CTMike

Friday Outlook: Commodities, Global Markets

David,
This is the first time in my memory I didn't see a GLD chart. Conspiracy theorists will claim you have moved over to the dark side. My "guess" is that you feel it is irrelevant or golds moves are so unexplainable its not even worth trying? Please explain so I don't have to "guess".

My take on the market for what it's worth is that the administration is gambling that they can "talk" the markets/banking system back to health and they very well know they are stretching the truth and downright lying at times. They have put all their cards on the table for this final bluff. If it works they will be hero's. If it fails, some of the doomsday scenarios become a possibility and the general public will turn on them faster than the speed of light and possibly not return until a new administration takes over.

Have a great weekend and thanks for all your insight/analysis.

Revisiting Gold's Valuation

Interesting study. Seems to be a lot of rounding of numbers. One in particular is 5 billion oz of gold. When I checked, the number I got was 3.4 billion oz of above ground gold still in existence. Now that's a 30% difference. Less gold means higher price per oz so instead of $1500 to $3000 it becomes $2000 to $4000. Unfortunately if the other numbers have similar accuracy we could easily get a +/- 50% or even more on the numbers; $750 to $4500. That probably fits within the range of most other estimates so we haven't learned much.
Again, the study concept has merit but just not sure about the numbers.

I was playing with a study that assumed China decided to engage in an economic war with the USA by buying gold recognizing that the dollar would be trashed. Today they could buy 2.2B oz with their $2T of USA dollars. Of course that won't happen because the price of gold would skyrocket as soon as the world recognizes the war has begun. Lets assume the Chinese slowly starts buying so as not to get attention. If they could accululate 0.2B oz (6,200 tons), then they would come out even if gold would rise to $10,000 per oz. Can they find that much gold? Unlikely. Would they settle for a big loss? Is it fesible gold could go to $20,000 per oz which would give them a more realistic target of 3,100 tons? GLD has 1,100 tons in their vault and it wouldn't take long to accumulate it all if you were serious. Ya, this is a crazy doomsday scenario but it is just as interesting as the scenario above. AND, remember; long term for us is the next quarter - for the Chinese, its next century.

Exclusive: Big Banks' Recent Profitability Due to AIG Scam?

And who is going to lead the charge for accountability? Won't be the congress; they are too busy covering their tracks and making sure they are taking care of their buddies. Won't be the administration because as noted that are part of the cover up. Won't be the press because they are still having a love fest with the administration. Maybe if we are lucky some insider will write a book or series of articles to disclose what is really going on; fleecing of the American taxpayers. There is simply too much money to be made to upset this scam right now. I'm back to where I was last September - - let them all fail. The local banks will pick up some of the pieces and the worthless crap can just vaporize. Banks should exist to facilitate business not to facilitate financial engineering to make huge profits for themselves. Somehow we have to get back to basics.


On Mar 30 03:10 AM the_feds_corrupt wrote:

> If this is true i expect the bull run is the fraud run!
> These people need to be punished! Criminal prosecution for the banks
> and aig.
> timothy G needs to lose his job!
> There is no bull run its all based on fraud and lies. This is the
> story of the decade if true!

The Strategic Threats Facing Google

You missed the single biggest threat - GREED. In their lust for advertising revenues they have strayed away from becoming a search engine have become an advertising engine. Don't get me wrong, there is nothing wrong with making a dollar. BUT, their business model is based on lots of traffic which only some (few?) is interested in advertisements. Back a few years ago, I almost always could get "information" I was searching for. Now, the search results are so proliferated with advertisements that its becoming incredibly time consuming to find independent information. I only use Google when I'm desperate. Won't be long until the general public finds a better way to search. Some day Google will be forgotten just like the previous popular search engines.

Wednesday Outlook: Commodities, Global Markets

It's beginning to seem like the half life of major events such as the Fed buying treasuries is not much more than a day; after 1 day the impact is 50% diminished, 2 days 75% diminished, 3 days 87.5% etc. This clearly says the market is without direction and the next piece of news will whip it in another direction. Also, makes the market incredibly susceptible to short term manipulation. Unless you have the inside track on the next piece of news, you have a 50% chance of winning/loosing in the short term. I'm with David, might as well go to Las Vegas than invest in this market.

The next collectors book will be "The Great Financial Crises of 2008-2010; How the Public Was Fleeced in the Greatest Con Game In Human History". Do you really think the world would come to an end if some of the super banks disappear. I've never seen a vacuum last more than a few nano seconds. The vultures and local banks would immediately step in and pick the carcases of anything of value and let the toxic assets rot as they should. My local small town bank does a great job at supporting the community the old fashioned way - nobody on the payroll makes 7 digits and they don't even know what a financial engineer is. (AND, when GE money market recently put a 21 day hold on a credit union check even though it cleared after just 3 business days, my local bank worked with me to avoid problems.)

Waiting patiently for reality to come back.

Wednesday Outlook: Commodities, Global Markets

I see what you are talking about. Looks a little sloppy to me. My experience with H&S's is thay are not strong indicators and sloppiness just makes them weaker.

Look at March 08 to mid Feb 09 plus mid Feb 09 to today. That's a text book cup and handle with a perfect handle. One can argue that the cup is sloppy so breakout will be prone to failure. But my expereince is that a good handle and a solid breakout are more important.

Of all the charting/analysis/etc. I've done over the years, I've had more success with the cup and handle formation than anything else. Keep in mind that we will need a strong breakout above 100ish (quickly and with extremely high volume) to be valid. From there it could go to 130ish if you believe in chart gods. More often than not, breakouts are followed by a pull back to the top of the cup but then its off to the races if it holds.


On Mar 18 02:33 PM paultaut wrote:

> Ok, I see where you're coming from.
>
> a Pattern within my pattern.
>
> I start with the first breach of $100 last year, with the left shoulder
> being the low around 84 in early april.
>
> If GLD can manage to hold the same $84 area on this move to the Downside,
> I will have my right shoulder.
>
> It used to be so much easier.

Wednesday Outlook: Commodities, Global Markets

H&S Top - left shoulder late Jan/early Feb, Top Feb 20, right shoulder now. Neckline to top was 87 to 97 so a chartist would predict we could be going to 77. Just not sure how many traders are watching GLD this way and therefore help the "prediction" come true?? This is pretty short time frame but meets the minimum of 6 weeks. Won't show up unless you use a daily chart.

I am now using 6 month and 1 year charts. Maybe if there is a legitimate rally, I will use longer term charts but for now I think its mixing apples and oranges (maybe punch bowls and ter*s).
I gave up on Bolingers a while back because I felt like many of these algorithms, you can find many examples where they are helpful (the ones in the books) but just as many or even more that are useless/wrong. When I looked at GLD after your note I used 20 day moving average and 2 deviations on a 6 month chart..
I'll go way back the the $700 days to see if I can see your H&S. I sort of feel like gold has many of the factors that make charts usefully for typical stocks but has the added complexity of just being "gold".
Finally I really don't like the feel of coin shortages. My experience is telling me that this is all hype to suck out as much money as possible from the average guy (Chuckie?) and then pull the plug. This is classic marketing - create a demand and then a perceived shortage to drive up the price. Works until you reach buyer exhaustion. With all the financial chaos and trillions of new dollars rushing into the system and the market looking 6 months to a year out, why hasn't gold exploded?
I have GLD, SLV, bullion in both gold and silver, and several gold equities. I'm starting to feel sick.


On Mar 18 10:31 AM paultaut wrote:

> Where is the Head? of the H&S top.
>
> I have a perceived neckline, an inverted pyramid with the nadir about
> $700, which I use as the Head for the Bottom, left shoulder formed,
> right shoulder forming.
>
> Are you looking at something smaller than a 1 year chart? If so,
> please point to the time frame.

Wednesday Outlook: Commodities, Global Markets

paultaut - how did you set up your Bolinger? The services I use all ask for conditions.. Plus, I think the head and shoulders top formation on the daily GLD chart looks a lot stronger than the bottom you mentioned.

David Fry - I worked in the Washington environment for many years and what you see is only the tip of the iceberg. There are a few congressmen that are trying to do the right thing but they get ostracized by the herd. Don't ever believe a single word that comes out of their mouths. You need to set in on just a few backroom conversations and you will quickly learn they are a bunch of phony scoundrels that have a sliver tongue. They will say whatever necessary to 1) discredit the other party, 2) assure reelection 3) enrich themselves, 4) get more power, 5) make themselves "look" like true patriots. What drives their decisions has nothing to do with what the public wants or what is in the best interest of the country - never even considered other than making public statements to make it look like that is what they are doing.
Enough of that. I'm beginning to see the press commentaries fall in line with the administration. It's like they have been told they will be arrested as terrorists is they print anything negative. All of a sudden the light at the end of the tunnel isn't a train (and they are ignoring the whistle) but sunny recovery just like BB is saying. Even world events are falling into line. What happened to N Korea? Has Iran's nuclear program disappeared. Are India and Pakistan best friends. What about all the revenge killings that the Taliban continue to carry out? OH, sorry just like Ben fixing the economy, Hillary has made all world problems better no too. My point is that you are one of the few that hasn't sold your sole. BUT, and this is a huge BUT, we all know perception is reality and if everybody begins to believe things are turning around, is it possible the "real" momentum could begin to turn too? If so, at what point will "you" say ignore the facts and jump on the train? Or will your position continue to be don't jump on the train even though its leaving the station because right around the corner is a cliff and no bridge?

Gold: Not a Bubble

This is a fascinating comment if true. That would be an excellent indicator that a bubble is about to burst. Spot gold today is $930 in round numbers. If you could only get less than $900 for coins, I would say the bubble is letting out air and time to get out. The few dealers I've checkd with are still buying coins for over spot so based on this simple bubble test; we aren't there yet.


On Mar 15 02:12 PM Mark123 wrote:

> Be careful on ebay... I paid for 10 oz and got NOTHING.. It took
> me 2 months to get a paypal refund..... Additionally, don't forget,
> during the Dec 1979 and Jan 1980 run up to 850, not a dealer around
> would buy your gold back at spot...they were paying well under spot...
> good luck to all

Gold: Not a Bubble

From what I read, CEF and GTU have a extremely hefty premium. Why in the world would somebody buy a ETF that is selllin at over a 20% premium to spot price is beyonf me. Works only as long as someboy else is willing to pay the premium when you are ready to sell. Am I missing something here/ If you think I'm wrong on the premium, just check their web sites.


On Mar 15 01:58 PM Sakata wrote:

> On Mar 15 01:06 PM mr freddo wrote:

Gold: Not a Bubble

I haven't seen any place that offers volume discounts on gold coins other than shipping cost and I've been shopping around quite a bit. Gold bars do sell at a lower cost per ounce than gold coins but I really don't call that a discount. As previously mentioned, you will get some of the coin premium back when you sell coins but there will be no premium for bars. I've had my best luck with Bullion Direct and a samll place in New Orleans called Jefferson mint. The best price of all is as noted; 100 oz bars from COMEX. I've never heard anybody being successful at getting orders of less than 100 oz.

On Mar 15 11:15 AM Sakata wrote:

> On Mar 15 10:35 AM @TexasER wrote:

Bearish Sentiment in the Gold, Stock and Commodity Markets

Seems like neither of you have your fact right or I can't read. I just checked the GTU website and as of 5:00 PM 11, March, they are reporting a 22% premium. I've seen other references to a 33% premium but don't no the origins. If I'm reading GTU's web site wrong, let me know. Why would anybody pay that kind of a premium unless they are blindly buying based on somebody's recommendation or "misinformation"?


On Mar 11 05:42 PM Sakata wrote:

> "... the premium to net asset value of GTU, surged from an already-high
> 20% on Wednesday to a new all-time high of 33% in response to Thursday's
> technical rebound. Buyers of GTU near the close of trading on Thursday
> were, in effect, paying about $1250/ounce for gold while the spot
> gold price was in the $930s. No well-informed investor would do this."
>
>
> This is utter nonsense. NAV-premium for a fund is pretty close to
> price-to-book value for a stock. (OK, not exactly, but it is more
> like Granny Smith to Golden Delicious than it is to apples to oranges.)
> A quick check on Yahoo Finance of the current P/B of each sector
> shows most sectors with a value higher than 1.33. Even the financial
> sector has a P/B of 1.38 with most other sectors much higher. Now
> maybe those people are paying that premium because they happen to
> think that there is a good chance of a return on their investments,
> but maybe they are just uninformed investors who randomly chose the
> financial sector instead of precious metals.
>
> To categorize a puchaser of GTU as uninformed is insulting. I notice
> you don't mention GLD, which has a much lower premium. Perhaps you
> don't know enough about gold to appreciate that the purchasers of
> GTU are VERY well informed. Informed enough to know that GLD is a
> bigger risk than GTU but gold itself has much better potential than
> all those sectors with a P/B of 1.33 all the way up to 14.28.
>
> Perhaps you could also explain why your only other article on SA
> about gold was entitled "Gold Is the Only Long Term Bull Market",
> published only 6 weeks ago.

The Case Against Gold

Unfortunately, Louise, no matter how smat he has been in the past, has never run into this situation in the past. Tell me please, when was the last time we had a deficite of 2+ Trillion dollars and climbing. If the market is so smart and projects into the future, then why isn't gold already at $3500? Something is going on that Louise doesn't understand unless he forsees the DOW at 2000 in the near term - or maybe the DOW at 1000 and gold at $500?


On Mar 04 12:15 PM freddyv wrote:

> "Historically gold has been a place to hide when the dollar is weak."
>
>
> You miss the point: ALL currencies are weak and so gold will be the
> true, "currency of last resort."
>
> Louise Yamada pointed out that gold is likely to come into a 1:1
> to 1:2 ratio of the Dow within the next few years and that makes
> a lot of sense.
>
> If you don't know who Louise Yamada is I suggest you Google her because
> she is probably the single best analyst on Wall Street today. She
> is no spring chicken and understands how to use technical analysis
> in combination with all sorts of other data.

The Case Against Gold

Hope and praying is not an investment strategI'll pray for you - you need it.


On Mar 04 11:07 AM Kraut wrote:

> Usually we don't regret the choices we made, but mostly those we
> didn't made.
>
> I haven't been invested in stocks but in container ships - and because
> of falling imports/exports the outlook is grim, making me anticipate
> no returns for this year and I'm not too optimistic about next year.
>
>
> The whole issue of gold at the moment is something I consider essential
> risk diversification.
>
> If the economy makes a turnaround, my returns will come back. A little
> idle gold (physical, stocks) is a cost I'm more than willing to take!
>
>
> However, in the worse case scenario (let us all start to pray), gold
> will turn out to be a "life insurance". To miss this is something
> I could ill afford.

The Case Against Gold

John,
You don't live in Zimbabwe (I hope).

If you investment horizon is 20 or 100 years, you may be safe. But do you really care what your portfolio will be in 100 years if you need it to fund your life style in a few years or even 10 years. The problem with historical data is that it can't predict accurately near term.

Yep, gold has been good to us for several years but pleas to explain why it has not been good for the last year. The world is coming unglued and gold has not responded. If you can't explain this with facts then you don't know. If you don't know, you are not any smarter than everybody else that is guessing.


On Mar 04 09:49 AM John Polomny wrote:

> Yawn another fool who has learned nothing and forgotten nothing.
> Gold is the best performing asset for the last eight years. Every
> year we are told that gold has topped, it produces no income, it
> is a commodity, etc... ad infinitum. The fact is for over 5000 years
> gold has been a store of value. Look at the the Dow to gold ratio,
> it has went from around 40:1 to a recent 8:1 and will eventually
> get to 1:1. That will be the top for gold. I agree it will be volatile
> but I have been holding gold since 1998 and so far so good. I recently
> caught a video on the internet that showed people in Zimbabwe panning
> for a few grams of gold to buy bread for the day. The food sellers
> were not accepting dollars, euros or rand they were accepting gold.