1. stockpick

    If stocks are going to “correct” then bonds will rally!

    Stocks & bonds do not “crash” at the same time.

    1. Gary Post author

      I think if bonds actually do crash and signal the bond market is broken, it will also take down the stock market.

      1. stockpick

        If both stocks & bonds crash at the same time, then your thesis will prove to be right and we will get a rally in gold and a much bigger problem in the financial system.

        OTOH if bonds behave “normal” when stocks correct or crash then I will back up my truck in stocks to load up on stocks and gold will be sub-1000 early next year.

      2. vin

        Gary, there is no doubt about it. But, it will take all other “investments” with it namely gold (in dollar terms), atrs, real estate and the economy. And, what I know is also known to “them” as well,

        SO? It will NOT be allowed to happen if “they” can help. If not, then interesting times are upon us. It will be the end of the experiment which started in 1995.

        1. Gary Post author

          In order to stop it the Fed would have to print trillions. Maybe as much as half a trillion a month. What would that do to the dollar?

          I can tell you without a shadow of a doubt there is no free lunch in this world.

          In 2000 investors thought there was a free lunch in tech stocks even though most had no earnings and no chance of every having any. The market eventually proved them wrong.

          In 2006 investors thought there was a free lunch in real estate. It never goes down right?
          Again the market proved them wrong.

          After 2009 central banks thought they could get a free lunch by simply turning on the printing presses.

          I’m willing to bet there isn’t going to be a free lunch for central bankers anymore than there was for tech or real estate investors.

          1. vin

            Gary, I could not agree more. As I have said before many a time, this time “they” are caught between the rock and the hard place. In my views, they have NO choice. They will do their best to buy their way out with an incredible QE. Will it succeed? Let us hope it does and delays the catastrophe for a few more years. They have been successful since 1995 albeit every cycle has required larger amount of injection.

            The economy is now addicted to it.

            You have correctly pointed out that the next QE will be humongous. What will that do to the price of gold?

  2. Markab

    Seems like there is a lot of attention to the bond market right now, all because UST are yielding 2.6%. They were already above 3% a few years ago for a time and…guess what…they promptly dropped back. It is way too premature to assume that the bond market is crashing. And even if this is indeed the beginning of a trend, I seriously doubt the stock market will crash too. As I’ve said, this is THEIR Frankenstein. They created this monster and they will pull out all the stops to prevent a crash, unless you think a crash is just a 2-5% drop lasting a few weeks. And no matter what, gold will drop, as it does during a bear market, as it has been since 2011. There is no baby bull, the only support level left is last year’s low, and that will likely be taken out with little resistance like the others were–and probably soon.

    1. vin

      Markab, At this stage there are two major alternative scenarios:

      1. The bond marker crashes. In that case things will be worse than you can imagine. Stocks and gold will be the last thing you will have to worry. But, note that even then gold will hold its value while it will drop in dollar terms. If I remember correctly, you said you have gold bullion. If correct, you will do better than you think provided you don’t have too much debt.

      2. “They” are successful in preventing a bond crash. It can only be done by injection of liquidity. In that case both gold and stocks will do well.

      There is another scenario which at this point has a very low probability. Somehow bond market corrects itself without crashing. That can happen if the feds don’t increase rates or the increase is only small. In that case inflation will become a serious issue. That is probably the best scenario for the price of gold over the long run …… inflation and low interest rates!

  3. Goild

    My take for this week is:
    1) 5% probability to go back to the previous level.
    2) 80% probability to go sideways this week.
    3) 5% % probability to go down, gold $1100.

    We had last week a stiff loss ~30% (NUGT) and in view of the recent “Darvas box” behavior I would expect mostly a sideways movement. The issue for day trading is the range of this horizontal channel. Perhaps Gold is now towards the top of the channel range.

    Finishing Gold’s kill in the next two weeks to start a fresh new year is a possibility.

    After the FOMC meeting, data suggest that gold’s fall was not a manipulation by gold’s manipulators, but that gold/miners have/had been anchored to bonds/USD, and by bigger manipulators, Central Banks.

    The miner’s rally was fueled by greed and sentiment, not by value. A clear example of how much sentiment can impact the miners stocks, and to pay attention to how the bandwagon is being filled or emptied.

    As QE is reversing, we see a straight weekly-averages line on the drop of the miners indicating the big institutions/CB are behind.

    This is ominous as gold can go further down.

    Though there are credible signs to believe that relief is imminent.

    1. Goild

      I should add that clear scenarios/deals to trade come often.
      There was a wonderful deal to be planned on the eve of the 13th.
      Gold/miners were screaming short me, short me, short me!
      Perhaps lack of experience and how fear and greed taint our judgement prevented us from taking advantage. The cards laid all open on the table. Just to read them and take action.

      1. Gary Post author

        If you are basing golds rally on sentiment then it’s time for another big rally as sentiment is about as low as it’s ever been in the metals.

    2. Pedestrian

      Without a doubt, what happens next with the Yen will dictate where gold goes so it is worth noting that the Bank of Japan is having its December Monetary Policy Meetings on Monday and Tuesday of this coming week (starts tomorrow).

      The interest rate decision and policy statement come tomorrow at 22:00 New York time so that is long after the Monday market close. Watch gold carefully here though since this is decision time for precious metals. Depending on the wording of the minutes it could send gold crashing right back to the December 2015 lows or soaring in a surprise reversal.

      I only mention this because we are at very oversold levels and this could be the inflection point however, oversold does not guarantee gold can’t get even more oversold. Just think twice before placing bets on Monday is all I am saying unless you have a hotline to Tokyo!!!

      Because what they say next will decide gold’s fate.

      1. bginvestor

        Its also one of my trading rules to not place a bet the DAY before an important event.. yes, that one got implemented recently.. lol

  4. GMoney

    If long term rates get too high why can’t the Fed & ECB print up a few trillion and buy the bond to drive down rates?

    1. Gary Post author

      I think that’s exactly what they will try to do. But the problem will be that it would crash the dollar.

      There is no free lunch in this world.

    2. Pedestrian

      That is exactly what they are doing Gmoney. The Fed is now the largest holder of US Treasury debt. Someone has to buy what the Chinese, Saudis and Russia are selling to keep the market liquid. The ECB and Bank of Japan are doing the same. In the case of the ECB they bought so much European debt they ran out of qualifying issues to purchase.

      1. Pedestrian

        As an aside, they could collectively buy up all their own debt if there were enough QE’s. In other words, the Fed could end up owning 100% of the Treasury market (in theory of course) and then the interest rate question would be moot because the Fed returns most income from interest payments back to the Treasury Dept. Its kind of a curious situation that then arise. What would stop the Fed from just buying up everything they set their heart on? What does money even mean at that point? What limits are there to debt creation by government if the Treasury issues as much paper as it wants and then that is snapped up and put on the Fed balance sheet? This is not crazy though. It is already happening although we are a long way from the end game. But you get the point. It’s why Krugman said that Federal debt does not matter.

        1. GMoney

          One of my ideas on how the end game will play out is this: If other countries witness over and over the printing of trillions of Dollars out of thin air they will lose all respect for the currency. The Dollar will be viewed as a joke – a poorly managed currency, backed by nothing, with no discipline on its unbridled creation. They’ll demand more Dollars for their manufactured goods and commodities, or they’ll demand payment in something else. It will only take on large sovereign entity to do this and confidence in the Dollar will be severely shaken.

          1. jeffd5584

            That is why this is COORDINATED central bank activity. When QE stopped in the US, the ECB and BOJ picked up the ball and ran with it. Nowadays, the US markets are just as likely to get a pop out of something Abe or Draghi says than what Yellen says. Currencies can never be allowed to get too far from their “equilibrium” or the consortium of worldwide QE might be jeopardized. IMO, the post 2008 interventions are the final end game as many of the posts above have alluded to the coordinated debt buys, the non-stop interventions, the managed markets phase, etc, etc.

    3. vin

      GMoney, You can bet that that is exactly what they will do. But, then one needs to question why are the Fed increasing rates? Printing more money will undo the advantage of increase in fed rates. Depending on how much liquidity is injected, it could be a lot worse.

      1. jeffd5584

        They can raise rates slightly to lower them once again when any “minor crisis” hits. Plus, as we’ve seen, the markets can be managed via a “hawkish turned dovish” soundbite at any given time. Just look at how managed the entire rate hike soap opera has been over the past two years. Now they’ve managed to put three rate hikes on the table with the S&P 500 at all-time high’s, the Russelll 2000 47% higher than it was in February and Gold back down in the dumps.

  5. Alexandru Popovici

    Gary, i would argue that you are one third correct: stocks to correct next week BUT:
    1) DCL instocks to be found next week;
    2) dead cat bounce in stocks on Christmas rally in a new daily cycle to prove left translated and fail as the Scorch gets flamed up in JAN,
    3) treasuries already bottomed alongside gold and YEN –> treasuries to advance now forcefully.

  6. Barry

    The sentiment of these posts are sure negative for gold. That is probably a contrarion indicator in itself!

  7. Markab

    Sentiment has been very negative for gold for weeks, and there has not yet been one meaningful bounce yet. I don’t think even the biggest bears ever thought gold would drop $160/ounce in a matter of a few weeks.

    Really, the only hope for gold at this point is that the new Administration says/does something that results in a trade war or a military conflict. And even if that were to happen, chances are the stock market would rally anyhow.

    1. jeffd5584

      The election provided the absolute perfect backdrop to unleash this yen carry squeeze of historic proportions. Unlike 10-20 years ago, (maybe the 1930’s looked like this), where you can just create 180 turns in the markets within a series of “binary” type events. I always point to the chart of the Russell 2000 as the poster child for what is in play. You are either long or “chasing” and, if you short prematurely, well that’s painful as well. “Bull raids/Bear raids”, “called in shorts”, you name it…these markets are full of tricks. The gold/precious metals dump was perfectly orchestrated as well…Even Gary mentioned that the slamdown’s had disappeared from early 2016 thru September or so…then when everyone felt they were getting a “discount” to get back on the gold train, it’s just been another relentless drive lower, assisted at every juncture by the yen carry…

  8. bginvestor

    I understand some of you are trying to catch a bounce as a day trade.. But, it hasn’t quite hit the bottom channel support yet..

    Goild, you are 100% in JNUG in your account? Damn, your a risk taker..

  9. Goild


    Actually I am riding NUGT with two lots which are about 1/6th of my account.
    I’ve learned that things with NUGT do not happen instantaneously; with bad news I would have time to sell and have a loss from which I can recover with day trading. I did this when I bought the two lots at $6.94 on Wednesday, to end up reducing the price to $5.50 on Thursday, and by the end of day on Friday, by overtrading and playing strong, getting them to $5.8 and no loss.

    I would not say I am trying to catch a bounce, I am trying to catch the bottom with hopefully many NUGT shares. I want to have some money on automatic gains with a great potential. I do assist with day trading.

    For those guys/gals who do not have a lot of experience trading, and with accounts at critical levels, extreme care should be exercised with leveraged funds (meaning don’t mess with them unless one has the credentials to do it). The market has all the experience and is very ready to take money away from you. Despite’s Gary’s optimism he has indicated how careful he is in waiting for the appropriate setups and exercising stop loss. Ras said to not try to pick up the bottom, look2525 does not look at a stock if it is not above the 9 week or so averages. They have sound advice. The riches and potential of miners might be not very realistic at this time. For so two things at least must align, sentiment and a tangible real good reason, I think.

  10. TraderPete

    Harry Dent has finally admitted defeat. He has sent his subscribers a letter of apology for being wrong about the stock market. He no longer claims that the stock market will collapse, but will move much higher. He does say there could be a small correction at any time, but, after that, it is up, up, and away to much higher levels. Now, I will be waiting with bated breath for the other shoe to drop, when he admits he was wrong about gold. He has been predicting gold to go down to $750, and then, after a brief rally, resume the downtrend to eventually $250. Harry, I’m waiting for your mea culpa!!

    1. vin

      Thanks TradePete. Would you know the reason of his reversal? If true, then that is a surprise indeed because he was so sure of severe deflation before the inflationary collapse. What is his new scenario?

      1. jeffd5584

        Yes, I can find extremely compelling reasons why just about everything in the stock market is at its top and yet the bagholder brigade has flipped from projecting the S&P 500 would test 1200-1600 (when it was at its lows in February) to now a clear shot to 2800-3000. The number of posts I’ve seen talking about the Dow at 30,000 in short order is just as baffling. The greatest sentiment shifts can be achieved with these orchestrated squeezes, pump n dump raids that have become the norm in these markets in recent years.

Comments are closed.