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Gary Tanashian
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Gary Tanashian is proprietor of Biiwii.com. Actionable, hype-free technical, macro economic and sentiment analysis is provided in the premium market report 'Notes From the Rabbit Hole' (http://biiwii.com/wordpress/about-nftrh/). Complimentary analysis and commentary is available at the public... More
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  • Gold's Value Is Not About Currency Collapse

    This article at Hard Assets Investor talks about Jeff Gunlach's bullish gold call for 2014 and uses Dylan Grice's 2012 call as an example of how the end of the world (i.e. gold's safe haven value) can be put on hold indefinitely.

    Is Jeff Gundlach's Bullish Gold Call Too Early?

    So is Gundlach wrong today? Grice wasn't necessarily wrong in 2012. What he called "the largest credit inflation in financial history, a credit hyperinflation" has instead rolled on…taking asset prices higher and crushing interest rates. But it hasn't, as yet, hit the value of money itself.

    Nor will it hit the value of money, especially the US dollar, until all confidence is lost in the system. We are about a million miles away from that condition right now (see second chart below). Confidence will be lost first in the assets that are benefiting from the inflation - like stocks, so strategically at the heart of the wealth effect that policy makers are trying to stimulate - and then in policy makers themselves. Then we'd have a big bull market in gold for all to see.

    But if confidence comes out of inflated assets, like over priced momentum stocks and hideously over priced junk debt (benefiting from a full frontal and manic chase for yield) money is going to rush to safe havens sure, and ironically Uncle Buck would be a prime beneficiary; again, as long as the majority continue to think in linear terms like "oh, asset markets are dropping, I better go to cash". Only when the system begins its death rattle will the currency put on its death mask.

    Gundlach's more mainstream take is a good start, however to re-awakening gold-friendly psychology, encouraging investors to take another look at gold investment while the idea that currency debasement might ever lead to currency collapse is dismissed as just so much "history".

    People have been wrong in fetishizing currency collapse since the beginning of the gold bull market. The 'Dollar Collapse' cult is a cartoon that presents its case for easy understanding by the marks masses. Ultimately, the case for gold is the case for a lack of confidence in the economy and in those trying to blow asset bubbles in support of the economy.

    Gold vs. the CCI commodity index is but one big picture view that - as long as point 4 remains a viable 'higher low' to point 2 - tunes out all of the hysterical 'currency collapse' noise and simply awaits a turn on the global macro backdrop.

    (click to enlarge)

    Meanwhile, gold exists in a lowly state for a reason and that reason is confidence in the system. In very simple and even cartoonish terms, gold is not going anywhere while people are feasting upon the wonderful benefits of what has thus far been wildly successful (and ever so cynically maniacal) policy making.

    (click to enlarge)

    The above is a picture of confidence and a job well done over at Central Planning. Gold is boxed in at the depths of a bull market breakdown as measured in S&P 500 units. Fact.

    When confidence starts to wane then safe havens like Uncle Buck and gold should get bids to varying degrees and at varying times. Don't over complicate it by waiting for the 'Dollar Collapse' cult to be right. Minimize words like "fiat", "debasement" and "hyperinflation" and value words like well… value… and patience… and perspective.

    The dollar has no intrinsic value whatsoever? Well yes it does, it has a whopping negative value due to the debt-for-growth (official credit bubble vs. Greenspan's commercial credit bubble) Ponzi Scheme that simply has to keep on rolling. But in an environment of confidence by the majority, it has functional value and people would probably flock to USD like Lemmings (wait, do Lemmings flock?) in the next market liquidation. At least initially.

    As for gold, it simply has monetary value and it is going to get where it is going. Watch point 4 on the first chart above and have patience and perspective. People are falling all over themselves lately jumping from the gold bear to gold bull camp (and in some cases right back again) and they are increasing your noise level.

    "Shhh. Be vewy vewy quiet, I'm hunting wabbits"

    Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates (including Key ETF charts) and NFTRH+ chart/trade ideas!

    Jun 27 7:12 AM | Link | Comment!
  • The Real Price Of Gold

    The real price of gold, as adjusted by commodities is making some nice baby steps toward rebounding. Here is a picture of the gold ETF vs. certain key commodity ETF's and markets, that show the progress of what would be the most desirable condition (a rising real price) for a healthy gold bull.

    (click to enlarge)

    And then of course there are other notable measures like Gold vs. Stock Markets. Here is the progress vs. SPY and EZU…

    (click to enlarge)

    Recovery would have to start somewhere, and the fledgling moves above show that gold is above the SMA 50 in EZU (Europe) units but still has work to do in SPY units.

    Finally, below is our big picture road map NFTRH has been working to in a) managing risk against the gold bear market and b) not having its analysis shaken out of the fact that the real price of gold remains in a secular bull market and thus, so too does gold.

    The long term Gold vs. CCI commodity index has been a core (even the core) chart in NFTRH's biggest picture macro themes including prominently, secular economic contraction. As long as point 4 holds a higher high (to 2), that theme remains a good one.

    (click to enlarge)

    NFTRH was the first that I knew of to talk about a bullish economic phase in early 2013 when most people were under their respective rocks hiding as law makers went through the dreaded Fiscal Cliff Kabuki Dance. That was due to industry information I had about the Semiconductor equipment sector and also due to indicators like the Palladium-Gold ratio (ref. 1st chart above). But the chart directly above paints said recovery (post-2011) as a counter trend economic up cycle within an ongoing cycle of economic contraction.

    Why do policy makers continue to fight the good inflationary fight? Why, look no further than this chart.

    If you would like to get with the service that got it right and kept it right all through the bear market but maybe find some of the concepts confusing (they are, considering that the concepts are quietly presented against high levels of noisy analysis out there across the macro markets) just drop me a line for more detailed explanation any time after you subscribe.

    I am going to make a concerted effort to be very clear in explaining the why's and why nots about what lay ahead. 2014 was identified in NFTRH as a time for a 'Macro Pivot' and when the macro pivots, you definitely want to be on the right side of coming events.

    Biiwii.com | Notes From the Rabbit Hole | Free eLetter | Twitter

    Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates (including Key ETF charts) and NFTRH+ chart/trade ideas!

    Jun 23 11:11 AM | Link | Comment!
  • Gold 'Community' Revving Up On Iraq

    They are getting excited again, the gold 'community' that is. On the big bounce in GDXJ (juniors) especially, there is talk of bottoms, new up legs and even the potential Inverted H&S NFTRH has been charting since before I even heard of it anywhere else.

    This may or may not be the case. NFTRH has been on the IH&S for many months now and I'll be damned if the 'callers' are going to co-opt our theme. But insofar as Iraq has anything to do with anything, it's 'buyer beware' on this hype.

    Here GoldCore weighs in…

    Gold, Silver, Oil, Gas Jump on Middle East "Powder Keg" Concerns

    Why, they even have a cute Power Keg pictured with a long wick laying next to a couple of match boxes labeled 'War' and 'Chaos'.

    To be fair, they do mention an actual potential fundamental for gold in that "the US recovery may be stalling", but you know the 'community'… it is going to pitch whatever is inflammatory enough to get the troops motivated and pumping.

    I would venture a guess that a sizable chunk of the gold 'community' wants war and it wants Chaos because it wants to be right and it wants to get back up on the soap box with a booming I TOLD YOU SO!!. Again, not so much talking about GoldCore as the usual barkers. You know who they are.

    But this crap has nothing to do with gold's fundamental backdrop. I think many readers of biiwii.com know my view on that and on the b/s that so readily gets stirred up on the internet when it comes to gold, which is a simple and enduring monetary value asset.

    The bear market has driven home to me just how many pitch men and charlatans a good chunk of the 'community' are; stumbling all over each other to make 'the call' and not giving a damned about how said call - coming straight out the wrong orifice - can affect regular people, who maybe depend on 'analysis' they read in their decision making.

    So today's deprogramming and debriefing is this; if you are bullish on gold you'd better be bullish for reasons other than what is going on in Iraq as gold and oil pump together.

    Tags: GLD, USO, SLV, UNG, gold, iraq
    Jun 13 8:54 AM | Link | 1 Comment
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