3 weeks, that’s how long the bulls have left before stocks roll over and begin the next intermediate degree decline. That being said the next 2-3 weeks we should see some very healthy gains in virtually all asset classes. Why is that you ask? Because the dollar has begun moving down into an intermediate degree correction.

As of Friday the dollar was on the 11th day of its current daily cycle. The normal duration of a daily cycle is 18 to 28 days, with the average being about 23 or 24 days. That would suggest that the dollar should bottom somewhere around August 21st or 22nd. As you can see in the chart below whenever the dollar moves down into an intermediate degree trough it generates strong gains in asset prices.

What follows once the dollar bottoms and the next intermediate degree rally begins is not going to be pretty. Stocks are going to start to struggle and ultimately move down hard in September and probably October if the Fed doesn’t unleash QE3 at the September FOMC meeting.  

By the end of August, and certainly by the time we get into September the markets are going to call central bankers bluff, and it is going to take more than words and the threat of quantitative easing to keep asset prices propped up.

I have covered the rest of the forecast in depth in the weekend report available to premium subscribers.

I will again offer the $1 two day trial subscription to traders that would like to sample the premium newsletter. If you like the newsletter do nothing and it will automatically convert to a monthly subscription when your two day trial expires. If you decide the newsletter isn’t for you just cancel your subscription by following the directions on the homepage before your trial expires.

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Offer is now closed.

185 thoughts on “3 WEEKS TO GO

  1. Liquid Motion

    So U think the markets are going to call the CB’s bluff…hmmm…they havent got the same number of unlimited digits to do that nor do they want to be on the wrong side of the trade when its does happen(pre-emptive to stop a contagion or 20% correction). As we saw last week…disbelief (sell-off)becomes a short term concern. Anxiety is allayed with new found optimism..albeit unfounded. That’s the inflexion point (changing of the curve). We are in no-mans land…trading ranges are narrowed, without breadth/volume….a road to nowhere. Yes its frustrating…but you better get used to it.
    No great sell-off …more of the usual…100 point trading range on S&P (last time I checked thats the limit for the better part of the year from Jan nothwithstanding all the rhetoric and numerous “potential” defaults). All the while inflation builds..slowly but surely it eats away and gathers momentum and creates uncertainty for consumers. Its not rocketscience….Friedman well documented the effects of monetary stimulus….”taking a far longer time to affect the price level than monetary totals”. That is why (as in 70’s) bond holders will be on the wrong side of the trade….future inflation will eat them alive.
    There is no doubt that further stimulus (QE) is necessary…
    equities,bonds, and commodities depend on it. Inflation therefore is certain bcos they cannot withdraw their support for those markets. They unfortunately cannot stop a recession/depression (the side affect). AND with the delays and potential for markets correcting meantime, their stimulus will only grow in magnitude whilst the effects are diminishing.
    The only certainty is that you will see more money printing. Psychology will take care of the rest….until reality hits.
    Oh..btw…Trust Gold and Silver….and the miners !!!!

  2. mika zman


    Looking at the DX chart, I’m seeing a daily cycle that is about 1.5 months long. From this, the $USD has already made its cycle correction and is about to start a new cycle. Next week will tell if the pivot at 82.19 holds and where we move from there.

  3. Gary

    The dollar is 23 weeks (5 months) into it’s intermediate cycle.

    At this point it’s a given that it is moving down into an intermediate trough. In order to time the bottom you have to move down to the smaller daily cycle. As I pointed out in the article the daily cycle is on day 11. We should have 9-15 days before the next major bottom.

  4. mika zman

    Maybe you’re right. You have more experience with this method than I. I just checked the weekly DX chart, and there I’m seeing a bullish divergence against the oscillator I’m using. So, both from the daily and weekly perspective, to me it looks like the odds are that the DX is about to move higher.

  5. Heads Up

    I see dollar intermediate lows arrive about every six months.

    Looking over 2010 and 2011, it looks clear that the dollar found lows in early November ’10, early May ’11, and late October ’11.

    The next low looks less clear.

    Late February or early May ’12?

    If the interval is generally six months, May ’12 looks more convincing.

    Why do you say we have a few weeks and not a few more months?

    Bernanke isn’t going to sit on his hands much longer with the current state of the economy. Any accomodation at Jackson Hole, August 31, and the dollar goes lower in to the fall, don’t you think?

    TLT is on the verge of a collapse, too, and that’s not going to be a couple-of-week correction, either.

  6. Gary

    The last intermediate bottom was very clear and came in Feb. There is no cycle low in May. It would have had to drop below the Feb. low to be considered as an intermediate bottom.

    Next week will be the 23rd week in this intermediate cycle, with a failed daily cycle in progress. A bottom is due in 9-15 days.

  7. Gary

    Bonds have been rising powerfully since 2009. One would have to be crazy to try and pick a top in that kind of trend. Not to mention the Fed is constantly in the bond market propping up price to keep rates depressed.

    No one in their right mind would fight that. Just ask everyone that tried to short the Japanese bond market for the last two decades.

    Bond markets turn very slowly. It could take years for the transition to bear market to complete.

  8. Heads Up

    This cycle-eze is cloudy with all the Central Bank intervention.

    So the late October ’11 – late February ’12 dollar intermediary cycle measured only four months?

    February’s low and May’s low were close, less than .50.

    Do you ever consider the long bond as a secondary indicatory in circumstances such as these?

  9. Gary

    Bonds are subject to continuous intervention so I mostly ignore them, and they won’t influence the dollar cycle anyway. The dollar is mostly tied to the stock market.

    The dollar’s intermediate cycle runs 18-25 weeks. Use that timing band to determine ICL’s. Although most of the time they are clear on a long term weekly chart.

  10. MikeS

    I just don;t see how you can think the USD is about to make a powerful move up out of an ICL yet Gold won’t break down to new lows

    I suppose the USD and PM’s could move together as they did out of the 2008 bottom but still

    a little confusing

  11. JG

    Tiho, is the Fund you manage open or close ended? If so can you provide me details i.e. Name, performance since inception? What is the current NAV?

  12. Gary

    If he’s trying to fight the Feds printing press then yes I’m smarter than Mr. Cass.

    There are easier ways to make money.

  13. Blog Posts - RNM

    Perhaps “Gold Lion”(alias for Tiho no?) – should start formulating his own ideas as opposed to reading/following those of others….let alone comparing… and looking for advice in consideration there in.

    I checked out the “cut n paste job” at Tiho’s site as well..(hilarious – drivel at best) – like some “pitch” from a cheap investment house.

    Perhaps sticking with your day job is the best advice.

  14. Liquid Motion

    “Cut & paste” the wonderful new age tool of plagiarism.
    The beauty about the electronic age is the wealth of information available with only a few clicks and the ability to pass it off as ur own idea/work of art….until someone notices. I’ve seen a few and the frequency is increasing. Blog sites like these become the go to place for all sorts, seeking fodder.

    RNM very astute of U. I agree with the observation 100%.

    I could name half a dozen well knowns….”They” know who they are so no names required to be mentioned but they have picked up themes and ideas for their own blogs/investments newsletters and passed them on as their own thoughts.

    I see it in some ways as a good thing. Important themes are finding their way into a greater reader base….more awareness/knowledge making the “sheeple” think outside the box.

  15. Liquid Motion

    “Liquid MotionMay 17, 2012 2:08 AM

    AND the bigger the corporations become …the BIGGER the GOVERNMENT that is required to regulate the “b$%#ards”. Lets face it….GOVERNMENT is a bureaucratic nightmare.
    They interfere with everything..unnecessarily.
    Ultimately, the structural pliancy that “…..” talks about becomes very narrow and acute at the pointy end….where decision making ultimately reverts to the Dictator under a Totalitarian regime. The President has the supreme power to veto all powers of government. In fact it is astonishing how far his power reaches (i.e. well beyond the shores of AMERIKA).
    These are the makings of a new world, where everyone surrenders their rights to the State”.

    Liquid Motion said

    “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”.
    July 21, 2012 3:05 AM

    Now go here:


    Very well written and pertinent David.

  16. Veronica

    The gold correction continues to look like most corrections we’ve had since the bull started. The weekly Bollinger bands are providing support and both have now flattened out nicely, with the next target being the upper band. I believe the proper way to build $ long term now is to buy and hold as much as one possibly can at the lower band and refrain from selling too much at the upper band.

  17. Blog Posts - RNM

    As much as I too agree with the current “count” on the dollar cycle..Ive booked the last of my profits ( long commods vs USD as well JPY to name a few) here as of early this morning.

    Looking across markets – things do appear to be running into some resistance at this level – and thats enough for me to book and sit on cash.

    Keep in mind all…..”sideways” is a direction as well….and one that I am not a particular fan of.

    Many, many days can be chewed up this way…with next to no price movement so……Im staying very nimble here.

  18. Gary

    Just my opinion but the time to make hay is while the dollar is dropping down into an intermediate low.

    That’s in progress right now. This is the best chance for resistance levels to get broken. We’ve waited months for this moment, I for one am going to give it a chance.

    At a bare minimum the dollar should have at least 8 more days before a final bottom and likely more.

  19. Blog Posts - RNM

    In trading/investing in gold I can certainly appreciate the frustration that must have come with these past few months. Since May really….I too have been patiently waiting to pull the trigger – sideways is no friend of mine.

    I track ng, ngd, lsg , gld , slv , exk , and have been in and out of a couple along the way but for the most part – darn miners have been difficult.

    Here again we seem to see the dollar moving lower but in all the reaction in the PM’s has been muted. I wonder what it will take to get them off their buts?

    Currency wise….as I continue to just book profits as fast as I see em – commods are most certainly pushing for a breakout (or down)….so…Ill sit out a day..and may get another great entry …

    Gary Im curious if you dont mind, and perhaps its through your membership etc…so by all means pass on it …but through what vehicles are you guys looking to take advantage of movement here?

    I cant see many stocks moving much at all despite the indices climbing in general?!

  20. oa92000

    “Blog Posts – RNM said…

    Looking across markets – things do appear to be running into some resistance at this level”

    what resistance you referring to ??

  21. Blog Posts - RNM

    I dunno…like….aud/usd at 1.06 maybe….or $rut around 800 ish….or the downward sloping trendline on $tran…..perhaps 13,200 on $indu.

    Im not one to say how strong these levels are..but as far as I can see…at least significant areas for consideration or “pause”? No?

    I am as jumpy as a rabbit here these days as well so…….considering the current environment – Ive not been so inclined to just kick back and “hold” through trend…in that….the chop in general has been killer.

  22. coolkevs

    August 17, 2011: US Dollar Index /DX low at 73.515
    SPX closed at 1193.89

    Fast forward to today:
    US Dollar Index @ 82.22= +11.8% return
    SPX 1406 = +17% return

    Huh? Stock market can rally with a rising dollar????
    I think I said something about this a few years back to much taunting and jeers…

  23. Gary

    What mostly happens is the market manages to trade sideways during periods when the dollar is rallying and then gains when it drops into daily and intermediate cycle lows.

    Keep in mind that just because the dollar is rallying against the Euro doesn’t mean it is gaining purchasing power. It’s just loosing value at a slower rate.

    Notice how when the dollar rallies aggressively such as from May 1st to June 1st it drives stocks down into an intermediate low.

  24. Blog Posts - RNM

    Looking back at May’s run ya…..if it where only that easy all the time eh!

    And the action since……the overlaps /retracements – no wonder Ive come to trade like a rabbit as of late – as one does need to adapt to the current environment.

    I loooooooong for the next “trend/run” but most certainly wont be holding my breath.

    These are tricky times to say the least.

  25. saif

    Looks like we are in relative agreement. I Think the USD should bottom in the next week on some “Europe is saved headlines”, or could have today already.
    In either case the next move up will be big.
    Lot of Euro shorts have been squeezed out. I think in the October to December time frame Yen troubles will come to the fore front.
    Being long Gold in Yen terms will soon be fantastic trade (after one major rinse lower).

  26. Gary

    Maybe next week, but I think early the week after is probably more likely, and the dollar has to drop much further in order to reverse the bullish sentiment.

  27. Gold Lion

    Back in 2008 the miners were so beaten down you could just buy a basket and hold for a nice return. I did in fact do that putting 160k in a basket and riding it up over 500k. But this time seems different. I think its going to be a stock pickers market for the miners. Two with exceptional stories and prospects IMO are Oceana Gold (OCG on TSX) and NSU. Oceana will have new production by the end of the year (Goldman is a holder too). and NSU is already growing production with a PE of about 4. SVM which can’t seem to gain traction has a lot of potential to, even pays a dividend.

  28. Gary

    That’s the problem I have with individual companies. There’s no guarantee that the market is going to reward them with higher prices even if they are good companies. And heaven forbid if a mine floods or a labor strike. The stock will tank.

    ETF’s avoid that pothole altogether. IMO it’s better to sacrifice a little underperformance than have to wake up to one of those kind of surprises.

  29. Gold Lion

    I know this is a PM focused blog, but I don’t think that is the only game in town. Some of the biggest and most profitable companies are trading at multi-year low valuations. People could look at MSFT, CSCO, AMAT, HPQ. XRX, DLB, IBM just to name a few that are going to be big winners IMO.

  30. saif

    The problem Gary is that a large % of GDX company mines are located in unfavorable regimes.
    There is a lot of potential confiscation there. We have seen it already in relation to Bolivia.

  31. Gary

    We are currently focused in four separate areas at the moment. We will start to concentrate in precious metals once we get into the high demand fall season.

  32. Gary

    I could careless where mines are at. That will be completely irrelevant. What I’m waiting for is the miners to have their momentum run just like silver and gold did last year.

    I’m not betting on financial statements. I’m betting on human emotions.

    The last time we saw valuations this cheap it spawned a 2 year 300+% move. I expect this one to be even bigger before it’s done.

  33. Gary

    I tend to play regression to the mean strategies and use cycles to try and time entries. When ever something gets really stretched it inevitably triggers a snapback move as violent if not more so than the original move.

    I’m betting on that snapback and the fact that metals are in a bull market.

  34. saif

    Miners are quite cheap and are discounting sub $1250 gold prices.
    So if Gold does rally rally to $2000 miners could easily double.

  35. Piazzi

    Gary-bashers have become somewhat quieter


    the cycles gave us very good entries

    Gary, one cycle that I have not heard you talk about is the 2-year cycle of semis, that one might have hit a low as well

    I am sure the the bashers show up at some point to tell us how good they are and how misguided everybody else is, until then, we have some health gains to book 😉

  36. Gary

    I’ve never actually looked at semi’s as a stand alone asset with its own cycle. I would assume that they follow the stock market. Looking at a six-year chart they do appear to follow along with the stock market.

  37. Liquid Motion

    GL is correct… the best way to play this “miners” move is to be very selective I dont see it as a broad brush advance. Those with the prospect of significantly improving their reserves or as an explorer being taken over bcos of its proven reserves and proximity are the ones to watch. I have a broad selection of 12 miners from minnows to mid-tiers. The best returns I have to date have been in the minnows….one move alone from .09 – .98c (still holding). Others are mixed. Having big names on the register is no guarantee of success either.

  38. saif

    A strengthening USD along with lower oil prices should decrease labor (overseas) and fuel costs, which are almost 80% of the variable costs for miners.

  39. Liquid Motion

    have U actually monitored the cost of production over the last 4 yrs ……of the miners ?
    Australia is (I believe) the second largest producer of gold in world. Variable costs not reducing there. Would assume the same for Canada too. If you are referring to third world countries(labour costs)..then that is not representative of the market. Plus they have other costs to deal with (infrastructure/haulage/energy).
    Its about digging the stuff out of the ground economically..where they can get a ROC….otherwise they mothball or shut it down.
    I see the price of gold moving higher on the supply/demand equation and also the cost of production…which is increasing.

  40. saif

    All costs you mentioned in my opinion have peaked for the medium term.
    Australia is going to have bust of epic proportions. Lower base metal prices are going to create a huge influx of cheap labor. Energy prices have peaked, barring a war in the middle east.

  41. Gary

    I’m betting you’re wrong, and the three year cycle in the CRB is just getting started. Yes there will be corrective moves from time to time, but the stage is set. CB’s have made it clear their intention is to fight any slow down by printing.

    It will have the same effect as it did in 2007 & 08. It will spike commodity prices and just accelerate the general economic collapse.

    If QE’s are open ended as the Boston Fed suggested this morning, then look to CB’s to throw more and more fuel on the fire when they don’t get the results they are looking for.

    The flaw in their strategy is that they can’t, or won’t, recognize that Keynesian economics are not solving our problems, they are making them worse.

  42. saif

    Good, just to be clear I think they will fail like they did with Japan.
    The countries exiting the euro might have hyperinflation, but net global commodity demand is about to collapse.
    Still Grains, Energy and PMS should do definitely better than base metals and steel.
    At least that is the way I am betting.

  43. Gary

    I think you are making the mistake of focusing on the demand side of commodities, when you should be focused on the supply side of currencies.

  44. saif

    There is so much overcapacity in China right now that even moderate inflation outside of developing countries is hard to get.

  45. Ken

    If the markets melt up and silver experiences a significant penetration of $30 there is a real danger that silver could rocket to $37.50 or higher. Just like records… All of the technical lines on your chart are ment to be broken! 🙂

  46. Ken

    If the markets melt up and silver experiences a significant penetration of $30 there is a real danger that silver could rocket to $37.50 or higher. Just like records… All of the technical lines on your chart are ment to be broken! 🙂

  47. Blog Posts - RNM

    If only to lend further creedence to the notion of higher highs (however slight perhaps) as well some additional perspective – Ive reloaded “risk on” via currencies as of this moment.

    In several pairs as much as 100 pip dips overnight (a fortunate re entry)and we are back on the move upward.

    Cheers Gary.

  48. grimweasel

    Ok, so I spoke with a Large Bank’s Prop trader (read, Hedge trader, post Volker rules) and his advice was NEVER try and trade your long book (ie Pension or 401/ISA etc). He said never try to beat the market, just be the market in the cheapest way (low TERs etc). Only ‘trade’ your short book and this book should be no more than 10% of all your portfolio. And this from a Pro trader!!

  49. Gold Lion


    You said “NEVER try and trade your long book (ie Pension or 401/ISA etc). He said never try to beat the market,”

    Tell that to Chin Lin who traded his wifes 5k IRA to over 2 million.

    No one “rule” is right for everyone.

  50. EddieG

    Anybody know if Tiho and Saif are posting on this board anymore. Would be a shame if we lost the two smartest guys here.

  51. Gary

    They mostly only post when we are weathering a draw down. Since I’ve been exactly right on my recent calls they are no where to be seen 🙂

  52. saif

    I have been posting all along my ups and downs unlike what grisly Gary may want to believe.
    I am not shorting high yield. SO must be TIHO.

  53. EddieG

    I enjoy your posts and hope you continue with them. Same with Tihos stuff. Seems like all the smart and successful people are eventally driven away by all the nonsense here.

  54. saif

    It’s all good EddieG.
    I actually started reading TIHO’s stuff after I came here.I know some on this board believe we are the same person and I do not blame them, in terms of how similar our current outlooks are.
    Except he is long some PMs already, whereas I am not.

  55. EddieG

    Thanks Saif. I have been lurking for awhile but only now feel obligated to speak up before you guys get frustrated and leave. In the last year this board has lost posters like WW, Alex and Poly and I don’t want to see anymore leave. Opposing opinions are not received well here.

    Fundamentals will eventually prevail and I think you and Tiho have it right. You can choose to trade the short-term wiggles but I prefer to position for the intermediate-term trends.

  56. smartbullion

    Gary,have you any concerns that gold is essentially flat for the year to date? Strange given the negative real interest rates.I’d appreciate your thoughts :o)

  57. Gary

    Look at a 6 month chart of basically anything. Do you see a trend there?

    Now you know why no one is making any money.

    The only thing that has a trend is the CRB. Who called the bottom in the CRB before it bottomed and how did he do it?

    That’s right it was Gary and he did it with cycles. And yes we have a few positions related to the CRB and we are making some money on them.

    Tiho is just loosing money on his shorts that I warned him not to take, and going nowhere on his silver like everyone else.

  58. Gary

    Gold is consolidating that huge 2 1/2 year C-wave. Don’t expect much until the high demand holiday season later this fall.

  59. smartbullion

    Gary, thanks. Just wondering if we will ever see the good old days again. I have been impressed though how gold basically wont budge below $1600. Seems pretty solid there

  60. EddieG

    Why are you getting defensive? I didn’t make any comments about your system. I just asked Tiho or Saif a question about high yield bonds. When they didn’t reply I jsut wanted to make sure they didn’t leave

  61. EddieG

    “All the nonsense” just made reference to the bickering that happens here now which drives all the good posters away.

  62. Gary

    Unfortunately that is the fate of most blogs eventually. I really never understood why people feel so strongly about their market opinions that they have to resort to name calling and such.

  63. Gary

    And I have no problem with differing views but when Tiho calls me stupid or a moron I tend to take offense 🙂

    I’ve tried multiple times to get him to act civil but he always ends up letting his testosterone take over.

    We had a simple burrito bet on gold and I thought the stock market. We could have left it at that without all the innuendos.

  64. Gary

    Yes guilty as charged. Training for nationals with and injured back definitely caused me to not be myself last spring.

  65. EddieG

    Takes a big person to admit when they are at fault. Obviously no offense intended. Now if others can just check there egos at the door maybe this place can get humming again.

  66. saif

    there may be name calling, but I think your arrogance is part of the problem.
    If you have done so much better for your subscribers they will see that. However we hear that you make almost no wrong calls when the titles of your blog entries for the past year will show almost 30-40% calls were wrong.
    That may still be enough to make tons of money but does not justify a God complex.

  67. Gold Lion

    Since TBT is in an uptrend it would be called a hanging man. It’s a long term trade though, so I’m not going to worry about short term trends.

  68. Gold Lion

    Tiho, where ever you are you better come out and make yourself know, or I’ll apologize for everything you ever said to hurt Gary’s feelings. LOL

  69. Liquid Motion

    “Look at a 6 month chart of basically anything. Do you see a trend there?”

    Isnt the idea in making money …to spot a trend before it takes hold ?
    Like right now….PM’s are set for new trend…consolidation done. No false breaks up in both gold and silver. New buyers (with strong hands) are creating higher bases by taking gold from weak hands.
    With coordinated efforts afoot by major CB’s (expected easing) we would expect “anticipation” to start overwhelming (before the fact). Lower expected fiat currencies…across the board.

  70. Gary

    While I think gold has put in a B-wave bottom it’s still way too early for a strong trend to develop in the metals. We had a 2 1/2 year C-wave. That isn’t going to be corrected in 10 months.

    I believe gold is now in the consolidation phase of a new C-wave, similar to what happened in 2006 to mid 07.

  71. Gold Lion


    What is the 10 bagger mining stock you mentioned the other day? I doubt I’d buy it unless they already produce but I’d still like to evaluate it. I’ve already mentioned my three best prospects (IMO only).

  72. Liquid Motion

    Yes they are producing believe it or not as they were when they were just .09c…great value. Still another 100% +++ upside IMO as they are turning up some very positive results (additional resources)and cash flow is enormous. One of the lowest cost producers around. Wouldnt surprise me if they were taken over.
    Providing their name doesnt prove anything to anybody. I made the comment to prove a point (which you also made) that you need to be a stock picker …not a fund buyer.
    Besides its not a tip..this isnt a stock tipping forum. Some can also use the information to their benefit which adversely affects my position.

  73. Gold Lion

    Okay LM,
    But, disclosing your position in Gary’s blog could also juice the stock as more become aware of the terrific value you’ve found. Damn, I should start a site where people share stock ideas. LOL

  74. saif

    “Isnt the idea in making money …to spot a trend before it takes hold ? “

    That is for value investors. Traders ignore the first 10% and last 10% of a trend.

  75. Gary

    How about a combination of both? When the market is in a trading range like now become a trader. When it’s trending strongly revert to buy and hold.

  76. Gold Lion

    Funny you think were in a trading range Gary. IMO we have just switched from a trading range to a trending marker for the first time in quite a while.

  77. Liquid Motion

    That’s why I said they were great value. I couldve traded in and out of the stock several times…but to what end ? Overall my position is well in the money. Trading is fraught with dangers/ for those that can withstand the high % of trades being losses.

    Trends are the rich mans friend. Volatility is a traders delight.

    Why be late to the party…waiting for confirmation…to only find out its failed…sound familiar !!
    Get in early..ride it…if it keeps punching through (confirms)…stay with it….if it takes a draw down…you know the secular side will remedy that.
    Timing (as in Gary’s cycles theory) provides an advantage, so too does an awareness of money flows, macro themes and CB action.
    Knowing what the Large Comms positions are is beneficial.market movers.

    I see that Copper for China is in backwardation…you wanna wait for confirmation on that one ?

  78. Liquid Motion

    Oh GS…FWIW…I think the late part of July was the end of the consolidation…it moved through the triangle upper resistance and has stayed there (that’s the trend I am referring to)..perhaps you saw and acted on that too. Gotta get through 1630 fib level for it prove its out of danger though, but I feel buyers are doing the job with new bids being placed above 1600 (support level). Back in June I felt that the consolidation would be done around late July to mid-late August. Seasonality will also come into play here.

  79. Gold Lion

    If the dollar gets turned back down at 83ish there could be a breakout in the markets to new yearly highs. It could get interesting very soon IMO.

  80. Gary

    Like I said it’s way too early after a 2 1/2 year C-wave to expect another strong trend to develop. That just isn’t in the cards until the fundamentals change. And that means Ben has to unleash QE3, and it has to be open ended.

    That hasn’t happened yet. Until it does we are going to continue in this choppy mess similar to 06 to mid 07.

  81. Gold Lion

    As always, I could be wrong, but I don’t think you’re ever going to get your QE3. There is already plenty on money in the system. The FED doesn’t print money, it has to loan it to create it. If the FED would stop paying interest to banks for holding their capital overnight, you would get a lot of money in cheap financing deals overnight.

  82. Gary

    The Fed is loaning it…to the government.

    Yes if they were to quit paying interest that would accomplish the same thing as another QE.

  83. Rocksit

    Gary what is your rationale for QE3? S&P is 2% away from high. Interest rates at rock bottom levels. No signs of deflation. Reported unemployment at roughly 8%. The market is doing the Fed’s work for them already and right now the risk is skewed to inflation with oil and ags ramping higher.

  84. Rocksit

    Are those feelers or is it their way of keeping the market doing their bidding. Any mention of QE and investors rush into treasuries to frontrun any Fed program. Besides those trial balloons send oil surging so it gives the Fed a preview of what they face if they do announce another round of QE.

  85. MikeS

    ‘Rosengren, who is not a voting member of the Federal Open Market Committee this year’

    So no one really cares what he thinks

  86. Rocksit

    The Fed parades out their hawks and doves as needed to push the market where they need it to go. I think Gary is listening to Jim Rickards a bit too much.

  87. Rocksit

    The fed will do another round, it’s just a question of timing. I just get a kick out of everyone calling for me QE without providing a reason or rationale. I respect Garys opinion so I was curious what his reason was. By the way, you really need an edit function on this blog

  88. saif

    “coal is black gold”
    Metallurgical coal is probably going to drop substantially from here.
    Most coal companies make most of their MARGIN on Metallurgical coal.

  89. Gary

    I think you are putting way too much faith in the China slow down story and not enough in the CRB three year cycle low.

    I’ll bet a burrito that we don’t see the CRB back below the recent lows anytime in the next 2 1/2 years.

  90. saif

    China slow down theory?
    It is not a theory. It is happening.
    Look at the news releases today.
    China accounts for half of the world Steel consumption.
    They have built enough factories and commercial real estate to last them till 2030 at least.
    Interestingly they have also built enough STEEL producing plants as if their consumption was actually going to keep increasing.
    Realistically China Steel demand should drop 50-75% over the next 5 years.
    That will create a reverse parabolic demand for Met Coal.

    No Burrito bet. We already are playing for the “Sir” bet on USD.
    I will think of something more interesting.

  91. saif

    China excels at building unprofitable items. Half of its recent newly built airports cannot even cover their overheads.
    In its aim to reach GDP growth of 10% it has built so much excess capacity that profit margins keep getting depressed.
    I dare say that if China achieves its goals of 8% GDP over the next 5 years (less than 0.01% chance), their stock market will probably tank another 50% as no one will make any money on anything.

  92. Robert

    Does anyone know anything about Wiseguy Trading—was checking out his blog and he has had some very impressive returns ( up over 60% the last few months )–He states he uses an automated trading system..not sure if that includes cycles or not—but you can check out his trading spreadsheet..he must be doing something right

  93. Gold Lion

    I’ve never seen that site before but I am almost positive he is using Amibroker. I use it and highly recommend it. You can design your own trading systems and back test them. Amibroker is what I use to develope my trading strategys. I find I have a lot more confidence in a trade if I have back tested the signals and know what the odds are before placing it. Thats how I got to know the win/loss ratio of just about any trading strategy – at least ball park.

  94. saif

    This is an excellent article showing PONZI schemes in China.

    There was another article which got little attention but was quite telling as to the true state of affairs there.
    In China, companies can guarantee other company’s debts. However when the company guaranteeing the debt goes under or goes into trouble, the credit lines are pulled on all companies it has vouched for.
    In July a single company’s bankruptcy led to cascading credit lines being pulled that ended with approx 600 companies having their credit lines pulled.
    Have a good weekend everyone.

  95. Gary

    I still think we should make a burrito bet.

    You think that the China slowdown is going to continue and as such it will pull commodity prices down with it.

    I’m saying that the three year cycle low in the CRB is clearly saying that assumption is false. Maybe the Chinese economy will recover similar to what happened in the US the last two years, or maybe central banks around the world are going to print enough money to delay the recession.

    One of the other is going to happen and commodity shorts are going to get annihilated over the next two years.

    One burrito. I say the CRB will not dropped below the June lows at any point in the next two years.

  96. saif

    All right Gary since you are so adamant. If you think that cycles can predict, stock markets, commodity markets, celebrity pregnancies and derby winners.
    I will see your Burrito and raise you a 10 year subscription. I will subscribe to your newsletter every year for 10 years, if you are wrong,
    you will start every update to your premium letter with the words “I was wrong and Saif was right.” and send me 10 years of the letter.
    Work for you?

  97. Gary

    Well I don’t plan on doing this for another 10 years. My intention was just to help investors ride the secular gold bull and I expect that will be over sometime in 2017 or 18.

    Let’s just either stick with the one burrito bet, or if you want to up the stakes I will give you and 10 of your friends free membership for the duration of the bull market if you win.

    If I win you buy me a burrito and a yearly subscription until I close the service.

  98. saif

    See there Gary,
    you missing an important economic concept which cycles cannot teach you.
    For me buying a subscription has a cost. A real cost which I would otherwise not incur.
    For you giving 10 subscriptions to people who would otherwise not subscribe (I would be hard pressed to personally locate one, not being insulting here, I simply do not have friends who read investment letters), has zero opportunity cost.
    Now putting an embarrassing title on your updates, that does have a cost.
    The bet you are proposing has no upside for me.
    Barring the Burrito, although I cannot understand your obsession with them. I dare say that your burrito love cycle has probably been stretched and is now due for intermediate top.

  99. Blog Posts - RNM

    Hi Guys….hey a question…and perhaps a “reprieve” from the burrito betting (which is absolutely fantastic I might add)…

    This talk of “Profit margins / excess capacity” etc……”China Ponzi” etc….”Bull Run” /Cycles….etc etc etc…..

    Why don’t you guys skip all the small stuff and just plow your knowledge /abilities into the currency markets?

    I mean….when / if anyone has any of this figured out – or at least as strong a hold on the fundamentals moving forward….as you fellows appear to have…

    Why waste your time looking at individual companies silly lil “quarterly earnings reports” or…gamble with the (current worlds casino) SP 500/ Americas stock market…when all these ideas/knowledge could much better serve you (let alone be alot more interesting no?) in the currency markets?

    I really don’t get it….and moreso feel – Isn’t that a little more like “putting your money where your mouth is”? – as opposed to waking up tomorrow morning…. finding out that the CEO of “XYZ” just got caught with his hand in the cookie jar etc? or some ETF blows up?

    A handle on global economics….gold movement….commodities….the dollar etc….why not skip the small stuff and hit the currency market?

  100. saif

    I am short the AUD versus CAD from 1.05. I do occasionally use currencies. You are right that they have that advantage of not worrying about company specific stuff, but stuff I bet on is through long term options as I like to define my risk.
    Currencies unfortunately do not have leaps.
    You can bet I would be buying the 75 cent puts on AUD for Dec 2014.

  101. Gary

    Way too many interventions in the currency markets for me to want to wade into that mess. Just ask Swiss franc traders from last summer.

  102. Gary

    I obviously can’t start everyone of my reports like that, it would be unprofessional.

    My suggestion is we just keep it simple and stick with the one burrito bet.

  103. saif

    Since giving away a subcription to someone who is not going to get on anyway, has no cost for you I suggest we even the odds a bit.
    I will subscribe to one month of your service if wrong, if right you give me a year’s worth. And I will throw in 2 burritos, regardless of who is right or wrong when the bet is decided.
    Work for you?

  104. Gary

    Gold Lion,
    All markets get manipulated in the short term. I don’t think any sane person would disagree with that statement.

    However, in a true bull market, with true demand, it is impossible to manipulate the market in the median or long-term.

    So contrary to what the conspiracy theorists think, gold is exactly where it should be on the 12th year of its bull market.

  105. Blog Posts - RNM

    Huh…interesting…and thank you both for your take on it.

    For me…..the decay/timing in the options markets GROSSLY OUTWAYS risks in currencies (as well….playing one commod currency against another AUD/CAD makes little sense and offers little in the way of possible gains – as opposed to “commod vs safe haven”)

    And as far as “interventions” go…..first and foremost DONT TRADE CHF! (..well I do…..but small contracts in obvious scenarios.ie….dollar down….hmmm.. short USD/CHF.

    In any case…..I guess whatever asset class one chooses….but…..I most certainly could not sit idle through months n months of flat /sideways etc….in GOLD….with opportunities abound currency wise.

    Thanks guys…..have atter.

  106. saif

    AUD/CAD is a bet on Energy outperforming base metals and US outperforming China.
    Currencies also have costs, often in the form of Interest rate differentials.
    LEAPS when implied volatility is low can be really worth it.
    But you really have to buy when IV is very low.
    Like I have been in the last few weeks as VIX is hitting lows.

  107. Blog Posts - RNM

    If thats your trade – best suggestion is just hit AUD/USD for at least 100% larger move (as illustrated in even the last uptrend in both pairs since May – 800 plus pips vs 400 – and cheaper reserve requirements on aud/usd).

    The specifics of “energy vs base metals” will not manifest as obviously as “risk vs safe haven” in pairing against USD as opposed to a commod currency such as CAD.

    Profits made therein long and away make up for the interst rate differentials (neg roll over)….if this helps.

    Have a good weekend guys.

  108. Liquid Motion

    Agree with the “intervention/manipulation in all markets” comment (u have changed ur tune of late bcos u were not always of this frame of mind/mentality…wasnt long ago that you were espousing the virtuous market mechanisms)…but
    “gold is exactly where it should be on the 12th year of its bull market” is not readily accepted.

    The volume of shorts on gold (& AG)
    has and continues to distort pricing levels abnormally. There is not enough ST physical to deliver on those paper shorts (in both metals)..thats fundamental and reality. Added to that you have ETF’s and CB’s leasing out Gold. Thats been true for some time. When the price moves violently against those shorts, they will be severely squeezed and forced to buy (at higher prices) to settle. Thats when you have real price discovery. That is coming sooner than most appreciate.
    When you consider the selling pressure has been met (and convincingly I might add), it tells the true story.
    There was a heavy consensus not long ago that Gold could have gone lower (sub 1523)….see how that has now dissipated…its a slow grinding process but the worm has turned. Bears are back in their caves (except for some idiots at FT). Just for the public to get involved…if you dont make your fortune in this market after all that has been layed in front of you…you will never make it. Blind Freddy can see this.

    Other bets to keep in your back pocket (but not for long):
    Anyone short commodities are going to get smashed.(Energy, Grains, Feedstock, PM’s, Base metals)
    UST are bursting…thats a trap to replicate what happened in the 70’s.
    Anyone shorting the AUD..is kidding themselves. Interest rate differentials there are drawing in funds from all across EURO,US,ASIA. If you thought China was about to implode, why would you enter the currency at a supposed top ? After all the AUD is a proxy for China. Not commonsense. You are on the wrong side of the trade…and trend. Being a contrarian will be very unkind to you.

  109. Gary

    Maybe you haven’t noticed but derivatives in all markets vastly overwhelm their underlying markets. Why?

    Because most traders don’t take delivery and sell the derivative before expiration. Gold and silver are no different than the futures in the ES, NDX, Copper, Wheat, Cotton or any other commodity.

    And BTW I’ve always known there is short term manipulation. How can there not be? In order to take positions big funds have to move price below or above key technical levels to trigger stops so they have the necessary liquidity to enter or exit positions.

    I’ve noted many times in the past how major turning points almost always occur either right after a breakout or break down.

    The 2002 bottom, 2007 top and almost every D-wave bottom in gold has unfolded this way.

    Let me say this again. In a true bull market with true demand (not a housing bubble) it is impossible to manipulate price other than in the short term.

    This is why price controls didn’t work in the 70’s. By creating artificially low prices it just jacks up demand to the point where supply shortages occur. Once you have a shortage then it’s impossible to keep price suppressed.

    Gold is no different than oil. If someone depresses price below true market levels then a shortage occurs and price has to rise.

    Like I said gold is exactly where it’s supposed to be in Aug. 2012.

  110. Gary

    If anything gold is much higher than a normal bull market. If gold is up again this year it will be the 11th year in a row. I don’t think any other bull market in history has done that.

  111. ISpeaksTheTruth

    Sure is nice to see that during my time away nothing has changed here. I see that many of you are still stepping over dollar bills to try to pick up nickels. Aren’t you growing tired of playing the game when you don’t even know the rules? Well in the words of Barry the Baptist, it’s Need to Know time and we MAY just have received our tell this week from TPTB. And what pray tell would it be trying to say? If my antennae is as kosher as Christmas then it probably means a decline in the S&P to 1100 between August and November. Of course one never can tell for sure with these sneaky little buggers.

    This son of a bitch is throwing a two-hit shutout and he’s shaking me off. You believe that? Charlie, here comes the deuce. And when you speak of me, speak well.

  112. Piazzi

    neither cycles nor any other tool can predict anything

    only people can predict

    cycles are just tools that can help an analyst or observer assess probability of certain outcomes

    they are tools and nothing more

    only the deluded knows the future for sure

    all that said, some here are having good gains and little draw downs because we have been using cycles to assess probability and get into positions when some overbloated egos started using foul language and rude behavior just because they did not understand why market would bottom and rise despite all the econo-mumbo-jumbo that they had read

    amateur losers often shed all veneer of civility faster than a lizard in the sun

    as for playing the markets, it is just a matter of finding a trend in a chosen time frame and ride it. Cycles is one good tool for that

    as long as playing the market is concerned, price is what we play.

    all the econo-mumbo-jumbo and europe-this-and-europe-that are better left for headline writers and those who earn living by selling speeches and appearances

    Now, we are getting close to, at least, top of the daily cycle, so, we look at what we have and either trim for size or tighten stops or both while ignoring headlines and ignoring the overbloated egos — trade what you see not what perma-creatures want you to see

  113. Blog Posts - RNM

    Both can be right about AUD – and both can make money – again depending on ones time frame.

    All the more reason to just trade what you see, and let the price action show you the way.

    You guys want some real fun…..pull charts for both EUR /AUD and EUR/NZD! Now those are some trends!

    Meatgrinders in an hour to hour / day to day way (swings of 150/200 pips) but man….once on board – wow!

  114. Piazzi

    “blog posts”

    the interest Aussie dollar pays is better than many corp dividends, that can always help put a floor under a drop or a pullback

    the only caveat is that interest rates may be dropped with much too much ease than dividends

  115. saif

    You have no idea how many billions are parked into Aussie dollars because of the fact that they pay an interest.
    When RBA cuts rates to 0% by mid 2014 and starts QE you will see AUD under 50 cents.

  116. Gold Lion

    Tell me exactly is “conspiracy theory” about this report, or that it is acceptable for the eight largest traders in silver to be short 185% of the total commercial net short position. If you don’t see it for what it is, then you just chose to deny facts.

    “In silver there was a small increase in the Commercial net short position…490 contracts to be exact. This position now stands at 21,852 contracts, or 109.3 million ounces of silver. The report also shows that the four largest traders are short 162.8 million ounces…and the ‘5 through 8’ largest traders on the short side, are short an additional 39.1 million ounces.

    These eight traders are short 185% of the Commercial net short position and, when the market-neutral spread trades in the Non-Commercial category are removed, the four largest traders are short 34% of the entire Comex futures market in silver…and the ‘5 through 8’ largest traders add another seven percentage points. So…the eight largest traders are short over 41% of the entire Comex futures market in silver.”


  117. Gary

    Let me ask you this. Where in the report does it tell you how much physical silver each one of these entities holds? Every one of these so-called evil cartel players has long positions, probably in bullion, that match or are at least close to their hedged positions.

    Remember these are the largest and smartest traders in the world. Do you really believe that these people have been fighting a bull market for 12 years without getting the hint?

    There is also nothing in the COT reports that indicate who a particular trader is.

    By law traders are required to prove that they are using the futures market to hedge price fluctuation risk in order to be considered a commercial trader.

    As far as the COT report is concerned these hedgers could and probably are miners that are locking in price on some of their forward production.

    Like I said all derivative markets overwhelm their underlying assets. That’s because most traders are speculating on price movement and have no intention of ever taking delivery. Silver is no different than any other commodity or asset in this regard.

    The simple fact is that when silver price becomes depressed commercial hedgers significantly reduce short positions, and when price becomes stretched far above the mean, commercial hedgers sell futures in order to lock in gains before the inevitable regression to the mean profit-taking event occurs.

    Almost all commercial traders employ regression to the mean trading strategies, as they are probably the most successful, and dependable strategies in the world.

    The simple fact is that conspiracy theories will in no way improve your odds of making money. They do one thing and one thing only. They give an analyst an excuse, and a scapegoat to blame when they make a wrong call.

    It’s one of the oldest scams in the book.

  118. saif

    Gold Lion,
    It is rare that I agree with Gary, but I must say I think he is right.
    Beyond that, let us assume that the price is manipulated. Do you think it can remain suppressed in case of a massive currency devaluation or hyperinflation?
    If the answer is no then you should welcome this suppression as it lowers the average price of your purchase.
    Hell, I would invite them to suppress a few more prices I pay on a day to day basis.
    BTW, compare the commercial short position in Platinum
    in relation to its supply and above ground stocks, to that of Silver and Gold.
    You will find it is quite close to Silver and much more drastically “Manipulated” than Gold.
    Yet have you ever heard of PATA?
    Why not?

  119. Blog Posts - RNM

    Saifs got it right on the money “Aussie wise” looking out a couple years (not 100% sure of 0% rates – regardless – the ballon’s gonna get popped here at some point).

    Otherwise…Im just trading what I see – and will ride out the next few days of this dollar cycle – long AUD for a couple more points.

    The entire “silver/paper/physical/deliverable thing” is further reason why I stick to currencies – at least I have “some” idea of whats actually going on.

  120. Piazzi


    how do you know jhat I know or don’t know, you are being presumptuous

    Since you know so much about the monetary policy of Australian central bank, do teue and pll us when the rate cut starts and when QE starts, common, don’t be vague with grand standings, tell us when? one week? one month? one year? one decade? one century?

    without any specific time frame, what you say Australian Central bank will do in an uncertain future is useless
    o have been saying binds are shorts for years, and the capital gains on Trasuries has trumped so many other asset classes

    So, the all-knowing super knowledgable saif, when? When does the Australian Central bank cut rates and when will they do the QE?

    as useless as those wh

  121. saif

    I do not know who u r confusing me with but I have never said anything about shorting Treasuries or bonds Piazzi.
    As to the exact time frame of the AUD monetary policy, I am extrapolating the complete implosion of Australia, from its own housing bubble and that of China.
    Australia’s housing bubble is a magnitude larger than the US.
    Look it up, look up house/rent, house to income ratios, versus US at its peak.
    Here is a starting image,
    Have fun with it.
    If 0% rates and QE could not resuce US housing, what do u think RBA with get to before it is done?
    Then you have china.
    I have so much on that front, that u better go through this blog for all my past comments.
    In either case all those including Peter Schiff who are hiding in AUD are going to have their asses handed to them in the next 30 months.

  122. Piazzi


    you seem like you though I was defending AUD

    I was not

    I was merely trying to present one reason for the currently uptrending AUD

    I do not own AUD and was not defending it

    as fars all other things you said, you have your opinions and that’s good

    the rest is price and trend, it’s been up, and neither you nor I know how long it will take for it to turn for good

    I also did not say that you had said bonds were shorts. I was merely comparing grandiose stands on secular trends and their terminations. The facts remain:

    1. Trends are what trends are until they turn
    2. you do not know what future may hold

    BTW, I could care less what Peter schiff, or anybody for that matter may say, I just follow price of what I like, which at this moment is S&P and Gold

    Again, I was just trying to present a reason for the longer term of AUD

  123. Liquid Motion

    “That just isn’t in the cards until the fundamentals change”

    Well I cant see that they have changed…too much debt, banks and sovereigns are bankrupt, economic activity is declining, real interest rates are negative and inflation is prevalent AND fiat currencies losing purchasing power. Perfect climate for precious metals. Excesses of last c-wave have been worked off already and the weak hands have moved on.

    The market is in denial and the forces of nature will push it where it is supposed to be. IMO the next up trend in Gold has already commenced. It doesnt need BSB to make that happen.
    Besides CB pyschology is keeping the market in its place (sentiment). A major bankruptcy of a corporate/broking or clearing house/bank or a default will be the only triggers for any major correction in equities and that will be the trigger for any further QE.
    It could very well be that the expectation of QE is having more of an impact that the actual printing should it eventuate.

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