Market Musings

This week has the potential to be very important for Gold Miners.
First, there is the recent whip-saw for gold, I expect some follow through one way or the other this week.
Gold Miner stocks report earnings this week, so the news should affect ETF's GDX & GDXJ in some manner.

Then there is the matter of the overall market.  Is this time truely different? Market about ready for a rapid rise? Don't dismiss it! If gobal currencies start to fail we could see an epic market tear.

However if this time is not different, reversion to the mean is long overdue.

I think this time its different is possible, but not plausible if you use history as a guide.  But then again, we are in a time unlike any in history.

I happened to have sold 1/2 of what Gary told me in Quest and got full in near the GDX bottom last week with cheap options, so this week I am very interested to see what happens, as I am out there, on my own.

Good Luck!

Quest

I just joined Gary Savage's Quest challenge, to turn 1K into 100K in the next year or so.
I'll be happy to land with simply my money back :)  But hey, some people buy lottery tickets, I'd rather try Quest.

For more info, pay for Gary Savage's https://smartmoneytrackerpremium.com/ for his daily blog commentary, and Quest.  Pretty sure quest will close forever in next day or so.

Commodity Index -costs- breaking up

The Commodity index CRB has broken out of a range starting back from 2010 this past week.
This maybe a foretelling of what is ahead.
Gold and Gold Miners have NOT clearly broken to the up or downside since it started to consolidate in a price range.

I am optimistic that gold miners have bottomed, as it has had a really solid price this past few weeks relative to market volatility.  The ETF GLDX, representing high risk pink sheet gold miners is seeming to get some traction, moving up from 10 to 13.85 in recent weeks.

But according to chart view, there isn't a solid view of an upside yet.
I am in GDX, GDXJ, and looking to get into GLDX in the week ahead, with optimistic view yet again due to the strength of the ETF's price action.  But until we see GLD, GDX or GDXJ break up, all we have is CRB as a possible lead indicator and the seeming bottom price in GDX and GDXJ in the face of market volatility over the past few weeks.

See Gary of Smart Money Tracker for his thoughts by clicking here, he believes market will explode up over next 3-4 months as the final inflation bubble starts to be re-blown before a horrible pop.

GDX is at 23.91, GDXJ at 38.35.
To the charts! Food for thought!

Canary in the Coal Mine - Japan

My friend John said years ago that Japan is the Canary in the Coal mine to watch.   Japan's demographics and extreme deficit spending makes it worth while to watch.  They are in effect ahead of the US trajectory.

Unfortunately, I believe if Japan enters currency crisis, a vortex over the year following will take with it other countries not too far behind it. I am not predicting that Japan enters a crisis, (2014-15?) merely stating that if Japan hits a currency crisis, this will be the beginning of what I feared all the way back in March 2009. (about the bottom of the market)

The decision to transfer all risk from private to public, put the public financial system at risk.  Since money IS about trust (work done today, will be paid back tomorrow), once trust in the system hits a tipping point, it will get ugly.

Japan recently announced basically an all out currency war, pledging to break the yen.  While the yen is not yet broken, it has had a nice decline rather rapidly.  It has lost valuation, wiping out 2.5 years of gains in months.   If Yen reaches below 0.0083, in my mind, its game on for currency crisis.




Safe havens for a possible currency crisis are going to get severely slapped around.  As tensions mount, I expect safe havens to fall, not rise at first.   Even once the worst has past, the safe-heavens should remain under brutal assault throughout the currency crisis.  There is no free lunch, and no easy way out.  A currency crisis will shake the very foundation of everything, and bring on an era not seen since the 1930's.

The last great depression got started the same way, loosely speaking.   A huge credit bubble, credit burst, currency war, then depression and world war 2.  I obviously hope we will avoid WW 3, and at this time don't expect it.

I do have optimism overall.  I believe we are seeing a massive redistribution of capability starting, preparing for the new economy after the worst has past.  I am re-iterating my doom and gloom call for USD until 2015-2017 time period, more likely in 2017.

Gary of the Smart Money Tracker has more to say on this topic, recommend subscribing to his service.

Bullish on Miners

I have been waiting for WEEKS for a clear sign that Gold miners are a strong buy.
The best indicator I can muster is the mining sector has held firm from further declines in recent months.

Gary of the Smart Money tracker posted on his public blog that this time its different with miners.
An indicator, a mild one, is that this time instead of the usual sharp down in miners like we have seen for years, this time its more mild.  Click here to read and see charts.

What is likely happening is that gold miners are being bought, en mass on the recent down slope preventing the usual sharp down forcing action.  But this is speculation, no scientific proof.  The chart could be round for  any reason or no reason.

The market was expected to swan dive because of Government Fiscal cliff, that fizzled.  Also sharp downturn AFTER the elections.  Also because of bad Christmas sales.  Frankly, pick any of 100 reasons why it should turn down and has not.

And that is the point, it hasn't.  What can't go down usually will go up.  While some stocks may soar (think AAPL as a comeback king temporarily) I still like the gold miners for long play for my 401K.

ETF for Gold Miners GDX is at 45.82, GDXJ at 20.48
ETF for gold (GLD) at 163 and silver (SLV) at 31.12

Market Musings

I am without internet access for foreseeable future at home.  This will severely impact my postings.
I'll try to post, but likely not in earnest until my access is restored.

Gary of the Smart Money tracker likes gold right here.  And GDX & GDXJ are holding up since my post "Decent Spot for Market Entry".  If the market can't make significant decline a week after the presidential election, my market optimism for gold miners will increase.

For now, if you wish to buy on the low, now is good, with eye on SPX 1395 as a mark to reconsider investments.
The S &P 500 has has a floor above 1400 since a week ago, October 23rd.

In a nutshell, nothing decisive yet.  Some minor technical breaks to indicate gold higher, but not impressive yet.  For actual real analysis, click on Gary's link, 10 buck special to try his service.

Decent spot for market entry

While I remain very concerned of a longer term market decline, I'll be first to admit that anything could happen.

On the PLUS side for market advance, the market knows corporate profits are missing and getting pinched. But yet, the stock prices had not moved down severely.
There is the thought that all financial institutions, governments, and corporations all want stocks to go up.   Financial institutions are employing sophisticated trading platforms to 'manage' the market, such as High Frequency Trading.  The government changes laws to make corporations look better, such as changing accounting rules in place since the great depression.  Corporations continue to innovate to move liabilities to off-book accounting mechanisms.


So while I am skeptical of the market making new highs, doesn't mean it wont.  Today is a good entry point if your mildly optimistic, with a stop-loss if the market closes below SPX 1395.
Futures are pointing up.  US presidential election home stretch is upon us.  The USD may resume it's decline, bolstering stocks until the effects take another bite out of companies.

Image below.  I will buy some GDX, GDXJ today on advice of Gary of the Smart money tracker, but not to the same degree as he may.  Also lighten on HDGE. Good luck.

Market Cycles

My friend John, a professional securities trader, has recently become bearish enough to put a toe into shorting the market, for near term.  He views the market movements after QE1, QE2, different than current after QE3.  The market movement difference now has encouraged him to take a bearish stance on the market.

If you read the news, there is plenty of bearish news to back up this view.  Fedex shipping is down, which can be compared to GDP forecasting, California sales tax revenue declined 20% YOY in August,  IMF chief warns of US financial issues in short, medium, and long term, Eurozone is seeing steepest contraction since 2009, Japan exports contract 3rd month in a row and China PMI contracts, Toronto home sales decline 64 percent (due to law change).
Pile on the Euro news with Greece, France, and Spain seeing Neo-Nazi fractions rising threatening those countries status quo.

Now lets look at the opposite view, there is plenty to find, but I am quoting the top two from my perspective. The Federal Reserve bank believes QE3 will help the US economy, as QE1 and QE2 did in the marketplace.

My favorite market watcher Gary of Smart Money tracker is calling for a "near term" bottom with market reversal.  Gary isn't the sort to make super long term predictions like the year ahead, he watches cycles to see next move.

So what is next?  A market fall of significance is always in the cards, especially if you look at history now or in the Great Depression.  (currency wars occurred back then too)  I am mixed, while I don't think in the year ahead we will see 30% market gains, it is possible the market finds a dead range of +10% and -10%.  My inner voice tells me the market is very weak and going to implode, but then again, I have heard that voice a few times in the last few years.

A conservative stance is probably in order, and on any strength, I may continue to lighten to be nimble.

Gold explodes upward

Today, Gold exploded up, also silver.  Gold miners had a nice up day also.  Gary of the Smart Money tracker is convinced its time to buy.

I am real nervous.  We are on the cusp of an announcement from Europe.  If your of the belief the Germans will cave and finance the debt of Spain, Greece, Portugal, and Ireland, then buy Gold and miners on the open Wednesday.

If you think the Germans won't go for this, then a deflationary collapse is about to begin.  In such a collapse, I have a hard time believing gold rockets up.

So I am splitting the baby.  I am buying a little bit of GLD (gold) and SLV (silver) .  Why? Because if the metals explode up, it will be very hard to buy.  Each day you will look and say "that has to come back down".  It may not.  I'd rather have a toe hold to use as leverage to buy more as gains amass.

Conversely, if gold and silver are indicating a rise, but instead collapse trapping all of us in those sectors, I want to minimize losses by not taking huge positions.
I cannot day trade, i have no time.  I don't like stop losses since as we saw today, metals can move huge swings in a day.

In addition, probably buy 100 shares of gdxj, the junior gold/silver miners.
Again a toe hold, and each day I wait for the market move of Europe indicating, inflationary or deflationary event in the year ahead.  Also if the Fed announces yet another attempt to break the USD into a death spiral.

One thing is on the side of Gold and silver, no matter what happens fear tends to push up the precious metal sectors, and European fear can only help Gold Silver.

Market Commentary

If I exclude the possibility of the US Dollar hyper-inflating (which in the next year or two seems highly unlikely), I am now very pessimistic for the market.

I can't stress hard enough that cash is king.
See yesterday's post, and combine that with Gary of the Smart Money Tracker private pay advice (I won't republish, join to read) I am more bearish than ever.

I may be tempted to buy double inverse funds.......to catch the down swoop in a "positive" way.

Good luck.

In-Sync with Gary of Smart Money Tracker

Gary of the Smart Money tracker has a paid service, pretty much the only one I pay attention to anymore. Why? The chart trackers are terrible future predictors, but are good for indicating turning points. The chart trackers also do not take into consideration that the "real world" has changing rules, such as the Federal Reserve Bank's ability to print money.

Gary recently waffled in the last thirty days as the final near-term rally of gold is underway. As a result, I have joined him in staying out of metals.

Gary has laid out his multi-year view. I encourage readers to purchase his service, for I think Gary is smack on, and it is in-line with my view.

I am going to recap my view, but it parallels Gary's. For this reason, I'll avoid putting up charts and going into a deep explanation that Gary has, for it could be viewed as stealing his pay-post.

The market will roll over with the global economy. Europe, China, and America are all showing obvious problems with their economies. Once the market rolls over significantly (15%? 30%? 50%?) lower, the Federal Reserve bank will be encouraged to do respond with "what they know". For the Federal Reserve Bank is not able to control any other aspect other than monetary policy. This reaction is wrong, and allows the politicians to defer to the Federal Reserve bank to "fix" the economy.

The problem isn't the Fed's monetary policy at this point, but is a much broader, structural problem that can ONLY be fixed by politicians. The Federal Reserve Bank actions ENABLES politicians to avoid making hard decisions for now. Eventually the Fed's actions will totally become ineffective, and then the politicians will have no choice but to act. But by then, the problems in 2008 will seem easy, as we have magnified all the issues since then.

Once the Fed resumes printing, there will likely be a nice market rally, with a resumption of it falling. The dollar will start to decline after a nice, large rally from the pending market decline.

And here is where the epic divergence will begin. The market while spiking up, will overall trend down as profit margins are compressed. The dollar will resume trending down, with spikes up for each market decline (flight to safety).

But contrary to a recessionary environment, some sectors of resources will trend up. Why? Global political tensions, fiat currency issues, and yes, overall consumption.

Of all the possible resource sectors, me and Gary expect precious metals to do well. I dare to venture to say that other resources such as Oil, Food, and other resources will either maintain price in a range, or rise. This falls in line with my pontification in 2008 that Americans will see their lifestyle significantly degraded as Chinese citizens gain wealth, meeting at a closer equilibrium in the years ahead.

On my party, I am going to rely heavily on Gary for the green light to get back in the markets, after a decline. The markets may in the months ahead hit new highs, I will sit out. For when the rally ends, the decline COULD be sudden. I'd rather not play this one, for I don't think the remaining upside percentage is as great as the potential DOWNSIDE snapback.

Overall, I am in agreement with Gary, and as mentioned at the start, he has an excellent post from this past weekend that goes into great details about market cycles, charting, and bringing it together with current political policies.

Precious metals into 2015-2017

I reserve the right to change my view that I have today in the years to come.
For after all, one must remain flexible to change their outlook as new events and information come to light. Those who subscribe to a religious like belief into any one destined outcome are 99.9% likely to be wrong in the final outcome. Only the either super smart, or probably, super lucky, are those that attain the 0.1% correct outcome.

Since the start of this blog, I was ranting about not trusting the stock market valuations, the problems with financial system, the lack of law enforcement, and many other topics. I have evolved into focusing on the positives of investing in natural resources as a long term positive investment. I say long term, but that depends on the sector. For precious metals of gold, silver, etc, I have been quoting in past posts about 2013 and beyond for a top. I have said as far out as 2016, but could be farther.

Gary Savage, of the Smart Money Tracker, has become my guide for precious metals investing. I recently posted how I am sitting more on the sidelines as per his paid service recommendations. I am keeping core positions, as I will until this run ends, sometime after 2013.

Since Gary has become my guide, for precious metals investing, it is important to listen to Gary himself on his vision. I have found a nice interview with Gary about the course through 2017.

Gary DOES NOT look at things like investing in Uranium (URA, CCJ), Rare Earth Minerals (AVL, REE, MCO, LYSCF), Oil and natural gas (OIH, FCG), alternate energy (MGMXF), Food (RJA, DBA) and other resources like I do.


But Gary will probably have the last laugh as he world cannot afford the same parabolic valuation in any of those resource plays as it can in Gold and Silver. For the other resources if they go parabolic, there would be many more countries experiencing revolution. The world can remain relatively stable with expensive gold, for the world truly does not require gold to operate. The other resources....well....without them people die.

So onto Gary's interview, a must watch if your interested in precious metals.

Summary: Gold/Silver A-B-C patterns on stock relies on 3 year cycle low of USD.

2011 will see 3 year dollar low, then 2014, then finally 2016-2017

Gold/Silver will enter into a parabolic upswing for a straight year in the end.

Next cycle for gold top in May-June.

Recommend silver miners, AGQ or GDXJ.

C waves are parabolic moves, so must correct.

During correction, Gold/Silver trade sideways for a year before next C wave advance.