Let’s face it, gold bulls have had it pretty easy the last 2 1/2 years. During that time QE1 and QE2 drove a gigantic rally out of the 2008 eight year cycle low.

Folks, at some point a move like that has to enter a lengthy consolidation.

With quantitative easing coming to an end (and QE3 not politically feasible at the moment), the economy likely rolling over into recession, and the dollar possibly setting up for a powerful rally out of the three year cycle low, I think the next deflationary period is now upon us.

The last two deflationary episodes forced a severe (2008) and a moderate (2010) correction in gold.

I do think demand is strong enough in the gold market that gold should hold most of its gains. However, I suspect it’s going to be a lot harder to make money during the next year and a half as I expect that gold will be locked in a volatile trading range as it consolidates that gargantuan rally.


  1. Gary

    If gold were to correct back to the 200 day moving average (1450ish), I expect the silver parabola will finish collapsing.

  2. Keys

    Not sure about the soft landing for gold…just throwing it out there of course….but the demand from gold if from buy and hold, replace the USD investors, are true buy and holders that are so big that they will not sell even during a massive drawdown, then this gold is like being removed from existence…
    If then the only ones willing to buy or sell are traders, that same support you see now, may not exist once the trade is dead…big hands won’t come back in until their well-timed patience comes in. Once traders turn the trade, then all rules are off, broken gold bubble…blah blah…and gold is taken to the wood chipper.
    That being said down is down…so the above, even if too extreme, is just another thought to why I don’t want to venture back into pm’s until we get a real correction. Corrections are important in bull markets, they test and provide support….right now I have no earthly clue to what that support will be. If gold were surging here it would be one thing, but it seems to be toying with its prey…marginal new highs, teasing recoveries.

    I can’t imagine gold falling like in 08. The only reason gold fell in 08 was due to hedge funds gone wild, being forced to sell the metal due to margin requirements and redemptions. I don’t see that happening now…but a good couple 100 bucks off the metal could be called for.

    These are just thoughts…no predictive power here.

  3. Robert


    The demand for physical gold is exploding in Asia–if they keep on buying and they are not letting up at all,the gold price might just surprise you–

  4. Keys

    Asian gov’s are not stupid…if they know they are the reason that gold is going up, they will stop buying to allow it to go down, so they can buy it cheaper…the only way that support continues is if there is a rival for demand…ie someone else buying it up a la masse that is not willing to trade for it later.

  5. Gary

    Wouldn’t it be nice if gold would just keep going straight up forever?

    Unfortunately that would mean the bull would soon be over.

  6. Gary

    That’s no surprise to anyone. Gold has been discounting that for months.

    The government has never failed to raise the debt ceiling when it threatened to cut off their spending. Once we hit this debt ceiling it will be raised again.

    Gold already knows all this. I’m just saying that sentiment is too bullish. Now it’s time to sit and wait patiently for that sentiment to clear or the dollar to break the May low.

    Either way gold is now in the timing band for a daily cycle correction. Now isn’t the time to step on the gas no matter how hard gold tries to sucker you in. That’s why we use cycles, to tell us when to take our foot off the throttle.

  7. High 5

    Gold is fractionally reserved, from the bullion banks, just like fiat is fractionalized from conventional banks.

    That’s the problem with saying gold is a commodity since commodities are consumed and aren’t subject to fractional reserve banking.

    There is a whole shitload of paper gold floating around with no entity to backstop it in a bank run. Bank runs normally happen in deflationary periods. As soon as a big player can’t get their physical delivery all hell will break loose.

    Good luck buying physical gold after a major non delivery. Also, paper gold like GLD and DGP will become worthless overnight because only the big players have a right to the actual physical. You need 100,000 shares before you can receive delivery through an Approved Participant with GLD.

    The reason BB are shorting gold? Because no central banks will backstop them in a run and they are super fractionalized on gold. They’re just trying to keep the whole shebang from imploding.

    Anyone who doesn’t have a good supply of physical will probably regret it. And I’m not a gold bug. I don’t believe in a gold standard any more than I do fiat since both are totally controlled by governments.

  8. William Wallace


    “Now isn’t the time to step on the gas no matter how hard gold tries to sucker you in.”

    Do you say this before every correction? I have only been with you since May, im not sure but if I remember correctly I think you were calling for a C-wave parabolic leg up right before the May correction, but I know you were saying the saying it right before this last intermediate correction…thanks it helped me sit tight in my short position (although I know you dont recommend shorting) I wanted to thank you anyway πŸ™‚

  9. riley

    I”ve been premium subscriber for about month. Interested in cylces as follow Martin Armstong, love your stuff. But follow another poster on another site that has traded gold for last 25yrs.

    His analysis is simple buy the dips but keep good bit in cash for inevietable 10-20% dips. one reason looking for cycles to avoid dips. He thinks as you thst gold follows QE (nice chart that on stockcharts that shows exactly) and usd sort-of. Also, with this new debt ceiling bill just more of same so eventually QE3.

    So, Gold will conslidate for a few days or weeks until gold miners catch up. His reasoning is miners follow market partially due to general selling and buying but eventually fundementals of producing co”s win out. Producers only, AUY,GG,AEM.

    Not trying to argue as like your style and I sold my futures and can sit on sideline until market proves itself. Still long miners but bought long ago. Just that maybe Price of Gold will stagnate above 1600 until miners catch up.
    First time posted and will keep to minimum from now on. like site Riley

  10. riley

    High 5 like to say that there is a fractional reserve but commodities exchange can at any time if short of physical give cash as exchange. now sounds ominous but not enough gold players now to make dent in cash exchange if everyone took delivery. Non-event until masses understood fiat vs gold/silver/oil/palladium/platinum/diamond/copper—any commodity exchange

  11. Hack

    A correction back to S&P 1250 would be healthy right now in preparation for a bounce in Sept. If we break that then nothing will survive, not even gold…

  12. Bill

    Gary, does your gold sentiment indicator cover WW? Or is it just the US/Europe? Here thinking about China, India, Australia, Japan?

    From the bit I read, Chinese save approx. 20-30% of their incomes, and much of that goes into gold. Based on this my own sense is that China’s sentiment about gold is growing, like an opened ended parabola. The Chinese govm’t is also encouraging people to buy gold. We don’t see this in the US.

    China’s (and India’s) demand for gold could eclipse US sentiment, in both size and velocity. There are 1.3 billion people in China. 1.21 billion in India. Almost 1/2 the world live in these 2 countries, and these 2 countries are creating new and increasing demand for gold.

    I also wonder what Europe is doing – when they sell the Euro, do they buy Swiss Francs? Gold? Not dollars, right? Would love to hear from folks in Europe on this. Esp. what are the Germans doing? Thanks!

  13. Dubbelito

    Hi all, for those of you who wonder why you get a lot of NL hits when googling GLD it’s the abbreviation for the Dutch Guilden, their old currency.


  14. TZ(8155)

    Gold doesn’t look like it’s stopping.

    Still looks like it wants to make a run for it and that the recent action has accomplished the legendary bullish trait of leaving people at the station expecting an pullback and that ‘things are too high’.

  15. TZ(8155)

    If it breaks higher I might try to chase it (with a 1% stop) thinking:

    a) we had a very sharp and short daily cycle low on 7/28

    b) and that the last int low was 7/1

    c) and that we are still heading for a blowoff before things cool down (based on EU still falling apart and the new US recognition that we are a basket case too and in the process of passing a “hard fought” budget/debt-limit which essentially doesn’t even START to do something for 1.5 YEARS and then counts ‘savings’ as spending less than you were going to.)

  16. TZ(8155)

    I’m simply taking the angle of “what if I’m wrong” (about selling earlier today) and what the effect or my response to that will be.

    Just good investing. Always try to look both ways even when you don’t think it can happen.

  17. Brian

    Looks that way. Public opinion is definitely bullish based on sentimentrader.com data, but there is limited participation by investors in the rydex PM assets, also courtesy of Jason Goepfert’s service. A daily cycle correction may be around the corner, but we are moving into seasonal strength here for gold, corrections so far have been mild and as you say, the gold bull has shaken quite a few off its back. Bullish and long above $1,600.

  18. Poly

    Demand for gold is now worldwide. One thing I wont forget from the tech bull (bubble) is that very mature (11 years) bulls don’t sit idle for a long time. I take the standpoint of wanting to be invested and letting my stops get me out as opposed to getting out and hoping we get better entries.

  19. Poly

    Silver is a very volatile and speculative asset, we all know that. I knew any drop would be sudden and massive. When it blew through $42 is was no longer a sustainable path so I got out, that’s why.
    I know what you’re saying and I respect it, but I just don’t think you can compare golds run here with that Silver run. Gold is running on massive soverign fears right here, Silver ran on extreme specualtion, gold right here is not and is still within sustatinable parameters, IMO.

  20. Keys

    Since we are all up way too early..:)


    In terms of your cycle tools, is there a time frame for clarity on this gold issue?

    In terms of targets, I believe you mentioned 1600 for gold, that I would agree for on the bottom end. On the top end, do we have any targets to change our minds again.

  21. Keys

    Generally I don’t feel any different about the PM market right now. The bull seems to be teasing again…interesting to see if theses gains hold, and if miners confirm the move….either way I believe there we be some nice gaps in miners…

    In terms of getting out, I didn’t like to, but there are still too many unresolved issues before I would like to re-enter….don’t care about being right or wrong…peacock feathers where shaved off last time I got burnt! πŸ™‚ I do know that only looking at price action can be very deceptive, and it would seem that this is the only thing positive for gold right now….worse we are not talking parabolic behaviour, we are talking a slow grind in a stretched market…don’t like that either…

  22. Gary

    No target. I just no that it’s starting to get late in the daily cycle. Sentiment is too bullish. Gold is stretched and miners and silver are diverging.

    So I want to see how the next daily cycle correction unfolds before I decide whether I think we are at the beginning of a new intermediate cycle or at the end of a stretched one.

  23. Poly


    Would it be fair to say you’re calling for a B wave here, in absence of a C,D waves, primarily because the 3yr dollar cycle has printed which you require to fuel the C?


  24. TZ(8155)

    CHASED; went back long at 1639 with a 1% (of my money) stop loss. Risky. Looks like the wedge has broken higher after repeated attempts (and getting knocked down).

    Does it hold and continue? I’m betting yes for now.

  25. Gary

    The higher this goes without a correction the more nervous I get. Everyone is convinced that gold can only go up. When everyone is thinking the same thing then no one is thinking.

    I’ll let the 10% position do it’s job but I’m getting more and more nervous as this moves deeper and deeper into the timing band for a correction.

  26. DG

    TZ” Posted yesterday and never heard back from you, so re=posting on the off chance you didn’t see it…

    TZ: I know what you mean about not selling 1/2. I have always been that way myself (to my detriment, I believe) and have been weaning myself off that attitude. Perhaps it works better for you than it has for me. A question, then:

    Do you have a mechanical system for deciding how much to do. That is, if you find yourself at 6 X. If you decide by “feel” then you might as well have decided to do 3 X if the mkt looks iffy as 6 X and, voila, you are at 1/2. If you were looking at something fresh and would do 3 X, and the market haas morphed into a 3 X one from a 6 X one, cutting back just fits the current reality. “Cutting back” is just relative to an arbitrary starting point in the recent past. What am I missing?

  27. ALEX


    Just a thought-

    Is it possible that a ‘correction’ will look different in a parabolic move/ run away move? Perhaps more sideways and not necessarily holding to “STANDARD” rules , like breaking below a trendline or dropping a certain %?

    In T/A, Gold is just now breaking above a sideways correction from May to July (see a 6 month chart), and has a minimum target of $1750, I wont even mention my top target.

    I ask because GOLD is really only about 13% above the 200ma…we used to worry when it was 100%.

  28. Aaron

    Copper, oil and the SnP off thier highs, is a deflationary sign to me. If this continues, gold and silver will correct too, they are lagging because they have the strongest fundamentals. This Dollar rally is just getting started.

  29. Gary

    I haven’t been able to find any instances where the daily cycle correction just drifted sideways.

    Like I said they all close below the 10 DMA and they all break the cycle trend line.

    This is why we use cycles so we can keep a level of sanity during periods when the technicals are telling us “it’s going to the moon” or “it’s the end of the world”.

    Gold is trading inversely to the stock market at the moment. As long as stocks continue down then money is going to flee into the only thing going up. But as I pointed out stocks are getting terribly oversold and are due a bounce soon, even if it’s only a bear flag.

    It’s a pretty rare gold cycle that hasn’t topped by at least day 25. Today is day 21. I expect we are going to get a key reversal some time soon.

  30. Keys

    First thought
    Playing Devil’s advocate

    Is there a possible dcl on july 20th?

    Second thought
    This MAY shape up to being an interesting day…that last surge in metals looks rather sharp…I don’t know, but perhaps we get some real info on this market today if that things decides to reverse…miners will be forced to rally with a big gap up, and gold needs to rally stretched even further.

    Mark my words…..I really have no words…..:) Just observing.

  31. Robert Thrane

    If there was going to be a top in gold, today would be the day. Also most likely this would occur BEFORE the noon debt ceiling vote.

    We’ll see. πŸ™‚

  32. Gary

    Gold is now rising at a 77% clip 17 out of 21 days. It’s stretched 52% above the 75 week moving average.

    That is never sustainable. Folks it’s time to control emotions and think logically. This is not the time to chase.

  33. Michael

    Lots of posts around here hey …

    Miners are down in Europe against backdrop of 1640 today. Not a good sign.

    Miners historic underperformance is due to high starting valuations (EV/EBITDA, P/NAV etc) last few years … that is being worked off now at $1600s vs historic averages. Long thorny discussion getting into valuation, but the rubber band is stretching toward undervaluation … a takeover or two will come eventually and you will have limited window to get into small/mid caps in the sector. Risk:reward mathematics look good – if you’re very roughly right on the eventual magnitude and direction of gold then there will be stocks that do GMCR-type stuff – either long or wrong in risk-controlled fashion.

    Sentiment in spots getting excessive here – e.g. Citi was neutral gold and came out with “Gold – A Spike to $3,800/oz or $5,000/oz”?” Friday. Analysts all behind the curve.

  34. Shalom Bernanke


    Gold does well in deflation, contrary to what most think. 2008 was a unique situation, and more the exception than the rule.

    Silver is an industrial metal as well as real money, so could face some headwinds in deflation, although I’d bet it trades more like gold than copper. We’ll see.

  35. Robert Thrane

    It appears there’s a lot of publicized fear about the markets, as well as a lot of publicized over-exuberance about gold.

    Gold way overbought, markets oversold. I bet we get a bounce in the markets and a decline in gold, and then they both start going down hard together in the coming weeks.

  36. Keys

    For me…I am not chasing! Testing my arguements and my thought process…looking for different signs for the next time.

    Massive gap open like this, I won’t chase into..sell if I had, but not buy!

    Gary you answered my first thought about July 20th being a DCL in your previous comment…so thanks for the cyrstal ball approach.

  37. TZ(8155)

    Increased and moved up stop; now 6x gold futures with a very tight 1% stop loss (on net worth).

    If this doens’t hold I have one more trade anticipated at a slightly lower level.

  38. Aaron

    SB, I have seen gold perform well in deflation, so that is true. If the deflationary pressure is mild, gold holds or at times goes up, its when it becomes somewhat vicious that it get dragged down due to margin selling, as everything starts tanking. Silver is a lot weaker than gold due to its industrial uses/trading. Should be interesting times ahead…

  39. Robert Thrane

    Silver is still close to 4% off it’s highs of last week (that’s from it’s current price of $40.27). This should be telling you something loud and clear!

  40. ALEX

    O.K. Thanks Gary

    Just mentioned it because I have only been with cycles since Aug 2010 ,and wasnt sure if anyone looked back at the 9 month run 2005 to 2006 ESPECIALLY MARCH TO MAY( one can see that it did visually have brief pullbacks, just wasnt sure if they were different (sideways)in cycle analysis ).thx

  41. Shalom Bernanke

    Robert Thrane,

    Could be, but I don’t trade options. Suckers bet that most who trade them don’t understand, just as they’re intended.

    I’ll have to do it the old fashioned way. πŸ™‚

  42. Robert Thrane


    I was being facetious. I smell blood in the water.

    I was trying to communicate the divergence silver is showing from gold. The miners also speak volumes to this.

    Be careful.

  43. Shalom Bernanke


    I hear ya, was just having some fun.

    I’ll just see how much this rally has in it for another day or two, and might even take some profits then if miners don’t gain much ground.

  44. Michael


    so far you have been right on the money with your calls on the miners… I’m with you, still in with stops and watching… my sense is miners are due to outperform ..

  45. Shalom Bernanke


    One catalyst we have to see them outperform is earnings. That’s not why I bought them, but I do like having a potential trigger.

    I still have gold too, but my miners are doing much better since purchase.
    We’ll have some answers over the next 24-48 hours.

  46. wolf33

    One of my explorers. Grande Portege

    In June 2010, Grande Portage (GPTRF:$0.3863,$0.1112,40.42%) entered into an agreement with Quaterra Resources Inc. (QMM:$1.4100,$0.0800,6.01%) to explore the Herbert Glacier gold property. GPG has now fully earned its 65% interest in the property. Grande Portage (GPTRF:$0.3863,$0.1112,40.42%) and Quaterra will form a joint venture for the further exploration and development of the project, with each party bearing their proportionate share of costs. Hit the pay zone!

  47. Brian

    Robert, you seem to have quite strong views on the precious metals sector for someone who has just picked up his first gold of the bull market. Seasoned traders are off climbing rocks and not getting too caught up in the recent surge higher. Be careful.

  48. Shalom Bernanke

    I’ll check in later, as I don’t see any changes to be made other than cancelling my open buy orders a few % below the lows the other day.

    At this point, if prices went low enough to get filled I would no longer be interested in adding.

    Good luck today.

  49. Michael


    we now have a swing low in HUI and the individual miners I follow- GG, AUY, NEM and AEM.. picked up more AEM on the puke a few days ago… time will tell… it is good to have a your voice of reason when things get rough..

  50. rose

    Dear Haggerty,

    HKD on the TSX is double short copper.

    Sorry not to have any other info.

    With kindest regards, Rose

  51. TZ(8155)

    I made three attempts to get in large with small stops as gold dropped.

    Two got stopped out for about 1% loss on each. The third got in around 1638 (dec futures pricing) and looks good.

    I’m holding and now expecting a panic buying scramble higher as the wedge breaks upwards and as people who sold start to realize they need to be long and we aren’t stopping yet. (My opinion, of course. Maybe this rally doesn’t hold like the previous days and we collapse back down again.)

  52. deshy

    Rose: I looked at that yesterday but I noticed the trading volume is VERY low. Is that a problem if you need to get out quickly? Did you find anything else on the TSX? I couldn’t.

  53. ALEX


    I have been seeing that the Miners bottomed in Mid June and ran ( some even 40 – 60%), then they had a healthy correction while gold went up.

    Miners retraced ROUGHLY 50% of that run up and found support on their 50ma…some were stronger.

    Yesterday the MKTS fell, Metals fell , Miners were up…
    now they look to be putting in another leg UP. I used this simple chart to show a possibility


    I Own my own basket of AG, SVM, BAA, UXG, NAK, REE for miners.

  54. Patrick

    Impressive work Alex…you seem to have a good grasp on the price action in the miners. And looking at GDX, the 50% retracement you mention does appear to happen frequently on these legs up. Now I’m considering entering a small GDX position with a stop at the 200dma…

  55. Movax2


    I understand where it is coming from (sentiment, cycles, etc) and that part makes sense, but sometimes pure demand can take over. There is pure demand for more debt. No sentiment indicators are going to change that demand. Unless the leaders are willing to let deflation take hold, they are going to keep paying off the bankers debts with printed money, as well as their own government’s debt. This process seems to be increasingly parabolic, already at the point of no return, not something that can consolidate. POG should continue to reflect that fact. Sharp corrections in gold are and will be the norm, but I don’t think there is much significant downside risk, at least until the mania phase takes hold (maybe starting now) and then the corrections, though maybe scary should be over very quickly.

  56. Adam

    Speaking of stretched beyond its 200 DMA… how about five and ten year bond yields? They’re stretched further below their 200DMA than Gold is stretched above its 200DMA. Given the oversold nature of the market, the stretched McClellan oscillator, being toward the end of a daily cycle (day 32) – it would seem to me to be a low risk play to get into stocks. It seems everyone is bearish on the economy; why not start thinking contrarian?

  57. rose

    Dear deshy and Hagagerty too,

    Further to HKD, the average daily volume of its sister fund HKU (double copper bull) is even lower – in the 13 or 14 thousand range, I think. Well somebody IS buying/selling both, but it would be hard to recommend either with such low traffic, especially in double leveraged funds, which deteriorate like crazy anyway. I do hope this helps.

    With very kindest regards,


  58. Hack

    Exellent action in the miners. I may sell into strength here if my triggers are met: EXK at $11 and SLW at $40….

  59. coolkevs

    From Kevin Depew at Minyanville:
    S&P Daily has recorded a Sequential 13 BUY yesterday. This means look for a 12 day counter rally starting today (ha ha!) to a couple weeks from now. But we are in a 4 month window until the end of September of a MONTHLY SELL setup, so something else to think about.
    Jason Goepfert of sentimentrader also had an interesting stat today:
    This morning was the 2nd time in h istory the S&P futures gapped down at the open after 7 lower closes. The other was 10/10/08, which saw a short-lived 140 point S&P rally – be careful here if you are short!

  60. Slumdog

    Congratulations to Jim Sinclair, the greatest predictor of price within a reasonable time range I have ever witnessed.

    His call, 1650, will be reached within hours.

    Again, congratulations.

    And to those who believed and believe as he does, to you who have been Old Turkey, you too, congratulations!

    Next price? The Great Doubling.
    IMO, 2000 is in the bag.

    Sinclair says that a price above about 1760 means the next price will be 3000 6000 12000 and beyond anything he himself will claim as a price target.

  61. Glenn

    Europeans are piling into gold….banks have serious
    problems in Europe and people are converting to gold and silver. This could be the start of the parabolic move? Time will tell.

  62. Slumdog

    Gary, there are cycles and there are cycles.

    The reality is that the minds of the rich have finally begun to be tweaked towards the PM’s.

    I just experienced an encounter with one of my average rich friends, worth about $3-6 million USD, as in 4 Yuan…joke, and he for the first time, after my years of beating on him unsuccessfully, in a casual conversation asked me what price gold will be at in the near future. Imagine that!! The man who is all in cash says to me, after being so very critical to me about my PM positions, “so, how much?”

    That’s from a guy who turned down at $1000 an offer from me for him to buy 1MM in gold physical, hold it and me guarantee its price by up front partial cash down and a split of the profit from the rise. I figured that would get him into gold; but even that didn’t work for him. Now? He’s asking.

    The cycle in the mind of the rich has turned to discomfort, ill-ease, and soon enough, panic.

    Your backside of the parabola position I continue to believe is incorrect. I’ve stated so repeatedly. You’ve said the circumstances now are not the same as 1980-81. You state the cycles don’t support that.

    Gold at a new high supports my position and at 2000, The Great Doubling, will have confirmed that your view is not big enough.

    It’s not that the dollar is dead. It’s that panic is normal human behavior, and we haven’t had a good panic for a long while.

    We also have Obama the spineless and a Cabinet full of financial men who want to save the banks, the ones that are primary dealers, the financing facilities of the Feds. So, other nations call us parasites and risky, and still the boys in DC go about doing what they’re doing. There’s no choice but to step out of that irrational game. PM’s. Thus 2000 and unfortunately, Weimar thereafter.

  63. Greenspansconscience

    NFP could be a huge reversal day for the markets. Who knows.

    I went against Gary’s recommendation to exit miners and instead set a stop just the 50dma for the HUI. I absolutely did not want to get whipsawed again on what could be an epic run in the HUI.

    Unless we see an major collapse in gold, I expect that 50 dma to hold.

  64. Russell

    You have been right about this gold run and it’s relation to the euro problems. The move does not seem to care about the USdx. Keep posting and if you ever start a blog, please sign me up.

  65. thedocument

    Whether gold continues higher or takes a rest, I expect it to far outperform the SPX in coming months. And if gold continues to rally along with the dollar, we will likely see a crash in the SPX in terms of gold.

  66. Michael

    Hi Doc,

    Nice to see you post here… I am a sub of yours too… that pair call was terrific… I missed the initial entry and now am waiting… thanks for your input..

  67. ...at ease

    SF Giants Fan, Not near an internet to google, can you tell me what the SOS list is that GLD etc appear on and what that indicates? Thank you

  68. manicmonday

    Russel: “Poly…if you ever start a blog, please sign me up.”

    I’ve been asking the very same thing by e-mailing Poly. Still waiting for that Polyblog to pop up πŸ™‚

  69. MarkF

    This is the second time in a row Gary has sold right before a big move up in Miners. Looks like that C-wave parabolic blow off top is coming just as Gary predicted, but without him. And me.

  70. Poly

    Wow really, thanks for the vote.

    OK you got it, send me $497 via Paypal, I will email you just as soon as the site is up. πŸ™‚

  71. Slumdog

    Gary, your short term approach is conservative and responsible. Were I not long, I’d be watching this irrational excess.

    The tag of 1650 will be amazing, simply to vindicate the thinking of Jim Sinclair.

  72. MarkF


    This is the second time in a row you’ve sold the miners into weakness, not strength. The last move up was about 20% I think. I’m confused as to why this might not be the parabolic C-wave move you described. I am a subscriber.

  73. Slumdog

    Sinclair will sell at 1650. He honors his “angels”, points of profit taking.

    There’s a daily NY Pit gap back down to 1635. Today is the breakaway gap. Expect this to be filled within 3 to 5 days.

    My guess? We’ll see 1700 and then a fall back to 1635.

    SI’s performance is disappointing, even though the G/S ratio has improved from 43 to 40.5

  74. Poly

    Gary is right about caution here, being in the timing band to move to a low and considering how far we’ve come. I just don’t want to lose positions though. Caution especially with leverage.

    We should be coming to earth soon you would expect and we should (hopefully) experience some form of a DCL. There is a fear based trade (Doc’s Gold/SPY liking it) on, but they can reverse rather quickly.

    The other scenario is the runaway scenario, which I’ve held a strong probability on since soon after the July 1st move. I have positions to reflect this.

    But a DCL would make me feel so much more comfortable, I think we’re fast approaching that fork in the road on these two scenarios.

  75. deshy

    Poly: That said would you take a small ‘feeler’ position here or just wait for the DCL? I’ll make my own decision but I am just curious as to your risk/reward outlook–it seems to be firing on all cylinders. πŸ™‚

  76. marksomething

    Bill said…

    “Are there any seasoned cycle people on this blog here/now who can explain why gold is going up?”

    I am not seasoned in the cycle theory but as a newbie I can say this(!), I came into the silver run late because my good friend has been a sub here for a while. I bought Silver high and it went higher, then crashed crashed crashed. I bought at the top without having done the research…

    That is what I think is happening here, word of mouth “gold is unstopable”.

    Gold bull sucking people in at the top only to shake them off real soon and hard.

    Ive only just recouped my principle investment from the may silver crash.

  77. Hack

    Obama just spoke and said we need to raise taxes, which means recession. I may buy a position in gold before close…

  78. Silverhound


    Not a seasoned cycle person here but I mentioned this a couple of days back. Pull up a gold chart. If you draw a trendline under the current daily cycle then compare it to the trendline for every other daily cycle going back to the last D wave. There are only two other daily cycles that were this steep. The Feb ’09 top and the Dec ’09 top. Both were long and topped on day 24/25 of their cycles. Both were blowoff intermediate tops. If we continue to run long here we could be in a similar situation.

    Just my take.

  79. Poly

    That’s a difficult call Deshy, it’s a very personal call, so I won’t say either way. At these heights and in the timing band, you would have some significant probability (over 50% I would say) of a $40 draw-down into a DCL. If you enter now, you need to work with that expectation.

    On the positive side, it provides a stake if we do runaway and it gives you a foundation to add from without having to chase the move to hard.

    If you do enter now and get drawn down into a DCL, you could add the 2nd lot at the DCL and you should be in strong status by day 5-8 of the next daily cycle. If that new daily cycle was to fail as Gary believe is possible, you would exit both lots at the DCL pivot, losing $40 on the first and breaking even on the 2nd.

  80. Bill

    Thanks Mark.

    You/Gary/atease are right that the best time to buy is at a cycle bottom.

    Right now I have no position.

    The 1 thing that get’s me about the current 4-5 stated strikes against gold is that, w/my novice eyes, the cycle chart Gary posted still looks like July 1 was an important low.

    I myself don’t get cycles yet. Ugh.

  81. RacerX

    Poly said…
    “Wow really, thanks for the vote.

    OK you got it, send me $497 via Paypal, I will email you just as soon as the site is up. :)”

    Okay Poly. What’s your email? πŸ˜‰

    Joking aside, I concur with selling out of PM positions early. I was selling the miners even before Gary did. The gold trade seems “frothy” to me right now.

  82. Bill

    Thanks Silverhound. Yup, I get that. Thanks for the reminder. Rubber-band theory. It does work.

    Well I missed this, so the best thing is to do something else and wait for the next wave, eh?

  83. ...at ease

    Gary normally calls tops early.
    Patience and timing of cycle bottoms will get you the best profits in quick run ups.
    It is hard to hold your trigger finger, when you see these kind of runups, however these can also fake you out and take you out.

  84. deshy

    Thx Poly–Good advice. I’m not completely out now so wouldn’t chase too hard, but maybe try to boost returns (or start the DCL with my buying)

  85. Greenspansconscience

    I understand Gary’s position on the miners, but selling into weakness with the MA’s so close-by was not something I could get myself to do.

    Anyone investing in the miners should take a look at the historical HUI chart. It looks like an EXG pattern. The volatility in an index like this is insane, even when it is trending up. Your timing has to be pretty much perfect to not suffer a draw down, even if you are right about the longer term trend.

  86. Bill

    Trading-wise, I’m not unhappy because gold is overbought.

    But core-position-wise, I’m very unhappy to not have a core position in this bull market. Will fix at the next cycle low.

  87. ...at ease

    Bill, most of us are out in cash waiting to get the core position on the cycle down. So you are not alone. Once we are at the cycle down, we will be all in again.

  88. marksomething


    Not sure when Gary had called his sell, but I was all crash when the markets opened. Put in a ridiculous high sell order and 75% of my position was gone in 1 second, 7 seconds later the other 25% at an even high price…

    All cash right now waiting on a DCL

  89. Keys

    I frankly have no earthly clue to what will happen in gold….but for us gold bulls we had better hope a severe correction takes place soon…a minor dip won’t do it anymore imo…
    CNBC, BLOGS, etc…all seem to be pointing to gold, even suggesting 20% or more of a person’s portfolio…
    Either we fall now or fall later…we hits levels that should be returned to…the last time I heard about gold this much was when we broke 1000…or when oil was ready to hit 150…or the nasdaq was ready to hit 5000….needless to say these are my concerns….
    So I for those reasons have put old turkey out for a bit…already made quite a bit until April, where I was able to get out in time…this time seems like a bonus. If this buy gold message gets any further drawn, this gold bull is dead…there we be no rescue from the bull.

    That is the type of fire I like to avoid…and happy to be early. Maybe enjoy the rest of the summer, instead of being on edge since April. If we correct, will need to reassess…but everything right now is a pure trade in my eyes…nothing long-term can be looked at.

    In any regard, new highs here is not positive for the gold bull, however positive it is for individual portfolios. Either we correct soon, or even Ben starts buying, and this bull dies..

    Just a scenario of course, and one opinion…Good luck to all! I wish I would have sold today, instead of before, but that’s what happens when you have a paranoid personality. πŸ™‚

  90. Poly


    The cycles are calling for a decent drop into a DCL, they have been very good indicators in the past.
    So I would not be adding here if you already have a position (I worked on the premise above of no position) and want to just goose returns, now is not the time to goose returns and excessive positions could be trimmed here. I’m just saying don’t lose your position in this bull, let it take us where it once to go.

  91. TrendFriend

    Greens…con…science, RE: “Anyone investing in the miners should take a look at the historical HUI chart. It looks like an EXG pattern.”

    Someone please explain to me what an EXG pattern is.

  92. wolf33


    the best core has always been the physical gold and silver. It is like insurance and NOT FOR SAIL. But buried. Like a time capsule 4 now.

    Also a separate account for miners.

  93. basil


    that is because as long as one talks about should and could and will, one always remains right. Welcome to the world of forecasting. It could go up or might go down…

  94. MrMiyagi

    SPY setting up for a BB crash day if it closes 126.60$-ish or lower.
    At this point, may not mean much and Obama signing the papers may or may not do anything.

  95. burtoncarrier

    I agree/understand of course that no one can see the future. HOWEVER, there are varying OPINIONS and of course, we wish to be allied with the right opinions/forecasts, that is when we make money. When we GUESS properly with the tools at our disposal. Answer to what do i see NOW: Missed opportunity.

  96. ...at ease

    Bill, Another way to think about it, is yes, there is a run up right now, and you are not enjoying those gains, however…. what if you were in and then overnight the markets changed and opened drastically lower and then continued. That was the scenario that we encountered in May with Silver run. So most of us are satisfied with the meat of the fish and not worried about getting the head. Once you buy cycle low, you will then be in on those highs on the way back up. So yes, we all have the same worries, it’s about keeping our heads and emotions in check and follow the trade plan with proper risk/reward ratio controls.

  97. ...at ease

    Bill, Another way to think about it, is yes, there is a run up right now, and you are not enjoying those gains, however…. what if you were in and then overnight the markets changed and opened drastically lower and then continued. That was the scenario that we encountered in May with Silver run. So most of us are satisfied with the meat of the fish and not worried about getting the head. Once you buy cycle low, you will then be in on those highs on the way back up. So yes, we all have the same worries, it’s about keeping our heads and emotions in check and follow the trade plan with proper risk/reward ratio controls.

  98. burtoncarrier

    High 5. I have glasses and i do see. The opinion of the blog was consolidation. That didn’t happen. I am not blaming. I make my own trades. just stating the obvious. A good opportunity has been missed.

  99. ...at ease

    Burtoncarrier, Missed Opportunities… are simply regrets. No worries, the market will correct and we will once again be back at these prices going higher.

  100. High 5


    You’re missing millions of opportunities both to make and lose money. It doesn’t pay to spend too much time looking in the rear view mirror while driving.

  101. burtoncarrier

    High 5. I respectfully disagree. Too not “look in the rearview mirror” is just a cliche. We DO look. we correct based on the past and on experience. When we get chinked at financially because of missed opportunity, it makes a difference in how we live. You can choose to look straight ahead, i don’t.

  102. Abdullah

    New subscriber here.

    Enjoy reading the blog and Gary’s SMT letter. Is this only Gold/Silver/mining stock discussion/letter/portfolio???
    It would be great if the SMT discusses stock/ETF picks. FWIW

  103. wolf33

    Does not Matter about BO now. Payroll bad and Katy Bar the Door.

    Funds will be funneled to Big Banks to try and stop carnage!

  104. burtoncarrier

    I have no personal gripe with you. I think the call was missed. I based my play on the opinion of blog. LET ME BE CLEAR, I am not blaming anyone! I am not pleased, of course, by the gain since i am short. I missed the call. I will use my gut more than i have in past. Listening to others has not played well for me. I was clobbered by silver. And this feels like a loss though it is no where near what happened in May. Allow me my temporary whine, I’ll give you the same gift.

  105. MrMiyagi

    I had mentioned at the time maybe SLW on the way up. At this time though it is quite choppy.
    For all I know, tomorrow SPX could be up 15 points. It’s not the first time I see “Wall Street Down on Economic Fears” one day and up the next day.

  106. Slumdog

    Le Fou asks, “
    Why do any of us have any stake in vindicating the thinking of Jim Sinclair?”

    Why do you give a hoot about Thomas Jefferson? No reason.

    Move along.

    My dear friend, there’s no reason to recognize anyone except the person in the mirror.

    That truth identified, there is a small matter of the number larger than “1”.

    Sinclair has stated boldly his positions which happen to be on the topic of gold, a matter of some importance here.

    Many here look for profound thinkers who are able with reasonable accuracy to deduce the probable outcome of human reaction the evolving economic stresses they/we experience.

    Why do we do that? I am sure you have a reason. Please share.

    Sinclair has been called a permabull, which is bull-shit.

    He has been quite accurate in terms of price and timing, albeit wrong for those on a shorter time scale.

    Now, given that you so enjoy debate, might be a minor problem for you.

    As for me, I think the man has done something amazing. He has argued successfully to me as a reader that I should continue along with my belief that first gold would achieve 1000 and then what I saw as The Great Doubling, 2000, which then was above what he thought, and still is so.

    I don’t think much of Dines or Russell nor the many others, on the ability to see the economic evolutionary pattern. Sinclair saw it now for the past 7 years that I’ve read his postings. He saw it very much the way I did and do.

    So, I guess I’m just congratulating the guy in the mirror, and being vain in so doing.

    A better question for you might have been, “So, what does Sinclair think, now?”

    Go ahead. Email and ask him.

  107. Billy

    Seems like it is going to take a rally in the stock market to take down gold. The rising dollar is not having any impact at the moment. If you look at a 5 min chart of GLD and SPX today they have gone in almost exactly the opposite direction all day.

  108. Russell

    I have bought some gld puts. I believe there will be a DCL. I’m not betting the kid’s tuition savings,but I may be contributing to the put sellers favorite charity.

  109. Slumdog

    Poly, can I subscribe to the Poly Light version? I’d like to send in only $49.75, including handling, for you to send your newsletter with only 1 out of every 10 words… just every 10th word. If that won’t work for me, I’ll ask for the Poly Half & Half version.

    That NY GC Pit gap is not to be ignored. In NY SI, there’s no daily gap. So, there’s less pressure to stop the run up than there would be if both PM’s gapped.

  110. pimaCanyon

    Those of you who are upset because Gary got out too early: Please note that Gary is NOT all cash. He still has a small position. Small, true, but it’s still a position and continues to make money as gold goes up. So if you’re a sub and you’re all cash, I would ask, “why?”

  111. Michael

    10-year and 30-year bonds have crashed with a capital C last 3 days. Deflationary hurricane or country risk premium or both.

    To those with complaints against selling early – you are harboring illusions – one can spend forever looking for someone that’s 90% right and by that point the person’s edge will be arbitraged away. Just take it as fact that anyone and everyone in the trading, newsletter, advisory business is going to be right 40-70% of the time with their calls and move on from that to maximizing the winners. Jim Sinclair Jam Shminkler was saying “silver is just being silver” and it’s a dip so to speak all the way through silver’s descent through the high 40s and into the 30s. Win some lose some like everyone else.

  112. Felix


    All cash because G told us to go to cash on the blog in realtime. When he altered the portfolio next day, he decided differently.

  113. Gary

    I was early in Nov. of 09 also.

    Like I said pick your poison. One can either be too early or too late but one will almost never time a perfect top in real time.

    We were late in May. All the reasons for trimming positions are still there. The miners and silver are still diverging. After today sentiment will be through the roof. The stretch just gets larger and larger and we keep getting deeper and deeper in the daily cycle.

    At this rate gold is going to burn out in a flash. If this is going to continue we need to get some kind of serious shakeout.

  114. Poly

    Gary is right, we are FAST approaching a daily cycle top and this run right this hour has the hallmarks off a top. I just took some profits on DITM options.

    If we don’t get the top here/today/tomorrow, then the runaway move is on the table and we could expect 5-30 trading days of firework, followed by one monster drop.

  115. DP

    Gary wrote:

    “Gold is now rising at a 77% clip 17 out of 21 days.”

    Can someone decipher that for me please?

  116. Farm Girl

    NEW YORK (TheStreet ) — Gold prices were hitting record highs Tuesday as the Bank of Korea announced it bought gold for the first time since 1998, reminding investors of gold’s large safe haven appeal as global economies slow.

  117. Gary

    I’ve found for most people it’s almost as painful to miss a move than it is to get caught in a crash even when you logically know the move isn’t sustainable.

    Usually when they want it this bad it’s a good idea to give it to them.

    This is not what we want to see. We want a slow grind higher with plenty of down days.

  118. samppa_nyman

    So there went 1650! Boy do I wish I was on the bull from that July low…
    Now a measly position on ZSL, almost guaranteed to burn my fingers on that, damnit.

  119. Rob L.

    I’m feeling the same way right now as I felt the night I saw silver go crazy in AH a few days before the big drop in May.

    That night I said “oh my God” out loud, no one else was in the room with me. I just said it again when gold was above +$30 for the day a few minutes ago.

  120. Alex in Montana

    Jackson Hole,WY – August 26-28,2011

    Last year Bernanke telegraphed QE 2at this meeting. Three Scenarios for this year:

    1) He announces (QE 3) which may be why gold is doing so well.

    2) He does not do anything (read Felix Zulauf, Marc Faber etal who believe the Fed will only do QE3 on a reported quarterly decline in GDP and/or the stock market being off a minimum 20% or more).

    3) He does a half baked QE3 or just says all options are open.

    In any case, if gold is beginning to discount QE 3 then logic dictates you will want to be out of gold prior to the meeting as the announcement is already in the price.

    If Bernanke does nothing watch for a pretty good correction in gold.

    Bottom line: Gold move will be over before the meeting.

  121. grimweasel

    I think traders etc are targeting 1700 bucks for Gold by the end of the week.

    Gary, would you buy a few puts here with a strike price of 1600? We have covered warrants over here in the UK that can be useful as insurance and knowing your max up front loss. I’m not a fan of options per se but this is insane and I think the trip back down could be profitable to at least 1400?

  122. Avann

    Can someone answer please …
    low volume on ETF commodities …
    is that really anything to worry about?
    Since the ETF is directly tied to the value of the commodity … even on low volume would it not still be easy to liquidate at close to the BID?
    For example right now I’m looking at HKD and although there are only 100 shares BID there are over 10,000 BID – 1 penny.
    And it’s been like that pretty much all day … even though only 9000 shares have traded all day …

  123. Bill

    Intra-day, GDX’s price has made 3 attempts to break above 59, but could not. 3 attempts. Yet gold plows higher.

  124. Gary

    This kind of move should have triggered a 5%+ rally in miners. So far they haven’t been able to regain the 10 DMA.

    Keep your emotions in check people. This is not the time to mortgage the house and buy gold. When everyone is on the same side of the boat it’s usually time to go to the other side for a while.

    We are going to have to see a serious correction if this is going to continue. Wait for that correction.

  125. Russell

    Ft Knox has 147 million Troy ounces of gold according to Wikipedia???
    Why don’t we just sell that for 2.4 trillion and make a down payment on our debt.

  126. Bill

    Good advice.

    Just had another earthquake. 3rd one in 4 days. So long world!

    Time for an early morning ride before Japan slips into the sea …

  127. Elaine

    Darn, just refinanced an hour ago and bought gold at $1655.

    Just kidding, but it sure hurts to have closed out all my positions yesterday. πŸ™

  128. Gary

    We are getting to the stage were everything gets thrown out the window. Well except gold. But once that stage is over money will come out of gold like air out of a busted balloon.

    Be cautious here.

  129. Keys

    It is only a matter of time before this goes 08 on us…market first, metals resist, then off to the wood chipper….bzzzzt there goes 3 years of investment down the drain…why risk that? Then the saving grace of the US comes back, TLT suggest a very interesting story!…we are in the change up period…dollar on, everything else to the wood chipper….

  130. marksomething

    im all cash, considering a small position in a bear etf for a dcl.

    if wrong i lose VERY little. if correct, then a lil padding helps for the ride back up or at least the trade fees.

  131. Slumdog

    GC: After the breakaway gap from today’s NY trading, we are witnessing in the night session the set up for the NY daily exhaustion gap.


    Finally, SI moves. Now 40.79. This too is setting up for its breakaway gap, tomorrow in the NY Pit session.

    This translates to a close at the high tomorrow, and then after that, we are on Everest without oxygen.

    If you’re in the orgy, enjoy the next 20 hours. After that, it’s time to leave even if the party is continuing.

  132. Elaine

    And, had a fair amount of cash. I followed you in late. As usual you were right about not being able to buy at the bottom. I didn’t start chasing, but I didn’t get in early, either.

  133. Gary

    This is not how runaway moves act.

    Runaway moves grind slowly higher day after day interspersed with frequent down days and occasional measured corrections to temper sentiment.

    This is an emotional response triggered by the collapse of the stock market. Emotional moves are almost always wrong.

    I expect we will get a violent bear market rally in stocks once the March bottom is breached, and that will trigger the daily cycle correction in gold.

    At that point we will reevaluate and decide whether or not we want to be heavily invested in the sector.

  134. wallofworry

    Wow, what a day!
    I closed out my GDX and GDXJ on Friday. Small gain, nothing to write home about.
    Kept all my GLD, though. Nice call on that move Gary.
    Bought some more NGDAF today at the low end. Earnings report comes out Thursday just after the market opens, if they make their numbers of beat them I stand to make a quick buck on that one. If not… well… I’ve got another 6 years to sit on those warrants, so I’m not worried.
    Royalty and streaming companies like RGLD and Sandstorm Gold are looking like a much safer way to play this gold bull run and make some big $$.

  135. Slumdog

    $20,000 gold and the game’s even steven.

    China holds its paper. They love to burn money in celebration. Here’s their chance. New jobs at the Govt Printing Office to make the stuff the Chinese will burn.

    Happy Fun Day, China.

    Again, Congratulations to Jim Sinclair. That’s the bravest, gutsy’est public position I’ve ever seen anyone take and see reality come to greet.

    Yes, this is a blow off top. But let’s look at it from a bigger parabolic point of view.

    The obvious opportunity is to financially ruin those rushing in. But we’re hearing SOS on new highs being reported here. So, the fools have broken the SOS defenses. Now we are in sudden death playoff time.

    We know there are MANY who want in on the gold game, my friend included.

    So, what if the SOS fails and the shorts get scared? Is that possible? Are the banks able to borrow at zero and keep shorting all the way up?

    I think so. After the FedRes and Treasury dishonesty starting in 2008, handing out free money to short the rising gold and silver markets is a nothing burger by the FedRes and Treasury.

    So, we will see a drop that will in seconds kill ’em all. But first, a few more days of the tragic sense of victory before the Star War Federation Troopers and their machines appear again.

    Get ready to hedge and leave the rest for the pigs and for whatever deity you think best.

  136. Elaine

    I have to say, baring my soul here, that I have lost a lot of confidence since April in myself. I was up substantially and gave back most of my profit. I am not down, since last fall, but I am very uncertain.

    I don’t have time to study the markets as intensely the members here and so, I lack confidence and clarity.

  137. MrMiyagi

    Great move up on PMs.
    As was the case in late April, I am seeing a lot of euphoric sentiment about prices being unstoppable and climbing to the stratosphere on forums and blogs.
    Understandably, the situation today is not like the one in the spring however, please keep your wits about yourself.
    Like Gary said, moves like these are not sustainable, at a point, lock in your gains or minimize exposure.

    Just sayin’.

  138. gold silver troll

    after seeing how the silver parabola crashed, I’m happy to take profits here in gold and go to cash…

    gold is going parabolic and sentiment is a little out of control..it is going to crash to the 1300/1400s..sure it might go up for a week or two or even a month, but I will buy it back in the 1300s/1400s or after a crash and after no one wants any part of gold πŸ™‚

    good luck to all

  139. Hack

    A day like today you just have to sit back and watch it all go by. I know quite a few traders that were buying into the market long this morning thinking that “it can’t go any lower than this”. A fool and his money are soon parted…

  140. Poly

    Gary, SPY daily cycle failed today on day 32.

    So we either get our SPY DCL very soon and fairly early in the timing band, or we continue much lower, which at these levels brings in potential crash warnings.

  141. Cory

    Bought IWM at the close now that it has continued it’s intermediate cycle. Expecting the next one to be extremely left translated. Largest position still EUO. My small DUST got spanked today. Missed out on huge moves in all my silver/silver miners. Oh well. Playing the reversion to the mean game now before everything deflates.

  142. William Wallace


    Today I did that all day long trading gold futures…bought when I was scared to death, sold when I was ecstatic…Thats how you know your going to make the right move πŸ™‚ I like that about you Gary, your not only a learned investor/trader but you also have a good understanding of the human condition.

  143. Poly

    Sorry, technically that would be the daily and the IT cycle failed today!

    We may be looking at rephrasing that June IT low, otherwise we ain’t see ugly yet.

  144. Troy


    The SPY has been trading after hours on decent volume at the March low.

    I am with Gary…I think the SPY officially takes out the March low soon. Possibly as early as tomorrow and rallies hard out of that low.

  145. Adam

    Gary, you’re not convinced that July 28th was a daily cycle low? It broke a trendline. If you’re expecting the 3 year cycle low is still ahead than that interpretation makes perfect sense.

  146. Gary

    I think the market is probably pricing in a negative employment number. Once we get it the market should rally hard.

    I’m still operating under the assumption that the June rally was manufactured and should be ignored. That puts us on week 20 of the current intermediate cycle.

  147. Gary

    We clearly do not have a daily cycle low in gold yet.

    We desperately need a sharp correction or this run will be over quickly.

    I realize that this kind of move feels good, but this is not how we want gold to rally.

    We wanted to creep higher with plenty of down days to temper sentiment.

  148. aklaunch

    I am speechless after todays action…… Gold could go to the moon, but unfortunately not with me. It always happens like this. Great big peak before the fall. I just read a report saying that the bank of Korea has been buying gold for the last couple of months. I think it was released around the end of the day?

    May you live in interesting times.

  149. Poly


    I buy that, otherwise it sure makes it difficult to mark up πŸ™‚

    You’re right, jobs Friday could be a great turning point. Will be interesting to see how strong that new IT cycle is.

  150. Cory

    Weekly swing low in the dollar, left translated intermediate cycle in stocks, euphoria in precious metals, it’s all setting up for a 4 (3.25-3.5) year decline. The miners unfortunately have been the most confusing of them all, even though I know they rallied right before the 08 top.

  151. Poly

    @ aklaunch,

    If this is the great big peak before the fall, you could easily expect $1,800-$1,900 gold in short order. We’re some 13% above the July lows. Big gold peaks can run 30-35%!

  152. Billy

    Poly, seems like the most logical phasing is that we are in week 20 of an IC that began back in March. Otherwise yes this could get real ugly as we are only on week 7 if the low in early June was the end of an IC

  153. Gary

    Unlikely. Don’t underestimate the rubber band theory. The further this stretches the more violent the correction is going to be.

    The severe divergence by mining stocks is suggesting this isn’t going to be pretty.

    I saw the same thing in energy stocks in 2008. It wasn’t pretty.

  154. DG

    I expect to be buying into a sharp gap down tomorrow, if we get it. Quality names only. If you buy and we bounce place a break-even stop. These things can go on for a few days. You don’t want to be long at the close unless we have had a decent reversal. Look for a big stock that gapped badly as some fund puked up its shares (look at NLY a few days ago). ETF’s a great as not all their components are going to go broke this week!

  155. wmp


    The 2008 pullback resulted in a 40% price drop over an 8 month period..surely that’s not what you expect?
    Also, how broke can the silver parabola get? Down to the January breakout? The breakout of last August? Can you give us a perspective?

  156. Gary

    Unless you are just buying for a day trade I would wait until we see a large BoW print before venturing into the stock market.

  157. grimweasel

    Looks like I was a day too early selling my leveraged Gold ETF this morning. How come all the action seems to be in the US Session? Is it only the US buying gold?

  158. Mikey


    Couldn’t this be the long-awaited C-wave top we’ve been looking for? Which would imply that any sell-off will be a D-wave.

    (Sorry if you already answered this one.)

  159. Gary

    As I’ve said several dozen times this will boil down to the dollar.

    Either way I expect a regression to the mean trade on both gold and stocks soon. Stocks are severely overdone on the downside and gold is severely overbought on the upside.

    If there is one thing I really don’t like to see, it’s a 2% up day on the 21st day of a daily cycle.

  160. Shalom Bernanke

    “As I’ve said several dozen times this will boil down to the dollar.”

    It looks to me the dollar isn’t doing anything. It’s a no play, and not stretched either direction like stocks or metal.

  161. Hack

    Today I felt like shorting the market and buying gold so I will do the opposite…S&P 1250 is a clear buy signal…

  162. Mr. T

    Gary, I’m using 20,-2,2 for the bollinger bands, but it looks like a BB crash with SPY portending another retrace?

  163. Poly

    SB you’re right IMO, this is not a dollar liquidity C wave type of action. Looking for a dollar collapse to fuel a gold run simply will not happen here.

    It’s a pure safe haven play, as long as that trade is in play, gold and the dollar will keep soaring, throw away your technicals.

    In 2008 gold got caught down in the deleveraging wave, all assets were sold on margin calls and gold got caught. With this flight to safety, the boys are prepared and gold is finding its place along with the run to treasuries, Swiss, treasuries etc. Obviously we will have pullbacks, but one should not be surprised with gold running. Tell it to the $3T of Italian and Spanish paper holders, I say they’re a little worried about now.

  164. Mr. T

    Points in regards to the dollar and gold I agree with, although it just supports Gary’s rubber-band theory, and a possible parabola collapse. Too many people are getting in on this trade… Watch for the shoe-shine boy to suggest gold now… I’m waiting for it, and will employ tight stops, and frankly short-term trade it to manage risk tightly while it goes up, expecting a crash…

    Although, a nice write-up on a currency crises was done by QB capital redistro’ed by zerohedge


    The gold-run up is a risk-on way of getting out of currencies without running to the dollar. With Italy and Spain on the wings, when the fat lady sings, the euro bond holders will likely get a haircut or they will crash the euro. Personally I hope for a haircut (more likely in the euro than the US) which would be good for the euro but I don’t think they will take that medicine.

  165. Gary

    Safe haven? Absolutely ridiculous.

    The stock market is discounting a recession. Recessions are deflationary.

    Jewelry is 54% of demand in the gold market. In a recession half of the demand for gold is going to collapse.

    You are kidding yourself if you think gold is rising as a safe haven. Gold is rising because it is the only thing going up. If the stock market truly is discounting a recession then there is no fundamental reason backing the gold rally.

    I would be very careful trying to rationalize why gold is making emotional moves. I saw this very thing happen at the top of the oil bubble.

  166. Gary

    Don’t get me wrong I don’t think gold is a bubble.

    I do however think we need a stronger foundation for this rally than stocks are going down so gold should go up.

    That being said, there are some interesting things unfolding in the dollar index.

    I will cover it in tonight’s report.

  167. Felix


    Just a reminder that you said to go to cash rather urgently during the day on the blog. The next day when you changed the portfolio you left in 10%.

    Some of us had taken your advice and had already sold out.

  168. wallofworry

    It’s starting to look like central bank buying combined with increasing purchases of bullion in China and India will more than compensate for any decline in gold for jewelry.

  169. Robert

    Gary ,

    Gold is going up because
    These three factors are:plain and simple–

    (1.) Sovereign debt woes out of the Eurozone
    (2.) Raging inflation across China and other parts of Asia
    (3.) Anemic economic growth in the US guaranteeing accomodative monetary policy for the foreseeable future

  170. Bill

    Gary, is your 54% gold jewelry a current stat? I don’t know the stat myself, and in the past jewelry was the bulk of the buying, hence seasonality – but 6 mos ago or earlier I distinctly remember reading on many gold bug sites that gold investing had taken the lead over jewelry, so 54% isn’t current I think. Gold investing has eclipsed jewelry. So if this is the case, what Poly is saying about Safe Haven buying is correct, IMHO.

    Maybe not in the US, but out here in Asia, which is 1/2 the world, they are buying as safe haven.

  171. Poly

    “Safe haven? Absolutely ridiculous.”

    Gary, that’s some statement to cover this action, must be mom, pop, TZ8014 and myself doing all the speculating here.

    But then when your whole analysis is so dollar index centric, outliers like this become almost unexplainable.

  172. Gary

    Sovereign debt woes are meaningless to gold.

    China is raising rates and draining liquidity to fight inflation. Not to mention that if the rest of the world goes into recession China will to.

    It’s not politically feasible yet for the Fed to run QE3.

  173. Jason

    I believe Gold is a safe haven from dollar inflation. Aside that, it is just another asset like equities.

    When the Fed inflates the money supply in response to recession, the first place the money goes is equities and capital investments. To the extent that inflation has proven a failure to recover the economy (and stocks), that money has only one place left to go: PMs.

    I think the next time deflation threatens the market, gold will show even more resilience than in 2008.

  174. Poly

    You’re absolutely right about discounting a recession. You’re right they are deflationary. But jewelery demand from a recession will drop gold? Come on!

    Guess what a recession here really means. It’s a MASSIVE drag on sovereign revenue at a time when there is zero room to move.

    With the western world running at yearly budget deficits in the order of 7-10% and sky rocket debt to GDP’s, it does not take Einstein to work out that many major sovereigns are going to see one mother of all runs on their paper. TARP will look like my child’s weekend pocket money. It’s already clearly happening, in a few years these signs of the past few months will be referenced as many of the signs.

  175. Gary

    I’m saying gold is going up because everyone is panicking out of the stock market. That’s not a sustainable move because the stock market is due to bottom soon.

    And if this were to turn into a climax selling event then gold will eventually get caught along with everything else.

    I want to see a real fundamental driver for this other than stocks are going down.

    If the dollar index is collapsing then yes we have a fundamental driver to send gold much much higher.

    We still need some kind of sharp correction though for this to continue.

  176. Poly

    Yes we need a correction to keep it sustained, today hopefully provided the top we needed.

    I’m really dumbfounded by “Sovereign debt woes are meaningless to gold.”

    That is insane. There can be no default of the magnitudes of Italy and Spain, just not possible, but the market will dictate it. It will mean only one outcome, a massive multi-trillion dollar ECB intervention.

    You should be open to the possibility that your beloved C Wave will be euro/demand driven and save the monster finale C wave for the next 3yr dollar low in 2014.

    Got to run, catch up with it later. πŸ™‚

  177. Poly


    No way, it’s all good. A healthy debate always keeps one sharper.

    Plus I doubt I want to cross Gary, he could lift, clean and snap me.

  178. diana

    My mother used to say to me, “Don’t be dumb,” or “Stop being ridiculous.” It made me feel stupid.

    How about we say, “In my (strong) opinion…” or “I (really) think this time…”? Then nobody feels attacked about their opinion πŸ˜‰

  179. William Wallace

    Poly & Gary,

    I got news for you both, you both are dead wrong about why gold is going up…gold is going up because of all the new rappers entering the hip hop industry…ugh how could ya not know that…yall better recognize!

  180. Keys

    I like it better when Gary calls people dipshits…

    Nothing wrong with Poly making a debate either…that’s what we are here for…Nothing wrong with Gary’s response too..let’s not get too PC here.

    Interesting days ahead! Dipshits away!

  181. TZ(8155)

    I’m 5x gold futures (from my comments about buying back earlier today.) Two stop outs in the process of reloading though. -2% net worth loss on those (recovered with afternoon gains however).

    I’m also 1x silver futures cause they looked good on a breakout pattern and I saw a good stop point. Silver looks ready to break above its daily uptrend channel line around 41.50 and resume going forward. Someone else posts that article at king world news suggesting another silver squeeze. I’ll take it πŸ™‚

    Stops both my positions are about 1% net worth.

    I think we go higher into the end of week and potentially continue going up strong for another few weeks into a crazy peak. If wrong I’ll just get stopped out.

    Worldwide recognition is setting in and today was a recognition day. Lots of people are out in disbelief and waiting for a pullback. I suspect the market won’t oblige just yet.

  182. TZ(8155)

    We broke out of that wedge higher which is an unusual event. In doing so they usually result in an explosive move up which is what we saw and what I suspect will continue.

    If the wedge was a halfway point from the start end of june then we could go up to $1750.

    I’m not getting crazy and I’m not holding out for it, but I’m just saying.

    I think it is chase time and unfortunately plenty of the people on this blog are in that camp and ‘waiting for a pullback’. I was there last fall.

    There are trillions and trillions of fake/fiat/paper/bogus/BK/ and worthless assets floating around the world that are getting dumped. People are waking up. They are now starting to dump them for the real stuff. And the best real stuff in the world is gold and silver.

  183. TZ(8155)

    If there are any pullbacks overnight I don’t think gold (dec/continuous contract) will go below 1640. I don’t think silver will go below 40.30.

    And I think we will be up and higher tomorrow.

  184. TZ(8155)

    Before anybody get’s rabidly bullish on my account remember:
    1) I could be wrong
    2) I have stops if so.
    3) I am trading 24hr futures that get me out almost any time (instead of trading stuff like GLD which locks you in 2/3 of the day)

    Clearly today was a sharp move up and frequently those drift down to hurt anybody who buys late. Maybe. Maybe not. I’ve posted my thoughts on price on the previous post. But as always I have stops and am willing to take them if wrong.

  185. Keys

    One small note about oil in 08 to add to the report. I remember oil trading needed to be halted since it soared $10 in one day..even before noon if I remember..oil oil oil was all over the place…stories about people opening wine bottles in celebration…and then the collapse came…and it came hard 145 to 90 fast…and then it kept going..then the bears got into it and the stories reveresed…the same stories that were used to push oil to hmmm 200-300 were used to bring it back down to insane levels.

    If my memory serves me right…alright so i guess I will hold off on the 150% leverage in weekly slv calls for now.

  186. TZ(8155)

    Somebody posted this a zerohedge:


    That large H&S pattern just brokedown today. I, for one, will not be betting on a huge stock rally from here. Things getting bad.

  187. Γ‰amonn

    WW, what kind of leverage is involved in trading gold futures? What would be the basic differences (apart from 24 hour trading) between trading with gold futures, and trading with GLD options? Thanks…

  188. Gary

    The ones today were about 40′.

    In the summer here in Vegas we have to go early and stick to the shady cliffs. Usually we’re done by 10:00 am.

  189. William Wallace


    Yeah I remember you mentioning your home by 10 because of the heat…I wentt to Vegas once, spent alot of my time there in the range shooting guns…you can carry over there without a permit right?

  190. Γ‰amonn

    I hope Toby enjoyed his day out. Do you leave some water and food for him while you are climbing? Or maybe he has his own concierge…

  191. Rob L


    I couldn’t even imagine living in the desert during the summer.

    Is the mall a popular hangout for locals this time of year?

  192. Slumdog

    Internal, same direction DSI patterns fail.

    I know you don’t get what I’m saying, but let’s look at what’s happening in the DJIA.

    March was the low; April surged ahead. May was an inside month.
    That’s the setup for a continuation pattern which will fail.

    The drop will be below the low of the setup month. The drop length will be 1X the high-low value.

    Thus, we have seen no confirmed decline until 11550 is passed.

    When that happens, the next number will be 10150, or effectively, 10000, a nice magnetic round number.

    As soon as 11550 is passed, that the direction of this move in the US equity market.

    This trade has about a 90% probability.

    This assumes that May had a lower high and a higher low than did April. I can’t see it that clearly on the charts I use. But if so, 10000-10150 is the target range over the next few months.

    Will that help gold and silver? Dunno. But I think there’s gonna be a lotta wailing going on as the DJIA is about to give up 10% to the chart monkeys.

  193. Slumdog

    Ritchie Russell on the direction of the PM’s.

    “I’ve studied bull and bear markets for over half a century. In my experience, great extended bull markets, such as the current ten-year bull market in gold, don’t die with a wheeze and a whimper. They die amid excitement, torrid speculation and finally the wholesale entrance of the retail public. I’ve yet to see any of those characteristics in the current gold bull market. Therefore, I’m trusting history, and I’m sitting (in) the gold bull market.

    My impression is that individual retail buyers from all over the world are beginning to accumulate gold in small quantities, regardless of the price of gold. Thus there is subtle pressure to push gold higher, even regardless of its official Comex price. Thus, we may be seeing just the edge, the very beginning, of retail interest in gold as a safe-haven currency. Slowly, the retail public is once again accepting gold as real money (sorry, Ben Bernanke, who recently denied that gold is money).

    Wait, does it make sense for the Dow to sink while gold moves higher? Under one scenario it does. Here’s the scenario. Bernanke continues to stimulate, but the newest stimulation (like the old ones) don’t work, and the declining stock market is already discounting Bernanke’s continuing failure.

    But gold is rising on the tail of the latest Bernanke quantitative easing or whatever you want to call it. Of course, the other fire under gold is the stalemate in the US efforts to solve the boost in the national debt (monster stalemate) and the potential decline in the US’s credit rating. As if that was not enough, Europe is having its chronic problems with Italy, Spain, Portugal and Ireland, none of which are even close to being solvent.

    Silver! — Silver (recently) broke out above both its 50-day and 200-day moving averages, and its MACD has turned bullish.

    Bull markets have a tendency to carry all the troops along with it, and the bull market in precious metals is not about to ignore silver. Thus, all those who got frightened or disgusted with silver and sold out — are now looking at the chart and licking their wounds.”

  194. RJ


    Anyone holding the Gold miner “JAG”? Or, has anyone been an investor in the past?

    If so, how strongly do you recommend (or not)? Do they have solid management? Good track record, etc?


  195. DG

    Gary—you wrote:”Unless you are just buying for a day trade I would wait until we see a large BoW print before venturing into the stock market.”

    Maybe a day trade maybe more. I’d like to snag something that gets a margin call or drops a ton like in the Flash Crash. Look at NLY a few days ago to see what I mean. If i get one of those I may just hold it.

    Re Poly: I agree with him. If a dollar collapse would spur gold buying why couldn’t a Spain/Italy/Europe collapse? And if gold is going up “only” because everything else is going down, then if Italy and Spain collapse LOTS of things will go down and gold will go way up. It’s not like if all of Europe buys gold a dollar rally will prevent it from going up. Maybe it won’t go “parabolic” (funny how often that word is being thrown around), but who cares? Higher is higher to me. Do you think if the euro implodes gold won’t go up? Where the heck will Europeans put their money? GOLD and the dollar.

  196. RJ

    Sorry I didn’t post the update sooner, but the COTS timer over the weekend DID NOT go bearish on Gold…

    It missed his signal line by a whisker…go figure.

    If the Large Specs get any more bullish this week (through today) for sure his signal will go bearish on the open monday.

    Take it with a grain of salt, just another information source….


    Looks like he’s got some work to do on S&P as the signal has been bullish for 4 weeks now….

    Note to self…When Gary, COTS Timer and Veronica all go to gold bullish signals (July 5th), bet the farm, place deep stops and don’t look back…

  197. jeff

    If Euro collapses than both USD and gold relative to Euro will rally. And for gold to go parobolic relative to the USD, there needs to be another factor (I believe Gary says USD needs to break the May lows).

    If you are convinced of a Euro collapse or weakness, you may want to short the Euro and use the funds to go long gold instead of using USD funds to go long.

  198. Γ‰amonn

    86d4life, smart trade IMO. I’m thinking about it myself. I want to see how the US Dollar index behaves this Friday on the employment report

  199. WalterW


    > Safe haven? Absolutely ridiculous.
    > […]
    > Jewelry is 54% of demand in the gold market.
    > In a recession half of the demand for gold
    > is going to collapse.
    > […]
    > I do however think we need a stronger
    > foundation for this rally than stocks
    > are going down so gold should go up.

    Those three points you made don’t hold water, imho. Taken together, that is. Since if all were valid, it would imply that jewelry demand is at least half of that strong foundation, while safe haven buying is almost no part of such a foundation. It seems to me that borders on the bizarre. Are you suggesting something like half of this gold bull market up to $1650 is due to jewelry demand? Since when have jewelry shops been spreading like wildfire during this bull? Has anybody noticed any relatives or friends buying six times as much genuine gold jewelry as they did in 2001?

    Sure, jewelry is part of the demand for gold, and that part might even collapse in a recession. But that is not going to cut the price of gold in half, nor even by a quarter. Or perhaps in an ordinary recesssion it would, but not in an oversaturated-debt driven, sovereign balance sheet recession like we’re in today, which comes around litterally once in a human lifetime – currently some eighty years. In these circumstances, I’d say there will be safe haven buying – and lots of it. Now, I could be wrong and so could you, but explicitly ruling out safe haven buying doesn’t make sense. Neither -indeed, none- of us have been in this particular kind of prolonged financial crisis before.

    You mentioned the US can never default on its debt because it can print its own money. Technically that’s true of course, but it isn’t about formal default. It’s about confidence in a sovereign’s currency. If tomorrow the US printed 100 gazillion dollars and declared all its debt payed, confidence in both the USD and US would collapse without any prior formal default required. So it just isn’t written in stone the US will never +effectively+ default.

    That applies even more so to Europe. Every single one of the Euro-countries can even go formally bankrupt since they cannot print their own currency at will. Like Poly noticed: go talk to the Spanish or Italians and tell them there is no sovereign default risk and gold is not a safe haven to them. They’ll laugh you out of the room.

    Indeed, a serious case can be made that precisely because of the different sovereign default situation in Europe -making the euro more vulnerable than the dollar- gold and the dollar will BOTH go up in a world wide recession in which the euro would crash due to sovereign defaults. (Since by definition the euro has to crash against something, and that something which Europeans are going to run to isn’t likely going to be the currency of that other equally insolvent but merely holding out somewhat longer sovereign, the US.)

    Mind you, I’m not saying gold and the dollar WILL go up together. But effectively ruling out that possibility like you’re doing, seems to me to be short-sighted and missing the point of what could be unfolding in Europe. Gold is not ONLY about the dollar. There’s more to it.

    So, I fully second Poly’s remarks (plus TZ’s at 3:21).

  200. Gary

    Prices are set at the margin. If 54% of the demand for gold is removed because a recession severely limits demand for jewelry it will most certainly effect price. It did during the last reccesion.

    Certainly I think gold can rise along with a rising dollar but only if the dollar is rising because the Euro is dropping. If the dollar is rising because deflation is clamping down on the world then gold is going to take a hit.

    I believe we are on the edge of another severe deflationary event. I would be nervous about getting aggressively long anything during another severe deflationary event.

    So I would prefer we see the dollar declining before I jump in with both feet.

  201. Gary

    FWIW the number of hits to the site are the largest all month. Actually the only period that has been larger was during the crash in May.

    Usually when a spike like this occurs a turn is near. Since we obviously aren’t at a bottom I have to assume the turn will be corrective.

  202. SF Giants Fan


    Good report but

    Unless we are at the end of run on gold, I don’t think it is an apples to apples comparison showing the divergence of at end of the run on oil. Hopefully there is some more juice left in gold.

    Longer term question

    Will the model portfolio participate in stocks/ETF when stocks hit there 4 year low sometime next year?

  203. WalterW

    Seems to me the combination of severe deflation and European sovereign default risk will make the euro drop vs both the dollar and gold.

    After that I’d say the same severe deflation will make the dollar drop vs gold.

    What I worry about is a mild, slow and ultimately contained deflation hitting gold. Gold isn’t primarily an inflation hedge, it’s a crisis hedge.

  204. MrMiyagi

    Gold is more oversold than silver and when it starts to decline, it will take silver down further than itself, percentage-wise.
    I’m basing this opinion on recent silver volatility vis-a-vis periodic gold declines.
    I’ll see tomorrow, I might initiate a SLV put, something small as I’m too busy with renovations to keep an eye on it.

  205. Mark

    The jewelry demand is as much effected by the weather in India, as it is by the economy. They buy metals at the end of the harvest season. This was a good year!!!

    When they sell the crops, they buy Jewelry. In any economy. Period.

  206. Keys

    Well it seems gold is set to go higher. Everybody is on the trade…the long gld/short euro is a Gartman idea..don’t disagree.

    My issue is the vortex effect…A US deflationary event becomes a vortex event…the world becomes squeezed, and everything falls…gold goes up because everyone is convinced it is a currency…then people take profits, and then more…and then the vortex consumes gold too..

    When people freak out, they don’t think buy gold, they think cash under the mattress…the fear trade will not work, since the public is not educated in this manner….the strong buy in US bonds suggests a strong trend back to “business as usual”.

    Gold is on the verge of going parabolic btw, not there now, but a couple more nut case days like today, with the public frothing at the bit, we are back in that zone of nutcase. This is not a fear trade, this is a greed trade right now.

    The more I hear of positive stuff for gold, the more I hear the same old story to justify a parabolic move. So many get stuck on price action and then justify it with whatever nonsense is out there. Still waiting for the GS call of oil to 300 to get there.

    Right now the vortex is taking place, already sucking down everything…bond market confirming the move, not even caring about potential downgrades…that is a strong move! More so the TLT outperformed gold today…but nobody is talking about that…AND I HATE BONDS both during inflation and deflation, they suck as an investment. Just an observational tool.

    Gold seems to be the new oil…it is the for sure thing…I only see what I see. I have been old turkey hard core for several years, but the objective of old turkey(buy and hold) is to hold until the events tell otherwise…

    I try to ignore price action as much as possible. But the risk reward has turned, gold is no longer an investment, it is now a speculative investment…no different than trading options…the gains have not been tested, they have not kept the general public out, and worse Jim Cramer is all over it!

    I classify Gold right now as a high risk trade….potential great gains, but massive risk potential..

    Good luck trading! I think I am going into beer mode until things resolve themselves…without a correction I won’t touch gold again…too dangerous. Preserve my gains, and wait for another long position to present, which I think will be in gold or oil or maybe both, once the vortex finishes.

    But who knows, cash right now…enjoying my 0.0000000001% return.:)

  207. Mark

    1 more thing. Did anyone consider that the mining strikes are the reason metals are rising, but the miners aren’t?

    Don’t forget the new additional demand Andrew Maguire and James Dines talked about, coming out of the Asian Exchange.

  208. Keys

    I remember the China demand in 08 for oil too…with 12% annual growth oil only had to go up…

    More of the same stories coming out…really bizarre how similar these stories are btw. Almost a cut and paste with Gold substituted for oil.

    Only greed right now…people will get caught in this…some will make plenty more during this ride up, but most will get caught with their pants down, and have to explain what the definition of is “is”.

  209. High 5

    54 percent of gold demand is for jewelry? Nonsense. Your confusing percentage of new supply with percentage of stocks (supply).

    Gold isn’t consumed like oil or pork bellys.

  210. Elaine

    Whod’a thunk it – looks like Gary is right

    I found this info at wikipedia under consumption (about half way down the page)


    The consumption of gold produced in the world is about 50% in jewelry, 40% in investments, and 10% in industry.

    and similar information at


    Quick facts about the U.S. jewelry market:

    More than 80 percent of gold in the U.S. is used to make jewelry.
    U.S. gold jewelry sales were an estimated $19 billion in 2006, accounting for 31 percent of the $62 billion U.S. jewelry market.

  211. youks

    Oh my god I am one of those who exited early and seeing the action lately I so want to jump back in, at least just for a few days. THIS IS DRIVING ME CRAZY.

    I’m no subscriber but I hope Gary is seriously right with his call for a major correction sooner rather than later, and we don’t get left staring at this rocket to 1800+ without a major correction. What if the next major correction is not going to be in the 1400s or even the 1500s.. but in the 1700s? 1800s? The only thing standing in gold’s way it seems is a major financial crisis like in 2008, which probably isn’t going to happen anytime soon…

    Sitting on the sidelines watching the gold bull do its thing and waiting is harder than selling at a profit or a loss on days like these.

  212. Bill


    Could be.

    Remember that Japan, HK and PRC (China) just added their gold ETF’s in the last 6-12 months … I am wondering but couldn’t tell when the Wiki page was last updated. It had jewelry as of 2010, which is before these ETF’s existed. Dubai also has a gold ETF if I recall correctly.

    Anyways, jewelry is still big, that’s for sure.

  213. Slumdog

    There’s a sense of malease in the western public. They butchery in Syria; the exposure of the Arab mind pouring out of Libya and the surrounds; the vituperation of the Israeli’s, the opportunistic, mercantilist silence of the Chinese and the blockage of UN sanctions by Russia protecting Syria all cause all those in the democratic world to be aghast at the behaviors of the powerful countries which are self-charged with the moral values of human socio-groups.

    Who wants to own anything when it is colored by the self absorption of their local democratic nation-state?

    Stand with gold. Stand with silver. There’s so repeatedly nothing else to do to claim any moral ground.

    It’s amazing that metals, worthless bauble piles, are perceived as rescue from the political insanity of the time.

  214. Bill

    Another thing about jewelry buying, as most know, it’s mostly in India, for their festivals and weddings – and it’s seasonal – between Nov and Jan I think it is. August is typically a VERY slow month for gold, in terms of jewelry. So I think this month’s rise has nothing to do with jewelry, and is more about speculation. If that’s why you all are saying then I’ve caught up w/ya. πŸ˜‰

  215. Bill

    My 3rd and last comment. πŸ˜‰

    Gold is only up 2% so far this week (2 days). Not too big of a deal.

    And, if I had subscribed 1 month earlier, I’d be on this boat w/a partial position. Right now I’m out.

    Also I think that Gary’s really got this gold thing dialed in. And I think he’s correctly applying the lessons from silver to gold.

    I’m just saying, speaking for myself as a new subscriber, that I think he’s doing a great job, and long term this is the place to be.

  216. Elaine

    From the World Gold Council, probably a bit more current and credible…


    Global gold demand in the first quarter of 2011 totalled 981.3 tonnes, up 11% year-on-year from 881.0 tonnes in the first quarter of 2010. In value terms, this translated to US$43.7bn, compared with US$31.4bn in the first quarter of 2010, an increase of almost 40%. This was largely attributable to a widespread rise in demand for bars and coins, supported by an improvement in jewellery demand in a number of key markets.

    Jewellery demand in the first quarter of 2011 registered a gain of 7% from year earlier levels of 521.3 tonnes to reach 556.9 tonnes.

  217. Elaine

    Jeff, yeah, it must be one of those nights. Everyone ran out to buy some gold jewelry and drove the price up again


  218. Bill

    Elaine, you should be Director of the Library of Congress or something! World Gold Council is the right place to look. I stand corrected then! Also notice that ETF’s had a net outflow of gold in FY11 Q1.

  219. Europe

    Out of Europe: Spain and Italy the ten years were up yesterday to over 6%, which brings the problem, that Italy cannot participate in the ESFS. Or the other countries have to support Italy on that. And tere are not many countries which like to do that.
    Italy lending at 3,5 tot Greece and self borrowing at 6,5 is not sustainable.

  220. Bill

    Europe, do folks in Europe worry about the Euro? And if so, do they think about selling it and buying something else, like the Swiss Franc, or the Jpn Yen, or Gold, or what? Thanks much.

  221. MarkF

    Again, how come this isn’t the parabolic C-wave Gary was excited about, but changed his mind as the train leaves the station? Add up the moves, and a 30% to 60% run up in many gold stocks isn’t bad. Too bad I sold my positions.

  222. Poly

    It’s not a C wave because it’s not being driven by a collapsing dollar into a 3rd low. At least not yet πŸ™‚

    This will go down as a C wave when all is said, with or without the dollar.

  223. Sasa


    for general public, i dont think anyone realises that there could anything be wrong with euro. Euro is just euro, money in the wallet, we’ll continue to pay with it, little problems will be sorted out by financial gurus which are working ‘hard’ right now, etc.

    There’s this feel of resignation on general economic situation though. Many companies going belly up, etc. But it’s just like.. the thing to say like “ah, it’s all going to hell, isnt it? All the managers stealing and all the companies failing”. But i dont think anyone actually realizes implications of “all going to hell”.

    So, from the middle class around me, i dont see any gold buying. And to buy any other currency as a protection is very far from people’s minds. Many still have vivid memories of their venture into “investing” by buying china mutual funds at the end of 2008.

    It will take TV news of ‘dire inflation’ probably for people to start looking for solutions. Until then we just discuss how beer was 0.5eur 10 years ago, and now it’s 2.5 – but nobody makes a connection to value of currency. Never.

    Personally though i can say that in dec. 2008 i bought physical gold, primarily to get money out of banks cause of systematic risk. Didnt think of it too much as earning lots on it. Just to sleep tight with no worries.

    I think one big thing has to seriously fail, which cant be saved and bailed out, before it will click to general public.

  224. deshy

    Poly:I believe the last gold IT cycle has been marked up 2 ways. One suggests a near end while the other just we have just started the beginning of a new one. Clearly these have different implications for the DCL and/or inter decline. Any thoughts which make more sense?

  225. Poly

    Deshy, only July 1st makes sense to me, it has far more of the puzzle pieces intact then the other two options. We also have the May drop as a 3rd unlikely option.

  226. Gary

    This is the parabola but it’s late in the daily cycle and the miners aren’t participating. If this has 5 or 10 more weeks to go we need a sharp correction to reset sentiment before another leg up.

  227. High 5

    In Q1 2011, gold supply declined by 4% year-on-year to 872.2 tonnes from 912.1 tonnes in the first quarter of 2010. This was despite an increase in mine production of 44 tonnes year-on-year, a growth rate of 7% from year earlier levels, and negligible net producer de-hedging. The decline in total supply was due to recycled gold, which was down 6% on year-earlier levels to 347.5 tonnes from 369.3 tonnes in the first quarter of 2010 and a sharp increase in net purchasing by the official sector.

    The above is from The World Gold Council. So the roughly fifty percent used for jewelry is a percentage of NEW SUPPLY which includes recycling of old jewelry. It doesn’t include the roughly 165,000 tones of total supply.

    So jewelry use per year is roughly 1.25 percent of total supply. The rest is used, for the most part, as wealth storage (reserve). When you also consider the fact that most jewelry is used as wealth storage, in the third world at least, this percentage is reduced to near zero.

    So the idea that the rise in the price of gold is due to jewelry use is complete hogwash.

  228. Gary

    I never said the rise was due to jewerly demand. I said 54% of demand comes from jewerly and that will take a big hit during a recession.

  229. Greenspansconscience

    Put me in the camp of this move being a realization event. In other words, a critical mass of investors has realized what the endgame is, and it sure as hell is not US treasuries.

    I was actually surprised we didnt get this kind of move in gold in 2008 after the Fed and the US govt backstopped and guaranteed the entire financial system ( and arguablely for the entire globe through swap lines). Nothing moves in a straight line I suppose. Fiat currency is absolutely toast, of this I am 200% certain. Bernanke will definitle destroy the USD. He has no other choice because of the backstops.

    I would also argue that capital controls are far closer to being implemented than most think.

    Could we have a 2006 type spike and then long consolidation? Perhaps, but I would be surprised.

  230. High 5

    54 percent of demand FOR NEW SUPPLY comes from jewelry. This means less than one percent of total demand is for jewelry, each year. This means jewelry demand is insignificant in the whole scheme of things, recession or boom.

  231. High 5

    This is the main thing that is difficult to understand about gold. It has the highest stock to flow ratio of any element humans use and store.

    When the price of gold rises the demand goes up and supply is reduced. That is one of the reasons it is the supreme store of wealth.

  232. Poly


    I like your post. 2008 was not a sovereign/debt issue and it took everybody by surprise. The deleveraging was across the board, it was a liquidation event. The great recession has crippled all sovereigns ability and has required record low rates and printing. This is fueling the bull like nothing else.

    I love your reference to 2006, it’s a model to follow here, IMO.

  233. ALEX

    G-Morning Gary

    I did some research and think I may have found something interesting.

    last wk end I was thinking GOLD may have just done a “sideways consolidation”- a “running correction” and then a move up would continue…so I asked you yesterday about this, your reply was at 6.10 a.m.

    I haven’t been able to find any instances where the daily cycle correction just drifted sideways.

    Like I said they all close below the 10 DMA and they all break the cycle trend line.”

    but I think I found in the 2006 run that it did not violate the 10sma or 10Ema for 34 days.


    I know its too dangerous to jump in late risk/reward wise…

    but maybe get in on any touch of the 10sma? That HUGE 1 day reversal on APRIL 22 was it at that time.

  234. Gold Lion

    I personally think we in the beginning stages of the mania stage for precious metals. The public is just now starting to talk about gold. From the 2008 lows to now the miners are just starting to get back to old highs, not there yet. The deal is that the gold market in tiny and the mad rush to get in is going to drive it much much higher. And yes, nothing goes straight up. There will be pull backs but they’ll be used to get in by those that missed getting in earlier. JMHO

  235. High 5

    The 2008 deflation was caused by a private debt crisis because everything but the kitchen sink had to be sold off to cover obligations.

    Sovereign debt crisis are different in that things don’t need to be sold. Did you notice Greece selling any islands or the US selling any military bases?

    The sovereigns just print up more fiat to cover their obligations which will fuel the fire beneath PM.

  236. High 5

    Because of its scarcity platinum has been suggested by some as a new monetary metal.  But in the event that flow was to stop then stocks of platinum would be exhausted in a matter of months.  In those circumstances the value of platinum would skyrocket.  That makes platinum far too volatile for use as money.  Platinum is a precious metal, it can never be a monetary metal.

    If the flow of copper were to stop, then above ground available stock would be exhausted in around 27 days.

    The first and absolutely essential function of money is that it must be a store of stable value over time.

    When there is only a small stock of a commodity compared to flow, then the value of that commodity can fluctuate enormously.  A new large mine would increase the flow and drop the value of the commodity.  A sudden closing of a large mine would increase the value dramatically.  Such volatility in supply would cause great instability in the value of any commodity with a small above ground stock.

    It is ironic that some people believe gold is money because of its scarceness.   In fact, gold is money because there is so much of it… relative to flow.  Because of its high stock to flow ratio gold holds its value with great stability.

    An ounce of gold would buy a great toga in Roman times, and will still buy a great suit in the 21st century.  What this means is that because gold and silver have been successfully used as money for so long, it is now almost impossible to imagine how anything else could ever succeed as money.

    Even if a new commodity appeared that satisfied the many functions and requirements of money, it still would not be able to achieve the high stock to flow ratio necessary for real stability of value over time.

    It is the high stock to flow ratio of gold, higher than anything else, that ensures that gold holds its stable value over the longest period of time.  That is why gold will always be the very best money.

    All of the above was stolen from timesofgold.com

  237. ALEX


    Thats a real nice close up .

    Your chart shows about $1800, and if you look at mine…each little square is $100 , and it also tops at $1800.


    If you look at my 1st chart , the one with Gold above the 10sma for 34 days ,it shows down days as it went along…so even if today was down, I would be watching the 10sma for a clue.

  238. burton

    gold goes up $40 and thats not a missed call? No mention of it….just waiting for a dip in the midst of monster moves. It’s been real. real disappointing.

  239. Gary

    I got you in at 1511 and you should still be in with a 10% position if you are following the model portfolio.

    I’m starting to get real tired of this Monday morning quarterbacking.

    Your trending on thin ice people.

  240. pimaCanyon

    what wolf said!

    in at 1511 and still in! What’s the problem folks? If you don’t like the allocation percentages use your own damn allocation percentages!

  241. Rob L


    I believe we will have a severe IT correction soon, perhaps ending up below the 150 DMA. You will be proven correct.

    Give it a bit more time…then be pissed off at the haters.

  242. burton

    I’m sure your a good man. And, opinions are just what they are. everybody’s got one. It hasn’t been good for me, but i know a lot of people here really love you and the advice. Best of luck.

  243. marksomething

    if anyone missed a call it is with the traders pushing the buttons to make the trade, not Gary.

    look on the mirror and you’ll see who the blame lies with.

  244. burton

    I’m sure your a good man. And we all know about opinions, they are what they are, everybody’s got one, etc. A lot of the subscribers love the blog, It hasn’t been good for me. I wish you the best of luck.

  245. High 5


    Gary didn’t call for anyone to go massively short just to sell and go to the sidelines for awhile, a good call with the information and probabilities at the time.

    Gold hasn’t moved that much since those calls. Just step back and look at the big picture here. We are guaranteed to have a pull back and when we do you will be afraid to buy and for good reasons too!

  246. pimaCanyon


    I don’t understand why it hasn’t been good for you. If you got in at 1511 and got MOSTLY out even $40 ago (that would be around 1630), that’s an 8 percent move in a few weeks. And you’d still be in the game if you’re following Gary’s portfolio. Maybe it’s a smaller allocation than you’d like, but you are still making money as gold goes up.

    So why hasn’t this been good to you?

  247. JaketheFake

    >>I’m starting to get real tired of this Monday morning quarterbacking.

    Your trending on thin ice people<<

    Unfortunately, it goes with the territory. People get very emotional around making and losing money.

  248. Glenn

    Please ignore negative comments…we value your ongoing advice and analysis…that doesn’t mean we follow your every recommendation. Don’t get sensitive…or feel responsible for our decisions…its not worth the heartburn…keep up the good work…anxious to hear your latest analysis of golds latest moves

  249. Shalom Bernanke

    Gary is correct more often than not, and will remain my cycles guy.

    It’s natural to feel disappointment when one gets caught or misses a move, but a guy like Gary has already taught most here far more than the subscription cost. For example, he has not shorted metals and is actually still long albeit not long enough for some subs.

    I hope the other subs don’t shoot me here, but I think it adds too much stress for Gary to suggest how much size traders should take in positions. Everybody has different levels of risk tolerance, account sizes, etc.

    Further, every single trader misses at times. Never seen one that didn’t. Look at golden boy John Paulson’s results this year.

  250. basil

    Gary, if you claim to have special skills you also need to take the heat when you seem to be wrong. The same applies to your followers. That is what it means to be a good sports. I don’t understand why there is outrage every time.

  251. Avann

    Still holding 10% and not whining …

    Also thanks to Doc for his call on Oil and Copper and all is well with me.

    Thanks Gary and Doc.

  252. CMT

    SB said “Gary is correct more often than not, and will remain my cycles guy.

    It’s natural to feel disappointment when one gets caught or misses a move, but a guy like Gary has already taught most here far more than the subscription cost. For example, he has not shorted metals and is actually still long albeit not long enough for some subs.

    I hope the other subs don’t shoot me here, but I think it adds too much stress for Gary to suggest how much size traders should take in positions. Everybody has different levels of risk tolerance, account sizes, etc.

    Further, every single trader misses at times. Never seen one that didn’t. Look at golden boy John Paulson’s results this year. “


  253. Europe

    Bill asked:
    Europe, do folks in Europe worry about the Euro? And if so, do they think about selling it and buying something else, like the Swiss Franc, or the Jpn Yen, or Gold, or what? Thanks much

    No they don’t worry about the euro. Only international companies do a littleand of course the traders in euro.
    People are worried about the constant aid which is necessary for Greece and now perhaps also for italy.
    People are getting into Dutch bonds which are beside the German ondes the safe havens.

  254. High 5

    How long will the Global Monetary Collapse take?  It will last for as long as it takes for the buyers of sovereign debt to stop turning up at the auctions… when they have finally come to the understanding that they are never going to get their money back.

    The US has not paid back a penny of its debt for just over 50 years… no country pays back sovereign debt.  They just pay an ever increasing amount of interest on an ever growing pile of debt which is denominated in a ‘value’ that is ever diminishing.  Like all frauds it continues until it doesn’t.

    When it finally dawns on the investors who are still buying sovereign debt that they have been gypped, that they have always been and always will be gypped, then the jig is up.  Sovereign debt will never be paid off, it is not designed to be paid off.  Eventually it will collapse because of this, a fact that is well known and understood.  It is just that everyone thinks that it will be someone else left holding the empty bag… just like Madoff’s victims did.

    Don’t hold your breath.  An awful lot more ever diminishing in value ‘money’ has to be poured down the government drain before the paper money game comes to an end.

    The US default of 1971 will be repeated all over the world.  Probably Europe will go first, but only because the US is engineering it that way, not because their currency is weaker than the US$.  The US is acting like a fat bastard on a lifeboat who is busy throwing all the women and children overboard in an effort to save himself.

    It is not only demeaning, it is utterly pointless as when they go, they will all go together.  The difference will be days or weeks, at most a couple of months.  It will take one major sovereign default and finally the bond bunnies will wake up to their fate.  They will scatter faster than the US can point the finger elsewhere.

    Above is from timesofgold.com

    I like the way this guy writes. Almost as good as Gary.

  255. Brian

    An interesting factoid from John Hussman: In the rare instances when 1) The rate of inflation has been higher than 6 months earlier, 2) Treasury bond yields have been lower than 6 months earlier, 3) the NAPM Purchasing Managers Index has been below 50, and 4) the Gold/XAU ratio has been above 4.0, then the XAU has soared at a rate of 123.63% annualized. In contrast, when none of these have been true, the XAU has plunged at a rate of -53.21% annualized.

  256. Rob L

    samppa_nyman ,

    Go look at some of Alex’s charts in this comment area over the past couple of days – you’ll find your answer there.

  257. jabalong

    We’re not always going to get the call right or the peak timing. In the end of the day, it’s all about getting enough profits and staying out of trouble. I’ve done very well following Gary and am content to take a chill pill at the moment. Money will be made, it’s all good.

  258. Unknown

    GLD is doing just fine IMHO….moved up stops and Gary you just keep doing what you do best….sitting tight till you suggest otherwise

  259. TommyD

    Plastics are the wave of the future.

    It’s not TBT I’ll tell you that!

    It feels good to be in all cash, my account up 28.7% for the year.

    Thank you Gary.

    Folks, I would be up more but I didn’t listen to Gary on TBT, shorting treasuries. And, another time I shorted real estate via RSR. Both times losses…

    I am using this break to help a farmer down the road keeping his goats inside the fence area. Getting exercise and blood flowing.

    I can’t tell lies with a straight face,means I can’t be a politician, so, I best continue to follow Gary.

    Peace all

  260. ALEX


    glad U asked or I would have forgotten to post-

    I sold REE 2day and added to my current SVM position. Good earnings report yesterday on SVM

  261. High 5

    Much is said of DOC on this blog. I myself am one of his subscribers and he is excellent at market analysis. If it hadn’t been for Gary though, I wouldn’t have gotten in at 1511 and made so much money in the trading account.

    The same can be said for the previous year. Gary makes firm calls. He is bold, unlike DOC. If you want someone who is wishy washy and leaves himself escape routes, SMT isn’t going to be your cup of tea.

  262. Europe

    Unfortunately I cannot paste in the graphs, but this is how soem in Europe think about the gold:

    These are great times for investors in precious metals! Gold reached a new record at 1670 USD / ounce and silver notes again firmly above 40 USD / ounce.

    The agreement on raising the debt ceiling in the U.S. put the prices again on fire. This will be the regular readers of Smart Investing is not surprising: for many years, we insist that gold and silver will rise much higher.

    Even after the surge, today we remain very optimistic about the further price movements of gold and silver. The Dow / Gold ratio has a long way to go. You still today more than 7 ounces of gold needed to buy the Dow Jones index.

    There is only talk of a possible summit in gold when you are about 1 ounce of gold to the need to buy Dow Jones. Today, an ounce of gold is around 12000 USD / ounce (position AP) should cost to make this happen.

    So we are still far from the ultimate top in gold and silver.

    But the real opportunities lie today in gold stocks!

    We move three clear messages emerged:

    Shares are goldmine for technical outbreak
    As you can see on the following long-term graph of the Barron’s Gold Mining Index, is the industry since 1980 in a broad consolidation phase. A similar consolidation we saw in the period 1937 to 1961. When the time index above 50 points scum, entered the race in the next four years to head directly to 220 (340%)!

    Today we see a similar technical pattern in the chart. A substantial outbreak may Barron’s Gold Mining Index again catapult to a multiple of the current state.

    Gold Mine Shares not so cheap since 2000
    We insist there been on the valuations of gold mining shares collapse. Moreover, the sector has not been so cheap since the turn of the century!

    Erste Group put the annual price / earnings ratio (PE) HUI Gold Bugs index of order in a bar graph.

    While the average price / earnings ratio of gold stocks historically is around 28x, 15x, the sector today under. We know that certain quality gold shares now trading below 10 times: it should not be much crazier!

    By higher prices for gold and silver will continue sinking deeper appreciation if the stock prices remain stable. This of course is not long. The prices of the shares in the sector have a significant catch-up ahead in terms of appreciation.

    Gold mining shares are not welcome
    Gold mining shares are far from loved by investors. The sector is still considerable ‘underweight’ in the portfolios, despite the rise in gold and silver.

    This falls under more recent figures to be derived from Rydex Precious Metals Fund. The sector is underweight in both nominal and real terms. Gold Mine Shares are entering at a low percentage compared to other sectors in the fund (see chart).

    Moreover, the gold mining sector is only a piece of cake “in size. While the market capitalization of the S & P 500 is around $ 10.365 billion goes, is the HUI Gold Bugs at $ 220 billion, or only 2%!

    The market capitalization of the gold sector is even smaller than that of Exxon Mobil or Microsoft …

    In short, gold mining shares are ‘underweight’, ‘unloved’ and a ‘fraction’ of the total market!

    These are terms we do not immediately expect from an industry that is in a historic bull market moves.

    We are on the verge of a historic gold mining shares outbreak. The move up will be breathtaking! It’s only a matter of time.

    And who knows, maybe the outbreak has already begun while the equity -2.5% bottom-emerged on increasing the debt ceiling in the U.S., Hui shot the Gold Bugs index up 3%!

  263. Michael

    USD not budging on some very severe selling in equities and a mini-crash in bonds. Granted this cycle up in USD was expected to be muted, but absent a Flash Crash-type run for the hills, its hard to see what will drive a USD rally here. EUR:USD – brown paper bag:piece of cardboard.

  264. Gary

    With the dollar still very weak despite crashing equities I am starting to believe the three year cycle does lie ahead πŸ™‚

  265. Michael

    Puke here below the major break of SPX pivot, a few stocks like IWM and OPEN have filled major old gaps today, SPX has hit 38% retracement of the rally from 2010 lows, GS is often a tell and diverging today intra-day … equities bounce lies around here somewhere.

  266. Wav_ridah

    In last nights report you said you had no clue what to expect in regards to the dollar and friday’s employment report. Do you have a clearer picture now? Do you think we could get a blow off top in this daily cycle or next?

  267. ALEX


    If your still reading, enjoy some time “out” and clear the mind…I have done that before (always during summer trading co incidentally) and enjoy some Golf and Siesta Key Beach (great place to read a good book)!

    Best wishes

  268. Bruce


    Instead of the assumption the miners are diverging from the metals, how about they are climbing a wall of worry?

  269. Bruce

    The miners are up but they are severely lagging the metals performance.

    GLD is at all time highs. I don’t see any miners at all time highs. I’m sure there is one or two, maybe .. but GDX, GDXJ, $XAU, $HUI are all 5% off their highs with GLD at fresh highs.

  270. Shalom Bernanke

    It’ll be interesting to see how miners act once the S&P gets a several day bounce. Money might come out of them to chase the S&P, but I’m betting it gives miners extra juice.

    If they don’t run together, I’ll be forced to clip miners and possibly gold, too.

  271. Slumdog

    How’s the broken parabola kid doing today? Home from the hospital?

    It’s 1980, like it or not. The bingo will be 130. Then everyone can get off the bus and take their private limo’s home.

  272. Slumdog

    High 5: “The decline in total supply was due to recycled gold, which was down 6% on year-earlier levels to 347.5 tonnes from 369.3 tonnes in the first quarter of 2010 and a sharp increase in net purchasing by the official sector.”

    Ask any scrap dealer or coin store, where the flood of public scrap would flow from. It ain’t happening. I was there in 1981 as an active buyer. There is no flood of people this time through. They’re begging gold from the descendents of those who were rich and who were not poor or middle class in 1980. It’s a very small segment of the population.

    Moreover, young people in the west today are not gold hoarders; so their parents, those in their 60’s, are the last great hoard of PM’s received from their parents. They sold and have little to pull from to liquidate this time through.

    Demand remains where it was, for SI and GC. The price has only one way to go, fundamentals driven, ans that’s “up”.

    This crazy parabola is another story. But when down, next time, whenever that is, the Old Turkey’s IMO should buy and hold the physical and think nothing more until they see chaos and panic from the public.

  273. High 5


    It’s also interesting that new supply peaked in 2001 and has been dropping ever since then.

    Roughly 2,600 tonnes new supply in 2001.

    But new supply is meaningless concerning price. All production could cease or double tomorrow and it would have very small result in price next year. The total supply is anywhere between 165,000 and 1,000,000 tonnes.

  274. High 5

    The political imperative of the 20th century was the attempt to turn back millennia of rising consciousness and social progress and to force mankind back to the level of obedient, Palaeolithic dirt-scratchers dependent for their survival upon great and mysterious forces that only experts could comprehend. Needless to say the push was not initiated by the newly freed working people themselves, though the ignorant were quickly co-opted to the cause through welfare handouts.

    Today we live in a world, where not only do we own nothing that cannot be taken from us by legislative whim and where even the product of our labour is confiscated in an amount finely judged to be just bearable, but where our mind itself can be confiscated. The casualties are locked up in psychiatric wards or, when psychotropically neutralized, left to blindly ramble the streets of our inner cities in pursuit of their next handout. With the mind no longer functioning properly all that is left is the urge of the body to survive.

    That stumble-bum on the street corner with the blank, staring eyes is the logical conclusion to the mad dreams and schemes of The State. Lest you look down on that bum, you would do well to remember that s/he was once an independent entity. If you doubt this then, the next time you see one of these unfortunates, say: “psychiatric hospital” and see the eyes fill with fear before they lurch away.

    Whether this has been an accident, or whether these actions have been outlined, designed and effectively implemented is beside the point. The State is a primitive organization that knows only violence. It passed its use-by date back at the dawn of the agricultural era. Just keeping out of way of The State is no longer an honourable option. It is time for active resistance; indeed the lack of resistance can only be understood in terms of people having already lost their minds; if not to psychotropic drugs, then to the erroneous perception of self-interest. Where else does honour and decency and hope for the future reside if not in the mind of the individual?

    Productive individuals are the last bastion of sanity in a world that is not going mad, but which has already gone mad. The fully expressed horror of The State Almighty is already upon us. North Korea is what awaits all of us if we do not quickly change the course of events. Other than feebly awaiting the natural purge of a monetary and social apocalypse and futilely mumbling over one’s beer, what should one do? Active resistance should not be violent. Whilst the pent up frustration naturally tends to violence, violence cannot be the answer. To do violence is to stoop to the level of The State. If we do that then we have already lost and The State has won. States that are violently overthrown are, of necessity, followed by equally repressive States. Violence bears only more violence, witness the French and American Revolution.

    Sorry but this guy is a great writer and talks good sense. The above is from:


  275. Slumdog

    burton wrote, “gold goes up $40 and thats not a missed call? No mention of it….just waiting for a dip in the midst of monster moves. It’s been real. real disappointing.”

    burton, that’s dead wrong thinking. There are two positions. Profitable and Flat. You think Gary has to hit every moving target. The game never ends. Being flat, with capital intact is crucial. That’s where Gary stands, but for the 10% Old Turkey in a bull market.

    Your disappointment indicates imo a level in puerile ignorance of what investing logic is to be.

    You want other action? Go buy it elsewhere. You can join the quick traders. You need a fix, go down to the projects and get one.

    Gary’s the most responsible newsletter writer I’ve ever encountered, and I’ve examined every one that held the chance of being trustworthy.

    Instead of thanking Gary for the many, many, many right calls, you harp on nothing and your harping exposes your own investment philosophy… I won’t say none but maybe you’d like to explain what that is.

  276. Hack

    @Unknown – wish I could take credit for the EXK trades I have made but they always beat the Street earnings estimates. Plus I believe that silver is range traded so I am not worried about broken parabolas dragging the miners down. Someday EXK will be a $15 per share company, it’s just a matter of time. Today they reported that they mine silver for$5.70 and sell it for $37.50.

  277. High 5

    While reading the above from Philip Barton I was reminded of all the unfortunate children that are being drugged by The State with the threat of being banned from free education.

    The public schools of today in the US are nearly psychiatric wards. The product of these state schools is millions of wasted lives.

  278. Glenn

    Open Question…Why are there different quotes in gold and silver prices…I see different values on cnbc vs kitco vs fox business vs blumberg…who’s right or why the differences

  279. Greenspansconscience

    Keep up the good work Gary. I think the missed top in silver and some late subscribers getting torched has gotten to you a bit too much, IMO.

    Your bottom calling insticts are incredible. I would only say that you should be less inclined to sell almost your entire position when there is so much uncertainty regarding the cycle.

    Then again, maybe gold falls apart right here and the HUI drops to new lows. πŸ™‚

  280. High 5

    “the city behaved like an aroused woman: vibrating, writhing, moaning and sighing lustfully for orgasm and release. It is not purple writing: it is an exact description of what Vienna was and felt like on Monday, 14 March 1938, as Hitler entered her… lined by hundreds of thousands of waving, jubilating Viennese, its church bells rang out their own obscene jubilate.” Georg Klaar

  281. Slumdog

    On a less interesting note, I’ve just posted at Hammy’s this:

    “Silver, even at 41+ now has a breakaway gap today, and that is coupled with the gold Exhaustion Gap today. So, the high will be in within the next 12 to 72 hours, and the price will retrace to slaughter all the greedy and latecomers, to fill this breakaway gap in SI and yesterday’s in GC.”

    The gaps occur off of the NY Pit market.

  282. Felix


    “But when down, next time, whenever that is, the Old Turkey’s IMO should buy and hold the physical and think nothing more until they see chaos and panic from the public.”

    Damn straight. Very good advice. Thank you.

  283. Slumdog

    High 5, has anyone perfected the Total Recall drug to get back to that moment? Sounds pretty intriguing.

    Thx to Gary Goldman, the writer, who adapted that Philip Dick novel. And who did Big Trouble in Little China and Minority Report and many more. OK, “see you at the party”.

  284. High 5


    “But when down, next time, whenever that is, the Old Turkey’s IMO should buy and hold the physical and think nothing more until they see chaos and panic from the public.”

    But then what? Exchange it for pieces of colored paper?

  285. DP

    Wav_ridah, Avann —

    It looks like today is DCL for USO.

    Avann — could you elaborate on what Doc advised on oil?

  286. Peter

    Just some personal observations in the chart of GLD.

    The months in recent history when GLD was stretched the most above the 200-day MA:

    May 2006—72.26—51.82—20.44
    Mar 2008—100.44–76.74—23.70
    Dec 2009—119.54–95.68—23.86
    Aug 2011—162.86–140.95–21.91

    I would think it’d make sense to use percentages instead, but perhaps that’s not the case.

    Difference between May 06 and Mar 08 is 22 months.
    Difference between Mar 08 and Dec 09 is 21 months.
    Difference between Dec 09 and Aug 11 is 20 months.

    In addition, final rally in May 06 lasted 20 or 34 days depending on where you count from. Final rally in Mar 08 lasted 23 days. Final rally in Dec 09 lasted 24 days. This rally is on day 22.

    Not trying to spook anyone at all. Just some technical symmetry I see with recent history.

  287. Gary

    I can tell you that every time I see something like the miner divergence I’m going to error on the side of caution.

    We made that mistake in May. I’m not going to make it again. People can pat themselves on the back about how smart they are, or were, but at some point they are going to ignore the warning signs and they are going to get caught again.

    If this is the final push then there will come a time to exit. I will almost certainly be early. I’m sure I will take heat again for the early exit.

    But these same people that got this call right will expect to do it again and they will get caught at the top as a D-Wave collapse begins. Trust me I saw this happen at the 09 top.

    I took an unbelievable amount of crap because I exited early. I then saw all of those people get caught as the bottom dropped out of the market. I suspect most of them wished they had been early like me. I also exited the real estate market about six months too early. I have absolutely no regrets.

    So don’t break your arm patting yourself on the back yet. If you can manage to get out at the top without losing a big chunk of your gains then you can congratulate yourself.

  288. Blindweb

    Jewelry vs. Investment

    The rich store their physical in a vault, middle class in a safe deposit box, the poor bury it, but the uber poor put store their gold around their wives neck in the form of jewelry.

    Most jewelry gold in the world is investment gold. I give my fiance a diamond ring to show I’m committed, i.e. invested in her. If I leave her the ring is legally her property, and hers to sell. If I’m a poor Indian I put my savings around my trusted wives neck.

    I keep coming back here because there’s some really excellent investors on here, but everyone really needs to work on their philosophy and history. Like I keep saying, at major inflection points many of your built in assumptions are going to turn out wrong. Black swans are increasing.

  289. DP

    aklaunch —

    Oh yeah, I see …

    Gary counts oil daily cycles as 50-70 days.

    What I did — I just counted them naively, not looking at the premium site, and came up that 25-28 days would fit quite nice.

    Unfortunately, I don’t know how to post pics over here, but to me these shorter cycles fit quite nice.

  290. Harry

    I love how people are already talking about ‘missing the move.’ Gary got us in 150 points ago and still has part of the portfolio in gold. It seems like half of you are highly leveraged, anyway (I certainly am), so even at a 10% allocation you’re still making big bucks without a dangerous exposure.

    I also shorted copper at $4.42 (now at $4.33) so I have nothing to complain about.

  291. Avann

    DP … a few days back (last week?) Doc recommended a short position on oil and copper … seems he nailed it πŸ™‚
    I highly recommend a subscription to his letter as well … between Doc and Gary it’s hard to go wrong.

  292. Avann

    I’ll rephrase that … Doc never makes recommendations … he just does a great job of analysing the market and sharing his trades with us.
    The rest is up to each individual.

  293. DP

    Avann —

    Is there that much of a difference between Doc and Gary?

    Anyway, either we at 63rd day of 50-70 Gary count, or 26th day of 28 of mine count, we are very close to DCL for oil.

  294. basil


    two months ago I wrote here that the dollar low isn’t in and that the dollar will likely break the lows and might crash 15% before putting in a low and recovering. I suggested that the low would be in by late September. You said that was impossible and that the dollar put in a 3-year-cycle low. Now you are seeing the cycle low ahead instead. You kept saying that silver will likely see $21. I wrote it will probably bottom out at $31. You wrote that most certainly I will be wrong. That was in May. About stocks you said that they will break down, but they went up short term instead. As a response you wrote they might need more time to top out and that we might see slightly new highs before dropping; stocks went down instead. You have been expecting gold to go into a D wave free fall since late April. Gold has gone up substantially since then. You changed your mind and suggested that Gold will have a last leg up in it’s C wave. A few days ago you then suggested that gold instead ready to have a severe correction right about now (no C wave parabola); you sold at a low and gold (and silver) went up quite impressively since then. In my book these are wrong calls. Some times though when I read this blog, I am thinking I must be dreaming all of the above, because you and some of your loyal followers sound like you are right for the most part. I honestly couldn’t say that’s true. Also, you are running a financial blog, so it should be a given that you and your very loyal followers let people measure you based on the quality of your calls, and voice some critique if the quality of your calls does not convince. You get a lot of rave when you are right, but when you are wrong you got to take a little heat as well, and so should your loyal followers. I don’t understand the emotional reactions that some people here show when there is any sort of critique.
    Btw, I believe that the trouble simply is that nobody can successfully day-trade precious metals and that whoever tries will underperform buy & hold in the long run (that is for the remainder of this bull in PMs). To me it seems obvious, that there is no way in hell that anyone, at the end of this bull, will have made more money in trading in and out of gold or silver. I think the best strategy is a combination of buy & hold core and some very rare trades.
    You also say often that you are making people money. I don’t argue that, but I believe that whoever follows the cheerleaders on kingworldnews, absent of any complex cycle work, would have made more money and also makes more money currently. I don’t think it is a big deal stating that. PMs are in a bull and there is no reason and no gain in day-trading them. It’s a losing proposition. It seems fact to me.

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