Sunday, October 3, 2010


Most people have a lot of trouble buying anything when it's in an overbought condition (they have trouble buying when it's oversold too). Unfortunately virtually every breakout occurs from overbought levels. This is especially true during a powerful C-wave advance.

Take a look at the last two C-waves and the first leg up in the current C-wave.
You can see that each one of these powerful rallies when it broke out of the trading range had already reached overbought levels. Then it stayed overbought for most of the rest of the rally.
If you didn't buy the breakout you missed a huge portion of the C-wave as no corrective move retraced back to the breakout point.
One of the biggest mistakes investors and traders make is using oscillators after a breakout has occurred. Oscillators are great tools if an asset is in a trading range. Once that trading range gets broken though one has to throw out their oscillators as they will cause you to miss huge portions if not all of the move.
Now let me remind everyone that Bernanke clearly stated he would print money if the economy didn't improve. We know there is no way the economy can improve because we still don't have the next "new" industry to drive job creation.
Folks this one is a no brainer. The Fed is going to print. That is going to cause asset inflation. The dollar is going to drop down into a yearly and three year cycle low. And the market is going to make Bernanke pay for his insane monetary policy with at least a mini-currency crisis in the dollar by next spring. And ultimately it is going to cause general inflation in all prices with the possible exception of real estate.
Gold is likely now in a runaway move higher. Smart money is using any and all pullbacks to get in ahead of the inflationary storm that's coming. We saw it in the action yesterday. Gold briefly traded down to the $1300 level and miners briefly tagged 500. Buying pressure immediately came in at those levels.

I think there is a very strong possibility that the miners are never going to see sub 500 again for the duration of this bull market. And even if they do it will be only briefly. As a matter of fact, The miners are on the cusp of a historic event which I have been discussing at length in the last several premium updates.


  1. "there is a very strong possibility that the miners are never going to see sub 500 again for the duration of this bull market"

    I wish it too...but looking a "jin" "egu" "osk" "er" "cg" "ngx" .... Mhhhh.... I doubt on it... this stocks are overbought... they need a big correction...
    let's see how they'll whork in the nexts mounts...

    ...I follow the austrian economy school and canadian markets since 8 years.. so don't worry..I'm a friend... :-)

  2. As I pointed out in the article all breakouts occur at overbought levels. Waiting for a correction simply because the market is overbought will just cause one to miss the entire move.

    Now certainly we will see minor pullbacks during any rally but waiting for a "big correction" will probably not occur until gold is much higher.

    The intermediate cycle still has likely 8-12 weeks still to rally before we can expect a signifcant correction.

    The same for the dollar which is driving this move in gold. The dollar cycle still has 2 months before it is due for an intermediate bottom.

    My best guess is wee see a test of 71 on the dollar index before any kind of sustained bounce.

    Until that happens there's little chance of gold correcting significantly.

  3. ...I've appreciate a lot your article...really perfect as always..

    many thanks...

  4. ...sorry intenction is not to create noise...
    ...what this stoks has since now miss is a consolidation on the high levels reached since today and this will give space at what you predict

    see also "atc" "eas"....

    again, many thanks...

  5. Alessio.... Think about how long the miners haven't broken out. This move is well overdue. The market is still very reluctant to buy these shares and is very cautious about them. This will be great for us. What do you think about this Toby? Do you also subscribe to the belief that these shares have been deliberately suppressed along with the metals? I do. I think the planners/cartel are losing control of their suppression efforts. By the way.... What happened to the blog earlier here today?

  6. I know the cartel comspiracy makes interesting reading but it really is pure nonsense.

    Gold is just doing what bull markets do. It's climbing a wall of worry interspersed with vicious corrections that are just par for the course in bull markets, but can easily be misinterpreted as manipulation.

    This is just how all bull markets behave. There isn't anything mysterious about it.

  7. If I may add to the 2003 mining stock run and 2005 ( or was it 2006?) this 'no big correction' did happen. I was trading then , and stocks ran up...then moved sideways (not down) they bounced off their 20ma repeatedly, then occasionally down to the 50ma, but a sideways move first got the 50 sma closer to the higher price.

    Pullbacks were mostly intra-day, and I sold when I thought i should, but had trouble getting back in. Toby is correct...everytime I sold, i bought back in after a sideways move of maybe a week or two...& almost at the same price!

    Today see in U.S. makt stocks like HL and sell and they stay the same price sideways so far,then break out soon. Old Turkey trading will pay off. -Robert /Alex

  8. Toby...are you thinking Sept 28 was a daily cycle low for Gold-read as a measured correction and restarting the count as day one?? I know your focus is on the Dollars low coming up,and maybe cycle count can be tossed aside on a run away move... but just wanted your opinion on that. thanks

  9. There are two possibilities. Either Aug. 24th was the daily cycle low and gold is now in a stretched cycle or Sept. 10th was the cycle low and the last cycle was stretched.

    One can count it either way but like you said the only cycle that is significant right now is the dollar cycle as it seems to be dominating all other cycles.

  10. Toby,

    I wrote recently about needing to be careful about using oscillators after breakouts

  11. Oh I remember the good ole days in June-July when certain Hecklers used to tell you to put your HELMET on and get ready for the crash! Called you crazy because they were so negative sentiment blinded that all they shouted was 'deflation will eat your Gold'.
    HMMM , pretty quiet when they re eating crow, aye??

    Seriously, NICE CALLS in July about the MKT turning, cycles and sentiment , and a possible retest of Mays highs.---Robert/Alex


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