"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Tuesday, October 1, 2013

Gold Breaks Psychological Support

Gold has fallen through psychological support at the round number of $1300 surrendering its "13" handle and replacing it with a "12". This will add to the already bearish sentiment towards the metal which once again has failed to act as a safe haven during a time of crisis. For that matter, neither are US bonds providing any kind of haven right. With the US fiscal condition being at the heart of the current crisis, it would certainly be counterintuitive to see US bond prices moving higher.

Additionally, gold has also broken technical chart support down at the recent low at $1290. Bulls must quickly take prices back above this level and preferably above $1300 if they are to avoid suffering deeper losses. Bears are growling today and flexing their muscles having picked off downside sell stops and that has turned the momentum negative. Hedge fund computers will certainly notice that.

There is some additional downside support coming in near $1280 extending to $1270. Should that fail, losses will accelerate. Bulls need some help and they need it quickly.

Losses in the soybean market have also worked to pull the rug out from under silver, which still maintains a connection to this market, even though that link has weakened a great deal in recent times. Many traders tend to look at soybean prices as a sort of proxy for food prices in general and if the former are moving lower, they tend to discount any inflation fears and thus sell silver.

The link was much stronger back in my early days of trading however. Silver is one of those markets that takes its cues from several inputs and right now, those inputs are negative.

The physical market can stem the bleeding in these precious metals but that buying in and of itself cannot push prices higher without momentum based buying and right now momentum is trending lower.

I have also included a longer term weekly chart of gold to illustrate the problem with this market from a technical analysis standpoint. Start at the beginning of 2013 and look at the bottom indicator, the old, very reliable and familiar RSI, or Relative Strength Index. For the entirety of this year, this index has not moved above the 50 level for this weekly time frame. As a matter of fact it has oscillated between 50 on the top and 20 on the bottom. By definition, this is a market that is in a BEARISH posture. If gold were able to at least push high enough to take the RSI above 65, I would feel more comfortable about its prospects for the immediate future. It cannot even accomplish that in spite of the recent FOMC press release stating that there would be no letup in the bond buying program. What is it going to take to get this metal to have anything to the upside if it cannot push higher and remain higher on that sort of news?

Forget all the chatter about BACKWARDATION, DWINDLING COMEX STOCKS, etc. None of that matters. As stated before the only thing that matters is PRICE ACTION. Why is this so important? Simple- because in today's markets Hedge Funds are the drivers of trends and they are not buying this market except for bursts of short covering after which subsides, they promptly return to selling. Translations - they are currently missing in action from the buy side. Until they return, price will move lower. If any of those aforementioned issues were indeed so significant, the price action would reflect it. It is not.

Also, the largest gold ETF on the planets, GLD, continues to experience drawdowns of its reported holdings. How in the world can that be considered anything but bearish as it indicates a lack of sustained speculative interest in the yellow metal?

Back to the chart however - if you note those Fibonacci Retracement levels provided on the chart. I displayed only the 38.2% level for the sake of clarity and to avoid cluttering the chart. Note that the rally higher that began in late June/early July off the spike low below 1200 only managed to reach the 38.2% retracement level off last year's high near 1800 before the metal began moving lower once again. It thus failed to extend above the psychologically important $1400 level. That attracted additional selling.

It is now trading within the confines to the pitchfork with the upper line acting as resistance. If the line is valid, the market has the potential to drop towards the median line again which unfortunately is now below $1200 based on this time frame. Also, since the RSI has been mired in that trading range between 50 and 20 and is now headed lower, it is conceivable that we could see it begin moving  lower until it nears that same level once again.

With all the money printing occurring across the planet, it is difficult to conceive of gold moving lower again but from a purely Technical Analysis perspective, it is quite feasible. Only time will tell if Asian demand for the physical metal is strong enough to overcome Western oriented selling and finally put a LONG TERM bottom in this market.

It would certainly help matters if the Indian government would lift that ill-advised and senseless import curb on gold. After all, a 10% tax on gold coming into the country will only do one thing - kill demand, at least it will kill "legal demand". The festival season will soon be upon us so perhaps saner heads will prevail over there. We will see.

While it would be most unpleasant for the gold bulls, I would personally like to see this metal move lower in order to set up a RETEST of the $1200 level and perhaps that summer low itself to see how the metals acts. If it bounces from there, that would tend to indicate that we finally have a final, lasting bottom. In that case, I believe buyers would be quite active and very vigorous. But the truth is the bulls thus far have had very little conviction especially as indicated by the continued poor performance of the mining shares. We need to see solid bottoms in that sector and in the bullion before there is another chance of a solid up-leg in price.

Also, please keep in mind something I suggested mining companies to do some time ago now.... hedges must be put in place to secure profits. Any mining company that refuses to lock in profitable prices on mined metal is basically taking the role of a speculator with its shareholders' wealth on the line. If you can mine gold at a profit, and fail to act to lock in that profit, exposing your shareholders to the vagaries of the market, that is foolish. Mining companies should be in the business of securing profits; not running a pseudo hedge fund out of their risk management division. Leave the risk to we speculators; that is what we do by profession.

This is also one of the reasons that we are probably seeing rallies being sold so heavily. I believe some miners are indeed using those to secure solid hedges for some of their production and to lock in those profits.

It will take a complete shift in sentiment towards gold and of course, silver, from one of bearishness to one of bullishness in order to dissuade me from seeing hedging as a sound practice at this time. While it is tempting for any mining company to remain unhedged in a rising gold price environment however, it should be obvious that management has no more clue as to where the price of gold is headed over the short term than any other informed market participants.


  1. Wow, many careers ruined as a result of this move.

    So many "acclaimed experts" reputations now on the chopping block.

    We are now experiencing a life-altering event for many in the investment advisory world.

    1. Mark

      The "acclaimed experts" have been long gone for sometime now.
      I really don't think anyone takes them seriously anymore.

      Most if not all PM investors have sold out or at least lightened up.
      This is probably the final shake out.
      The real life altering event lies somewhere in the future when all of this starts to unravel.
      You better hope that you are smart enough to know when it is time to exit general equities as that time will surely come.
      If you are that market savvy please don't forget to share that knowledge with the rest of us !

  2. PM Bulls, I could find only 1 fundamental positive and that was that so far, platinum and silver are outperforming gold on this vicious, once again down move, and that ain't much to write home about; swb

  3. Armstrong is calling for $650 gold now, unless it's a typo and he meant $850. Nevertheless $1000 could be in the cards:


    1. These expert predictors are funny. When gold is moving upwards they immediately call for higher prices. When it is moving downwards they immediately calling for lower prices. This is not a prediction, this is simply reacting to the price movement. Even a dog can do that. Although it is still much better than "the gold price is just about to explode to the moon" type con artists. The only guy who had a long-term clue about what is happening is called Mike Stathis. He predicted gold to top around 2000 - 2200 dollar many years ago (recorded in his book). He was spot on. Too bad i did not know him at the time.

  4. Prophet,
    I think Armstrong said that will be what the crowd thinks but gold will go up after it hits 1000. Read it again. It was quite positive for gold in the intermediate term.

  5. Don't forget that even Armstrong uses the words "Could" and "Should"
    Not "Will" and "Shall"
    There is a big difference..but...prepare for the worst and hope for the best.

  6. Dean,
    I know but the guy has been right. I hope gold rebounds. It just does not look like it will happen until lower prices.

    1. Hey Concord

      Well, Armstrong is still bullish gold and he is probably right that the remaining bulls will be so demoralized that they will sell on the rallies and not get to enjoy the big ride to the top.

  7. Hi all,

    I don't want to repeat myself at every post by saying that Dan's posts are a beacon in the dark for the permabulls, so let's say it is a general statement :)
    The pitchfork is there, and there is no reason to hurry to catch a falling knife as long as the mlh inf sup is not broken (unless you play very short term, and try the bounce on the Bols in range on the 2 day candle chart. I won't, I don't think the odds are good enough.)

    One thing I'd like to share, even if maybe it's a pure lunacy :
    - traders like volatility. It's the price movement which makes them make money.
    - traders like bear markets. Market collapses are faster and gains bigger with higher volatility usually in bear markets.
    - the gold market is full of "fish", or "newbies", who have no skills in trading, they just bought for 12 years in a bull market and are an easy prey.
    - we live in a corrupted world, where power for the rich means cheating, and being able to decide when to increase or decrease Comex margin requirements, and to elaborate a whole game plan to their own profit.
    - as long as delivery of physical gold is ok, paper gold will determine the price of both physical and paper gold.

    Given all those "statements", putting them together, what would I do if I had a lot of money and enough power to determine the next steps of the game?

    1) I would wield all my power in order to suppress gold's prices in order to achieve maximal collapse with maximum leverage, shorting with unlimitted leverage and ensuring maximal profit, until the physical stocks are nearly totally depleted. First phase of making huge money.
    2) at the brink of a delivery default, I would convert all my positions into physical gold (or gradually before, so that I'm sure I have the stuff when the lows are hit!). Then I would announce risk of default and change the rules of the contracts, by raising margins at 100%. Suddenly I'd become all-in long with my physical, and with the depletion of stocks I ensured while shorting crazy, now fully loaded with phyz, I'd also ensure a huge move upwards, from which I'd also benefit from. Volatility both ways. Down. Then up. I'm all in both ways and winning big time.

    If this scenario is more or less right, then expect huge forces now trying to cap gold prices and create a last wave of panic while depleting the remaining of gold stocks. Maybe I'm in science fiction. But I like the idea :)

  8. Same players same methods FED support for failing US$. Anyone who has been accumulating since $250 is way ahead of the game. Just think like corrupt Government and Central Bankers who need the Ponzi for survival. TBTF market timing is so predictable Shanghai closed till next, NFP another fail while the cats away the mice will play. A short or long term buy, a win either way take your pick!

  9. Dan -

    Good call on sugar you had a couple of weeks/month ago!!

  10. Dan perhaps can offer us some insight on some of the gold price predictions we're getting. Armstrong calling for $650 gold seems pretty whacko does it not? Is it just me LOL. All-in gold production costs for most mid-tier producers run $800 to $1000 so gold price below that would have new gold production grind to a halt. If supply dwindles/stops, demand will kick prices up big time.
    I can see where paper gold can be manipulated down and I'm sure JPM would love to close their huge short positions.....and the Asians would love to buy gold at lower prices cashing in some of the US paper they hold with great angst. The Dow some think is in a bubble, the US can't get their own house in order and perhaps more Detroit type bankruptcies coming? So, what is realistic....that is, Dan, what scenario can you foresee that would have gold at $650 and where would US$ be and various economies?
    Balancing out Armstrong's price prediction (no dates mentioned) is James Rickards suggesting monetary issues will all be forced to be resolved within next 2 years and expects some degree of gold backing a new world currency with gold price somewhere between $7000 and $10,000. So who do you believe,,,,,a big chasm between $650 and $7000. Its enough to make my head spin. I couldn't make up such a crazy story even if I tried.

    1. As gold is an asset, the higher the price goes the country that has much gold will be worth more. Its a way of balancing things out. So one can pick any number, but the higher the price, the more financial backing a currency will have. So for the case for 650 gold. Lets list them:
      17 trillion debt. no
      A moronic president. no
      Zero interest rates, no
      Fed printing money. no
      $100 oil. no
      Entitlement obligations into the trillions. no

      114 coffee. That must be the bearish case, and of course that someone wants it lower.

    2. Arnie,
      Armstrong did not say gold was going to 650, he said that if and when it goes to a 1000 it will be a big fakeout for the gold bears who will think it is going to 650, instead Armstrong thinks it will start its rise to new highs.

    3. I dont even see how it gets to 1000. Or even 1100. Or even 1200. Or even 1289. But its here. I just dont understand why

    4. I agree with you there, Arnie...

      But I think, Dan says it well here, "With all the money printing occurring across the planet, it is difficult to conceive of gold moving lower again but from a purely Technical Analysis perspective, it is quite feasible."


    5. It's simply about time.
      It is quite possible to manufacture a collapse of gold on the short-term.
      Both 1000 and 6000 $ can be valid targets, depending on your time horizon.
      Once more, I can be bearish gold within 2013, and bullish gold if you ask me by end 2016.
      It is not because the long term horizon pushes gold up that the short term horizon can't prevail for a few months and push gold prices down.
      I don't see what's hard to understand here.

    6. Chuck;

      I never get in the business of making predictions. That is the purview of the newsletter writers who do not trade their own money. the market will tell us where it wants to go and when. It is up to us to listen to IT alone and ignore everything else.

  11. JPM doesn't have a huge shorts in gold any more. As a matter of fact, it has around 25% of the long contracts in COMEX. But, it still has a huge short position in silver.
    So this gives us a very interesting scenario. It can drag the gold price up to cash the profit, or it can smash the gold price to drag down silver price to cover the shorts.

  12. today's action was a backbreaker. i think today was the worst day for gold, since the bull market began. it was carried out on official channels, and executed with military precision. The sellers knew exactly what price points to hit.

    With that said, gold is good at any price. However, one must be comfortable with trading future contracts, if he owns a sizeable amount of physical. Silver is a waste of time. Gold is good at any price. However, in this market, which has telegraphed its moves since late last year, and especially since the 1632 breakdown in February, One must hold more than 1 contract short for every 100 oz long. Why? One must cover cap gains taxes.

    I let up on my passive hedge (drop from 3-4 to 1-2 contracts) because I thought we might see some seasonal bounce. Today showed that this is no longer wise. My short-intermediate term target of 1285 was hit in the time it took me to make breakfast and go to the bathroom.

    The choice of this day was intentional and executed well. I give them credit. Today's volatility allowed me to scalp for about 3k in addition to my 5k in passive shorts. But I lost more than that in physical amount. i am usually very good at gaining more, but with my two contract short going into this drop, I was not able to fully offset my losses. There is no catalyst whatsoever, for a bounce. Any bounce needs to be shorted. Short of Bernanke coming out and saying he wants to go to a gold backed dollar, every bullish scenario has been priced in.

    I would like to see a bounce overnight to 1295-1299, but I do not think that will happen. Why would anyone, who saw what happened this morning, bid gold here? I see no reason why Dan's test supports will not elude us long. They could be hit pretty soon.

  13. I agree with Trader Dan, let's test 1200, smash through it and find a bottom. Then start all over.

  14. Do you really think there is no market manipulation done by the Fed and the Bullion Banks? Give me a break. This is not a free market anymore and the criminal cartel is actively manipulating the price to the downside.

    from GATA this afternoon:

    "What would you do if you had not only just been exonerated by the CFTC, but basically knew there is NO gold or silver manipulation that could run afoul of their "strict" criteria? Relentlessly bomb the hell out of it, that's what you would do. And indeed they are. As has been the constant pattern lately it only takes the cartel 2 or 3 crucial minutes to do the damage. The illiquid pre-Comex open, the first minute of the Comex open, and 10:00 AM are tried and true.
    8:00 AM: 120 Dec. contracts traded
    8:01 AM: 4,531 Dec. contracts traded
    8:30 AM: 594 Dec. contracts traded
    8:31 AM: 8,175 Dec. contracts traded

    10:00 AM: 284 Dec. contracts traded
    10:01 AM: 1,738 Dec. contracts traded

    1. Eric, good pts made here and I am surprised nobody has mentioned the action at the top and bottom of the hour during the day, but not only pm but lots of other mkts; as for everyone else, relax and do not pay much attention to price forecasters, as you have not yet learned that those who know are quiet and those who are clueless have price targets all the time because they know that everyone else out there is clueless also and looking for the easy way out; bottom line is the pm mkts are bearish; swb in sparks

  15. Eric;

    Good traders learn to accept the market as it is and not what they wish or hope it might be. That means understanding when the trend has changed from bullish to bearish and either getting out if you are long or shorting it to make money as it moves lower.

    Hedge funds love illiquid conditions because they are more easily able to move price and thus trigger computer buys or sells. it is not bullion banks who are selling as the price of gold moves lower; it is hedge funds. The COT Report confirms that. Bullion banks are not momentum traders; they sell into rallies as they did the entire length of the bull market in gold that lasted until 2011.

    Now these same bullion banks are covering shorts or getting long. Same goes for the swap dealers.

    Also, if the bullion banks are the ones selling gold as the price moves lower, then they are also simultaneously shorting the hell out of every single gold and silver mining stock on the planet. That idea in and of itself is preposterous.

    Mining stocks are moving lower for the same reason that gold is moving lower right now - there is no fear of inflation among the investment crowd. Right or wrong, that it is the current sentiment. Until that changes or confidence is lost in the US Dollar, gold will struggle.

    1. Dan, then in your mind, who has that firepower to dump such a huge amount of contracts in a short time?
      If it's not from who already has huge longs, HF wouldn't be allowed to do so because of the CFTC restrictions.
      And the intention is very obvious to take out stop orders, and it indeed did.
      Also, there will not be COT report this week because of the shutdown.

      All combined, it just looks so suspicious to me.

    2. "Good traders learn to accept the market as it is and not what they wish or hope it might be."

      Basically you are saying that we should accept a corrupt market that serves the objectives of a corrupt government that bases its power on a fraudulent debt based fractional reserve monetary system? I am sorry Dan but I could not disagree more with you on this one. I do not accept flagrant market manipulation that only enriches the powerful elites. I will fight against it as strongly as I can by spreading the word to as many people as I can and in every opportunity that I have. Every good citizen with a conscience and a minimum of moral and ethic values should do the same.

    3. Eric

      Dan said good traders and not good citizens. As a trader he accept the market so that he can make money. It does not mean he accept corruption, etc
      You can fight with the market if you like but than you won't make money. And if you don't make money than somebody else will. Perhaps the one you are fighting with.

    4. I never did and never will trade the future market.

  16. Hi guy...

    I am out of market.... i will be sleeping with profit today..

    See profit grab it.


  17. Hi guy,

    I am still bearish with market... but when I am out short that does not mean i am turning bullish...

    Just like to take profit.

    Profit is nice when you take it but wasted if you let it pass by

    Cheer guy

    1. very true, Preditor1976! good work once again!

  18. Despite the daily ugly marubozu, I'd be careful making conclusions of an immediate drop.
    The 2day unit candle chart shows Bollinger Bands in a range, as mentionned before, so this target of 1285 was actually expected, "manipulation" or not.
    Now prices can still bounce on that area.
    So you have to check what"s happening on the smaller time unit, like the 4 hours candle chart. And there at the moment the support seems confirmed.
    Then on the 1 hour, I see the MACD crossing up.
    I don't think we will break down 1280 immediately, meaning we are still in a range in 2 day unit between the Bollinger if we don't. No need to hurry to sell. Market much show an increase of volatility first on the 2day time unit.
    I don't want to be trapped.

    1. P.S : to speak more clearly : imho tomorrow this market may still easily reverse up just as fast as it went down today, and play scissors. Right now is not a good entry point to sell. It's too late, or too early.

  19. " Bears are growling today and flexing their muscles having picked off downside sell stops and that has turned the momentum negative. Hedge fund computers will certainly notice that.'
    This is the US Fed pounding down gold as hard as it can Dan. It's illegal and immoral yet they manage to get away with it. Who's going to do anything about it when they have the ability to use every $ needed to keep the charade going.

  20. With everyone so negative towards the PMs, i think we need a relief rally, even though everything suggests that it wont happen. The massive sell off yesterday will have wiped a lot of longs out and the shorts will be gloating, so time to go long (short term only). I almost capitulated at the NY open yesterday, glad l didnt...2% less worse off as a result!

    1. Exactly, John, imho you are right.
      The red marubozu is scary but it stops dead on a support area, and the inf bollinger bands on a 1day and 2 day scale.

      As long as 2day Bol Bands are in a range (1285 - 1410), I am neutral short term on gold, not bearish.
      We may as well bounce once more towards 1340 by the end of the week as far as I know...important to monitor small time units if you want to play long on the 1285-1290 area. But the stop loss seems easy to put, like around 1275? My opinion only, of course :)

    2. I'll keep my eye on that - thanks!

  21. You guys should all be following www.mmacycles.com Ray Merriman has proven to me that his work is near flawless. Longer term he is bullish and we are in the window of a longer term cycle lows. What I like best are his daily calls and windows for HIGH RANGE days and orbs and potential reversal days.

  22. Hi Dan

    I'm not clear on this point and would appreciate clarification.

    "Also, the largest gold ETF on the planets, GLD, continues to experience drawdowns of its reported holdings. How in the world can that be considered anything but bearish as it indicates a lack of sustained speculative interest in the yellow metal?"

    If price expresses a balance between demand and supply, why would inventory in the GLD increase as price falls? Put another way, how is a lower price reflective of a decrease in the stock of gold in the GLD?

    Many thanks

  23. I think I want to state as clearly as possible what I think is the most absurd situation that it is possible to imagine. How can a monstrosity of a 17 trillion dollar debt not be a problem and a few dollars highers in gold be a major concern?

    1. Arnie

      Paranoia rules the fiat money crowd.
      They know full well that faith in their paper is a fragile thing.
      Gold is the tell that exposes the chinks in their fiat armour.

      They do not want you holding gold for wealth, they want you holding their debt dollars.

  24. gold has pretty much reversed all of the territory lost yesterday - and im still looking for a reason for that massive drop yesterday otherwise im going with the 'chinese holiday therefore smash gold to make dollar look good cos of upcoming inevitable fiasco with debt ceiling and more' reason...im happy cos i didnt sell but i dont know if this is enough to hold the 1300 level, but what i think is mor eimportant, is to make sure the 1270 level holds cos that is the level holding off from another 50 buck drop to 1220 ish area...and in china earlier it went to about 1277...anyway, as long as 1270 doesnt break it looks like gold is still doing ok, especially given fundamentals..and i know inflation isnt trending news but how did gold go up so much from 250 to 1900 with only less QE....i wasnt into gold back then so i dno how much 'inflationary' chatter was going around but October is a big month..if QE does not taper again, and debt ceiling is raised how can anyone make any more excuses for gold dropping if it does (which i doubt)...as usual, great comments Dan...look forward to your next article...and if you can mention the mining share levels to watch that would be appreciated too.

    1. That is exactly what I would have written. So I not only look forward to always reading Dan"s comments,, but yours as well.

    2. appreciate it man! im just watching the difference between the miners (HUI and GDX) and comparing it to gold...cos i feel like miners are outperforming gold itself....i got a bit lucky with my PVG stock today cos of some decent news but it dropped about 2 percent max yesterday with the huge drop and its up almost 10 today without even making up for the drop completely! i just feel like the selling in miners is exhausted and come october 17, or probably before that debt ceiling date...gold will not be this low again

  25. I would take today's rally with a grain of salt. Jobs numbers not up to expectations, but not horrible either. Considering yesterday's drop, bit of a dead cat bounce, plus head fake bear trap in my opinion.

  26. Let's face it the trend has been decidedly down since we fell through 1530. We are still below the crash level of 1320 that we fell to those two horrible days in April. Gold is now in a bear market until it proves otherwise. I sold a small part of my gold holdings yesterday and maybe I am just angry I did.

    Gold may move back up to 1350 or so but the shenanigans of the hedge funds and settlement on these debt issues will allow for more pressure on gold. I hope I am wrong.

    1. USD is at the very very low of it's range. It will work it's way back to the top, as usual. Meaning preasure on gold. This 'rally' looks to be petering off already.
      -The Prophet

    2. Yeah - im sitting this one out now waiting for the trend to becomes clearer. What a wild day, look forward to reading hat Dan has to say about it. But for 25 minutes i would have got out of my trade neutral. Chalk that small loss to lack of experience. Bar humbug!

  27. Prophet,
    The meeting with Obama later today will dictate if this standoff in Washington goes on. My sense is the Tea Party members will not cave as they don't care about public opinion. This standoff will go on. Obama will not cave in healthcare for awhile and maybe not ever.

    1. Concord; it is all theatrics; debt ceiling, Chinese Holidays, Indian taxes, tapering, blah, blah, blah; it is all in there, and do not even pay attention to Obama because he never mattered, does not and will not; it is the powers that be that call the shots; we have to go on psychology and what the hedgies do, since they have the muscle; all this chatter about nothing reminds me of the clowns who are talking about who can go undefeated in the nfl > 4 games; do not worry about your cash holdings; the guys that are stupid like me and try trading these broken mkts are the ones belly-aching, along with the perma bulls who have no lives; take care and good luck, swb

  28. GDX/GLD ratio keeps plunging, now only a hairsbreadth away from re-testing the world record lows in June.

    Then, on the other hand, you have Priceline which has rallied from $45 to $1,050 during a time where the scroom-screechers have been yelling and screaming to get gold, guns, and a getaway plan and get out of the system.

    Anyone who invested a $100,000 IRA in this stock back in 2009 now has a balance of an astonishing $2.3 million!!!!

    Never before in stock market history have so many dispensed the absolute worst advice possible, which kept many out of the greatest bull market of our lifetime.

    1. "scroom-screechers have been yelling and screaming to get gold, guns, and a getaway plan and get out of the system."

      HAHA! Fricken hilarious. But hey I don't think it was the worst advice in history. Buying at the top of the tech bubble would win the award for that. Atleast there is alot of hope that gold will rally big yet when the time is right.

    2. Mark are you saying you went out and got an assault rifle in case you caught your neighbour peddling through your canned food and bottled water stored in your dug up safety bunker?

      Sorry I just had to carry the joke on :)

    3. Mark

      The big question here is..."did you buy priceline"??
      Do you personally know anybody who backed up the truck in 2009 on that one? " Do you know anyone who knows anyone who bought $100k of priceline in 2009?
      In 2009 the fear in the market was palatable. Had Bernanke not intervened to start bailing out the TBTF's we would all be living the Movie Mad Max right now.
      However, if the economic miracle you speak of is just around the corner, why not back up the truck now?
      PCLN will probably go to $12,000 in the next 5 years.

    4. @Mark -
      You're like our own Cramer here. Have you invested in any of these companies (just curious if you're walking the talk)?

      I was at ground zero of the Dot Com bubble 13 years ago. It's hard to tell the s**t from Shinola in that environment. I wasn't exactly a Kool-Aid drinker, but neither was I prescient enough to see that the bubble was merely a bubble and not a paradigmatic shift.

      This is why I kinda like the cyclical guys (Armstrong, Nenner, etc.) - First, it's not so different than technical analysis (very heuristic to reign in any losses). Too much talk of a new era of Prospero Bernanke and his magic books, and you'll get fooled against the countervailing argument. Quite frankly, I don't buy Catherine Austin-Fitt's argument of a "breakaway economy."
      E.g. Your headlines of HOG, NFLX, LNKD, etc--
      HOG has essentially the same revenue it had in 2006--just a lot more leverage...NFLX had negative OPERATING CASH FLOW for Q4 2012 and Q1 2013 (and pretty awful cash flow Q2)--It generates cash flow by issuing debt and equity.

      It will go on until it can't go on, I guess.

    5. MD, I wasn't into stocks back in the Dot Com era, but how were people investing in garage start ups making no profits and not thinking twice that this might be too good to be true??

    6. Elijah,
      I was working at a 'better' dot.com internet consultancy...we were signing new clients and QoQ growth was hot even after the market hit Mar 2000 high. You see the old rules broken (e.g. P/E ratios astronomical, "eyeballs" etc). and so you think it can happen again. Human nature. I opted for cash salary vs. options and got a year long boondoggle opening a European office branch (who knew the Euro would move over par w/ the dollar?)--but I had no idea that Greenspan had blown my up my adventure.

      Look at Jesse's post of Maria B. on Cafe Americain today...Outrageous to people outside the bubble, but to her, Jamie Dimon is a demi-god.

      By the way- the comparison of the US to Imperial Rome and its moral decline is a bit misguided. First propounded by Gibbon, it's not right, empirically - Caligula/Claudius/Nero are seen as a moral corruption of Rome, leading to its decline. That's about AD 60--but the largest extent of the Roman Empire occurred with Trajan--60 years later and really kept going through Marcus Aurelius in 180--so over 100 years...

  29. Keep in mind that yesterdays action was such an obvious FED intervention that it was close to being laughable...I mean really...the DOW rallies on a bad news Monday, I wonder how many billions the FED spent on that one.
    You can be sure of one thing, Bernanke will not allow a DOW smoking hole under his watch, he will do whatever it takes to keep things afloat until the day he walks out the door.
    After that, Yellen will have smoke pouring off the printing presses to show how great life will be under her watch. Ad nauseum.


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