again I would like to ask, when does a selloff (correction) become a rally failure??
I would say that until we breach where this last leg started from (ie $864) that there is no failure in the rally from $864-$990. It can technically retrace its entire move on a first leg, assuming that was what we just had (i of v in major wave 3). A break of $863 would place the entire Nov-June move into a continuing correction from March 2008....basically busting the current rally. Dropping to $880-$918 and then recovering in August would place the current rally on firm ground, regardless if it is corrective or impulsive. And this would give the symmetry in the chart (12 month inverse H&S) that Cohodk likes to see. Since the first leg of the most current 2 month rally ended at $915-$918, falling below that imo would kill the most recent phase we were in.
One could argue further that since the A wave down from March 2008 bottomed in the $680-$700 range, with B topping out twice at $990/$1007, then a C leg down to $700 would still easily keep the 8 year rally in play. That would produce a standard ABC correction. In fact C legs, quite frequently fall to under the A leg which means that a bottom to earlier resistance levels to as low as $575-$625 would not technically kill the long term trend. Drawing an early trend line off of the 2001-2005 lows extrapolates in 2009 to $575....exactly at the last point of resistance before things can fall off the cliff. A trend line formed off the bottoms from 2005-2009 extrapolates to the same bottom area we just came out of: $860-$880.
For what it's worth, a standard 50% correction of the entire move from 2001-2009 would be $644. A 62% correction of the entire move would be $552 which would be cutting the trend lines and resistance levels awful close. In looking back at long term support, we bounced off $850 in May 2008 following the all time high. That's a key resistance point. The other key support is around $900 which was the last strong bounce up that occured in the 2008 correction before succumbing to a "toss out the baby with the bathwater" dumping that took gold in a straight dive to $700. For those that feel that a 3rd time trying to break $1000 writes off gold for gold, look at the action back when gold was trying to break $450 and $700 resistance for good. It took a 4th attempt after 9 months to leave $450 in the dust after leg 1 peaked. It took a 4th attempt after 16 months to break $700 following the leg 3 peak. And we're now in the 16th month after 3 attempts at $1000 following the leg 5 peak. The 2 earlier patterns occured during the fall in odd years 2005 and 2007. Is fall 2009 the 4th and successful attempt at $1000?
If I had to vote, I'd look at the $900-$918 area holding firm this time around barring another deleveraging mania. MoneyLA, I don't know if you got the precise answer you were looking for. In a nutshell, I'd place the current line of defense at $850 for simplicity sakes....bottom of the "trading range."
I had a nice $7 gain on my futures play yesterday, but I got out. I'm going to keep my $9.50 AUY, even though it may head lower next week. I still have a lot of other cash waiting to buy other gold stocks at lower prices. I have my eye on GOLD, IAG, TIRXF, UXG, and ETFs DBS, DGP, and SLV.
As this pattern evolves, I see gold holding $910-920. I'm going to buy in at $925, I don't think it will go significantly lower and I'm don't want to miss out. "Everyone" is looking at the 3rd week of June as a major turning point. The fourth assault on $1000 will not fail. I suppose if someone wanted to play this fairly conservatively, a breakout heading through $975 would be a solid entry point.
RR, if we see the $1500 gold by the end of the year that a lot of people are claiming, what juniors and speculators (stocks) do you think will benefit most from that? On that kind of price increase for gold, investor money is going to come flooding in (more than it already has). The rising tide will lift all boats, but some will be lifted much higher. It will be like during the RE boom - even houses with serious problems sold for huge premiums as investors were able to overlook the serious flaws that some properties had just to get in on the boom. I don't know if you follow any companies like that - I'm mostly referring to penny stocks, of course. TIRXF is the closest I come - I've been following that one for a while and it actually seems like a solid company with good funding, promising land holdings, and a promising exploration results. I'm not dumping a ton of money in it, but I've got a few dollars in there.
Golden Star Resources (GSS at about $1.95/share) is about as low in the juniors/intermediates as I've been willing to go so far. I've only concentrated on the top intermediate producers as I think this next wave up in PM's will still demand fabricated gold from it's miners, not probable or hopeful ounces in the ground. It might not be until the final spec blow off phase where the penny stock juniors and those with only an empty hole in the ground will take off. It could take $2000+ gold to make that happen. The solid producers will be looking for good junior takeover targets like Osisko, Detour, Jaguar and others. Eventually they will get to the smaller companies that only have drill results. But with all the scamming going on over the past 15 years, are we ready to push the penny stocks like we did worthless dot.coms? Have no lessons been learned? Gold production has been dropping for years so the only way for the majors and intermediates to keep their numbers growing is to find takeover candidates. South Africa's output is less than 50% what it was in the 1970's. Randgold's P/E is well into 3 digits. GG and AUY are more reasonable in the mid-teens.
Another concern of mine with the smaller gold miners is that many of them have sold their souls via non-recourse derivatives to banks to get the operations up and going. The banks will likely end up owning the ones that do eventually produce either by takeovers by bank friendly miners like Barrick or other majors that the banks have large stakes in. The miners will consolidate over time just as the banks are in process of doing. And rest assured that those who are left will have a large % owned by the big banks.
I'll probably start looking at smaller miners down the road but I think I'll keep the majority of my buying to the producing unhedged miners that have limited geopolitical risks. Geo-pol. risk was not really a factor back in the 1970's but will be far more important in this current market. I don't need to go for the 10-1 or 50-1 score when the good intermediate producing miners themselves can be a 3-1 or 5-1 shot eventually. But if you can identify late stage exporers and profitable small producers as they come on line, that's where the money will be....as long as the bank doesn't own them and calls in their note. And you either have to review a site in person or 100% faith in the analyst that does review the operation. Relying on analysts has not been a good game the past 5 years.
Roadrunner, thanks for your lengthy post. You make a good argument. But one thing I have to question is your statement that "a C leg down to $700 would still easily keep the 8 year rally in play."
All I can say to that is "yikes." If gold dropped $300 you would still say an 8 year rally is still in play? Heck, I would be wishing I sold at $950.
I can't hold on to "investments" or "trades" that lose more than 10%. In fact, I like to have even tighter stop losses.
My perfect plan would be -- as Ive said here many times -- to buy something that has broken out to new highs and is going higher. Again to repeat what Stan Weinstein said years ago... "buy high and sell higher."
MoneyLA, I don't think RR is suggesting that you buy and hold through a drop of that magnitude. He's merely pointing out the the chart pattern would still be considered bullish from a long term, big picture perspective. Sure you could weather it and come out fine in the long run, but who would want to?
But one thing I have to question is your statement that "a C leg down to $700 would still easily keep the 8 year rally in play."
All I can say to that is "yikes." If gold dropped $300 you would still say an 8 year rally is still in play? Heck, I would be wishing I sold at $950. I can't hold on to "investments" or "trades" that lose more than 10%. In fact, I like to have even tighter stop losses.
My perfect plan would be -- as I've said here many times -- to buy something that has broken out to new highs and is going higher. Again to repeat what Stan Weinstein said years ago... "buy high and sell higher."
ProofCollection pretty much mirrored my sentiments on the above. As a parallel, a lot of investors held on from 14,000 Dow all the way down to 6600 Dow. While I'm sure none of them would have held had they known where it was headed most probably felt they were in it for the "long haul" and it "always comes back." You gotta be in it to win, etc.
You can bet that when gold breaks to a new high and corrects the first time it will be more than a 10% correction. The volatility coming at us will not be like what we saw from 2001-2008. Erase that from your memory banks. If you can't suffer a 10% correction and unload, are you sure there will be a windown to re-enter? Obviously you must have held all the way on the first run from your entry point of $255-$500 gold all the way to $950 as you explained several times. Note that you must have entered well below gold's previous high in violation of Stan's rule #1. When gold corrected from $730 to $575 in 2006, if you stayed in you suffered a 21% correction. I know I did. You've made it clear you'll be back at a new all time high. But I would expect some serious corrections along the way of far greater than 10%. If the first new high gets to $1200 it could easily correct to $1000. If you jump out when are you back in? $1225? When/if gold completes it's major leg 3 up some are figuring on $2500-$3500 with a serious 20-30% correction to follow. If for example $3500 gold fell back to $2500, are you back in at $3600?
The Dow last peaked at 14,100. I would assume you'll only be back in at around the 14,200 level? Waiting for indexes to return to all time highs in this market could take a long time. This was a great plan in the "perfect" credit/investment mania from 1988-2007. Does it still apply or is goal the easier goal to only invest in shorts and bear funds? Will you be moving into oil at $150, silver at $51, copper at $4.10, platinum at $2500, and rhodium at $10,000+? Weinstein and others had a free pass from the FED, Treasury, and Congress for the past 25 years. Everyone assumes that's still the way to invest for these next 5-15 years. I think some of these guys may need to update their playbooks. The perfect 25 year plan went kaput at Dow 14,100.
If someone told us to get on the gold train back at $500 and that it was going to end up 5X or 10X higher within 10 yrs how many would have taken that bet and just let it ride, bumps and all? The ones timing it will probably screw up along the way and get kicked off early and end up with 20,40,60,100% in trading profits. Most of them won't do as well as the early birds that came in around $300-$700 and have just held in there taking the 20-30% lumps along with the 50-100% upmoves. Let's face it 90%+ of those who play in the markets aren't "good" traders. They are better left to following a trend and just sticking with it until it nears completion. I know I won't be one of the herd buying in at the $2500 or $3500 level if gold makes new highs at those levels....even if there was good reason to suspect it was going to $5000 or higher.
The websites I have been monitoring have all been shut down.
There are multiple deaths reported, and resignations/defections inside of the current government appear likely.
storm888, in Iran?
roadrunner, I understand the dynamics of buying a gold mining company in terms of the leverage effects from a fixed cost structure as gold rises - that's been the attraction in buying the miners for a long time, but isn't the risk equal in the opposite direction if the pog heads down?
That being the case, why stay in paper?
Q: Are You Printing Money? Bernanke: Not Literally
The miners leverage you in both directions which is why it's fun to ride them up, but hopefully not down (lol). The down legs are quicker than the up legs so the pain/stress is even greater on the way down. Some traders move from stocks into bullion on the longer down legs so as to still maintain a position of safety regardless of what happens.
Other less known attractions with some of the miners are the other ores that come along with gold. Freeport McMoran mines mostly copper but gets a lot of gold in their ore. Some of the unhedged miners such as AEM have at times brought their cost per oz to mine gold to essentially zero due to the silver they collect in the process. This was the case when silver was flying in early 2008. Some others get to reduce costs with base metals such as zinc or copper. It all helps to reduce the costs of the miners. With the price of oil, supplies, and even labor contracting over the past year, the miners have gotten a nice reduction in their net cost per oz. But at the same time, the reduction in the price of silver, copper, and other base metals has canceled out that benefit.....for now.
roadrunner, thanks for clearing up my previous question.
now you pointed out that: "Note that you must have entered well below gold's previous high in violation of Stan's rule #1."
you are correct that I bought gold when it was much lower and many hundreds of dollars below the 1980 peak. however, when I bought gold several years ago it had just started to break out from a "stage 1 base building formation."
Weinstein has four stages... base building, rapid growth spurt, topping, and the down leg which will be followed by the base building all over again.
if you can catch the break out from a long base building period, that is almost as good as "buying high and selling higher" but by buying when there is a break out from the base building you run the risk of a false break out.
again, tech analysis is an art and not a science. your methodology can work just as well.
I would just like to comment about gold stocks: too many variables with gold stocks which means they dont truly track the price of gold. what if there is a labor dispute, a cave in, a problem with financing, management gets taken hostage, etc. these events could ruin the performance of the gold stock even as gold prices rise.
if youre going to invest in gold, buy the metal.
if you want to buy gold mining stocks they should be considered part of your stock portfolio and not part of your hard asset holdings.
<< <i>again I would like to ask, when does a selloff (correction) become a rally failure??
thanks >>
For me, it would be a new low ($730 or so). Lower highs, and lower lows mean the rally is either over, or at least on hiatus.
I don't understand those that only buy physical gold, that spend so much time focused on the short term moves (like $20 in a day). A person (non-dealer) can't make money on physical for 5% or even 15% moves. The spreads, risk (and shipping) will eat all the profits over time.
I don't understand those that only buy physical gold
That would be someone, like me - who has bought stocks, options, bonds, futures, etc., etc. - and who is not interested in putting capital at risk right now (at least not in the hands of the paper pushers).
that spend so much time focused on the short term moves (like $20 in a day).
In this environment, I don't understand it either. The guvmint is changing all the rules on almost a daily basis. From one man's perspective, they can't confiscate or tax what they can't prove exists.
A person (non-dealer) can't make money on physical for 5% or even 15% moves.
One comment: You got to know when to hold'em, know when to fold'em - know when to walk away, and know when to run.
Right now, I'm running as fast as possible from paper. (Far be it from me to even suggest that the paper markets could somehow be "manipulated". Such blasphemy!)
The spreads, risk (and shipping) will eat all the profits over time.
True, so true. The remedy is buy & don't sell. Do that and you aren't paying shipping or transaction costs all the time. Do that and you are creating a position that becomes less and less risky because you are cost-averaging. By definition, the risk is reduced.
Over time, you end up with a large position. That position is subject to large swings if the markets have large swings. So be it. Obviously, you build such a position in anticipation of a longterm price trend for which you have determined the root cause.
I've determined that the long term trend for pms is up and that the root cause is governmental mismanagement and the resultant monetary inflation. Seems like a 100% slam-dunk, no-brainer to me.
Q: Are You Printing Money? Bernanke: Not Literally
An interesting observation for tonight. As soon as the futures markets (YG mini) opened up, we had about 150 contracts go through between about $936 and $937 in the first 5 minutes. Volume after that has been about 5 contracts per 5 minutes, with a max of about 30. I haven't paid attention to other week openings, but this seems strange. Someone wanted to dump a lot of contracts, and there was a buyer there at $936 to snatch them all up. I don't know if this is unusual or not, but with a price fluctuation of only about $1.50 with that much activity, it tells me there's a lot of buyers out there.
Taking a look at ZG (full contract) things look about the same. For GC, (gold comex), they drove the price from an opening of $940 down to $935.7, but it took 40 minutes to get there, but a TON of volume (relatively speaking for opening on Sun night).
FWIW, I bought a futures contract again at $936, going to ride this for a (hopefully) $7 gain to $943. Pivot is $943.9, so touching $943 shouldn't be hard. Support (s1) is at $931.7. Resistance, if we get that far, is $952.
would just like to comment about gold stocks: too many variables with gold stocks which means they don't truly track the price of gold. what if there is a labor dispute, a cave in, a problem with financing, management gets taken hostage, etc. these events could ruin the performance of the gold stock even as gold prices rise.
If you go by strict correlation numbers one could say that the major gold indexes (HUI, XAU, GDM, etc.) don't always closely track the price of gold. P. Radomski has done correlations on this from 10 days to 1500 days. Aside from periods of overperformance of the HUI from 2001-2004 and 2009 vs those year of underperformance such as 2005-2008, the average 1500 day correlation of HUI vs. Gold is 83%, a fairly high correlation. That's the same correlation % as the HUI vs. $USD. Only the gold to silver correlation of 93% is higher when one is looking at gold and silver related items vs. equities (CDBX, S&P) and $USD. Oddly, the HUI to gold correlation breaks down at the 750 day point with only a 37% correlation but over the last 90 days it's been 94%. If one compares the HUI vs. Gold charts over the past few years the charts trend pretty well imo. But no doubt the ability of major players to manipulate paper gold can cause major disruptions in the correlations as fall 2008 would attest.
Most of the major miners have anywhere from a dozen to many dozens of mining projects spread out around the world. The risk is somewhat spread out from an isolated mining project. To reduce the risk further, invest in a gold fund (such as USAA PM's fund USAGX) that typically samples an entire industry. Other choices are ETF's such as GDX that mimic all the players in the HUI index, though top weighted a bit towards the heavyweight majors. The risks that you mention with gold stocks (other than cave-ins) are also inherent with any Fortune 500 or Russell 2000 company. The real risks today is how available is credit to the company, does the business model still work well without govt support and credit, what are the assets really worth if you had to sell them today, and is the company burdened with derivatives or other counter-party risks that would totally distort current shareholder price if all the facts were presented?
I don't understand those that only buy physical gold, that spend so much time focused on the short term moves (like $20 in a day). A person (non-dealer) can't make money on physical for 5% or even 15% moves. The spreads, risk (and shipping) will eat all the profits over time.
There have been times when generic gold for example has had some prime opportunities to take advantage of shorter terms move in the gold price. Generics act sort of like the "futures" of the numismatic gold market in that they give leverage up and down. One can easily take a position near wholesale levels and have very little total expenses when finally selling. Ex. In early January $10 Indians in MS63 were down to approx $1075 retail after having reached $2000 or so 9-12 months earlier. It would not have been hard to buy these in the $1025-$1050 level. 2 months later they were in the $1350-$1400 range wholesale after only a 10% move in the gold price. A lot of 10 of these sold on a Heritage internet auction for $1015 each + shipping. Worse case, one could have bought these in quantity at retail at $1075 and still sold them for over a 20% profit after all expenses. During the same period one could have bought quantities of MS63 $2-1/2 Indians for around $600. They moved to $950 within 2 months. There were similar opportunities in all the denominations except the $3's. So yes, a non-dealer can easily play short term moves in gold-related items other than stock-trading and not get eaten up by commissions, fees, etc. The circ and lower MS grade $20's made a major move of >20% during this time as well as their premiums rose. A non-dealer could have bought these for very small premiums (0-3%) and done quite well. But if the main idea is that a non-dealer cannot make any real money buying a single AGE I would tend to agree. I use the short term gold moves more to support what I am doing with my stock's more than anything else.
Today the gold/silver ratio expanded all the way back from 63 to 66.0 with silver taking 4X the % hit that gold did. That would be consistent with the commercial interest continuing to increase their silver shorts from last week and sell off their winning gold shorts.
It looks to me that the $dollar and GSR is at least going to touch the upper end of their boll. bands. Gold looks to be completing a 3rd leg down in it's final C leg (of ABC) which means a probable bounce back and followed by a 5th leg down....maybe to that $915-$918 area. Similarly the $USD is completing a strong 3rd leg up with probably a pull back to follow with one last surge to the .83 region. Then time to reassess if the previous dollar down/gold up trend will continue. A few of the more beaten down gold stocks touched or dipped past their 50 dma today. I'm tempted to buy some here such as AUY at 8.8-9.0 but figure that even if some strength follows from here, there is almost always another final pullback to dash the last bit of hope. And we can't rule out a dollar rise to >.83, especially if another deleveraging event is instigated by the usual suspects.
The weekly gold chart has been showing weakness for a few weeks. But the interesting point of this chart is that a nice triangle formation has been building since November with a lower base line intersecting around the $915-$920 area. This formation runs out of space by the 4th week of July at around a $960 apex. Trends should point to this breaking upwards past $960 slightly earlier in July. Supporting this are that weekly RSI, Slow Stoch, Macd all show a coiling trend of lower highs and higher lows starting back in November. Stewart Thomson notes in his latest article that Friday's weekly gold chart formed a head and shoulders top forecasting a reversal to approx $890....assuming no bounce back in the lower $900's first. The daily chart picked out $895. $890-$893 was a sticking point for gold several times during the past 5 months.
I will start buying (nibbling) back in on gold stocks on the next show of weakness. That probably won't be Tuesday considering the GSR pull backed a ton and the $USD appears to have peaked at about 81.0 for now.
cohodk wrote: "I follow rules in trading, and rule #1 is NEVER TAKE BIG LOSSES."
I agree with you. But it seems to be the attitude of the golden bulls that long term holding and roller coaster rides are all part of their game and they will win in the end... even if the "end" is twenty years in the future.
I still prefer Weinstein's formula. It's worked for me since the early 1980s in stocks AND gold.
What you all are referring to is a trade-off between risk and reward. It's great if you have the skill and ability to *accurately* forecast dips and pullbacks and breakouts and you can participate in all of them profitably. Most people aren't that good. If I can buy gold at $1000 today and sell it for $1500 in 5 years, I've done OK, even if it dipped to $700 after I bought it and if it gyrated up and down several times. I could verywell have attempted to buy and sell and get in and get out at the right points and end up making a mistake that costs a significant portion of the profit. There's plenty of studies that show that people who leave their 401k's alone do better than the people who buy and sell and trade all of the time.
There is merit to both approaches, and the risk and reward vary accordingly also.
But from personal experience of over 20 years in the financial services industry, I have seen too many people hold a 25% loss which soon turns into a 50% loss, which is later a 70% loss. These are the type of losses from which one NEVER recovers. Avoid the big losses and you will be successful in anything you do. To avoid the losses one needs to learn humility and to control ego. Unfortunately these are powerful human emotions and are difficult to overcome. Even as a professional trader, I struggle with them everyday.
<< <i>For me, it would be a new low ($730 or so). Lower highs, and lower lows mean the rally is either over, or at least on hiatus
Yikes!! Thats a 25% haircut. To me that is completely unacceptable as a 25% drop requires a 33% increase just to get back to even.
I follow rules in trading, and rule #1 is NEVER TAKE BIG LOSSES. >>
I agree, that for trading positions, big losses are a no-no. I don't have any current trading positions in gold. I don't know what all the fuss is about. Someone asks a question, I gave an answer.
For long term value investors, the opposite of the trader rules against losses works better. For long term value investors, stop losses are a poor strategy, and easing in, even doubling down, tends to work better.
/edit to add: Readers of my investment blog know that I am rather ruthless and emotionless when cutting my losses in trading. I have a decent pile of losing trades documented in the blog to back that up. It is ironic, that I am getting called on this, because I rarely read about anyone taking a trading loss on this forum, it is mostly the winners that seem to get reported.
With all that, for long term value investors, the reason to get out is that the fundamentals have changed, or the initial analysis has proven to be wrong. The reason for getting in, is perception of mispricing--a bargain. If a bargain gets cheaper, and the fundamentals are the same, it becomes a better bargain. Time to load up more. For some, at some point, the analysis may have to be said to have been wrong, but in general, stop losses are a poor way to proceed for long term value investors. For long termers, diversification, asset allocation, and gradualism are better strategies. Readers, please don't confuse what works for short term traders vs. what works for long term value investors. For every buyer there is a seller, and often those two groups are on the opposite ends of the transaction, for good reason.
<< <i>I agree, that for trading positions, big losses are a no-no. >>
I just want to point out that the statement is made as if to suggest that people purposefully take big losses. No one wants to take a loss - big or small - on anything if they can avoid it.
Looking at an investment that's starting to crater and re-evaluating it is one thing. Is the trend reversing? Is this temprorary? Is the market still viable or is it changing? Is this just a consolidation? Recognizing that a stock or commodity is about to capitulate and doing nothing about it is quite another. I'm sure there are the lazy or complacent that fail to react to obvious signs of a trend reversal or capitulation or those that just say I'm not selling for x more years so I'm not going to worry about it, but otherwise I highly doubt there are people that recognize such signs and fail to act, unless they are second guessing themselves. In the end, it's just not as easy as you all make it sound. It's not as easy as simply adopting a "no loss policy."
<< <i>I agree, that for trading positions, big losses are a no-no. >>
I just want to point out that the statement is made as if to suggest that people purposefully take big losses. No one wants to take a loss - big or small - on anything if they can avoid it.
Looking at an investment that's starting to crater and re-evaluating it is one thing. Is the trend reversing? Is this temprorary? Is the market still viable or is it changing? Is this just a consolidation? Recognizing that a stock or commodity is about to capitulate and doing nothing about it is quite another. I'm sure there are the lazy or complacent that fail to react to obvious signs of a trend reversal or capitulation or those that just say I'm not selling for x more years so I'm not going to worry about it, but otherwise I highly doubt there are people that recognize such signs and fail to act, unless they are second guessing themselves. In the end, it's just not as easy as you all make it sound. It's not as easy as simply adopting a "no loss policy." >>
A lot of novice traders do purposefully take on big losses. They do that because they don't have a plan to cut and run before getting in. Novice traders also often tend to trade too large, taking on too much risk for the size of their bankroll. If a market moves against them, the novice tends to rationalize and trade on hope rather than on calm logic and good analysis. Sometimes they start seeing things that aren't there, just because of their trading position.
It's best to have a plan before entering the position. If the mental stop-loss gets hit, it is not the time to waffle, it is time to be emotionless and follow the plan. Sure, once in a while a meteor hits the Earth by surprise or some similar out of the sky event happens, and there is a big gap against a trading position and a loss is more than the stop because of the gap. However, the majority of losses do not belong in that category. The recent action in gold is not in that category.
Many times, gaps occur around known events, such as when a big economic report like the monthly employment number comes out, or for individual stocks, when an earnings report comes out. Novices tend to lack a coherent plan, or fail to follow the plan, and go to emotion and hope. Emotion can be the "blue screen of death" for traders. Those that can't make and execute their trading plans tend not to last very long. A lucky person will run out of luck, and their account will be gone.
I ended up closing out my position at breakeven, I never got the bump I expected. I had another buy order at $925. Low for the day was $926.6 for YG. I realize I mis-called my buy-in. Gold sturggled at the high $920's, so this is the new support. We might get some dips below this level, but I am not counting on it. I'm raising my buy in to $927.50. If we get a dip to the high $910's I'll add more. I'm still looking for a trend reversal later this week or next Monday.
Dollar just finished another bounce off a higher low and now moving back up. I'm hoping that it doesn't peak out before 10 am Wednesday to allow some shopping on beaten down miners. I still have to temper this with the Aden Sisters urging to buy stocks 2-1/2 weeks ago (a perfect call for them) and now JS is pounding his drum harder that 3rd week in June (this week) will be about the last opportunity to get one's house in order before PM's blast off again for the final and successfull assault on $1000. The only thing that bothers me is that Sinclair's short term calls on where pog is going have usually not faired well. He does best when he leaves the timing for others and just predicts the major milestones:
I have a great deal of certainty that both Martin Armstrong and Alf Fields are going to be proven 100% correct in their predictions that gold finds or has found its low in this month to be followed by a dynamic move to the upside. This move will not be modest by any means, but rather the most vigorous move we have experienced so far in this Gold bull market. Attend to completing whatever you wish to do in the next few coming days. Watch your simple trend lines very carefully this time because sales at $1000 will be wrong. The glib saying of "Sell in May and go away" will separate you from terrific gains this time around.
The least I can take away from this is that he feels $1000 is coming before summer is out. We could get a low of $890-$918 within the week and spend a number of weeks chopping slowly upwards for a stronger move in July. I'm watching the charts and still no positive confirmation of a definitive pog bottom yet even though a number of the indicators are in bottom territory. If the dollar moves up strongly and flattens the stock market, I don't see how gold miners can avoid correcting as well.
GSR's next resistance level is at 68.0. So far we've only gone to around 67. If that holds then we'll probably head back to test the 60.0 level again. If it doesn't, we could head all the way back to the 70's again which probably places the dollar in the >84 category. A strong move by the dollar from here is not out of the question. And that could short circuit all thoughts of a big gold move in the coming month or months.
Most miners seemed to have about bottomed for now, same for GLD. It would appear a series of up legs would be on tap, maybe $955-$960. The dollar index has just completed a 4th leg down in a 81.5 to 78.3 trading range. It should take about a day or two at most to complete the 5th leg up, assuming 81.3 holds. If it doesn't, the dollar could rally for a while. Whether than would stunt gold remains to be seen. As of late, gold and dollar are inverses.
I nibbled on 3 miners today (AUY, KGC, EGO) for about a 10% position with 90% still waiting in cash. I regret not buying on Monday morning when levels bottomed. Several of the miners have reached 68% retracements from the April-June run. Most all the others were in the 55% range. GLD has retraced 50% while silver only 38%. That would portend a little more correction still due in silver. GDX has retraced 53% and using Jeff Kern's USERX desired bottom of 11.48, that requires GDX to drop to 36.35 (62% retrace) to initiate a proper bull wave.
Better yet, Gold/Silver Ratio is getting toppy in the 66 range with oscillators and indicators nearing overbought conditions. We'll see.
Options expiration in the stock market should cause some havoc later this week. Fed meeting on Tuesday should draw some market reactions. According to Sinclair, early next week might be the last time to board the train on what he expects to be a strong up move. JS has not participated in charting predictions since early in 2008. So this will be interesting to see what is coming around the bend.
The idea of a final and last 5th leg from the April 17-June 3 is still back on the table. This down leg since the $990 top has been 11 trading days, an often seen number on corrective legs. This would be about 2X the length of corrective leg 2, and 1/2 the length of up leg #3. All fit nicely. The last leg down also did not violate Elliott Wave theory of passing below the peak of leg #1 (ie $918). All this can fit with JS's idea of a major move imminent. That is also coupled with July of last year also having a major move up. The one thing that bothers me with this setup is that gold just completed a series of 5 legs down (wave A). Usually that is followed by a B and C wave which would take another few weeks to complete and probably end up lower than where A ended at $925.
I can see this move up for gold hitting $950 on Thurs. I am seeing, and hoping for one quick test down from $950 before the assault on and over $1000. I think the test down might not get any lower than $930. I wish I had bought at $930 but on the other hand, I'm also glad I've had the discipline to not buy in yet because I think I will get the chance. A strong breakout over $950 could signal that the assault is starting now.
I agree that the timing predictions I've made appear to be in tune with what you're seeing. Friday or Monday should be the "turning point."
I've also seen others calling for Monday 6/22 as a turning date. I see the potential for one more leg down from here based on the action of the gold and silver miners. A number of them made lower lows today vs. Monday when gold bottomed at $926. But they can continue slightly lower even with gold not making new lows. A fall under $926 sends us at least $10 lower. I nibbled some more today on beaten up miners but wondered by late afternoon if I still wasn't way too early. EGO for example has now retraced 75% of its April to June move.
The action in the dollar and gold seem very similar and unspectactular. The dollar was supposed to go raging off in a bullish move up but really has fizzled since hitting 81.5 on the first rebound. From there it has put in a wedge/flag type pattern with similar highs and higher lows. It needs to get up >81.3 quickly in order to keep the move alive. Today it seemed like it got "goosed" from 80.2 to 80.8 after appearing totally flat. Maybe that was due to some "help" by TPTB or the President's televised remarks on new regulatory controls.
The dollar is ready for a 5th leg down in its sequence from early March. It is following the identical flag/wedge corrective pattern it did in April before heading down to 78.3. This would imply it resolving (downwards?) soon, possibly by Monday.
A bottom on gold of 6/22 would be in line with follow on mid to late June through July rallys of the previous 6 years, with half of them being quite substantial.
I'm still holding off on purchases of futures contracts. I had a buy in at $930.0 which was missed by $.40. It's kind of frustrating - maddening - trying to wait for the right entry point. I see that $930 is kind of a barrier and I expect one more test/touch of this area. It's possible for it to dip down through to the $910's, but I don't think a move to this area will be there long... less than an hour perhaps. I really see $930 holding up though. I guess I'll buy a small position at $930 and load up if it hits $920. I'm sure this pattern will still find some way to screw me.
I bought AUY and some other mining stocks over the past few days when the prices hit my targets. I'm going to load up on Monday morning (almost) regardless of the price and adjust any unfilled orders so that they fill. I know it's risky and probably not the best investing strategy, but I am convinced that this next move up is coming on schedule and sometimes you just have to go with what you feel.
The saw-toothed pattern in gold continued again this morning. That's 5 days worth with 4 successively higher bottoms...last at $932. Silver has been basically flat during this period. Sort of surprised that there was no takedown this morning like last Friday.
The dollar turned at 80.73 early this morning and bottomed at noon time at 79.98, which was lower than the 2 most recent low points this week. Still no sign of 81.3 and even more weakness on the lower end. Gold responded by reaching back to $938 again. If the dollar closes below 80.0 for the day, that would be strong support for a gold move. I did note that ATR (average true range) for both the dollar and gold/silver ratio turned down 2 days ago (weakening trend). But gold ATR has not yet turned up either....but getting close I think. I'm still holding back most of my ammo for early next week as well even though it feels like I should be buying today. The market still feels creepy and not fully oversold even though most miners have pulled back 20-25% from the June peak. The most I can make of it is maybe one final weak drop for gold over the next 2 trading days and a stronger drop coming in the dollar.
I concur. Gold is in at best a closing triangular pattern which in a downward set should also turn down. My other big concern is that we have a very distinct set of 4 symmetric waves down so far: down....flat...down...flat. That to me leaves too large a possibility of a 5th wave down to complete an A wave. So I sold out of my small position this morning and am waiting for a better entry. My overriding fear is that with a stock-deleveraging event like last summer that gold stocks will get pummeled, though not quite as bad as last year, but pummeled nontheless. It could come at any time this summer.
Gold stocks, while still exhibiting negative momentum, have apparently turned the corner or drastically slowed their rate of descent. So crashing from here seems unlikely while another 2-5% correction from this week's low could still be fit in.
The dollar is acting the same general way as gold is...weak and lazy. It would hard to imagine both the dollar and gold headed down together. The only difference is that the dollar has been in a down channel since March and has more to go. Gold has only been in a small down pattern for 2 weeks as part of a larger 6 month up pattern. I guess I'd give the nod for gold to break up at some point soon while the dollar falls. JS has been adamant this week about a gold move of larger proportions right around the corner. He has stepped out for the first time in a long while about not being tricked out of your gold at this point....stay the course. While that may be the case for bullion, it may not be the case for miners and other gold-related products.
I saw that RR. It's observations like this that start to convince me that I'm not going to get my entry point. But swince you posted it dropped pretty fast down to almost $933.
I placed a large physical order this morning at APMEX. This is for long term holdings in my IRA and for physical I'm not so concerned if the price of gold drops $10 or silver goes down another $.25 or so. To my surprise, they beat Monex, and I much prefer dealing with APMEX.
FWIW, I bought from APMEX. They had the best price on ASE, at $2 over spot that I could find. Everyone else was $.50 higher. I also nabbed the dip in silver (assuming it doesn't go down further). For gold, I just bought AGE's.
I'm going to hold off on the futures contracts and just keep an eye on things. Still have a buy order in at $930, and will add at $920. I will also buy on a breakout over $950.
One more consideration... There's a fed meeting next week. There's speculation that there may be more "quantitative easing" announced after the meeting. If that's the case, gold should get a nice bump.
Yes, a break under $925 would send gold to the $900-$915 range for starters. It doesn't feel like we've had a washout yet...except in the miners which have been beat down pretty hard. And the miners have been leading pog for a while now. The miners have lost 3X to 4X the pog drop. There's 2X leverage at work there along with a little "boost" from our friendly TPTB shorts...naked or otherwise. The first 2 legs down dropped gold $48 and $38. This would imply at least a $38 drop still to come if there is a leg 5 left in the mix. That would mean around $905 or lower. The H&S top in both the daily and weekly charts pointed to $890-$895 as possible.
I would also add that generic gold has picked up some steam the last 2 weeks counter to the pog movement. This is not normal behavior following a $65 drop in the pog. Most issues in the 63-65 range are the same or higher with most of the movement in $5's, $10's, and $20 Libs. Not sure what it means other than there is demand from somewhere across the spectrum. Issues that lagged the more bullionesque coins have picked up steam. For example MS63/64 $5 Libs have moved up 10% over the past 2 weeks. These were probably underpriced somewhat as well. Could be dealers and/or investors speculating.
Some more heavy bond ($100B+) auctions next week along with gold futures and options expiring on Thursday/Friday. Should make things interesting. Interest rates should likely rise and help move gold up and dollar down. If the auctions don't go as "well" as last week's, even more a lift for gold.
Peter Degraaf's Gold Direction Indicator peaked 2-3 weeks ago at 87% and fell to 6% on June 11th. It now stands at 18%. Hulbert's Gold Sentiment index peaked at around 57% in May and now stands at 10%.
COT update for 6/19:
The commercials dumped 15,559 short gold futures contracts and picked up 2,120 longs. Open Interest dropped by 15,184 contracts. The short to long ratio dropped from 3.8's to 3.56. Silver saw an even exchanged between longs bought and shorts sold, a far cry from last week when the ratio was highly leveraged to the short side. Obviously the intended goal was achieved. The commericals added more copper longs than shorts once again.
Rosen is a must read. The symmetry he denotes in the 1 yr. chart is quite compelling imo. Every high since Nov 2008 is higher than the lower lows of March-Oct 2008. In effect the gold price is being drawn up by JS's $1250 and $1650 magnets. There have been some good annotated charts coming out as of late. Rosen, Willie, Maund, and others are all giving creedance to JS's mantra of the first big move in pog is right here in front of our faces today. It only comes down to who will be the first one here to support a new all time high by July?
Since Stewart buys the dips, this is no surprise. But his view of the GDX chart is more bullish than bearish. The H&S top that was completed last July is nowhere to be seen this June...yet. Stochastics are essentially bottomed with RSI at 50 rather than 70. The view of a trader who thinks like the bankers.
Friday ended with a prominent and symmetric H&S top formation to start off Sunday night's trading. I would expect an initial move down.
Edit for Sunday night: Silver has retouched just under $14.00 and the dollar rebounded to 80.5. However if the dollar doesn't take out 80.8 it looks like another bear leg is imminent.
The awaited 5th leg down in gold/silver and 5th leg up in the USD and Gold to Silver ratio just showed up on the heels of that H&S formation occuring in gold on Friday afternoon. This takes the GSR and Silver to their 50 dma (67 and $13.88) The dollar will have to best 81.3-81.5 to keep this move alive. Only to 80.88 so far and it seems like that all 5 legs are there in that last move.
Silver needed to catch up some after its huge in May so this helps that. Now will gold be able hold at $918? I think it will as that leg completes the expected pattern. The move down in gold from $933 to $920 looks more like a search party for stops.....a straight line down rather than a series of impulsive selling legs as silver showed. This would have been an ideal spot to take out all the shorts in the $920's and clears the slate.
Gold is now at what I believe was one of Ackerman's hidden pivot points for a bigger move in gold... ~$918.5 IIRC, but gold is underneath S3 (support 3) which is at $921.1. Today is supposed to be THE turn day for gold. Which to me, means that we will establish a near-term low for gold, and that from here it will be nothing but up. Not necessarily a fast up, or straight up, but whatever the low is today, it should be the lowest point of probably the rest of the year.
I'm a little disappointed in myself as I kind of knew this might happen, but in the end, it's what always seems to happen. I played this one wrong, but not badly as I started to doubt my original expectations. I was waiting for $920 as an entry point as documented by earlier posts. however, last night, I was looking at the patterns and support levels and I wasn't thinking that it was going to actually make it to $920. Seeing that S1 was at $931.6, I opened a futures position at $931 thinking I would catch a dip. S2 was around $929, and S3 was $922.7. I added to my position at $926 bringing myself to my max position. I've left plenty of room to weather a dip below $900. If we break $915 I'll consider reducing my position or bailing, but until then, I'll see if things hold up.
I'm going to go load up on stocks now that the market has opened.
The market was already pretty much oversold as of last week. And Ackerman did get his hidden pivot nearly exactly at $918 ($917.85)this morning. The oscillators were buried low shortly after the open today.
If you look at Friday's action on GDX, besides the head and shoulders topping that gold was showing, the indicators for GDX were all topping into the end of day, and the divergence on some of them was negative looking back into Thursday. The bollinger bands were severely constricted along with GDX at the upper end. It would have been expected for a dump on mining stocks Monday am as well as gold.
Kern ski's method was looking for USERX to hit 11.48 to reinitiate a bull move in gold stocks. That number won't come out until end of day and will likely be higher. The GDX equivalent of that was hit today however at 36.35 (62% fib) when it bounced off 36.16...then 35.7. The USD on the first 5 legs up did not make it back to 81.0 and along with the GSR is now moving back down again. That well could be it for the counter moves in those. I did pick up some cheaper miners today. I got CDE pretty close to $10.00 and just resold it all considering that 5% in one hour should not be ignored (later found out that it got a favorable US Supreme Court ruling on an Alaskan mine). It will help make up for some of the stocks I picked up that went down further. AUY at $8.50 certainly seemed cheap enough as some of the bottom callers were figuring that to be a buy at $9.00. Another push lower and it's still a better buy. AEM made it to under $50, GG under $33, EGO under $8, and KGC under $17. Those all fell to at least the 62% retrace levels with several as high as 70-75%.
Gold lead the way down before commodities so one would expect it to bottom early as well. It is disconcerting to see oil continuing to fall along with the general SM and this could tend to pull down gold stocks down. But if the dollar is falling as well, does it make reasonable sense that everything is falling except TBonds? That does play into the hands of the Treasury's $100B+ auctions this week as the money has to come from somewhere (ie push down the SM and gold shares)...but do the bond buyers want to pay higher prices for them, only to see yields pop right back up later in the week? The FED meets Tuesday/Wed for the last time in a couple of months. That along with PM options/futures expiring later this week could make for some more anxiety along the way.
Can't also help but notice that at $917-$922 I only count 4 waves completed so far this morning. Another down wave breaks strongly through that $918 pivot point. But if I count the last move on Friday from $938 to $932 as the first wave, then 5 completed this morning. That fits with the dollar making it's first move up from 80.11 on Friday afternoon up to 80.50. The dollar has then also completed 5 legs as of late this morning and double topped at around 80.9. Note also that a number of the miners have now have put in double bottoms over the past week.
The above weekend analysis didn't expect a lower bottom in gold today. But the analysis does show bullish sentiment bottomed at least equivalent to the 2nd bottom of gold at $864 back on April 17th.
A good chart analysis of how the HUI peaks of the last 8 years have transpired....and how 2009 compares. Brochert feels we've just completed the first major leg down with B-C legs to follow.
Despite my minor misjudgement earlier, I was pretty happy with the action today and the closing. I liked how it hit $918 but spent most of the day north of $920 and $921 with closing North of $923.50. This gives me a loss of about $5 on my futures position. Had I followed my original intentions, I'd be up about $2 right now.
I'll be nervous until gold is back over $930, but I expect that to come Tues or Wed at the latest. I'll be very nervous if gold dips below $915 and then $910, especially if it doesn't recover right away.
I'm "all in" now though. I have a full position with futures, stocks, and options. If I'm right, I'll be sitting pretty. If not, I just hope I get out fast enough.
To clarify, "all in" means I've taken the full position that I plan to allocate to PMs. I'm not putting **everything** into PMs.
Today was a whacky day for the miners, probably their worst overall day in a while and similar to the sell offs on the last 2 consecutive Monday's. If it's any help, the rest of the previous weeks only saw gold move up or stay steady. The miners seemed to sell off a stiff 6-8% more on the fact that oil weakened along with the stock market than gold itself fell back. Gold fell only 2%, silver about 3%. Maybe some trimming of positions by funds in order to look good for the end of quarter, before the numbers slip any further. The dollar is still limping and ran into resistance at 80.92.
Like PC, I took a good position near the lows today but realize we could easily see another down day Tuesday. The other % will go later in the week as long as we don't violate the current low. Another big down day in the main stock market could drag miners down further. But it's been rare in this March-May stock run to see the general market take a big thumping 2 days in a row. If things look to fall apart I'll get out and watch for a while. It's getting harder to juggle these falling knives.
Some Elliot Wavers have noted we broke the technical $918 barrier that was the peak of the first leg up back from April 17th to 27th. That's a technical no-no in EW theory and would invalidate the entire move as a bull run. That would label it a corrective B wave with gold now in the C wave down....still all part of the March 2008 follow-on correction. I'm not an expert wave theorist so I don't know if 20-50 cents in a peak really makes all that difference in whether wave 1 was really violated.
Edited Monday night: gold to $912.70 and silver to $13.60 in Asian trading. GSR still around 67.10. Dollar sitting around 80.76 still deciding what to do....in 2-3 days the symmetric triangle that has been building for 2 weeks runs out of room. Opportune time Tuesday to push the overnight PM weakness even further. $890 from the H&S reversal is looking more likely. The banks get to unload a lot of their shorts before going much stronger long.
Last night gold dipped down to the $912's which was quite concerning, but the trend turned around and we were carried up to $925+ by 5am. The trend from yesterday should be exhausted, and will take about a day before the pattern is ready for another move. Until then I expect consolidation between $916 and $926. I'll have to really consider bailing if a new low is established. (below $913 for the YG contract).
It was diappointing to see a new low get established for this morning, although we have to allow for the possibility of our expectations being a day off in either direction, as none of this is precise. Some of the timing projections are based on an 8 week cycle, and there is a possibility that the 8 week cycle didn't start where I thought it did, and the actual turn date could be July 24.
If this were a normal week I'd feel safer about the turn date. But with the FED meeting through Wednesday, gold options expiring Th/Friday, and $100B in 2-5-7 yr treasury bonds being sold mid this week, I see too many possibilities for the boyz to spin the markets. Even with the dollar breaking past 1.40 I'd have expected a lot more strength in gold. The brief move to $912 last night broke through several key resistance/pivot points, one of which was the previous high in the first leg of the April-June run up. The miners have moved through their 50 dma's with the 100's and 200's looking much more vulnerable.
Even more concerning is that starting last week through today just about every major PM analyst is calling a bottom nearly or already in place. Hence, some more downside should occur as these guys are rarely all in agreement and so bullish at the same time. Maybe a quick move to the $890's or lower $900's to flush out remaining shorts?
I lightened up this morning on the bounce back as I felt too vulnerable once $912 was hit last night. It did look like a fishing expedition for stops but one can't be sure. And more than likely, another retest around the corner....no shortage of retests since we've been falling from $990. A close of below 80.00 on the USDX and the GSR getting away from the 66.5-67.3 range would be more favorable to a bounce back. The symmetric triangle that the USDX has been playing in has only to the back half of the week to resolve itself. The range is now 80.10 - 80.90 and shrinking.
Comments
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I would say that until we breach where this last leg started from (ie $864) that there is no failure in the rally from $864-$990. It can technically retrace its entire move on a first leg, assuming that was what we just had (i of v in major wave 3). A break of $863 would place the entire Nov-June move into a continuing correction from March 2008....basically busting the current rally. Dropping to $880-$918 and then recovering in August would place the current rally on firm ground, regardless if it is corrective or impulsive. And this would give the symmetry in the chart (12 month inverse H&S) that Cohodk likes to see. Since the first leg of the most current 2 month rally ended at $915-$918, falling below that imo would kill the most recent phase we were in.
One could argue further that since the A wave down from March 2008 bottomed in the $680-$700 range, with B topping out twice at $990/$1007, then a C leg down to $700 would still easily keep the 8 year rally in play. That would produce a standard ABC correction. In fact C legs, quite frequently fall to under the A leg which means that a bottom to earlier resistance levels to as low as $575-$625 would not technically kill the long term trend. Drawing an early trend line off of the 2001-2005 lows extrapolates in 2009 to $575....exactly at the last point of resistance before things can fall off the cliff. A trend line formed off the bottoms from 2005-2009 extrapolates to the same bottom area we just came out of: $860-$880.
For what it's worth, a standard 50% correction of the entire move from 2001-2009 would be $644. A 62% correction of the entire move would be $552 which would be cutting the trend lines and resistance levels awful close. In looking back at long term support, we bounced off $850 in May 2008 following the all time high. That's a key resistance point. The other key support is around $900 which was the last strong bounce up that occured in the 2008 correction before succumbing to a "toss out the baby with the bathwater" dumping that took gold in a straight dive to $700. For those that feel that a 3rd time trying to break $1000 writes off gold for gold, look at the action back when gold was trying to break $450 and $700 resistance for good. It took a 4th attempt after 9 months to leave $450 in the dust after leg 1 peaked. It took a 4th attempt after 16 months to break $700 following the leg 3 peak. And we're now in the 16th month after 3 attempts at $1000 following the leg 5 peak. The 2 earlier patterns occured during the fall in odd years 2005 and 2007. Is fall 2009 the 4th and successful attempt at $1000?
If I had to vote, I'd look at the $900-$918 area holding firm this time around barring another deleveraging mania. MoneyLA, I don't know if you got the precise answer you were looking for. In a nutshell, I'd place the current line of defense at $850 for simplicity sakes....bottom of the "trading range."
roadrunner
As this pattern evolves, I see gold holding $910-920. I'm going to buy in at $925, I don't think it will go significantly lower and I'm don't want to miss out. "Everyone" is looking at the 3rd week of June as a major turning point. The fourth assault on $1000 will not fail. I suppose if someone wanted to play this fairly conservatively, a breakout heading through $975 would be a solid entry point.
RR, if we see the $1500 gold by the end of the year that a lot of people are claiming, what juniors and speculators (stocks) do you think will benefit most from that? On that kind of price increase for gold, investor money is going to come flooding in (more than it already has). The rising tide will lift all boats, but some will be lifted much higher. It will be like during the RE boom - even houses with serious problems sold for huge premiums as investors were able to overlook the serious flaws that some properties had just to get in on the boom. I don't know if you follow any companies like that - I'm mostly referring to penny stocks, of course. TIRXF is the closest I come - I've been following that one for a while and it actually seems like a solid company with good funding, promising land holdings, and a promising exploration results. I'm not dumping a ton of money in it, but I've got a few dollars in there.
Another concern of mine with the smaller gold miners is that many of them have sold their souls via non-recourse derivatives to banks to get the operations up and going. The banks will likely end up owning the ones that do eventually produce either by takeovers by bank friendly miners like Barrick or other majors that the banks have large stakes in. The miners will consolidate over time just as the banks are in process of doing. And rest assured that those who are left will have a large % owned by the big banks.
I'll probably start looking at smaller miners down the road but I think I'll keep the majority of my buying to the producing unhedged miners that have limited geopolitical risks. Geo-pol. risk was not really a factor back in the 1970's but will be far more important in this current market. I don't need to go for the 10-1 or 50-1 score when the good intermediate producing miners themselves can be a 3-1 or 5-1 shot eventually. But if you can identify late stage exporers and profitable small producers as they come on line, that's where the money will be....as long as the bank doesn't own them and calls in their note. And you either have to review a site in person or 100% faith in the analyst that does review the operation. Relying on analysts has not been a good game the past 5 years.
roadrunner
All I can say to that is "yikes." If gold dropped $300 you would still say an 8 year rally is still in play? Heck, I would be wishing I sold at $950.
I can't hold on to "investments" or "trades" that lose more than 10%. In fact, I like to have even tighter stop losses.
My perfect plan would be -- as Ive said here many times -- to buy something that has broken out to new highs and is going higher. Again to repeat what Stan Weinstein said years ago... "buy high and sell higher."
www.AlanBestBuys.com
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Any pop is not likely to stick, but it could be very large.
.......
The websites I have been monitoring have all been shut down.
There are multiple deaths reported, and resignations/defections
inside of the current government appear likely.
.....
For a trade ONLY, I would consider being LONG GLD on any weakness
at or before the open each day next week.
All I can say to that is "yikes." If gold dropped $300 you would still say an 8 year rally is still in play? Heck, I would be wishing I sold at $950. I can't hold on to "investments" or "trades" that lose more than 10%. In fact, I like to have even tighter stop losses.
My perfect plan would be -- as I've said here many times -- to buy something that has broken out to new highs and is going higher. Again to repeat what Stan Weinstein said years ago... "buy high and sell higher."
ProofCollection pretty much mirrored my sentiments on the above. As a parallel, a lot of investors held on from 14,000 Dow all the way down to 6600 Dow. While I'm sure none of them would have held had they known where it was headed most probably felt they were in it for the "long haul" and it "always comes back." You gotta be in it to win, etc.
You can bet that when gold breaks to a new high and corrects the first time it will be more than a 10% correction. The volatility coming at us will not be like what we saw from 2001-2008. Erase that from your memory banks. If you can't suffer a 10% correction and unload, are you sure there will be a windown to re-enter? Obviously you must have held all the way on the first run from your entry point of $255-$500 gold all the way to $950 as you explained several times. Note that you must have entered well below gold's previous high in violation of Stan's rule #1. When gold corrected from $730 to $575 in 2006, if you stayed in you suffered a 21% correction. I know I did. You've made it clear you'll be back at a new all time high. But I would expect some serious corrections along the way of far greater than 10%. If the first new high gets to $1200 it could easily correct to $1000. If you jump out when are you back in? $1225? When/if gold completes it's major leg 3 up some are figuring on $2500-$3500 with a serious 20-30% correction to follow. If for example $3500 gold fell back to $2500, are you back in at $3600?
The Dow last peaked at 14,100. I would assume you'll only be back in at around the 14,200 level? Waiting for indexes to return to all time highs in this market could take a long time. This was a great plan in the "perfect" credit/investment mania from 1988-2007. Does it still apply or is goal the easier goal to only invest in shorts and bear funds? Will you be moving into oil at $150, silver at $51, copper at $4.10, platinum at $2500, and rhodium at $10,000+? Weinstein and others had a free pass from the FED, Treasury, and Congress for the past 25 years. Everyone assumes that's still the way to invest for these next 5-15 years. I think some of these guys may need to update their playbooks. The perfect 25 year plan went kaput at Dow 14,100.
If someone told us to get on the gold train back at $500 and that it was going to end up 5X or 10X higher within 10 yrs how many would have taken that bet and just let it ride, bumps and all? The ones timing it will probably screw up along the way and get kicked off early and end up with 20,40,60,100% in trading profits. Most of them won't do as well as the early birds that came in around $300-$700 and have just held in there taking the 20-30% lumps along with the 50-100% upmoves. Let's face it 90%+ of those who play in the markets aren't "good" traders. They are better left to following a trend and just sticking with it until it nears completion. I know I won't be one of the herd buying in at the $2500 or $3500 level if gold makes new highs at those levels....even if there was good reason to suspect it was going to $5000 or higher.
roadrunner
There are multiple deaths reported, and resignations/defections
inside of the current government appear likely.
storm888, in Iran?
roadrunner, I understand the dynamics of buying a gold mining company in terms of the leverage effects from a fixed cost structure as gold rises - that's been the attraction in buying the miners for a long time, but isn't the risk equal in the opposite direction if the pog heads down?
That being the case, why stay in paper?
I knew it would happen.
Other less known attractions with some of the miners are the other ores that come along with gold. Freeport McMoran mines mostly copper but gets a lot of gold in their ore. Some of the unhedged miners such as AEM have at times brought their cost per oz to mine gold to essentially zero due to the silver they collect in the process. This was the case when silver was flying in early 2008. Some others get to reduce costs with base metals such as zinc or copper. It all helps to reduce the costs of the miners. With the price of oil, supplies, and even labor contracting over the past year, the miners have gotten a nice reduction in their net cost per oz. But at the same time, the reduction in the price of silver, copper, and other base metals has canceled out that benefit.....for now.
roadrunner
There are multiple deaths reported, and resignations/defections
inside of the current government appear likely.
storm888, in Iran?"
///////////////////////////////////
Yes.
Cells are all out. No texting (the main way the dissidents communicate).
Social sites blocked. Journalists detained.
The link below can be used as a portal to some of the sites as they come back on line.
portal
//////////////////////////////
The tweets are coming mostly from folks who are NOT in Iran.
There are sat-phones that are getting some stuff out.
The situation seems to be much worse than CNN/FOX are reporting.
twitter
now you pointed out that: "Note that you must have entered well below gold's previous high in violation of Stan's rule #1."
you are correct that I bought gold when it was much lower and many hundreds of dollars below the 1980 peak. however, when I bought gold several years ago it had just started to break out from a "stage 1 base building formation."
Weinstein has four stages... base building, rapid growth spurt, topping, and the down leg which will be followed by the base building all over again.
if you can catch the break out from a long base building period, that is almost as good as "buying high and selling higher" but by buying when there is a break out from the base building you run the risk of a false break out.
again, tech analysis is an art and not a science. your methodology can work just as well.
I would just like to comment about gold stocks: too many variables with gold stocks which means they dont truly track the price of gold. what if there is a labor dispute, a cave in, a problem with financing, management gets taken hostage, etc. these events could ruin the performance of the gold stock even as gold prices rise.
if youre going to invest in gold, buy the metal.
if you want to buy gold mining stocks they should be considered part of your stock portfolio and not part of your hard asset holdings.
www.AlanBestBuys.com
www.VegasBestBuys.com
<< <i>again I would like to ask, when does a selloff (correction) become a rally failure??
thanks >>
For me, it would be a new low ($730 or so). Lower highs, and lower lows mean the rally is either over, or at least on hiatus.
I don't understand those that only buy physical gold, that spend so much time focused on the short term moves (like $20 in a day). A person (non-dealer) can't make money on physical for 5% or even 15% moves. The spreads, risk (and shipping) will eat all the profits over time.
That would be someone, like me - who has bought stocks, options, bonds, futures, etc., etc. - and who is not interested in putting capital at risk right now (at least not in the hands of the paper pushers).
that spend so much time focused on the short term moves (like $20 in a day).
In this environment, I don't understand it either. The guvmint is changing all the rules on almost a daily basis. From one man's perspective, they can't confiscate or tax what they can't prove exists.
A person (non-dealer) can't make money on physical for 5% or even 15% moves.
One comment: You got to know when to hold'em, know when to fold'em - know when to walk away, and know when to run.
Right now, I'm running as fast as possible from paper.
The spreads, risk (and shipping) will eat all the profits over time.
True, so true. The remedy is buy & don't sell. Do that and you aren't paying shipping or transaction costs all the time. Do that and you are creating a position that becomes less and less risky because you are cost-averaging. By definition, the risk is reduced.
Over time, you end up with a large position. That position is subject to large swings if the markets have large swings. So be it. Obviously, you build such a position in anticipation of a longterm price trend for which you have determined the root cause.
I've determined that the long term trend for pms is up and that the root cause is governmental mismanagement and the resultant monetary inflation. Seems like a 100% slam-dunk, no-brainer to me.
I knew it would happen.
IMHO it would just mean a bigger bounce up, with less a gravitational pull
Taking a look at ZG (full contract) things look about the same. For GC, (gold comex), they drove the price from an opening of $940 down to $935.7, but it took 40 minutes to get there, but a TON of volume (relatively speaking for opening on Sun night).
FWIW, I bought a futures contract again at $936, going to ride this for a (hopefully) $7 gain to $943. Pivot is $943.9, so touching $943 shouldn't be hard. Support (s1) is at $931.7. Resistance, if we get that far, is $952.
If you go by strict correlation numbers one could say that the major gold indexes (HUI, XAU, GDM, etc.) don't always closely track the price of gold. P. Radomski has done correlations on this from 10 days to 1500 days. Aside from periods of overperformance of the HUI from 2001-2004 and 2009 vs those year of underperformance such as 2005-2008, the average 1500 day correlation of HUI vs. Gold is 83%, a fairly high correlation. That's the same correlation % as the HUI vs. $USD. Only the gold to silver correlation of 93% is higher when one is looking at gold and silver related items vs. equities (CDBX, S&P) and $USD. Oddly, the HUI to gold correlation breaks down at the 750 day point with only a 37% correlation but over the last 90 days it's been 94%. If one compares the HUI vs. Gold charts over the past few years the charts trend pretty well imo. But no doubt the ability of major players to manipulate paper gold can cause major disruptions in the correlations as fall 2008 would attest.
Most of the major miners have anywhere from a dozen to many dozens of mining projects spread out around the world. The risk is somewhat spread out from an isolated mining project. To reduce the risk further, invest in a gold fund (such as USAA PM's fund USAGX) that typically samples an entire industry. Other choices are ETF's such as GDX that mimic all the players in the HUI index, though top weighted a bit towards the heavyweight majors. The risks that you mention with gold stocks (other than cave-ins) are also inherent with any Fortune 500 or Russell 2000 company. The real risks today is how available is credit to the company, does the business model still work well without govt support and credit, what are the assets really worth if you had to sell them today, and is the company burdened with derivatives or other counter-party risks that would totally distort current shareholder price if all the facts were presented?
I don't understand those that only buy physical gold, that spend so much time focused on the short term moves (like $20 in a day). A person (non-dealer) can't make money on physical for 5% or even 15% moves. The spreads, risk (and shipping) will eat all the profits over time.
There have been times when generic gold for example has had some prime opportunities to take advantage of shorter terms move in the gold price. Generics act sort of like the "futures" of the numismatic gold market in that they give leverage up and down. One can easily take a position near wholesale levels and have very little total expenses when finally selling. Ex. In early January $10 Indians in MS63 were down to approx $1075 retail after having reached $2000 or so 9-12 months earlier. It would not have been hard to buy these in the $1025-$1050 level. 2 months later they were in the $1350-$1400 range wholesale after only a 10% move in the gold price. A lot of 10 of these sold on a Heritage internet auction for $1015 each + shipping. Worse case, one could have bought these in quantity at retail at $1075 and still sold them for over a 20% profit after all expenses. During the same period one could have bought quantities of MS63 $2-1/2 Indians for around $600. They moved to $950 within 2 months. There were similar opportunities in all the denominations except the $3's. So yes, a non-dealer can easily play short term moves in gold-related items other than stock-trading and not get eaten up by commissions, fees, etc. The circ and lower MS grade $20's made a major move of >20% during this time as well as their premiums rose. A non-dealer could have bought these for very small premiums (0-3%) and done quite well. But if the main idea is that a non-dealer cannot make any real money buying a single AGE I would tend to agree. I use the short term gold moves more to support what I am doing with my stock's more than anything else.
roadrunner
It looks to me that the $dollar and GSR is at least going to touch the upper end of their boll. bands. Gold looks to be completing a 3rd leg down in it's final C leg (of ABC) which means a probable bounce back and followed by a 5th leg down....maybe to that $915-$918 area. Similarly the $USD is completing a strong 3rd leg up with probably a pull back to follow with one last surge to the .83 region. Then time to reassess if the previous dollar down/gold up trend will continue. A few of the more beaten down gold stocks touched or dipped past their 50 dma today. I'm tempted to buy some here such as AUY at 8.8-9.0 but figure that even if some strength follows from here, there is almost always another final pullback to dash the last bit of hope. And we can't rule out a dollar rise to >.83, especially if another deleveraging event is instigated by the usual suspects.
The weekly gold chart has been showing weakness for a few weeks. But the interesting point of this chart is that a nice triangle formation has been building since November with a lower base line intersecting around the $915-$920 area. This formation runs out of space by the 4th week of July at around a $960 apex. Trends should point to this breaking upwards past $960 slightly earlier in July. Supporting this are that weekly RSI, Slow Stoch, Macd all show a coiling trend of lower highs and higher lows starting back in November. Stewart Thomson notes in his latest article that Friday's weekly gold chart formed a head and shoulders top forecasting a reversal to approx $890....assuming no bounce back in the lower $900's first. The daily chart picked out $895. $890-$893 was a sticking point for gold several times during the past 5 months.
I will start buying (nibbling) back in on gold stocks on the next show of weakness. That probably won't be Tuesday considering the GSR pull backed a ton and the $USD appears to have peaked at about 81.0 for now.
roadrunner
Yikes!! Thats a 25% haircut. To me that is completely unacceptable as a 25% drop requires a 33% increase just to get back to even.
I follow rules in trading, and rule #1 is NEVER TAKE BIG LOSSES.
Knowledge is the enemy of fear
I agree with you. But it seems to be the attitude of the golden bulls that long term holding and roller coaster rides are all part of their game and they will win in the end... even if the "end" is twenty years in the future.
I still prefer Weinstein's formula. It's worked for me since the early 1980s in stocks AND gold.
www.AlanBestBuys.com
www.VegasBestBuys.com
There is merit to both approaches, and the risk and reward vary accordingly also.
But from personal experience of over 20 years in the financial services industry, I have seen too many people hold a 25% loss which soon turns into a 50% loss, which is later a 70% loss. These are the type of losses from which one NEVER recovers. Avoid the big losses and you will be successful in anything you do. To avoid the losses one needs to learn humility and to control ego. Unfortunately these are powerful human emotions and are difficult to overcome. Even as a professional trader, I struggle with them everyday.
Knowledge is the enemy of fear
<< <i>For me, it would be a new low ($730 or so). Lower highs, and lower lows mean the rally is either over, or at least on hiatus
Yikes!! Thats a 25% haircut. To me that is completely unacceptable as a 25% drop requires a 33% increase just to get back to even.
I follow rules in trading, and rule #1 is NEVER TAKE BIG LOSSES. >>
I agree, that for trading positions, big losses are a no-no. I don't have any current trading positions in gold. I don't know what all the fuss is about. Someone asks a question, I gave an answer.
For long term value investors, the opposite of the trader rules against losses works better. For long term value investors, stop losses are a poor strategy, and easing in, even doubling down, tends to work better.
/edit to add: Readers of my investment blog know that I am rather ruthless and emotionless when cutting my losses in trading. I have a decent pile of losing trades documented in the blog to back that up. It is ironic, that I am getting called on this, because I rarely read about anyone taking a trading loss on this forum, it is mostly the winners that seem to get reported.
With all that, for long term value investors, the reason to get out is that the fundamentals have changed, or the initial analysis has proven to be wrong. The reason for getting in, is perception of mispricing--a bargain. If a bargain gets cheaper, and the fundamentals are the same, it becomes a better bargain. Time to load up more. For some, at some point, the analysis may have to be said to have been wrong, but in general, stop losses are a poor way to proceed for long term value investors. For long termers, diversification, asset allocation, and gradualism are better strategies. Readers, please don't confuse what works for short term traders vs. what works for long term value investors. For every buyer there is a seller, and often those two groups are on the opposite ends of the transaction, for good reason.
<< <i>I agree, that for trading positions, big losses are a no-no. >>
I just want to point out that the statement is made as if to suggest that people purposefully take big losses. No one wants to take a loss - big or small - on anything if they can avoid it.
Looking at an investment that's starting to crater and re-evaluating it is one thing. Is the trend reversing? Is this temprorary? Is the market still viable or is it changing? Is this just a consolidation? Recognizing that a stock or commodity is about to capitulate and doing nothing about it is quite another. I'm sure there are the lazy or complacent that fail to react to obvious signs of a trend reversal or capitulation or those that just say I'm not selling for x more years so I'm not going to worry about it, but otherwise I highly doubt there are people that recognize such signs and fail to act, unless they are second guessing themselves. In the end, it's just not as easy as you all make it sound. It's not as easy as simply adopting a "no loss policy."
U.S. likely to lose AAA rating: Prechter
<< <i>
<< <i>I agree, that for trading positions, big losses are a no-no. >>
I just want to point out that the statement is made as if to suggest that people purposefully take big losses. No one wants to take a loss - big or small - on anything if they can avoid it.
Looking at an investment that's starting to crater and re-evaluating it is one thing. Is the trend reversing? Is this temprorary? Is the market still viable or is it changing? Is this just a consolidation? Recognizing that a stock or commodity is about to capitulate and doing nothing about it is quite another. I'm sure there are the lazy or complacent that fail to react to obvious signs of a trend reversal or capitulation or those that just say I'm not selling for x more years so I'm not going to worry about it, but otherwise I highly doubt there are people that recognize such signs and fail to act, unless they are second guessing themselves. In the end, it's just not as easy as you all make it sound. It's not as easy as simply adopting a "no loss policy." >>
A lot of novice traders do purposefully take on big losses. They do that because they don't have a plan to cut and run before getting in. Novice traders also often tend to trade too large, taking on too much risk for the size of their bankroll. If a market moves against them, the novice tends to rationalize and trade on hope rather than on calm logic and good analysis. Sometimes they start seeing things that aren't there, just because of their trading position.
It's best to have a plan before entering the position. If the mental stop-loss gets hit, it is not the time to waffle, it is time to be emotionless and follow the plan. Sure, once in a while a meteor hits the Earth by surprise or some similar out of the sky event happens, and there is a big gap against a trading position and a loss is more than the stop because of the gap. However, the majority of losses do not belong in that category. The recent action in gold is not in that category.
Many times, gaps occur around known events, such as when a big economic report like the monthly employment number comes out, or for individual stocks, when an earnings report comes out. Novices tend to lack a coherent plan, or fail to follow the plan, and go to emotion and hope. Emotion can be the "blue screen of death" for traders. Those that can't make and execute their trading plans tend not to last very long. A lucky person will run out of luck, and their account will be gone.
Rick Ackerman is hoping to buy gold at $918. Link
I have a great deal of certainty that both Martin Armstrong and Alf Fields are going to be proven 100% correct in their predictions that gold finds or has found its low in this month to be followed by a dynamic move to the upside. This move will not be modest by any means, but rather the most vigorous move we have experienced so far in this Gold bull market. Attend to completing whatever you wish to do in the next few coming days. Watch your simple trend lines very carefully this time because sales at $1000 will be wrong. The glib saying of "Sell in May and go away" will separate you from terrific gains this time around.
The least I can take away from this is that he feels $1000 is coming before summer is out. We could get a low of $890-$918 within the week and spend a number of weeks chopping slowly upwards for a stronger move in July. I'm watching the charts and still no positive confirmation of a definitive pog bottom yet even though a number of the indicators are in bottom territory. If the dollar moves up strongly and flattens the stock market, I don't see how gold miners can avoid correcting as well.
GSR's next resistance level is at 68.0. So far we've only gone to around 67. If that holds then we'll probably head back to test the 60.0 level again. If it doesn't, we could head all the way back to the 70's again which probably places the dollar in the >84 category. A strong move by the dollar from here is not out of the question. And that could short circuit all thoughts of a big gold move in the coming month or months.
roadrunner
I nibbled on 3 miners today (AUY, KGC, EGO) for about a 10% position with 90% still waiting in cash. I regret not buying on Monday morning when levels bottomed. Several of the miners have reached 68% retracements from the April-June run. Most all the others were in the 55% range. GLD has retraced 50% while silver only 38%. That would portend a little more correction still due in silver. GDX has retraced 53% and using Jeff Kern's USERX desired bottom of 11.48, that requires GDX to drop to 36.35 (62% retrace) to initiate a proper bull wave.
Better yet, Gold/Silver Ratio is getting toppy in the 66 range with oscillators and indicators nearing overbought conditions. We'll see.
Options expiration in the stock market should cause some havoc later this week. Fed meeting on Tuesday should draw some market reactions. According to Sinclair, early next week might be the last time to board the train on what he expects to be a strong up move. JS has not participated in charting predictions since early in 2008. So this will be interesting to see what is coming around the bend.
The idea of a final and last 5th leg from the April 17-June 3 is still back on the table. This down leg since the $990 top has been 11 trading days, an often seen number on corrective legs. This would be about 2X the length of corrective leg 2, and 1/2 the length of up leg #3. All fit nicely. The last leg down also did not violate Elliott Wave theory of passing below the peak of leg #1 (ie $918). All this can fit with JS's idea of a major move imminent. That is also coupled with July of last year also having a major move up. The one thing that bothers me with this setup is that gold just completed a series of 5 legs down (wave A). Usually that is followed by a B and C wave which would take another few weeks to complete and probably end up lower than where A ended at $925.
roadrunner
I agree that the timing predictions I've made appear to be in tune with what you're seeing. Friday or Monday should be the "turning point."
The action in the dollar and gold seem very similar and unspectactular. The dollar was supposed to go raging off in a bullish move up but really has fizzled since hitting 81.5 on the first rebound. From there it has put in a wedge/flag type pattern with similar highs and higher lows. It needs to get up >81.3 quickly in order to keep the move alive. Today it seemed like it got "goosed" from 80.2 to 80.8 after appearing totally flat. Maybe that was due to some "help" by TPTB or the President's televised remarks on new regulatory controls.
The dollar is ready for a 5th leg down in its sequence from early March. It is following the identical flag/wedge corrective pattern it did in April before heading down to 78.3. This would imply it resolving (downwards?) soon, possibly by Monday.
A bottom on gold of 6/22 would be in line with follow on mid to late June through July rallys of the previous 6 years, with half of them being quite substantial.
roadrunner
I bought AUY and some other mining stocks over the past few days when the prices hit my targets. I'm going to load up on Monday morning (almost) regardless of the price and adjust any unfilled orders so that they fill. I know it's risky and probably not the best investing strategy, but I am convinced that this next move up is coming on schedule and sometimes you just have to go with what you feel.
The dollar turned at 80.73 early this morning and bottomed at noon time at 79.98, which was lower than the 2 most recent low points this week. Still no sign of 81.3 and even more weakness on the lower end. Gold responded by reaching back to $938 again. If the dollar closes below 80.0 for the day, that would be strong support for a gold move. I did note that ATR (average true range) for both the dollar and gold/silver ratio turned down 2 days ago (weakening trend). But gold ATR has not yet turned up either....but getting close I think. I'm still holding back most of my ammo for early next week as well even though it feels like I should be buying today. The market still feels creepy and not fully oversold even though most miners have pulled back 20-25% from the June peak. The most I can make of it is maybe one final weak drop for gold over the next 2 trading days and a stronger drop coming in the dollar.
roadrunner
Not making higher highs though. Nor is my momo indicator, which is turning down at this second. I am cautious. Cash is best place for me.
Knowledge is the enemy of fear
Gold stocks, while still exhibiting negative momentum, have apparently turned the corner or drastically slowed their rate of descent. So crashing from here seems unlikely while another 2-5% correction from this week's low could still be fit in.
The dollar is acting the same general way as gold is...weak and lazy. It would hard to imagine both the dollar and gold headed down together. The only difference is that the dollar has been in a down channel since March and has more to go. Gold has only been in a small down pattern for 2 weeks as part of a larger 6 month up pattern. I guess I'd give the nod for gold to break up at some point soon while the dollar falls. JS has been adamant this week about a gold move of larger proportions right around the corner. He has stepped out for the first time in a long while about not being tricked out of your gold at this point....stay the course. While that may be the case for bullion, it may not be the case for miners and other gold-related products.
roadrunner
I placed a large physical order this morning at APMEX. This is for long term holdings in my IRA and for physical I'm not so concerned if the price of gold drops $10 or silver goes down another $.25 or so. To my surprise, they beat Monex, and I much prefer dealing with APMEX.
FWIW, I bought from APMEX. They had the best price on ASE, at $2 over spot that I could find. Everyone else was $.50 higher. I also nabbed the dip in silver (assuming it doesn't go down further). For gold, I just bought AGE's.
I'm going to hold off on the futures contracts and just keep an eye on things. Still have a buy order in at $930, and will add at $920. I will also buy on a breakout over $950.
Knowledge is the enemy of fear
I would also add that generic gold has picked up some steam the last 2 weeks counter to the pog movement. This is not normal behavior following a $65 drop in the pog. Most issues in the 63-65 range are the same or higher with most of the movement in $5's, $10's, and $20 Libs. Not sure what it means other than there is demand from somewhere across the spectrum. Issues that lagged the more bullionesque coins have picked up steam. For example MS63/64 $5 Libs have moved up 10% over the past 2 weeks. These were probably underpriced somewhat as well. Could be dealers and/or investors speculating.
Some more heavy bond ($100B+) auctions next week along with gold futures and options expiring on Thursday/Friday. Should make things interesting. Interest rates should likely rise and help move gold up and dollar down. If the auctions don't go as "well" as last week's, even more a lift for gold.
Peter Degraaf's Gold Direction Indicator peaked 2-3 weeks ago at 87% and fell to 6% on June 11th. It now stands at 18%. Hulbert's Gold Sentiment index peaked at around 57% in May and now stands at 10%.
COT update for 6/19:
The commercials dumped 15,559 short gold futures contracts and picked up 2,120 longs. Open Interest dropped by 15,184 contracts. The short to long ratio dropped from 3.8's to 3.56. Silver saw an even exchanged between longs bought and shorts sold, a far cry from last week when the ratio was highly leveraged to the short side. Obviously the intended goal was achieved. The commericals added more copper longs than shorts once again.
Ron Rosen's gold turning points
Rosen is a must read. The symmetry he denotes in the 1 yr. chart is quite compelling imo. Every high since Nov 2008 is higher than the lower lows of March-Oct 2008. In effect the gold price is being drawn up by JS's $1250 and $1650 magnets. There have been some good annotated charts coming out as of late. Rosen, Willie, Maund, and others are all giving creedance to JS's mantra of the first big move in pog is right here in front of our faces today. It only comes down to who will be the first one here to support a new all time high by July?
Stewart Thomson is buying
Since Stewart buys the dips, this is no surprise. But his view of the GDX chart is more bullish than bearish. The H&S top that was completed last July is nowhere to be seen this June...yet. Stochastics are essentially bottomed with RSI at 50 rather than 70. The view of a trader who thinks like the bankers.
Friday ended with a prominent and symmetric H&S top formation to start off Sunday night's trading. I would expect an initial move down.
Edit for Sunday night: Silver has retouched just under $14.00 and the dollar rebounded to 80.5. However if the dollar doesn't take out 80.8 it looks like another bear leg is imminent.
roadrunner
Silver needed to catch up some after its huge in May so this helps that. Now will gold be able hold at $918? I think it will as that leg completes the expected pattern. The move down in gold from $933 to $920 looks more like a search party for stops.....a straight line down rather than a series of impulsive selling legs as silver showed. This would have been an ideal spot to take out all the shorts in the $920's and clears the slate.
roadrunner
I am much more concerned than that.
Knowledge is the enemy of fear
I'm a little disappointed in myself as I kind of knew this might happen, but in the end, it's what always seems to happen. I played this one wrong, but not badly as I started to doubt my original expectations. I was waiting for $920 as an entry point as documented by earlier posts. however, last night, I was looking at the patterns and support levels and I wasn't thinking that it was going to actually make it to $920. Seeing that S1 was at $931.6, I opened a futures position at $931 thinking I would catch a dip. S2 was around $929, and S3 was $922.7. I added to my position at $926 bringing myself to my max position. I've left plenty of room to weather a dip below $900. If we break $915 I'll consider reducing my position or bailing, but until then, I'll see if things hold up.
I'm going to go load up on stocks now that the market has opened.
If you look at Friday's action on GDX, besides the head and shoulders topping that gold was showing, the indicators for GDX were all topping into the end of day, and the divergence on some of them was negative looking back into Thursday. The bollinger bands were severely constricted along with GDX at the upper end. It would have been expected for a dump on mining stocks Monday am as well as gold.
Kern ski's method was looking for USERX to hit 11.48 to reinitiate a bull move in gold stocks. That number won't come out until end of day and will likely be higher. The GDX equivalent of that was hit today however at 36.35 (62% fib) when it bounced off 36.16...then 35.7. The USD on the first 5 legs up did not make it back to 81.0 and along with the GSR is now moving back down again. That well could be it for the counter moves in those. I did pick up some cheaper miners today. I got CDE pretty close to $10.00 and just resold it all considering that 5% in one hour should not be ignored (later found out that it got a favorable US Supreme Court ruling on an Alaskan mine). It will help make up for some of the stocks I picked up that went down further. AUY at $8.50 certainly seemed cheap enough as some of the bottom callers were figuring that to be a buy at $9.00. Another push lower and it's still a better buy. AEM made it to under $50, GG under $33, EGO under $8, and KGC under $17. Those all fell to at least the 62% retrace levels with several as high as 70-75%.
Gold lead the way down before commodities so one would expect it to bottom early as well. It is disconcerting to see oil continuing to fall along with the general SM and this could tend to pull down gold stocks down. But if the dollar is falling as well, does it make reasonable sense that everything is falling except TBonds? That does play into the hands of the Treasury's $100B+ auctions this week as the money has to come from somewhere (ie push down the SM and gold shares)...but do the bond buyers want to pay higher prices for them, only to see yields pop right back up later in the week? The FED meets Tuesday/Wed for the last time in a couple of months. That along with PM options/futures expiring later this week could make for some more anxiety along the way.
Can't also help but notice that at $917-$922 I only count 4 waves completed so far this morning. Another down wave breaks strongly through that $918 pivot point. But if I count the last move on Friday from $938 to $932 as the first wave, then 5 completed this morning. That fits with the dollar making it's first move up from 80.11 on Friday afternoon up to 80.50. The dollar has then also completed 5 legs as of late this morning and double topped at around 80.9. Note also that a number of the miners have now have put in double bottoms over the past week.
Radomski on gold
The above weekend analysis didn't expect a lower bottom in gold today. But the analysis does show bullish sentiment bottomed at least equivalent to the 2nd bottom of gold at $864 back on April 17th.
Katz bullish on gold
Brochert on major HUI peaks going back to 2001
A good chart analysis of how the HUI peaks of the last 8 years have transpired....and how 2009 compares. Brochert feels we've just completed the first major leg down with B-C legs to follow.
roadrunner
I'll be nervous until gold is back over $930, but I expect that to come Tues or Wed at the latest. I'll be very nervous if gold dips below $915 and then $910, especially if it doesn't recover right away.
I'm "all in" now though. I have a full position with futures, stocks, and options. If I'm right, I'll be sitting pretty. If not, I just hope I get out fast enough.
To clarify, "all in" means I've taken the full position that I plan to allocate to PMs. I'm not putting **everything** into PMs.
Like PC, I took a good position near the lows today but realize we could easily see another down day Tuesday. The other % will go later in the week as long as we don't violate the current low. Another big down day in the main stock market could drag miners down further. But it's been rare in this March-May stock run to see the general market take a big thumping 2 days in a row. If things look to fall apart I'll get out and watch for a while. It's getting harder to juggle these falling knives.
Some Elliot Wavers have noted we broke the technical $918 barrier that was the peak of the first leg up back from April 17th to 27th. That's a technical no-no in EW theory and would invalidate the entire move as a bull run. That would label it a corrective B wave with gold now in the C wave down....still all part of the March 2008 follow-on correction. I'm not an expert wave theorist so I don't know if 20-50 cents in a peak really makes all that difference in whether wave 1 was really violated.
Edited Monday night: gold to $912.70 and silver to $13.60 in Asian trading. GSR still around 67.10. Dollar sitting around 80.76 still deciding what to do....in 2-3 days the symmetric triangle that has been building for 2 weeks runs out of room. Opportune time Tuesday to push the overnight PM weakness even further. $890 from the H&S reversal is looking more likely. The banks get to unload a lot of their shorts before going much stronger long.
roadrunner
It was diappointing to see a new low get established for this morning, although we have to allow for the possibility of our expectations being a day off in either direction, as none of this is precise. Some of the timing projections are based on an 8 week cycle, and there is a possibility that the 8 week cycle didn't start where I thought it did, and the actual turn date could be July 24.
much more vulnerable.
Even more concerning is that starting last week through today just about every major PM analyst is calling a bottom nearly or already in place. Hence, some more downside should occur as these guys are rarely all in agreement and so bullish at the same time. Maybe a quick move to the $890's or lower $900's to flush out remaining shorts?
I lightened up this morning on the bounce back as I felt too vulnerable once $912 was hit last night. It did look like a fishing expedition for stops but one can't be sure. And more than likely, another retest around the corner....no shortage of retests since we've been falling from $990. A close of below 80.00 on the USDX and the GSR getting away from the 66.5-67.3 range would be more favorable to a bounce back. The symmetric triangle that the USDX has been playing in has only to the back half of the week to resolve itself. The range is now 80.10 - 80.90 and shrinking.
roadrunner