"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


Monday, March 4, 2013

HUI / Gold Ratio Chart - Updated

Today's sell off in the mining shares dropped this ratio, which has already been collapsing, to levels last seen at the depth of the credit crisis back in 2008. It should be noted that the ratio did recover that month moved up smartly off its worst reading.

This time around however, the ratio is not recovering. It closed last month in February at the lowest CLOSE for a month since May 2001. That is an astonishing TWELVE YEARS AGO. The month of March is still young so the ratio has time to recover but so far it is showing no signs yet of reversing.

Some select shares are either the screaming buy of a lifetime or gold is going to fall further yet. It is unclear just what it is going to take to convince BROADER stock market perma bulls to stop chasing them higher. News that China is attempting to slow its overheating real estate market down was shrugged off like a bad habit in today's session in the US.

I know that many analysts continue to insist that the broader stock market is still cheap. That is their business and their opinion. I believe we are witnessing another speculative mania courtesy of the Federal Reserve. With the Fed having slashed interest rates to practically ZERO and with commodities in general out of favor with hedge funds and other larger investors, stocks are the only game in town to obtain any sort of yield in this insane speculative nirvana that the Fed's policies have created. I suppose the rally in equities will continue until it just doesn't. The tape continues to tell traders to buy the thing.

That of course is not much use as predictions go but these guys are drooling all over their chins while they eagery await any dips in the market to gorge themselves on more equities. Nothing, and I do mean "NOTHING" can disabuse this gang of the current Bullish rage that has seized upon them and will not let them go. Quite frankly, it is stunning to watch this herd mentality grow more virulent with the passing of each and every day.


  1. Dan,
    What do you think of Jim Sinclair's forecasts that the end of this correction is due before his birthday?
    Do you anticipate TIME the same way in your TA?
    What about DI and concentration signals (Eric de Groot) seeming to confirm that there are practically no bulls left on the gold & silver scene, i.e if everyone sold, it can only go up?

    I'm quite interested in knowing your point of view, not about prices (supports, resistances...) but about this TIMING "prophecies". Not the price we will be by then, but that "by end of march, the correction will be behind us".
    What's your take on this one?
    What is the rationale behind it?
    Thanks a lot for your lights, as a trader :)

  2. Hi Dan,

    Firstly, your blog and posts are fantastic. Very grateful for your work for the benefit of others. Thank you!

    Secondly, I'm very much looking forward to your reply in regards to "Hubert Du Haut" question above.

    Cheers! (From Singapore)

  3. "Nothing, and I do mean "NOTHING" can disabuse this gang of the current Bullish rage that has seized upon them and will not let them go. Quite frankly, it is stunning to watch this herd mentality grow more virulent with the passing of each and every day."

    You would think that the Emini S&P 500 monthly chart that you posted here might get their (the equity bulls) attention, in the manner that flashing red lights at a railroad crossing might get the attention of a person approaching in a car. Then again I've observed some outrageously reckless behavior from people driving cars who just can't seem to get to the bar fast enough. I will be observing this potential train wreck from a safe distance. Thanks Dan, for all you do.

  4. Hello Dan,

    My God, what your're describing is the classic discription of the end of a huge tulip bubble. Only this time the tulips are made of paper.

  5. Another day where Bernanke rules all markets.

    Gold, grains, and oil resuming their plunge, giving the consumer the ultimate tax break.

    And the S & P 500 priced in most foreign currencies are surging to record highs, led by consumer stocks like CarMax, which is already up 500% off the 2009 lows.

    Nothing can go bad with the stock markets as long as interest rates are at rock bottom, inflation is plummeting, and consumer borrowing is surging again.

    Never before in recorded history has this magical feat been able to be pulled off by a central banker.

    Printing trillions every year, racking up huge deficits, yet at the same time inflation easily quashed with mere "words" and interest rates stuck at 50-year lows as each equity market selloff results in a resumption of the 35-year bull market in U.S. paper.

    Economic professors will be marveling at this feat for the next 100 years.

  6. Could today be a sign of the mining shares reversing?

    1. rich -
      one would hope... certainly gold not going down today helped, i'd imagine the minor volatility helped as well. someone went off script today and didn't sell at 10:30 (when the retail investor knows...probably a contrarian indicator) and so the algos couldn't just dump shares 30min-1hr after opening bell and buy back low (since no one is ostensibly short of the gold shares).


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