Wednesday, March 16, 2011

GOLD AND SILVER BOUNCING update II FABER

Looking like the buyers are wanting to play long ball today. Not surprising but don't get to comfortable. We'll see how the volume plays. Certainly we are NOWHERE close to a top in these markets. I want to get that out right off the back. I had a young investor tell me smuggly a couple of days ago that he would not invest in gold or silver and smild knowingly as he gave his reasons.....it was in a bubble and he doesn't chase bubbles. I thought that his answer probably reflected the majority of investors out there...young or old. They have no understanding of what these metals represent.

Will they ultimately create a massive parabolic bubble of historic proportions? Probably. But if you wait for the top of an asset bubble in commodities to form then you are playing with fire. For one..when these go parabolic in the end the volatility is ten times what it is today. It will be heralded by 200 or 300 point daily moves. NOT 20 or 30 like now. THAT IS ALMOST A CERTAINTY.......200 to 300. More than likely there will be extreme euphoria for the metal...at least PANIC for the metal.....and YOU WON't want to sell your metal for fear of recieving a zimbabwe currency that would be worthless withing a few days. I am NOT going in to what you should be doing instead but one option is to just hang on...one option.

I laughed at how incredibly naive his response was as he related that he was invested in bonds......My jaw dropped. I asked did he recall that gold sold for 35$ an ounce in the early 70s. It then ultimately ended in a parabolic spike to over 800 in 1980 and crashed to under 300 in the next 4 years while the fiat ponzi crowd took over the derivatives game for the next twenty years and created the greatest pyramid ever witnessed. Whats funny though is a gold investor in the early 70s still had an 800% gain in their investment AFTER the crash (orchestrated by the cabal) The low price of the metal continued through the late 90s with continued Central Bank selling.....hehehe. They had to keep a lid. Then the commodity cycle began to take place with gold once again moving as the cycle of fiat pyramid was becoming long in the tooth. Now we have gold at 1400 and IMO headed to 5 or 10K....That could be ultimately a 3000% move off of the late 90s low. Not a bad return...SO WHAT if it crashes from there 80%....you still are up a thousand percent from 1999. These numbers are just mind boggling. Here is the kicker and here is the MAIN reason you want to have physical metal. It is truly a store of wealth. It could literally explode in price as the current printing press continues out of control and the overall deficit/debt crushes the economy.

Ask you friends how many own physical gold........NONE. Sounds like a bubble to me. The MSM like WSJ....CNBS....Bloomberg....Money Magazine....etc all tell you gold is a bubble......you better listen....one day they will be right.

PS ask yourself a simple question .... why do all central banks own gold? Why? You don't. They do.

update I......clusterfock

http://www.zerohedge.com/article/deplorable-belgium-12-month-auction-validates-belgium-decision-pull-sovereign-issuance-due-m?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

update II.....faber interview have fun

http://www.goldalert.com/2011/03/marc-faber-sees-qe18-wwiii-ahead/












77 comments:

  1. http://seekingalpha.com/article/258498-zalicus-expanding-drug-pipeline-helps-make-it-a-strong-buy?source=yahoo

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  2. Some one want gmxr higher nuk nuk nuk in this crappy mkt..

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  3. WPRT......take a look (closely) hehhehehehe....my main man

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  4. GM Kli and everyone...I cannot tell you how many times I've had that exact conversation over the last 3 years...as you said, young & old. In the meantime, gold/silver continue the bull ride...;).

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  5. ANIK trying to breakout.......

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  6. Wish I added to my ZLCS position yesterday.
    I agree no bubble yet with the metals. I remember the Dot-com days & we are no way near the level of euphoria that was going on back then.
    Interesting to see UEC up. Short covering??

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  7. UEC is up because I finally sold!!! lol ;-)

    I'm still worried about the reactors and if something happens to bring UEC back down I'll be buyer again. Until then, too many variables for me and too much risk IMO to hold overnight. I think the reality is this power source will have to be an option moving forward, most current designs are better then the FUKU plants, barring California, most places they will be built are safer and much of the downward movement I think was just reactive.

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  8. whoops, sorry mr dip buyer...hows your booty feeling...Call me later, your friends Jamie and lloyd

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  9. creditguy,

    Are you staying away from OSIR?

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  10. HB,

    See the daily gap URZ keeps giving between 3.20 and 2.67, heheeeeee!

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  11. Palmerjoe,

    Scaling in now...looks like they covered the gap all the way back to 6..the 200sma sure did stop it in its tracks the other day..maybe they will keep it in range of 5.90-7.00 for a bit..money flow is still

    looking hard at DAG or dba and it seems the 100sma is important with dba bouncing off and DAG just climbing above it..

    this disaster is highly inflationary...in fact I heard Ben B is calling Kli to borrow his printer...

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  12. creditguy,

    Most people blame the power elite and those who control the market when they lose money including dip buyers BUT in reality any retail trader who loses money should have no one to blame but themselves since they already admit the game is rigged, how ever their greed drives them to still be in the market, no one has forced them to play the game, it's their own free will and choice which means no bitching really allowed once one decides to play in devil's territory. When people decide to dance with the devil, they can not beat the devil, it beats them. Humans need to find the courage to accept responsibility for their own decisions and stop blaming powerful for all their problems, afterall most become victims to their own greed or fear because they allow it by participating in casino. Freewill, free will.

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  13. Hi everybody...fab Kli, fab Nancy...and fab Joe. GLNG has gone parabolic. BUT it hit the 12/2007 pivot high and pulled backed. Thoughts? Also, SLV has formed the 1st bearish MACD crossover of the year on the 1-yr daily. URZ trading is for maniacs like you, Joe...Lol

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  14. HB,

    When I brought up GLNG, it was at 19, you could have taken profit by now, heheeeeee!

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  15. Palmerjoe,

    I'm just adding some humor to the blog, I understand greed..my saying is

    greed sleeps with the devil...life is like a 4 way stop sign, you need to look in every direction including in front of you before you move forward as sometimes things hit you head on...

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  16. 3 main rules for retail traders:

    1) no Emotion

    2) Do not gamble what you can not afford to lose

    3) If you ended up losing money, do not bitch about it or blame any one else which means respect the law of free will.

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  17. creditguy,

    I know you meant it to be funny and my message was not directed at you personally, the content of the message you brought up although mentioned in humorous fashion becomes important as well since it says an important fact about human nature which people find it always easier in life to blame any one else but themselves .

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  18. http://seekingalpha.com/article/249516-osiris-finding-opportunity-amongst-uncertainty

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  19. Being a dip buyer...

    "3 main rules for retail traders:

    1) no Emotion
    2) Do not gamble what you can not afford to lose
    3) If you ended up losing money, do not bitch about it or blame any one else which means respect the law of free will."

    Number 1 is very tough I think most will agree
    Number 2 is a given
    Number 3 is a two part, I always take responsibility but I do like to bitch a little (see number one...) ;-)

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  20. Forgot to add nice article on Osiris - passing on the the better half for her learned take...

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  21. French Finance Minister Legarde was talking earlier about a G7 meeting for a financial response to Japan's troubles.

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  22. Homer,

    Most retail traders in longer term lose money because of exactly what you said in regard to rule #1, but that's the key, the discipline to maintain non-emotional approach since there are two sides to the coin ( upside going long, downside going short). The process of no emotion is achieved only by few in life time and it's achieved outside of market from childhood mainly by training and then applied to market as one application.

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  23. http://www.youtube.com/watch?feature=player_embedded&v=D9W_-0uGN1E&skipcontrinter=1

    not easy to watch....the world is on edge....

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  24. It becomes lot more difficult but doable for humans who can not control their emotion to suddenly try to reverse that, the older you get the harder it becomes since in the middle of the game you are trying to control what has been part of you most of life which is why most humans are resistant to change, in order to change people have to throw away lot of crap within them which creates vaccum and then fill it with another concept. The biggest struggle within any human is CHANGE and adjust to something they are not used to eventhough the change is what they need.

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  25. Homer,

    Most humans forget that we are an exceptional animal due to the FACT that not only we have our natural instincts and the elements/environment which shapes our behavior, belief and action, but also we have the CAPABILITY to go AGAINST our embedded nature. All the great human beings in the history have exercised the concept of going against what's considered natural. That's the essence of choice. Huge difference between I can not vs I do not want to.

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  26. Changing in midstream is most definitely a b itch especially the part of trying to unwind half a life of beliefs and habits....... However its well worth the journey!

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  27. Tom,

    Exactly, and most people will say I can not BUT in reality they do not want to, again huge difference between not having a capability to change ( which means no choice) and choosing not to change because it seems hard. While back some one told me a story and story goes that a person was faced with having a gun pointed at the back of his head and then was given a gun to either kill a child in front of him to save himself or refuse to shoot the child and get killed by the gun pointed at his head, he chose to kill the child to save himself and his friend said to him, it's natural and it makes sense, self-preservation, no choice here at all, the guy responded NO, wrong, choice was there which is why I can not sleep at night, I just chose to save myself rather than the child forgetting all death is certain anyway.

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  28. need to get the s&p above 1260 by end of day or 1225 here we come....

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  29. Tom,

    The story ends with the guy ended up dead from cancer two yrs later.

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  30. Hey Joe - I know you're right, but choice so often is waylaid by emotion, almost like an addict giving in to habit. Sometimes its being lazy, many times fear. But as long as it's recognized, the tough choices become a little easier.

    Reminds me of 'Defending Your Life', look at one's life and all the bad choices they made based on fear.

    Also, to kli and Joe's point yesterday about the folks still there fighting...
    http://edition.cnn.com/2011/WORLD/asiapcf/03/16/japan.nuclear.heroes/?hpt=T1

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  31. Inspiration or Desperation is usually the catalyst for change. In my case it was the latter sprinkled with a little of the first or I would have met my end. So my choice was for self preservation rather than continue on the path of self destruction. It was easy the choice however the choice presented in your story is a far more difficult one as it goes against our instinct for self preservation.... A choice I hope no one would never have to make.

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  32. scotty, we mustt keep engines above 1260..
    aye aye captn...dilithium crystals inserted now...

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  33. http://finance.yahoo.com/echarts?s=YCS+Interactive#chart1:symbol=ycs;range=3m;indicator=sma(50,200,100)+bollinger+split+volume+stochasticfast+mfi;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

    check out when YCS gets candle below bollinger band...maybe worth a quick hit

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  34. GORO EGO GPL all seem to be catching a bid in a terrible market.....and with volume......somebody is digging in

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  35. Looks like a pretty solid buying opportunity to me......heheheh.....now if I can just figure out where.....

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  36. Can you guys see my post? It has shown up before but disappeared. Maybe I finally got this figured out.

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  37. Your on Bat but just in case here is your post to credit........Tell Davies ( I forget his Id on your blog) don't short the yen. He may make a couple of dimes here or there, but it is going much higher. Japan gets normal repatriation end of quarter without this mess, don't short it with all that has been going on. 300 billion of liquidity has done nothing..very poor risk reward.

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  38. Davies,

    Shorting yen here is risky. Yen has repatriation under normal circumstances at quarter end. Now with the natural disaster along with carry trade unwind to add to repatriation it may get much stronger till month end. BOJ has added over a quarter of a trillion in liquidity in 3 days to weaken it with no luck. This tells you how rapid the liquidity is drain. They are suffering a liquidity crisis right now. You may be able to flip it for a couple of dimes, but it's a risky longer-term hold. IMHO.

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  39. Whoops there ya are......good ta see ya

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  40. LOL! Kli TY.That's dollars too not yen. In yen its north of 25 trillion, I've lost track at this point. The pump is on full.

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  41. alas ben has to unwind the yen carry trade now. I wonder If he can print fast enough.....

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  42. Nope he can't, you have global dollar reserves tight due to increasing commodity prices. Though their decline may relieve a bit of the pressure. But they have to pump the AUD against USD and yen, right when leading indicators turned negative for Oz as did housing. And last night there was chatter of rate DROP next meeting. I don't think they will drop under these circumstances, but you can bet the 1.50 point increase anticipated for rest of year is off the table now. They also have to strenghten the euro, against big risk there. They will have to press risk to max, against deteriorating fundamentals. This is classic suicide banking.

    Game isn't going to last long IMO.

    http://www.theage.com.au/business/banks-funding-costs-may-rise-after-japan-quake-20110316-1bwq7.html

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  43. Uncle!!! I just posted a long post and it went poof again. Is there anyone there who can help with this problem?

    Suffice it to say, ben is going to have mucho trouble prining enough for a multitude of reasons I'm too lazy to re-type now. Will try again later.

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  44. Hey Bat - I always copy what I'm typing to the clipboard just in case something burps. Sometimes even paste it into a scratch text file I have if I need to run off and do things before posting. Just a thought since there appears to be an issue.

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  45. Thanks homer, yes I should have been more careful. I will do it next time.

    It had a link, could that be my problem?

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  46. Ouch! That liquidity hole just exploded ( no pun), they better find a plug soon.

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  47. China might have played push the regional rival over the edge just now...

    yen/dxy fell to 76.5...

    Nikkei market close tonight?

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  48. That would give Ben time to dig down deep in his pocket for the transition...meanwhile Ghadafi is bombing the last hold out city to smitherines.......

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  49. PURE FEAR developing now.........

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  50. Last I heard everyone says there is trouble in Japan except the Japanese. If there wasn't fear before, there is nothing but fear and confusion now.

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  51. Kli, do you have any opinion on how low silver gets taken down? i am confused, in one instant i would think people would enter gold/silver as a fear trade, but at the moment the japan situation creating a deflationary fear. any thoughts?

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  52. Kli- good read...interesting comparison to today...prescient...

    http://professorfekete.com/articles%5CAEFTheDecoyOfTheFallingDollar.pdf

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  53. Bernanke is not going to be able to just crank up the printing presses and rescue the markets like he did last summer. The problem isn't that there is a shortage of liquidity. The problem is that there is too much liquidity. It is causing commodity prices to surge out of control. Oil up despite continued high unemployment and impaired demand. Food prices up and have already trigger social revolt throughout the mid east and most emerging markets. As crisis intensifies Bernanke will be forced to end QE or risk breaking not only the currency but also the bond market. Without an endless supply of fresh money the markets and economy will quickly start to collapse. We saw this last summer when QE1 ended. The same thing will happen this time only Bernanke's hands will be tied.

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  54. The Japanese Government will need to sell a large quantity of its horde of US Treasuries to pay for reconstruction. With China not adding to its holdings of US Treasuries, the Arab oil exporters looking more volatile every day and now Japan looking as though it may be an active seller that doesn't leave many buyers left for US Treasuries except its biggest holder and sole-buyer of nearly all new issuances from November until at least June - the Federal Reserve.

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  55. Bat,

    Real deflationary collapse requires not only asset deflation which that part will continue BUT also the overall cost of essential goods/services to decline drastically as well otherwise double wamy which is deflation of assets like home, wages and loss of employment along with inflation in essential cost of goods/servics like food, gas, health insurance, and taxes.

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  56. QE3 is a guarantee.......but I suspect there is a very large overnite QE occurring as we speak

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  57. rude...in any market takedown the PTB look to rip the heart out of the metals....with hedge funds liquidating to meat margins they dump the PMs and the banks use their short positions to try and hammer them....they can take silver down to 26 in a matter of a week or two.....gold will be ripped to 1320 with ease.....not sayin it will...watch the $HUI...if you see volume and green at 490....it may be over for the miners.....thats close and just below the 200ma......thats what I am watching VERY closely.

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  58. kli,

    QE3 can not and will not last long since the overall cost of essential goods/services are already high, if bernanke decides to continue doing it then that means dollar worthless and a nightmare worse than deflationary collapse and law of supply and demand will take over which makes evrything collapse, his hands are really tied this time. I am not talking about the next couple of weeks or months, no matter how much money he prints japan's black swan along with other issues we discussed will not be effective any more. Time to pay the piper.

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  59. I meant Japan's black swan along with already high cost of essentials/ services is going to trigger the law of supply and demand regardless of what he does, it's coming.

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  60. As far as Gold and silver, the next rally this yr will be the last before collapse of at least 20% to 30% in price of Gold and silver which would mean once BEAR is back in the market just like 2008 then Gold and silver stocks would lose around 75% to 90% of their value brutally but will recover faster than other sectors since gold at some point during deflation would play it's safety net.

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  61. Joe then you feel the Black Swan will accelerate the arrival of the deflationary collapse before 2012......? I would think that QE can prolong this another few months......

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  62. During 2008 SLW went down from $20 to 2.5, GG went down from high 40s to 14,,,,etc. Once real bear comes back all assets will take it up the rear end and carnage on Gold and silver stocks will be real brutal since hedgefunds and institutions will dump like there is no tomorrow, margin calls taken out until dust settles. My guess is it starts in 12 months but it could be sooner. As of now market is just correcting and this is not a bear yet but bear will be here and start roaring.

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  63. Hi Joe

    I liked your comments on free will. I think it is easy to forget that we can choose how we live in the world. This is a short interesting write up about a film director who seems to see the world in a new way. Like you wrote "you don't have to play."
    http://www.guardian.co.uk/film/2011/jan/16/tom-shadyac-hollywood-movies-film

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  64. kli,

    Before japan's crisis my guess was 10% correction in market indexes for this round which means about 30% correction in stocks , now we have to wait and see the addition of Japan's tragedy to the overall market and how it behaves. It's important to remember Japan was one of the largest buyers of our debt as I mentioned above and now they have to sell U.S. treasuries, that puts lot more pressure on bernanke.

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  65. Ben's up to the task......after all he has the greatest power on earth behind him.......problem is he now has to fight the greatest power in the universe.

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  66. Joe,


    Pardon my typos,as I'm on iPad and can't scroll thru message to fix them. I have no doubt there will be many. I hate typing on this thing.


    I understand what it takes for a true deflationary collapse, you and I are in agreement. This is what will occur IMO as there is no way to avoid it. Derivatives almost guarantees it. Reserves have tripled in last decade, along with that derivatives have increased almost 10 forks. When these default, the magnitude is astounding. You can't sustain that kind of leverage tied to growing reserve base with out having a deflationary collapse sooner or later, especially when we are the reserve currency and now a funding currency too.

    Liquidity is very very tight. There is a point when extremes in commodity prices exceed printing and all goes towers reserve needs. This doesn't include the basic needs for bank books either. Excess liquidity becomes deflationary in and of itself. Printing has limits. We hit them in 2007- 2008. We are hitting them again now. This wipes out reserves, eventually you get a crisis and everyone is left naked looking for a buck. If you look back in 2008-2009 reserves actually dropped even with all the emergency printing going on globally. This is deflationary. They dropped about 300-400 billion and yet look at all the damage.

    This deflationary collapse won't be a sudden event but rather a crisis, everyone will expect another quickie recovery and hold on...till it doesn't come and finally people, businesses, governments capitulate and realize this can can't be kicked down the road any longer. It market to market hadn't dumped trillions of liquidity, we would be waking up to that reality now. With more room. Now all sovereigns have busted their banks in last year can kicking, so next time there is nothing left to save the day. JMHO?

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  67. Bat,

    Your analysis is in line with mine, the end game is deflationary.

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  68. Japan will not be the tipping point unless the radiation leak becomes MUCH more severe than what I am anticipating...it would require an uninhabitable area of a commensurate radius of 100 miles. That would ripple into the JIT supply chain with an astounding impact worldwide....that also reflects a downtime for most of Japan that would number in the months....instant depression. Without that level of an exposure ....the ponzi lives. I may be a pessimist ( i prefer realist) but I've got a hunch one of the toughest, most impressive group of people I have EVER witnessed will come out of this intact....GO JAPAN!!!!!

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  69. thank you Kli and Joe. very interesting reading. personally i hope you are both wrong, because if our country is headed towards an economical collapse in the future, it doesnt sound to appealing. unfortuneatly your arguments are very convincing. and Kli thanks for the tip with the $hui. looking at the charts, it seems it does have room to go lower. i will be watching.

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  70. Joe,

    QE 3 won't make dollar collapse, especially if commodities are this high or higher. Every penny will go to replenish global reserves as they race to keep up with commodity prices. We are very close to that point now. Liquidity is getting very tight for that reason now.. Sure their currencies, ex-pegged currencies, have appreciated against dollar. But commodities have risen more. That early currency off-set is now gone.

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  71. Great to see you bat, it's Nancy. Thanks for the yen discussion, I was thinking of shorting next month. And Credit guy, prof. fekete is my favorite. G'night all...

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  72. This comment has been removed by the author.

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