173 replies to this topic

[dharma]

stubaby, yes i have been watching that pennant , its getting close to the end=no power. sentiment for the miners just keeps getting more and more negative here. oi is increasing=the shorts pressing the matter. i have turns 11/12 so maybe we are seeing the lows here??? euro slips to new lows vs the dollar. i am not looking for much over the next month or two. but the backdrop for higher gold prices keeps developing. the food stuffs are overbought, so a correction is in order. but the vertical move suggests higher prices. and the fact that the grains have taken out old highs here, from a gann perspective -buy high , sell higher. gann bought above old highs , grains certainly fit that bill here. so,i wait. dharma

[dharma]

seems to me , the markets are marking time. waiting is a large part of the game. looks like this is going to continue for a bit longer. above 1650 and we have something going . above 1700 and its game on. below 1550 and retesting the lows comes into focus. more time . i am not in the hyperinflation camp. but, as of right here. i see stagflation much like the 70s . grains look very strong= higher food prices. dharma

[dharma]

folks we are in a bull market in the pms. i dont know if we have bottomed or not sentiment is @extremes. and yet after a year consolidation in a bull market. the consensus of analysts has a bearish view this is what leads me to believe phase 2 of the bull is ending volatility and markup lies dead ahead dharma, is the correction over? is that what you are saying? no, it is not . i dont know if the correction is over or not. but what i am saying is sentiment is again @an extreme. analysts are bearish to an extreme. this is what leads me to the view phase 3 is dead ahead this is the backdrop that is necessary to kick this phase off. sure gold could drop to low 1400s ,but the potential for upside appreciation is much greater. we are close here. sentiment is supporting this view . along w/ the lows holding since dec. dharma

[dharma]

i dont know what everyone/anyone is watching folks have gone deep inside their bunkers and cut off communication. me, i see 3 california municipalities declaring bankruptcy in the last month. the fed buying bonds. and everything appearing to be normal. the euro seeking fair value. and the sovereigns awash in debt. we live in a world dominated by keynesian economists. its not a mystery to me how this plays out. sentiment gets more and more negative. you gotta love it. bull markets dont end w/a whimper, they end w/everyone wanting in. and here we have advisors getting short! sure there could be an event that sends the pms on the skids. i dont know. but the lows are continuing to hold w/the advisor community getting more and more negative and genius 'proclaiming gold doesnt pay a dividend. well guess what neither does anything else. i dont know when , but soon phase 3. confidence is hitting the skids on the economy. dharma jag shandong had offered jag 9.65 a share in a takeover. the board of jag fumbled. their largest share holder called for and ousted 3 board members. the share price is .76 sure seems like a deal to me. do your own dd.

Edited by dharma, 12 July 2012 - 11:30 AM.

[johngeorge]

dharma I am in your camp..........watchful waiting. As you have often mentioned of late the fundamentals could not be getting better. Gold looks shinier and shinier to me with each passing day. My portfolio has been hit, but, hanging in there. (At least my water treatment business has been busy ) The future is so very bright for the yellow metal. Thanks for the update on jag. Best to you.

[dharma]

again they tried to break gold. again they tried to break 1550=it held. sentiment is quite negative. analysts advise their clients to short. and again the market holds support. and now it is positive on the day. the climate is right for a good rally and maybe the bottom. the one caveat in this environment is an unforeseen event another lehman, but this time w/a sovereign. i am cautiously optimistic. every one has forgotten we have rising prices for a decade in the pms. bull markets dont end w/a whimper. the grains were under accumulation before the weather man pronounced the drought official. crude oil has an inverse h&s pattern in spite of the obvious lack of demand . then you have gold which has been money for 5k years, w/zero interest rate policy , falling against the dollar. against the euro and cando, it is slightly up. pay attention folks. seasonal weakness is heading into the rear view mirror. stay alert. i sit w/some cash in the even there is an unforeseen event dharma

Edited by dharma, 12 July 2012 - 02:55 PM.

[dharma]

well 1550 held again. now we try upside resistance. caught in a range until we break one way or the other. w/a backdrop of higher food stuffs. and energy putting in a bottoming pattern, it appears that the upside is the path of least resistance. we shall see. it also appears interest has waned in the sector. dharma

[johngeorge]

Yes, I see they turned gold back @ ~1596 this am. 1600 being a nice round number could easily be resistance for the time being. IMO we need to break above a minimum of 1650 to really get gold rocking again, however, 1700 could easily be the likely point. Will know in the fulness of time. Thanks dharma, as always, for your comments and dedication to helping bring useful insights to those of us on this board. Best to you

[stubaby]

Always a "must read" for me this week's article by Doug Noland (formerly Credit Bubble Bulletin) entitled "Game Theory and Crowded Trades":

I would today argue there is a momentous unappreciated cost to central bankers' "reallocations" and "incentive distortions:" they've nurtured one massive, and now hopelessly unwieldy, "crowded trade" throughout global risk markets. And, as seasoned traders appreciate, once a trade becomes "crowded" the nature of how a trade - how a market - performs tends to turn highly unpredictable, erratic and, in the end, unsatisfying. Over time, fundamental developments are overshadowed by the brute force of market technicals. For example, "crowded" short positions will tend to "melt-up" into dramatic short squeezes before eventually collapsing. And crowded longs tend to turn highly speculative, yet inevitably susceptible to air-pockets and abrupt downdrafts. Locate a "crowded trade" and you've found a captivating place where it's easy to lose money. In general, crowded trades fuel speculation, unpredictability, and Bubble Dynamics - along with a lot of frustration and eventual disenchantment.

Global central bankers have ensured that way too much money now chases limited global risk asset market returns (contemporary prevailing inflation). With global short-term rates pushed near zero, hundreds of billions have flooded into more speculative instruments and ventures, certainly including the global hedge fund community. Not surprisingly, funds have struggled with performance. After a poor 2011, score of funds have crowded into similar trading strategies and are these days under intense pressure to make money. Many are desperate not to miss a tradable market trend, while at the same time suffering from an unusually low tolerance for losses. Funds, careers, businesses and dreams are at stake - and the "tape" shows it.

It's all created an extraordinarily mercurial backdrop. The game of seeking to extract speculative trading profits from "crowded trades," trend-following derivative trading strategies, and generally weak-handed participants has, itself, become one massive and dysfunctional crowded trade. "Crowded Trade Squared," a creature of prolonged policy interventions and incentive distortions, is a perilous predicament posing as a functioning marketplace. Meanwhile, the backdrop seems to ensure the type of "Roro" volatility that wears down managers, performance and investor confidence. This is the case for markets across the globe, in an era where market-based finance has never been as critical to global financial, economic and social stability. And that amounts to an incredible accumulating cost the "inflationists" will continue to disregard.

Entire article here:
Game Theory and Crowded Trades


stubaby

[dharma]

sentiment readings rival the lows in the gold market, yet gold is near 1600 an oz. as opposed to gold being below 300 an oz. i dont know if the lows are in or not . for an investor this is not the question. the market is being set up for a bottom/or the bottom is in. what is important is if the bottom is in sentiment will remain bearish , advisers will continue to recommend shorting as prices rise. this will be the kickoff for phase 3. the parameters in the gold market have been set. breakout above 1650. below 1550 and we test the lows. miners are cheap in relation to gold. could they get cheaper? always a possibility. i can and will wait. the bull is not finished dharma