260 thoughts on “PORTFOLIO CHANGE

  1. smt_troll

    “Visitor said…

    I know this is a gold bug blog and all, but while you are over analyzing gold, Sugar is the place to be as I let you know last week. SGG is making new highs today.”

    Hmmmmm. September sugar futures fell from 31.85 yesterday (I actually sold my last one at 31.80) to 28.92 less than twenty-one hours later. Percentage wise, that is almost as much of a drop as gold.

  2. Poly

    Gann, your 7.37am post and chart is clearly showing we’re entering and printing a DCL. We just need to wait it out to confirm the daily cycle.

    At this point, this isn’t a broken parabola (I’m not for a second suggesting it will not be) and if we can hold the line here and print a DCL, the technical damage will be manageable.

    That would leave this IT cycle on week 8, some 2 to 3 plus months from a major ICL.

    Obviously many scenarios remain, but we should not focus on only one. As this first daily cycle was so powerful, there is a school of thought that suggests this IT cycle has topped and so with many weeks remaining, this will unfold as a failed IT cycle and a Gary D-Wave. I would say this has a decent to high probability of unfolding, probably better than 50%.

    However if we can escape with minimal technical damage, a base could form which could allow for 2-3 more powerful daily cycles, that on the high side, send gold to $2,220-$2,400 by late fall. This has lower probabilities, but should not be discounted as this would present a major opportunity. Don’t forget, this is now a mature bull market and can easily shock to the high side. We also have worldwide macro and geopolitical headwinds that could fuel gold. Not to mention an unpredictable FED.

    For now, we should soon get some positive price action from a new daily cycle, maybe it tests the all times highs too.

    Back to the beach for me, family vacation. Excuse the iPhone errors.

  3. Natanarchist

    Hey nitro,

    I was also someone who haas never owned an apple product until my kids brave me an iPad for fathers day. My initial thoughts were this is a nice toy, but I really wanted a Stihl chain saw. Haha. After using it for the last3 months, this device is awesome I have also used it for online trading…no problem. One can also use it as a phone, as there are many apps.

    Posted from ipad2

  4. Natanarchist


    I really want the Stihl as well…my B day is coming up so I have been leaving hints…haha

    I like your miner plays. Same with Alex. Made some nice profits on some of your guys suggestions. Many thanks

  5. Silverhound


    I found a chart showing what we were discussing earlier. This shows how the miners held their price for a few months after the gold bubble peaked in 1980 and then went on to make higher prices for a few years.

    Gold vs Miners 1974 to 1984

    Note the Gold chart uses a log scale.

  6. Shalom Bernanke


    Thanks again for all the great charts. What’s most interesting in the last ones posted is that the miners made their quickest and largest gains AFTER gold topped. They didn’t just hang in, they screamed higher.

    It’s the anticipation of gold pulling back that shook people out of miners. Of course they are affected by gold prices, but they can also march to their own tune. In fact, people that want to stay long the “metals trade”, might sell gold and buy miners to stay in, even though they know bull is going higher too.

  7. Gann360

    Possible inverse H&S Pattern SLV?



    yes even if GLD /SLV are now turning down. it is a Process, with many HeadfakeS ALONG THE WAY, SO I DO NOT RULE OUT A Possible lower high or something.it may happen, thats why i didn’t want to case Indeces here,i think i could get a better entry long the Market.

    we may get another pullback on the SPX DOW Jones etc:

    in which case Metals should rally imo. but the Process of Bottoming in the Indeces and Topping in Metals has Begun imo

  8. MrMiyagi

    Of all big techs, NFLX is green? NFLX? That bloated overpriced pig of a stock that the insiders have not bought a share (but sold almost all) for nearly 2 years now?

  9. Feel




    Stop at 174.50 keying off of yesterday’s post-breakdown recovery high. Will add below 168.50

  10. Silverhound


    What’s not to like about miners πŸ™‚

    I know one thing. If they spend the next couple of years doing what they did in the late 1930’s and 1970’s it’ll be worth any short term pain….

  11. Shalom Bernanke


    That’s my thinking as well. I’m just trying to get all my positions and hold on. I don’t even get excited about days like this, until we get 12-15 of ’em in a row!

    I still expect they’ll take some work before really moving higher as the only game in town, but we can use that as opportunity to add. πŸ™‚

  12. oa92000

    ” St. Deluise said…
    stopped out of SPY at a small loss. wacky tape here!

    next micro target 115.16
    macro target 112.89″

    The market get crazy before Jackson Hole . think we see the low of the day..

  13. n1tro


    You and others who posted that they never used an apple product before and now love it just proves apple has done a good job with their interface and marketed well to people who aren’t “technically inclined”. My point was is it a must have accessory behind a laptop and a smartphone.

    I can trade off my smartphone too but I like to have charts going at the same time. So far the closest I can get at doing that on a tablet is using a linux based tablet with moonlight (linux’s silverlight) running a .web version of my forex platform.

  14. Silverhound


    Here is a current chart of the DJIA starting from the 1990’s bull to now. Compare it to the 1970’s chart I posted earlier and you can see the similarities and the long term trend is the same. I’m not a fan of exact retraces of history but the patterns are so close it’s spooky.

    DJIA chart

  15. Feel

    Broader market thinking-

    My history is in equities/indexes. Gold & PMs is a new and fascinating area for me and Gary’s approach spurs me on.

    Anyway, near-term, stock market…I think today is the beginning of the set up for Jax Hole market action.

    Will the lead up to JH be bought or sold? If sold, today will remain weak and also tomorrow with SPY 112 as pull. This will afford BB the opportunity to “come thru” and “save” the day. Even if he does not actually come thru until after JH like last year market he can save the day nearer SPX 1000. That would really juice how “needed” they are and fill the hopper with more shorts.

    Gary has indicated no QE3 because there’s no stomach for it and they did not flinch during the recent waterfall.

    If we rise into JH we better reverse soon (as in NOW) and the banks and AAPL will have to get up off the floor. Aiding this set up would be short covering in front of Ben.

  16. Dan

    Think I may hold off on this one. Made a quick buck shorting gold after waiting for several weeks. Not a big fan of rushing into PM stocks until we get some more confirmation. This could easily go either way.

  17. Silverhound

    HnS pattern forming on the qqq’s over the last two days suggests we may see lower prices leading into tommorrows meeting. It hasn’t broken the neckline yet.

  18. aklaunch

    Sold my GLD puts and am having a little bout of sellers remorse. O well…. Like to be a bull more than a bear. Have been a bear with sore paws for a while. Back on the Bull with GDX.

    SLV is starting to look descent too, but i won’t touch it until i hear from Gary.

  19. Mean Guy

    I think this Mkt. action has something to do with Irene. Mon., Tues morning is going to be a bitch on the East Coast. This one is coming right up the chute, heading for DC, Wall Street, Boston. Live in NC and the Outer Banks are going to get Hammered unless this thing moves off to the East. Plus J Hole is starting, so the CNBC gang might be @ Home Depot buying all the plywood, putting it up tomorrow.

  20. Feel

    For you tablet traders:

    Something to check out…. I haven’t had time to yet. For you traders wanting trading platform capability in a tablet you should look at the Acer Iconia the version running Windows 7. They have a Honeycomb version (probably the most common, of course) but there’s a W7.

  21. Mean Guy

    Checked out the Acer Iconia last Sat. A guy there liked it better than his IPAD because it has a USB port. Can hook a printer, expand memory, etc. $399

  22. n1tro


    I have the iconia tablet at the office with my charts going and my smartphone broadcasting my 3g signal to it. πŸ™‚ work pc blocks my trading platform program so that’s what I have to resort to.

  23. Strat81

    Part of me is wondering if this move up by the miners is simply short covering caused by the unwinding of the long gold/short miners trade? I recall similar action when Silver collapsed. Chart does look pretty bullish though.

  24. Feel


    are you running W7 or android?

    Smartphonewise I’m running an EVO and get a good 4G most of time.

    I’m kinda over it though…

  25. Driver

    I bought a Gateway netbook at Office Depot on sale for $229 for the wifey, but then she got interested in a tablet and smartphone (iphone vs. android,) so now she’s trying to figure out what to do. She only needs something to run the Internet and do a little texting, and have something on trips while I “hog” my laptop. What to do……

  26. Feel

    Is GDX the “go to” plain vanilla miner ETF?

    If so, how come the narrow $13 Hi-Lo 52 week range with all gold itself has been thru?


  27. St. Deluise

    short the SPY here. target 114.66 stop 117.46

    market has had all day to make a move and blown every single one. and i don’t think mr. b will be announcing anything especially dollar negative tomorrow.

  28. PST

    Interactive Brokers just posted the following message:

    “As a result of the continued volatile trading environment, please be advised that exchange margins and/or house margins are likely to increase overnight and over the next couple of days, particularly in the metals. For exchange specific increases, please visit the respective websites. IB will also be increasing the gold derivatives margin. Please monitor any affected holdings closely and manage your risk accordingly.”

  29. Silverhound


    In case you hadn’t noticed, that is what we have been discussing. Gary just made a suggestion that maybe the hot money that moved into silver and then gold is now moving into miners. Hence the portfolio change.

  30. Harry

    Gary, in the words of the immortal Black Dynamite, you are one crazy motha. I’m staying parked on the sidelines for now, but this is a hell of a call.

  31. Feel

    Margin hikes –

    I remember the margin hike discussion during the silver parabola in May…

    I don’t recall if there were hikes on the way down???

  32. Shalom Bernanke

    I wonder what will happen to GLD if the criminals in gov’t ever decide to confiscate gold again, like in 1933?

    I have no idea if that happens or not, but maybe that forced people to buy miners. Just a thought.

  33. Shalom Bernanke

    “The order was rationalized on the grounds that hard times had caused “hoarding” of gold, stalling economic growth and making the depression worse.[1] The New York Times, on April 6, 1933 p. 16, wrote under the headline “Hoarding of Gold,” “The Executive Order issued by the President yesterday amplifies and particularizes his earlier warnings against hoarding. On March 6, taking advantage of a wartime statute that had not been repealed, he forbade the hoarding ‘of gold or silver coin or bullion or currency,’ under penalty of $10,000 fine or ten years imprisonment or both.”[2]”

    It feels like we’re still a little ways off before being called “hoarders”, but I’m getting more like that every day!

  34. Robert

    Only three more margin hikes to catch up to silver.Can you spell manipulation, gold has dropped more than $150 and they are still increasing margins–the whole system is so corrupt at this point .

  35. Feel

    In case you hadn’t noticed, that is what we have been discussing. Gary just made a suggestion that maybe the hot money that moved into silver and then gold is now moving into miners. Hence the portfolio change.




    Remember, I’m the guy that had to ask if gold was in a parabola.

    What kind of racing is that car doing in your picture?

  36. Shalom Bernanke

    Once the exchanges announce the margin hikes, I’ll use the pullback in gold (and hopefully miners) to add to miners.

    Let’s see how they do it, for now it’s just a heads up from a broker. Should be soon, like tomorrow.

  37. Feel

    It feels like we’re still a little ways off before being called “hoarders”, but I’m getting more like that every day!



    This is part of my fascination with PMs.

    When this issue was previously discussed someone (Gary?) made the point of why would they do that now since the dollar is unbacked? What’s it to them if gold is 20K/oz. ?

  38. jeff

    Do traders of copper, oil and commodities believe when those margins are hiked, that there is active manipulation occurring?

  39. Shalom Bernanke


    I don’t know the answer to that, but my best guess is that gold is money like it always has been, even if not backing a currency. Gold up=loss of faith.

    I’d guess it’s because they want to be the only ones that control money, whatever form it’s in.

  40. Shalom Bernanke

    Gold is a competing currency, like the Euro, except they can control how much Euro is created. (supply)

    It’s much easier to make the dollar look acceptable vs. the Euro, than gold once faith is lost.

  41. Shalom Bernanke

    Side note:

    SVM foretold the silver margin hikes last time by staying weak the days immediately ahead of the hikes, and it’s doing it again although not from new 52 week highs this time.

  42. wolf33

    i did notpost this morning as was thinking of just stoping

    internals—-i questioned what i saw. which was

    Broads—negative—sold half qs at a gain on morning up open. sold balance little later—was stupid not to sell all on the open.

    GOLD—was neutral to tiny bit positive.

    Silver was neutral but positive bias.

    Miners—-I was surprised here of the positive bias.

    did i buy miners—no not at first but did add a wee bit a little later—my work was ell of a lot better than execuon. one other reason is my $ from tue sale does not sttle till tomorrow. i am in the penalty box and need settled funds in trading account. but i did have some free $ that i handled badly.

    Internals—-What you need to understand is i only get AFTER the close. So if they are negative and market opens down—I will miss
    that chance and need to sell into weakness. I do alwaws think of what Gary says. Wile gold was making last run, internals were strongly positive each day. That is until big Crunch down day. I will post these without a lot of comment but that does not mean they will always be right. tie it into your own work as i will tie into yours. SB and others were spot on handling the minors. i still will say for 90 plus % following Gary is your best option.

  43. Feel


    I just realized I’m corresponding with YOU. You’re the “THEY”!!

    I’m crying with laughter. Hope you’ve boarded up in Carolina…

    I’ve never had physical or paper (yet) but if I did have physical and found someone who would accept it as payment for whatever then I would consider that money.

    I know that, for example, Canadian dollars are money but I don’t know anyone around my parts who would accept them for goods or services. I do think it would be easier to find someone willing to accept gold even now in these “ok” times.

  44. MrMiyagi

    Just drywall dust.

    Funny you mention the Canadian money story, I can’t tell you how many time it has happened on our trips that I’ve handed a Canadian dime or other coin in with the rest of the change and have had it returned to me because it wasn’t “money”. It’s a frikkin dime!!! There are so many US coins in circulation here at par, sometimes thems Americans drive me nuts.

  45. wolf33

    I am going to guess broad internals will be negative toninght. If can get a small rally will buy a tiny amt of puts. I am not so sure abt bernanke at referring to QE 3.

  46. St. Deluise

    seems a new LOD in SPY coming. wonder how many people will be sticking around for the next hour once that goes.

    gold should bounce at least to 1800 to put in a right shoulder. probably even higher as the gold dip buyers still think that’s a can’t lose trade.

  47. fubsy_cooter

    Gary et al,

    That’s a great question re GDX being next in line for a parabolic move. I’m still not sure gold has completed its parabola as I would suspect enormous volume at the peak of a parabola that is culminating a 2 1/2 year rally. Double to triple previous high volumes is normal for a climax reversal, and we haven’t seen that. it was high, but not explosive.

    Also, the GDX is setting up beautifully for a powerful run…IF it can close above the 64.15 mark and hold. I followed you into GDX this morning, but in smaller size as I want to see the miners prove themselves by breaking above this mark, where I will add a bit more. I’ll also add on a successful test of the breakout, if it occurs, meaning a tag of the 64 range and a reversal higher. I’ll then add again if the GDX breaks above the peak prior to the test of the breakout.

    So, in a nutshell, what I’m saying is the miners have a bit of work in front of them to confirm continued strength, and if they do, there will be several points of entry to build a meaningful position.

  48. wolf33

    did get some short spy —-long silver – gold—–good levels 4 now—not huge amounts.

    in investment account left with exploers/juniors—almost every up–some large.

  49. Adam

    GDX lagged gold while gold was on a tear. OK, maybe it will play catch-up when stocks rally. Stocks rallied the past two days. GDX sold off hard & gave us a failed breakout. Tough for me to initiate a position when its acting like that. Plus, GDXJ has been consolidating below its 200 DMA. The high beta names should be outperforming, not under-performing. Something is amiss.

  50. MrSu

    Caution: Another Gold Margin Hike Imminent

    Thu Aug 25 13:54:57 2011 EST
    As a result of the continued volatile trading environment, please be advised that exchange margins and/or house margins are likely to increase overnight and over the next couple of days, particularly in the metals. For exchange specific increases, please visit the respective websites. IB will also be increasing the gold derivatives margin. Please monitor any affected holdings closely and manage your risk accordingly.


  51. Keys

    lowered my hedge from 189 and 186 to 181 and 178. If gold takes off I have less blow out in the puts, and I am covered on the way down. Pocketed the cash difference in the account, where it rots.

    Othere than that, I am not doing anything now. My puke bucket is full already.:)

  52. St. Deluise

    new theory: marginal new low past the 8/9 to 8/23 trendline that everyone and their momma has drawn in SPY. THERE is where the institutional jerks finally back the truck up into all that fresh selling. 112ish.

    assuming of course ben don’t make it rain tomorrow. but either that’s the best kept secret in town or it ain’t happening.

  53. Hack

    Gold moving again…unease in the market place. Europe still can’t seem to arrive at any solution. Plus fund managers are trying to shake out investors so that they can buy into the market cheaper, much cheaper

  54. MrMiyagi

    Some big blocks of GLD trading after hours, price of gold hasn’t budged but GLD down 5$ just on those trades.

    Also some big block 5,000,000 share transactions on SPY 10 minutes ago.

    Double hmmmmmmm…

  55. MrMiyagi

    Just equities and options, RBC doesn’t have futures trading and frankly I have enough trading in one day to want more. Although there’s money to be made there too…

  56. MrMiyagi

    SF Giants fan,
    It was the block trades. They took out all the “normal” sized 100-300 share trades all the way down.
    In my experience (from what I know (not much (quit putting yourself down (oh shut up (no you shut up))))… this is from selling as you take out all the bids below. If it was buying then the price would go the other way as you would take out all the asks above.

  57. Clarkatroid

    I just tried to log into my new trading account.

    It asked me to set up a password eight characters long.

    so I went for snow White and the seven dwarves

  58. Veronica

    DP, it all boils down to how you build your system. Anything built on intraday data will generate much more trades, but if your system incorporates daily/weekly data and a large # of tick data then it slows it down a bit.I find it the most relaxing way to trade as emotional decisions are minimized, and I find I get more confidence in a trade when Gary’s analysis lines up with mine.

  59. William Wallace

    As I mentioned yesterday looking at previous daily cycle declines… Gold got that bounce off the 30sma today, looking for another up day to backtest the 10sma at 1800 level…previous daily cycles have shown a continued pullback at the 10 and a bottoming on the 50sma…something to keep an eye on

  60. Γ‰amonn

    Has anyone an idea of the time the Bernanke speech hits the markets? I read that its a closed door speech so maybe it will take some time to get out?

  61. Sleeper

    Kinda eerie knowing that by 10:30AM tomorrow the market could be up or down 400 pts, and gold +/- 150. So many bets already in place for both outcomes. Incredible uncertainty. Anybody up for an option straddle?! jk

  62. Sleeper

    At ease,
    Nah, just dreamin.

    Actually I don’t think the swing tomorrow will be THAT wild that a bet on both sides would pay off. I prefer to wait and see which horse gets out of the gate best and then ride that one for a ways.

    However, something pretty
    BIG is gonna happen in the market real soon. I can smell it. Wonder which way we will go? I’m glad I have plenty of dry powder…

  63. n1tro


    Using the windows version iconia although I install linux onto it to speed things up. Using ATRIX 4G to broadcast. Been following the hacks for the ATRIX and it’s so close in allowing me to run full ubuntu on the phone itself and running my trading platform through .web format.

  64. Dan

    Although I did notice the potential of HUI breaking out after hitting highs a few days ago, I held of taking positions, waiting for confirmation, and ended up shorting gold instead. Well see what the action is over the next few days but the safe play here would be stay flat until we get a breakout above 610 and load up at that point.

    If this really is going to break out then theres plenty of upside left so theres no point in guessing/gambling and rushing into positions IMO.

  65. Danno

    Not convinced gold & silver will make a run at their highs so soon but I did buy back my covered calls.

    Long AGQ (double silver ETF) with a 10% crash insurance hedge (OCT SLV puts).

  66. james r

    I don’t believe the bond rates are going to fall any further than they did a few days ago.

    To me this is a measure of “fear”.

    The markets should go higher from here.

  67. MrMiyagi

    Just July to October 2008 must have broken a lot of people’s financial lives, very few can just put it aside and wait it out.

  68. Keys

    I have a feeling most everyone is going to get rapped! Both short and long…the inability to stay in one postion will kill most traders…anyways, I will leave that to the so many that are smarter than me.

  69. Beanie

    Are you guys ready for the super bull market in equities…coming within a few days to weeks? Once we take off, we’re not gonna look back for years.

  70. Danno

    I stupidly had LEAPS (long term call options that did not expire for 18 months) on GDX just before the 2008 crash. I never sold them because they lost so much value so quickly during the crash that I threw my hands up and just kept them. Of course speculating with options was a dumb thing to do and I no longer monkey with that, but fortunately in 2008 I was able to afford to hang in there and wait it out. By Winter of 2009 the LEAPS had regained all of their losses. That was fine and I was thankful, but what annoyed me (and what I will never forget) is that I had been thinking about adding a 3% or 5% hedge (inexpensive out of the money puts) as disaster insurance right before the 2008 crash, but I nixed the idea because I was too cheap to spend the money. But if I’d put on the hedge in 2008, I would have made a MASSIVE profit during the crash. Massive. Since then, I never take on a serious position during uncertain times without a hedge of some kind. I’m not saying I never use stop losses on my long positions. I reserve the right to use stop losses too. But I always keep a hedge just in case disaster strikes. Not trying to beat a dead horse. Just sharing. I realize not many people are fans of hedging. But I’m sorry to say the risk with not hedging is that, one day, the market may gap down hard way beyond any stop loss loss orders and some people will not get their orders filled for hours hours (if at all) as the market free falls. One nice thing about a hedge is that once you realize you made a huge mistake that’s about the time the hedge begins exploding in value… and you can ride that pig all the way down spanking it the whole way as your hedge morphs into one the best long positions you ever had.

  71. MrMiyagi

    I bet that 97% would have sold the options at a loss just to get some money, heck I have done that in the past. Your situation was a little different, LEAPs gave you all that time (some still would have sold) vs regular options even 6 months out.
    Personally I like day/swing trading best, I guess my short-term foresight is what made me a good air traffic controller, not too good at long term planning, except marriage…
    Before signing up here, I rarely had long term holdings, even now most times I’m out before most but that is what I’m comfortable with.

    A lot of great traders dispensing information on this blog.
    BEANIE, I even read your posts, I feel everyone has some insight that another misses, newbie or seasoned.

  72. DP

    Michael —

    “The fly in the latest concoction is that GDXJ saw massive volume bid-hitting in a selling tail below 200MA …”

    Agree. Another thing, which is pushed over here is that y’day GDX volume was above the average.

    My sources show it below.

    BTW, how do you distinguish MASSIVE bid hitting versus ask hitting?

  73. DP

    Veronica —

    To my knowledge, following 2 time scales besides you major, say, daily timescale is beneficial to trader’s bottom line. In other words, one need to include also weekly and 240 min timescale to the analysis.

    Can you advise on any website oriented on building mechanical trading systems?

    As I recall, you use MultiCharts. But you need to buy separately data provider for it, right?

    Also, is the EasyLanguage inough for your needs, or you use C++?

    Your sharing is appreciated.

  74. DP

    Danno —

    I share your opinion on the options as a better risk management tool than stops.

    Stops fail in case of the morning gap-ups, or crowded markets when everyone is running for emergency exit.

    Can you share, if don’t mind , the technical detail about protective puts for a long equity position?

    I.e., are those puts out-of-the-money, what is the strike, and how do you calculate amount of the contracts to balance the original position?

    BTW, hedging the long position with the puts has another benefit, connected with growing Vega in the case of equity adverse movement.

    I wish you good luck with your AGQ hedging.

  75. DP

    Michael —

    I am a chipskate, so don’t have much of a luxury to be hooked to Bloomberg or other pro tolls.

    Are you aware of any standard indicators (like VIX’s) which would show you market sentiment versus heavy bidding on the bid or ask side?

    SOS a BOW do the similar things, BTW.

    Thanks for cooperation.

  76. Michael (Hulk)

    DP, how much volume transacted at the bid versus at the ask is a chunky data processing calculation and requires software firepower. Markedelta is the only one I know of and is not very expensive but there could be others that have appeared more recently…

  77. Veronica

    DP, I originally learned about trading systems from a poster named Casualtechwatcher on the NEM Yahoo board. The guy has to be one of the best long term gold traders in the world as he had consistantly made $ since the late 70’s.The one year I saw him in real time make over 700%!I do use Easylanguage.

  78. Danno

    I don’t have a special hedge formula. I just try to use common sense. One trade I have now is 200 Shares of AGQ (double long silver) hedged by 15 Oct 39 SLV puts, and some Sept 32 SLV puts I bought a while back that aren’t worth much now but I didn’t pay much for them either. I opted for puts on SLV instead of puts on AGQ because AGQ options are ridiculously expensive due to AGQ’s volatility. The size of my hedge position I base on how worried I am. If I’m not worried at all it might be just 2% or 3% of my long position. (Epic disaster insurance.) If I’m stressed out that a sell off might be a higher probability I might increase it to 10%. If I feel I need to hedge much more than 10% I may think about closing my long position because it’s probably not a good position. I do buy out of the money puts. Usually when I am wrong I am really wrong and the out of the money puts will increase in value rapidly in that case. How far out of the money? It just depends on what they are selling for. If there is a really good deal closer to the money compared to other options I’ll buy a bit closer in. More important is time. How far from expiration? It depends on how imminent I think a potential sell off might be, but usually around 2 to 3 months from expiration. If I think the stock will hit a flat spot (sideways movement) I may decrease my hedge and/or roll it out to the next month. My way is a bit like Jazz. Relaxed and flexible. Not too many rigid rules. But I’m not a multi millionaire yet so there is a chance I have no idea what I am doing so buyer beware!! lol

  79. SF Giants Fan

    Gold is doing what Gary expected silver to do in April 14th report. 2 or 3 day scary sell off (back to 50ma) then back to new highs. Only difference is gold has had only had 2 margin hikes.

  80. Danno

    Can we have gold and silver do that all today please? I’d like to retire by the end of the day if it’s not too much trouble.

  81. Duuuuuude

    This is a rather large margin increase on gold. I am surprised that the market has held up as well as it has.


    I suppose there are two ways to look at the margin increase. First, it removes capital out of long positions to meet the additional maintenance requirements.

    Or second, it provides reassurance to the long holder that the counter party risk is under control.

    Still, these margin increases usually break a parabola.

  82. ...at ease

    Have you figured out the best timeframe out to buy the options for hedge insurance? 4 to 6 months or longer? Do you take the profits if the market turns and buy more insurance or let the insurance ride until it expires?

  83. Blindweb


    Poor people buy insurance, rich people sell insurance. The 2008 hedging example you gave almost had me convinced of it its merits, until I remembered that. Buying insurance is never in your favor, probability wise. Although I do buy emergency health insurance; I never risk anything in options that I can’t afford to lose, and that would put me in an emergency situation.

  84. DP

    Danno —

    Thank you for sharing the details of your approach in hedging.

    I did it a while ago, but for some reasons stopped doing that.

    I’ll probably try to protect my position in the first portion of Gary’s portfolio in such a away, since I am leveraging.


  85. wolf33

    Internals—this is fyi—use it at your own peril. If it does not fit with your methodology than ignore.-whatever, use stops.

    Broads— not as clear as i would like to see.—i would rate as a slight negative. to me, it appears like small triangle with the bottom at about 1140. that is where i would cover any puts or inverses.

    gold—this is the big surprise—-i would rate as extremely positive. scale 0 to 3—have rated for my use a 3. i do this for my own decision making process. as i have always said—listen to Gary. i have 3 price levels that would like to see gold clear—1777-1790–1810.—-If we do, perhaps 65 day cycle will be restored topping in early Oct. For this to happen, would require a lot of strength in gold.

    Silver—A +2

    miners—mixed but rate +2. With gold so strong in rating—-would be very surprised if miners did not do well-IF gold strong tomorrow.

  86. William Wallace

    As I was anticipating, gold tested the 10sma at the 1800 level and then dropped off hard, if the correction resumes as it has in previous daily cycle declines gold will pullback to atleast the 50sma at around the 1640 level. Miners may very well go with it. I didnt take the GDX trade because of this possibility.

  87. DP

    Veronica —

    Thank you for answering in such detailed and informative manner — I did not expect it! πŸ˜€

    I hate, frankly, the EasyLanguage since it forces you to ride the same rail back and force. It still allows to make pretty powerful systems.

    Hope you don’t leave us, poor SMT boys for too long time …

  88. Danno

    I have been friends with 5 true multi-millionaires. Not ‘internet friends’ but in real life. All of them were insured to the hilt. In fact, one told me he was worth more dead than alive.

  89. DP

    Michael —

    Thank you for info on MarketDelta, i’ll look at it.

    Appreciate your willingness to share information with SMT group.

  90. Adam


    You told us to get ready for the “super bull market” that won’t look back for years. Please explain what you are seeing that everyone at this blog does not. We seek enlightenment.

  91. Dubbelito

    I think that Insurance is not at all only for poor people… It is something for a lot of people (myself included) to have in order to have a peace of mind should something happen. I see it as money well spent should they never kick in, but if so I am protected.

    (Some SMT member whose daughter had a gall bladder operation and paid 2k instead of like 80k $ (darn it if I cannot remember who it was!)? That is what I call healthy protection, nothing stupid in that.)

  92. DP

    Blindweb —

    “Poor people buy insurance, rich people sell insurance.”

    If you can elaborate on how SMT members can benefit on selling insurance, please explain it.

  93. Duuuuuude

    At ease, margin requirements fluctuate up and down depending on volatility of the underlying asset. They are never fixed. Margin requirements could decline as gold prices increase, if the volatility decreases. I don’t see that happening for a long time though.

  94. St. Deluise

    not a convincing gap down in equities but also not bullish here either.

    still thinking a convincing little jaunty back to the 112/113 zone to fake lower out of the wedge everyone’s looking at in SPY.

  95. Feel

    Close to being stopped on my GLD short (stop 174.50)

    watching my SSO and how it behaves after Jax Hole “news” begins trickling out…

    disappointing trades thus far…

  96. St. Deluise

    whatever weird thing BB had to say it’s already been digested.

    i think we’re seeing the actual reaction now and now the kneejerk one.

    they are going to break the wedge lower to buy into.

  97. Poly

    We should see a test of the recent daily cycle low at lows $1,700’s in the next few sessions. Choppy trading action in the least before any significant direction gets going, imo. Could be a great point to add on a test of the lows.

  98. Feel

    stopped out for $3/sh. loss on GLD

    these were the 200 I got partial filled on yesterday.

    turning attn. back to my struggling SSO.



    I saw your last reply re the iconia, etc.


  99. Shalom Bernanke

    I’m getting the feeling that anybody waiting until late Sept to buy what they want, whether stocks,metals, or miners will not get to make the buy easily.

    There is no way to make real money in this business without taking some pain, except for those that are sanctioned to cheat. The rest of us need to get in the way of danger.

    That’s not to say one has to buy today, b/c we could easily get lower prices, but making a game plan around Bernanke is a waste of time and capital.

  100. Shalom Bernanke

    ” The Federal Reserve chairman, Ben S. Bernanke, said Friday that the economy is recovering and the nation’s long-term prospects remained strong, an upbeat assessment that ….” -NYT

    Again, I can’t help but laugh my ass off. πŸ™‚

  101. auger

    St.Deluise, “”Were these magic grits? Did you buy them from the same guy who sold Jack his beanstalk beans? “

    Seriously though, I was looking for SPY 112.3. Perhaps a second push down to 114, isn’t out of the realm of possibilties

  102. Gann360



    of course a close above the neckline,would Negate to Pattern.so watch if SPY closes above the neckline.

  103. Hack

    Ben will wait to see what the impact on the market is after Obama’s “Jobs for Americans” speech. So far the details are: a mortgage refinancing plan which will include a wider population , extend unemployment benefits, shovel ready infrastrucure jobs…

  104. St. Deluise

    haha auger, i don’t know. i thought there would be a bigger push down but it also makes sense to buy into the wave of people expecting a simple test of that lower trendline.

    regardless, this little ramp here is is looking 2 legit 2 quit

    bought 1/2 around 115.5. vwap is 115.25 ish, should not break this today if this is real.

  105. Danno

    …at ease,
    “Danno, Have you figured out the best timeframe out to buy the options for hedge insurance? 4 to 6 months or longer? Do you take the profits if the market turns and buy more insurance or let the insurance ride until it expires?”

    I would not buy put insurance any closer than about 2 months until expiration, but not much farther than around 3 months. Any farther out and they won’t increase in value rapidly enough to offset your losses. If the weeks tick by with no action you sell your options and buy next month options (roll out) to keep a healthy distance between yourself and expiration. But if your original puts were purchased only 1 month or so from expiration they will diminish in value too rapidly if you hit a flat spot and you won’t be able to afford much if you have to roll out.

    If the market moves against me mildly I won’t do anything but roll out when the time comes. If the market moves against me hard then at some point I will sell the put options when I feel the bottom is near and use a portion of the sale to buy even more put options lower in strike price just in case I was wrong calling the bottom and the plummet turns into a blood bath.

    One thing to remember is that you’re not trying to make money with the put insurance so I would not go overboard and spend a lot of money. Put insurance is for a disastrous trade the moves hard against you, and if that happens a few puts could go a long way. If you suspect months of dulldrums ahead I would just stay in cash. You don’t want to be forced to keep rolling your puts out over and over because unless you spend a bit more money each time the puts you sell will not buy as many new puts so your hedge will drop from 10% to 8% to 6% etc.

    Another thing I might do in the event my long position jumped UP is quickly roll my puts up to a higher strike price and/or to the next month while my existing puts are still worth decent money.

  106. oa92000

    ” auger said…
    Still think SLW/GDX have a near term H&S shape, Sloping neckline, so look for a break of the trendline and a long near the 35.80. 58.30-58.50, on GDX.

    3 years , weekly chart for SLW, tell me what you see?

  107. wmp


    RE:”Ben will wait to see what the impact on the market is after Obama’s “Jobs for Americans” speech”…Groundhog Day

  108. Shalom Bernanke


    It changes every day. πŸ™‚ I used to like SVM the most, but it’s been my worst performer of late.

    UXG, EXK, NGD I’m up on and seem to hang in strongly.

    It won’t really matter which you buy, if you’re correct on the miner/metal theme, as long as you don’t pick a real stinker with thieves for management.

  109. auger

    oa92000, I see a lot of things, what do you want me to see? Intermediate term looks like a break of the downtrend, rising channel, long term the obvious H&S looking pattern; I’m only talking near term possibilities, here

  110. Shalom Bernanke

    If I weren’t positioning for the long term, GDX would be fine.

    I’m buying individual names so ownership cannot become an issue later on, if for some reason everything disconnects.

  111. Shalom Bernanke

    My favorite of the day is always the best performer.

    Still, I just add across the board b/c they’re always flip flopping. I’m trading it more like a group than trying to pick one to add to. Who knows, SVM is my worst right now, but was my best earlier in the year.

  112. Avann

    SB … thanks … I like(d) SVM as well … will probably start buying some soon as it’s nearing its 52 week low. Thanks for others … NGD has also been on my plate.

  113. auger

    SB, I’m not seeing a good UXG entry here, wouldn’t surprise me if it tested $4.20. Also, don’t forget they are an Explorer, not a Miner.

  114. Shalom Bernanke


    Thanks, but I don’t want my wealth sitting in confetti so have to get involved on the way down. I hope UXG gets to $4.20 in Sept, if it’s going there. πŸ™‚

  115. Blindweb

    Insurance is essentially inverse investing. Investing pays you a return for risk. Insurance, you’re paying the insurance company for a return on their risk. It doesn’t make sense to me to do both. You then just waste time and money on premiums/arbitrage.

    I buy the bare minimum car insurance required under state law. I know that the probability is that I will pay out more for insurance than I will ever get back. Now the actuaries could be wrong in a black swan situation, but in those circumstances they should have a blackswan out clause, go bankrupt, or get bailed out by the masses.

    Hedging is like going long 20 and then going short 1 leveraged 10x, and then paying a premium for it. I’d rather just go long 10. If I’m unsure I cut my position down smaller.

    (The insurance thing is just in general. I’m sure there’s ways to push the costs of the insurance on someone else or hide your true risk to lower your premiums. My guess is that’s what guys like Donald Trump do all the time. But as the paper shuffling ponzi US economy crumbles I would think that ‘career’ choice would diminish somewhat.)

  116. Poly

    I like how gold has held and now looks to be confirming it’s in a new daily cycle. Timing and action makes it a very high probability. Although a retest of the recent lows is a decent possibility, we should be generally moving higher from here. This new daily cycle will be the “show me the money” daily of this big IT cycle. A good showing here will strongly suggest a massive IT cycle is well in progress, as well as obviously making it RT.

    I’ve initiated new base positions in GLD, stops below the recent lows.

  117. Leilani

    I am waiting for the Iphone 5. It will probably be out in mid October. Anyone want to share their experiences trading with Fidelity, Etrade, and TD Ameritrade on the iphone? Danke

  118. St. Deluise

    one weird thing about this little juicejob in equities is that there have been no huge buy orders accompanying it. shrug?

    money still slowly and steadily flowing into the dollar. UUP at 20.96 right now, $21 jan calls are about $60. i just bought one.

  119. Poly

    At ease, I’m not risking a massive gold move while sitting in under performing miners. I know they are undervalued and due for a big rise, which is why I have them in my old turkey long accounts. But i’ve learned that bullion almost always needs to move to get miners going, so using options on gold, I can leverage gold’s movements and not have to worry about miners coming along or selecting the right miners.
    It would be nice to see miners going ballistic too.

  120. Michael (Hulk)

    I’ve seen a lot of work on correlations and the bottom line is that they change over time, sometimes gradually, sometimes suddenly, but sharp changes can herald some sort of regime change. After the inability of 10-year and 30-year bonds to take out their massive multi-year pivots (the old rinse and hold) at 2% and 3.4% respectively may be foreshadowing a very, very early trend change from deflation to early expectations of inflation if the bonds get moving on the run here. Thus, relevant things to watch for for us now are miners moving with equities, and, in fact gold moving with in line equities as the transition to a “save me from inflation” environment gets going aka Weimer 1930s. This is supported by most commodity markets out there, particularly metals and agriculture.

    On the other hand, my apologies, perhaps its just that we’ve already had a few drinks in our European timezone here while you guys are trading the slops in your afternoon session. While on the third hand, I suppose it beats reading Mr SB explaining his investment strategy for the umpteenth time! :-)))

  121. Hack

    First of all Bernanke will have to see what the market does after Obama’s job plan speech in Sept. If I am correct there will be a sell off which may precipitate more QE…we’ll see…

  122. DP

    Michael —

    Very interesting.

    Naive question — just looking at the charts of, say, 10 or 30 years bond, can you distinguish between periods of inflation and deflation?

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