4 replies to this topic

[stocks]

GLD puke indicator

Just in case anyone missed it in last night’s letter, our GLD puke indicator that has nearly a flawless record at marking lows in gold triggered a buy signal yesterday after the ETF spit up 31 tonnes (and some blood) to trigger a 2.48% decline in its bullion holdings.

As we’ve noted before, one-day declines in the holdings of this ETF of over 1% have tended to be capitulatory in nature and have typically occurred near important lows in the gold price during gold’s secular bull market.

GLD

[stocks]

GOLD --> Has been nothing special for 2 years

That's about to change

The dow-gold ratio was 9:1 in April 2009 and is still 9:1. Big Deal.
Time to kiss 9:1 good-bye.

Richard Russell:

“A typical know-nothing article appeared in Saturday's Wall Street Journal. The title of the article was: "Is Gold's Golden Era Over?" The article was accompanied by a chart which shows gold matched with the sluggish Consumer Price Index (CPI). The inference is that since the CPI has hardly budged over the years and gold has surged, that gold is in a fairy-land world of its own.

Of course, we know that the CPI is just another phony government index, an index that fails to reflect the true path of price inflation. The WSJ article tells us, "The price of gold largely reflects sentiment rather than fundamental demand, which is one reason why gold kept rising the past ten years. But speculators already have cut their bullish bets on gold to the lowest level since 2009. Heavier selling, in turn, could beget still more selling."

This is the kind of utter nonsense we read in the media, week after week, month after month. Of course, ironically, the media is doing so-called "gold bugs" an enormous favor. The media has kept the US public out of, or afraid of, gold for years, thus holding back what otherwise might have been a panic by Americans to buy gold. In this way, the media has kept gold cheap, cheap enough so that the so-called gold bugs have been able to accumulate the yellow metal at bargain prices over the years.

Russsell

[johngeorge]

James Turk 1-31-2011

“Through Friday’s close on the LBMA, silver remained in backwardation, even by the numbers reported on the LBMA’s site. The strong bounce on Friday after the option expiration combined with the backwardation is clear evidence that silver doesn’t want to stay down here in this area and is ready to move higher.”

“If we get silver above $28.70, that will reverse the trend followers from short to long. The number on gold is $1,378. This is what is going to take gold and silver to new highs. You will see open interest expanding as people who were shaken out come in and put on long positions.

You have to keep in mind Eric that this little shakeout over the last couple of weeks has done nothing to change the very bullish fundamental factors that have been driving gold and silver higher. Most significantly the CRB CCI (Continuous Commodity Index) is at record highs. There is simply too much money being printed around the world and this monetary debasement is behind the ongoing bull market in gold and silver.

There is a relationship between Brent Crude and West Texas Intermediate with WTI normally trading at a premium to Brent Crude. However, over the last couple of weeks, Brent has climbed to a huge and record premium over WTI and has remained in the high 90’s. At one point Brent was trading as much as $12 higher than WTI which is unheard of.

The significance of the way these two oils are trading is that Brent is a more accurate reflection of global oil prices and is therefore mirroring the record high prices we are seeing in the global food indexes.

Given the usual close correlation between the CCI and global crude oil prices and gold and silver, we can reasonably conclude that the correction in gold and silver is over and that the precious metals are going to start climbing higher.

As further evidence that we have reached an important low, bullish sentiment and the commitment of traders report are at levels seen at important bottoms.”

[stocks]

Inflation

Here are the 6-month price percentage moves in some of the things people need to live with:

Cotton = +125.7%
Sugar = +82.6%
Corn = +59.0%
Coffee = +41.4%
Rice = +40.5%
Oats = +36.6%
Copper = +36.1%
Lumber = +33.8%
Oil = +25.1%

Inflation kills emerging markets. Inflation kills bond markets. These are historical facts and they are also reflected in last week's bearish price action in emerging markets:

Egypt = down 15.7%
Chile = down 4.2%
Turkey = down 4.1%
Brazil = down 3.5%
India = down 3.2%
Thailand = down 2.5%

Inflation

It's going to be the 29-year-old farmers who have the Lamborghinis.
Jim Rogers

Edited by stocks, 03 February 2011 - 09:04 AM.

[Lysis]

Thanks for finding that puke indicator article. Good stuff.