515 thoughts on “PORTFOLIO CHANGE

  1. Gary

    We are days, if not hours, away from the announcement of QE3.

    The announcement of QE2 was the fundamental driver that broke the back of the yearly cycle correction in 2010.

    The announcement of QE3 will be the fundamental driver that will halt this yearly cycle correction.

    This whole scenario is setting up very similar to what happened in 2007. I will elaborate in Monday night’s report.

  2. MrMiyagi

    Hmmm… Asian market opened low but did not panic like Godzilla just stepped out of the water.
    Futures still low but not as low as before.

    Gary, I’m not sure Benny will initiate QE3 as quick as you may think, there will probably be a bullshit session denouncing the S&P and such for a while.

  3. Haggerty

    I’m assuming an announcement of qe3 would have a normal gold bull like myself jumping in at these levels and getting destroyed by a daily cycle correction or a possible intermediate correction.

    Now if we do get that announcement of qe3 I would think that would support the the general markets and bring the dollar to new lows…..so is it fair to say one can expect opposite to happen?

  4. Gary

    Prepare yourselves, gold is going to take a nose dive when QE3 is announced.

    If it wasn’t then the miners and silver would not be diverging. Hot money is not going to land on an extremely overextended market like gold. It’s going to flow into things like banks and semi’s, things that have gotten crushed.

    Regression to the mean people. You have to learn how to play the game or the big boys will always take your money.

  5. Gary

    The market is going to assume the QE will produce the same result as it did the last two times. So traders are going to pile into the stock market thinking that we have been saved.

    We may even see new highs in the S&P. But make no mistake a bear market has begun.

  6. Gary

    Smart money is preparing to hand off the gold bag to the little guy. They will use the announcement of QE3 to do just that.

  7. Gary

    Let’s face it the dollar is already discounting QE3. It should be rallying like a fiend by now. It’s not.

    The pieces are all there for everyone to see. Just don’t let your emotions cloud your vision. And don’t let GS take you to the cleaners on your gold positions.

  8. Keys

    Lots of interesting things going on…..I don’t see QE3 now, but I won’t disagree with the statement that QE3 is around the corner, as I said before….

    Interested in that nightly report to why you are so confident in QE3 now…when you say days, if not hours that is pretty bold. You obviously see something, clear from your comments here and at SMT premium…

    Mr M…nice Godzilla reference..lol

  9. Poly

    So Gary, you’re back on the gold stretched IT cycle theory again?

    Dollar back down to multi year lows, undermthe April 3yr lows.

  10. High 5

    This downgrade is coordinated and timed just after a huge sell off, which was initiated by insiders who knew beforehand.

    They want a scary sell off so that QE3, or whatever they call it, will be an easy sell.

  11. Gary

    Let’s assume for a minute that QE3 has been announced.

    Where will be largest gains be made?

    The stock market is likely to rally 10% or more in the first two weeks. Ask yourself what the possibilities are of gold rallying $170 in the next two weeks?

    Exceptionally beat up banks, semi’s, transports, etc. could rally 15% in the first two weeks.

    What are the odds of gold rallying $255 in two weeks?

    Instead of letting your bias for gold cloud your judgment think like a money manager trying to find the sector with the most potential for rapid appreciation.

    Now think like a money manager that is holding a very extended gold trade. Do you continue to hold the trade knowing that you will never even come close to matching the gains in the stock market, or do you exit the overextended trade and move your money into a sector with massively greater potential for rapid appreciation?

  12. TZ(8155)

    I’m going to again politely caution those who do not have a plan if Gary is wrong. I’m not saying he is. Clearly nobody knows. I’m saying he *might* be.

    He is no more perfect than any of us including me and I marvel at the confidence many of you are now exhibiting in light of a stomping you took not too long ago blindly doing the same thing.

    Markets are legendary for crushing those who think something absolutely will (or won’t) happen.

    I’ll leave it at that and simply say good luck.

  13. High 5


    Probability wise Gary is obviously right. Gold extremely overbought and stocks way oversold.

    I’ll probably stay nearly all cash, I don’t trust the Wall Street/DC syndicate.

  14. Poly

    I hear you Gary, not disagreeing. Just trying to say, these are not not normal times, fear is inducing a run and gold is being massively revalued, stretched or not.

    Will or can gold violently correct? Absolutely! But, I’m trying to tell people that you want a position in a 11 year old generational bull market no matter what. Sure go ahead and time the cycles/moving averages with the bulk of positions, but get yourself a position and ride it. On the note of cycles, your still trying to fit this “reversion tom the mean” event with a stretched IT cycle. The cycles clearly point to July 1st, do they not? Each $10 move higher is making the case for a stretched cycle so much less likely. Its also making it harder to buy into a blow off move with no position. At this point, you now need over a $200 drop for an official stretched IT low still ahead, getting dicey.

    BTW, I like the portfolio change call a lot. My only fear, granted low probability, is the over sold crash scenario.

  15. TZ(8155)

    I have a different technique than gary (although I find his insight complementary and boosts my returns).

    The same technique I used with silver which worked and got me out near the top is indicating there are a number of weeks if not a month or so of gains left for gold.

    I will attempt to get back in with a small stop. I am in NO way resistant to gold going lower cause it would be great to load up at better price. I get it. I agree.

    But it might not go lower and my work is saying it won’t.

  16. TZ(8155)

    I’m pissed cause I got stopped out unnecessarily and now I’m watching it run away from me like everybody else here. I should be in and long and I got cute with my stop level and now it’s costing me.


    Let’s hope we get that pullback. I need it now too.

  17. Gary

    The last intermediate cycle is a tough one. On a very long-term chart it doesn’t really look like an intermediate cycle bottom.

    On a daily chart, maybe yes, maybe no. Hard to say. The decline only lasted seven days. Most intermediate degree corrections last 4 to 6 weeks.

    All I can say at the moment is that I would much rather put money to work in the stock market then the gold market at this particular time.

    If we were to get a severe corrective move back to the 50 day moving average, along with a sharp Blees rating reversal, then I would reconsider stomping on the gas, especially if the stock market had already rallied 100 to 150 points.

  18. TZ(8155)

    My gut is telling me the opening today around 1682 is the low for the week and it’s gonna run from here and not look back.

    I feel like I should buy with a $10 stop and just hold. But I’ve been in situations like that and chasing is frequently a ticket to failure.

    So I’m just gonna try and lighten up and let it play out and look for a smart entry with some sort or legit stop.

    But I’m pretty sure it is gonna hit $1700 in almost no time and keep running.

  19. Gold Lion

    If gold and silver don’t nosedive when QE3 is announced will you admit you were wrong and you got all your followers out just when they should of held strong? lol

  20. Gary

    I would have to ask why you are worried about missing a move in gold which has no hope of matching the move coming in stocks.

    If you’re worried about making money just by the stock market. Your gains will almost certainly far surpass anything that gold could do over the next several weeks.

    There’s nothing that says that one has to be limited to making money only in the gold market.

  21. Poly

    Gary, sure is a difficult call all round. Good luck all and be careful, you need to think of the “worse case” scenario for each of your positions.

  22. TZ(8155)


    You and I have different understandings about what gold is and what will soon happen to the world financial system.

    QE3 could easily crash the stock market and send gold skyrocketing.

    We will just have to agree to disagree.

  23. JEFFtheFLEA

    o shit gary ……. should i tell the wife she should give vangard the money back. and let them invest it?
    her 401 k we got out when you were screaming .. GET OUT . i wont be directing it, but they will place it and do what ever they do with it

  24. Shalom Bernanke

    “Let’s assume for a minute that QE3 has been announced.

    Where will be largest gains be made?

    The stock market is likely to rally 10% or more in the first two weeks. Ask yourself what the possibilities are of gold rallying $170 in the next two weeks?” -Gary

    Actually, if QE3 were announced, I’d say we get +$170 gold a few days after if not immediately. +/- $100 days if gold are not far off, IMO. I think it is fooling oneself to be overly confident gold will drop on a QE announcement, likewise that a QE is definitely coming tomorrow or this week. I suppose it depends how ugly things get.

    I do think the S&P, Nasdaq, etc will bounce but I’m not very interested in that trade. I remain long the same miners and PHYS for now.

    It looks to be an interesting week with lots of volatility. One thing I’m sure of, traders better adjust their trading sizes lower to compensate for the swings or their emotions will force a mistake.

    Good luck tomorrow.

  25. TZ(8155)

    The market is a single, collective realization away from “we’ve tried everything, nothing works, and it’s all BS paper/debt and lies” before crashing.

    The entirety of the world media, politicians, laws, central banker speeches and govt statistics is geared toward *preventing* that singular realization from hitting home.

    It will. It is only a matter of time.

    Gold has already shifted to that realization and it is starting to sink in (cause precious metal investors are smarter and have studied history more than the people screaming ‘boo yah’ at their TV.)

    QE3 is one more step in driving that realization home.

    No matter how stupid a person is, if you fix their car once they can deal with it. If you repair it a 2nd time they might go along. Once you start hitting the 3rd repair even the slowest bloke in the world starts to think there is something else going on.

  26. JEFFtheFLEA

    i just reduced size as per gary, and im glad you said it to, so i can just let it fly in the storm thats a brewing.. just wish gold would correct so i can get on again. im in the stands watching you ride at this time.

  27. Shalom Bernanke

    One final thought:

    Gold is up over $43 tonight, so $170 is not that much of a stretch.

    I agree stocks will bounce at some point due to the oversold levels, but that’s the only edge I see. The problem is everybody wants to catch the spike higher when it comes, but once they get a profit the temptation to book it at the first sign of a turn lower will be too great to resist. This will cap most bottom pickers’ profits if they manage to make them at all. It will be very difficult to press gains in stocks as we head further into the Greatest Depression.

    Sleep tight!

  28. Gary

    I’ll say it again. Cycles may stretch but they never fail. Gold still hasn’t filled any of the parameters for a daily cycle low.

    If the miners & silver can correct the divergence then I will get interested in gold again once the daily cycle correction has run it’s course.

    There is a reason the miners didn’t follow gold to new highs. I’m not sure what that reason is, but it sure as hell has me nervous, especially with gold stretched this far above the 200 DMA.

  29. Keys

    To put simply….gold=not good right now…the set-up for gold to crash and I mean real hard is at our feet…This is exit time, not putting more money to work time! Man these things always end badly! I hope nobody here at SMT really loses a mint on this!

    Anyways…last comment on that, since I could very well be wrong, and this very well be the first time that something is different…even though it has always been the same.

  30. Hack

    Geithner staying on as Sec of Treasury, which means QE3 and the downgrade – I’ll be buying gold in the morning.

  31. Keys

    Alright I said my piece right or wrong…good luck all…off to a night cap and off to bed! Big day tomorrow, I think we can all agree on that…:)

  32. Broken Parabola


    What happened to gold when QE 2 was announced? (gold had been rocketing up out of last August into Oct/Nov, it was extremely extended). Everyone was expecting it was priced in, sell the news, etc etc.

    Sold off that day, the reversed hard going up by end of day. We then have been moving up since then.

  33. E

    I am guessing that we all missed the last 2 weeks of gold move. Too late to get in, but with all the sovereign debt issues going on, I dont see gold dropping back to 1500 levels.

    what do you guys think?

  34. Blindweb

    2008 crash, QE1 fail, QE2 fail but everyone is going to rush to stocks? After 3 years I think everyone has been reeducated on gold. Gold has been the winner since 2008, why would everyone not rush to it? I don’t see how it can be held down for another entire intermediate cycle before a c wave blow off top.

    The fact that gold indicators are failing tells me that this is the time for an epic move. Indicators should be broken exactly at a time of extremity like now. That’s when new patterns are formed.

    Cycles never fail…waves never fail at coming in to the beach, but that doesn’t mean there isn’t a hurricane every once in a while. One spends decades building homes based on normal wave patterns, and they can be destroyed in a day. Everyday weather forecasting techniques fail exactly during an extreme event.

    90% physical
    10% leveraged long gold trades
    Still contemplating taking a partial Gary move to hedge myself. I believe my systemic view over his; but I don’t have the historic knowledge of who moves markets that he has, which is my only worry.

  35. Ken

    I called 1162 and the ES hit 1161.50 0nthe opening drop. That’s a sign for those who are paying attention. We’ll break 1162 and close lower, much, much lower as the Bank Of Japan and every other central bank inside the G7 makes sure The Bernake lays in the bed that he and Greedscam created for the American people.

    Gary’s leading everyone into the lion’s mouth after having everyone safely in 100% cash. Why Gary wants to get everyone involved is beyond me. I guess he feels that he has to have “something on” even though he knows that the three year cycle low is in in the dollar and gold will start its d-wave decline this week. Catching a falling knife isn’t advised and if you’re safely in 100% cash sit on your hands or better yet don’t turn on the computer or TV all of tomorrow.

    QE3 isn’t coming… that’s the “curve ball” that Gary’s going to swing and miss just like he missed the OBL top in silver. Remember the pain you experienced for those 130% long SLV, SLW, SIL, etc. When you’re long QQQ and thinking something was going to happen i.e. “QE3” and it didn’t and doesn’t come… Thank Gary for leading you into the lion’s mouth. Stay the hell away folks and wait for late 2012 to get involved as we’ll be much, much lover.

    Book It!!!

  36. Jayhawk

    Listen to any number of interviews from Jim Rickards on King World News and you will see that they don’t have to do QE3, they can reinvest what they already have on the balance sheets and be fine. Besides, if they do have some kind of stimulus, it will be named something completely different this time and will not come until a full on panic sell off in under way.

  37. Gary

    Runaway moves don’t act like this. They grind higher with plenty of corrective moves. This is an emotional semi parabolic top forming.

    Learn the lesson from what happened in May. Better early than late.

  38. Gary

    Broken Parabola,
    No gold corrected when QE2 was announced and stocks took off. Just exactly like I’m trying to warn people of right now.

  39. Gary

    Gold Lion,
    The C-wave has been ongoing since April 2009. We didn’t miss it.

    We got a little too greedy and gave some back last May. And there are a bunch of people now setting themselves up to make the same mistake again, but we most definitely didn’t miss the C-wave.

  40. Gary

    At least Beanie had the guts to show up when he was clearly wrong.

    I suspect we will never hear from Ken again when the trend reverses.

    So what will it be? Will you show up and admit you were wrong when the trends reverse.

    You know I took a load of crap over on the other blog during the June rally. Turns out I was exactly right and none of the trolls had the guts to return and apologize.

    I suspect Ken will be the same.

  41. ver

    If this action holds into the open, perhaps we’ll finally get a clue about what the hell the miners are doing: gap down with the market or gap up with the metals.

  42. Broken Parabola

    QE 2 was announced Nov 3rd. Low for gold that day was 1325, closed 1348. 4 days later it hit 1422, then had a several day correction down to 1331. We then had that triple top thing over the holidays around the 1430 zone…Our intermediate bottom was extremely mild and only came back to 1310, when it launched into this 400 point move out of Jan.

  43. Ken

    The $1,700 target in gold has been hit and it wouldn’t surprise me to see gold drop $250 tomorrow alone. I’d say the $1,000 – $1,250 level is an area to get involved. The dollar index will have an 80+ handle before you can even blink an eye and the stock market will drop 20%+ in less than 2-3 months time. The Fed is irrelevant at this point as for every $ the Bernake prints the worlds central banks will print $2. The dollar, treasuries and short positions are where you’ll want to be in the next 3-6 months. QE3 never comes, so don’t bet on it!

  44. Gary

    Gary UK made the mistake of staying short too long last year and blew out his account.

    It’s too late in the intermediate cycle to continue pushing the short side. Sentiment has reached bearish extremes rarely seen in history and if the dollar was going to rally it would be doing so, big time, by now.

    Know when to take profits.

  45. Ken

    Sorry but Ken’s not going to be a Bennie Gary. I’m not trying to be a Bennie I’m just telling you how I see things. Right, wrong or indifferent that’s how I see and I’m playing things. This is Gary’s blog so he’s “the man” and that’s cool, but he’s never been 100% correct in his calls. Those who cannot think for themselves and are following every one of Gary’s moves are going to get wood shredded on this one.

    Sure the risk reward favors getting long after a 10%+ meltdown ,but this isn’t a typical meltdown. If you think that the French & German citizens are going to take it in the crapper so the Greeks, Italians, Portuguese, Spanish and Irish can retire at 55 or piss off 8+ weeks vacationing each year you’re mad. If you think the productive members of American society are going to rollover and pay 50%+ tax rates you’re freak n’ crazy. Without the Fed debasing the currency than Gary’s gold bull and equity bull is D-E-A-D O-N A-R-R-I-V-A-L.

    Gary’s thesis resides on the fact that Ben prints, but what happens to gold and all risk assets when Ben doesn’t print? Answer the question Gary. What happens when Ben doesn’t print or better yet what happens when Ben’s printing press is met with the printing press from other world central banks. The US will not devalue itself out of the $15 trillion box ir corner its painted itself into. Aren’t you glad we have a community organizer at the helm to see us through the storm? Not!

    Take a swing if you will Gary but staying in 100% cash is where 100% of people should be. I’ve been short since June 2nd 2011 and will remain short even if we get a bounce. Rallies are to be sold not bought (you said that yourself). Everyone is entitled to do whatever they must. It’s your capital not mine.

    All I can say is do what’s best for you and I’ll do the same.

    I’ll see you on the other side.

  46. Broken Parabola

    Nope. Thew annual meeting in Jackson Hole was August 26-28th. Benanke only HINTED that QE2 was coming and the Nov. date was when it was officially announced. Gold was around 1237 at the time. It went on to have a massive 2 month run. The Nov day when it was announced was down right away, but then the market saw it was a pretty big number so gold moved higher for 4 days. This run we are on now is a result of the QE2 announcement & other global events.

    Here’s a link to last year’s meeting


  47. Gary

    If you intend to hold through the entire bear market then sure stay short.

    I do find it hard to believe that you managed to hang on to shorts during the June rally when the market made a higher high. But if you say you did then so be it.

    Yes if the fed curtails it’s printing spree then yes all risk assets will take a hit. However Ben has shown for the last 5 years that he always chooses to print when things get dicey.

    Why do you think he will change his mind this time?

    BTW it’s only a 15% position on the open. One is hardly going to lose everything even if the market went to zero.

  48. Gary

    I stand corrected on the dates. But the result is still the same. When the stock market put in it’s yearly cycle low it forced a correction in gold. The dollar had already started to break down. It had already sniffed out QE2.

    The only difference now is the stretch is much more extreme in both asset classes which should lead to more violent reversals in both once the trend reverses.

  49. gold silver troll

    we might open down 500-1000 points tomorrow if the panic sell continues…

    would be very interesting to see what Bernanke will do then…

    His only option would be something to relieve the selling pressure

    If not, we all (including Bernanke) knows what happened in 2008

    with employment already at 10-12%, we could see it go to the 20s…

    very scary times we live in…

    I’ve learnt my lesson of not chasing parabolas, not selling into fear and learning buying into panic…

    sentiment is lowest since march 2009…and I’ve never been more scared in my life about the market

    for the first time in my life, i’ll take my chances and buy here…

    win or lose, I’ve become a better trader in that i’ve learnt to control my emotions

  50. Natanarchist

    its still Sunday so here goes…

    Blindweb, SB, High 5, and the others that are awake to our reality, this is for you. Enjoy!

    T&J. Gold…or anything else can be measured as a unit. Therefore it is now a mathematical equation. Its infinite. Please don’t trot that silly nonsense that “there are only so many ounces of gold’ blah, blah , blah….That argument is for those who haven’t been taught to think.

    No worries folks about MMT. Never going to happen. Pay attention to what the IMF, World bank and the central bankers’ Central Bank, the Bank of International Settlements are doing. That is where the action is. The information can be found in publications and presentations to/by, Academics and the Elite to, Coventry House, Club of Rome and the CFR.

    Let there be no doubt, Prof Wray, Cullen, and the rest of the MMT crowd don’t even register with the Elites who run this planet. They are 50 years behind in their thinking.

    having doubts?

    well read the writers from more than 60 years ago…

    Huxley, Orwell, Bernays, House, H.G. Wells, Shaw, or even closer to our time Quigley..its all there.

    T&J…get over it…whether you call it MMT, Social Credit, or Chartalism, it lost. tried and failed. Our rulers assured that.

    No freedom loving Human would knowingly choose a collectivist system. The elites know that. So, instead, they use simple techniques to train us how to think. linear thinking is primary to implement this system. Critical thinking is absolutely to be discouraged. And that is why you and millions of other can’t make the link between, our ponzi scheme monetary system, our political system called Democracy,Jersey Shore, MTV, Facebook, Twitter and Google, LOL, LMAO, Crack cocaine, Crystal Meth, Planned parenthood, Global Warming, Mandatory Vaccinations, Mexican drug cartels, US dollar hegemony, North Korea et al, Prisons, and Public Education, that were all designed years ago for all of us.

    “Wake Up!, wake Up!

    Dress Up, Dress Up’

    its all right, Its all right

    We are the party of freedom!

    We are not about to make that mistake twice “

    Two Party’s . One Agenda.

    Read the authors I listed above and say it isn’t so..oh say it ain’t so Joe!

    two video’s to watch. pay attention to the first one..in 1’45 seconds you can clearly hear the plan. make no mistake, the speach is not for you. it for the elites..because well you never consented to the New World Order, The United Nations can “fulfill its PROMISE and VISION of its FOUNDER’S”


    This one you play loud!


    “watch and Learn”
    “God Bless America”
    “A New World Order”

    Its always currency event.


  51. marksomething

    Went back and reviewed…

    You said “you called” 1162. Sorry to say but you observed numbers close to 1162.

    However you did just “call” on August 7, 2011 8:41 PM.

    As with Basil you are far too concerned with being “right” and your obvious “anger” (that has nothing to do with this blog or participants) is blinding you.

    I am quite amused with what you are writing here, in a mel brooks/pauly shore kind of way. There’s comedic structure but ridiculous premise.

  52. Gary

    Gold is up 24 out of the last 26 days. Miners and silver are diverging badly. The move has now become parabolic.

    Everyone is predicting the end of the world and gold is going to rally $170 to $255 in the next two weeks.

    Folks when you start hearing this kind of talk it’s time to take the other side of the trade.

  53. marksomething

    how hard is it to call a break below 1162 when it is so close anyway. you might have had my ear if you “called” 1162 if in fact we were at 1262.

  54. Natanarchist

    Well its still Sunday

    Blindweb, SB, High 5, and the others that are awake to our reality, this is for you. Enjoy!

    T&J. Gold…or anything else can be measured as a unit. Therefore it is now a mathematical equation. Its infinite. Please don’t trot that silly nonsense that “there are only so many ounces of gold’ blah, blah , blah….That argument is for those who haven’t been taught to think.

    No worries folks about MMT. Never going to happen. Pay attention to what the IMF, World bank and the central bankers’ Central Bank, the Bank of International Settlements are doing. That is where the action is. The information can be found in publications and presentations to/by, Academics and the Elite to, Coventry House, Club of Rome and the CFR.

    Let there be no doubt, Prof Wray, Cullen, and the rest of the MMT crowd don’t even register with the Elites who run this planet. They are 50 years behind in their thinking.

    having doubts?

    well read the writers from more than 60 years ago…

    Huxley, Orwell, Bernays, House, H.G. Wells, Shaw, or even closer to our time Quigley..its all there.

    T&J…get over it…whether you call it MMT, Social Credit, or Chartalism, it lost. tried and failed. Our rulers assured that.

    No freedom loving Human would knowingly choose a collectivist system. The elites know that. So, instead, they use simple techniques to train us how to think. linear thinking is primary to implement this system. Critical thinking is absolutely to be discouraged. And that is why you and millions of other can’t make the link between, our ponzi scheme monetary system, our political system called Democracy,Jersey Shore, MTV, Facebook, Twitter and Google, LOL, LMAO, Crack cocaine, Crystal Meth, Planned parenthood, Global Warming, Mandatory Vaccinations, Mexican drug cartels, US dollar hegemony, North Korea et al, Prisons, and Public Education, that were all designed years ago for all of us.

    “Wake Up!, wake Up!

    Dress Up, Dress Up’

    its all right, Its all right

    We are the party of freedom!

    We are not about to make that mistake twice “

    Two Party’s . One Agenda.

    Read the authors I listed above and say it isn’t so..oh say it ain’t so Joe!

    two video’s to watch. pay attention to the first one..in 1’45 seconds you can clearly hear the plan. make no mistake, the speach is not for you. it for the elites..because well you never consented to the New World Order, The United Nations can “fulfill its PROMISE and VISION of its FOUNDER’S”


    This one you play loud!


    “watch and Learn”
    “God Bless America”
    “A New World Order”

    Its always currency event.


  55. Ken

    Gary’s a big boy Mark you don’t need to fight his battles. I’ll email the trade confirms to prove my point Gary if need be. Never the less the 15% trade isn’t going to get people hurt as you’ve got everyone out of gold’s d-wave decline which will start this week. QE3 never comes and that’s the curve ball that most will never see coming. The only think you’ll see out of the Fed and the MSM is talk of QE3 which is where the fits and starts in the market happen. Friday’s price action was indicative of just that. Talk out of the ECB brought the market up 38 S&P points from the intraday low. That’s all bulls will get is “hope” that QE3 starts, but given enough time they’ll see that it never does come. The FOMC will state clearly this Tuesday 11:15 PST that the market is on its own. The downdraft off the FOMC is going to be E.P.I.C. F.A.I.L. just like TARP, QE1, and Q2. We’re on our own and you’re and the market is not going to be rescued by another QE operation.

    Book it!!!

  56. Gary

    Why would the Fed remain on the sideline when both periods of QE have demonstrated the ability to inflate asset prices?

  57. Felix


    What planet are you on? There are debts to be paid, checks to be issued. Did our Reps suddenly grow a pair last night? At least one more round coming, on the House.

  58. marksomething

    Gary needs me not. but there are other people here who may not recognise your dooms day ramblings for the meatless meatloaf it is.

    Everyone is responsible for their own trades, but you seem to want to occupy the 100th floor in the tower of song, representing those who do not need it nor want it. Your barely on the ground floor.

    put down the roach and back away.

  59. Greenspansconscience

    Bernanke will print, no question about it. The US govt and the Fed have too much skin in the game (via MBS and various backstops and guarantees, fannie freddie etc) to allow a full on, true deflation. With the backstops, The TBTFs really are TBTF.

    The only question is how long it is going to take bernanke to blink. He is definitely playing with fire and he knows it.

  60. Beanie

    It actually makes no sense to have QE3 when QE1-QE2 aren’t even baked into the market or economy yet. It also doesn’t make sense to have QE3 when S&P already downgraded our arses over “overspending”.

  61. NJ

    If Bernanke prints and the $$$ 3 year low is still ahead, won’t Gold rise rapidly after a brief 4-6 day DCL? How can Gold IT low be ahead with the $$$ 3 year low ahead as well with Bernanke printing?

    Boy, sure is hard to sit on hands with Gold up over $60! But AGQ back in May is still fresh in my mind…Just hoping to recoup the lost profits from back then!

    I am with TZ and Poly – Gold drops into a DCL instead of IT low…Hopefully we can time it well just like the early July call!

  62. Greenspansconscience

    The miners are diverging because the stock market is tanking in a panic. πŸ™‚

    Have they ever outperformed the metals when the VIX is spiking? Sadly, I think we still need the stock market and the metals to be rallying at the same time for the miners to keep up, much less outperform the metals. One of the gold juniors I follow was down close to 20% last week. Now that’s frustration with a capital F. Unreal.

  63. NJ

    Sorry, wanted to add: If Bernanke does not print, then guess King Dollar, here we come and bye bye Gold and SPX!

  64. Greenspansconscience

    Buy and hold a core position of physical gold and silver and forget about it. You are nuts if you don’t own some.

    I was buying ounces at $340 10 years ago. I also bought some at $1000, and gold promptly went to $700. Not such a big deal, was it.

    It may not make you wealthier, but i guarantee it isnt going to zero.

  65. james r

    The futures are gaining traction.

    And I would not be surprised if we gap up in the morning.

    It seems the SP downgrade was a knee jerk reaction and the market is figuring out that it is safer to be in the market than in cash.

  66. Beanie

    My tweets tonite:

    This is the most manufactured “bear market” I’ve ever seen. Debt ceiling debacle..bamm. S&P downgrade, bamm!

    As this “bear market” is as fake as big boobs on skinny girls, big dips are buying opportunities.

    S&P crazy political games played now makes them impotent. Market does an in-your-face rally http://t.co/DrPrlXl


    By the way, gold will likely begin to crash this week. And the bull market in equities is far from over.

  67. Dubbelito

    JP Morgan loves gold, sees it hit 1800$ in Dec.

    Two takes on this:
    a. Conspiracy and manipulation by big bad bullion banks. What conspiracy?

    b. TIMBER!

  68. Ken

    The legitimacy of the Fed will be called into question with the failure of QE3. Any American paying attention for the last decade has seen the debasement of the fiat currency to the benefit of the equity and gold markets. The Fed is already leveraged 55-1 and going up to 80-1 isn’t going to help the economy all its going to do is blow up. The Fed will be hard pressed to unwind a 55-1 leveraged balance sheet. Plus why would they continue to go all in when the market will keep calling their bluff? Does Bernanke really want to loose the Fed’s bank charter or the ability to secretly manipulate the worlds reserve currency and the world’s most productive economy? We saw what happened in the 2010 mid-term elections with the Tea Party. The Tea Party was spawned from government malefactors including but not limited to TARP, TALF, QE1, QE2, QE Lite and maybe QE3. You saw what the Tea Party did to the political establishment with the debt ceiling debate. It was the Tea Party that held that deal up and it’ll be the Tea Party that starts the movement to remove the Fed’s ability to destroy the value of our paper currency over time should QE3 be launched. Elites in both the Democratic and Republican establishment do not want even more Tea Partiers coming to D.C. to throw a monkey wrench in what they’ve been able to accomplish over the last 30+ years. The game has changed and the debt ceiling debate and the Tea Party movement scares people. Bernake told Congress the last time that he testified on the hill that the Fed has done everything they could to support the US economy and that another round of QE wouldn’t help but rather make things worse. Take him at his word and what he said at face value. What’s the upside in launching QE3 for the Fed? There isn’t an upside only a downside. Members of the Fed can clearly see that Obama is a cooked goose in 2012 with unemployment 10%+ and $75 million Americans on SNAP. The “smart money move” for Bernake and the Fed will let the blame fall squarely on Obama’s shoulders not theirs.

  69. Scott


    If you are basing your short-term forecast on a QE3 starting soon, I respectfully think you will be disappointed.

    QE2, the Fed purchasing of US bonds, was started on November 10, 2010. It was not intended to reduce interest rates. The 30-year was at 4.28% in November and went to 4.76% by February. It was not intended to promote consumer barrowing or equity purchases. Banks and brokers are awash in free money to lend.

    QE2 was intended to increase the money supply, drive down the value of the US dollar, and create commodity inflation.

    As you have pointed out, deflation is Bernanke’s biggest fear because it will wreck our economy. We got it in 2009 when inflation averaged -.34%. It had turned back up the end of 2009 and early 2010 to about 2.5% because of QE1, a Fed funds rate of 0%-.25%. However, in mid-2010 deflation started coming back. In June through October 2010 inflation dropped down to a little over 1%. When Bernanke saw deflation coming back again he panicked and implemented QE2 that November.

    It worked and worked well. By May and June of this year he has inflation back up to 3.5%.

    And that is why you will not see QE3 soon – Bernanke has inflation where he wants it. QE3 will not happen until inflation drops back down to around 1% again and he thinks action is needed. That will take a while.

    It is also difficult for me to believe the US dollar can go much lower on increased supply. QE2 ended in July and the hose has been turned off for now. It could go lower on other factors.

    If you want to keep an eye on deflation and when QE3 might start, you may view a monthly inflation rate chart at: http://www.fintrend.com/inflation/Inflation_Rate/HistoricalInflation.aspx

    I learn a lot from your analysis and enjoy it very much.

  70. Shalom Bernanke

    See, everything is OK.


    I agree with Natanarchist’s earlier comments. I would add that most people don’t realize that the Fed exists to facilitate theft AND the New World Order, one currency, etc so actually want the $USD to vanish over time. The tricky part is making people beg for the end to their sovereignty, which takes time and conditioning. Thus, the Fed will always pretend to guard the $USD as it slowly lets the air out.

  71. Ken

    By the way I keep hearing sideline bears who are under committed watching the greatest shorting opportunity of the last three years unfold right in front of their eyes say the following, “When we get the bounce higher off QE3 I’ll enter a 130% short position into that ramp!” Do they really think that’s what the market is going to give them? Not going to happen. No, those sideline bears will be waiting for a bounce that never happens and eventually they’ll capitulate and go short about the time the trapped underwater longs who also happen to be waiting for the QE3 bounce to unload postions at higher levels.

    What a perfect plan Mr. Market has designed to fool most of the people some of the time. It’s almost like were watching the GD 2.0 played out in real-time. Sitting on my hands and watching the slow bleed day after day as politicos talk up the market only to see it fall again the next day is what we’ll be seeing over the next 15+ months. Anyone wanting to get long should do so 2-3 months after the Nov 2012 elections just like they did in 2008 with Obama.

    Please don‘t use “hope” as an investment strategy folks. You see where “Hope & Change” has gotten President Obama don’t you? We’ve got a lot of people here in America hoping for a change in 2012.

  72. ...at ease

    Gary, could you put a blog link on the smTp site, so those of us operating on phones can get back and forth with postings. Thank you for the consideration.

  73. Ken

    The smart money will use the BS that comes out of D.C. and delivered on CBNC to build their short positions if they don’t have them already. Use the talk, talk, talk and rumor this and rumor of that to your advantage. The second half GDP prints will be negative and so will the revisions to last quarters. We’re going into a global depression and no amount of talking and rumoring of the market will change that fact. Limp into BEARX and GRZZX on days we’re up 300 Dow points over the next 2-3 months and you’ll be rewarded in late 2012 or early 2013 when bargains will be found everywhere for pennies on the dollar.

  74. Shalom Bernanke

    Some perspective on miners vs. metal:

    In more “normal” times like the end of 2007 and before the dislocation, gold was priced around $840 and silver at $14.77 while the $XAU was roughly 185-190.

    Gold has doubled, silver up over 2x, and the XAU up only about 3%. I think the very real fear of deflation has hit the miners as traders expect a repeat of ’08, but my bet is the reaction will not be nearly as severe.

    Just a hunch, but thought I’d share it anyway.

  75. Shalom Bernanke

    The major difference between ’08 and now being that miners have been making lots of money and are sitting on piles of cash, so will not need to access credit markets for capital.

    Anyway, enough from me. I’ll check back at the open. πŸ™‚

  76. PST

    The fed is not an elected body, so they could really care less what the public opinion is about them. However, I do agree with alot of what you said.

    In terms of monetary stimulus, I agree that we will not get a formal expansion of the Fed balance sheet (yet?) similar to QE1 and QE2. Their next move will be to change the duration of their treasury holdings by buying longer dated maturities. They can either continue to just reinvest proceeds from MBS and maturing treasuries, or actually sell some of their shorter maturities to finance additional purchases. Net net, there will be no expansion of their total holdings just a change in their average maturity. The effect will be to force duration matching investors into risk assets in a search for yield. If short term yields rise as a result, they will then just lower the interest that they pay on reserves to force banks into short dated treasuries.

    I think the market is already pricing this in as money continues to flow into treasuries despite the credit rating downgrade.

  77. Ken

    Ladies and Gentlemen, This Is Captain Lucifer Speaking.

    On behalf of the flight crew, let me welcome you aboard SPX flight 1162. We should touch down in hell at 11:15 (PST) Tuesday 8/9/12, depending on this headwind and the number of breaking news rumors by the CNBC mouth breathers of a Warren Buffet bailout of the US Treasury. Uncle Warren thinks the US should be rated AAAA so he’s going to buy, buy, buy while US debt is trading at or near all time highs. That’s what guys like Buffet does, “Buy high and sell low…” Not!

    Folks, we’ve just hit our cruising altitude of 11,200 feet. I’ve turned off the seat-belt light, which means you are now free to move about the cabin. However, for your own safety, please fasten it when you are seated, in case we encounter any unexpected turbulence or I jerk the stick back and forth. This one time, I hit an “air pocket” at SPX 1162 and sent, like, 12 passengers flying about the cabin straight up to the ceiling. Unfortunately many passengers died when they tried to buy the dip.

    Although, to be precise, you don’t “fly straight up” when a QE3 announcement happens. Actually what happens is the airplane suddenly drops, while you remain in place. So the ceiling hits you hard in the head. No that’s not fun! Though I’ve turned off the seat-belt light, please note the “no smoking” light will remain on throughout the flight, in compliance with FAA regulations. You may not smoke in the lavatories and federal law prohibits tampering with the smoke detector. Feel free to pack a chew as I know everyone is nervous about the opening price action and neither are federal crimes… Yet!

    Flight attendants, two dirty martinis to the cockpit, please. Another light I’ve turned on is the “don’t wiggle your leg obsessively” light. Why do some people do that? Are they nervous about being on the wrong side of the trade? Why do they refresh their browser every 2-3 seconds to see how much more money they’ve lost in the last couple of seconds. Don’t just sit there shaking their leg back and forth, refreshing your web browser wondering what to do. Do something, anything, just try not to panic.

    Please also note FAA regulations require passengers to follow the instructions of the flight crew at all times. So if I ask you to raise your tray tables and seats to the upright and locked positions prior to entering into turbulence, do it! If masks drop from the ceiling unexpectedly take that as a bad sign and not that I may have to dump the plane into shark infested waters. Don’t worry though the cushion under your seat is actually a flotation devise. Use it to beat back the sharks as they eat you alive.

    Depending on the time of the day and if things get really bad or should we hit the “air pocket” just below the 1162 SPX level and start to waterfall off like the “Flash Crash” in May 2010 you might hear me scream orders over the cabin P.A. or possibly even say a small prayer to God to spare the lives of the many and just close the market for a couple of hours or better yet the rest of the day/week. We can’t have too much panic and chaos so we might just close the market down.

    On behalf of your cockpit and cabin crews, please, sit back and enjoy your trip.

  78. St. Deluise

    all right ken we get it. straight to hell. this time will be different. maybe- the great part is, we get to find out very soon!

    meanwhile–and i know it was a sunday night–hourly volume in /GC did not accompany that move AT ALL. could very well change but smells more like short covering so far. let’s see what happens when that gap fills..

    *grabs popcorn*

  79. Ken

    Most Popular News Article on Bloomberg: S&P Seen Surrendering to Tea Party Costing U.S. Taxpayer


    The Tea Party is for real and the MSM is trying to blame 30+ years of government malfeasances on Tea Partiers not entrenched Demopublicans proves it! The 2012 election will see the Tea Party movement double in size and influence. Ignore this political fact which creates King Dollar going forward at your own peril.

  80. Gary

    Folks this is not how a bull markets should act. They should grind higher. This has the possibility of being a final C-wave top followed by a left translated intermediate cycle.

    The miners are trying to warn that something is wrong.

    Think rationally here. When has gold ever jumped $60? either when it was in a bear market or at a parabolic blow off top.

  81. Dan

    Pre-market S&P is currently at 1665, below Fridays lows. Would be much more bullish if we held above 1168. So much for Fridays candle on the charts.

  82. St. Deluise

    baby stepping into SSO starting at $39.80

    will increase once/(if!) that trade goes green.

    today may just fool everyone and be a bunch of choppy garbage.

  83. David Kafrick

    I agree with Gary that the risk in holding gold here is way bigger than the potential reward. Any kind of stop that makes sense would be so much lower than where we are now, that it is just very risky to stay long.

    Regarding the S&P, I don´t think this bottom will be an easy one. We will probably go up and down several times before any meaninful and consistent bounce can occur.

  84. Poly

    “Think rationally here. When has gold ever jumped $60? either when it was in a bear market or at a parabolic blow off top.”

    You are correct Gary. As I feared (although certainly very happy about) this is becoming a blow-off. It could run another hour, reverse and drop $80 or run many more days/weeks, and hit $1,900 in 1-3 weeks.

    Blow-off’s tend to defy gravity for longer than you can believe and reach unimaginable peaks, but they should not to be traded by most people.
    Past gold blow-off’s had similar trajectories and went much longer/deeper than this, but that means little here. Not much would surprise me now. My money stays with the blow-off, trimming profits all the way, but then I’m fairly protected against a crash and fully aware of the risks. As DG often says, not a pitch one needs to swing on, but if you’re already in a deeply profitable position, I believe you still have options.

  85. CMT

    Frank, watching that, too. I was in and stopped out of BGU this morning for a 2% gain. Was thinking of getting some more exposure if we could hold the morning’s lows. Now, it just looks ugly.

  86. Michael (Hulk)

    Sure we could bounce a bit before Fed speak day. But broken bear markets are broken bear markets. 20 foot waves – are you up to it!? 3 standard-deviation outlier move becomes 10-standard deviation in a bear in a heartbeat! Any bounce buy strategy would have had you -10 to -50% in 2008 because the volatility blew out any reasonable stops. If you did not use stops – as the stats guys says – you were “non path-dependant” – then you can go for smaller positions and ride them out but that’s swimming against the tide and you’re investing there … don’t buy falling knives do it – easier money in bull markets because of the lower volatility.

  87. Dan

    Wow thank goodness I held off on buying this morning. Still think the bounce will be huge, whenever it eventually comes.

  88. Frank

    If you want some comedy, put on CNBC. They just had Cramer on spewing some nonsense. Even though I am out in nowhere in Sweden the damn TD Ameritrade has a CNBC feed these days…

  89. MrMiyagi

    Overall, the market hasn’t fallen as much as I thought it might. I was fully expecting 600 points on the DOW.
    The day is not over though.

  90. Mean Guy

    Don’t post here much but S&P is taking a full swing @ this mkt. Looks like a “Goodfellas” moment. Is there anything else they can downgrade? Some of these prices are “If its ever that price again I’m buying” Hard to pull the trigger, have to hold nose and jump on a few things.

  91. Gary

    Trying to time a perfect bottom probably isn’t going to work in this volatile environment.

    But we are late enough in the daily, intermediate, and yearly cycle that any position in this range should be hugely profitable as the market rallies out of that major cycle low.

  92. Dan

    Lol problem with taking a position like tqqq is your screwed if it drops cause you can’t hold long term due to decay. Currently the market could drop another 5% just as easily as it could turn around and soar.

  93. Michael (Hulk)

    Gold volatility has gone from 18 to 25, VIX from 20 to 40 (a significant crash-type event). For those looking for a spot to enter the bull market in miners, you can take the timing uncertainty out of the equation by selling 60-85% puts on big miners with very high volatilities at 55-65% as a way to enter them 15-40% below current price and have time-decay and deline in volatility work in your favour. Will need to be able to have the cash to buy and absorb the stock if it gets down there by expiry.

  94. High 5


    Agreed. Why would anyone be interested in a monetary theory that talks about people as “subjects” and believes these “subjects” must be forced to invest their savings in Wall Street in order to do their duty to their nation.

    Typical authoritarian BS from T & J.

  95. Frank

    NGD is 4% off its low today. My favorite miner…. It often leads turnarounds in miners.

    It would also be very indicative if SLW (who “missed” today) can claw back to green.

  96. coolkevs

    From Kevin Depew’s twitter today:
    “TD Buy Setup 9s recording today on DAX, FTSE-100, CAC-40, SP, SPX, NDX, CCMP, TSX, … tomorrow for IBOV, NKY”
    These are DAILY buy setups, so 1-4 day (Tuesday-Friday) UPSIDE reactions expected in all of these indices…or maybe we crash and the rest of this doesn’t matter πŸ™‚
    We also more than likely will perfect the NDX WEEKLY BUY setup, as we made a lower low in the NDX today. This week is on Bar 8 and will record Bar 9 next week, so this will be in effect from August 22 to Sep 16.

  97. Frank

    Ha. That didn’t take long for SLW. Let’s see if it can hold.

    Oh boy, I have to get out of here. Now they have Geithner on. Have you noticed that both he and Obama whistle when they speak. That really bugs me. Maybe they learn that at socialist youth camps when they are kids?

  98. Gary

    If the miners can follow the stock market up while gold corrects then the divergence will be rectified and at that point I would be interested in metals again.

    I am not interested in anything that is showing signs of a parabolic blowoff top. I learned my lesson in May about trying to pick the exact top of a parabola.

  99. Shalom Bernanke

    I’d like to get out of here for awhile today too, but unfortunately I have to stick around and add more miners into dips.

    I’m still prepared for more weakness throughout the week, but GDX is trying to turn the shorter term charts higher. We might have seen the near term lows already.

  100. Gary

    The only other time in the last 11 years that the 10 day RSI has reached this level of oversold was right after 9/11.

    Look at what followed.

  101. Gary

    The big question is will the miners follow stocks higher, or gold lower?

    I must admit I have no clue what to expect in that regards

  102. Shalom Bernanke

    The miners aren’t following the stock market up today Gary, they’re leading it.

    One can’t get much more relative strength than GDX+4% with S&P’s down over 3%

  103. Edwin

    even for a gold bull as myself.

    i can see a HARD correction coming.

    gold is way off the charts. 1738 is what i’m calling as the end of the run.

  104. ALEX

    Blogger Shalom Bernanke said…

    I’d like to get out of here for awhile today too, but unfortunately I have to stick around and add more miners into dips.

    Hey SB

    I see STRENGTH in your Miners! Flight to value? Dow down almost 300 and I see RIC, EGO, EXK, GG, etc showing good signs of buying volume. πŸ™‚

  105. MrMiyagi

    GLD buyers vs sellers ratio is 8.28:1
    This is the highest I have seen of any stock myself, is this a rush of emotional buying or rational?
    SPY ratio is 1.69:1 for buyers!

  106. Gary

    I’m more concerned about the months of the divergence. The same thing happened with energy stocks as oil went parabolic.

    At this point we have an obvious parabolic move happening in gold and months of divergence in mining stocks. That makes me very nervous.

  107. Gary

    Add to that we have had several large SoS days on GLD.

    I noted previously that the same thing happened at the 09 top.

  108. Shalom Bernanke

    And I also agree that gold could take a hit if stocks get some legs.

    I’m trying to get in position of heavily invested in miners at decent prices for the rest of the bull. I do not want to stay in confetti at this later stage in the gold bull.

  109. ALEX

    I bought a lot of AG cheap enough 2day I could sell it now 4 a decent profit…BUT I WONT πŸ™‚

    and RIC ,, EGO , HMY, etc volume is telling me that they are recognized as Value now.I.M.H.O.

    Back to the charts for now.

  110. Big Bang Investor

    Miners have seen some major volume the last couple days. Certainly has the feel of capitulation.

    With gold this stretched about the 200DMA, I have been expecting a large correction to the mean. However, today’s move combined with the dollar movement does have me wondering whether this move could be a runaway parabola like we saw in silver.

    I can’t say I’m expecting it, because it’d be an unprecedented move for gold. However, we did see action like that in silver and a few other commodities earlier this year. It’s possible.

    It also seems like most everyone is expecting a heavy rally in the markets this week. Wondering if that could be a bad omen.

    Just thinking out loud.

  111. Gary

    Silver rallied $10 in nine days and then formed a top.

    Gold has rallied $120 in 11 days. Does that sound more like a bottom or a top?

    Control your emotions folks and recognize what is happening.

  112. mikezza

    I heard that traders were going long precious metals and short miners earlier this year. Do you think we might be seeing a reversal of this trade. Traders selling gold into strength and buying back miners to cover their shorts.

  113. Gary

    That is a nonsense trade. The reason the miners diverged is because they knew a serious correction was coming not because hedge funds were shorting miners and buying gold.

  114. thedocument

    I am not in the QE3 camp, at least not yet. It seems to me the world’s central banks are coordinating turns at devaluation. They see simultaneous inflation as potentially harmful. The US had its turn with QE2, and now Japan and the euro zone are having a go at it.

    I have dollar longs, and I’m going to hold those longs unless the current daily cycle fails. That said, I am also hedging via S&P calls because if the dollar breaks lower and/or the FOMC surprises me, stocks should rally violently out of their intermediate low. At the same time, stocks have been beat up so much, they have a decent chance of rallying even if the dollar bounces… a temporary positive correlation is not out of the question. So the hedge could make me money even if the dollar trade works… my kind of hedge.

  115. Bob loves Hawaii

    Gary, it looks like miners are closing the gap here with gold. Is it possible that the cycle is out of phase here?

    Serious question. I am counting the ICL later than you.

  116. Shalom Bernanke

    From Zero Hedge, supporting Gary:

    Should D-Day strike at Paulson, the firm’s multi-billion GLD “gold share class” will likely have to be sold very fast to preserve liquidity. When that happens we may see a 20-30% correction in gold in one day. This is just a theoretical warning, and we hope to have some sense of when, if at all, it would take place. But just something to keep in the backs of your heads…

  117. Dave

    how’s the BOW look? i got in earlier on stocks that today and am starting to get nervous about the continued fall…..

  118. ALEX


    I did…but I got stopped out last Thursday ( I had a trailing stop up high , because silver was taking off and the mkts were tanking).

    I rebought this morning @ $19.70 area and went heavy because I think Miners are in favor here , so I was up .75 cents as I wrote ( not a lot, but good profit considering # of shares). I have been trading this In and Out all along …( not based on emotions πŸ™‚ but based on other indicators).

    Any of this can be verified by DG or POLY if it sounds fishy πŸ™‚ I am in touch with them often, so they do know my trades real time. I guess I kind of slowed down posting here because some of my ideas were opposite Gary . sorry for the confusion.

  119. St. Deluise

    dave i don’t know how BoW looks but the amount of up volume vs. down volume has been creeping upwards since 10:30.

    i expect to see a new low while effective volume stays up.

    how many sell stops does everyone think are at SPY’s HOD (118.35)? i would expect a whole, whole lot. even if the market sinks lower here that is way too juicy a stop to run in the immediate term.

  120. SF Giants Fan

    Copper down > 3% today alone. World wide double dip in the bag. Or the second leg down from the first dip. Either way it ain’t good…

    DOC. Good call….

  121. Elaine


    No worries, I have been out of the market for about a week. I am not a skilled enough trader, nor can I trade enough on a daily basis.

    Thank you for all your analysis and help to the board members.

  122. PST

    It’s not just BAC…check out all the banks today including C, MS, GS, JPM and WFC. The money center banking model is broken and they have become nothing more than quasi-nationalized utilities. Their main income streams have been severely impaired given the market and regulatory environment. There is very little lending occurring, especially in real estate and construction. Many banks have also spun off or severely curtailed their proprietary trading activities. Revenues from institutional trading volumes have fallen off a cliff. And with the Fed likely pursuing some type of yield flattening exercise, their spread income will get crushed.

    The earnings of banks with large real estate exposure including BAC (Countrywide and Merrill Lynch portfolios), Citibank (Washington Mutual’s portfolio) and Wells Fargo (Wachovia and Golden West portfolios) will likely continue to come under pressure as residential real estate rolls over again. The legacy brokerage houses including MS and GS are especially exposed to the slowdown in trading volumes and investment banking business, not to mention to the loss of revenues from proprietary trading. And even firms like JPM which seems to be in the best shape are seeing increased short interest due to their large exposure in the derivatives markets and increasing delinquency rates in their credit card businesses.

    We are now seeing shades of 2008 as banks stocks are getting hit and their CDS are being bid up. In case you thought another credit crisis wasn’t possible, I’d watch this trend over the next few days and weeks. Modern day bank runs do not occur with people withdrawing their savings but rather when intra-bank lending seizes and we are seeing the potential for that to occur both in Europe and now in the US. Banks will not lend overnight to BAC if they get concerned about its ability to continue as a going concern. I’m not predicting that this will happen, but it’s something to watch very closely if this crisis develops.

  123. ALEX


    I cant remember if you were the one who said you were investing from your kitchen last week?? If so , I wanted to write that I am proud of you too then, but I didnt πŸ™‚

    I am.

    You said you were proud that you were doing better than some money managers when it appeared someone questioned a trade you had made.

    If it wasnt you, it was another female on here.

  124. DG

    I can attest that Alex’s AG trade was posted real-time (Alex, you owe me $1 now since I backed you up like we agreed. No coins, please.).

  125. coolkevs

    If interested in DeMark Analysis and witty banter, read Kevin Depew’s article from today at minyanville dot com – “Five Things You Need to Know: End of Days Signs”
    Point 4 explains the DeMark theory I was trying to go over the other night.

  126. St. Deluise

    39.84 close enough to my 39.80 target, first slug of SSO is purchased

    out for today, can’t watch anymore! fully ready for yet another gap down tomorrow if they really want to drive the point home.

  127. Gary

    Today we are getting a classic example of how hard it is going to be to sell at the top of the gold bull.

    Emotions will be running rampant. The end of the world will be imminent.

    But at some point one has to exit the parabola and not look back.

    This is not the top of the bull market by any means but this is obviously a spot where one needs to exit and not look back.

    I’ve quoted the rubber band theory many times. The gold rubber band is now stretching so far to the upside that the reaction is going to be unbelievably violent when it comes and people caught in it are going to think the gold bubble has popped.

  128. DG

    Rob: Are you a subscriber? I have been posting there. not sure I will post everything here as well. I am long a little QLD right now but have been in and out of it during the day. Frankly, best is to buy a little and not look at your computer for ten days.

  129. Gary

    I remember Pimco predicting QE3 sometime in early Aug. I think Gross will be right.

    If the dollar can’t catch a bid even with this kind of selling pressure something is seriously wrong.

  130. Mikey

    In 2009 gold topped out about 25% above the 200-day. We still have a bit more to go before we reach that percentage level again… about 177 on GLD.

  131. Keys

    I manage a small family trust…with my bias to PM’s, I imagine going to the bank having gold silver and cash on me…I have this one and only chance to sell or buy or diversify amongst the three right now. After that I pretend I need to hold for three months before I can switch it up again…100% cash was an easy one..I couldn’t imagine losing 30%-40% of fund intrusted to me.

    1-year ago my allocation was an easy 75% gold…25% Silver. At least that is how I look at things.

    Been in gold for several years now, as many here have, not too worried about missing the last punch.

  132. Gary

    No it doesn’t effect our trade. But the people that are buying here or holding expecting this to continue indefinitely are getting set up to get caught in a gold crash.

  133. AJ

    The current trading environment reminds me of SLV in May. Everyone keeps looking for bottom but there is none to be found on SPY. Gold is almost perfectly inversely correlated to SPY. I hope BAC falls far enough for Paulson to sell his gold and get a correction.

  134. Robert

    from Dan Norcini today–
    One normally expects to see interest rates rise after a downgrade but such is the current environment that investors are rushing into cash and into gold. It would seem that gold is finally getting the due respect it deserves after being constantly harangued as “no safe haven” by far too many talking heads who confuse liquidity driven issues with fundamentals. I marvel at the obtuseness of some who just last week were trashing the metal for being “no safe haven” on a day in which equities were getting hit hard and investors were rushing to get liquid and meet margin calls. Never mind the fact that gold had been making one record high after another across a wide variety of currencies. Never mind that as the sovereign debt crisis in Euroland escalated, more and more buying of gold was occuring. All that mattered was we had a huge selloff in stocks last Thursday so out were trotted CNBC’s “experts” on the gold market who pronounced it as “no safe haven” because it was being sold to meet margin calls.

    Today, those nitwits are looking very stupid indeed because now the talk is that “gold might be the last safe haven available”. Gee, what a surprise – 6,000 years as a currency finally does matter. My oh my what a difference a day or two can make. Let me guess – these same “experts” will now be trotted back out to tell us why gold is such a great safe haven – and they can do this without blushing!

  135. Gary

    I just have one question. When gold crashes as it surely will after this kind of parabolic move. Will it be because of a normal regression to the mean profit taking event or because the evil gold cartel took it down?


  136. wmp

    SLV flatlined the last hour plus while gold makes two new highs..it’s only an hour but really pretty interesting

  137. Marc

    Too many people out there saying we’re going to bounce. It was like this in 2008. I’m waiting for the towel to be thrown in (or a swing low πŸ™‚

  138. Dan


    Another day or two like this and all those trying to catch the falling knife will have no choice but to throw in the towel. Was not expecting such big declines at all, was planning to buy in today all weekend. Good thing I held off.

  139. Avann

    Yeah … that’s enough for me.
    I didn’t like taking the trade in the first place. I’ll bail at the close if there isn’t any sign of turn.
    I’ll sit with 100% cash until there’s a better PM setup.
    This is too hard to watch.

  140. 86d4life

    perfect example right now what you speak of on BOW; retail investors buying into what smart money is throwing them. Thanks for the lesson!

  141. High 5

    Sept. 1929
    “There is no cause to worry. The high tide of prosperity will continue.” Andrew W. Mellon, Secretary of the Treasury

  142. High 5

    The bankers must be begging Ben to announce another bowel movement of funny money.

    These events can go exponential very quickly with counter party risks and all that.

  143. William Wallace


    Im sidelined in all cash for now…not even going to try and approach this market as if its something we have already seen before…I think we may be witnessing something for the first time.

  144. Billy

    Best thing now is for the markets to close hear or near the lows, make slightly lower lows tomorrow and then leap up Wednesday. As of now it would take a huge leap to get us to the swing in the S&P.

  145. 86d4life

    I grabbed some spy puts this morning when it started getting midevil and if I get the mouse pointer close to them now, the pointer starts smoking!

  146. St. Deluise

    let’s face it, buying this bottom is going to be HARD and very few people are going to do it, waiting for a swing or no.

    yes i should have waited on SSO (bought at 39ish) but i knew i was going to have to sit through some BS. i’m mentally prepared to see SPY all the way down to 109 before i throw it in.

    i believe the odds are in my favor that we’ll see a bigger bounce from here than we will further decline. i might be wrong! but all one can do is play their system when its more probable you’ll make money than lose it.

    good luck to everyone else, cash or no. know where your stops are.

  147. Avann

    at ease … yeah I know … I only sold half I may hold onto the other half … not sure yet. The point is I don’t have enough of a stake in this to make a difference … especially since I’m not even sure why we’re doing this trade.
    If this market has truly turned into a bear market I’d rather just watch and wait for a PM trade. I’ve only ever traded PM for the last 4 years so I’m not really sure why I bothered.

  148. Gary

    Greece has already banned short selling. It’s only a matter of time before the US does it. The banks are going to be protected at all costs. Plus I don’t think Bernanke is going to sit ideally by and watch all of his reflation efforts go up in smoke.

    We are days if not hours away from a monster rally. I know it seems like the losses are so large they can never be recovered but remember the most violent rallies occur in bear markets.

    We could easily see a 100 point day in the S&P.

  149. ...at ease

    Avann, I understand, I hate trading stocks, only like PMs, but we have to wait on that cycle bottom for that trade. So taking my best shot on this hopeful rally!

  150. Avann

    Another point I’d like to make … and this is just me … I tend to lose most of my money when I try to buy into a market that “just can’t go any lower”!
    I have no problem sniffing out tops … usually early but nevertheless profitable … then I start buying dips thinking “OK this is the bottom” and I start to give it back.
    Silver in may was just like that … fortunately I recognised my error early enough to preserve most of what I made.
    I’ll pass on this one.

  151. Brian

    I still think you need to give the miners a little more time here Gary. In a -5% down day for stocks, the miners are up. That’s not a bad performance.
    Now, if they fail badly on a strong day for stocks, then I will respect that non-confirm.

  152. Gary

    You can’t buy this expecting to pick the exact bottom. You buy because it’s very late in the daily, intermediate and yearly cycle. When the bottom does come the rally is monstrous.

    One doesn’t have to pick the exact bottom to make a winning trade. They just have to hold their position until the cycle bottoms, then the next cycle will correct any timing mistake.

  153. Gary

    The big question still remains what will the miners do when gold crashes. Will they follow stocks higher or follow gold lower?

  154. Brian

    Agreed SB. The miners are literally printing money at $1,700 gold. NEM raised their dividend 50% last quarter. It will go up another 50% as god approaches $2000. That’s a 4% yield and 9x P/e multiple on a stock that is growing earnings by 20% plus yr/yr

  155. Shalom Bernanke

    I wouldn’t assume gold will crash as stocks rally, as whatever the catalyst is for stocks to rise will probably put gold up to.

    I understand gold is due for a pullback into cycle low, but a news item to stem the decline in stocks is just as likely to drive gold up too, IMO.

    Either way, I have lots of confetti I’d like to move into metals, so let’s get it started. πŸ™‚

  156. Avann

    Gary … I hear you and appreciate what you’re saying.
    But I know myself very well and I just can’t do 5% draw downs all in 1 day!
    Not too mention that I bought an ETF so it’s actually down 10%.
    Anyway, I’ll hold onto the other half … I think/hope I can take one more of this πŸ™‚

  157. Brian

    I hear you Gary. I am worried about a sharp correction in gold but my best trades are the most difficult to place and hold. I am struggling to hang on to my positions in NEM, AEM, AUY and GDX, but I feel that they are starting to move. Time will tell.

  158. Brian

    Thanks SB. Even the large caps are tough to hold but I think that’s where the institutional money will flow first whenever the penny drops!

  159. DG

    I bought QLD at 70.71. I will need some decent room in it to hold overnight. If we fade it gets kicked out at cost.

  160. 86d4life

    thanks, but am I wrong for thinking of put options as another form of short selling? I am new to the options trade and perhaps I haven`t watched enough episodes of survivor.

  161. DG

    Margin calls will hit tonight and tomorrow’s forced liquidations will likely be the bottom (unless we can have a sharp rally into the close). That’s why they call it turnaround Tuesday. Mondays are often weak after people stew all weekend about their losses.

  162. Bob loves Hawaii

    My stops are set in GLD, using options to protect an overnight collapses.

    Out at 165, until the next time.

    I am also short silver through ZSL.

    Holding my SSO and SPY positions and calls.

  163. Adam


    Yes in that you can make money on the short-side, but you’re not pressuring shares by selling them short. I would recommend staying away from options.

  164. Frank

    I just got back. I ran into this German guy (I am in Sweden) who told me that he sold all his physical gold (2 kgs) the other week and he wants to come by tomorrow evening and learn about gold miners!?

    I put in an optimistic limit order on Aug 52 QQQ calls at 1.40 and I am now a happy (?) owner of these instruments. As I write this they just broke lower.

  165. Ivan G

    ‘Gold up 65 for the day. Everyone is dropping equity to buy gold. Newmont flat for the day’

    I think this is what we have been expecting…

  166. David Kafrick

    Too many bottom pickers out there. It feels that all of them are buying whenever we get a 10 point rally or so. We can´t have a bottom while this keeps happening. People are not throwing the towel yet, as weird as that is.

  167. Poly

    What an amazing sight to watch.

    Closed half of the GLD options, a great run.

    Moved a lot of the exposure into Aug options, from Sep/Oct and banked the time premium (brought the time up) as the expectation now is that we no longer need time in a blow-off. This allows to play with more OTM options without risking any significant capital, the money is made, the rest is all icing.

    Be careful all.

  168. David Kafrick


    Yes, there is panic when you look at market internals and indicators. But the price action during this whole decline has yet to reach a panic mode. As big as the declines have been, I have yet to see one of those 4% declines with not a single 5 point rally in between. And every bigger rally that we have it feels as everyone is jumping in.

  169. Mean Guy

    There has to be support some where in here. Anyone have a #. This mkt got slapped harder than gangsta girlfriend in a 1947 movie.

  170. David

    The VIX is at 44. This is a number that historically marked major bear-market lows — with the notable exception of 2008.

  171. David Kafrick


    The 10 day moving average of the advancing issues on the NYSE is at 832. It has never been this low as far back as I can see, which is at least to the late 90´s.

  172. Michael (Hulk)

    37% of the entire equities bull (within a bear) market evaporated in last 4 days of trading. Thanks for playing, we hope you had a lovely time and we’ll see you again next time round! πŸ™‚

  173. Mean Guy

    I avg. in my 15% all day what a Freaking ride. Live in NC and sweating my az off feel like I just ran 5 miles. I guess the Obama Cares didn’t work. Sub since Feb 2011

  174. David Kafrick

    Even though this has been brutal, we have yet to see a gap down open (I am talking about a gap between the open and the bottom of the previous day, not a gap between the open and the previous close).

    If we open with a big gap down tomorrow, I will buy.

  175. Shalom Bernanke


    I thought you’d start picking up some miners, deflation or not.

    Sure I’m rooting for the markets to rally, being miners seem to trade in lockstep with it, regardless of metals.

  176. 86d4life

    you recommneded staying away from options. Please explain. There was a bit of a conversation getting started on the other blog about volatility. Now seems like a perfect time to have this conversation. I for one really apreciate when the experienced option guys start talking. So can one of our option Dudes explain volatility and the affect it has? Thanks.

  177. David


    I already have a big slug of miners that I will hold for 2-3 years come what may. Since it’s not clear what will happen to miners when gold reverses, I’m just making an unusual (for me) side bet on equities for now.

  178. wallofworry

    NGD is solid, a well run, low cost producer that is planning to double it’s production next year.
    Best intermediate producer IMO.
    Stay long on that one, buy on any dips below the lower BB.

  179. gold silver troll

    And there you have it: following last Thursday’s massive 500 point drop which so many said was a buying opportunity, here comes a -633.78 plunge in the DJIA, which is the 6th largest absolute point drop in Dow Jones Industrial Average history, following 4 larger drops in 2008 following the Lehman bankruptcy, and one back in 2002. We just made history. If the DJIA can drop more than 800 points tomorrow, which it probably will if Bernanke does not announce QE3 in some form, 2011 will be #1! ~zerohedge

  180. jeff

    Given the selloff, QE3 is rather useless. Think about the market is back to Oct 2010 levels and completely cleansed itself of any gains made from QE2 (that spanned end of Nov 2010 to June 2011).

  181. Adam


    You said you’re new to options. And you asked a rather elementary question with regards to how they’re different than shorting. I think you should do a little more work with them before you start toying w/ instruments like that. I didn’t really want to express my opinion like that because it sounds kinda jerky, but you asked.

  182. MrMiyagi

    Okay.. been downstairs most of the day.

    Good job Obama!

  183. DG

    David K. I have the same feeling. The internals (breadth, volume, etc.) are saying “we have crashed”, but the tape action feels wrong to me. Importantly, tomorrow morning may do it though. It can happen very quickly with a scary gap opening. We did have some panic in the option pits today and that’s not “internals”; that’s pure fear. I’d be happier if I could smell it like I have usually been able to. Seems like denial to me more than panic. On to tomorrow!

  184. 86d4life

    Not to be a jerk, but I think asking questions is a real good way to learn. When some of the people here that are experienced in options start to discuss various parts of the option process, the learning curve(for me but I expect for others as well) is huge. I can and do read until I`m going blind but my biggest leaps in knowledge are from listening to the people that really do it.

  185. youks


    You mentioned margin calls earlier… shouldn’t most of them have happened by now? And from all indications so far do you think this panic selloff mode is anywhere close to the end, assuming BB doesn’t do something drastic?

  186. james r

    My worst fear would be that the markets will continue to ignore QE and Congress will have to step in and create some sort of emergency package to halt the selling.

  187. David

    What kind of “emergency package” could congress create to halt the selling?

    We just went through a near-default over government spending — you think congress is suddenly going to throw a trillion dollars at the market?

  188. D

    Quick question… How come people are saying option premiums are high and not to buy when options prices are going down at the same time prices are going down?

    Thnx for any insight!

  189. james r

    You see David ( I maybe way off here) but everyone is expecting for the markets to make its low sometime next year…

    But that’s what scares me.

    I think we have a good possibility that the market is making its low now.

    Because no one is expecting this now.

  190. ocean

    The Fed Mandate Scorecard
    1. Price Stability – Pass (we don’t have hyperinflation)
    2. Employment – Fail
    3. Stock Market – Fail

    Though I still wonder if the Fed can ruin price stability.

  191. jeff

    You need to watch vega in volatile markets like this. When volatility spikes your options (both a call and put) will increase. But when volatility drops (which it will when the relief rally begins) your option (either call or put) will drop in value given by vega so you can lose money with a put even if the market goes your way. I’m not doing this justice but hope it helps. I know just enough about options to know I can lose lots of money πŸ™‚

  192. pimaCanyon


    What Jeff said.

    Some people use the term “premium” to describe the amount of the option price that is not due to its intrinsic value.

    Intrinsic value is number you get when you subtract the strike price of the call from the price of the stock. Example: A stock is trading at $31. You own a $30 call. The intrinsic value of the call is $1 (price of stock minus strike price of call).

    If volatility on that stock is very low, the call might be selling for $1.10 which means it has an “extrinsic” value, or “premium” of 10 cents. If volatility is very high, the call might be selling for $5.00 which means it has a premium of $5.00. If you buy the call for $5.00 and volatility collapses, even if the price of the stock goes up $1.00, you could end up with a call that’s worth only $2.20, less than the $5.00 you paid for it.

    If you’re going to play in the options sandbox, you need to read about and understand volatility, as well as all the option “greeks”. Otherwise you can get badly burned.

  193. Silverhound

    Thats the T1 pattern / Measured Move target hit on Gold for this last leg up from July 1st. if you look at a chart, this is the point where silver moved into it’s blow off top.

    Just an observation.

  194. Keys

    Don’t need to announce QE…just need to change the language to hint towards it and the market gets the message..Further it doesn’t need to be Qe, it needs to act like QE…

    Bank stabilization program.


    Buyer of last resort in T-bills…ie if yields go to x%, the Fed steps in to support otherwise does nothing…this is due to downngrade and giving faith back to the market…anything like that would work too….or maybe offer a put option to holders of US debt…sell at a minimum price…

    NOW if the fed does nothing what happens…Banking is being taken out and we know how the FED feels about banking… But I can only imagine if Ben says nothing, what the market will do? Ugg…Vortex to the abyss, no puke bucket needed, just straight down.

  195. Ivan G

    So what if FOMC does not? What if they say – it is what it is we will be side watching doing nothing and keep interest rates low for the next 12 months. After that whoever survived will have the chance to proceed. After all – what if they decide to do their job ??

  196. StupidMovingAverage50/200

    … repurchase at the middle of the yield curve or was that ECB. ECB claims they will sterilize the procedes from the bond purchases and not print money.

    Just thought of something funny in an odd way. Ben should be a quadrillionare with all the bonds he bought from qe2. Guess he doesn’t need GS or the Wall Street banks anymore.

  197. StupidMovingAverage50/200

    Ben will be the first quintillionaire. Ben will soon retire and buy out JP Morgan for $1.99 and re name it BS Bernanke.

    Trump will become the first sextillionaire when NY real estate recovers.


    A mummified Octavius Ceasar will arise and become the first Octillionaire.

    Ninillion, Decillion. …

  198. gold silver troll

    talking about sentiment – take a look at the chart of the S&P Bullish Percent Index

    A plunge from 70 to 22…sentiment is almost at rock bottom and fear is out of control

  199. D

    Could someone help me out with understanding why people are saying the cost of options are at premiums?

    Doesn’t the option just follow the underlying security and price goes down along with it?

  200. aklaunch

    The sky is the limit i think on these parabolic moves? There is a lot of money in Gold above 1600$ now. If the boys in the futures pit decide to start selling i can only imagine how fast it will be back at 1500$ I took out a small put options trade on GLD when it hit 1628. Down nicely 50% but it is a very small position. I think i will buy a small handfull of puts on SLV when gold hits 1870.

  201. trader

    Hi Gary

    i remember you saying at the end of July we were on around day 30 of a daily stock market cycle that typically lasted 40-45 days. if this is the case could we not a few more down days before a reversal. Or it would be expected that a reversal here would lead to a longer cycle to the upside in excess of 45 days. Just curious.

  202. MrMiyagi

    I posted this on the premium site but meant to do it here…
    Just my rant.

    At this rate of decline, there will be no buyers because the shorts will have all covered and no one else is stepping up.

    Anyway… let’s try to think like the huddled masses, yearning to break even.
    So we’re little Mom&Pop, stocks have gone down the shitter, do we sell today? Do we wait for it to go back up? Do we buy more?

    What do you kids feel? If you had stocks, would you sell them? Are you itching to short the market “because it ain’t done yet”?
    Most people at this point will just want to get out; once they do, the reversal begins. Then after a multi day rally they start buying in again with what little they have left, usually too late in the game and it reverses again. This is how people lose their money, I know because this is what I did many years ago when I started.

    I’m calling bottom latest tomorrow mid-day.

  203. Dave

    It’s funny. When i heard about the downgrade, my gut said two things: 1. this is going to crush the market, and 2. if US debt is downgraded, gold is going to skyrocket.

    So far both are true and i’m kicking myself for having been in the former too early not in the latter at all, losing big when i could have been gaining big, a double loss.

    one of the gold guys i follow that’s more of an old turkey accumulate and hold guy is saying look how far we’ve come and it’s only going higher.

    but, at this point, having started down this path with gary i just have to trust and hope to make it to the other side!

  204. Γ‰amonn

    MrMiyagi, I feel if we don’t get good news from the Fed & soon this sucker will keep going down and down. Even if we do get good news, I don’t think the rally will last too long, maybe a few months, and then we are facing into a black world recession.

  205. MrMiyagi

    The recession is almost inescapable I think but a few months of rally (more like yo-yo) would set most of us here with a bit better cash flow.

  206. David


    It’s useless to speculate on what “most people” will do, because retail investors make up such a small portion of the daily trading activity. Some say 70% of volume is trading bots. Institutions make up much of the rest. I imagine many funds are selling to meet redemptions at this point, and we will surely hear of some big margined player that went belly-up at some point.

  207. burton

    Good Luck Dave, that path has cost a lot of people a lot of money. Based on Silver miscall and this miscall..hundreds of thousands lost… And while we each make our own trades…if you charge money for expertise…getting at least in the ball park should be a reasonable expectation.

  208. Gary

    You came to the silver trade at the top and used way too much leverage. That is why you lost money.

    I clearly said that anyone taking the QQQ trade should be prepared to hold through extreme volatility and purposely entered a small position in the model portfolio so draw downs would be manageable even if we didn’t get the timing perfect, which would be virtually impossible in this kind of environment.

    You obviously didn’t learn your lesson about leverage from your mistake with silver and are now trying to “make it all back” in one trade.

    If you follow the model portfolio, enter when I do, and exit when I do, you will almost never take any large draw downs and will almost certainly make money.

    Unfortunately you seem incapable of learning from your mistakes. Whose fault is that?

  209. D

    Thanks for the info on option premiums everyone.

    So I need to watch the vega, and based on the comments, if I wanted leverage, I shouldn’t get options and instead should go with a leveraged ETF?

  210. burton

    This is not about what i have made or lost. It is about you taking responsibilty when you make a wrong call. I’ve never seen that happen. You state your position with great authority e.g. “Silver through 50 like a hot knife” within days it went the other way. You called for corrections on this big gold move at about 1620. It quickly shot the other direction. I think you handle your responses confidently but your analysis, especially on the big moves has been just dead wrong.
    I came HERE at the top of silver (around 40. but had been buying physical for years. I will acknowledge the over-leverage comment. It’s true.
    But the bottom line is that the silver call and this call were not good. You know and i know it and anybody reading this knows it. The big move down in silver was missed and this big move was missed. The people here argue that we each make our own trades, and that is true, but there is a certain reliance placed on what you say. I believe that is a reasonable expectation, you proclaim expertise by virtue of the fact that you charge money for the information. I give you props for holding your ground, but the bottom line is i don’t hear much personal responsibility taken when errors are made, and if you can’t call it better than this it isn’t worth selling.

  211. Blindweb

    A 15% move in gold…gold’s got sooo much more to give. I might get out partially before 1750, and then finally (for this leg) before 2000.

    “We didn’t even see this level of panic during the 08 crash.”

    Whether this crisis is smaller or larger than 2008, it’s the fact that it came after only 3 years. Complex systems that can no longer support their level of complexity, seek simplicity…nothing simpler than gold.

  212. burton

    i will say one other thing….I do respect your even tempered response. I perhaps have underestimated your ability to accept criticism and respond well to it.

  213. wmp


    Your analysis reminds me of Eddie Murphy in Trading Places..Christmas eve in the offices of Duke and Duke..deciding when to buy pork bellies. Hope you’re right and thanks for the fun memory!

  214. David


    When you find the blogger with a .1000 batting average, please let me know.

    You pay Gary for a point of view, not for someone to blindly follow. You can follow him in a trade or not, based on your own judgment.

    He’s acknowledged the silver thing many times. In the aftermath of that he said he’d get out early next time, and that’s what he’s done.

  215. Gary

    You seem to think the QQQ trade is a loss. It hasn’t even had time to work yet. How can it be a loss? We haven’t even got the signal to enter the second half of the trade.

    The gold comment is ridiculous. We made a nice profit on the gold trade. That’s all I care about. I am not interested in what happens after I exit. Gold can go to $1800 for all I care.

    The only thing I care about in gold is not getting caught when another parabola collapses. I’ve covered my bases on that by exiting.

    I will only be interested in gold once a correction has run it’s course. The parabolic conditions almost certainly mean a crash is coming. If you want to try and dodge that ball again, be my guest. I learned my lesson with silver.

  216. Farm Girl

    Burton –
    What David said.
    I was out of silver two days before Gary because I’m more conservative. He missed the top by hours.
    I bought NUGT for the gold bounce around $31.50, sold when Gary got cautious at $36.36. Sat in cash until he pulled the stock trigger.
    I bought SPY, not the Q’s, and I went all in. I’m down 7.5%. No big deal. (A) I don’t expect Gary to pick THE bottom, just to pull the trigger around the bottom. I’ll do the rest. (B) I’ll let this trade run a few weeks and see where we are. Got cows and chickens to take care of, so I can walk away for hours or days at a time. I make more money this way and, more important, lose less.

  217. sophia

    Silver is really trading badly….
    Bought silver 40 puts 10 days ago, underlying price ddnt move much but volatility did the job and I have already a nice profit, listening to Gary….

  218. ckpc

    But Burton does indeed have a point.
    There is a difference between “getting out early” and missing the meat of the run, when in fact the “parabolic C wave” is what we’ve been waiting for, and focusing on all along.

    DOW futures down 133 points. Nasdaq futures down 27. Gold up $15.

  219. Gary

    Like I said. I could care less where gold goes at this point. We made a profitable trade and now I’m waiting for the inevitable crash before I will consider re-entering.

    If you want to play chicken with a parabolic move be my guest. I learned my lesson in May. Most apparently did not.

  220. Mark


    To be fair, you have to admit your record has been very bad since the beginning of May.

    AGQ, the miners, now the gold miss. Not saying you don’t have value, but you’re certainly in a slump. I’m sure you wish you would have done better.

    Even if gold sells off from here, it doesn’t make getting out at $1600 a good call. In fact, many people warned you this was about to happen. You were defensive then too.

    You also made fun of Harvey Organ, when he said we would have 2 days of manipulation at OE, and then take back off. He nailed it on the button!

  221. David

    “Missing the meat of the run” applies only to the metal itself. If you were invested in miners, you’ve missed nothing but losses.

    Since Gary made his call, the miners are lower, not higher. So if you followed him into his GDXJ trade, his timing has been quite good.

  222. SF Giants Fan


    Give it a rest. You got the disclaimer on the qqqq trade. The belly aching is getting old.


    Probably shouldn’t have even commented to Burton.

    It’s water under the bridge.

    Just my 2 cents

  223. David

    Anyone who followed Gary on the GDXJ trade (I didn’t) probably made around 20%. That’s better than most hedge funds will do this year.

    Before anyone accuses me of blindly defending the guru, please note that I challenge Gary all the time.

    I have noticed, however, that the Gary-worship and Gary-hate usually tends to peak just before a turn in the market proves him correct.

  224. Gary

    I got you out of stocks. So you missed the entire debacle while everyone else is getting crushed.

    The gold trade was profitable.

    Both mining trades were profitable.

    If you got into silver when we originally did that trade was massively profitable, even after missing the top.

    I expect the QQQ trade will be hugely profitable also by the time we exit.

    You seem to have really high expectations. I’m not sure anyone will be able to produce the kind of perfect returns you are looking for.

  225. Γ‰amonn

    Gary, all I’ve learned from you, and all the others who contribute to this great blog, is worth many $1000’s. Don’t think I could have got a better education. real people who are in the know

  226. Ken

    Look what happened when the 1162 level broke today. I hope everyone enjoyed today’s ride but the crash happend today. We lost 6.66% on the SPX today and will eventually break the March 2009 bottom of 666. We’re on the highway to hell and tomorrow is just another day down that road.

    P.S. I covered everything and am 52% committed to the long side and will buy a little more longs on tomorrow’s open only if futures are blood red like Satan’s eyes!

    Book it!!!

  227. pimaCanyon

    What I am wondering about is this: QE obviously didn’t fix anything. Sovereign debt is out of control, both in Europe and at home. How will another round of QE help that? Why would investors and traders think that another round of QE will help?

    I am thinking that Ben could announce QE III and the markets could respond by giving him the finger and continue crashing.

  228. SW

    Gary, the gold weekly chart looks like an orderly up trend, whereas the silver weekly shows parabolic move. Would like your opinion for educational purpose. Thanks!

  229. trond56

    The miners and silver divergence indicated an impending stock market and base-metal crash, not a gold retreat. (Silver is a base-metal too). So that was a very elementary mistake.

    That divergence is only valid to predict gold in a relatively stable stock market environment.

  230. CMT

    When I first started reading Gary, someone on the blog said “Gary’s almost always right. And almost always early.”

    Once you think about that for a bit, you’ll realize the value of the advice Gary gives.

    Further, this statement rings true: “I have noticed, however, that the Gary-worship and Gary-hate usually tends to peak just before a turn in the market proves him correct.”

  231. Ken

    The market is looking for any reason, any reason at all to rally. Greedy shorts are going to get a 100 handle SPX up day ramed up their @ss by the NY Fed and every other black box algo momo trading hedge fund in the world. If you thought the downdraft over the last week or so was crazy just wait until everything is up 5% – 25% in one day. I plan on “buying the dip and selling rips” until we hit SPX 1295 – 1300 at which point I’m going to short everything with a ticker! A 50% increase in the VIX doesn’t happen everyday and you cannot short into a move that’s already happend. We gap down 30+ handles, close that gap within the first hour of trading, trade around in a 10 handle range until the FOMC until 11:15 AM (PST) and then rip higher and fast than anyone and everyone could imagine. The CNBC mouth breathers are getting Joe 6-Pack out while Da Boys scoop up everything on the cheap. Whether you’re a bull, bear or trader this is the fastest market you’ll see in many years. Take advantage of the movement and don’t be afraid to have your head handed to you!

  232. Dan

    Can someone please clarify something for me with respect to why you would want to go long here. If Bernanke provides hints of further monetary easing tomorrow then the markets will rip higher and the rally will probably last several days. However, if Lord Bernank stays silent the market will probably have a record down day tomorrow.

    Therefore, would it not be prudent to simply wait till Lord Bernank speaks and if his words are favorable then buy into the close, (obviously higher) and hold for the ensuing multi-day rally?

    Seems the risk/reward is not there for buying before he speaks.

  233. Gary

    Bear market rallies tend to last 4-10 weeks not a couple of days. Any purchase in this area is going to ultimately be hugely profitable at the top of the bear market rally no matter how much further the market falls first.

    We are very late in the daily, intermediate, and yearly cycle. That’s why one wants to be buying.

  234. Shalom Bernanke

    Spooz down big after hours, and yet the $USD gets no interest. Could it be that nobody cares, since it’s measured against other equally worthless fiat?

    Miners are a bargain, and rallied the most today when stocks decided to bounce. That said, more downside to come first. As uncomfortable as it is, I’ll continue to add into weakness.

    Sleep tight!

  235. james r

    Maybe we should be looking at the price of oil as to where our next rally will begin.

    We all know QE does not work, so why would another round of QE do the trick?

  236. riley

    I’m new here as trying to learn cycles. I follow a friend on another site that is 71 yrs old and traded gold for 25yrs and is rich doing so. He will tell you right now gold is over bought but has no idea when will correct. He is a buy the dip type with small purchases now becaue we could have 2008-2009 drop again.

    I can tell you after 3 yrs listening to him he would say Gary is a genious, cause he made profit on a gold trade maybe %15-20. Beats the hell out of mutual funds. He would also say cash is a great thing while others are making money if uncertain cause the other half is losing.

    I personally hanging on to GG, Auy, NXG, and AEM cause bought after 2008. Now a core. Trying to learn to trade around core with cycles. If Gary misses some profits, could really care less as long as beat fed rate(what %2). Will continue to follow my elder buddy but he is rich and not trade the daily cycles, so glad found Gary. And after a month know he can change with the tides and stick to his principles. Thanks Gary

  237. St. Deluise

    dan that’s a good point and fair way of looking at it, but i guess my answer would be (as someone who began dipping in today) that i’ve weighed that uncertainty via my minuscule position size.

    i will probably add another small position in the morning. if if takes off in the afternoon i increase my stake much more significantly.

    until the story unfolds i feel there’s in edge in starting early by taking advantage of the abundant amount of fear and greed i’m seeing in the bulls and bears right now.

  238. gold silver troll

    there is no doubt anymore…we were waiting all along for the final parabolic move and ironic part is that it looks like we’ve missed a chunk of the move…oh well..that’s life…no point crying over spilled milk

    hey, atleast we didn’t lose money in the stock market and we made some money on this parabolic move in gold πŸ™‚

    remember to always make your own decisions instead of blaming others

  239. Ken

    Why go long? Because the mouth breathers on CNBC are too calm on air which tells me that the bears are getting set up big-time. Remember that the fewest amount of people make the most amount of money in the shortest period of time. Getting in on today’s close, tomorrow’s open and maybe even Wednesday’s open seems very risky and dangerous at first glance which is why I want in on it!

  240. Mark


    You may be right, but I hope not. Very high hopes for silver. David Morgan just mention $75 for the first time. Not to be taken lightly. James Dines is calling for $300 to $500. Also not to be taken lightly.

    Silver will be the trade of the decade, according to Eric Sprott. And yes, he’s not to be taken lightly either. I wont bother to mention Ted Butler, James Turk, Max Keiser, Andrew Maguire, or Harvey Organ. Well, I guess I just did. Can’t leave out Mike Maloney either.

  241. Gary

    The difference between us is that you are worried about missing a move up while I’m worried about getting caught in the move down.

    Every C-wave is followed by a D-wave. I want to get greedy at the bottom of a D-wave not at the top of a parabolic move.

    When you’ve been around as long as I have you learn these lessons the hard way and if they are painful enough you don’t soon forget them.

    May was pretty painful for me. I’m not going to make that mistake again. I’ll let someone else get caught in the crash and then pick up their shares cheap when they puke them out at the bottom.

    Buy bottoms, sell tops. It’s not important to get the exact top.

    Everyone seems to be getting side tracked by the move. There was a perfectly good reason to exit, and that reason hasn’t changed. It was late in the daily cycle, miners were diverging and now silver is diverging.

    I am becoming more and more convinced this is the final top and once gold starts to crash it is going to get unbelievably ugly.

    Remember most D-waves retrace 50 to 62% of the preceding C-wave. At the current level that would be a move back to $1300-$1400.

    That’s where I want to buy.

  242. Gary

    Silver certainly will be the trade of the decade but the parabola is broken. I want to buy silver at the D-wave bottom, not in the middle of a broken parabola that hasn’t finished correcting.

    Gold’s D-wave will destroy silver. Buy it when no one wants it.

  243. Mark

    I agree a silver will drop some, when gold corrects. In fact, I’m 100% cash for several days, since I sold CEF. I want a shot at PSLV, with a reasonable premium. Uner 15%all of a sudden. 10 sounds really good, if it ever happens. I think I might go “Stone Cold Frozen Turkey”, with those share. 5 years from now, Yachts and cruises.

  244. Moneyman


    You still think that there will be a sell off in gold when Lord Bernanke announce QE3?

    I understand how you are thinking and you might be right..When the stockmarket starts to rally gold will correct..

    But we dont know if it will be a DCL or intermediate low.

    Im still holding my gold long positions but sold half when you did..

    Still long SPX. Think I will add some more tomorrow..4 hours until OMX opens..

    I think Bernanke will do everything to propp upp this market..

  245. jhnewman

    The Fed statement tomorrow comes out at the “old time” of 2:15 Eastern and Bernanke does NOT have a news conference scheduled. This is is the format for 1-day meetings.

    From Bloomberg:

    “Bernanke isn’t scheduled to hold a press conference tomorrow, unlike after the June 21-22 policy meeting. He holds news conferences only after two-day meetings, when the Fed releases updated economic forecasts. Forecasts are next scheduled for release after the Nov. 1-2 gathering. On such days, the Fed releases its announcement at around 12:30 p.m.”

  246. Mark

    Oh yeah, my apologies to Jim Willie, for forgetting to mention his name. Jim is the “King of the Unbelievable Predictions”, and a silver guru from jump street.

  247. Slumdog

    On 1929…
    “Sept. 1929
    “There is no cause to worry. The high tide of prosperity will continue.” Andrew W. Mellon, Secretary of the Treasury” posted here.

    If you look at the chart, we are setting up for a retracement during the month of September, and then the crash month, October, will drive the market down from 10500-700, this month’s low (whatever it actually is) down by 2000 points in October.

    That scenario at this time is now a 70% probability. After the 3rd week in September, we’ll know.

    Those who have studied the 1929 crash year note the major crash of July 1929 and the recovery, and then the smash of October. Nobody I know ever refers to July 1929 save myself.

    So, for those who are longer term players, heads up.

  248. ALEX

    GARY said…
    “Buy bottoms, sell tops. It’s not important to get the exact top. “

    That is really very true in time. In ‘real time’, it just doesnt feel right , but it is correct, and in time it all adds up.

    And SOPHIA!!

    Yes it was you and let me say then, that I am proud of you ( I know the kitchen is burning, and maybe the house tomorrow…but Repair work is on the way! Hang in there πŸ™‚

  249. St. Deluise

    i’m wary of my basing my entire trading contingency plan on some numbnut announcing he’s going to throw more money at the problem, but since i’m doing it anyway and that 2:15 is pretty late in the day, i wouldn’t be half surprised–if it happens–that it is poorly leaked earlier on in the morning.

    definitely going to be on the lookout for anything weird happening premarket.

  250. Gary

    Bernanke already has a history of shock and awe tactic’s. What do you suppose would happen if he decides he’s had enough of this and says I’m going to do a 2 trillion QE3 and put a stop to this right now?

    If a ban on short selling was initiated too we would probably see new highs in a matter of weeks if not days.

  251. Mark

    My prediction, for what it’s worth….

    The Fed launches QE3, in the form and timetable Bill Goss suggested 2months ago.

    The “risk on trade is initiated, and gold is sold off. Silver is dragged down with gold. Stocks rally.

    Soon gold and silver bottom. The current deflation fear is replaced with the more reasonable hyperinflation fear, and silver goes back to kicking golds but, the way it did during previous QEs.

    Silver ends the year, healing the “broken parabala, when it passes $50 forever. When silver reaches $75, we send all the previously mentioned silver gurus, and Gary Savage, invitations to our mansions. Lol.

  252. Gary

    History suggests that it usually takes much longer to heal a broken parabola. Plus if gold enters a true D-wave decline and retraces 50% of the C-wave then silver will continue down into the low $20’s. That kind of beating will take many months if not a couple of years to recover from.

  253. Gary

    Folks it seems like a great many people have got it into their head that one is only allowed to make money in precious metals.

    I don’t care where I make money at. Gold, silver or the stock market it’s all the same to me.

    Right now the gold trade has become too risky for me. Stocks however are moving into a bottom that will lead to a huge rally. I would rather put capital to risk in that market now than the gold market.

    Profits are profits, it doesn’t matter where they come from.

  254. smt_troll

    “I just hope this holds into the open. I’m afraid Ben may come out premarket and announce QE3 and ruin our buying opportunity.”


  255. Hack

    Nothing that Bernanke says tomorrow will make any difference because he will have nothing of value to say. The reason is this crash happened so fast that he hasn’t had the time to formulate a position, he is a careful man. Obama was late making his speech today for a reason, it’s because they do not have a plan. We need to quit relying on a QE3 announcement to get us back into the green. And by the way, asian traders are selling dollars to buy gold.

  256. SF Giants Fan


    Your predicting that QE3 is inmenante, however how can the US fund such an event with the current debt problem. How are they going too spin it.

  257. Slumdog

    For a rational 5 yr and 10 yr perspective, look at those charts here (bottom of page).


    If you see the parabolas and where we are on them, welcome to reality. Those show us a drop to 1600 as retracement is a nothing burger on either chart. We will increase our speed, faster. That’s all that’s happening.

    This is nice news that for years and years, the parabolas continue to form, uninterrupted. The probability is now in the mid 90% that we will see much, much higher gold within the next 2 to 3 years.

    The Great Doubling, 2000, will be a nothing burger. 3000 – 6000 and then irrationality will set in.

    Nothing will stop these, with a 5% risk behind that at this time; they’re moving and we can state fundamental reason after fundamental reason. They’re rising.

  258. jeff

    How about this …The Fed supports and magnifies this current market crash in attempt to destroy the upcoming bear market they see coming, thereby breaking Gary’s cycles πŸ™‚

  259. RJ

    There are a boatload of in the money GLD call options for the August expiration.

    Even OTM August 175’s are pricing at $1. That’s another 5%+ move in under 2 weeks. Insane.

    Those were up 715% today.

    Who the fuck is buying 3500 way OTM near dated GLD call options?

    On the flip side, the ATM 176 GLD August PUT closed at $3.42. $3.42 of time value for 9 trading days? With a volume of 4800 contracts today.

    Nucking futs.

    Is there any way to profit here with complex option strategy? How can you profit on a “reduced volatility” trade?

  260. jeff

    At the same time the Fed is creating a parabolic selloff in the SPY that they hope will take a few years to consolidate; they are manufacturing a gold parabolic breakout that they plan to crash like silver leading to a a few years of precious metal consolidation.

    (I’m not serious at all but I wonder if it could work).

  261. Slumdog

    The safety trade is the USD.

    RMB is 6.443
    Yesterday 6.35
    Last Week 6.29x, the high.

    Some day, the RMB will decouple and we’ll all live happily ever after.

  262. RJ


    Suppose the miners fall along with gold, do you have a stop where you’ll get out or will you continue to buy in all the way down?

    If you have a stop, can you share where it is? e.g. NUGT or GDX.


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