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***JANUARY 2010 Gold and Silver Stocks/Options/Futures trading thread***

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  • ProofCollectionProofCollection Posts: 5,920 ✭✭✭✭✭
    I still dont see much bearishness in PM's. Most are still saying they go higher by end of year and much higher after that. Still sensing that most view the dollar bounce as just short term. Some PM's offered on the BST do seem to be sitting around longer than usual though.

    We're in the last 14 months of a parabolic move. It's typical in this stage of a parabolic move to have a 4 month consolidation period. We're at the end of month #2.

    So what will bring in the buyers, higher prices? Sounds like a fools trade to me. Would lower prices mean even less sellers and absolutely no buyers?

    It doesn't have to make sense. It's how things work. People have no interest in buying things that aren't on the move (up), whether it makes sense or not. That's what continues to pushes prices higher - to obscene levels sometimes. The smart traders are the only ones who know to do the opposite.

    This "correction" may not be over.

    It's too hard to say right now. Which is why I'm on the sidelines. I don't see gold going much lower, but I have to acknowledge the tear that the USD is on and see the possibilities. Of course, and at some point, gold will become de-coupled from the USD.
  • cohodkcohodk Posts: 18,991 ✭✭✭✭✭


    << <i>I still dont see much bearishness in PM's. Most are still saying they go higher by end of year and much higher after that. Still sensing that most view the dollar bounce as just short term. Some PM's offered on the BST do seem to be sitting around longer than usual though.

    We're in the last 14 months of a parabolic move. It's typical in this stage of a parabolic move to have a 4 month consolidation period. We're at the end of month #2.

    So what will bring in the buyers, higher prices? Sounds like a fools trade to me. Would lower prices mean even less sellers and absolutely no buyers?

    It doesn't have to make sense. It's how things work. People have no interest in buying things that aren't on the move (up), whether it makes sense or not. That's what continues to pushes prices higher - to obscene levels sometimes. The smart traders are the only ones who know to do the opposite.

    This "correction" may not be over.

    It's too hard to say right now. Which is why I'm on the sidelines. I don't see gold going much lower, but I have to acknowledge the tear that the USD is on and see the possibilities. Of course, and at some point, gold will become de-coupled from the USD. >>




    How do you know we are in a parabolic move? Why and how do you know this move will end in Mar 2011. I've never heard of a 4 month consolidation period. Seriously, I looking for info as I've never heard of this.

    The parabolic move in the Nasdaq lasted 4 1/2 months. For gold and silver in 1980 was about 2 months. There was no consolidation and a push higher.

    The parabolic move in gold in late 05 into 06 took 16 months to exceed the high. The parabolic move from late 07 into 08 took 18 months to exceed. Is it not possible that the parabolic move in late 09 could also take 16-18 months to resolve?

    Why will gold become decoupled from the dollar?

    I know how markets work and consider myself to be a "smart" trader. My point was to get his across to the rest of the board which you did. And this is why I use sentiment and psychology in my trading. In November gold bullishness and dollar bearishness was off the charts. Every third commercial on TV was about gold and the talking heads on TV were all bashing the dollar. I thought it was extreme in Oct but went way overboard in Nov. I dont see nearly as many gold commercials as I did 2 months ago. I think you are actually quoting one of my favorite sayings, "The ma$$es are a$$es."

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • ProofCollectionProofCollection Posts: 5,920 ✭✭✭✭✭


    << <i>How do you know we are in a parabolic move? Why and how do you know this move will end in Mar 2011. I've never heard of a 4 month consolidation period. Seriously, I looking for info as I've never heard of this.

    The parabolic move in the Nasdaq lasted 4 1/2 months. For gold and silver in 1980 was about 2 months. There was no consolidation and a push higher.

    The parabolic move in gold in late 05 into 06 took 16 months to exceed the high. The parabolic move from late 07 into 08 took 18 months to exceed. Is it not possible that the parabolic move in late 09 could also take 16-18 months to resolve? >>



    Sounds like you are ignoring or forgetting about the longest part of the parabola, or only referring to the last part of a parabolic pattern. Previous parabolic moves have lasted just over 5 years. Look at Toll Brother stock (housing boom) from Jan 2000 to mid 2005. OR oil from 2003 to beginning of 2009. The steepest part, is of course, the last 12-16 months or so. Look at oil's pullback/consolidation from mid 2006 to Jan 2007. Might that be a parallel to the pullback we're seeing now in gold? Look at Nasdaq - that move started in 1995 and ended in early 2000, but there were pullbacks and consolidations at mid 1998 and early 1999, about 4 months long.

    I'm can't say for sure that we're in a 5+ year parabolic pattern, but everything matches the other parabolic moves so far.



    << <i>Why will gold become decoupled from the dollar? >>



    I guess it isn't a requirement, but it will be likely in order for gold to soar to $2000+ later this year. The world-wide supply of gold is tight, and when big money starts moving into gold we'll see price appreciation due to shortages of supply, at which point the USD could become insignificant.



    << <i>I know how markets work and consider myself to be a "smart" trader. My point was to get his across to the rest of the board which you did. And this is why I use sentiment and psychology in my trading. In November gold bullishness and dollar bearishness was off the charts. Every third commercial on TV was about gold and the talking heads on TV were all bashing the dollar. I thought it was extreme in Oct but went way overboard in Nov. I dont see nearly as many gold commercials as I did 2 months ago. I think you are actually quoting one of my favorite sayings, "The ma$$es are a$$es." >>



    I know you're one of the smart traders, and I hope I didn't imply anything else. However, it's my impression - I could be wrong - that smart traders would either not participate or would get killed in the later stages of a parabolic move as the market becomes irrational. I wasn't actively trading back then, but the move in oil (for example) from $95-150 probably wouldn't have made sense to someone like you - and it didn't. It was an irrational bubble. But if you were short oil because you you could see no reason for oil to be that high, you would have gotten killed unless you could hang on until after the bubble burst, and you wouldn't have found the logic to go long during that final move up because why would you buy something that's inexplicably priced too high?
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    Gold imo has been in a "parabolic" move since 2002 only the early parts of the curve are nearly undiscernable from a straight line. Pog could fall back in the mid-$900's over the next month or two and still remain on the parabolic trend line.

    After today's action in the main SM breaking key support the miners don't look so cheap, even after 25-35% declines. I may pare back/eliminate what I purchased this past week on the bounce back to the 200 dma's. I'm one step closer to buying into Cohodk's deflationary scenario for 2010 though I'd like to think we have at least another 1-3 months before that hits full bore.

    So what will bring in the buyers, higher prices? Sounds like a fools trade to me.

    Yes, but that's what happens every time. The bulk of the buyers come in late in the run. Isn't that how the masses work? It is usually a fools trade for those late comers.

    Would lower prices mean even less sellers and absolutely no buyers?

    Lower prices, at least towards the end of a down trend does seem to produce the fewest sellers...and hence the fewest buyers. There would never be a point of absolutely no gold buyers with our current economic and financial system. Maybe when everyone can make gold from sea water at home using a Ronco $29.95 "juicer" then there might be no buyers.

    roadrunner

    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • ProofCollectionProofCollection Posts: 5,920 ✭✭✭✭✭
    After today's action in the main SM breaking key support the miners don't look so cheap, even after 25-35% declines. I may pare back/eliminate what I purchased this past week on the bounce back to the 200 dma's. I'm one step closer to buying into Cohodk's deflationary scenario for 2010 though I'd like to think we have at least another 1-3 months before that hits full bore.

    Deflationary in what sense? Consumer prices (or commodities?) in terms of fiat or gold?

    The money supply has been dropping for a while now, both M2 and M3 estimates. But how long and how far can they keep shrinking the money supplies? The banks aren't lending anything out, although I'm wondering if this will change as the "recovery" (*cough*) takes hold. Certainly stimulus (*cough*) money will start to enter the economy now as well. By the ECRI, the economy is improving... there is data out there to show things are coming around and many company forecasts are expecting recovery. So the recovery - or perception of recovery - could probably start to induce some banks to start lending.

    However, the US will have to refinance 40% of its debt this year, in addition to any new financing. With deteriorating conditions worldwide, it's unclear where this money will come from. I still don't see any foreign countries increasing their holdings of our debt. They may maintain current levels or decline, but unlikely to go up, IMO. We'll either have to raise interest rates to attract investors or print the money. Raising interest rates increases our interest expense and will be a drag on the economy, while printing the money will be inflationary. They'll choose the printing press every time.

    The Fed's Anti-Inflation Exit Strategy Will Fail

    Time frames are uncertain, it's hard to say what will happen this year and what might happen in the years ahead.
  • renman95renman95 Posts: 7,037 ✭✭✭✭✭
    VIPSX has had a nice climb this month while the PM's have gone down.

    This TIP is up 1.5% this month and the major averages are down around 3.5%.

    The markets seem to have shrugged off the GDP, MSFT numbers. It seems the market is reacting to the "damn the torpedoes" mentality by BHO.

    Are we going to see a major (15-20%) correction between January and March? I kind of feels like it.

    R95
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    COT report for 1/29/09

    Some interesting changes this week so I'll post them. Commercial short position on the gold futures dropped a massive 23,000 making a huge dent in the short to long ratio from 3.51 to 3.23. That's a long ways from the 4.5 peaks we saw in November. These are now at levels not seen since the doldrums days of July. Open interest is still up high at 507K. The net commercial short position dropped a huge amount to settle at 248K net short. That's about 60K less then its fall peak. A good point to build from should the fall stop here. The commericals added 2300 longs as well this week.

    On the dollar side things have swung right back to very heavy on the short side. O/I is still high at 59K with a net commercial short position of 41,700 contracts....at an 8.13 short to long ratio. These nosebleed ratios have been around for 7 weeks now. During the Feb 2009 high ratios when the dollar was last ralling, those ratios only lasted 3-4 weeks before the dollar turned back down. And it was only 2 months ago where the net short interest was 0 (in October this was at 10,000+ contracts net long). That's a +52K shift in net short interest. Regardless, it hasn't done anything yet to slow the dollar down.

    Deflationary in what sense? Consumer prices (or commodities?) in terms of fiat or gold?

    Should that come it would be deflationary for most everything but essential consumer items such as food staples. Things like gold bullion should hold up ok. We all probably have different definitions of what constitutes essential consumer items.

    I agree that M2 and M3 have been dropping but that's not the case for M0, M1, and TMS (true money supply) which have been rising. Also rising has been the FED's agency debt slush fund (+$450B this year). It can be debated at length as to which of the money aggregates is the best indicator for monetary inflation/deflation. The banks aren't lending anything that can be seen. But there are liquidity flows unseen to our eyes being worked by the FED/Treasury. That liquidity may only be flowing between govts and central banks.

    roadrunner
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • ProofCollectionProofCollection Posts: 5,920 ✭✭✭✭✭
    Had to share this... Mark Dice again:
    A sad state of the country these days. People sign petition to repeal the 1st Ammendment
  • cohodkcohodk Posts: 18,991 ✭✭✭✭✭
    Sounds like you are ignoring or forgetting about the longest part of the parabola, or only referring to the last part of a parabolic pattern. Previous parabolic moves have lasted just over 5 years. Look at Toll Brother stock (housing boom) from Jan 2000 to mid 2005. OR oil from 2003 to beginning of 2009. The steepest part, is of course, the last 12-16 months or so. Look at oil's pullback/consolidation from mid 2006 to Jan 2007. Might that be a parallel to the pullback we're seeing now in gold? Look at Nasdaq - that move started in 1995 and ended in early 2000, but there were pullbacks and consolidations at mid 1998 and early 1999, about 4 months long.

    Didnt this run start in 2002? Thats 8 years now.

    Look at the Naz, Nikkei, Brazil, Russia, Oil, Real Estate, PMs in the 70s,----none lasted more than 8 years.


    95-150 probably wouldn't have made sense to someone like you - and it didn't. It was an irrational bubble

    It made perfect sense and for just the reason you mentioned. But if you go back to June 2008 what was all the talk about oil? Peak oil, Brazil, Russia, India, China, worthlessness of the dollar, ect. Were those irrational thoughts at the time? Most people dont see the "irrationalness" until after the bubble has collapsed.

    Hopefully we will not look back in 3 years and see the run in gold from 700 to 1200 that coincided with the hysteria(Glenn Beck style) of the demise of the dollar and countless advertisements and proclamations that gold will protect you from the end of days.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • ProofCollectionProofCollection Posts: 5,920 ✭✭✭✭✭


    << <i>Sounds like you are ignoring or forgetting about the longest part of the parabola, or only referring to the last part of a parabolic pattern. Previous parabolic moves have lasted just over 5 years. Look at Toll Brother stock (housing boom) from Jan 2000 to mid 2005. OR oil from 2003 to beginning of 2009. The steepest part, is of course, the last 12-16 months or so. Look at oil's pullback/consolidation from mid 2006 to Jan 2007. Might that be a parallel to the pullback we're seeing now in gold? Look at Nasdaq - that move started in 1995 and ended in early 2000, but there were pullbacks and consolidations at mid 1998 and early 1999, about 4 months long.

    Didnt this run start in 2002? Thats 8 years now.

    Look at the Naz, Nikkei, Brazil, Russia, Oil, Real Estate, PMs in the 70s,----none lasted more than 8 years. >>



    Sure, gold has been increasing since 2002, but the distinct move upward started in earnest in Aug/Sep 2005. My charts aren't that good going back that far so I can't pinpoint the exact month. But, like with EW theory, it probably all depends on where you start counting, but I wouldn't count the dip into the $200's and subsequent recovery to $400 as part of the parabolic move.
  • cohodkcohodk Posts: 18,991 ✭✭✭✭✭


    << <i>

    << <i>Sounds like you are ignoring or forgetting about the longest part of the parabola, or only referring to the last part of a parabolic pattern. Previous parabolic moves have lasted just over 5 years. Look at Toll Brother stock (housing boom) from Jan 2000 to mid 2005. OR oil from 2003 to beginning of 2009. The steepest part, is of course, the last 12-16 months or so. Look at oil's pullback/consolidation from mid 2006 to Jan 2007. Might that be a parallel to the pullback we're seeing now in gold? Look at Nasdaq - that move started in 1995 and ended in early 2000, but there were pullbacks and consolidations at mid 1998 and early 1999, about 4 months long.

    Didnt this run start in 2002? Thats 8 years now.

    Look at the Naz, Nikkei, Brazil, Russia, Oil, Real Estate, PMs in the 70s,----none lasted more than 8 years. >>



    Sure, gold has been increasing since 2002, but the distinct move upward started in earnest in Aug/Sep 2005. My charts aren't that good going back that far so I can't pinpoint the exact month. But, like with EW theory, it probably all depends on where you start counting, but I wouldn't count the dip into the $200's and subsequent recovery to $400 as part of the parabolic move. >>



    I would. The move always starts when higher highs and higher lows are being made. The upturn in gold clearly started in 2001 as it probed the 250 area and investors sought an alternative to the stock market. Gold was the red headed stepchild of assets for the better part of 2 decades. It took an 80% decline in the Naz and a terrorist attack to bring out its glitter.


    To get the thread on topic, both gold and silver are at the line in the sand. In am encouraged that both held their ground on Friday, but an concerned a negative headline from Europe on Sunday could result in a 2c pop in the dollar on Monday. Regardless, this dollar rally--or at a minimum stabilization at higher levels--will last for a very good part of the year.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    The first up leg in gold was from 2001-2004 when it peaked at around $425. And I agree that it was part of the parabolic move. What I don't readily agree with is the 8 year gold run in the 1970's. That is assuming that we only look at the time since coming off the gold standard (Aug '71). One could easily argue that the commodities boom began in the inflationary days of the early to mid 1960's and in particular when we stopped making silver coins. The price of silver doubled by 1967-68 when it peaked out (the SM peaked out in 1966 as well). One could say that was the end of the first silver up leg (technically it began in 1932 and just slowly rose but most of the appreciation came from 67-68). That would imply a 14+ year bull run in silver. It went through 2 recessionary slumps/corrections along the way. It had 3 up legs, each much steeper than the previous one (1932-68,72-74,77-80). Gold would have reacted similarly if given the same conditions as silver.

    Had gold floated at the same time as silver it would have begun it's official run much sooner than August 1971. But that fact that London gold pool operated from 1961-1968 to suppress gold's market price by coordinating gold sales and purchases kept it at the same level as the "official" price of $35 US. This was following the US exportation of 2,000 tons of gold in 1958 to cover it's inflationary excesses. Obviously that could not be allowed to continue. But the London gold pool eventually failed to effectively control market price as by 1968 it was disbanded...agreeing only to control the official price between central banks while letting the market price float. In reality gold was trading above $35/oz from 1968-1970 and peaked with a 25% gain in May '69...following 6 years of central bank manipulation to keep it down. A 25% gain in any commodity is nothing to sneeze at. That would be like gold jumping to $1350 right now. Had gold been free to float all along (and with public ownership) it probably would have "officially" reached $60-$100 long before 1972-73. And that little 25% "blip" from 1968-1969 counts as the first of 3 legs that ended in 1980. The first hints of a recession coming in 1970-71 no doubt helped to curtail gold's first move somewhat.

    In any event I submit that gold's move was much longer than just 8 years....and probably more like 12-14 years. That gives at least another few years still left in the run. It's accurate to say that we have never seen a full length gold bull market on a pure fiat currency. From a historical standpoint it's interesting to note that former Treasury Chief Robert Rubin got his start in gold during the days of the London Gold Pool. He passed along his gold suppression experiences in the 1990's to his able student Larry Summers.

    As a comparison, oil prices rose from 1946-1957. Then again from 1963-1980. While the mania stage may have lasted 8 years there is some evidence for much longer bull cycles. And the fact that we left any backing to our monetary policy decades ago certainly will effect the length and swings of today's gold and oil prices.

    Average historical oil prices

    roadrunner
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • ProofCollectionProofCollection Posts: 5,920 ✭✭✭✭✭
    New Feb thread started.
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