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  • Does Central Bank Gold Buying Signal The Top Is Near? [View article]

    Always appreciate your perspective since it's frequently different from mine. In this case, though, I am not particularly bullish on gold. With that said, I think it must be pointed out that one can draw a trend line connecting any two points. Choosing the panicky August 2011 peak as your starting point arbitrarily rigs the game against gold. I think a much better trend line to draw is a longer term one, one starting long before the 2011 blow-off tops, and basically ignoring the latter. Yes, we've very weakly breached that support / trend line this year, but so far it's not been a convincing breach. I'm neutral to slightly bearish on gold, because I don't think your downtrend is (yet) very convincing.
    Jul 19, 2012. 02:08 AM | 1 Like Like |Link to Comment
  • Does Central Bank Gold Buying Signal The Top Is Near? [View article]
    That's not just your humble opinion.
    Jul 19, 2012. 02:05 AM | Likes Like |Link to Comment
  • Why Gold Miners Are A Buying Opportunity At These Levels [View article]

    I've thought about it. Models are great for retrospectives; they're not so great for predictions. This is obviously the problem facing anyone who comments on the market. I'd rather not get stuck between the rock of making foolish predictions and the hard place of writing commentary without any impact.

    For me, it's really more of an intellectual curiosity, the drive to bring technical expertise to bear on an unfamiliar subject. I have neither the depth nor the breadth of macroeconomic understanding to predict much of anything about where the factors (and thus the model) are headed, but one thing I do have is the timidity to wonder if anyone really does. Still, I will leave the following tantalizing tidbit: the model uses seven ETF prices as inputs, nothing else. Over the last six years, that's been good enough for R^2 = 0.93. That includes the financial crisis; that includes the 2012 miner slump.
    Jul 19, 2012. 01:48 AM | 1 Like Like |Link to Comment
  • Why Buffett Is Dead Wrong On Gold [View article]
    This guy does the same thing all the time here. He also claims to have bought NUGT at $7. Really? Let's not even get into the matter of quoting nominal returns over multi-decade investment horizons.
    Jul 18, 2012. 11:23 PM | 2 Likes Like |Link to Comment
  • Why Gold Miners Are A Buying Opportunity At These Levels [View article]
    I've developed a multi-factor model for miner prices. Gold is a major factor, accounting for about 30% of the price action. Other significant factors are the dollar (another 30%), equities (15%), the treasury yield curve (10%), the VIX (5%), and crude (2%). The remaining 8% of the variance is gold-related, but in a more complex way: I've extrapolated trend lines in the gold price of different periods, forward in time, and found that this surrogate for gold sentiment dramatically improves the ability of the model to fit miner prices. Because it is the *slope* of these trend lines that the model considers, a flat gold price (which we have seen in the last few months) is actually a negative as far as the price of the miners are concerned.

    The biggest factors keeping miner prices down right now are a middling gold price, and a flat trend in gold prices. All of the other factors are actually conspiring to keep miner prices quite high. Without a strong dollar, rallying equities, and a steepening yield curve, we'd be seeing even lower miner prices.
    Jul 18, 2012. 11:20 PM | 1 Like Like |Link to Comment
  • Why Gold Miners Are A Buying Opportunity At These Levels [View article]
    Miners price in not only the current gold price, but expectations about future gold prices. If the significant drop in gold prices (say, a meaningful break below the $1550 line) current miner prices seem to have factored in fails to materialize, it's pretty hard to justify miners dropping any lower. That said, I don't know that there's a compelling case for the miners to rally to anywhere near their 2009-2011 highs without another substantial gold rally. From that perspective, I think GDX and individual issues are probably a better choice than leveraged plays like NUGT, where decay will kill you in a flat market.
    Jul 17, 2012. 02:26 PM | 1 Like Like |Link to Comment
  • The Traders Did It! [View article]
    The SEC was busy downloading pornography, as I recall. That may have had something to do with it.
    Jul 13, 2012. 01:11 AM | 11 Likes Like |Link to Comment
  • Why The Gold Rally Depends On U.S Money Base? [View article]
    remurray has serious entry and exit problems. He (or they, if you believe his "royal we") re-posts the same things over and over, wildly exaggerating his entry and exit levels. Rounding to the nearest dollar on single-digit stocks is not helpful, unless of course it makes you look better. And of course, he apparently didn't bother selling his physical gold at any time during the eighties or nineties. Not when it was down 10% from the 1980 peak, or 20%, or 50%, or 60%...To bring it all together, he cites the return on his 40+ year investment in nominal terms. I have a feeling that if gold prices really do collapse in the near future, he'll still be holding so that in another thirty years, after it recovers once more, he'll be able to claim a 10,000% increase in nominal terms.
    Jul 13, 2012. 01:08 AM | Likes Like |Link to Comment
  • The GDX slides 1.7% following Goldcorp's (GG -8.5%) cut in production guidance. Other miners: Yamana (AUY -1.5%, Kincross (KGC -0.9%, Agnico-Eagle (AEM -0.7%), Newmont (NEM -1%).  [View news story]
    Buy the dip
    Jul 12, 2012. 01:07 PM | Likes Like |Link to Comment
  • More on jobless claims: At 350K, it's the lowest level since March 2008, but the number is likely skewed by seasonal adjustment issues (last week included July 4). Look for a makeup bounce in the print next week. S&P futures are showing no reaction, remaining -0.7%.  [View news story]
    Go to FRED's website and search for the initial claims data, click download, paste into Excel, and compute an MA.
    Jul 12, 2012. 09:41 AM | Likes Like |Link to Comment
  • Gold ETF assets climb to a new record of 77M ounces, according to ETF Securities, but industry giant GLD isn't getting as much of the business as a look at its size would predict. The $65B fund garnered just $88M over the past month. The less expensive, but less liquid $9B-sized IAU pulled in $57M.  [View news story]
    What happens to the price of a commodity that rose 10X on the speculation of comparable inflation, when said inflation doesn't materialize?
    Jul 11, 2012. 11:35 AM | 1 Like Like |Link to Comment
  • Far from suppressing the gold price, central bank buying may be propping it up. After a decade of selling, central banks were big buyers in 2011 as ETF demand for the metal slowed. Traditional buying (jewellery) has yet to recover to pre-crisis levels. What happens to gold if official buying slows?  [View news story]
    Being contrarian to a contrarian hypothetical means assuming the status quo.
    Jul 11, 2012. 11:33 AM | Likes Like |Link to Comment
  • Initial Jobless Claims: 374K vs. 386K consensus (prior week revised to 388K from 386K). Continuing claims +4K at 3.30M.  [View news story]
    There's no recession, but your suggestion that "claims continue to drop" is totally false.
    Jul 5, 2012. 08:36 AM | 5 Likes Like |Link to Comment
  • Is It Time To Buy Nokia? [View article]
    What are your complex calculations telling you now, Sam? Are you buying below 2, as well?
    Jul 3, 2012. 09:01 PM | 3 Likes Like |Link to Comment
  • The VIX ETN (VXX -6.6%) prints an all-time low, as does a related ETF (VIXY -6.6%), fear evaporating from the stock market even as German and U.S. 10-year yields under 1.6% suggest otherwise. Stocks themselves have rebounded nicely, mostly green a few minutes before the bell.  [View news story]
    You could compare VXX to the actual VIX and try and assess the rate of decay of the fund. Then, use the floor on the VIX ($14-15, it looks like) to estimate the floor on VXX.
    Jul 3, 2012. 11:10 AM | Likes Like |Link to Comment