THE LEMMINGS ARE HEADING TOWARDS THE CLIFF… AGAIN

Did we learn nothing from the tech bubble?

The real estate bubble?

The energy bubble?

Apparently not, as here we go again. The next series of bubbles is now in progress (Bitcoin is the first).

Let me go over again the signs of a bubble. Price will usually rally at least 100% or more in a year or less. A clear sign of out of control human emotions.

Price will stretch 40, 50, or even 100%+ above the long term mean (200 day moving average).

Investors will start to rationalize reasons for why this rise in price is justified. In 2000 investors convinced themselves that earnings didn’t matter. All that mattered was how many eyeballs your website was attracting.

In 2006 investors convinced themselves that we were running out of available land in the world and skyrocketing real estate prices were justified. Apparently none of these people had bothered to take a look at the Mohave Desert. Land as far as the eye can see.

In 2008 investors convinced themselves that we had reached peak oil, even though we had tankers sitting in the Gulf of Mexico unable to unload their oil because all of the storage facilities were full.

Investors have now convinced themselves that the ability to counterfeit their own currency really is a viable strategy to get rich.

And finally towards the end of a bubble you will get a massive insurgence of copycats trying to piggyback on the mania. During the final few months in 2000 there were literally thousands of websites coming online, none of which ever had even the remotest chance of making a dime. Here is a list of current Crypto currencies as more and more people try to piggyback on the mania. Again, classic behavior as a bubble nears its top.

There is no barrier to entry in the cryptocurrency market and there is no fundamental difference between Bitcoin at $8,000 and bytecoin at less than a penny. It’s not like one has a superior business model and produces a more desirable product. In fact the inevitable massive dilution of the cryptocurrency market virtually guarantees that price will eventually go to zero.

I’ve said this before, and I’ll say it again: Human nature never changes.

At the very beginning of a bubble almost no one believes. The very few with the foresight to see what is coming are laughed at and branded as extremists. For almost a year now I’ve been telling investors that once the NASDAQ composite broke out above the 2000 highs we would see an aggressive rally and 10,000 would be a piece of cake, 20,000 wouldn’t be completely out of the question once we get into the nutty phase of the bubble. Most everyone laughed at me then, and many continue to laugh at me now even though the NASDAQ is doing exactly what I said it would do, it’s already almost halfway to 10,000 from the breakout above 5000.

Four years ago I could’ve made that same statement about bitcoin. When bitcoin was under $1000 I could’ve predicted that we would see price go above $8000. I guarantee at the time everyone would’ve laughed at me, and thought I was insane. Now however, as price has continue to rise sentiment has swung 180° in the other direction, and no one can see any possible scenario where price could collapse. But I guarantee you price will collapse. Every parabolic move in history ends this way. This time is not going to be different.

Let’s face it, anyone with a shred of common sense left can see that crypto currencies are a Ponzi scheme. Getting rich simply isn’t as easy as creating your own currency out of thin air and then watching as gullible investors bid the price up. That is a perfect example of the Greater Fool theory in action.

The sad fact is most of the fools jump into a bubble towards the very end and then get caught when the market collapses.

You need to ask yourself:

Did you get caught in the tech bubble?

Did you get caught in the real estate bubble?

Did you get caught in the energy bubble?

If you answered yes to these three questions, and you are now buying bitcoin after it’s already rallied 700% in the last year, then you my friend are the Greater Fool. You are unable to learn from past mistakes. You are one of the sheep that drive bubbles. You buy too late, and you hold too long.

The time to get into a market is before the parabolic phase begins, not after it’s already rallied 700%. I don’t believe bitcoin is going to be the only bubble. We are going to have a bubble in the stock market, and I expect we will probably have a bubble in the gold market after that.

Many, many Greater Fools are now piling into the bitcoin market.

Those very few that can still think logically recognize that it’s too late to jump into the bitcoin bubble. Those with foresight can see the next bubble is just now beginning in the stock market. If you want to ride a bubble you need to get in early. I’ve posted the Robo ratio a couple of times in past articles. It is one of the best, if not the best single sentiment tool to judge complacency in retail investors.  The Robo ratio still isn’t even vaguely close to conditions that exist at final bull market tops, much less at a bubble top.

Source: sentimentrader.com

Folks if you want to profit from a bubble, you have to get in early when everyone else is still in denial. Despite doing exactly what I predicted it was going to do, most traders still view every pullback In the stock market as the beginning of a crash, instead of a buying opportunity. At some point price will go up far enough that traders will lose all fear and every pullback will be viewed as a buying opportunity just like they view pullbacks in bitcoin right now. When we get to that point it will be close to the top and time to start thinking about selling your stock market positions.

If you got caught in the tech bubble, real estate bubble, or energy bubble maybe it’s time to exit the Greater Fool bandwagon and do something different this time. Maybe it’s time to buy at the beginning of a bubble instead of the end.

I warned people that once the summer/fall correction was complete the markets would begin a vertical phase and traders would make a lot of money quickly. Most ignored me and missed the opportunity, while they waited in vain for the September/October crash that I knew was never going to come this year.

 

This is just the very beginning of the bubble. You can either continue to wait and buy at the top just like you did during the tech bubble, real estate bubble, and energy bubble, or you can try something different and buy at the beginning of the bubble this time.

I think we are likely to get some kind of correction in January, or February. This time instead of viewing it as the beginning of a crash, use it for what it is…

Possibly the last great buying opportunity before the bubble shifts into a higher gear.

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204 thoughts on “THE LEMMINGS ARE HEADING TOWARDS THE CLIFF… AGAIN

  1. Americano

    Gary has Bitcoin.
    Superman had Kryptonite.

    Bitcoin doesn’t even start till 2018. This is positioning.
    http://www.thehalvening.com/index.php?lang=en_US#2

    A lot of anti-Bitcoin is people conflating it with a stock. It’s more akin to real estate – in Manhattan or Tokyo – not Kansas.

    This will start tingling for many in Spring. In summer, it’s gonna be “good night nurse” for how obvious it will be.
    $15K summer
    $25K EOY
    TQQQ cool too for trading if you have 401k etc. I’m always wary of gbtc.

    1. Steffmeister

      We will soon find out, remember I wrote about a full moon coming soon related to bitcoin/dollar which one is going up and which one is going down, or borth down or both up?

      For some reason it’s also connected to the Swissy …

        1. RTTPD

          Whenever I read folks debate Jim Rikards on twitter about how bitcoin ” is different” and its going to 50 or 100k or maybe a million ” anyone with just a little intution can recognize that many, many of these people are just dreamers that cherish a chance in life to become incredibly wealthy overnight with no work whatsoever.

    2. Marc

      The real problem with bitcoin is that no government can control it. As a result it’s completely unstable and the only use, other than speculation, is transferring funds to a third party outside the banking system. You can’t run a business with that kind of currency fluctuation. Imagine if the dollar doubled in a few weeks or halved. I’ll bet the rise in bitcoin price is proportional to the use of bitcoin (and speculation) rather than businesses actually keeping assets in bitcoin. The smart ones convert to dollars right after a bitcoin transaction.

      Where it could succeed is as an alternative to bank wires or ACH transfers. Again, I wouldn’t keep a lot of assets in bitcoin.

      1. Americano

        You’re not there yet Marc.
        The “real problem”you site is the feature.
        Keep this firmly in mind – Intensely smart & credentialed people missed Bitcoin by subconsciously using inexact correlaries to stocks, the US dollar, how we use cash etc.
        Evidence of this is Kyle Bass recent mea culpa on Bitcoin & the fact my Ivy League educated brother in law lawyer that speaks 4 languages didn’t get 3 Bitcoin because he “only had enough $ for 2” lol.
        This will become more apparent as you think about it more. When in doubt glance at price. That is the true arbiter.
        Show starts this spring.

    3. dj

      Real Estate? Really? Yea, those bytes on hard drives use up a lot of valuable land. It’s more akin to RE in the Simms or 2nd life. Still backed by nothing with unlimited competition.

  2. jacob2

    Gary, Your site. Things to be thankful for on Thanksgiving. Don’t always agree but always appreciative of the time and effort you put into maintaining this free site. Have a nice holiday.

  3. Steffmeister

    Yes, I see cryptos as tech-stox from year 2000. The reason why the government has not brought it down yet is becauos it was a God sent event to allcocate speculators and attention from Gold&Silver into something else. That will will change soon I guess when states has created a full hedge against the coming finance-debt crisis.

  4. victor

    Gary, what is your thinking on cannabis? I bought 3 weeks ago thinking I’m too late, but it goes up everyday 2-4%. In July 2018 there’s going to be legalization in Canada on it. Announced taxation is not bad for business, Thank you.

  5. Roy Batty

    BTC has been 100% + over the long term mean so many times it’s tough to keep track. Many bubbles it’s had and every one has popped. The question is how many more are available. Bubbles don’t finally end until they run out of buyers and I suspect this bubbling asset will be no different. Unless of course this time is different. Too bad we don’t have a ROBO ratio for BTC. Is Jason thinking of trying to come up with something?

  6. Roy Batty

    Especially when you consider the fact that anyone in the world can buy it, small or huge quantities, without anyones approval (governments or banks), with an internet connection, and no third party involvement. Unlike TQQQ.

    1. Gary Post author

      It the ratio of small investor call buying to put buying. At bull market tops the ROBO ratio is massively skewed towards call buying and will have been for months leading up to the top.

      We aren’t even at a mild extreme yet, much less at a huge extreme that has lasted for months.

      1. mikeyboyguy

        The original concept of the coins was intriguing, hidden commerce, but now it is 99% about speculation. This has now become merely smoke and mirrors. The coin bubble (total speculation) will be huge. It is strictly a numbers game. When one of the top 3 goes it will be a domino effect. Clearly, as Bitcoin goes up in value fewer and fewer investors will be able to afford the escalating price. Supply and demand is king in this scenario. Once there are fewer buyers who can afford to chasing than holders the whole pyramid will come crashing down. Take a look at your chart Gary and add up the capitalization of all the major players. Huge dollars will evaporate over night and cause havoc for many small investors. This is a calamity waiting to explode. It will be ugly!!!!

  7. Gary Post author

    The problem isn’t that bitcoin is going to top tomorrow. The problem is that it’s a bubble and when it does top it’s going to crash every bit as hard as it went up. The rubber band theory.

    Considering how far it’s already stretched above the 200 DMA this thing is going to lose 95% or more of it’s value when the crash comes. So it doesn’t matter whether it goes to 10,000, 15,000 or 20,000, almost no one will realize any of those gains because they will hold too long as people always do in a bubble and they will ride the market all the way back down to under $1000.

    So you either have to be one of the very few that is able to control greed and just decide you’ve made enough… or you have to be one of those that bought under $1000 so when you get caught in the crash you will still be able to get out with some profits left.

    1. Roy Batty

      My point is that I don’t think BTC is anywhere near the top. I have given you a good reason for my opinion, sighting the extremely small number of folks who own it as compared to the potential ownership by 7 billion people. Not only have you not supported your theory with any facts, concerning timing, but you haven’t addressed my point about so many buyers still being available.

      1. Gary Post author

        I answered your question right there in the article.

        700% in less than a year. Bubble behavior.

        Stretched over 300% above the 200 DMA. Bubble behavior.

        Investors inventing reasons for why counterfeiting their own currencies really is a viable business strategy to get rich. Bubble behavior.

        Massive numbers of copycats now flooding the market as everyone tries to piggyback on the mania. Bubble behavior.

        At this point one is playing Russian Roulette or musical chairs and hoping they can guess when the bubble will top. Almost no one will and they will get caught when it pops. I expect in the first 2-3 days bitcoin will lose 50-70% of it’s value. At that point 90% of all investors will be massively underwater with no hope of ever recovering their investment.

        1. Roy Batty

          Yes we agree on bubble behavior. You still haven’t addressed my point on adoption saturation or speculation saturation concerning TIMING. Good point on number of new cryptos flooding the market as being a sign. However, this was going on with dot coms for years before the top. Also, listing dot com companies was/is significantly harder than issuing a crypto token. A guy in his mothers basement can easily create new tokens left and right, given that he has some very basic programming skills. No approval or financial system is required. The comparison is essentially meaningless.

          1. Gary Post author

            Ahh but that is where you have it wrong. It’s so much easier for the crypto market to get diluted. Why would traders throw money into bitcoin after it’s already over $8000 when they can buy Bytecoin for less than a penny?

            There is no barrier to entry in this market and that alone will ultimately destroy it as more and more people create their own currency.

  8. Roy Batty

    Very good point. I’d say your best argument yet concerning the future viability of cryptoCURRENCIES in general, or as a whole. Many of the cryptos, especially etherium, aren’t being created for use as general currencies though. They are for use as a utility currency (token) within a protocol as smart contracts.

    As to the creation of so many crypto currencies I’d argue that nearly all of them will not attract fiat for speculation or transaction purposes. BTC itself is limited to 21 million, as I’m sure you know, which eliminates the possibility of BTC inflation after that number is reached. Also, first mover status gives BTC exponential advantage over any competition…. it has well over half of all crypto market cap and multiples more when you eliminate smart contract tokens.

    Still, only 5 million people own BTC and most of them comprise the people who own any cryptos. A very small sliver of potential buyers. Most of the cryptos have been bought by people who’ve made sick money on bitcoin and etherium. As long as they keep their winnings in cryptos they owe no income tax.

    1. Gary Post author

      It really doesn’t matter the limit on bitcoins. The cryptocurrency market itself is unlimited as we are now seeing. And there is no fundamental difference between bytecoin at less than one penny, and Bitcoin at $8,000. It’s not like one is a superior company producing a much better product. The fundamentals for Bitcoin and bytecoin are essentially exactly the same but one is priced exponentially higher than the other.

      Ultimately this is going to collapse this Ponzi scheme market back to its essential value, which is 0.

      Governments throughout history have been unable to resist the temptation of free money by counterfeiting. Do we really think the average citizen will be any better? I think we all know the answer to that question.

      In the end cryptocurrencies will become so diluted as to become virtually worthless.

      1. Roy Batty

        “And there is no fundamental difference between bytecoin at less than one penny, and Bitcoin at $8,000. It’s not like one is a superior company producing a much better product. The fundamentals for Bitcoin and bytecoin are essentially exactly the same but one is priced exponentially higher than the other.”

        That’s like saying there’s no difference between the USD and Zimbabwe Dollars. The USD is dominant due to its market capitalization and widespread usage. They are both just pieces of paper with some ink on them. They are essentially exactly the same. LMAO!

        The USD isn’t a superior company producing a much better product either.

          1. Gary Post author

            LOL I understand bubbles, and human nature.

            I also understand a market with no barrier to entry and the ultimate effects of massive dilution.

          2. srsly_imean_srsly

            No, you have a deep misunderstanding Gary… off course people won’t buy bytecoin… it’s an obvious scam with a huge premine, and more important: noone accepts it, there’s no network…

            I will ask you to please stop what you’re doing here and read up on it… You obviously have no idea what this asset is about, it’s NOT some stock, it IS the product… it gets more useability the more people buy and use it…

          3. spectrum2105

            The classic dead certain sign that you’re in a bubble is when the participants say, “This time it’s different.”

  9. Roy Batty

    I think the reason BTC is different when it comes to withstanding extreme rubber band stretchings is that it has an extremely small market cap when compared to indices you’re familiar evaluating, such as DOW or SPX. And an even smaller trading volume as most holders, 95% held by 4% of owners, are whales who don’t trade it. This volatility means, as evidenced by long term charts, it can suffer many bubbles and crashes as small speculators get greedy and fearful. So the fact that it is over the 200 day moving average by huge amounts isn’t a good indicator of a final or long term top. IMO.

    1. Gary Post author

      Lol the US has a multitrillion-dollar bond market and a trillion-dollar GDP to back its currency.

      Zimbabwe has basically nothing.

      The only thing backing any cryptocurrency is speculators willing to play the greater fool.

      1. Gary Post author

        I think I can guarantee that 10 years from now we’re going to look back and wonder how we could have been so foolish as to repeat the Tulip Mania all over again.

  10. Gary Post author

    I suspect the data is incorrect and there are a lot more people buying Bitcoin then what many of the Bulls would like to believe. I know rock climbing friends of mine that own Bitcoin. That should tell you something.

    However if the numbers are even remotely close all it proves is that the vast majority of people are buying late in the bubble just like always happens during bubbles. This is why the vast majority of people never make a dime off of a bubble. They buy too late and they hold too long.

  11. ted

    I don’t think BitCoin will be the big winner. But crypto’s will be. The question is which one. Just like the dot coms. Where is AOL, YHOO, and [email protected] now? From those days, only AMZN became the hero. But I do which crypto will win out. It’s DASH. They are the only one who has made a platform where the user has privacy and transactions happen instantly. Remember, 5 years from now. DASH will be our Cash.

  12. MagnuM

    Gary, you didn’t make a dime over one of the greatest bubbles in history. We’re talking like 100-fold in 4 years. It’s clear that you’re just sour grapes that missed it.

    Why didn’t you use your cycle theory against it, if it works so well? Even if the “asset” was dog poo, a good technician could probably make money off it. They don’t have to fundamentally believe in it.

    I know almost nobody into cryptocurrencies at all. Everyone is scared of it, doesn’t understand it, and thinks it’s going to crash. Until it does, they’ve all been wrong.

    I find it funny that you’re trying to confidently predict future bubbles that have not yet occurred, and might not occur, yet you missed one of the greatest ones that ever was. That isn’t a prediction, it’s already happened! You could have gotten your subscribers in with a very small 10% or lower position, and they would have made it out like bandits. Your insistence of trying to top-call the cryptos sounds like regret to me.

    Disclaimer: I’ve realized 250% gains from the cryptocurrency space (10% portfolio allocation), and have now cashed out completely as of yesterday. I’m also a senior server administrator that has a grasp how the underlying technology works.

    1. Gary Post author

      That one is easy.

      I don’t invest in Ponzi schemes.

      A bubble and a Ponzi scheme are two different things. I’m trying to get in early before the parabolic run in stocks. And I’ll try to do the same thing with gold when I think its time has come.

      But never in a million years would I ever put a dime in a glaringly obvious Ponzi scheme. Those will have to go up without me. I got caught in the tech bubble. I made millions in the real estate bubble as well as the energy bubble. I’m already doing pretty darn well in the pre bubble stages of the stock market, and I hope I catch a nice chunk of the gold bubble.

      But I will let others mess with crypto’s. Although I guess I could try my hand at creating the SMT coin and see if I get any fools to bite. 🙂

        1. Gary Post author

          What is the difference between recognizing a bubble and saying this time is different?

          Answer: ownership…

          :0

          Investors caught in a bubble always think “this time is different”.

  13. dj

    I’m not interested in investing in stocks because they are historically very expensive right now. I concede that they could go higher but I only buy things that are undervalued. What would you recommend to buy now? What sectors are currently undervalued?

  14. Roy Batty

    “Lol the US has a multitrillion-dollar bond market and a trillion-dollar GDP to back its currency.

    Zimbabwe has basically nothing.

    The only thing backing any cryptocurrency is speculators willing to play the greater fool.”

    Good reason for the differences between USD and ZD. However, I was attempting to compare this difference and the difference between BTC and BCN. Both are “essentially exactly the same” with all cryptos being essentially ones and zeros and all fiat paper and ink (mostly ones and zeros also but essentially the same no less). The reasons for dominance of USD over BTC are a different issue entirely. Is it not possible that BTC enjoys similar advantages over BCN but for vastly different reasons. One concept is fiat currencies mandated by laws and violence/prison while the other concept is currencies that are slaves to the laws of open source algorithms. One is enslavement while the other is freedom. Enslave the money, not the people. Why is it that super rich individuals are buying BTC in all these countries that have tyrannical governments? Answer: they want a percentage of their wealth stored in secret places where no governments, attorneys, or LEO’s can seize it, tax it, or disappear it. They can transact with one another free from prying eyes and parasites. At virtually light speed, not three weeks, they can secretly transfer billions without third party involvement at near zero cost, not $550 or whatever. No government/bank approvals, no going between eleven different third parties. Safely, conveniently, secretly, cheaply, peer to peer, Eritrea to India, like it’s been for millions of years with humans. Well, not the Eritrea part. Human to human transactions are the best way to go in the future as well. It’s nobodies business but mine what I do or don’t do with my hard earned property. I believe property is a significant part of my life and I have the right to life. To believe otherwise is just another form of “yes massa”.

  15. Roy Batty

    Sorry for the rant … I blame it on drinking too much during our celebration of freedom and prosperity in the land of the free and the home of the brave. For real?

  16. Goild

    Here is an excellent example on how to report profit from MagnuM:

    “Disclaimer: I’ve realized 250% gains from the cryptocurrency space (10% portfolio allocation), and have now cashed out completely as of yesterday. I’m also a senior server administrator that has a grasp how the underlying technology works.”

    He reports 250% profit on 10% of his portfolio.
    The amount of portfolio heat he took is 10% which is very reasonable.

    250% profit on 1% portfolio heat does not mean too much.

    Reporting profit without the amount of portfolio heat taken has little meaning on the trader skills.

  17. Alexandru Popovici

    1.1881 is so close for eur & USDJPY has just set swing low after a 28-day DC, and oil is playing with its 200Wma –> gold’s decline to ICL is here just as the last gasp of the risk-on mood for stocks and commodities.

    1. Alexandru Popovici

      the dead-cat bounce of USDJPY should be capped at ~ 113; that should coincide with TLT setting its DCL, gold ICL while stocks and CRB their ICHs.

    2. Nada

      Sorry, but much too early for ICL in gold. I have a target of 108 for USDJPY before this correction is over. Your “swing low” will be invalidated shortly and you can disappear for a few months then pop back up and make some more horrible currency calls.

  18. carlvan

    Roy, you wrote: “Why is it that super rich individuals are buying BTC in all these countries that have tyrannical governments? Answer: they want a percentage of their wealth stored in secret places where no governments, attorneys, or LEO’s can seize it, tax it, or disappear it”. And I agree with you that people don’t want government and banksters to take their money thru taxes, seizing, etc. And I also remember that, a decade ago, a lot of people once gave their money to a certain B. Madoff, whose funds were only rising day after day, until it (the money) disappeared…IMHO, all you said about crypto’s is true, but, as it is a non-regulated/backed market, I give it no more value than roulette: you double your money 2 or 3 times in a row on the red, put all your capital again on the red, and losts it all. Well, casino is probably funnier.

    1. Roy Batty

      “And I also remember that, a decade ago, a lot of people once gave their money to a certain B. Madoff, whose funds were only rising day after day, until it (the money) disappeared…, all you said about crypto’s is true, but, as it is a non-regulated/backed market, I give it no more value than roulette:”

      B. Madoff was extremely regulated and backed. The banking/finance industry was the most regulated industry in the history of mankind yet we experienced the 29 crash, the 08 implosion, everything in between, and now negative interest rate policies around the world. Regulations end up being captured by the richest among us and used against us for their benefit. Lobbyists write most bills passed by Congress.

      The insurance industry wrote the ACA and it was passed before being read. BTC has no central power controlling it other than the emotionless and cold power of logic circuits and algorithms. Like the laws of physics they are impervious to greed and fear, violence and incarceration, tragedy and hope.

  19. didier

    A 250% gain in a 10% portfolio allocation is a peanuts gain. I think it’s representative of all those btc investors bragging on blogs. Almost no gains, almost no bitcoins but almost trolling us non-believers to death. Give us a break.

    1. Roy Batty

      Hey didier, in case you didn’t notice this post by Gary is focused on BTC/cryptos. In addition Gary seems happy to discuss the issue. You can easily ignore my posts as I can yours.

  20. Adrian

    Bubbles are not the problem, asset allocation and leverage is.
    Not more tan 2% of portfolio in Cryptos were the right allocation.
    But I know people that want to allocate 10% of their total assets in cryptos and with leverage, perfectly nuts.

  21. Goild

    I wonder if someone can comment on the rational of diversifying a portfolio among different securities and small percentages, versus putting the portfolio in a single investment.
    I take this from the point of view of the active trader. Of course for someone who will pay attention to a portfolio once a year diversifying makes sense, which is an extreme. What about the other extreme with an active trader, all eggs in a single basket?

  22. isavage

    Gary your EUR/USD call of 1.1919 is about to be tested. If it go’s above do you call off the lower low for the Euro. If so is not the lower low in metals called off??

    Thanks

  23. Jimsee

    gold wants to selloff here (took out Nov 23 low first thing this morning) but the currency/irate fundamentals won’t let it go,lol. CHF has higher commercial longs than in DEC 2015 fwiw, same level as DEC 2015.

  24. Gary Post author

    I mentioned the other day that it would depend on which currency was controlling the currency cycles. By that I mean if the euro has completed a short DCL and is now in the advancing stage of a new intermediate cycle then it’s going to force the dollar into an extremely stretched cycle. And instead of the dollar finding a DCL in the normal timing band it will stretch out to 50-60 days as the euro rallies.

    This is exactly why I will never trade currencies. They are just too erratic, don’t adhere very well to cycles, and or sentiment extremes, and tend to be highly controlled by central bank interventions.

    This scenario would indicate that the dead cat bounce in the dollar is over and the megaphone pattern is about to break down. The logical conclusion would be that gold would proceed to rally. But as we have seen in the past,, the futures market can be used to control the direction of gold and sometimes it can be prevented from rallying as the dollar declines.

    So it’s still a bit risky to go long gold when sentiment still hasn’t reached any kind of bearish extreme, and the COT levels aren’t particularly bullish.

  25. Gary Post author

    If the S&P can close above 2605, give or take, then I think we have a successful breakout and will now start the run to tag the bull market channel trendline (somewhere around the 2630ish level)

    1. Alexandru Popovici

      Indeed. That’s virtually a done deal with USX to start a new DC, eur falling to HCL, while gold and GBP to ICLs.
      Watch out when USDJPY gets close to 113!!!

  26. Gary Post author

    Things that aren’t behaving correctly:

    The energy stocks are not following oil to new highs. Something is wrong = I want no part of the sector right now.

    Biotech isn’t following the stock market to new highs. Something is wrong = I continued to be worried about what Washington might do to the sector as we move into the next election cycle.

    Gold is not surging higher despite the euro and yen now confirming new intermediate cycles. Something is wrong = the banks may be controlling the gold price in the futures market. I’m staying away for now.

    Sector that is behaving correctly:

    Stocks continue to grind higher just as I was expecting them to do during a vertical phase. = easy money. This is where I want to focus for now.

    1. tallboy

      Gary, Such common sense on all market reads by you. Your stock market call continues to bring huge profits for your subscribers 😎😜 Sorry to brag folks but I’m a simple man and that is simple plan.

      1. vin

        Thanks tallboy. Wouldn’t someone invested in BTC say exactly the same thing?

        In fact they have made gains which the SM can’t ever dream of making. I mean ever. And, no one really knows how much up potential is still left. btw I don’t own BTC and have never seriously considered buying either.

        This is just to point out that there is no difference (except for the name eg. SM or BTC) when it comes to greed, or in fact any emotion.

    2. Anthonyo

      OIL is just a function of geopolitics right now, so not behaving strange at ll , it just is doing what it should be doing.
      Iran vs, Arab gulf coalition is a real possibility now in the foreseeable future.
      Plus the dynamics with MBS coming in as Saudi king has changed, he wants higher oil price to finance the coming war effort and pay the stipends to its population.

      This commodity is not only a slave to cycles.

      AGAIN, we never heard go LONG oil here when it was at $42-$45 did we?

      1. Gary Post author

        I don’t think you’ve been paying attention. I’ve been predicting for months now that oil would at least make it to $60-$62 before this intermediate cycle tops.

        What I didn’t foresee is the extreme divergence between oil and the energy stocks. That tells me something is wrong and it’s probably best to just stay on the sidelines for now in the energy sector.

        We’ll get an ICL sometime in the spring and that will be a better spot to start energy trades.

  27. Gary Post author

    Armstrong is sure going to look foolish with his euro collapse theory once it becomes clear that the euro has entered a new bull market and it’s the dollar that is collapsing.

    1. vin

      Yet he has a large following. His proponents would argue that he is always right. And, of-course like all Gurus he changes his position offer so as to be never caught while doing an excellent of selling that he is always right. …….

      And, then he, like all Gurus, makes a point of talking down those who dare oppose him or try to show him the mirror.

      In short, investing as opposed to selling is not gambling. Gamblers rarely make money in the market in the long run. If someone feels that there were no tools which were supposed to beat the market, they are wrong. Yet it is a very (& I mean very rare) event that someone beats the market. There are very….very few Peter Lynches and Sir Templetons. Even Warren Buffet did not really “invest” in the market. His strength was buying companies because he has the means. And, again he is a part of the establishment.

      1. Gary Post author

        He has convinced a lot of people that his AI program really can predict the market. In reality it’s just a large trend following system. So he always misses the cyclical or secular turns because the program is set up to assume the large trend will continue.

        1. vin

          Understood. In my humble opinion many mambo jumbos work for a short period. But, in the long run it is almost impossible t beat the market.

          BTW I am your follower and would love to subscribe to your advise except for a couple of technical issues as I have explained before. BUT, that does not mean I feel that you will always be right.

          Keep up the good work. You are not good but excellent. You would be even more respected if you weren’t so defensive. I still feel that I should subscribe to SMT. Unfortunately, I am at least 150 years behind others when it comes to staying with the value system I have been given to understand.

          Thank you for this site and for your advise. God bless you!

  28. Roy Batty

    So I read many arguments here about BTC being in a bubble yet have seen no arguments here that it isn’t. You have been using strawman logical fallacy. The question isn’t whether or not BTC is in a bubble but when it will end. After all, Gary has made “millions” in the real estate bubble. Obviously if he’d sold too soon he’d have made less and if he sold too late he’d have made less. If he’d bought too late he’d have made less and if he’d bought sooner he’d have made more. TIMING is the question here and would make for an interesting discussion. Gary already said the BTC bubble had, “without any doubt”, popped … back in the middle of September. Amazingly enough he made this call at the very bottom of that particular crash event. Some here, especially Gary, have great minds that, when focused on analyzing a new and complicated asset market, could possibly make tens of millions. We could potentially ride multiple bubble cycles in one asset. Etherium is a good example of a blockchain protocol with massive future implications and people have been making thousands of percentage returns in some of the better protocols. I’m buying selective tokens and cryptocurrencies in small amounts. If just one of these hits big I expect to earn millions. My argument still stands that, regardless of Garys’ anecdotal climbing associates, an infinitesimally small number of folks are participating at this time and therefore the bubbles have a long way to run.

      1. Gary Post author

        Sold my properties. Sold a bit early (spring of 2005. The Vegas market didn’t top until fall). Could have made more if I had held longer.

        Learned my lesson during the tech bubble.

        Control greed. Sell early and don’t look back.

    1. Gary Post author

      “the bubbles have a long way to run”

      This is why almost no one ever makes a dime off of a bubble. At some point price goes up far enough and long enough that everyone becomes convinced that it will continue to rise for a very long time still. Complacency becomes extreme and if by chance the bubble pops long before your expected target your brain is locked into a target much much higher so you hold on expecting price to resume it’s upward march. The the drop becomes deeper. You convince yourself this is just a bigger correction but it won’t be long before the bull resumes.

      Then the bottom falls out and price collapses back to the 200 DMA which is a long long ways down. Keep in mind depending on how far above the 200 price had stretched this whole process could unwind in a matter of 2-4 days.

      By this time investors are already massively underwater, their confidence is shaken and now all thoughts of millions and buying their own island are long gone. Now they just want to get out with their original investment.

      But that’s not how bubbles work. When a giant parabola collapses price can slice right through the 200 DMA and just keep going and going. Investor never recover their money and instead they lose everything. Huge bubbles often lose 90% or more of their value before the bloodletting is over.

      So ask yourself, do you really think you will be able to tell the difference between a correction that will recover and the bubble popping?

      History says unequivocally that you won’t.

      1. Roy Batty

        “and now all thoughts of millions and buying their own island are long gone.”

        Awesome… I laughed loud and hard at this one. But seriously, the same can be said for any bubble and I reiterate, my argument still stands that an infinitesimally small percentage of people are now participating. You still haven’t sufficiently addressed that point. Timing.

        I realize that real estate is different. It’s far less liquid and therefore the movement down is at a snails pace. I myself also made millions in the real estate bubble, but not with a buy and hold strategy, which would have been better. I didn’t have enough wealth at the time. I rapidly flipped properties I bought off courthouse steps at trustee sales events in 5 counties. Bought and sold over forty properties from 97 to 07. Another guy buying foreclosures kept most of his, financed at more than he paid, and continued on that way until the topping period in 06. He held all his properties, pretty much, and still has them now. He has done a few 1031 exchanges into apartment buildings.

        Breakfast time. I’ll continue later.

        1. Gary Post author

          There is no way to determine how many people are participating in the bitcoin bubble. I also don’t have any idea how to determine what full saturation would be in this market. Clearly it is a different market than real estate, gold or stocks.

          Likely full saturation for bitcoin is considerably less than for most other markets that are more easily understood by the masses.

          By the way I’m now starting to regularly see bitcoin mentioned in multiple TV series. Possible approaching the same level as the gold and energy markets when they topped back in 2008.

          1. Roy Batty

            Of course you’re right about not being able to determine the exact number of partici-ants. But BTC transactions are transparent, all the wallet addresses are known, and the transaction amounts. All contained in the blockchain ledgers. I’ve researched all the analysis I could find on how many entities are participating and have come up with between 3.5 and 5.5 million. Also, you’re right about not knowing how many are required for saturation. But you analyzed the real estate market just as I did. I knew it had topped because I was constantly doing neighborhood comps when screening or selling properties. It’s an ancient market and easy to analyze but I don’t think the crypto market is impossible. I have some bitcoin but a small percentage of portfolio. I don’t expect to make a 1,000 bagger on that. Mostly used to purchase other cryptos in small amounts where I think huge gains are possible. I’m casting a wide net in hopes of catching at least one big fish. And no, I won’t lose everything because it’s risky speculation, like calls, and it’s only a small part of my portfolio. You said you got caught in the dot com crash and I feel your pain. I made a small amount on it after being up huge for a while but also got caught in the crash.

          2. Gary Post author

            Let’s say you are correct and roughly five million people are now in the Bitcoin Market. The estimated number of people that lost their homes during the real estate crash is 10 million.

            Would it be reasonable to assume that half the number that got caught in the real estate bust might be a total saturation number for the considerably more technical bitcoin market?

          3. Roy Batty

            “Would it be reasonable to assume that half the number that got caught in the real estate bust might be a total saturation number for the considerably more technical bitcoin market?”

            I don’t think so. Where’s the logic? Homes cost, median in my area, around $250,000. Tough to purchase even when zombie loans were common. Forget about buying 15,000 of them as I recently did with Civic Tokens. You can buy $1 worth of bitcoin and not just people in advanced countries. A stone age human can now buy BTC in the middle of Africa.

            You might be right but that’s different than reasonable or logical.

      2. Bluebellkid

        IBD has put the markets “In Correction” prior to the tech bubble bursting (and I didn’t heed the warning) and also before the ’08/’09 meltdown (I did listen this time). Right now the distribution count is high on the Nasdaq (but only the Nasdaq) – it may work itself out. As time goes by days fall off the count as they are no longer relevant.

  29. Gary Post author

    Here is another classic sign of a mature bubble.

    Disciples become more and more rabid in their defense of why one should be in the market. The targets become more and more absurd as time goes by. Of course none of these people were beating the drum fanatically back when bitcoin was under $1000 but now that it’s gone up 700% in the last year they castigate anyone who isn’t buying or who didn’t buy. Hypocritical when they themselves didn’t buy under $1000.

    On the other hand I’m trying to get people in now before the stock bubble really starts to go parabolic but almost no one will listen. I’m like the one lone voice trying to get you to buy bitcoin under $1000 but no one will do it. They all wait for it to rally 700% before they will believe.

    Human nature never changes….

      1. Gary Post author

        The SM and semi’s aren’t showing any of the signs of a bubble yet. Look at the ROBO ratio chart in the article. The semi’s haven’t even made nominal new all time highs. How can something be in a bubble when it hasn’t made new highs?

        Bitcoin is the first asset that is clearly in a mature bubble stage.

    1. carlvan

      Human nature and emotions, that’s very true. For me, but that’s just my humble opinion, I won’t go in BTC market anyway, and for just one reason: not regulated, not backed by anything. Now, if CME were to open bitcoin futures trading tomorrow, I would still not trade it, at least for now, seen that, yes, we are probably very far into a bubble. Plus, I guess the liquidity would be questionable in the beginning of the life of this new futures product.

      1. Roy Batty

        I think you compared BTC to Bernie Madoff and your argument was that regulation was needed. I’ll say it again… Madoff was heavily regulated and backed as was the entire financial system in 08. You seem to trust government regulators more than yourself. Good luck with that.

        1. carlvan

          No, I just meant Madoff was a Ponzi scheme, and I think that BTC is just the same thing at the end: a pyramidal system- no way to tell when we will be at the top of the pyramid though.

          1. carlvan

            So, when BTC will be regulated AND backed by something THEN it might not look like a Ponzi crap anymore, if that day comes. Unless that happens, I am just happy to trade something else. I don’t say that I 100% trust government regulators, far from that, but what I will say is that, without any regulator, it can only be worse…

    2. Roy Batty

      “Disciples become more and more rabid in their defense of why one should be in the market.” Disciples? You need no practice at ad hominem logical fallacies. I’ve been giving reasonable arguments that are no more rabid than your obsession with calling the top in cryptos.

      I know plenty of people who’ve been advocating to purchase BTC and ETH since they were below ten dollars. Plenty. Jeff Berwick, Max Keiser, David Seaman, and many more. Unfortunately I’m not one of them because I was obsessed with PM at the time, like you. Lost some big money following your advice, partially. I made the mistake of getting too leveraged, which you advised against, and got “kicked in the teeth”, as you like to say. It was totally my fault and an expensive lesson I will never repeat. Well learned.

      I’m convinced you’re right about the direction of U.S. stock markets and I’m fully on board. This time without heavily using call options.

  30. Anthonyo

    I am glad Thanksgiving is over.
    Traders of NYC still in their Hamptons villas till next week.

    Bitcoin may be a bubble, but the people who bought it at 500, 1000, 2000, 3000, 4000, 5000, 6000, and 7000, and 7500 have made REAL money if they sold now.
    Besides it has already put in a big DENT(not the Harry kind) in gold, deny it or not, it has.
    If gold “were” to peak at say $5000 by 2021; now with Bitcoin around it would peak at a lesser price.
    Why is this too hard to accept? It’s happening.

    LOTS of people made REAL money in the real estate, DotCom bubbles too and got out in time.
    We cannot generalize bubbles as a pure loss game.

    The fact is most analysts missed out on Bitcoin’s historic and incredible ascend. I even missed out, and I ain’t no analysts. So no amount if hand-waving is going to change the FACT that Bitcoin was the 8000 lb gorilla in the room that every single analyst missed out on.

    Bitcoin 10,000 is a given, 20,000 could happen in 1-year at this rate.
    Let’s not be biased on traditional investments being vertical.
    Why is it “OK” for NASDAQ to go to those heights and not Bitcoin?
    Bitcoin might be a Ponzi game, but it is government and mega-bank creation…Hence, it will last much longer than you think.
    To kill the Golden Goose, they needed this weapon.

    I ain’t biased against Bitcoin, no use crying over spilled milk.
    But I might dabble and get half a coin just for the heck of it. And when it is at 10,000, 11,000, 15,000 I sell.
    Eyes wide open.

    ‘Nuff said.

    ————
    QUESTION:
    If a short deep bear market is coming in stocks, why don’t we SELL now and re-enter in Jan/Feb?
    Some analysts are predicting a 500-1000 point haircut on SPX.

    1. Roy Batty

      Well said. 🙂

      But, “Bitcoin might be a Ponzi game, but it is government and mega-bank creation…Hence, it will last much longer than you think.” How is this position logical when it’s plainly obvious BTC is allowing folks to escape from cartel banking hell? A secret currency, with all the aforementioned attributes, which nearly guarantees the destruction of banking as we know it, has been secretly created by a cabal of bankers? Don’t make me laugh.

      1. Anthonyo

        You will realize that it is a government(western governments) and mage bank creation disguised as some Japanese guy creating it in his basement.
        But by that time gold will be lucky to reach 2500 at its peak later.
        And that is what they want no astronomical peaks in gold.
        Now, they have their digital currency and control it too.
        This is a dry run on abolishing CASH altogether and going into digital curency for all.

    2. Gary Post author

      Who said anything about a bear market?

      We are just going to be due for another run of the mill ICL. Notice that the last two in March and August were very mild.

  31. Jimsee

    CHF Oct 26 leadership cycle looking good for next IC in gold fwiw… wonderful universe we live in imo. Order beyond imagination yet we beings of chaos wander lost – waxing philosophically on a holiday week.

    1. Gary Post author

      Seriously that’s what you have gotten from these discussions?

      I’m trying to point out that bitcoin is late in a bubble phase. Stocks are just starting. If one missed the bitcoin bubble you are now getting a second chance as the stock market bubble is just now moving into the vertical phase.

        1. Gary Post author

          By definition the “start” of a vertical phase would have to be before price rallies more than 100% in a year or less and before price gets stretched 50%+ above the long term mean.

          BTC clearly doesn’t qualify as “at the start of a vertical phase”.

          1. Roy Batty

            You’re seeing and interpreting it in the same way you do huge established markets. Your numbers and analysis are geared for different asset classes. You might at least spend a few minutes analyzing long term BTC and ETH charts. If you do it’s plainly clear for everyone to see that BTC and ETH have had repeated vertical phases over and over again. So using your logic I think you would have been out of BTC at $3. How sad that would be. You can find many people online who sold all their BTC at $3 and hate themselves. Also plenty who have bought things like pizzas which, in the long run, ended up costing them $50,000.

      1. Anthonyo

        OK; but I would argue that Bitcoin is not even near its end yet.
        Sure, it will have deep corrections up to 50%….but so does/did gold in its bull run history.
        after a deep correction Bitcoin will resume its ascend to new highs until it does not anymore.

          1. Roy Batty

            That’s a good question and one you cannot answer. I’d think the main variable to measure is participation. I think that’s the key.

          2. Gary Post author

            I would argue this is what makes BTC so dangerous. It is so volatile that investors have come to expect 35-50% corrections as normal. They have become conditioned to hold through these kind of massive drawdowns.

            But one of them won’t be a drawdown, it will be the end of the bubble. Anyone that has become conditioned to hold will lose everything as it loses 90% or more of its value.

          3. Gary Post author

            I doubt participation is the ultimate variable. Like I said we have no idea how to judge what full saturation is for bitcoin.

            Secondly the energy bubble popped with virtually no participation by the general public. It was driven almost solely by hedge fund trading.

            It doesn’t seem unrealistic that the bitcoin bubble could be driven almost solely by technical geeks and conspiracy theorists (and some money laundering) convinced they need to escape the current monetary system.

          4. Roy Batty

            Great points. “I doubt participation is the ultimate variable. Like I said we have no idea how to judge what full saturation is for bitcoin.” I think it’s possible but your point about that 08 oil bubble makes me wonder. I’m sure there were variables there that smart operators were measuring. I imagine some people made huge fortunes on that bubble with low risk (mostly insiders). BTC isn’t very liquid either. Well only a fool would be heavily invested in BTC, unless they got it cheap. I’m not going to even get close to losing everything and might possibly make millions on my small token plays. I love speculating and don’t mind losing a little… like with call options.

  32. Jimsee

    Can someone explain to the BTC wunderkids that the FED can buy ALL BTC up to infinity *whenever they damn well feel like it*. So…..u end up with 10Billion in BTC profits IN USD the day before USD is translated to SDR or something else at a point of a gun.

    If u never sell then u have a useless hedge/instrument.

    If u interact with the banking system u ARE already backdoored – done deal – do not put r lifesavings into BTC believing bullshit.

    Stop with the BULLSHIT – if a PERSON can buy anonymously – can A CB, or 2 or 3 or 4 NOT accomplish the same?

    1. Roy Batty

      Interesting argument. I’ll bite. First off, if anyone or any group attempts to buy it all up the price will skyrocket to the moon. Awesome, I’m happy with that. Second, the big whales and many others won’t sell, since it’s voluntary and all, unlike fiat. Still OK scenario. Third, if my USD dollars are stolen with a transition to SDR’s then so are pretty much everybody’s. Not happy but in the same boat. Fourth, they can be traded for other cryptos, so if the crazies do buy them all up then the money received by the recipients will go largely into other cryptos. As far as anonymity goes I’ll say this, I can buy BTC on the street for cash with only two people knowing of the transaction. So I think people living in glass houses shouldn’t be throwing bullshit.

      1. Jimsee

        I’m pointing out the supposed ‘airtight’ argument fro BTC is bullshit.

        I live in no glass house here – but I know emotions run high – It just makes me sad to see yet another scam – but that’s America.

        BTS may have utility, heck I’ll trade it gladly – but the positions put out about invulnerability will hurt many.

        There are many very debatable points in your argument there – for instance – WHALES will not sell – lol – sure – that’s classic bubble talk fwiw – absolutely the definition of the psychology.

        Let’s ask the following – if tomorrow u could liquidate all your BTC for 1Billion dollars and take care of your family for generations – u r saying that u would sell a tiny fraction and HOLD ON for eternity?

        What happens next if it falls 50% and now you think it may or may not ever go to the old high? Confidence in pretend scenarios is easy to gin up – THAT is another part of the bubble psychology.

        Best to you – I just want common sense and a fair deal with whatever we call money – and BTC almost surely will not be it in the end – unless all of history is about to be rewritten (hmmm , what sort of psychology would that? be ? ) 🙂

          1. Jimsee

            lol – like predicting whales behavior and the effectiveness of small network access versus CB control?

            Teach me o wise one – what am I missing?

            I’ve pored over the tech arguments and the energy density one is cogent – but itself make quite a few ‘strawman’ assumptions not to mention pretending the future is linear (even in energy production).

            SHow me!!!

  33. carlvan

    Discussions/opinions on cryptos are becoming hyper-emotional – is this a sign?
    Lol. Happy Friday guys, have a refreshing weekend before next Monday. I am curious to see what the Senate will do with the Taxt bill – might have an impact on markets…

  34. Americano

    Never ceases to amaze me the grandiose dismissals & overcooked damning Bitcoin gets by market pros like Jamie Dimon, CNBC Gardner guy, Blackrock guy etc.
    You’d think if it was just that Bitcoin was truly seen as a bubble ponzu etc it wouldn’t provoke such emotion, right?
    Indifference would be in order if it’s like all the other things we see & don’t want need etc. it just wouldn’t elicit more because there is nothing there.

    But we will have 6 months & a year from now.
    We will still have JPM marketcap ( that Bitcoin passes @ $15K) , all the bubble proclamations etc.

    Maybe it just me ( not a market writer mover etc)
    But Bitcoin ain’t the hill I wanna die on.

    1. jacob2

      Jamie Dimon the CEO of JP Morgan had a dog in the crypto fight as they are the largest issuer of credit cards and Treasury sales in the U.S. The rise of BTC was seen as a threat to the empire. Interestingly, Visa and MasterCard aren’t imploding as they keep rocketing forward along with BTC. The HBIB ( humongous big bankers) now view BTC as an additional revenue stream and an expansion of the empire not a threat. JPM just threw in the towel and added a crypto desk of there own. BTC now mainstream.

      The gold gurus, Homes, Casey, are copying the bankers. BTC not a threat to gold but another subscriber very revenue stream. Smart Bitcoin Tracker? Still waiting.

      How much longer Smart Bitcoin Tracker?

      1. Gary Post author

        Never in a million years would I ever buy an asset stretched 300% above it’s 200 DMA.

        Only an absolute idiot would do such a thing.

        I’m trying to get people in early on the next bubble, but many of the lemmings are blinded by greed and they can’t see the second chance opportunity. All they know is that the herd is running blindly forward in the bitcoin market and they have to run with the herd.

          1. Gary Post author

            Or one could have been paying attention when I called attention to the breakout on the Nasdaq after a 15 year basing pattern and what would happen once it did.

            Anyone that listened could now be safely in very early in the stock market bubble phase and not at risk of losing everything like they are trying to jump on the bitcoin bandwagon very late in a mature bubble.

            Added benefit: The establishment is protecting the stock market. No one is going to protect the bitcoin market.

  35. Roy Batty

    Gary, you said:

    “It doesn’t seem unrealistic that the bitcoin bubble could be driven almost solely by technical geeks and conspiracy theorists (and some money laundering) convinced they need to escape the current monetary system.”

    When you say conspiracy theorists are you talking about people who think the Federal Reserve is a privately owned banking cartel? I don’t know if they’re convinced they need to escape the current monetary system as much as they’d like to escape it. What sane person, who believes it’s a private banking cartel, wouldn’t? I’d argue that more people everyday wake up to the fact that it is a cartel.

    1. didier

      Roy answered that question: some btc, small allocation and bought late/expensive. Also holds other cheap cryptos, hoping for the big gain.
      I think they put something in your coffee Roy. You’re manic.

      1. RTTPD

        “Roy answered that question: some btc, small allocation and bought late/expensive. Also holds other cheap cryptos, hoping for the big gain.
        I think they put something in your coffee Roy. You’re manic.”

        Understatement of the day.

        Last thing in the world I want to see is a system where all assets are digitized and a digital ledger is created that is capable of tracking ones entire life.

        Politicians and unelected bureaucrats already have too much control over our lives……and folks like Batty are crazy zealous in promoting this thing called the block chain to hand them over even more control.

        I’ll never invest in a token or a crypto — but more importantly, the future implications of the block chain are sickening.

        1. Roy Batty

          All the needed info is on the distributed ledgers. The addresses are anonymous so it’s fairly easy to have secret wallets. Nobody has control over BTC … it’s decentralized. I agree, it’s crazy.

  36. Kenny

    Sassy, don’t expect an answer until Gary gets back. He and Roy Batty tend to be here together, something like when Pedestrian and Gary would go at it, if you know what I mean.

  37. mexican

    Hello folks,
    Boy is there ever a lot of crazy talk here about the CRAZE BITCOIN, Like gary says its a dangerous game and now for the question? How many of you on the blog have the steel balls to put your hard earned money to this piece of something that is only air when it evaporates?
    Really think about it it’s F—-king crazy!!! Yeah some will make money from the stupid people and the rest will be history. But hey be my guest and putup or shut up about this Bitcoin thing,,,, it’s boring!!!!
    My take!

  38. vin

    Roy, I am not educated about BTC. Your discussions with Gary have created much interest.

    I have a question for you. Aren’t about 25 BTC created out of cyber space every 10 minutes?

    If true then why would I want to trust someone unknown as compared to a known quantity (eg cb and the govt) which is more or less regulated?

    Banks are probably not trustworthy but then they are known evil. Why would one trust a virtual wallet when we know that any computer can be hacked?

    Production (inflation) and security are the two main issues with the present cb/govt based monetary system. At least on surface it looks like that both these issues are worse with BTC.

    Or, am I missing something fundamental here?

    1. Americano

      Vin –
      1800 btc created each day. In 2020 that goes to 900 per day. Can only be 21 million made, 16.7 million have been thus far.
      Bitcoin creates using massive electricity. This is a feature not a bug it’s about security. Currently more than Ireland on a daily basis.
      https://powercompare.co.uk/bitcoin/

      Bitcoin means value cannot be diluted / diffused by politics/ money printing.
      If someone states the canard “ but look at all the other 900 crypto currencies” LET THEM. There is joke liquidity & volume in those & there is a reason Bitcoin is at $8K and none other comes close,

      Here’s the thing. Have an opinion but the arbiter is price. Folks gonna wake up REAL HARD this spring regarding Bitcoin.
      Because this show doesn’t even start till 2018.
      EOY 2018 will be AT LEAST $25K.
      That’s just 5% of the gold market. Meaning the other 95% will be free to oscillate between $1400 & $1200 with 5% less suckers along for the ride lol.

    2. Roy Batty

      vin,

      BTC is called a trustless currency. There is no “someone” you need to trust that works “there at bitcoin”. It is a protocol that sits on top of the internet protocol. email is a protocol, not a group or person or company or entity. That’s one of the main beauties of it … no third party needs to be trusted.

      You’re right about any computer can be hacked. So if that’s the case, how safe are your USD accounts? Can’t hackers use your computer or passwords to hack into your brokerage and bank accounts? With BTC and other cryptos your money is stored at an address, it’s up to you to make sure it’s off the internet. You can get hardware wallets and store your money offline. If you have a good memory you can store billions worth in your brain! You just need to remember a 12 to 24 word sequence. boat, sycamore, tahoe, chevy, etc., etc..

      Inflation and security are exponentially better with BTC. You can store it all in your brain and its supply is limited. You can’t store USD in your brain and its supply is infinite.

      1. vin

        Thank you for the clarification. I am bit too old fashioned to buy it. Usually I am the last one in the queue for something so new. But, you have certainly raised my curiosity and made me interested. I wish you good luck in your endeavor.

  39. Roy Batty

    Gary you said a couple things:

    “Added benefit: The establishment is protecting the stock market. No one is going to protect the bitcoin market.”

    I’d rather have the free market protecting me than the establishment. Why? Because they can decide not to protect you in a flash, short the markets, and crash the markets. Good luck trusting the establishment to have your back. They only protect themselves, not the sheeple who worship them.

    “Secondly the energy bubble popped with virtually no participation by the general public. It was driven almost solely by hedge fund trading.”

    Every adult I know buys oil, and lots of it. In what fantasy world is that not full participation?

    1. Gary Post author

      First off politicians are never going to crash the market, and they will especially never crash the market during an election year. People get voted out of office when bad things happen during an election year.

      The price of oil is set in the futures market, not at the gas pump.

      1. Roy Batty

        Politicians aren’t the ones who manipulate markets, bankers are and they don’t give a damn who you vote for since they know you’ll vote for a sheeples candidate.

        Ever here of supply and demand? I thought you knew more about economics.

        1. Gary Post author

          Central banks have been supporting global stock markets for almost 9 years now. Central banks are about as political as it’s possible to be.

          If bankers didn’t give a damn about politicians then why spend so much money on lobbyists to influence politicians to write laws supporting the banking sector?

          How do you think Glass-Steagall got repealed in the first place?

  40. Roy Batty

    CB support markets until they don’t. Good luck knowing when that happens, it’s the insiders who get that info. Central banks were intentionally designed to not be political.

    I said bankers don’t give a damn who you vote for not that they don’t give a damn about politicians. They spend money on lobbyists in order to fleece the sheeple.

    Glass-Steagall didn’t get repealed because of who you vote for. Our votes means nothing.

    1. Gary Post author

      There is no upside to letting the market crash. Governments have been trying to control the business cycle for thousands of years. They finally figured out they could do so by artificially supporting stock markets. So if you think governments are going to willingly stand by and allow the market to crash I have some oceanfront property I’d like to sell you here Las Vegas. On the contrary, the risk is that they support the market too long and allow it to transition into another bubble.

      1. Roy Batty

        Tell that to the Rothchilds family in the context of Waterloo. Look what a wonderful job they did at supporting the markets in 2008. How many do you think knew of the announcement coming that would surely crash the markets?

        1. Gary Post author

          I think they figured out in 2012 that they could somewhat control the business cycle by artificially supporting global stock markets. Like I said though, the problem is this will invariably lead to more bubbles. When bubbles pop it’s extremely difficult to reflate them. The liquidity tends to flow into something else like it did in 2008 when all the liquidity from the real estate market and stock market started to flow aggressively into the commodity markets creating massive inflation which put the finishing touches on the recession.

          1. vin

            Roy, you mean you don’t speak mandarin? Xi Jinping will not be pleased. I am planning to take lessons in mandarin just to be on safe side.

  41. Roy Batty

    Gary, do you know how much it costs miners to mine one bitcoin? It differs based on ambient temperature, cost of electricity, etc. but just a ballpark figure.

    1. vin

      Roy, it is a function of computing power which can change drastically with new inventions.

      It is also a function of some mathematical formulation which can be enhanced as well.

      In my mind it is not as safe as it is claimed. It is not that transparent either. Above all under certain conditions it may turn out to be very inflationary.

      Having said that I have to admit that there is something quite intriguing about it. Thank for educating us.

  42. Roy Batty

    I wonder what the cost is to produce a USD or a Zimbabwe dollar. Whatever it is I bet it’s roughly the same cost for both. How much to produce a bytecoin? I wonder if information and knowledge about these things is valuable. Or at least useful.

    1. Gary Post author

      The time to get aboard was $7000 ago. It’s way too late to get caught up in the mania now. Much safer to be buying the stock market which is just beginning it’s bubble phase.

  43. Bv

    Has anyone bought Bitcoin in the trading challenge? Also, not sure whether I’ve missed it, but you seem pretty strong on the stock market now being in the bubble phase Gary apposed to the runaway move, when or what made you favour the bubble now?

    1. Gary Post author

      Bubble or runaway is still to be determined. Both scenarios are still in play. I have always favored the bubble scenario because I think there has to be consequences for years of central bank QE. And I don’t believe those consequences should be a secular multi-decade bull market. I think the consequences should be a bubble and then we pay an extreme price when the bubble pops.

  44. jaybee

    Gary, i’ve been a longtime lurker on SMT and with all the recent discussions turning to crypto i registered, just to be able to give my 2 cents to the SMT community. I’ve been involved in the cryptocurrency space for the last 2 years, both as a trader and investor and have profited nicely.

    Bitcoin at its inception was designed to be a store of value AND a pure p2p digital transaction medium, OUTSIDE control of the banks. It has undergone scandals (MT GOX) and countless forks in the 8-9 years since its been around. It’s still trying to find its place in society. As of right now, it is unfortunately a Ponzi Scheme. Why? Because it is acting purely as a STORE OF VALUE and not medium of exchange. Nobody is using it for purchases because of the very expensive transaction fees and long confirmation times. And as the price continues to rise it will only exacerbate this problem. For this reason I’m a firm believer in Bitcoin CASH (The truest to the original vision) and don’t hold any bitcoin. Its useless in my eyes. And when people see this there will be stampede out as new money stops flowing in and many uninformed investors will lose big time.

    Now onto the topic of the space itself. Currently there are around 1200 different currencies with new ones popping up each day. So how is one better than the other? The truth is that some are great, and most are shit. New ICO’s (equivalent to IPO’S) happen all the time and have become a way to quickly raise capital. There are frauds and pure ponzi schemes but this shouldn’t cheapen the idea of blockchain technology and its future impact on the world. It’s only in its infancy stage and will be here to stay. It can’t be stopped, banned, outlawed. This would require the collective efforts of all the worlds governments. It would be the equivalent of shutting down the internet and and that’s just NOT gonna happen.

    In analyzing crypto, its important to make the distinction between ones that behave as MONEY (Bitcoin, Dash, Monero, etc) and others that behave as STOCKS and Platforms (Ethereum) The ones who behave as stocks have a fixed inflation written in their code so their supply is theoretically infinite. BUT for the ones that have limits (MONEY) they will only ever exist in FINITE supply. 21 million Bitcoin for example. And therein lies their greatest asset. They are governed by mathematical code, and not by a printing press. And using this information as a frame of reference, the value of these coins will 1) Only rise 2) rise as fast as their RATE OF ADOPTION does for both users and merchants.

    Too many people are piling in because they see the huge gains and not because they understand the significance of what they’re buying. I guarantee that no one at the moment is spending any bitcoin. Its price is being determined by speculators and dumb money piling in. A coin’s utility has to be more than just a store of value which for Bitcoin unfortunately isn’t the case at the moment. Therefore = Ponzi Scheme

    How did we get here? This goes back to all the world’s goverments cranking up the printing presses to compete with one another. It’s a race to the bottom. That money needs to flow somewhere, and unfortunately cryptocurrency is one of the victims, on top of everything else at the moment – Real estate, stock market, bond market, etc. EVERYTHING is highly inflated. And when that bubble pops money will flow back into commodities and then precious metals (Gold especially) will have its day. Isn’t that what you’ve been preaching on this blog for all these years? The GOLD bubble phase? Well I don’t see cryptocurrency as anything different. The strong ones will retain their value and only grow. The main difference being that their true price won’t be manipulated the way gold’s is. It’s pure math at the end of the day. The fundamental code that governs the universe.

    There will be twists and turns along the way, but this train has left the station. It’s as significant of an event as the internet being born. Whereas there were only a few websites at the beginning and the top ones twenty years ago are definitely not the top ones today. But the space still exists and is stronger than ever. The top 10 cryptocurrencies have first mover advantage for the most part, but their fates will be determined by how much they can improve their technology, defend it, and how quickly they can get it mainstream. Smartphones have come out of nowhere in the last 10 years. 2.5 billion smartphone users now and only growing. How long before everyone’s phone BECOMES their bank account?

    Gold Market Cap = 8 Trillion Dollars

    All of cryptocurrency = 275 Billion Dollars

    We’re currently in a period of PRICE DISCOVERY. Nobody is sure what this is yet or how far it can go. Easy credit has led to bloated asset prices and their will be corrections. This is FACT. But where will prices settle if left to grow organically?

    So there’s my 2 cents. I hope this post doesn’t get lost at the bottom. Thanks for reading. Everyone please do your own research and due diligence. Cheers and happy Thanksgiving to all.

    – J

    Bitcoin Cash = TRUE BITCOIN

    1. jacob2

      Thanks, very informative.

      Bought a little ( too little ) OSTK this spring as an indirect play on this space. UP 4x and by far my best preforming stock, probably time to sell. Showing my complete ignorance but do you have an opinion on how or wether it is advisable at this time to invest in bitcoin cash? Thanks again.

      1. jaybee

        Bitcoin Cash is a so called derivative of Bitcoin. It was created in August because of a lack of consensus as to how to proceed with cryptocurrency. There was another recent Fork (Bitcoin Gold) and another attempt at a fork (Segwit2x) recently which failed. Its a little bit complex so i won’t go into to much detail. There are loads of resources available out there, so please do your due diligence before investing. A simple resource is coinmarketcap.com.

        Bitcoin Cash was created as an airdrop which means that for anyone holding Bitcoin, they were automatically credited with an equivalent amount of Bitcoin Cash at the time of the fork. 1:1 ratio. Although this doesn’t mean it had an equivalent price. It sold off around 900usd and then came back down to around 300, where it build its solid base in the last few months. It started taking off around the end of october and now sits around 1600USD VS (Bitcoin 8700USD) It is currently in 3rd place by market cap for all cryptocurrencies.

        Bitcoin Cash is different from bitcoin in that its meant to scale on chain and without the use of Segregated Witness (Segwit) which Bitcoin uses. The other difference its its block size 8mb vs 1mb. This is all quite technical so please do read up on it. The main difference, tangible difference, is that the confirmation times are MUCH faster and Transactions cost MUCH less on Bitcoin Cash. Same principle as Bitcoin, but faster and cheaper. Its meant for people to spend, not HOARD which is whats causing bitcoin’s massive price increases. New money in, no money out.

        There are talks within the community of a “flippening” occuring, which would be bitcoin cash overtaking bitcoin for the #1 spot. There are doubts if both coins can peacefully coexist together because they share the same proof of work chain. This means the miners (those who process the transactions) are always flip flopping between the 2 coins for profitability. Again, read up on it if interested.

        All in all, the current market cap for ALL cryptocurrencies is around 275 Billion. It’s grown by 100 billion dollars in the LAST MONTH ALONE. Prices have skyrocketed across the board. And even though i’m making money as is everyone else in the space, i’m starting be a little reluctant now. No organic growth happens this fast. Something’s gotta give. Have we reached a Mania phase in the cryptosphere? no idea. If yes, then its not alone. The stock market seems poised for its bubble run per Gary’s analysis which i 100% agree on. Coin valuations would definitely indicate a bubble at this point as well by any analysis. The main problem is that this is all uncharted territory. There’s no benchmark to measure against. No history. This makes it as daunting as it is exciting. Hope for the best. i do believe we’re still at the very very beginning of this all. Let’s see what 2018 brings.

        1. Americano

          LMAO.
          Bitcoincash is a FORK of Bitcoin that occurred Aug 1st. I have a bunch. I got it free for holding Bitcoin.
          Other forks include: Bitcoin Gold, Bitcoin Diamond & Bitcoin Cash Plus that is being given out January 2nd.
          Hold Bitcoin you get all free.

          But to buy Bitcoincash or Bitcoincashplus etc?
          That’s like getting set up for a hot blind date only to find out it’s with……..Katlyn Jenner.

  45. Pingback: Breaking News And Best Of The Web - DollarCollapse.com

  46. Roy Batty

    Gary, I read your link and have two observations.
    1) All those bubbles were in high volume markets other than Tulips and BTC.
    2) Tulips never ended up on futures and options markets.

    1. Gary Post author

      Here’s the bottom line: I think we all knew that QE was eventually going to create more bubbles. That’s what central banks do.

      No matter how much one squints and tries to rationalize why this time is different, the simple fact is the first bubble is here and it’s in bitcoin. More will follow.

    2. Bob

      I thought the tulips were the first futures market. People didn’t trade an actual tulip, until they were in bloom. Prior to the bloom, you bought the “right” to the bloom. The price for the “right” went all nutty but when the bloom came, all they got was, well, a tulip.

  47. JJHarmen

    All this talk about Bitcoin brings forth a question that probably others would like addressed besides myself. Why in the world should we give a rat’s ass about Bitcoin at all? I mean, Gary says it’s Ponzi scheme (and I think he’s right), it’s not easily traded and for the most part, is held by a very small group of individuals.

    Could someone please explain why it has become the focal point on this blog site? What am I missing?

    1. vin

      jj that is simple to answer. LACK OF TRUST IN THE PRESENT SYSTEM.

      Banking system is untrustworthy. Fiat currencies have no base. Savings of an ordinary person aren’t safe anywhere. Not in gold derivatives. Probably not even in actual gold holdings.

      SM is a Ponzie scheme. Even if the SM had some basis, can the brokerage houses handling average person’s account be trusted? Even those whom we elect to protect us can’t be trusted.

      Those who have the means and intelligence want to invest in a system which is not reachable by the banking system, governments and/or the managers of too big to fail corporations.

      Will this alternative currency work? I do not know. But, I can assure you that the present economic system unless brutally modified will NOT survive another 50 years. In fact its demise can be expected much sooner. Amen!

  48. rca123

    Of course bitcoin will “crash” temporarily, as it has already done several times this year. Then it consolidates and goes right back up, which it will continue to do for years. I have a 1500% gain in ether, and there is no stretching above any MAs because of the recent 5 month consolidation. Buy the dips. Even when the crypto bubble ultimately crashes, it will go right back up again, just as tech stocks eventually did after the 2000 crash. So for long term investors, who cares about price fluctuations.. blockchain is the future and cryptos are anything but a ponzi scheme, otherwise the Fortune 500 companies which include some big banks would not have formed the Ethereum Alliance to advance the technology which is growing by leaps and bounds. They aren’t exactly stupid. There are plenty of scam ICOs, but bitcoin and ether are not among them.

    1. Gary Post author

      Well when a bubble pops it almost always drops a proportional amount to how far it was stretched on the upside. As bitcoin is now the second largest bubble in history the odds are very high it will lose 90-95% of its value during the crash.

      Also when a bubble pops it often takes 10-15 years to recover if the asset is viable. If not then it will go to 0 like Tulip bulbs and many tech stocks. It took 15 years for the tech sector to recover. It’s been 12 for housing.

      Tell me, are you willing and able to hold through a 95% drawdown and a 10 year recovery?

      And just because some big companies are buying into it doesn’t mean it’s not a Ponzi scheme. That’s the definition of a bubble. Everyone starts to behave irrationally because price keeps going up. Being big doesn’t preclude one from irrational behavior. Hell even Newton fell for the South Seas bubble and he was one of the smartest men of his era. But still human with human emotions.

      One really has to be different than 95% of the population to avoid bubbles. You can’t be driven by the herd, you have to have the ability to think for yourself regardless of what everyone else is doing.

      And that my friends is a very rare quality in a human being…

      1. BeachandBiscuits

        An interesting tidbit about Newton is that he was so smart that he actually saw and decided the stock was in a bubble and sold for a huge profit.

        However, it kept going up and up and he saw friends making tons of dough so he bought back in!….then it went pop and he lost it all.

        Sounds like something I’ve heard Gary say about get out early, lol.

        1. Gary Post author

          During a bubble investors become so irrational they start picking out which island they are going to buy. They should just be satisfied with a yacht.

  49. Goild

    The beauty of day trading is that one does need to worry about so many things and sleeps very well.
    At this point there is no easy money anywhere.
    You have to have guts to make big bucks.

    It is Saturday afternoon, I had a nice workout, and it is time for a good glass of wine which I will drink to the health of all here at SMT.

    Of course a nice meal will follow with chocolates for dessert.

    Bon appetite!

    1. jacob2

      Yep, guilty been playing in the wrong sandbox. Not going to kick myself and not going to chase. Interesting that the bull in the sm and BTC started about the same time. Heat there not correlated but think they roll over/ correct in tandem. Just my take.

    2. jacob2

      Yep, guilty been playing in the wrong sandbox. Not going to kick myself and not going to chase. Interesting that the bull in the sm and BTC started about the same time. Hear there not correlated but think they roll over/ correct in tandem. Just my take.

  50. ras

    Correction in January? Unlikely. Earnings release dates for fangs and leading dow stocks cluster around mid January to mid February. More likely, a correction after? Time will tell.

    Fizz acting very well. Earnings release on 28 Nov, 2017 BMO.

  51. Gary Post author

    I’ve noted before that a bubble phase usually lasts about 1 year to 1 1/2 years depending on how liquid the market is. That’s about how long it takes for Tom Dick and Harry to catch on and decide they need some free money too.

    Towards the end emotions spiral out of control as price keeps climbing higher and higher (with bigger and bigger percentage moves). The sheeple view this as proof that price will never come down. It’s anything but. Normal markets don’t behave this way. They climb a wall of worry. They grind forward 3 steps then take one or two steps back.

    So when one sees a market just going straight up, this is most definitely not a sign that the coast is clear. This is the most dangerous sign one could see. It means the last buyers are piling in afraid they are going to miss more of the rally and convinced that price will never come down.

    We saw this behavior in the gold market back in the fall of 2011. Price was jumping 40,50, or even $60 a day. Gold bugs were pissing on themselves with delight as they took this to mean price would go up forever.

    I on the other hand understood this was a terrible sign. It meant the top was coming soon and we needed to get out and stay out or we would get caught.

    The vertical phase in bitcoin began in early 2017. We are coming up on a year. Price is starting to ratchet higher and higher every day. The sheeple are again doing what sheep do and extrapolating the past indefinitely into the future… and no one is recognizing the warning signs…

    This will soon be one of the greatest shorts in history, we just need to get options trading on bitcoin. The only way to short a bubble is with put options.

    1. Gary Post author

      BTW I expect we will see this kind of behavior in the stock market in 2018 as well. Assuming I’m right and this is about to turn into a bubble and not a multi decade bull market.

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