put insurance is exploding in value. If PMs continue to tumble my hedges will easily be worth more than any paper losses and I will be able to buy my covered calls back early too for a profit. When I sense a PM bottom is forming I’ll sell the hedges and buy more shares. May sell some naked puts too as they will get vaporized on the inevitable rally up and I can buy them back back for peanuts. Yippie skippy! However, I will always roll some hedge money out into new puts to keep some kind of hedge going because to play this game without hedging is straight up gambling. If you are ‘just’ buying and selling shares of stock without a hedge of some kind… you my friend are a gambler and you probably don’t even know it.

  103. JG

    Danno,

    Instead of mucking about and trying to time and keep track of a hedging stratergy why not impose position limits and set stop losses.

    I’d say 99.9% of people on this blog don’t have a big enough account to warrant hedging. Positioning sizing limits and stop losses are enough.

    To say that if your not hedging then your straight up just gambling is just silly.

  104. Danno

    JG,

    God forbid your market gaps down and your stop loss is not filled anywhere near your price (or filled at all for a couple of hours while price continues to move against you). This has happened, and it will happen again. Buying ‘only’ stock with just a stop loss is going naked. It’s a very dangerous thing to do. You don’t have to spend a lot of money on insurance. Most of the time (hopefully) those puts will expire worthless. But on those rare occasions when price plummets almost uncontrollably, they can save your behind. But hey, to each his own. Good luck.

  105. Danno

    Even if you can only afford to buy $1,000 in stock you can still afford to buy a put for $50 as insurance. If price moves hard against you that put could be worth $300 or… who knows. It could be a life saver. The put may cost 5% of your long position, but why even enter a long position unless you hope to make a heck of a lot more than 5%.

  106. Gann360

    Dubbelito

    My Friend Peter Atwater Writes for MinyanVille and is also very good at Dissecting Numbers,He sent me this Reply in Regards to the 282 Chart:

    “Joey

    Very interesting Chart. Off the top of my head all I can think is that 282 is 90*Pi, but I will keep thinking about it.

    Peter “

  107. ...at ease

    Danno,
    I find it an interesting concept to buy puts for protection for riding gold old turkey. What percentage is your portfolio are you in gold? And how far out do you buy your puts or leaps?

  108. JG

    Danno, I said stop losses AND position sizing
    yes I’m aware of these ‘gap downs’ but if your position sizing is right you will be ok.
    This is especially the case if your dancing on the backend of a parobala in gold or silver as both you and I seem to be…
    Anyway your right to each his own!

  109. Danno

    at ease,
    My old turkey gold I don’t bother hedging, unless things feel very tippy then I may put in a temporary hedge. I never trade my old turkey position. Ever. Never. When I finally do sell that position it will only be to buy something else (probably oil and/or land). I do however, hedge my trading positions. Always.

    JG,
    How are you ever going to make a significant amount of money with small positions? Your argument is a bit weak. And why is it okay to ‘only’ lose a little bit of money? I don’t want to lose any money EVER if I can help it (unless it’s just the cost of my insurance).

    You guys act like I am the only person on the plane to hedge and I must be crazy. What you don’t know is that a lot of people hedge. Especially people who don’t want to lose their money.

  110. JG

    No my argument is not weak.
    What is the point of putting out big positions on a trade that you know is risky….like gold 30% above its 200mva
    Trust me the closer gold gets to the 200mva the bigger my position size and the lower the chance of ‘gap downs’.
    Like I said to each his own, you go and to what works for you.

  111. Dubbelito

    Gann,
    thanks, it’s definetly worth reflecting. The more I learn the more creepy it gets how symmetrical everything really is…

    Even though it has always played a significant role in price in the markets, I wonder how much MORE accurate and important Fibonacci retracements are in today’s market where a large chunk of the volume is run by HTF algo’s?? Surely they are heavily programmed to look and react at these levels…

  112. Le Fou

    Nantarchist,

    Sorry, I missed you. I give great tours of the Black Hills. There’s a lot here beyond Mt. Rushmore.

    My daughter asked me the other day where I would live if I could live anywhere I wanted. Western Montana and Spearfish were very high on my list along with Portland and Ashland in OR.

    Best,
    Le Fou

  113. Beanie

    Instead of being crazy bastids and hoard gold, folks can promote green energies – the future drivers of great American properity.

    Even just a tiny fraction of people buy the Tesla Model S next year, it will change the world and fix all our national debt problems.

  114. wolf33

    Early Tue. i mentioned started doing some selling. i changed persons pivots from daily to 4 hrs on gold. knowing i would be gone last hour i pretty much sold all gold/silver positions. as mentioned i have been saying there is a long 64/65 day cycle that was a possibility. even first part of cycle there was a deeper pullback.

    needless to say, this cycle has been good to me. yesterday was an unbelievable day —likely best ever. i always get leery when i see that. it took a bit selling everything this morning selling levered positions first. at end of day i gave back from yesterdays gains less than 25%. i was most satisfied.

    so now sitting on a barrel of cash. i think long cycle still could be alive. any meaningful decline below about 1830 i would say something else a work. ie Gary’s model.

    I mightplay a little with gold around 1835 with dam close stop. and i mean just a little.
    i am due for a rest and i can not see a better way than just go with Gary.

    wed will be day 5 of cycle—if 1830 taken out on close the count for me is kaput. as i look at my internal technical they have moved from positive to neutral at best. it was nice while it lasted! the end.

  115. Dubbelito

    Another interesting Fib retracement check:
    Last uptick in Gold (Aug 5 to Aug 10) retraced pretty much exactly to its 50% line. This current leg up (Aug 15 to Aug 22) has a 50% retracement at 1820. If I wasn’t convinced that we’re due for a more severe correction I would be interested in that area as a possible bouncebackabilitypoint. 🙂

  116. Gann360

    Jeff Cooper

    Just emailed me in Regards to my 282 Cycle Chart.He said 282 is on the Vibration Line on the Gann Wheel Of September 15th,(close to septemder 11th as well)here’s what he said.

    “282 is important because it vectors/vibrates off September 15th, the day that shook the world in ’08.

    This year it ties to the 55 panic point count from the last pivot high this July.

    It also ties to the 10 anniversary of 9/11 and the next and closest approach of Elenin comet. The prior 3 approaches coincided with the huge earthquakes in NZ, Chile and Japan”

  117. n1tro

    SB,

    What miners are you holding again? I’m going to get some exposure to miners after I get out of my Canadian bank stocks if Gary is correct on the S&P going up soon.

  118. Veronica

    LOL Dan, electricity will not be the answer unless a new process to produce it comes online, with the infrastructure to safely and efficiently deliver it. Coal and NG power plants are not the answer.

    Wav,it is within 12 dollars of generating currently.

  119. JaketheFake

    Beanie said,
    Instead of being crazy bastids and hoard gold, folks can promote green energies – the future drivers of great American properity.

    I hate to rain on your parade, but every electric car and every windmill requires many pounds of rare earth metals and China has a headlock on those and it is squeezing its exports of them and hoarding them more and more for their own future production of such products. Withour rare earth metals, no “green” revolution.

  120. Shalom Bernanke

    nitro,

    You don’t have to buy the one’s I’m in, as any miner should work as long as it has little or no debt and some money in the bank. I’m mainly in juniors, but have my eyes on a couple big caps to acquire over the next month.

    Here is what I already have:

    SVM, EXK, UXG, GPL, NGD, and 30% of my PHYS left as I trimmed 705 recently.

    I also like AUY, IAG and several others that don’t immediately come to mind.

  121. St. Deluise

    effective volume thinks /gc should be trading below 1800 right now

    coincidentally it’s saying stocks should be higher than yesterda’s high..

  122. n1tro

    I’m a gambler, so playing with the juniors is the way to go for me. Your list would narrow down the list of huge spec play juniors a lot and I can read up on their financials and decide. Just because on paper a junior has no debt and some money in the bank is no guarantee. Just check out TVI.to, one of the biggest pieces of turd out there. I dug into their financials and found out the CEO has a bunch of companies he side runs and bills expenses to the main company. Despite all this being in the financials, people still believe it to be a undervalued play.

  123. Billy

    At this point most green energy is only a pipe dream made possible by government largesse. Once the government spigot dries up these green energy methods are not cost effective enough to be sustainable, no matter how strong the argument for the technology.

  124. Shalom Bernanke

    nitro,

    You’re correct about no guarantees, but you get the pic. Same quality names we’ve been looking at for awhile now.

    I’d still try and pick the best ones, but I suspect almost any will work if miners decide to go higher.

    One last thing, I don’t like miners that hedge forward production, mine do not.

    Good luck.

  125. aljiowa

    Solar thermal and concentrated solar power, just a few options that don’t need a lick of rare earths. CSP solar->hydrogen electrolysis->hydrogen fuel cell vehicle. There are solutions to our problems, this is just one example. All solutions don’t require consumption of scarce resources.

  126. Veronica

    Gold system just sold and made just over 300.00 this trade, completely obliterating the old record of 120.00.I was getting a little worried that we would have THE parabolic top here and would’ve resembled the 79 top had it continued for another 6 trading days and gone up a few hundred more points.Gary’s thesis of one more deep correction before the blowoff top is looking much more likely now.

  127. Harry

    Dubbelito, excellent point. It seems we’re just retesting the 50% level (approx. 1828) at the current time. I’m staying out of the fray until things clear up one way or another.

  128. Feel

    ckpc,

    Thanks for the link on the parabola. I’m reviewing it now.

    ————-

    Adding to my GLD short a little lower at 176.

  129. Dubbelito

    Harry,
    I had 1820, (we probably use different start-stop points, but that’s besides the point) and at this point I’m looking at a low of 1809, so that’s out of the window :-). Next stop 1798 (61,8%)??

    Or it will go down and break the trendline which is quite far away still…

  130. Veronica

    Eammon, I shorted but just a small position for entertainment only. Many times the system will buy or short without a stop(early in the signal) but not this time so it gives me a stop out point.I will be getting out of the short w/o posting so just remember what Gary says, don’t short a bull market as my confidence is growing now that this bull will continue.

  131. Éamonn

    Veronica, thanks. Also, congrats on your successful trade. Very interesting system you have. I know you cant tell me, but I’d love to know how it works, technically

  132. Gary

    Yes this is what I tried and tried to warn people could happen if they continued to try and catch every last penny of the gold parabola.

    But then again what do I know?

Comments are closed.