I know many of you are familiar with my 5th year correction scenario. For any who are new to the site. All that means is that typically secular bull markets will have a serious counter trend decline somewhere around the 5th year of the bull market. The 87 crash is a great example. Last summer I think we saw that decline in the commodity markets. During the first phase energy and base metals outperformed precious metals and agriculture. During the second phase I fully expect PM and Ag to outperform. Notice how the correction in PM during this time was also milder than what took place in energy. During this next phase I think PM and ag is where an investor will outperform. These second phases can be rather long. The second phase in the stock market lasted from 87 to 98. During this time corrections should be bought not feared. Remember a correction is just the market doing something stupid. Your job is to take advantage of this stupidity.
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25 comments:
Goodbye oils. STP and solar friends will show them to the door.
Grid parity now achieved.
Grid parity now achieved by STP.
http://biz.yahoo.com/prnews/071025/cnth031.html?.v=3
Spot gold has made a higher high for 9 consecutive weeks.
During the parabolic run in 2005 it made consecutive highs for 8 weeks.
Gold has recently moved 144 dollars in 10 weeks.
The S&P 500 traded back down to where it was PRIOR to the 1st 50 beeps rate cute.
To me that implies that further cuts are needed or 'wanted'.
Given the massive liquidity run away from the dollar and into non dollar commodity hedges - would it be safe to say these markets have already discounted another 50 beeps cut to happen on this coming Tuesday?
If so - will there be - sell the news on these trades?
Or a continued liquidity rush - as the seasonal buyers rush in?
COT???
More liquidity will mean higher prices, no question about it. Inflation demands it. Man, the economy is going to have one hell of a hangover when it finally staggers away from Ben's Helicopter Bar...
PM's on fire today. Not surprising. SLW was great. Anyone know why SA underperformed today?
thx..
Gary,
I read the COT
And i’m nuetral to oh so slightly bullish. DIA,SPY,QQQ,IWM...
I didn’t see any new trend, so market stays in a narrow range.
VIX is 50/50, so volatility, stays in a narrow range.
slightly bullish may reflect banking sector moderately higher next week, due to cut OCT 30/31.
i'll
Be glad when you have your results though, and post something, cause my interpretation still makes me a little nervous.
zee
Gary -
If interested , I'd love to hear your thoughts on this article:
Silver Lagging Gold
http://www.gold-eagle.com/
gold_digest_05/hamilton102607.html
I am particularly interested in knowing:
1. if this author's examination of the facts appears credible to you
2. where you think we may be in this current gold bull cycle (ie if we are near later stages, silver should turn parabolic soon).
thanks,
Mr. T.
Jake,
I like the EMA on a smaller time frame, as a lead 10 or 20 days. I try to keep the longer MA's on a simple, seems like they're more reliable, but I'd guess it's just preference.
VDSI low of day just touched the 200 d MA, seems like some buyers stepped in there and pushed up to close a little higher.
Added more XLF calls today.
Sold the last of the XHB Nov. calls.
The options are moving up quick on the rate cut rumor. They're asking premium prices now.
Still long CNX, XLF, USO, FXY, XLU, ATR and a few others not worth mentioning.
Short SMSC, XLY
HMIN had a huge B/O week, missed an entry. Also X breaking out now.
good luck
T,
Here's what I think about silver.
It's in a secular bull market. I don't care whether it's lagging or leading gold at the moment. All I care about is where it's going to be 10 years from now. I suspect that it will be at least $150-$200. I refuse to make the mistake of trying to trade silver. When silver is ready to move it will move, big and fast and it will be a sight to see. I won't take a chance of missing that by losing my position no matter how many negative opinions I see. 10 years from now we are going to see articles about the investors that got rich buying and holding silver. We are not going to see any stories about traders who got rich trying to trade silver. That one I can guarantee you.
bab,
SA looks like it's just consolidating some of the big gains lately.
Mr. T,
I read the article. I liked it. It confirms the way I think about silver. I am not let down as the author seems to be. I suppose I thought most people knew that about Silver. The author concedes that silver outperforms gold due to its parabolic spikes, and you catch those spikes and declines. However, if you are investing for the long haul, to ride the whole bull, what silver allows, is longer time period opportunities to accumulate the Silver at lower prices than gold. If you believe that Gold will go higher over time, which I do, then Silver will eventually catch up. One of the things I noticed, as I believe I mentioned this in an earlier post, is the gold/silver price ratio. Not the historical level of 16-1, as that is not a relevant indicator due to the nature of both metals being a measure of Money for thousand years. I like to buy when Gold is going sideways and Silver is greater than 55-1. I totally agree with Gary. I don’t know what the price will be 10 years from now, but I know that Federal Reserve Notes and our Fiat system will crash in time. By then we will be on a two tier system of Debits and Credits for the sheeple and Gold and Silver for the people.
for beannie..read it and weep. this should end your nonsense.
http://www.brookesnews.com/072210journalism.html
natan -
thanks for your post. makes sense to me and I will enjoy backtesting it to see how it works.
as we are 55:1 at the moment, and GOLD has traded essentially flat for the 15 months preceding this past September, i imagine you are bullish on SILVER going forward from here. :-)
Mr. T.
Gary -
thanks for the awesome weekly spreadsheet/analysis i received this morning.
you guys who are not subscribers should know that you are missing out on factual data and perseptive analysis not available anywhere else on the Internet.
Gary, I think you should find out just who exactly these COT commercials are and let them buy your data and analysis for yearly subscriptions of $10K or more (not kidding....as long as it is still $50 per year for me).
Mr. T.
Mr. T:
I am not sure what there is to backtest. I don't use a "system" per se. I believe, as does Gary, that the federal reserve has printed to many of their funny paper products. The rest of the world is not interested. Therefore the FRN (federal reserve notes) can only be discounted and destroy the purchasing power of its users, hence I am bulish on gold and silver. Therefore, when Gold is pausing, Silver usually pauses but drops down below 55-1..thats where I like to buy. If i think it is going on a 10 percent upswing, which happens regularly, I will leverage my holdings and get 5-7 thousand ounce bars, sell 4-6 of those and put the profit into the 1 bar. Sometimes I leverage 10 ounces gold and 5k silver and sell the silver on the upswing and put the profits into the leveraged gold. I have been doing this since Jan '06 Prior to that I just bought and held.
Most of the so called emerging world understand Gold and silver as stores of value and protection of wealth. The real disaster for FR Notes is when the West and Americans in particular come to understand what exactly it is that is passed off as money. Gold and Silver are measures of real wealth. There is no corresponding debt attached. No interest owed or due. Paper money schemes without backing in gold and silver have always failed and will fail in the current world system. Thats why the International central bankers are moving quickly to get everyone onto electronic banking. debits and credits. NOT WEALTH. No more cash. That is the goal. I can not tell you when it will happen. But I know they are moving swiftly. Rockefellers have invested Billions in converting the Chinese away from money, paper or metal to electronic. I suspect they have a 1 generation time frame. Which is very fast. It takes time to brainwash the population. However the Chinese were one of the last hold outs as a country to have Silver as their reserve, so it may not be as easy as it seems. Also with more and more Americans understanding that their dollars are not a measure of real wealth, the central bankers are anxious to move quickly. So destroy the dollar, blame it on something like "sub-prime" convert the canadians, Americans and mexicans to a new scheme and call it the Amero. Illegal immigration will be legal, America will still be fighting wars against "someone", the bogeyman will still be coming anyday to your town, at least thats what the gestapo..err Homeland Security will tell you. Cash will be completely discouraged, possibly disparaging cash in public school education. well they have already started that haven't they. kids "buy" their lunches in some American Schools with their thumbprint. Go cash a cheque at a bank you don't have an account and they want a thumbprint. its called training. Your training. Like the Visa commercials where everyone is happy swipping or scanning their card, but the guy with cash is looked on with comtempt and disgust. That's called training the public. And this will all happen under Hilary's Presidency. How's that for a prediction. Unless Ron Paul wins.
ok thats my rant..haha.
here my best guess on gold and silver.
800+ by dec 31. maybe 820 850 + by spring. Silver 16-18 (spikes to 18) by dec 31. 18-20 by spring. There could and most likely be some swings.
Mr. T..here is interesting thing that happened. I left some money in Canada back when I left in '95. It was in a retirement fund. I left it there because it wasn't much, 14K, and with taxes and exchange it would only have been 7k. Anyway it has grownto just over 40k, and with exchange is now worth more if I brought it here(USA). Instead I am collapsing the fund, buying all gold and silver and sticking it in a safe deposit box. I should have done this 4 years ago, but the exchange was so crap i didn't even think about it. I expect vs US dollars it will double in 3-4 years..if not sooner. The beauty is I can put in my pocket and sell it anywhere in the world for any central bank notes. Should I need.
T,
LOL I think you may have gone back in the lead with that one but thanks for the compliment.
N,
Your post inspired my next thread on inflation. Thanks
Mr. T,
I'll second that thought. I wait impatiently everyday for my "daily update fix". There are so many other technical newsletters out there that cost 4-5 times what the SMT does and they are for the most part worthless. Gary as long as the SMT is within my budget I will be a subscriber for as long as you care to publish it...a long time I hope?
Oh, great, thanks for putting ideas in his head.
SMT inflation at 100%!
I'm glad we can still pay in fiat.
LOL I forgot to mention I'll be wanting payment in Silver Eagle coins!!!
Gary -
you deserve the compliment and I have been consistant about professing your potential since I first read your blog....as you may recall.
You offer something of much greater value than most appreciate. this blog could easily become a catalyst for you to personally make a considerable amount of money. You have an incredible product to market, should you choose to do so!
natan -
i suspect you are like me - just trying to figure out what to believe - what to hold onto for successful investments.... and i certainly respect that.
i wanted to back test your statement about 55:1 Gold:Silver because i wanted to see if it was something i could hold onto.
no offense, but unless i understand your calculation incorrectly, your statement is useless.
i calculated the GOLD:SILVER ratio each and every quarter from 1981 to present.
the only readings in the 30:1's occured in 1983 and Q2 1984. There were no parabolic advances in that timeframe.
Except for Apr 98, July 99, and Jan 07 (no parabolic moves after any of these 3 40:1's either), there have been no readings in the 40's in the past 22 years.
55:1 is no magic number.
since 1986 (21 years), each quarter has been above 55:1 in 74 of the past 88 quarters.
i.e. only 14 quarters in the past 88 quarters have been at or BELOW 55:1.
And absolutely NONE of these 14 sub 55:1 instances preceded a parabolic move in SILVER.
the highest quarterly reading was 100:1 in Oct. 96, followed by 93:1 in Oct. 92 and in Apr. 1991, 92:1 in Jan 91 and 90:1 in Jan 92.
Absolutely none of these 90+:1 readings preceded a parabolic rise in the price of silver.
IMO, the ratio of GOLD:SILVER does NOT matter.
HOWEVER, i am given to believe that most of the parabolic rises in silver in the past 25+ years have been *preceded* by outperformance of GOLD.
SILVER parabolic runs:
Oct. 82 - GOLD was outperfoming by 24% 2 months earlier
Mar. 87 - GOLD was outperforming by 52% 6 months earlier, 24% 2 months earlier
Apr. 93 - GOLD was outperforming by 12% 5 months earlier
Apr. 95 - GOLD was outperforming 28% at the time
July 97 - GOLD was outperforming by 30% at the time
Oct 03 - GOLD was outperforming by 24% at the time
Feb 06 - GOLD was outperforming by 14% at the time
Oct 07 - GOLD is currently outperforming Silver by 31%.
i derived my data by charting $SILVER:$GOLD daily with $GOLD in the background and $GOLD and $SILVER in the lower panels.
the article we both read at gold-eagle.com makes sense to me - the author asserts that gold outperformance precedes silver.
he claims that silver exceeds gold's returns, but only after a period of time in which gold outperforms and speculators then push silver higher.
Mr. T.
I'll just point out that one really doesn't need to watch ratios of gold to silver to know when to buy silver. Just wait for an extreme bullish Blees rating on the silver COT :)
Gary -
your spreadsheet cites Blees ratings for SILVER back to Summer 2004, GOLD back to Spring 2001, and S+P 500 back to Jan 2000.
Any chance of extending the Blees ratings for each of these items on your spreadsheet back to, say, 1980, or so?
Mr. T.
Ps. i am willing to help, however possible.
T,
The COTs started being reported in 86. You can just copy and paste the Blees formula on your spreadsheet if you wish more Blees data. You can copy and paste the COT data from the historical section of the website if you would like longer time frames than what I have. I have the S&P from 89. That was close enough IMO. Most of the commodity markets from around when the secular bull started. I will make it a point to extend oil back to 2000 this week. That's good enough for me but you can easily extend it further if you wish.
Mr.T
I didn't go indepth like you..just looked at gold silver graphs and came to my own conclusions. As I said and will repeat, I am not a professional trader. I don't offer any special insight into the markets workings. I am macro looking. I base my decisions on what I see happenning in the country/world and what I perceive happening. Suffice it to say, the world be a very tense place after Beijing Olympics and Pres elections. I am just trying to protect what wealth I can. I totally agree gold outperforms silver. However it is when it spikes and you take advantage of those spikes..I think that was the point the author made. That year over year and month over month gold will outperform silver. But if you buy and hold who cares if during the preceding period Gold peformed better for a week, month, year or multiple years. But if you look at last friday, NY spot price of gold increased $16.50 while the silver spot increased $0.35 . That translated in 2.15 % for gold and 2.53 for silver. it is these little spikes I try to catch. For the week from low to high Silver gained about 7.5 % Gold about 6% next week who knows. Gold could go up 3 percent and Silver could drop 3 % so yes gold is performing better than silver...if you sell it. If you hold it who cares if at the end of the run you sell at or near the top, the % gain will be equal to if not greater than gold.
Again mr. t, you will do better following a system such as gary's if you actively play in the market..whatever market that may be than taking advice from me. I have a link i will post under gary's new topic that i think so of you will find interesting.
Have a great weekend.
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