Wednesday, October 26, 2011


In my last post I hypothesized that the bear market in stocks had finally sunk its teeth into the precious metals sector. I was looking for a final move down into a true D-wave bottom, coupled with the HUI dropping down to test the 200 week moving average. I could not have been more wrong!

Instead gold formed a double bottom at $1600 and yesterday confirmed a trend change to a pattern of higher highs and higher lows.

As is usually the case the miners played follow the leader and reversed their downtrend also.

It is now clear that gold put in an intermediate degree bottom on September 26. The double bottom is a much stronger basing pattern then a V-shaped rebound and should launch a test of the $2000 level at some point during this intermediate cycle.


  1. gold has rebounded because the market mistakenly believes that the Europeans have forestalled their problems. Once it is clear that they have not, then there will be a flight back to the USD.

    The question is, how long that will take. Until the realization that they have fixed nothing, gold could have a good rise.

  2. Gold has rebounded because the dollar is as bad as the Euro if not worse. The dynamic has changed and as the Euro looked as if it was going to implode this time the smart money was not running to the dollar as evidenced by the slide in the dollar over the last few weeks. Instead I would contend that the dollar is also in question because during this euro theater gold not only held its own but advanced. The question more aptly asked would be how long before the masses realize that all the fiat currencies are suspect at best? Now that the CDS market and general markets are "stabilized" by the EU solution attention will turn to the dollar as the same forces that pummeled the euro will now take their turn with the dollar. As for gold nothing goes up in a straight line and the correction we saw in my opinion was uncorrelated with the events in the EU instead it needed a breather. Essentially nothing has changed and gold along with the red headed bastard step child silver will continue to march higher over time with set backs along the way.

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  4. That's why you should not try to front-run the market. Don't try to guess whats going to happen. Just wait and see what actually DOES happen and respond accordingly. You always have to account for SURPRISE in your analysis. The gold and silver dollar value remains in play.

  5. I never never never short a bull market. So even if I expected a continuation into a D-wave decline I would never put capital at risk on that expectation.

    I learned a long long time ago that in bull markets the surprises come to the upside.

    We went long the precious metals sector Tuesday morning.

  6. BTW if one waits until they feel comfortable with the move then you are almost always at a short-term top and will experience an immediate draw down.

    While it sounds smart to say wait and see what happens, the reality is that waiting will usually cause the retail trader to experience a draw down which they usually end up selling for a loss. This is how retail traders lose money in a bull market.

  7. If you guys stop trying to time the PM's and just save your cash to buy more on weekness you'll never be surprised....and you'll always be ahead of the game.

  8. Is it true if the dollar goes below 75, its in danger? I read that somewhere. Its 75 now as I write.

  9. looking for some would like some opinions about my portfolio guys:

    anglogold ashanti
    m.vectors gold
    m.vectors JR

    smaller holdings in
    great basin
    allied nevada
    harmony gold
    alamos gold

  10. forgot SLW, but small holding
    RGLD any good?

  11. Just hold on to your PM's and ignore charts, cycles, guru's, experts etc.

    It's that simple actually.
    And you don't even need an subscription

  12. SLV,RGLD,and GOLD should be in the portfiolo for the PM' believers.

    GDX is a more stable play which included most senior gold stocks, to own this ETF only could be avoided the ugly case such like AEM has had happened last week.

    GDXJ is a much safe play compare with if you owns 10 junior gold stocks.

    AEM is reported earnings this morning, they said the production this year will be 1.01 million ounces, which is only 0.06 million ounces short compare with their previous estimate, but AEM stock price is cut the half already, this stock should be bottomed if the gold price would be stabled above $1700 per ounce.

  13. Buy and hold and buy more on corrctions...thats it...the gold story isn't going away anytime soon. When the G20 nations no longer carry debt, and are not monetizing debt, then you can sell your gold! We have a long ways to go.

    This timing nonsense won't pay off in the long run...Look at what happened to most of the poeple on this blog holding AGQ in May 2011!

    If you think your smart enough to time the PM markets then just buy puts to hedge your PM holdings...the puts are cheap and if you guess wrong the rise in the underlying metal will cover the option premium!

    I personally think you have too many stocks in your portfolio. Why not go with GDX, GDXJ and maybe 2 stocks like SLW & RGLD? Keep it simple in case you need to dump them in a hurry.

    FYI - My buy and hold strategy is for GLD...the miner stocks will not always move in tandem with the metals.

  14. mmm i hear some thoughts about gold that it is actually more volatile and stock will outperform gold in the mid-long run.
    the thinking behind the amount of stocks i have is to minimize risk. most of them (especially the bigger onces) basically go with the HUI and of course gold itself.
    if i would spread only to 4-5 stocks, a big 20-50% loss like AEM can have a huge impact, dont you think?

  15. Perhaps, but doesn't owning GDX and GDXJ cover all those stocks you mentioned?

  16. The suggestion is to own GDX and GDXJ as a stable play compare with a single gold stock may fell down 20% just in one day.

    RGLD,SLW,GOLD are the best performers so far this year, you can buy those three stocks or not depends on your personal analysis.

    SLV is a ETF, silver price should be out-performanced GLD in the next 1-2 years.

  17. So so finally see someone admit when they make a wrong call. I get so sick and tired of seeing over and over the so called financial gurus pontificating their RIGHT calls on the market. If the technicals change Toby changed, and he didn't go into hiding for two months. Good for you Toby make me consider subscribing to your service.

  18. I agree. Make a call and it's wrong, get over it and regroup. I can appreciate that. When's your next 15 month special offer? I still need to save every penny I can. Thanks!

  19. There is one fact and one fact only. Every soothsayer who told me I was nuts buying gold 10 years ago is now a genius gold guru.

    All the while they lost their shirts on netflix, and every other scam.

    You need to stop timing the market like tech stocks and simply wait for CNBC to say that the only investment left is gold.

    On that day sell your entire portfolio to cash and wait for 1 year.

    On that anniversary sell your cash to the next bull.

    50 years and counting. Never bought a top yet and always bought a bottom.

    Like Natural gas stocks on Tuesday this week. You all missed that one.

    Stop listening to people who talk their book. Every guru around talks their book. This Toby guy talked his short which probably wiped half of you out.

    fish never learn

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  21. Fish,
    As usual you have no idea what you're talking about. I have never suggested shortening a bull market.

    As a matter of fact I've probably said it 1000 times if I said it once.

    Rule #1 never, never, never, never, never short a bull market.

    The model portfolio is up over 20% just since July, during one of the toughest markets in history. And that is with zero draw down, zero leverage, very little risk, and never investing more than 75% of capital.

    I think I can safely say that the SMT newsletter is the single best investment newsletter in the world and has been for the last two or three years.

  22. Y2JPD said...

    "If you guys stop trying to time the PM's and just save your cash to buy more on weakness you'll never be surprised....and you'll always be ahead of the game."

    The problem is that most retail investors cannot hang on through an intermediate decline. They end up selling at the bottom. I try to get people out ahead of those hard corrections and back in close to the bottom.

    That is exactly what I did during the recent sell off. We took profits and avoided the large draw down and re-entered a day and a half after the final bottom.

    This isn't a perfect strategy because it is virtually impossible to pick an exact top, but I can usually get pretty close on bottoms.

    All in all subscribers almost always avoided large draw downs and are able to continue riding the bull market.


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