WEEKEND REPORT

I think the next couple of weeks and next Fed meeting are going to be a biggie. I’ve laid out the scenarios in the weekend report. I’ve also opened a $1 trial subscription for two days so everyone can access the report.

If you don’t wish to convert to a monthly subscription just make sure you cancel auto renew before the second day by following the directions on the home page

Offer closed.

221 thoughts on “WEEKEND REPORT

  1. Liquid Motion

    According to Pento…some 464BLN Euro was withdrawn from ECB in one session last week in response to ECB deposit rates going to zero.
    Thats some crazy ass money supply increase. As he puts it..proof of how banks act when their reserves earn NIL. Clearly they dont want safety…they want income.

    You def. want to stay ahead of the curve here…once the fed decides to do the same(my “itchy trigger finger” comment from LW)….gold and commodities are going to take off and the USD will tank. Dont bury your head in the sand …action stations. Credit may be in hibernation , but inflation is here and getting fatter.
    Some large players are slowing waking up to what is going on.

  2. Veronica

    So far, nothing unusual in gold’s action, as the weekly bollinger Bands continue to hold this correction as they have in every other correction save for 2008.This all could change soon but has not yet.

  3. Gold Lion

    Just to play devils advocate LM, the metals need to show some life here. The market futures at least showed a spark to life on Friday while gold and silver can’t even seem to manage a dead cat bounce. So far the only life in commodities is corn wheat and soybeans.

  4. Gary

    FWIW it will take time to build another base to drive the next leg up. It’s been less than a year.

    The last C-wave launched from a year and a half base. As the bull progresses each C-wave gets bigger and lasts longer. That means a longer basing pattern is required also.

    It’s unlikely gold will break out above $1900 this year and maybe not even till the fall of 2013.

  5. Liquid Motion

    I will agree there is consolidation in the PM’s but fridays positive action pushed Au up $26. Some other (long)players coming in.

    Gold Lion…also Oil.

    Heads up….
    What I am a little nervous about is the front running ahead of Tuesday. Watch for action Monday and into Tuesday am. Like clockwork. See what the benmeister does this time !!!!

  6. Liquid Motion

    Will he wait for Jackson Hole like he did in 2010 ? before announcing asset purchases..?
    No doubt this one will set the tone of the markets for the next 6 weeks.
    He has to talk about:
    -the state of the US Economy
    – includes govts fiscal policy (fiscal cliff)
    – EZ risks
    – USD strength
    If he says all the wrong things…the markets could quite easily take a 5-10% haircut. Gold could also plunge down to test 1540
    Best case scenario we have a continuation of sideways move with perhaps a little uptick in PM’s..recognising imminent danger for fiat and potential asset purchases end of Aug/early Sept.

    The dow components reporting this week will confirm the economic trend….but its a lag indicator ..watch for comments from CEO’s about next qtr/half.

  7. saif

    Remember when Sweden cut interest rates to a negative rate?
    Nothing happened. But at the time everyone was talking about a monetary time bomb.
    ECB cutting rates to zero is a non event.

  8. Tiho

    New lows in the Euro, yet Silver refuses to break $26 so far. Constant new lows in the Euro since September 2011, when Silver first fell to $26. Back than Euro was at $1.32 and today Euro is at $1.22 yet Silver is still at $26. Can’t argue with the tape…

  9. grimweasel

    Weekly Bolly bands hold the correction? I have heard some tripe. All indicators are a product of historical price action. I bet your Bolly data uses the 14 day setting?

  10. Gold Lion

    I’m getting gut feel that the metals are going to break out to the upside with strength very soon. DX is acting like it wants to roll over in earnest this time. Dan Norcini is saying the big banks are net long gold for the first time in a long time. The didn’t even get net long in 2008 according to Norcini. Got cheap mining shares?

  11. Liquid Motion

    damn right…last few weeks was a time for balls of steel..and conviction..not for bailing..
    Gold has held above the 1540 level with valiant efforts to go lower and now wants to push higher. Same with silver around 26-27.
    I wasnt joking when I said I was excited. Something smells rotten in the financial world…and Gold will be the go to safe haven..u watch.
    This summer in the northern hemisphere may be one to remember
    ….for all the wrong reasons.

  12. Danno

    LM, You are swimming with sharks. Balls of steel will only sink you to the bottom where they can feed on your carcass more easily.

  13. Danno

    Gold Lion, Trader Dan is a little creep. I remember asking him an innocent question once. His reply email was filled with hate spewing curse words.

  14. Gold Lion

    Danno,
    If you’re going to bash someone’s character like you have Norcini, can you at least state a little more of exactly what he said, so a some one could make an informed judgement, not just leaving the impression he is a racist, bigot or something else unimaginable? He seems like a very courteous guy from what I have seen.

  15. Danno

    GL, I said ‘trader dan’ sent me a hate letter. What more do you need to know? He has absolutely zero idea what will happen next or he would have been a billionaire long ago. He has been at this long enough. The clown is just guessing like everyone else. If you ask me POLITELY I might tell you the whole story sometime.

  16. Danno

    Gold Lion, I understand. Look at it this way. Why are you promoting the advice of someone you don’t know? Why do you hold this ‘trader’ up on a pedestal when he is still not filthy rich after trading for decades? What you are doing is just as bad as someone who slanders another person. You are wrongly promoting someone who does not deserve to be promoted.

  17. Gold Lion

    Danno,
    I am not promoting anyone. I simply quoted him. If it is true and the big banks are net long gold/silver contracts, it is a BIG deal. You are the one interjecting your emotions on people. I simply stated a fact.

  18. Gold Lion

    I have heard from 3 different sources recently that America has a very interesting advantage in the works which is very cheap energy compared to most of the rest of the world. A source equal to 20% of all of North Americas natural gas deposits was discovered and that could allow America very cheap energy and even allow us to become a net exporter. Supposedly cheap energy could help us become a low cost industrial producer again. Pie in the sky?

  19. Driver

    obummer’s handlers are interested in bringing us down to other countries’ levels to fit the NWO paradigm, so new sources of energy here will be quashed for now.

  20. Gold Lion

    Who was it on this board that is shorting Amazon? I did some research and that is a great short. Sky high P/E, declining revenues. As much as I like Amazon, their stock in gonna creater BIG TIME IMO.

  21. Liquid Motion

    GL,
    I read recently that Amazon is going to destroy normal retail (tenanted space)…currently spending > 1BLN on 6 x giant distribution warehouses in the country. It will offer same day delivery (some in less than 2 hours). Now thats a game changer …short it while u can(on ur metrics)…wait for the market to do its work, then go long…there’s some fantastic value coming up there.

  22. Gold Lion

    Now THAT is really interesting as far a business model. You’re right, it would be a game changer. That Jeff Bezos is really an inovator. My nephew works for them as an account mananger – really likes it there. I don’t short much my self. Maybe a short ETF once in a while. Not in my DNA I guess.

  23. Liquid Motion

    Yep…not all about numbers…its market share that is critical. Even if retail is tanking at mo…JB has eyes set on future. Those in the retail space across the globe better get ready. When a company spends that sort of money its not on a whim…they will need to “deliver” in more ways than 1.
    Just the two centres in Cali will employ 10,000 people. This is massive.

  24. Liquid Motion

    Anyone else notice the gap down in gold futures around 11.00am ? strong buying saw a very quick retracement = front running + shorting = losing battle.

  25. Liquid Motion

    NOW HSBC….wtf ??????
    oh dear…naughty boys…now ur going to get whats coming…or maybe not….ceo resigns (a la Barclays) and one less cat to skin..could be the next trend…!!!
    Bank screws up…gets caught…ceo resigns…fines are levied….and tomorrow is a new business day where some more manipulation /counterfeiting will recover all those costs.

  26. McBryde

    This site sums up the banking spanking nicely:

    http://www.thedailybell.com/4092/Hey-We-Told-You-So-Bank-of-England-Head-Demands-Immediate-and-Far-Reaching-Bank-Reforms

    “…As the power elite continues to push legislative processes in Britain and the US toward neo-Pecora hearings, you won’t likely read much of this kind of analysis. The idea is to point fingers at the private sector and demand more regulation.

    In fact, actors like King are considerably indisposed to larger inquiries that might focus on central banking misdeeds. It is noteworthy that King has gone out of his way to maintain that a “[broad-based] inquiry was not necessary, as the wrongdoing was plain” – according to the Beeb (BBC)….”

  27. McBryde

    Gosh – it’s quiet in here….. {:/

    I was interested to know what you might think about the new European directive where the central bank now longer gives interest on banks’ parked liabilities/money.

    liquid Motion – you seem to have a good handle on it. Do you think this will actaully increase liquidity now in the US equities?

    I’m wondering if it might push the SPX up a bit more than expected…

    But I think, since it was in a safe house, I wouldn’t expect the new location for the money to be in risk. More likely in US or German treasuries..

    Thanks

    John

  28. Liquid Motion

    ECB directive to remove interest on reserves held….was to encourage the banks into pushing the funds into the economy. Mass withdrawals may increase liquidity in markets if thats where the money flows. As we know the funds typically flow into treasuries (perceived “safety”).
    There is a complete disconnect between the sovereign debt levels (US included), the economy (unemployment, gdp, trade..etc) and the stock markets. Indications are a bear market is in place…and yet Dow is very close to all time high ?
    At this point even the 1% money is scared. Safety in hard assets…

    I would be understating the obvious if I said that solvency of banks and govts is a major concern. But clearly increasing the liquidity (money supply/debt) does not solve this issue….there is a material concern with the way keynesian economics works…there is an expectation that you have velocity…this is paramount for kick starting growth. This is yet to materialise and underscores Bernanke’s comments about not being able to put his finger on why all that he has done has led to NIL.
    I really dont have faith in the sustainability of markets (stocks). Balance sheets are distorted (accounting rules), growth in profits are a large factor of cost reductions (staff).
    Yield vs capital return equation.
    Then the question is what happens to stocks if there is another printing by Fed. Previously it was positive for stocks, but albeit from lower bases = speculation. Next time it may not have the desired impact = pushing on a string. Stocks could well sell-off.
    I think the economy is in a funk of slow growth, credit deflation, cost push inflation = stagflation.
    A secular bear market with opportunities for bull cycles within that = sideways moves for indefinite period.
    btw..u cannot escape risk by being in treauries/bonds. Any inflationary trends beyond the targetted level could imply interest rates would turn positive. Not saying that is going to happen ST. Just mo……

  29. Gold Lion

    I have recently began to study value and when I did I found tech stock among others were very cheap. So I started buying them and they are really starting to move up. When the market ignores bad news and moves higher it it trying to tell you something. I still have less than 20% in value priced mining shares. I’m willing to hold those even id gold drops to 1400 ish. A few of the mining stocks I own have excelent prospects, lots of cash, no debt, growing earning. Why sell them.

  30. Gary

    It’s too late in the daily cycle to push the long side anymore. We need to wait for the market to move down into the daily cycle low before re-entering any more long positions.

    My best guess is the market will start moving down into that low soon and will bottom on, or within a day of the next Fed meeting. That’s where one wants to get long, not 32 days into a daily cycle.

  31. Gary

    This has been the weakest move out of an intermediate cycle low of the entire cyclical bull market. not a particularly encouraging sign and definitely a warning that we aren’t in a buy and hold environment. Whether or not this market continues higher is probably going to come down to whether or not Bernanke turns the printing press back on.

    If he doesn’t give the market what it wants at the next Fed meeting then the bounce out of the impending daily cycle low will probably be weak and roll over quickly followed by a very sharp move down into the next intermediate cycle low sometime in Sept or early Oct.

    If he turns on the presses then we will probably see at least marginal new highs and he will probably delay the bear market by another 6-9 months.

  32. Liquid Motion

    Would tend to agree …
    Spx looks like it wants to go higher but unless it takes out previous high 1375…it could be in trouble.
    USD also not fairing too well…
    esp this week.
    Shaky market..uncertainty…
    correction ??
    Gary , U could be correct here, with markets falling away until next FOMC late Aug.
    GDX/GDXJ/HUI looking sad/wanting to also go lower…lower highs/lows..but not new lows = base holding/consolidation.??
    ….tempting !! Turning point.

  33. Natanarchist

    I tend to agree with your thoughts LM with respect to PM’s. Base building. There have plenty of opportunities over the last 6 + months for gold to crack 1500.00 and it hasn’t. Many posters here, on the SMT Premium and other gold blogs have been predicting this type of move lower, yet it has not happened.

    There continues to be buyers showing up around the 1550 level. I believe these are strong hand buyers who will not easily give up their positions. I continue to hold my longs and will not sell on a break of 1500.00 but add more. I have the time and patience to wait for the launch to begin. I believe the move upwards will come very shortly.

  34. Natanarchist

    Gary, I noticed that the Cot data on the premium site has not been updated since July 3 rd. Any particular reason for this.? If it is due to your traveling that’s fine, but I always look forward to seeing the updated data.

    Thanks for all you do.

  35. TenYear

    Gary:

    Try not to over think. Getting long now and holding through any turbulence is much better than being wrong and having to buy at higher prices. Better entries now than 4, 5, and even 10 months ago.
    Although September tends to be a nasty month. And if you are correct on another downdraft, that will be one hell of a buying opp.

    Stay strong.

  36. Blog Posts - RNM

    Gary…..I just dont understand how you can suggest/consider “Bernanke Printing Hope” as basis to form trading decisions – with a hung jury in the U.S polotical house….its outragous if not absolutely impossible!…Imagine the headlines / election buzz/catastrophe as Obama camp “eases” while markets approach near term highs – RIDICULOUS!….

    Now…along with your admitted “lack of knowledge” of currency markets….this is really starting to look weak….as gold is just “one” asset in an ever more complex investment environment – seriously…”if bernanke prints…then _____ ? ugh.

    Im sure your readers / subs demand more than that.

  37. Gary

    Blog,
    To begin you obviously don’t even know what positions we do or don’t have, so how could you possibly know whether we are trading correctly or not?

    Second the CRB bottomed just like I said it would. The dollar has topped just like I said it would. I called both of those perfectly. The stock market bottomed just like I said.

    I don’t know what else you want. Must I call the presidential election to and by how much before you’ll be satisfied?

    Now we are just waiting for stocks to move down into their next daily cycle low before taking any further action.

    I said several weeks ago that I would only be interested in gold again if it can make a higher high. It hasn’t done it yet and until it does I will continue to ignore the sector until it gets into the timing band for the next intermediate bottom or does something bullish.

  38. Blog Posts - RNM

    Awesome Gary…..man…..u take the hits and keep on comin! – Dont mind me…I just cant stand the continued consideration for Mr Bernanke…and his actions.

    I thank you for your response.

  39. Gary

    My position is that I don’t know what Ben will do. I find it hard to believe he will reverse course so soon after extending Twist, yet the CRB and the dollar are following the cycle expectations perfectly.

    I don’t see how the CRB continues to rally out of it’s three year cycle low unless the dollar has topped.

    Any QE is going to be disguised as GDP targeting or employment targeting anyway so who knows what will come out of the next meeting.

  40. Tiho

    The problem with relaying on cycles is that Gary puts his whole thinking process in one tool. Since he is constantly stuck on the three year cycle bottom – his thought process does not involve or reach too far away from that.

    Good investor by the name of Charlie Munger, once said: “I have said that in my whole life, I have known no wise person, over a broad subject matter who didn’t read all the time — none, zero. Now I know all kinds of shrewd people who by staying within a narrow area do very well without reading. But investment is a broad area. So if you think you’re going to be good at it and not read all the time you have a different idea than I do.”

    I am constantly surprised at the lack of broad views Gary offers here to subscribers, which obviously pay him money. His job is to know as much as possible. Majority of his answers disregard anything remotely important and just involve the cycle theory.

    I do not know too much either, but I try to read as much as possible. Regardless of if I am right or wrong, I will share my view with everyone for the sake of a conversation and a debate regarding QE3:

    Bernanke already told us what he will do. All one has to do is listen, read between the lines and understand. He said he stands ready to do further stimulus in various forms, including cutting rates to 0%, buying more Treasuries and MBS if necessary.

    However, he also said that he won’t do it until the economic slowdown, which he admits is currently in progress, gets much worse.

    It is most likely he is not talking Jobs or PMI numbers, but the stock market level and the inflation expectations, both of which have been a perfect guide in the past.

    Bernanke is actually not a smart man if you think about it, he just follows the market like the rest of us. If you want to know when Bernanke might engage into more Dollar de-valuation just follow the market. That means:

    – Bernanke won’t print as the stock market is 3% below its 52 week high and the VIX is at 15. That defeats the whole purpose. So we need a VIX spike like in October ’08, May ’10 and August ’11. What level will S&P reach before QE3 comes in? Fund managers think about 1100 or so.

    – Bernanke won’t print as inflation is currently much higher than we would like it to be. In August 2010 he stated he is doing QE2 to stop deflation. He was talking about Core CPI approaching 0% level. In Late 2008, when QE1 was introduced, Core CPI was around 1% level and today, Core CPI is at 2.5%. Unless inflation falls further, Bernanke won’t act yet.

    – Bernanke won’t print as market inflation expectations remain high as well. Treasury 5 Year Break Even rate is currently too high for Bernanke’s liking (I’m not even sure if Gary knows what this is as I have never heard him talk about it). We need to see the expectations of inflation, also known as the Break Evens, by market participants drop more towards the 2% level for Bernanke to gain the green light. That means further falls in Crude Oil, Copper and Equities are possible, as they correlation to Break Evens quite well.

  41. Gary

    Actually it’s a combination of cycles, sentiment, COT and money flows.

    I tend to stick with bull markets as the secular trend will rescue a mis timed trade.

    I’ve found that too much information just leads me to paralysis and I made a lot more money if I just focused on those four tools.

    My main weakness is short term trading. I’m just not very good at it. When we get in a trading range like we’ve been in the last several months I tend to struggle.

    The only way to make money is to time bottoms and tops. I can often get the bottoms pretty close but like most traders in the world I struggle with tops. Markets just go up differently than they go down and because of that tops are always going to be more difficult to spot in real time.

    I’ve been through this many times in the past though, eventually we will get another trend going and then everyone will forget all about the frustrating 1st half of 2012.

  42. Gold Lion

    Very true IMO Tiho about reading. If I sold my books at half what I paid for them I’d have much more in the market πŸ™‚

    One thing Bernanke said that caught my ear by surprise is that he stands ready to also buy “SECURITIES”. The single focus on gold and silver is ridicules.

  43. Tiho

    Gold Lion – By law Bernanke cannot not buy any security. Only Treasuries and MBS.

    Gary – you missed the point. No one is talking about trends or investing. We are talking about Bernanke and QE3 and when he will act.

  44. Gary

    Tiho,
    So all that info tells you what? How does it help you make money?

    I called a bottom in commodities based purely on sentiment and cycles while you were and apparently still are expecting lower prices.

    I think I’m right about the three year cycle low and if I am then we should expect the dollar to continue falling whether or not Bernanke runs a public or covert QE.

    Actually there is no question at this point that commodities just formed a major bottom. The only question now is whether the second part of my hypothesis is going to come to fruition and the dollar continues to move down (although it is due for a bounce out of a cycle low any time now).

    You can worry about Bernanke and QE, I’ll just keep tracking cycles and sentiment. And for now I’m going to stay in cash but at the next daily cycle low we will hit the long side hard. Whether or not that is in oil, tech or precious metals I will have to decide at that time.

  45. Tiho

    Ok, I’ll explain how I think.

    So all that info tells you what? How does it help you make money?

    It tells me that a few things have to play out relative to Bernanke stimulating through QE. These are a drop in inflation expectations (highly correlates to Crude Oil) and also a drop in US stock prices / spike in the VIX. Why is QE important?

    Well, I believe the Dollar will not top until Bernanke tops it with further QE. Simple as that. So this helps me preserve capital in cash, and also hedge my current longs in commodities (Silver & Agriculture) via shorting other risk like (Stocks & Junk Bonds). It also helps me wait for the final capitulation.

    Since you are so sure it is already here, don’t call it with your Monday quarterback hindsight BS, instead call it with your account. Go long and if it the bottom right here, you will make a killing!

  46. Liquid Motion

    Tiho,

    OMG…..ease up ol boy.

    Theory and reading might serve a purpose in some utopian world where free markets operate..and you can apply some resemblance of logic to that..BUT..clearly u dont see reality. We dont have a free market system working anymore…isnt that obvious.

    LIBOR scandal = interbank lending is rigged….
    …consequence…everything that has a financial construct based on interest rates is mis-priced. That extends to int rate swaps,mbs,cds, savings acounts and the BIGGIES..BONDS.& USD..to name a few.
    YES..everything is manipulated and the congressional hearings will expose this as ipso facto…naked organised fraud…coveted by the CB’s. Take a mo and think about the consequences of that.

    So putting the pieces of your puzzle together…..u have a fixation on the Benmeister…and QEIII. hmmmmmmm!!!!

    (whilst you summarily slap down Gary for his no nonsense approach of staying on the sidelines and not being so worldly or astute in economics,finance and socio political affairs. He has his own religion (cycles, sentiment etc). UR free to have urs too).

    BUT Dont be in such a hurry to state the reasons for such an QE event when the those very reasons/metrics do not have any more degree of reliability than the Libor everyone has accepted for the last 4 years.

    U state that iyo….inflation and the USD are critical for that event. Sure about that ?
    UR an absolute genius if u have worked out B.S. Bernanke. I mean really…u say he’s not a smart man. Of course he’s going to broadcast to the market exactly his play book….and all u gotta do…is read between the lines.NOT.
    Conclusion: He wont print, bcos we havent tested those markers. HE,iom, would go close to being a GENIUS. He has everyone fooled.

    All those factors that you astonishingly put forward are perhaps…just perhaps…not going to change. Inflation, Stocks.
    The game he (and the rest of them)is playing is keeping the system going for as long as possible (Barclays spelled that out as clear as day). Even Ben said the mechanism for determining the inter bank rate was wrong.Too many people misunderstand this concept. Its not easy to accept I must admit but that is reality. Rigged markets and fraud is paramount.

    What he said was exactly what the market expected….and is a repeat of the same BS…since February 12
    Dont be surprised if we dont see QEIII in the format that U expect…ie. as QE.

    If the last 4 years havent been painful enough, just wait to see what they have in store for the next decade.

    Deflation and debt destruction or outright default can never happen so u can eliminate that from the equation of a potential inducement to print.

    Inflation ( as reported) will not fall to the levels that are required to trigger action, neither will they exceed targetted levels (indicating interest rates should go up). implying… Extended periods of zero interest rates.

    However, I must say, the game that they are playing is almost up. The real data you need to be concerned about is negative “real” interest rates. That is not sustainable. Its evident in EU, US and JAP. Thats the end game for this nonsense.

    UR fortunate to have the commonsense to have phys Gold and Silver.

    Btw I read a helluva lot too
    “Priceless “words of wisdom” from late hedge-fund legend Barton Biggs”…and Charlie Munger’s quote is included to boot. I found it a good read and quite revealing.A stand out was “Good information, thoughtful analysis, quick but not impulsive reactions” as the keys to getting “IT” right.
    The piece de resistance was for me “The successful macro investor must be some magical mixture of an acute analyst, an investment scholar, a listener, a historian, a river boat gambler, and be a voracious reader”. Wiseman …said it all.

  47. Tiho

    I’m still long Silver and Agricultrue. I’m not trading it for a month or two, I’m long folio I’m ready to sell.

  48. Gold Lion

    “Dont be surprised if we dont see QEIII in the format that U expect…ie. as QE.”

    Also, we don’t really know what action is being taken right now. I think the FED has taken so much heat on QE1 and 2 that they’re not even going to announce anymore (maybe).

    Also, the reason I have switched to a more value focused strategy is so I don’t have to hang on every action the FED takes. I’ve been doing some very profitable trades on beat down tech stocks that are coming out with surprisingly good earnings. So what Ben does, who cares πŸ™‚

  49. Piazzi

    Tiho: “Deflation and debt destruction or outright default can never happen so u can eliminate that from the equation of a potential inducement to print. “

    Tiho:”The game he (and the rest of them)is playing is keeping the system going for as long as possible “

    Debt is the very essence of fiat. Without debt fiat dies. With fiat dead, system dies

    It’s that simple, and the rest, is hoopla. That, of course, is my very humble opinion and I have been wrong before

  50. Piazzi

    Tiho: “The real data you need to be concerned about is negative “real” interest rates. That is not sustainable. “

    Capital will go where capital is treated well

    what brings the system down is a flight of capital

    and so the intent must be to create either confidence in the capitalized system or fear against the alternative to keep the capital in the system — it becomes harder and harder to so so with things like MF Global or Libor stuff making headlines

    Providing liquidity can lube a system as long as that liquidity is accepted as a medium of exchange

  51. mika zman

    Deflation and debt destruction or outright default can never happen so u can eliminate that from the equation of a potential inducement to print.
    ==

    I disagree. The analogue to the 20’s, 30’s, and 40’s is very strong. What has been will be again, what has been done will be done again. As Mr Solomon also astutely observed, there’s nothing new under the sun.

  52. Gary

    In the 30’s money supply was constrained by being tied to gold. That isn’t the case this time. So I think we will still have to suffer a depression but it will take a different form than in the 30’s.

    Instead of deflationary this one should be inflationary.

  53. saif

    Spain 10Y closing at 7.27%, 610bps over Bunds
    As long as this is not cured, all the dance that Benny does will accomplish precisely Zilch.

  54. mika zman

    Instead of deflationary this one should be inflationary.
    ==

    I don’t think so. It will be deflationary at the core, inflationary at the periphery. The US is the core, others are the periphery. You’re seeing this already play out with the Euro (and other currencies) vs the $USD. Same applies to gold, etc.

  55. Liquid Motion

    ” potential inducement to print. “
    implies its a given event.

    “negative interest rates not sustainable” and “capital will go where its treated well”….are part of the same equation…
    interest rates will have to go up to attract capital (UST)…and that will be the day the system dies….debts become unserviceable and Banks will have zero capital..instant bankruptcies.

    Liquidity is still the requirement for markets to keep functioning. There is not a problem with that as there is an abundance of it sloshing around the globe.
    Solvency is more the concern, which cant be solved with the prior.

    “Delationary at the core = US”
    Not possible if the US is printing. For the US to survive just purely to keep the government functioning and welfare going it requires min. $1.5 tln p.a. Austerity wont work, tax hikes possible…more easing more likely = fed buying Treasuries. This money supply increase is INFLATIONARY. The US exports this inflation to the rest of the world….via the USD.
    You can have Deflation in credit.
    If they print too much = currency crisis = flight of capital = very high inflation. UBS recently talked about an HyperINflation event in one of its papers. This actually speaks volumes if you care to read it.
    Inflation is the silent killer. Cost of living is not going backwards. Its evident in everything we consume and is compounded by the USD. More money chasing fewer goods.

  56. mika zman

    More money chasing fewer goods.
    ==

    Nonsense. There isn’t a shortage of goods. There’s an overabundance of goods, where price is buoyed from collapse by deliberate corporate schemes of artificial “scarcity”. No, what there is, is debt saturation. To be followed by credit collapse and default. Only it will be mostly foreign banks that will collapse, as will foreign currencies, because there’s nothing there behind their fiat currency. That’s not the case with the US dollar. Unlike the other currencies, the $USD is backed by Saudi oil (and soon Israeli oil, and everything else that’s “sold” in $USD by way of US military supremacy and coercion).

  57. Liquid Motion

    Dont worry Mike…All you have to do is look at the US’s biggest trading partner (China)to see what they think of the USD….which is running on thin air. Nothing supports it other than the guarantee of a technically bankrupt government. Its an IOU that stands in line with trillions of other claims. Power and coercion…oooohhhh…!!

    Agree on the debt saturation…but collapse / default is destructive to the fiat system. Cant allow it to happen. Not saying it shouldnt.
    Your logic about the potential crisis affecting only foreign banks is misguided/uninformed. US banks (all of which are also technically insolvent and are only functional bcos of the change in accounting rules – mark to market) hold CDS (otc derviatives) in vicinity of $250TLN. World GDP is only $50TLN. US FED (standing behind those banks)cannot print that sort of money to save them without destroying the USD. As we found out with Lehman, the whole financial system is intertwined..a bankruptcy becomes systemic. Thats the issue they want to avoid, bcos they will not be able to stop it.
    UR completely out of touch with the real world and US centric in your views.

  58. mika zman

    collapse / default is destructive to the fiat system
    ==

    More nonsense. We had credit collapse before, and the $USD survived just fine. As to the Chinese and others, unless they are stupid enough to start a war, there’s nothing they can do about it. What they think about, and whether they enjoy it or not, when they’re being butt-slammed by the US is really irrelevant. As to the banks, ALL banks are technically insolvent. But as I already s’plained to you, the US gov mafia has the US military and ME oil to back their credit/currency. That makes them king, queen, and the whole fucking chessboard.

  59. saif

    The 250 Trillion number is pure crock.
    Yeah it might be right in a Notional sense. But that the Fed have to print it comes straight from Brain Farts of the likes of Micheal Pento.

    Almost half of this is tied to Interest rates and a vast majority of that is tied to controllable rates (like Fed rates) in developed countries. Chances of Astronomical losses on that are well…imaginary.

    If Bank A has an OTC derivative with Bank B for $100 Billion Notional and it moves 20% against bank A, then first Bank A’s capital would be wiped out assuming it does not have enough to absorb it.
    Then the qt is whether the Fed would print to give bank B a profit. Most would argue that bank B should have assessed counter party risk. There would be very little support even within the Fed for such action. Assuming it happens AND and this is a big AND, it is a direct print rather than increase US debt, then money supply would increase by 10 Billion.

    So of the 250 Trillion Notional, about 50 Trillion possibly could even have moderate moves.
    Taking 50 Trillion, a 20% move would mean 10 trillion. Even then a lot of it would be absorbed by existing capital and the fact that banks are often internally hedged i.e their positions are for clients and their NET notional exposure is usually multitudes smaller.
    SO worst case the FED might have to print 5 Trillion to give profits to its friends, assuming that flies and probably 40% will be taxed right back wiping out the budget deficit for the year.
    A far cry from the 250 Trillion number that gets waived around.
    But yes even in that case we should seem some teeth in inflation.

  60. RickH

    Gary,

    If/when we go through a severe inflationary cycle, do you have any thoughts on how real estate would fare during that?

    Thanks, RickH

  61. Bill

    Howdy. Question on double ETF’s, relating to US taxes, please.

    I can’t yet find but distinctly remember that someone somewhere once said that double ETF’s like AZQ, UGL, QLD, DIG, etc. have some tax complexity. Not in terms of cap gains, but that the forms don’t come in time for an April 15th return, so one has to file an extension, or something like that.

    I’m aware of how the double ETF’s perform (calc’d at NAV at EOD) – but if anyone has any tax info to share, I’d appreciate it.

    Thanks.

  62. Tiho

    Bloomberg front page article:

    “We’re looking at a situation when people are realizing we’re at a point of debt restructuring and repudiation,” Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London, said in an interview yesterday. “It’s cold-hearted reality. The great blag and bluff of the euro zone has always managed to kick the can down the road, but it is no longer a viable strategy. We’re getting to a crunch point.”

    I’ve been saying it all along, but that gentleman summarises it in a basic and simple way. Kicking cans, bailing out and patching over things is over and done with. Either ECB / Fed print massive amount right now… or its time for a default!

  63. Tiho

    Furthermore, the funniest thing of all is the fact that Greece is totally broke and its actually struggling to make the next payment of 3.1 billion Euros due in August.

    Take a guess who the payment is towards? The payment is for the European Central Bank. Hahahaha! You just couldn’t make this shit up a few years ago, because no one would have believed you.

  64. Liquid Motion

    250 tln just in the US banks show you what leverage is in the US banking system. Thats the point.World otc derivatives is xs of 1 Quad. Even if nominal and not net…its a threat. On many fronts the financial system is facing extreme stresses. It will require extreme measures to keep it from imploding.

    Default…yeah sure….bring it on. They have endless numbers to play the game with. 4 years and counting so far.

    You keep ur USD and I’ll keep my real money. I firmly believe that fiat will be debased into non existence before you have a deflationary event or an inflationary depression. Notwithstanding ur games of chess.

    Greece was technically broke when it joined the EZ. The geniuses at GS got around that little fact.

    The fiat money system is definitely being held together with band aid remedies. It will eventually crash, but until then, they will do everything they can to ensure its viability. The alternative is anarchy, then totalitarianism. So much for the land of the free.

  65. mikezza

    “Bulls will hate this, but it appears that the greatest macro call in history was actually Gary Shilling’s long bond call in 1981. He specifically told investors to roll over zero-coupon 25 yr treasuries every year, because the long bond was going to 3%. $100K on that strategy was turned into $23.15MM. 9.5 times the S&P 500’s total return from its epic 1982 low.”

  66. Tiho

    And they might even go to 2% if someone defaults in Europe soon, until the 30 year bond bull market bursts in a bubble.

  67. shyam

    Hi Tiho, Both Gary and you are following the same market framework with differerent aspects. You are more focusing on fundamental details. Gary is fcousing on market action and sentimtne/moneyflow/cot reports, to dervive the same conclusion. I think Gary’s approach is more comprehensive because market action usually prices in future fundamentals already, so you don’t have to duplicate the job of tracking fundamentals. Only issue with Gary’s approach is market can changet the course at any time for any reason and as long as you are willing to change your opinion with market, most of the times you end up making money like Gary, which is most important thing for successful trader. My $0.05 cents.

  68. Danno

    RickH, I’ve thought about this. Say inflation does take hold in earnest one day. Prices for everything will go up… with a couple of possible exceptions. If there are not enough jobs it is possible that home prices will not keep pace with food prices. Homes are the most expensive thing the average person ever considers buying, and home ownership is not a necessity. Home ownership is a luxury. In times of great duress we could actually see homes remain unsold and vacant, even as gas and food prices soar. It boils down to jobs and income. You might see people eating and sleeping well… in their vans.

  69. Liquid Motion

    “You might see people eating and sleeping well… in their vans.”
    That might not only be true for those who are unemployed/no income, but inflation does not discriminate between hard assets. Their plight might be a factor of prices moving beyond their reach/capacity in conjunction with being unemployed.
    Investors might see an opportunity in that space, where there is a shortage of take up from the normal householder. The expectation of wealth protection where purchasing power deteriorates in an inflationary environment, is paramount. Not saying this would be broad based, but certain pockets of the country may offer less risk and capital protection. Of course property doesnt offer the liquidity as with other hard assets and should be considered LT.

  70. Natanarchist

    Danno wrote: “It boils down to jobs and income. You might see people eating and sleeping well… in their vans.”

    What do you mean ..might?…it is already happening and has been happening. I am not sure where you live but go by a food bank/shelters in any city and you will see people, family’s, lined up every night for food and or shelter like nothing in the last 30 + years. Watch the families file out of their cars and vans that currently serve as their home. While its true geography plays a part in the severity of this, not many places in this country have been immune. In my zip code…30022..(and you can look up medium incomes for this zip code over the years) since ’09 we have brand new goodwill stores open that were never there. WIC stickers on food products that were never there 3 years ago. People buying food with Gov’t checks that one never saw. Now its common place.At the local Kroger in the strip mall near my house, up until 2009, they had a cop directing traffic just to get in and out of the strip mall around 5-7 every night. That’s been gone for 3 years. It isn’t getting better either. So what happens when the Gov’t can’t pay anymore? Or…IF the gov’t wasn’t funding at least a 5th to a quarter of the population (and probably higher if we factor in all Gov’t payments)this time in American history would put the “great Depression of the 30’s” to shame. And before this is over it probably will.

    But this is always the end result when Empires die. Just give it a bit more time.

  71. Tiho

    shyam – all I know is that you can claim Gary uses this and that technical tool including sentiment, COT and money flows, but if you do not understand the underlying fundamental move, sentiment won’t help you get the direction right. It will only help you understand where a pullback is to occur, before further moves in the trend restart.

    Take a look at the Dollar every peak that comes about. Apparently each one of them has been a top according to Gary, and yet the Dollar is still moving higher (Euro moving lower honestly). Gary stated the Dollar topped in early May due to cycles – that was wrong. Gary stated the Dollar toped in late May due to huge bullish sentiment – that was wrong. Gary stated the Dollar top recently in late June – that was also wrong. Even I called the top in early January on the Dollar and held that view for a few months, until I got proven wrong too.

    Each of these tops was due to sentiment, Public Opinion, COT etc etc etc. But the Euro still keeps going lower and therefore the Dollar higher. It is not until the fundamental picture plays out that the sentiment will matter.

    To understand that, one needs to understand fundamental catalysts. That means, something MAJOR needs to occur to shock the outlook of investors into reversing their bets the other way. A dramatic shock of the system.

    These could be Fed / ECB doing QE3 and most likely some Euro country defaulting. Only that or something as serious as that, will bring about the final capitulation. It is than, that sentiment measures will matter and it is than that one should trade against the trend as a major inflection point occurs.

  72. Tiho

    By the way, the Dollar is in the process of making a new 52 week high today Gary. That is a burrito bet half lost against many on this board.

    Furthermore, it looks as if Gold could break down out of its triangle today too. While sentiment is rather bearish on the overall PMs sector, sometimes even a crash could occur from negative sentiment readings.

    So, with that in mind, while not very probable, it is possible that we could see a break below $1,530 in coming days – that is a burrito bet other half lost against many on this board.

  73. Gary

    Yep wrong about the dollar. Right about the CRB and now the stock market.

    This should last until the next Fed meeting then it will either be a weak bounce if Bernanke doesn’t deliver or a huge launch and nominal new highs if he does.

  74. Tiho

    Just give the stock market some time… it has only started to break down so it has plenty of time to prove you wrong too. Look at the Dow Jones Transports Index today. Smells like a bear market to me!

    As for the CRB, I cannot be too bearish there, coz commodities are in a secular bull. I’ve never been too bearish on commodities in the first place, as I remain long Silver and Agriculture. I’m currently short Junk Bonds and certain US equity sectors as a hedge.

  75. Gary

    I agree if Bernake doesn,t act then stocks are going to continue down into a bear market.

    If he does he may be able to delay it 6-9 months. Either way load up the truck long on Aug 1 for either a counter trend rally or a move to nominal new highs.

    Which ever one it is we will get a cycle low on, or a day on either side of, the meeting.

  76. Tiho

    Forget about Bernanke dude… he already postponed the bear market in 2011 with Twist. There will be no QE3 until the market capitulates.

    IMF is ready to pull a plug on Greece soon, while Spain is falling apart. Rumors here on HK trading desks is that Finland could be the first to leave the EU. Apparently they’ve had enough.

    I think we are very close to a default now!

  77. Mark

    Gary,

    You are full of it. You were wrong about investing in the miners! That is all that mattered. You lost people money.

  78. ILUVPMS

    Mark,

    Not sure why you haven’t noticed that gary is full of it. This guy supposed uses real time based on his cycles, but is now depending on Bernanke. If that is the case then you might as well throw the cycles out cuz you don’t know when Ben is going to do anything.

    Also, I don’t know why you would sell your miners after a mere 20 percent draw down..Youre in a structural bull market you never sell at a loss!

    Oh, yes, gary also said that when they had the recent draw down he didn’t need to change his percent winnings to a negative because they didn’t sell at a loss. If thats the case, Im way up on ya gary!
    Buy and hold.

  79. Pibe

    I am glad that finally someone had the courage to speak up about Gary. Yes; Gary is a good salesman and he makes you believe that his “system” works by presenting data in a nice and logical manner but his “system” clearly does not work (same as flipping a coin) and he is making money out of the suscriptions and not the market. Like “1 $ trial” sounds familiar?

    Gary I thought that you were more humble but you do not even have the decency to admit that your were wrong all the time and you do not know what you are doing.

    Sure….the portfolio is still “up”???? Yes Gary you are full of yourself.

  80. ILUVPMS

    Pibe,

    The portfolio is not up at all. Gary makes money from subscriptions, this is a business. forget the cycles bullshit. Just remember what i said. 3000 subscribers, times 30 dollars is 90000 dollars a MONTH… gimme a break, he makes more than a surgeon and just writes opinions.

  81. Pibe

    Now tell me that you will use the anger in this board as a “contrarian indicator”. Same as you did when I was a subscriber.

  82. Gary

    Hmm in case everyone seems to have forgotten. We are still up huge from the silver breakout in 2011. Even though we missed the exact top we are up so huge that we aren’t even close to losing money.

    Yes we have been trending water lately but that’s because the markets are trending water. There have been no sustainable trends.

    And I’m a rather poor short term trader. As soon as we get another trend going we will add to those gains we made from silver.

    At the moment the market is heading down into a daily cycle low just like I said it would. We are going to get a major buying opportunity next week. I’ll decide at the time whether it will just be a counter trend bounce or a longer term hold depending on what comes out of the Fed meeting.

  83. Pibe

    Gary just admit that your “system” does not work.

    Some people still follow your trades and not everybody is making 90k per month to make up for trading mistakes.

  84. Gold Lion

    What is all the discontent about? I thought Gary was flat. Unless this IS the begining of the big meltdown, it is a buying opertunity. People seem to expecting bernank to save the markets with QE3. Well if he doesn’t do it now, when do you expect it. Gold and silver are holding up fine here imo.

  85. Gary

    I think everyone who has been in the market any time at all knows that all systems fail from time to time.

    However of everything I have tried over the years my system of cycles, sentiment, COT and money flows far outperforms anything else I’ve ever seen.

    Yes we entered too early and cut our 30% gain back down to 10%. Not trying to deny it.

    But that is still a gain during a period when the stock market and gold are down and miners are down by almost 20%.

    Eventually we will get a sustainable trend and we’ll get busy making money again. At the moment we’re just sitting in cash waiting for the cycle low.

    Cycles got us out and into cash so I don’t know why anyone would think it doesn’t work.

    It called the bottom in the CRB, the top of this cycle, the bottom in Oct and June and it will call the bottom of this daily cycle.

    It’s pretty obvious that it does work. And the reason it does is because human nature never changes. So markets will continue to cycle between extremes of optimism and pessimism for as long as humans are human.

  86. Pibe

    Gold Lion,

    The market might be up or down. My discontent is about Gary’s advice (changing his mind all the time and justifying his poor trade decisions).

    Someone who started following Gary at the end of 2011 will be down around 20% and not flat. Maybe Gary made some money at the beginning of 2011 (as somebody elses; I also made 70% profit in 2011 -It is easy to be a “genius” in a bull market-.

    My discontent is because Garys poor timing, changing his mind all the time and very poor trading record not to mention that he promotes ETFs as a “safe” investment vehicle when in reality when you check GDXJ and SIL holdings (his two main recommendations) the companies are very volatile and dangerous (some of those companies are only just fancy websites and explorers”.

  87. Gary

    Pibe,
    The market has been whipsawing back and forth. Pray tell, how does one pick a direction in a market like that?

    The only way to make money is by switching directions repeatedly.

    We were doing just fine up until the final plunge into the intermediate cycle low (we were up about 30% despite all the back and forth action). We just entered miners too early.

    We will enter at the next daily cycle low and start working our way back while we wait for a more sustainable trend that we can hold onto for a longer duration.

  88. Gold Lion

    The bottom line is that people are responsible for their own trading/investing performance. If you chose to follow Gary’s “system” and it doesn’t work out for you, don’t blame Gary. Gary’s timing is pretty good. But he is looking for a trending market when the markets just have not trended. In general, those trades only work about 40% of the time, and you have to exit when you realize your wrong. Gary has that part right.

  89. Pibe

    Lion,

    Somebody who bought and hold gold at the beginning of 2011 would be up 10% (as of today) without “back and forth action”.

    What part did Gary got right?

  90. Gold Lion

    The part Gary got right was exiting when the trade didn’t go as expected. Instaed of sitting on a gain for the year (I assume) he would be in the red. Good luck out there. This market is a SOB.

  91. Gary

    My goodness we are so far ahead of buying and holding gold at the beginning of 2011 that it isn’t even in the same ball park. Not even in the same city.

  92. Pibe

    “My goodness we are so far ahead of buying and holding gold at the beginning of 2011 that it isn’t even in the same ball park. Not even in the same city.”

    If you are going to “brag” about your timing and performance just use the “golden standard” to compare it against (Gold or GLD).

    Gary: your timing does not work -an investor is better of holding gold or GLD- than following your risky trades and investing in GDXJ, SIL or TVIX (remember that one?).

    Sorry Gary but you are trying (again) to justify your system and the need for your services.

    It’s all about getting more subscriptions I guess.

  93. saif

    If you notice the exact moment Gary’s portfolio peaked (based on comments on his blog and some identified trades), it was when he said that their latest trades were going to put his subscribers ahead of all of the top hedge funds.
    The market loves to mess with our egos.

  94. Gold Lion

    very very true Saif. Everytime I brag I get my head handed to me. Which is still to damn often. It is tough to beat head fund managers. The have big research budgets and they’re really smart. I’m trying to learn from them.

  95. Blog Posts - RNM

    My my…dont the claws come out when people are losing money…..gees….if you are following Gary’s system/service with the mind set that you,ve found the holy grail – or that you honestly expect (if ever again) to hit a “buy n hold moment…..and ride your profits off into the sunset..perhaps one needs to re evaluate what they are doing.

    Make your own decisions! – Based on your own knowledge..and dont blame others for “losing you money”! – think of how ridiculous that sounds! I lost “your money”…hilarious.

    Throwing Uncle Ben in the mix does muck up a pile of tech analysis…cycles..and the lot to a certain extent….but any dummy can see for himself (just crack a simple GLD or SLV and see that ya….its been trendless..and trading sideways – NO KIDDING!

    I poke Gary on occasion as well….as I trade currency (and have faired very well thru all of this) and quite frankly dont know how it could be excluded from ones analysis….regardless…I also receive personal feedback (almost insantaneous) from a fellow making what 90K a month you say?

    Not to bad reading here no?

  96. Pibe

    You are absolutely right, except that buying and holding is a sound strategy in a bull market –if you have the stomach for it-. I have 60% of my portfolio in physical gold and silver since 2006 so I guess I can be thankful for that since I did not lose money (at least not yet). I tried following Gary with my other 40% but I guess it did not work out. Nobody can beat physical -I do not care about the buying and selling premiums- and you do not have to stress out about the daily market fluctuations (even in the past gold bull market physical went parabolic and returned thousand percent of profits. Yes I know it was a totally different environment at that time but I am just making a point. If you want to invest in miners timing is everything and unfortunately Gary is not good at that neither do I. I guess I have learnt the lesson.

  97. Gary

    Pibe,
    I was comparing it to gold. Buying and holding gold since the first of 2011 doesn’t even come close to what we have done during that period.

  98. saif

    Gary, you have been drinking a lot of your own Kool-Aid?
    Gold since the first trading day fo 2011 is up around 10%, which by last check according to you was what your portfolio was up since the beginning.
    You make it sound like you outperformed Gold 10:1

  99. coolkevs

    DeMark:
    Interesting stuff in the dollar, if thinkorswim Sequential study can be trusted.
    I’m seeing a perfected DAILY SELL on the /DX futures. This is good for 12 days, but needs to be confirmed by a bearish price flip (close below the close 4 days earlier). Might be a few days to confirm.
    More interesting is the WEEKLY. We are on Bar 12 of 13 of a Sequential SELL that could record this week. This would be good for 3 months (12 weeks) of Dollar weakness.
    UUP perfected its SELL on Friday. Also, seeing a BUY on UDN for Friday (as expected).
    Euro not really showing these signals, though. So, basket of currencies is being offset here…

  100. Gary

    saif,
    We entered silver via AGQ as it broke above $21 (actually a little before that) and rode it all the way up. And even though we missed the exit almost everyone is up 100-300% for that period. The 9% is extra on top of that move.

    So yes we have outperformed a buy and hold strategy on gold during that period by so far that it isn’t even in the ball park.

    And yes if one entered late or at the top then you don’t have those kind of gains but then again I tried and tried till I was blue in the face to get people on board early. If they ignored me it’s hardly my fault.

  101. Liquid Motion

    LOL..
    Ben’s got a new mantra…..
    “Damned if I do…damned if I dont”

    Either way he’s screwed…and so is anyone who attempts to read his mind or predict his next move.

    When all else fails…lack of trends…no CB action…then its a bear market….hmmmmm..REALLY !!!

    Some time ago I said that with all the distortion in the markets, it would be very difficult to make money because the mentality had changed to a ST / Trading focus.
    Anyone else notice the trading ranges??
    Instead of making volatility ur friend, Gary has gone to the sidelines. Sure he can change tact at the flip of a coin when cycles/sentiment are not conforming, but that wont allow him to take advantage of the moves. He says he’s not a ST trader bcos his timing is poor. Well unfortunately…right there… that’s it in a nutshell. Then there is buy and hold crowd…saif, iluvpms, Nat, tiho, GL, Pibe..you guys have that part right imo. Its a commonsense approach. Trying to be a hero in this market will turn you into a villain.

  102. Tiho

    I remember that line actually… “SMT is better than 95% of the worlds hedge funds.” That was the reason I got posting on this board.

  103. Gary

    Tiho,
    I believe since the beginning of 2011 that statement is still true. But the one early entry with miners has knocked us back to just above average over the last year.

    I’m pretty sure we will recover though because my system really does produce exceptional long term results.

  104. Tiho

    “this is not a debt crisis, this is a currency crisis”

    Yeah ok. You should learn to follow this thing called the Bond market and look at its yields. For someone who claims to be better than 95% of the worlds financial investors, you really struggle to grasp fundamental and economic concepts.

    I know that the bond market is a bubble, but there are negative yields all across European 2 Yr yields now from Germany to Denmark and from Switzerland to Luxembourg . Bond market is telling you something bad is about to happen…

    … And i bet it is that Greece is about to default at any point now.

  105. Gary

    Tiho,
    Yes we all know this is a debt crisis. What I’m saying is that it’s not going to be allowed to stay a debt crisis. Countries are going to print to abort a debt crisis and turn it into a currency crisis.

    The debt bubble in the 30’s played out as a debt crisis and deflationary depression. I don’t think we are going to make the same mistake again.

    This time I think the world will go 180 degrees in the opposite direction in the attempt to avoid a repeat of the 30’s and turn this debt crisis into an inflationary depression.

  106. saif

    Gary what part you have got wrong and I think TIHO and I have right is the order of printing.
    It will be countries that exit the Euro first, then Japan and then the US. Although Japan could be number 1. Regardless, the USD is not done yet.

  107. Liquid Motion

    The danger with any assumption on further QE or any other form of debasement, is that if it does come, then it may not be telecast as such. It may even be hidden from the eyes of the markets (not the first time).
    CB’s have a tendency to now avoid disclosure because of the known consequences…just as they conjure up images of “funds” being available via some stability mechanism, that doesnt exist, are not committed, and are unlawful.

    These guys have turned into psychopathic liars, and are screwing with everyones judgements and morals. Its a complete propaganda fest where not even the scum can be skimmed from the surface of the cesspool.

    IMO…u will have to assume that what needs to be done, will be. If you want confirmation, I dont think ur gonna get it. What this means is continued “nonsense” for extended periods …5-10 yrs or more.

  108. Gary

    Saif,
    I think it’s painfully clear that we don’t know who has it right or wrong yet. That is why the market is whipsawing back and forth as it tries to decide.

  109. Tiho

    The bond market has it right, that is why the yields are negative on most European 2 Yr notes. Listen to the bond market… its screaming: DEFAULT!

  110. Liquid Motion

    See this is where one of the markets have to be wrong…they both tell a story….Bonds vs Equities….either Bonds will crash…or the Equities markets will.

  111. Tiho

    For those who track sentiment, it is worth mentioning that Euro Daily Sentiment Index – a measure of futures traders – hit only 7% bulls yesterday.

    Last time the sentiment was this low was 5% bulls on 30th of May, where Euro jumped from $1.24 to $1.27 in a short squeeze.

  112. saif

    The only market Gary, and you really need a global view, that is whipsawing is the US stock market.
    Every other stock or bond market around the world has a very very clear trend. Unless you are blind that is.

  113. Caleb

    Pibe, do you have anything constructive to say besides being an ass? Traders are wrong all the time, its just the way it is. Gary is not twisting anybody’s arm to subscribe to his service. I only win 60% of the time, taking losses is part of the game.

  114. Gary

    Saif,
    Gold has been pretty much down or sideways since last Sept. Stocks have been in a trading range. I don’t trade bonds or foreign markets and I’m not very good at selling short. So there isn’t much for me to do at the moment.

  115. saif

    Regardless whether you trade it or not, you need to understand and RECOGNIZE what is happening in those markets to make the right calls.
    Would you buy a solitary Gold stock that made new highs while GDX was making new lows? Similarly for the US stock market versus every other market.
    So the direction has been pretty clear. US stocks have just not got the memo yet.
    Will be delivered soon enough.

  116. Tiho

    US transportation stocks are getting the memo. They have failed to better their 2011 peak and are breaking down. UPS just delivered an awful earnings report on slowing global economy. Bear market is here. I’m not sure if Gary knows what Gross Profit Margins mean, but they have peaked and revenues have started to disappoint now!

  117. ILUVPMS

    Caleb,

    Its amazing how traders can be wrong when they give you opinions yet when they are right they want to be recognized.. I love it when they are wrong yet they still want your money πŸ™‚

  118. Pibe

    Caleb

    I am doing something constructive here. I am warning people that Gary’s system does not work therefore not to follow Gary!!!

    I am like a Geico (saving people’s money) πŸ˜‰

  119. Pibe

    Caleb,

    Here is an alternative to losing money with Gary:

    Buy physical silver (there are plenty of products with low premiums: NTR bars, Amark bars, Buffalo coins etc.) and store it for 3-4 years.

    You will likely make 400 to 500% profits -without the hassles of paying for an “expert” service or stressing out.

    Just my 2 cents

  120. saif

    ” I’m not sure if Gary knows what Gross Profit Margins mean, but they have peaked and revenues have started to disappoint now!”
    Maybe you should phrase that as Gross margins have hit a 3 year cycle high. That might work πŸ™‚

  121. Caleb

    Pibe, define your definition of losing money, I think he still up for year? One bad loss yes, but so what. In the end every individual has the option of pressing the buy or sell button, if they follow Gary trade for trade and lose money, thats their problem not his.

  122. Pibe

    Caleb

    We have been over this already. Please read previous posts. I just offered you my 2 cents alternative to Gary (it has been working for me since 2006).

    Thanks

  123. Gary

    Just telling people to buy and hold would be an easy way to invest and avoid criticism. It’s what the vast majority do and then blame the evil gold cartel whenever the market goes against them. I think I can do better than that. I have done much better than that. And I refuse to blame some mysterious cartel whenever I get a call wrong.

    We made a tremendous amount of money during this C-wave and avoided almost all of the D-wave. Buy and hold hasn’t even come close to the kind of returns we generated by combining cycles with sentiment and the COT report.

    I’m confident we will do the same thing during the next C-wave. Right now nothing is happening so I’m comfortable just sitting in cash.

    I’ve also noticed that no actually makes any real time calls except me.

    If you have a better system then give us your positions and do it in real time so we can judge for ourselves. Heck if you have a system that produces good returns during periods of volatile conditions I’ll be more than happy to take a look at it.

    But don’t give me the buy and hold crap and then complain because I have trouble making money during this kind of market.

    Everyone is having trouble making money right now.

  124. saif

    “I’ve also noticed that no actually makes any real time calls except me.”
    You have a very selective memory Gary.
    Actually I have made real time challenges to all your dollar calls and I have been right and you have been wrong.

  125. Pibe

    Gary,

    I have tried your system and did not work out. Sorry but I do not feel comfortable buying TVIX, GDXJ and SIL. Too risky and volatile for my taste (not to mention that the holdings of GDXJ and SIL are dubious companies at best). I do not need to explain myself on TVIX.
    Yes; I know, it was my mistake subscribing to your service. My opinions are unbiased –and I do not charge for it in fact I do not get anything out of it-

    You have a subscription business and I understand that it is in YOUR best interest to persuade people that you are good at making money.
    Buy and hold has been working for me since 2006 and your fancy system did not (sorry but I have tried it out already).

  126. ILUVPMS

    Gary,

    I do have a better system that you.. its called buy and hold as I’ve done for the majority of this bull… i don’t think you’ve made the gains i have from buying and holding…even the corrections in silver has still put me up to 300% gain. Gimme a break, buy and hold is the best strategy that livermore recommends.

    Also, you don’t blame the cartel you are indirectly blaming bernanke.. you’re real time was supposedly based on cycles, then it was based on what bernanke saids or will say. Tiho has pointed this out as well. you flip way to much. Also, according to you even if my miners are down it doesn’t count cuz i haven’t cashed out of them, so I’n that case I’m actually up 340%.

  127. Caleb

    Folks, Gary is not PERSUADING anybody to follow his calls, he has a service that is OPTIONAL. Now, just because he has a bad trade here or there, some of you think his system bad and does not work, fine. You cannot look at his system based on a handful of trades. It is a system’s edge over a large sample that you have to judge by, as long as that edge is positive, you still trade it. Being a forex trader I have studied many systems that only have about a 50-55% win ratio, but they still have an edge and you trade it. That is why so many traders jump from system to system, once the system goes into drawdown, like it always does, they give up and move on. I have had 12 losing trades in a row and it does not phase me one bit, b/c I know the long term expectancy of my system. I have no idea what Gary’s life time track record is, but it is highly probable that his system has some edge, isn’t that reasonable to assume? To get rich all you need is a small edge and the ability to execute, most traders cannot, hence there will always be a group of traders that are in the top 10% and then there is everybody else.

  128. saif

    Sentiment on Gary seems pretty low. I count less than 3% bulls, so I think his next call will probably be right.
    Mean reversion is a bitch.

  129. Tim and Jeanene

    Back in February, there was a little debate about Peter Schiff knowing what he was talking about and being right. I just found this: http://www.economicpredictions.org/peter-schiff-predictions/index.htm

    Also Razvan – still certain that silver doesn’t touch $25? I wish we could have made that bet! πŸ˜‰ I still feel the gold win streak of 11 years comes to an end this year, stocks make new all time highs within 12 months, and the shale revolution will continue to help America be transformed as manufacturing jobs come back to America. http://finance.yahoo.com/news/natural-gas-boom-may-power-225600394.html. Oh yeah – and Treasuries didn’t crash! Woot!

    Keep calling me crazy, and hate me …… but it’s been unfolding just as planned. That good ole monetary system thing helping investors know what to do. It’s good to take the time to learn and understand it.

    See ya’ll in another 6 months.

  130. Gary

    Saif,
    Before you break your arm patting yourself on the back let me remind you that the trade was for the CRB to form a three year cycle low. I expect the dollar to top along with that but it doesn’t absolutely have to happen.

    The CRB has clearly formed a major cycle trend change right when I said it would. I said last week that it was too late in the daily cycle to be long any longer. And now right on schedule the market is dropping down into a daily cycle low.

    I continue to maintain that the next move will be determined by what Bernanke does at the Fed meeting. If he days or the market becomes convinced that more stimulus is on its way then stocks will bottom next week ad get busy moving back to new highs. The CRB will begin the next leg up in the three year cycle and gold will start the next C-wave in earnest.

    If he balks again then stocks will rally weakly and roll over quickly moving down hard into a Sept or Oct bottom that will move below the June low.

    As far as I can see cycles are doing exactly what they are supposed to do. They got us out in time to avoid this correction and we even made a small profit on the last trade before exiting.

    They will get us long at the bottom when everyone is only looking for more losses next week.

  131. Gary

    Mark,
    Don’t you know that everyone loses money from time to time? No one is immune to that particular bugaboo.

    But in the long run we will make a tremendous amount of money because gold is in a bull market and I only trade bull markets from the long side.

    So in over the long haul it’s pretty hard to lose money.

  132. saif

    Gary,
    The only bet we had which I see you keep forgetting was on the USD.
    I think I mentioned on this blog several times that GOLD COULD go up along side the USD although I thought it more likely it was going to go down.
    For each of your USD calls, The dollar has topped, oh good gracious so so many times, I told it would go up.
    Now we are still 6 points away from my knighthood, but all good things take time.

  133. Gary

    Saif,
    Just wait and see. I think Bernanke is going to break the dollar rally next Wednesday. And the CRB is going to come roaring out of this impending daily cycle low.

  134. Tiho

    There is no perfect indicator or tool in this word, and no me can really be sure of anything 100%. I just wanted to say that before I make a comment on what Bernankes plan of attack could be.

    On the positive QE3 side – all I see supporting this outlook is huge bullish sentiment on the Dollar and amazingly low bearish sentiment on the Euro, Swiss Franc, Gold, Silver and Platinum. As I already mentioned above, there are now less than 7% bulls on the Euro as well, according to the DSI. Furthermore, Euro shorts on the COT as a percentage of open nearest are more than 2 standard deviations from the mean. Finally, Gold Miners bullish percent index, a good breadth indicator for the overall PM sector, is ridiculously low at 7%. All in all, conditions are ripe for a mean reversion rally and it could be QE3 if Bernanke choses to do it. However…

    On the negative QE3 side – as already explained before: Break Even rates (something Gary has no clue about) are still reading too high, compared to other times Bernanke engaged into various stimulus programs. Break Evens measure expectations of inflation, which abernanke tracks like a hawkeye (he himself has stated this before). Furthermore, Bernankes preferred measure of inflation is the CORE CPI and currently that remains elevated above 2% Fed target. This means some FOMC members who are more hawkish will vote against further bond purchases. Finally, and MOST IMPORTANTLY, Bernanke is not stupid enough to waste his bullets right here right now, as the S&P 500 is only several percent below its peak. He will wait for the S&P to sell off first. Every Fed program has occurred after the VIX spike, like October 08, May 10 and August 11. Why would Bernanke do QE3 now and than watch the market fall later?

    All in all, my view is despite strong USD sentiment, which signals mean reversion correction is overdue, no QE3 just yet. Since Ben has Twisted all short term maturities, he could still extend time frame for ZIRP policy towards 2015 or even cut rates to 0.0%. Something might happen, but inflation and S&P are still too high for full blown QE3 to happen.

  135. Gary

    Just wait and see where the S&P is next Wednesday. I think after a terrible GDP number and what will probably be a very nasty move down over the next week Ben will have all the justification he needs.

    Something is going to drive the CRB higher out of that three year cycle low and it sure isn’t a booming global economy.

    This is why all your fundamental analysis is worthless for calling turning points and how I was able to call that bottom in the CRB when everyone else only saw lower prices.

    It’s how I knew to get out at the top last week and how I’m going to get back in at the bottom next week.

    Sure you can just buy and hold silver but you aren’t even going to come close to the gains we will make by using cycles & sentiment to enter and exit at intermediate bottoms and tops.

  136. Keys

    Besides pissing into the wind and seeing who can get the least wet, does anyone have a view on the effect of a new batch of QE?

  137. Gary

    Keys,
    I’ve given my thoughts several times in the weekend reports. I expect another round of stimulus will pump up asset prices, mostly commodities. And delay the bear market by 6-9 months.

    In the end surging commodity prices will just make the collapse much more catastrophic and we will get a terrible depression instead of a terrible recession.

  138. saif

    Gary,
    U called the the 3 year low in Commodities for a long time before it actually happened. That is why u lost 20%on your last trade.
    Will we get a bounce (USD decline) for Benny? We might. Depends on how high on the USD index we go before that.

  139. Gary

    S,
    We lost about 10% not 20. And I first warned that the three year cycle was coming several weeks before it arrived. I said the CRB would bottom at the same time the oil cycle bottomed. Once oil got into the timing band for a cycle low we started looking for the bottom.

    If you understood how cycle theory works and the normal timing bands for each asset class you would add a very good tool for timing trend changes to your arsenal. Instead you ignore it, even though it’s obvious that it does work. Granted it’s not a perfect timing tool but it is a great tool to signal when to tap the brakes and when to step on the gas.

    Next week it’s going to be time to step on the gas.

    Sentiment on the dollar is way too extreme for it to make it to 90 during this intermediate cycle and if this intermediate cycle turns down now then it will become left translated. If it becomes left translated there’s a very strong possibility that the three year cycle will also top.

    And that is ultimately what I expect will drive the majority of the CRB’s rally out of it’s three year cycle low.

    Like I said it certainly won’t be a booming global economy.

    I was correct about the CRB now lets see what happens next week and see if the second part of the prediction also comes true and Bernanke breaks the dollar rally.

  140. Gary

    BTW gold dances to it’s own drummer. My mistake was in thinking that the metals would follow the rest of the commodity complex. Instead the momentum flooded into energy and grains.

    Ultimately gold will follow the CRB because the fundamental driver for this three year cycle is going to be currency debasement, not economic demand. And as we all should know by now currency debasement is gasoline on the fire for the gold bull.

    We just have to get through the consolidation phase and then gold will get busy ramping up into the next C-wave.

  141. Keys

    Gary,
    I have read and continue to read your reports of course. Thanks for your input! Sorry to see so much venom going your way….my comments were not directed towards you fwiw…but I have posted my views on the potential of QE3 being a non-event on your SMT premium site…(Happy subscriber for 3-4 years for readers btw, or maybe more I lose count)…

    My gut says assets up for a time, but the European issue bugs me….I wish this forum was more friendly, for valid debate without egos getting in the way. My point is not one of ego, but rather of confusion going forward….Valid give and take would be nice….but it seems this place is full of venom now, sorry I asked in this den….

    Gary your view that assets go up for 6 to 9 months is valid and registered, just hoping for some other angles on this puzzle…since I am dealing with real money. Either other angles are silly and give more confidence, or they are valid and give more concern….

    As always appreciate your input Gary, and happy to continue to follow the SMT journal. Your input in this Gold bull has been a GREAT asset!

  142. catbird

    Tiho,

    To listen to you, one would think Gary is a learning disabled bumpkin who can’t tie his shoes or feed himself.

    You really come across as a rude little snot on this blog.

  143. Liquid Motion

    Gary said “Just wait and see where the S&P is next Wednesday. I think after a terrible GDP number and what will probably be a very nasty move down over the next week Ben will have all the justification he needs”.
    If its true …doesnt the market work on perfect knowledge….implying that investors are working on that theory too…so a nasty move down in anticpation of a QE event doesnt seem logical ???
    How about buy the rumour …sell the fact …principle ??? Market trades sideways and then sees a st pick-up….only to sell-off.

    TIHO…to think outside of the box for a mo….QE doesnt need to take the form that everyone is accustomed to…how about the option of qe over an extended period….rather that an outright $750Bln for eg. That number is so dramatic and a smaller more frequent dose may not attract the speculation that previous printing did.
    His hand might be forced but that doesnt mean he needs to play by the same rule book.

  144. Gary

    LM,
    The market will trade down because we are in the timing band for the move down into a daily cycle low, not a daily cycle sideways.

  145. saif

    Gary, look at a 5 year chart of Greece bonds, Spanish bonds and Italian Bonds,
    Go ahead identify the 3 year cycle low.

    No wait, it does not work for bonds?
    You don’t say?
    Well, if it does not work or does not work this time for bonds, I can assure it will FAIL for everything else this time.

  146. Gary

    I’ve never been able to identify a reliable cycle for bonds. They kind of sort of run in tandem with the stock market. But then again I don’t want to trade bonds so I don’t care if there is a useable cycle or not.

    The same with grains and softs. There really isn’t a cycle so I don’t trade them.

    However there is clearly a repeating cycle in stocks, gold, oil and the dollar index. Those I do trade especially gold since it’s in a bull market and any timing mistakes will get corrected.

    If something clearly works why would one choose to ignore it? At the very least use it to confirm your other tools.

  147. Tiho

    I’m surprised no one is checking / talking sentiment readings this morning. Apparently all I do is use fundamentals. Well.. when I checked the recent sentiment data this morning, I found the following:

    Bullish sentiment on the Dollar is now at a record high according to the Public Opinion by SentimenTrader website. Furthermore, confirming this is the amazingly low bearish sentiment on the Euro and record low sentiment on the Swiss Franc. In the Precious Metals sector we have Gold, Silver and Platinum at bearish extremes right now. Platinum especially shows capitative mood from investors.

    As I already mentioned in the previous comments, there are now less than 7% bulls on the Euro according to the DSI. Furthermore, Euro shorts on the COT as a percentage of open nearest are close to record lows and more than 2 standard deviations from the mean.

    All in all, conditions are ripe for a mean reversion rally, so I wouldn’t be surprised if someone out of the US, EU or China announced something that market uses as a catalyst or interrupts in a bullish manner just for the sake of a mean reversion rally!

    I still remain very bearish on the stock market and junk bond market, both of which I am short. I also remain long Silver which is a buy / hold. I don’t plan to add or reduce any positions right now.

  148. Gary

    I have also noted the sentiment extremes in my nightly reports and I will point out that gold often bottoms a few days before the stock market.

    I’ve also said the miners are very likely in a 1-2-3 reversal at the moment and just testing the May low. Once the test is over we should see the next stage of the bull market begin and this stage will be led by the mining stocks.

  149. Gary

    Liquid Motion,
    I don’t know what you mean by shouldn’t. Cycles work because human emotions never change.

    Whether or not the market thinks QE is coming is kind of irrelevant, we still need the swing to extreme pessimism to set the stage for the next move up. One can’t occur without the other.

  150. oa92000

    Gold Correction: It’s Just The Way Markets Work
    Corrections are normal and are the way things should work, the way things do work. Having said that, I don’t know when the correction will stop. It’s normal in my experience for corrections to go down 30 or 40 percent. It’s just the way markets work. – jim rogers

  151. Tiho

    If you want to short something I would defiantly put forward an idea of looking at economically sensitive stocks like UPS and FedEx, and even the whole Transport sector. I think we are entering a recession / weak growth and cyclicals are discounting this. Besides, VIX is way too low right now.

  152. saif

    You definitely have a point there TIHO.
    I like the idea but I see falling oil prices might benefit the sector’s margins for now. Still I was looking into those. I have to run the falling oil price benefit versus falling revenues.
    I am already Short Nucor, which is probably the most economically sensitive stock out there.
    Analyst expect over $3.00 of earnings, I think they will make a loss in 2013.

  153. ILUVPMS

    gary,
    why should anyone go for a month.. what have you offered them in the past year. that buy and hold doesn’t accomplish.

  154. Mark

    ” and this stage will be led by the mining stocks.”

    Where have I heard that several times before? The A wave of a lifetime in miners. The latest C wave in miners. Oh yeah, they were all you too.

  155. Gary

    Mark,
    It’s the miners turn. In case you haven’t noticed they are in the process of setting up a powerful base if they complete the 1-2-3 reversal.

    Just because the market doesn’t do what you want it to, in the time frame that you want it, doesn’t mean it isn’t going to happen. It is a bull market after all.

    As long as one has patience this bull is going to make millionaires and billionaires out of the few that can stay focused on the big picture.

    You are worried about a minor drawdown in 2011. I’m focused on what’s going to be happening at the next C-wave top in 2014. By then we will have made so much money no one will even remember the frustrating first half of 2011.

  156. Gold Lion

    Gary you said
    ” bull is going to make millionaires and billionaires out of the few”

    Billionaires? Maybe if one starts with 200-300 million πŸ™‚ Or is a real good trader..lol

  157. Gary

    GL,
    Heck oil and natural gas made a billionaire out of Boone Pickens during the last bull. Why would you think it isn’t going to happen in the gold bull?

  158. Liquid Motion

    Who pray tell…has the tenacity or fortitude to hold all the way to the very top..??

    Greed and fear are the only things in your way.

    A classic example of this is the Hunt Bros…in their play on Silver in the 70-80’s where they went from being billionaires to declaring bankruptcy. A salient lesson.

    Visions of grandeur…should be tempered with a sense of reality.

  159. Gary

    Yes once the mania starts one has about 1 to 1 1/2 years before the bubble pops. Somewhere in that period one has to say enough is enough and exit.

  160. Tiho

    If you do a study of the 1979 parabolic movement in Silver specifically, you will notice that a parabolic lasted only 34 trading days. Silver went vertical from $16 to $50 in less than two months and peaked in early Jan 1980. Than it crashed 88% in less than 3 months!

    Furthermore, if one zoomed out a bit, you can notice that Silver movement started in August 1979 (good PM seasonality starts in August and last til Jan every year) at $8.50 and within 5 months went up 590%. Furthermore, Gold made 4/5 of all of its secular bull gains in the last five months as well.

    Both PMs doubled in the last 12 months and posted 100% plus annual gains for 1979. Furthermore, Gold shot up 110% above its 200 day MA, while Silver managed 140%. Silver touched a ratio of 14 ounces relative to one Gold ounce by Jan 1980, and Gold spiked so high it almost touched the nominal level of Dow Jones.

    Even to this day, the largest 10 up days and the largest 10 down days in percentage terms have all occurred in 70s and 80s. That tells us the volatility and real movements of the current bull market have not yet even been seen. It was common for Gold to post 5% up days during the mania and sometimes even very rare 10% up days. Silver recorded movements of 10% more often. Same for the downside.

    Quite to the contrary to many beliefs by Gold bugs, history shows that Gold Mining stocks under-performed the 1979 mania by a huge amount and tend not to participate in a bubble phase. Gold Miners did not spike with PMs movements. The best investment with most gains for buy and hold strategy is Silver according to the historical evidence.

  161. Pibe

    Tiho:

    This time is different πŸ˜‰

    You are actually right and silver was even less volatile than the BGMI (before the crash that is)

  162. ILUVPMS

    Tiho,

    Yes, the best investment was silver in the 70s with a buy and hold. Hence why i advocate it. Also, miners did participate AFTER the gold mania, the went for a major run for the next year i believe.

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