In todays video I’m going to cover stocks, currencies, oil and gold. This would normally be the nightly report on the premium website, but I’m going to make it public so everyone can get a taste for what is included in the premium reports. If you like this update you can sign up for the premium reports by clicking on the orange button on the right hand side of the page.
Smart Money Tracker
I told everyone to “get in where they fit in”… I hope they did, so now they can turn off their computers and take a long Rip Van Winkle nap! ;-$
Greetings Gary,
Nice report.
We are in the ending stages of decades worth of mistakes and runaway exuberance. Central banks have worsened this stage by attempting to maintain the status quo of a credit inflated economy.
Shorting the markets are always difficult due to the imbalances created and the squeezes that are generated. I thought I read somewhere you were looking for this 7 year cycle low around 1550? So why not short the market in a manageable position size?
Because the Fed has a printing press.
There is no guarantee the market will get all the way down to 1600. I would like to see it get there but if the Fed turns on the printing press then we can probably kiss that scenario goodbye.
Gary,
Agree they have a printing press. But at this point, those bullets have been used up. The economic data is worsening. Tax receipts are greater than 18% of GDP. If the FED was to begin printing again, they would more than likely get a credit downgrade by the ratings agencies as in 2011. This would wreak havoc on the entire system given the relationship of many instruments to the 10YR treasury.
The market is repricing. It says it does not want to be in the 2000’s anymore. It is getting confused on how the USD will affect future earnings.
a bit of caution
4 weeks ago gdx topped at 15 at 80 mil vol
2 weeks ago gdx bottomed at 12.50 at 80 mil vol
today we have gdx at 120 mil vol at 15.35
the only time gdx traded at or over 120 mil vol it was very close to a top or a bottom
Gary,
I’m still cautious about this gold bear market bottom but IF this bottom will be confirmed in the days,weeks and months ahead YOU, Mr.Gary Savage, will be remembered as the FIRST one who called this bottom!
Todays many other famous analysts and technicians like Peter Brandt,Rambus,Dan Norcini,Bob Moriarty,Lois Yamada,Jordan Ray Byrne etc… are saying that maybe the bear it’s over,but they were ALL convinced that when the HUI broke down to a new low we were destined to another downleg of this atrocious bear market.
I was in total panic and I was thinking to sell my position in PM stocks with a loss of over 90%.
But I did listen to your advice and I did not sell.
I don’t know if I will be able to regain the whole of my money,it will be a long way to recover all of my losses ,but the thing all the people that have been financially destroyed by this bear market needs now is a BOTTOM , a DAMN BOTTOM!
I really hope that the bottom called by Gary Savage will hold ,he will probably end in history books, I will probably able to exit the trench where i’m stuck since 2011.
Let’s hope this is for real.
As you know, it takes two to make a market .. so I’d like to offer an opposing view.
It’s my understanding you think the USD will weaken because the US has a printing press and because there are a lot of talking heads piled on the USD bull train right now. While I agree that not following the herd is a wise move, we both understand assets that are stretched can stretch much further than any rationale thought would allow. So, to the printing press item then…
Simply stating we print money is only one side of the equation, Japan, the EU et al are doing to same so lets keep that in context. Also, the US is a safe haven asset and when the rest of the world is crumbling due to slow growth like the EU or China, or b/c its a commodity-based country like AU, NZ, LATAM, Canada, etc, etc, its pretty logical to think funds would flow into the USD due to its safe haven structure and continue to strengthen it in the long term. Furthermore, the FED is basically the only one not lowering rates which we can write a book about and all of those pegged currency countries who have borrowed USD to fund their expansion, well they are witnessing a USD bull market and weakening purchasing power on their side and are forced to repay at higher USD values which pushes this USD higher and higher to levels, as I mentioned before, where rational thought would have stopped.
Ahh, none of this may matter… its all risk management anyways …
Thank you for your analysis Gary.
The FED has already begun to release news about easing up on interest rates rises …. the FED has also essentially just begun prepping the sheeple for negative interest rates – it’s subtly buried in the news flow over the past couple days.
Again, there are a host of countries already at negative rates and more to come. This is the same as saying we are printing… so is everyone else. Its the best of the bad apples is the point.
Put aside QE, govt. bond buying, etc. and think about negative interest rates.
They are telling us that there is ZERO demand for credit. The bank is not going to pay you interest on your savings if they cannot loan money out.
The USD is an overvalued asset. There are structural problems with it. Interest rates can move lower, but the flow of funds is / has changed. This is a headwind for lower interest rates in the future. Watch the long bonds.
That was great Gary! Thanks for posting those thoughts on the public thread.
I agree with quite a bit of what you had said. The dollar in particular is of interest here. You noted that the long dollar trade is one of the most lopsided and crowded trades right now and like you, am baffled as to why since the charts do not currently support that position at all.
As any casual observer should readily notice when looking at the dollar on a monthly chart, it is posting what is pretty clearly a double top that was formed since the start of 2015. We shall know soon enough what opinion is going to be correct though as we are now perilously close to seeing that double top confirmed should USD fall much deeper to its neckline.
The other most extreme trade is short-oil. As you mentioned, when everyone is thinking the same thing they are probably not thinking at all. Can it be a coincidence that long dollars / short oil has nothing to do with the continuing extreme bearishness on all things gold or that a whole lot of traders are about to get their butts kicked. Should we be surprised that simultaneous reversals are happening in oil, gold and dollars all at once?
I don’t think so and we need to really keep tuned in to these abrupt changes because markets are notorious for taking no prisoners at key pivot points such as now. I happen to think you are correct that there has been a fundamental change in the behavior of precious metals. Our early warning was when gold posted that first right-translated top back in October. That was a good call you made at that time because in retrospect it was the signal of an important change.
I am looking for gold to rise to somewhere between 1236 and 1240 on this cycle although I expect a pullback is very near if not impending in the next week. Once we hit 1250 then gold selling should commence as earlier longs who got trapped in a decline since last October finally get their chance to escape what they believe to be a losing trade.
Its right around that point that we will finally know if a Cup and Handle is going to be confirmed on the daily gold chart. Right now it looks like an excellent probability and my view is to buy that dip vigorously. This will be the first time I have taken mining shares seriously since the top in 2011. The risk is now substantially to the upside and as you mentioned, we need to trade on bull market rules right now rather than follow the pattern of selling into every rally.
On the HUI, I also agree with your assessment. Personally I am projecting it to rise to between 160 and 165 although a higher print is not out of the question. Interestingly enough the HUI is also showing a megaphone bottom and that suggests a strong breakout is upon us once confirmed.
The trades that interest me most therefore are to be short dollars, long-oil and long gold. More on oil later if the subject comes up again since that one is paying off like lucky a slot machine lately with beautiful and obvious entry and exit points both on the upside and down.
I wish it was always this easy.
“Once we hit 1250” should have said “Once we hit 1150”.
sorry about that.
It ain’t no bottom gold or any other color, until the “Fat Lady” (Janet) sings.
The longer you sit around with your hands in your pocket waiting for Grandma Yellen’s confirmation of QE4, NIRP, Helicopter $ or ALL THREE at once is another day the ? launch to the ? gets away from you. You need to get in where you fit in YSAB! ?
Well the G-man convinced me to get into some miners and so far so good, though I am a little concerned at all the bullishness in the short term trading community, combined with all the “bear is over” talk. It seems it’s never that easy.
It sure would be nice to be able to sit back and hold for next few years in an up trending metals market, only looking to add into pullbacks if any activity at all, but I think it will be much more difficult than that.
I’m also watching the biotechs for a buy but haven’t done anything there as yet. That sure was a mean hammer yesterday.
Gold miners do look darn good .
I’m sure now you will see next week , Gold the cover story of Barrons , WSJ , Newsweek . That will really get the price up in the coming weeks . Good job Gary .
I would not chase gold too much right now, Walt. Yes, some miners look pretty good and there is still some hay to make but you need to anticipate a reversal just about any time now. So you won’t miss much by waiting a little longer. My bet is next week we correct. The time to get in is on the next pullback. Keep in mind selling pressure will rise as those who held losing positions since Oct / Nov start to bail out or finally see some profit. Check your Bollinger bands on whatever stock you are buying and if its breaching on the upside maybe just hold back a little. Quite a few I track are close to the upper bands of their range. That’s not investment advice by the way. Just a thought to keep in mind.
Re: 19 trillion “debt”- probably 2/3 is interest we “owe” the bankers for money that they were nice enough to lend to us…….except it is OUR money in the first place- the greatest scam ever perpetrated on mankind! How about we do like Iceland and throw them all in prison.
In a buying stampede it’s dangerous to lose ones position or to expect overbought conditions to stop the move. Remember this is the market finally breaking 4 years of manipulation. There’s no telling how far and how violently the repricing could go.
Yee Yaw… Ride ’em cowboy! ?
Please let us know when it’s time to go Old Turkey! ?
No question we have had a bit of a stampede. It started to build slowly and has made good progress in the past few days. Happily I was on board with a few select trades but until gold breaks out above major resistance at 1200 I won’t take it too seriously. Gold is still a heart-breaker so it needs to prove itself to me. And we need not worry too much anyway. Nobody will be left too far behind if this really is the resumption of a bull. Some of these stocks could climb hundreds of percentage points so leaving some small gains behind won’t hurt anyone’s bottom line too much. But here is my real dilemma Gary. While I lean towards your optimism as I already mentioned above there is one other thing that holds me back. And it is this; Gold and gold shares are still dominated by traders, not investors and most of them don’t give a rats behind if gold lives to fight another day or it dies tomorrow morning. What I am saying is that they will take profits strategically at technical turning points and leave the devotees to be the usual bag-holders. Before getting too enamored, just keep in mind that its going to take a real thrust to draw institutional money back into this trade and come tomorrow or Monday morning if the S&P is up and the dollar is rising that gold will get the usual cold shoulder once more. I love the excitement of fast trades as much as anyone but reality is still tapping me on the back shoulder. We need to see genuine investment buying to really take prices up longer term. For now the day traders and profit takers are still firmly in charge.
Gary, I see the weekly HUI chart is still not overbought yet, however isn’t the possibility high for another major gold contract dump to appear any day now?
As you pointed out in your latest video, the weekly, Slow Stochastics Chart for the $HUI is not overbought yet. *But*, gold appears to be in a melt up, and just before tomorrow’s JOB report. To make things more interesting for miner long positions, China is beginning their New Years Holiday next week & Japan has a public holiday on February the 11th…I believe.
Last week, you exposed another one of those anonymous–I believe–gold contract dumps of 7000 that took the miners down. Usually when that kind of thing happens, additional attacks are not too far off.
Myself, like other traders on this sight, are sitting on a nice pile of GDX right now, If you have any concerns about possibly reducing positions of GDX in the model portfolio soon, then I need to end my vacation earlier than I was planning on doing and re-join your paid premium site no later than today. 🙂
The manipulation is being broken. That is why the move is so violent. There is no telling how far it could go after 4 years of artificial bear market.
I think you can now just sit back and enjoy the ride for the next 4-5 years. There shouldn’t be any need to trade gold or mining stocks any longer. Just buy and hold.
We’ve seen these moves before and everyone thinks the bottom is in. GDX went from 20 to 27 only to roll over and make lower lows. The fact is GDX has not even made a weekly higher high yet.
http://schrts.co/qCcO5i
Gary, thats rather naive isn’t it…??? What about the pullbacks…??
Thanks
I think you can buy and hold for the next 5 years now. Corrections will come and go but I think the third phase of the gold bull has begun.
Good deal!
STAMPEDE!!!!!
Bought NUGT at open today.
What is your target price?
Gold shorts who worship Armstrong looking stupid now. Not that I was long for this move, aside from holding a little fizz. Still think we see $500 gold this year.
Armstrong ?? anylink
Gary, last time I heard you proclaim a gold bottom and to be careful of getting flushed out was first week of October, virtually same as you now claim in your earlier post. At that time I took the opposite of your call and it proved a huge success. Gold did nothing but go down and miners in particular. well, we’re at the same point again, and most likely following tomorrow’s employment release or mid next week at latest I intend to do the same. The best gold does here is another fifty bucks, if that, and down we go. There is no interest or purpose for anyone to hold gold, no inflation, and geopolitics are terrible and getting worst yet has no effect on gold as if refuge is needed it’s the US dollar that’s the go to security blanket. This is nothing but a short covering rally. We’re in a deflationary environment and will be for some time and gold is not going to cut it in spite of all the claims to contrary.
Not too sure about a deflationary environment. Private sector wages are and have increased massively. Public offiicials wages are flying high. Food has never been more expensive as they continue to charge more and reduce product size. Almost every building material had a 5-15% increase as of Jan 1, 2016 even with the 70% decline in oil. Housing prices are back to bubble prices in areas. Low CPI is primarily due to low gasoline prices. Gold, at the moment, is aligned with the currency, nothing else.
just too much stuff Richard, the commodity index has been showing a deflationary environment for past several years. Best indicator of inflation is in find commodity index historically together with interest rates.. The rise in health care, food etc are always offset with some other area of consumer consumption. We’re in a major rut spawned by money printing. This will continue to prop up equity markets over short term into maybe spring and then it won’t work as has been already noted with additional qe in Europe and Japan. Made zero difference soon following announcements.
Only thing that will propel gold is negative interest rates and exchange controls as is starting to show up in China.
Harry, Good comment, definitely makes sense.
However, when I see the first consumer price decline, excluding gasoline, whether it be wages, food products, health insurance, education decline, then I will have realized that the consumer sentiment has shifted toward contraction and thus a potential deflation. We are seeing just the opposite. Look at record auto sales.
The commodity index is a function of a global commodity rush due to China in the past years. There is a global slowdown / overcapacity situation that is being accentuated with a massive global crowded carry trade. China was a massive consumer / hoarder of raw materials. Suppliers did not initially see this and expanded too late in the cycle causing massive overcapacity while incurring high debt loads. I cannot say deflationary based on this alone.
Flows and the economy are changing. There is a strong possibility that interest rates are in a bottoming process and will be rising soon. I don’t anticipate a rapid, significant increase, but a range for, let’s say 5 years, in which we are currently around the bottom of the range. Let’s say 1.5% to 3% on the 10 YR treasury.
No need to get excited folks, manipulation is alive and well. Let’s not believe in fairt tales here.
Gold is in the last inning of a bear market rally setting itself up for $50 drop in one day coming up.
Armstrong on Gold Feb 3rd: “Only a weekly closing above 1208 would hint at a more sustained rally.”
Armstrong elsewhere in his blog Feb 4th: “Obviously, all the sales jobs they use to sell gold are fictional.”, and, “So beware of market false moves. This is just the pendulum swinging to both extremes. It must do so to create the energy for the opposite direction.”
Long live the golden bear, it is still alive and kicking why this site insists in burying an alive bear for?
BTDYFI ?
Folks, make or break time again as Gold is testing its monthly vertical resistance line (for the 3rd time) from its peak in 2011…
Personally, i don’t think this resistance can be broken so easily given its massive run up in the past days…
U only need a “weekly shooting star” candle in GLD, GDX to confirm that the sell-off would continue next week….unless of course that the bull prove me wrong by the end of today!
In fact, the juniors’ GDXJ’s daily shooting star on yesterday’s closing pretty much signalled today’s selloff…
http://www.armstrongeconomics.com/archives/tag/gold
Dear Mr. Armstrong,
I have a question for your Blog . Do we need a falling dollar, like today, to see Gold rise?
Thank you
SH
Germany
ANSWER: No. When the majority begin to see that the government is really in trouble, gold will rise with stocks as they did going into 1980 as well as 1929 (in basket terms). The press is still touting that the world is fine with government in charge. The polls show that people are losing faith. This gradual process will snap in 2017.
The REAL function of gold is to act as a hedge against government — not inflation. We do not find any correlation that is consistent to imply that increasing the money supply will make gold rise. When you put the theory aside and just look at the data, you will see that gold rises when CONFIDENCE in government declines. When gold hit $875 in 1980, the national debt of the U.S. reached $1 trillion. We are now approaching $20 trillion. Obviously, all the sales jobs they use to sell gold are fictional.
sit and watch. dont bother predicting anything and be wrong 52% of the time.