33 replies to this topic

[SilentOne]

Anyone buying gold stocks here? I mean really buying or investing, not trading? Just curious. Everyone is touting $1000, $1050 gold etc, or this is just a 4th wave. cheers, john

[PrincelyM]

Anyone buying gold stocks here? I mean really buying or investing, not trading? Just curious. Everyone is touting $1000, $1050 gold etc, or this is just a 4th wave.

cheers,

john

John,

I am still a little short the miners. Not thinking of going long until 1st week of Dec but than can change. I think there is one more wave up left for the dollar which should put pressure on gold - one more wave down for Gold. Maybe 1110-1080.

Watching a triangle here on the dollar. Above 88 will confirm this. Below 87 and maybe thats it for now.

My 2 cents.

Your thoughts here?

Thanks,
PM

[SilentOne]

Hi PM, Steve Hochberg in the EW Theorist wrote the following this week. The 5-day Daily Sentiment Index figures for gold were at two extremes in the last several years. One at 96% bulls, a high at the Sept. 2011 top and 5% bulls, a low made last week when gold hit $1130. I think that pretty much looks like a low being made here. That 2011 high made in early Sept. was screaming a high, and yes most knew it to be a short term high. I was saying at the time that it was a very important high. Well guess what you are looking at now? The other part of that sentiment extreme story is the record short position for small spec traders (yeah they are always right - NOT) was at a 15 year extreme high last week. 15 years? You mean like 2000? On a volume look, GDX now needs to trade above Friday's closing high of 18.69. That would also coincide with a break of a downtrend line if it were to occur next week. I'm a buyer from here into next week. cheers, john

Edited by SilentOne, 12 November 2014 - 01:16 PM.

[dharma]

Hi PM,

Steve Hochberg in the EW Theorist wrote the following this week.

The 5-day Daily Sentiment Index figures for gold were at two extremes in the last several years. One at 96% bulls, a high at the Sept. 2011 top and 5% bulls, a low made last week when gold hit $1130. I think that pretty much looks like a low being made here.

That 2011 high made in early Sept. was screaming a high, and yes most knew it to be a short term high. I was saying at the time that it was a very important high. Well guess what you are looking at now?

The other part of that sentiment extreme story is the record short position for small spec traders (yeah they are always right - NOT) was at a 15 year extreme high last week. 15 years? You mean like 2000?

On a volume look, GDX now needs to trade above Friday's closing high of 18.69. That would also coincide with a break of a downtrend line if it were to occur next week.

I'm a buyer from here into next week.

cheers,

john

hi john,its been awhile. interesting information. i too thought 11 was a high, but short term. i did not envision this dragging out for 3+years. yes sentiment is @extremes . i do think we are in a bottoming process. i have 1080 coming up several ways. it is also 3x360 . but, i am waiting for the market to let me know. all of the previous extreme bottoms , the miners did not follow the metals down to new lows.
dharma

[PrincelyM]

John, Thanks for your thoughts. I have always found them valuable. Best, PM

[SilentOne]

hi john,its been awhile. interesting information. i too thought 11 was a high, but short term. i did not envision this dragging out for 3+years. yes sentiment is @extremes . i do think we are in a bottoming process. i have 1080 coming up several ways. it is also 3x360 . but, i am waiting for the market to let me know. all of the previous extreme bottoms , the miners did not follow the metals down to new lows.
dharma

Hi dharma,

Yes it has been a while. Something to keep in mind. We are making 16 year cycle lows in the miners. JMHOC.

What is likely to play out is that if we see the 1085 level (50% retracement of entire 2000 - 2011 bull) that might only happen next year. This would be much like the lows made in late 2000 (low for miners) and 2001 when gold double bottomed near $255.

cheers,

john

[johngeorge]

Good to see you here John It has been too long. Then again I believe you are a long term player and an excellent one at that. I bought miners last week for a longer term hold. Will add to them in the coming 30 days or so. I see gold regaining strength soon and heading to the 1300's by March-April time frame next year. Will be looking to sell around then and buy back next fall. Of course that can change, but, that is how I see it now. Come back and visit us soon. Best to you

[mss]

Anyone buying gold stocks here? I mean really buying or investing, not trading? Just curious. Everyone is touting $1000, $1050 gold etc, or this is just a 4th wave.

cheers,

john

I kept a small section all the way down, added some on the first return up and waiting for the next return to finish or break a few trend lines.

One might reference my charts above.

Waiting,
mss

[Rogerdodger]

I'm long the dollar...well... but never long enough.
But I have been trading NUGT vst.
It's a bull/bear war right now with the dollar being the trump card.
Gary Wagner observes:

The seesaw will continue to swing up and down, but as we've said, short of something major in the Ukraine or Middle East, gold has no legs to take it higher. Boiled down, the stronger the U.S. economy, the weaker will gold be. If China begins to really hum again or if Europe picks up (not a good bet), then gold will fall even further. Germany expects its growth next year to be around 1%.

PS Scott: I'm glad to see you still lurking.
I thought you might be the newest member here: zippy

Edited by Rogerdodger, 12 November 2014 - 10:58 PM.

[SilentOne]

More on sentiment.

Saw this article. The one thing I would say is that the prospects for equities are not likely to be quite what is laid out in this piece.

http://www.marketwat...;dist=bigcharts

WRT commodties the part I really like from a sentiment point of view is this:

Can anyone seriously believe this isn’t a long-term bear?

I cut and pasted it here so it is a reference for the future. These things have a habit of disappearing. Anyway, great read from a sentiment point of view.

cheers,

john

Oil, other commodities will be in the dumps for another decade
By Howard Gold
Published: Nov 13, 2014 9:13 a.m. ET

The ‘supercycle’ that drove commodities higher has now reversed

Remember the commodities supercycle, that seemingly endless 2000s commodities boom? It drove oil, gold, copper and other commodities to record levels.

The supercycle was driven by exploding demand from China and other emerging countries, supply bottlenecks caused by years of not developing wells and mines, and rock-bottom interest rates that inflated demand for hard assets all around the world.

But now gold, oil and other commodities are well off their peaks, so far off, in fact, and for so long that they can only be described as in a supercycle in reverse, or a secular bear market.

If that’s true — and I’m pretty sure it is — investors who piled in to commodities are in for a bruising decade ahead unless they take profits or cut their losses.

By 2025, we’re going to look back and say, wow, what a great period in U.S. equities.’
Shawn Driscoll, T. Rowe Price New Era fund

Meanwhile, stocks, which run counter to commodities, may well go much higher, along with the U.S. dollar.

“We believe that we are in the initial years of a secular down cycle in commodities,” wrote Shawn Driscoll, manager of the natural resource-focused T. Rowe Price New Era Fund PRNEX, -0.71% in the fund’s most recent semiannual report.

“Commodity cycles are very long on the way up and the way down,” he told me in a phone interview. They last around 13 to 15 years, because it takes that long for fundamentals of supply and demand to go to extremes.

When the most recent supercycle began in 1998, Driscoll said, commodities prices had plummeted, so producers shuttered old mines and wells and hadn’t opened new ones in a while.

But when demand revived, it took years for producers to catch up. Ultimately, companies built too much capacity just in time for the next peak.

Rivals outgun Bill Gross in race for bond cash(3:02)
Since Bill Gross joined Janus Capital, his new fund has attracted about $430 million in new money, or less than 1% of the $50 billion that has left his old fund at Pimco in the past two months. Colin Barr joins MoneyBeat. Photo: Getty.

That’s where we are now, he said. The previous commodities bull market started in 1968, just when the 1960s go-go bull market in stocks faltered, and ended in 1981 when gold surged above $800 an ounce.

The current commodities supercycle ran from 1998 through 2011, said Driscoll — the same length as the last one. “We think of the peak in the commodities supercycle as roughly early April 2011,” he told me.

That’s when copper topped $4.40 a pound; it’s barely above $3 now, a drop of more than 30%. Gold, which peaked around $1,900 an ounce that year, changed hands near $1,150 on Monday, almost 40% off its high.

And Brent crude oil, trading just above $80 a barrel, is more than 40% below its July 2008 record high of $146.

Can anyone seriously believe this isn’t a long-term bear?

The supercycle coincided with China’s hypergrowth before and after the 2008 Beijing Olympics, when it scoured the globe for materials to build a gleaming modern infrastructure. China’s iron ore consumption rose by 14% a year throughout the 2000s.

China’s boom also lifted commodity-producing countries and their currencies. The Federal Reserve’s ultra-low interest rates fueled the blow-off phase of the U.S. housing bubble and led investors to scour the globe for higher returns.

The financial crisis and Great Recession ended that. As governments bailed out the financial system, hard-money conservatives warned that the Fed and other central banks would eventually have to monetize the accumulated debt, leading to hyperinflation. So gold became an alternative to unstable “fiat” currencies.

Yet none of that has happened. Europe and Japan are desperate to avoid deflation and the U.S. has had a mild recovery with none of the wage growth of previous rebounds. Commodities, said Driscoll, outperform during periods of accelerating growth and heightened inflation.

“However, global growth is currently modest, supply is accelerating, and inflation is tame,” he wrote. China’s GDP growth has dropped sharply, and it’s switching from an infrastructure-based to a consumption-driven economy.

But commodities producers built up massive capacity during the boom. Exhibit A: the U.S., whose shale-oil production has added 3 million barrels a day to the world’s output.

How low can prices go? Driscoll says oil may bottom out around $50 a barrel over the next 10 years, and gold at about $800. That’s more than three times the yellow metal’s lowest price from 1999 and around its peak in the previous supercycle.

There may be some tradable rallies, but they’re not for the faint of heart. “We think we’re in year four” of the secular bear, said Driscoll. He expects it to last another decade.

U.S. investors have responded by pulling more than $30 billion out of the SPDR Gold Shares GLD, +0.19% and iShares Gold Trust IAU, +0.27% ETFs since January 2013, according to ETF.com.

Meanwhile, Mr. Commodities himself, Jim Rogers, wrote: “Historically, there has been a negative correlation between the price movement of stocks and commodities.” (Rogers is still calling this “a normal correction.” Really, Jim? After 30%-plus losses and 3 ½ years?)

Driscoll, however, thinks commodities’ eclipse is good news for U.S. stocks, as it was in 1982, when the great bull market began. “By 2025, we’re going to look back and say, wow, what a great period in U.S. equities,” he told me.

If you’ve lost money in commodities for the past 3 ½ years, you could do a Rip Van Winkle and tune out for a decade or so, or you can pretend you’ve been right all along.

I have small ETF positions in gold, energy and the Australian dollar. I may sell some or all of them in the days ahead. You should think about it too.

Howard R. Gold is a MarketWatch columnist and founder and editor of GoldenEgg Investing, which offers free market commentary and simple, low-cost, low-risk retirement investing plans. Follow him on Twitter @howardrgold.