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Gary,
Thanks so much for your valuable charting and commentary.
We already have hyperinflation, but it’s so far registering in the stock market and high-end real estate on the coasts. I fear that it will be in commodities, etc. next.
Where else can you be but phys. S & G and the shares? Nowhere.
Liberty!
We do not have hyperinflation, Liberty. We don’t even have much ordinary inflation yet. You have been eating at the gold bug restaurant again. They may be spiking your soda’s with propaganda. Careful who you listen to.
Ha Ha….Funny.
Listening? We’re reading and thinking Austrian economics here.
You are under the spell of gov’t propaganda. Mr. gov’t is always doing the right thing and never admits mistakes. Can’t you see it? Go to shadowstats.com for reality.
The Fed has ALREADY hyperinflated the currency. The pricing effects follow. Look at any Fed adjustment monetary chart.
We’ll need a double dose of monetary heroin on ANY asset deflation going forward to keep the fantasy alive.
Today in Dow Theory, Transports just hit an all-time high. Boom. Bull market confirmed.
Follow the Dow to Gold ratio and expect it to go to 1 or under. 100,000 Dow/100,000 Gold or lower for both.
Oh and sound familiar???
Hyperinflations are usually caused by large persistent government deficits financed primarily by money creation (rather than taxation or borrowing). As such, hyperinflation is often associated with wars, their aftermath, sociopolitical upheavals, or other crises that make it difficult for the government to tax the population. A sharp decrease in real tax revenue coupled with a strong need to maintain the status quo, together with an inability or unwillingness to borrow, can lead a country into hyperinflation.
No wonder you bugs keep getting squashed.
Haha SCORCHED again!!
Trading against central banks is almost always a losing proposition. They have a printing press after all.
of-course and that is why gold cannot go up without their permission, at least not as long as they are THE power.
But, just like Liberty I am thankful for the charts you provide. They are educational for me.
Exactly right. Since election night (which was another timely cycle low in stocks), the “pigmen playbook” has been opened up again. The gold slams, the relentless perma-bid in stocks and all sorts of odd games are being played again. All one has to do is look at the Russell 2000 to see the kind of trickery at work..18% in one month? Heck, that would be a good year…but realistically, at some point this stuff just flames out and the cycles repeat.
One thing is certain…as the “macro” conditions worsen, the moral hazard strengthens and the inflate at all costs mantra gets hammered over everyone’s head…Brexit, Trump, Italy…Europe some years back, Oct 2014 (Bullard bounce)…these markets are front run binary events…probably not that different from the Livermore era and the “trust’s”
Agreed! But, I find interesting that even jolts like Brexit, Trump and Italian referendum are considered to be manageable events by the real powers. Are they overestimating their strength? Are they ready for more of the same? Where are we headed?
Miners should do well going into next week
Bill,
Can you please explain why you think so?
I know I may take heat for this, but this feels like a Blow-off Top. Look at CAT. The price of CAT is trading like a 1999 Dotcom stock. CAT has had 42 quarters of declining sales and used CAT equipment is selling for pennies on the dollar. Yet the stock is trading higher now than at the top of the 2007/08 housing bubble. I haven’t seen anything this bizzarre in a long time.
All premature short sellers will be scrambling for cover, if not already. Short covering frenzy will feed on itself and lift price beyond what is normally deemed to be real, at least for a few days. Then profit taking inevitably sets in and brings down the price. Upside and downside price extremes are symptomatic of crowd psychology. Logic is not of much help in this context.
Except there aren’t really any crowds any longer…This is a market of sharks versus sharks (heck, some of the most prominent hedge funds that weathered 30-40 years of all sorts of markets have closed up shop)…Since QE (infinity) became the de-facto policy (and it’s never really left us, it just was offloaded to the ECB and BOJ), none of the “big dog” funds can beat the benchmarks. It’s just a series of squeezes in most markets where players are poorly positioned or not positioned at all…In 1999-00, you could FEEL the energy, the participation, the euphoria, the mania, whatever you want to call it…This market will drift for hours, days, weeks, then a spark is lit and it goes haywire.
More than anything, it’s the Pavlovian response to more central bank jawboning, promises, threats “whatever it takes” type stuff…We saw an exact replay of this market in early December last year ahead of a much anticipated Draghi speech, two weeks before an FOMC meeting…Different context, no question about that…Only difference is that there are even less participants at this point.
There are always two ways to play the market. You either take the opinion that something is overvalued, overbought, whatever you want to call it (and vice-versa on the long side) and you trade against the momentum, but you have to be willing to take the heat. The other option is to try and ride the momentum train, but this isn’t like 99-00, it’s choppy, algo driven and can cut you into a million pieces if you aren’t careful.
Take the Russell 2000 as an example. It’s within shooting distance of major channel resistance around 138. It’s extended far beyond the “mean”. Do you chase or do you fade it when it gets to that upper channel line?
Gary likes to fade the short term and position for the long term, it’s certainly not easy and if not committed, it can cause a lot of pain.
Gary never ever fades anything. It’s too hard trying to make money on the short side.
I have two strategies.
1. Long
2 Sidelines.
Shorting is never an option for me.
By “fade” I wasn’t implying that you short anything, I was basically stating that you will “fade” weakness in a sector that you believe is in a bull market. (i.e. buy stocks/pm’s, etc.) when others are selling. I don’t pretend to know the details about the why, when and where, but I have read the blog and agreed with much of what you have written regarding holding winning trades.
How to make big money.
Sell every thing that has value.
Buy bitcoin.
The powers to be like the idea of digital money.
Certainly they prefer digital money over gold, and for good reasons.
Small correction. ” They ” prefer gold and “They ” prefer you with digital money . India is not confiscating gold cause they like its color. The India central bank seems to have been caught off guard in this currency war.
Thanks for the correction. “They” prefer digital money because it can be produced in cyber space and hence controlled. Gold cannot be produced in cyber space and cannot be controlled. Do they “prefer” gold for themselves? You could be right. It is a sheer speculation.
Re. India. Obviously you haven’t been following it. It is an incredible phenomenon. No. The RBI hasn’t been caught off guard. In fact what has been done there has never happened anywhere else ever. I was quite skeptical of their success and even lost a bet. But, it looks like they have successfully achieved the first step in spite of all the opposition both from within and oust side. They stood up to the mighty corrupt who were supported by big money from elsewhere and still survived. Will Modi go unpunished? Only time will tell.
Again, just for your information they have put certain restrictions on gold. Gold is very close to Indians. Probably more gold exists in bangles and necklaces of Indian women than any other place. It is a social issue. Yet the government has successfully imposed some restriction on gold.
Interestingly, average India supports Modi. This in itself is mind boggling considering that India was considered to be the most corrupt major country in the world.
And obviously you haven’t been following either
https://www.bloomberg.com/view/articles/2016-12-04/after-demonetization-modi-should-do-no-more-harm
Nice white candle. Dow is powering up driven by heavyweights mmm, hd, mcd, v, etc., Likely a vertical rise for a few days. Just awesome. SM trend need not chime with our thinking. Do we have a choice other than riding the trend in place as best as we can? Fighting price is a non-starter.
Right now pms are out of favour. At some point, the pendulum will swing in favour of pms. Soon, I hope.
I wish somebody had told me that a couple of weeks ago when everyone was overexcited over gold and goldsI
Is it still a good time to get in? Or, is it too late?
We could be looking at a massive blow off top here, I’m not short and I’m not buying the market here either.
Ask Gary. He is the pm expert.
VIN, look for the strong gold stocks right now.. hint.. GLD is not one of them (but may be in the near future)..
Personally, I chose SLV/GDX (& 3X) and bought right at support of down trendline.. I’m not fully allocated yet, so I’m looking for one more entry opportunity..
So, for GDX, the price broke out of a bullish wedge.. I’ll be looking for back test of that pattern for entry OR buy support from the new pattern being formed right now.. We’ll see.
how about fnv, paas and slw?
I find that diversifying into a bunch of gold stocks is less effective than getting to know one or two and focus $$ in those.. much easier to control the investment in the long run.. wonder if other guys have found the same thing?
It is always a good time to buy the stock market. Buy now or be priced out forever.
The DOW has formed a perfect middle finger pattern..
You are funny!
The scenario…
Apparently equities will rally as much as they can till the FOMC meeting; as usual, it is about making as much money as possible before things turn around. The perfect scenario for the FOMC to rise rates is being built. The Smart-Money is in action.
We learned today that TIPS retreated as the market was rising. The conclusion is not to expect gold to rise for at least till the FOMC meeting as equities continue rallying..
Hopefully this scenario is wrong and gold takes off.
Beware of the traps.
Can anyone provide an opinion on how gold will fare as the interest rates increase?
My take again is that on 12/14th at 2:00 PM gold will quickly spike up/down for say +/- 1%-2% and finally will go contrarian to expectation and that I take is up.
“You know, it is a bull market”
It all depends on the increase. quarter? half? three quarter?
A quarter percentage increase is expected and that is not an issue. What will happen in 2017 and 2018 is the issue. ….. Gurus are predicting two increases in 2017 and 2/3 increases in 2018. 1 to 1.5% increase in a year and half could be problematic for gold. What I don’t understand is how can people in so much debt survive such an increase? What about the governments? Fed alone has a debt of about 20 trillions!
Under such conditions won’t other issues attain more importance than worrying about stocks or gold? It just does not add up.
My take is that interest cannot be increased. Playing games is ok, a quarter percent here or a quarter percentage there may be ok. But, there will be no serious increase in official rates, that is willingly.
Today the treasuries were up. Does it mean that “they” have made the money in bonds by scaring the average joe while fully understanding that serious rate increase aren’t in cards?
Interesting times!
Vin,
Thanks! You have a good point on the size and that it needs not to be too large. Thus an increase of 1/4% probably will not have much impact on gold. I think the FED does not think they owe any cent; they probably say the tax payers owe it, that is us. I estimated that about $300 paid by every tax payers goes to pay the interest of what is owe to China, just the interest. I feel bad about the elderly who saved all their life expecting a % return to live but they are not receiving almost any interest.
I just read that we owe to China 1.25 trillion and to Japan 1.15 trillion which add 2.4 trillion.
Assume that there at 100 million taxpayers, then my debt to China and Japan is $24,000.00.
Take it at 2% interest, then is $480 bucks a year. So about right.
You said the markets were going parabolic earlier in the year, and then changed your tune…..
I said we had a possible topping sign on the failed breakout. The market needs to recover the breakout and move back to new highs to negate the signal. The Nasdaq hasn’t negated the signal yet but based on the rest of the market it probably will.
So at this point I’m going to say it’s probably safe to buy at the next DCL.
The parabolic stage should still be months or years away yet.
Gary, this has been one long bull run in terms of duration.. In terms of cycles, isn’t it past due for a major correction?
Yet, your bullish on the equity markets. I’m new here to the blog, so I probably missed it, but why so bullish when longer term cycles are due to correct? Thanks!
Oh, I’m talking about the low cycle placed in equities back in 2009 til now. ..
Not for nothing- the $spx can stay overbought for a long time… this move looks to be a little exhaustive in nature since Nov 4… for those who like wave counts… I see 1, 2, 3, 4, and this week being the 5th wave on the day charts… a lower close on This Thurs and Friday would confirm a near term pull back perhaps in advance of the FMOC. I don’t like 5th wave on day charts for trades… this could easily roll in an A B C type of situation- p
Following yesterday’s VIX jump, VIX up almost 10% on another up day today!!! History says this does not bode well for near term returns.
http://jlfmi.tumblr.com/post/154191468635/stocks-and-volatility-indices-both-jump-whos