27 thoughts on “Metal portfolio update

  1. ocram

    Do this means that you don’t believe anymore in what you have stated in your last video?
    Or what you wrote here is mainly directed to a SHORT term trade?

    1. Gary Post author

      Just short term for now. But I want to see today’s sell off reversed pretty quickly or I’m going to stay on the sidelines.

  2. Dday

    Well yes it failed at $1160 resistance, and silver failed at $16.30, simple…Support $1124. Was it a bear rally or bottom. I don’t know neither does anyone else….

  3. Don

    Gary, since when did you become such a short term trader? You just told us a few days ago that the bull market is intact and you are jumping out already? Frankly, you are just not making sense anymore.

    1. Dday

      I think it’s called “flip flopping”. Gary’s not the only one even Harry Dent changed his long term view recently. The post two days ago was another “in your face, YOUR GOING TO BE RICH 100000……%, everyone else is dumb….” nonsense post. Whereas this one gets back to reality….

    2. Gary Post author

      Actually it’s called responding to an unexpected move. I did not expect the miners to sell off so hard especially with the dollar being down.

      I think it was prudent to take profits and wait to see what happens.

      I suspect it’s going to boil down to whether the stock market is allowed to deliver a normal correction into a DCL or whether the PPT steps in Tuesday morning to turn it back around.

  4. ARends

    When the US Dollar gets stronger, it takes fewer dollars to buy any commodity that is priced in $USD. When the US Dollar gets weaker it takes more dollars to purchase the same commodity.
    The price of all US Dollar denominated commodities, like gold, will change to reflect the fact that it will take fewer or more dollars to buy that commodity. So it’s quite possible, in fact it’s almost always the case that a portion of the change in the price of gold is really just a reflection of a change in the value of the US Dollar. Sometimes that portion is insignificant. But often the opposite is true where the entire change in the gold price is simply a mathematical recalculation of an ever-changing US Dollar value.
    When the dollar gets strong, gold appears to go down, and vice versa. That accounts for part of the fluctuations that we see in the value of gold.
    The other part is an actual increase in the supply or demand for gold. If the price is higher when being measured not only in US Dollars, but also in Euros, Pounds Sterling, Japanese Yen, and every other major currency, then we know the gold demand is higher and it has actually increased in value.
    Consequently, if gold is higher in US Dollars while at the same time cheaper in every other currency, then we can conclude that the US Dollar has weakened, and that gold has actually lost value in all other currencies. But the price, because it is being quoted in $USD will be higher and give the illusion of gold becoming more valuable. In such a case the devaluation of gold, due to increased supply on the market, is camouflaged by a weakened US Dollar.
    Our feature on kitco.com breaks the change of the price of gold into 2 components. One part shows you how much of that change can be attributed to US Dollar strength, or lack of it. The other portion is indicative of how much the price changed as a result of normal trading. Interestingly whatever changes happen to the price of gold as a result of US Dollar strength/weakness also occurs to every other US Dollar denominated commodity by the exact same proportion.
    look at the graph of both USD Gold might want to catch up? http://www.kitco.com/kitco-gold-index.html#5YR

    1. TraderPete

      Very good post, ARends, and very instructive. I’m a big fan of Kitco, and I’ve noticed the same thing you did.

  5. hammerud

    Gary, I saw my portfolio drop a ton by holding on since last July, but took comfort in your words yesterday with your assessment of the XAU chart that “in bull markets all timing mistakes get corrected. Most traders will never learn that lesson, and that’s why most will never make a dime off the bull market.” I thought “OK, hang on here,” which goes along with what I heard once from Jim Puplava “be right and sit tight.” So, I am somewhat confused on what you are saying. Do you still think we are in a bull market?

      1. hammerud

        Thanks Gary for the planned update. I read a lot of analysts and you are at the top of my list. I have seen what you have had to say in the past play out exactly.

  6. Goild

    It interesting how the swiftly the mood changes around here. Looks like the roller coaster day traders experience.
    Good judgment appears so rare…
    The right cards are open on the table, just to read them and get ahead.
    It is clear that gold has reached a bottom at ~$1225 to go down it will take a substantial force. Most likely as expressed by several of us gold has no choice but to go up. The upside potential is huge with the 3X funds and so good judgment is to go long and play old turkey.
    The last two days copied the top and bottom of the previous level channel. So my take is that next weeks gold will wander betwen $1550-$1665 to set a hooking bear trap and then to go up.
    I managed to get now 5 NUGT lots all effectively bought at $5.75.
    If we gold bugs are right and gold goes to heaven, some of us will have a luxurious retirement.
    Let it be.

    1. ocram

      I really hope your optimism will be proven right,though I think that Gary’s doubts are driven also by the fact that last year we did not have such a severe selloff after miners bottomed.
      It would be too good to be true to have an exact repetition of the last year’s move.

    2. Pedestrian

      Goild, if you play old turkey with 3X funds your goose will eventually be cooked. Don’t even consider it no matter how enticing it looks because it is one of the best ways available to blow up your portfolio (and yes, I am telling you this from personal experience). The problem is that you can be correct over a certain time period but still end up losing money by holding too long as the market gyrates up and down and decay eats away at your position. There are better ways to play. Old turkey is ONLY for stocks in genuine bull markets and even then you need to take care with your selections. We are not in a bull market in gold. Not yet anyway. We are factually almost back to where we started a year ago depending on what shares, metals or indexes you look at. Like 2016 never even happened. And during that time a lot of holders of 3X leveraged products had their arses handed them both on the bull and bear sides.

      1. Bv

        But as Gary said miners are nowhere back to where they were a year ago even though gold/silver are. How do you explain this big disparity?

        1. Pedestrian

          Like I said, it depends on the chart you are looking at.

          Anglogold for example ended 2015 at 7.10 before rising to 22.65 at its peak. That was a triple. It has since fallen to a low of 9.50 having retraced the vast majority of its earlier gains. So if you bought and held since December 31 last year then you have a very nice 35% total gain but that is not even close to the 320% you were enjoying at the peak!

          But that is just one stock of course. If you look at the HUI you can see something more akin to an average and indeed, mining stock has not fallen back to its bottom but rather retraced only 66% from its peak. Part of the reason is that those stocks had been severely beaten down and were very oversold at their recent December 2015 bottom.

          Too oversold in fact and many were well below fair market value. The 2016 gold bounce has corrected that discrepancy somewhat and even if gold itself declines to 1040 again it might be a long while before the stocks again reach those old lows, if ever.

          As a general rule though, gold and the miners follow each other up and down although with differing rates of intensity. The stocks can move dramatically over short periods of time in either direction depending on the mood of the underlying metal.

          But just because gold falls to its old lows does not mean that mining stocks will do the same and that is partly because they started from a very low level relative to the old low gold price.

          In other words, gold can still be in a bear market yet the miners can still bottom at a new higher-low (if that makes sense to you). And don’t forget that we are in a multi-year general equities bull market or that miners are merely equities that had been overlooked until gold perked up again this past year.

          So Gary is correct. When and if you go back to buying mines next time just keep in mind to select them based on their individual prospects as a business and with less regard to their reference to the old gold price. In other words, if you think you can wait to see them back at crash lows again you might just end up missing the upside they offer from their new base price level.

          1. ocram

            You’re correct.
            Gold did NOT experienced any “bull market”, Miners did.
            This is very difficult for many to accept but this is what we have in front of our eyes until now.
            Don’t forget that in the 90’s gold stocks experienced one of their strongest bull market when gold BARELY moved.

  7. ras

    Fast and furious decline. When price meets declining 50 day ma, technical traders are conditioned to sell aggressively. There could be a bounce next week to retest the highs. It would be surprising, if such a bounce is not sold as aggressively.

    What happens after a retest? Time will tell.

    1. Pedestrian

      Great point Ras. Funny enough it was not even mentioned during this past week either but the 50 day simple moving average was what stopped out the rise on the HUI and the Exponential 50 turned GDX back down.

      On the XAU, both were breached, however slightly, before price went South. It’s why I think its really important to watch the major gold and silver index’s for hints about the overall sector trend more so than individual stocks.

      Barrick, for example, overshot the 50 and its upper trend line before turning down. That could be bullish for that one stock but it appears the computers are programmed to buy and sell based on the averages which is what the major indexes present.

      1. ras

        Overshot for 3-5 minutes, may be, Ped. Pre-programmed sell orders by technical traders fed on themselves and made the price cave in. Similarly, when price pulls back to rising 50 ma, technical traders are conditioned to buy in abandon.

        After a high momentum move like this, it is entirely possible to get a retest bounce next week.

        After some difficult gyrations, shake outs and dithering to get time and space into alignment again, it is entirely possible for bullion to head towards 1220 area, close to 50 ma. Time will tell.

  8. stockpick

    A simple q:
    When are you going to come out and proclaim that we are not in a bull market for gold?

    If you are waiting for gold to trade below $1050 to come out then you really are too late to make that call.

    Just saying!

  9. SLEP

    It looks like to me that gold may have finished its bounce. It could go up on Monday, but after that I think it is downhill to new lows until about Jan. 31 or the 1st week of Feb.

    1. ras

      How can anyone know? Market is a 2- way street. It does not favour bulls or bears continuously. It is best to take it one day at a time, look for worthwhile setups, if any, and trade what one sees without being diverted by opinions from self or others.

  10. Goild

    Ocram, Pedestrian,

    Thank you for commenting.
    About the optimism I would say: Consider going short on gold, probably it is more risky and if there is a lower bottom should not be that far. Consider going long, there is great potential. OIl and SM are doing very well, anything good today is expensive, more inflation is coming (some say that gold’ price is a measure of inflation)., I really think that the miner’s low in January was extreme, 3X leveraged funds might be at a price bargain currently, so these are the reasons. The candles now are consistent with this view, that is they are over the daily averages!
    As per playing old turkey, I appreciate the comments and will try to be very careful. There is the dilemma to get out and in of the position to ‘outsmart’ the market which perhaps only very talented people can do with frequency.
    For another thing, I would be interesting to tally among the gold bugs/shorts the opinion about what would happen on this Tuesday and this coming week.
    Can you say positive, positive, for both?

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