Sunday pre-game, 10/14

Good evening, friends. I've been too busy to trade lately, but I have some charts for you nonetheless. My guess is an all-time high in gold is a few months away, based (among other reasons) on the chart below.
The red bar marks the time to the low point of the correction. The red+green together represent how long it took for a new all-time high after the biggest correction thus far (2008).

The gold-in-euros chart is the main reason I don't think things will get too ugly, and it's why I haven't been taking any short positions for awhile now (other than day trades).

On the other hand, a drop all the way to the 144-day MA, which would be around $1650, would not surprise me, seeing as we've been unable to re-enter the channel.

 But, even a drop back to the 21-month MA (green, dotted) would be no big deal. That's approaching $1650 too.
 Silver may drop to the 34- or 55-week moving averages. I would actually be happy to see tests of support like these.

 In the mean time, we should try to enjoy "જીવન માં ફાઇનર વસ્તુઓ," which means "the finer things in life" in Gujarati. Or, as the famous Bengali injunction goes: રોકવા અને ગુલાબ દુર્ગંધ ("stop and smell the roses"). What good is money when our immortal souls are on the line?

Ok, perhaps, dear reader, you've noted a change in my attitude, and perhaps I owe you an explanation.

You see, I visited the erudite trader Jesse at Cafe Americain yesterday:

 I've always admired his one-of-a-kind charts, and finally I got a first hand glimpse at the "feng shui" that serves to inspire the "deurmekaar duidelikheid" of his technical analysis. Loosely translated from Afrikaans, that's "cluttered clarity."
He also fed me a little French cuisine, made from the simplest of ingredients he picked up around his house:

All in all, a wonderful time was had, and a spiritually bracing one as well. Most importantly, I learned the categorical imperative of trading: never sell a stock at a price you wouldn't want someone to sell right back to you. I'm hoping this secret wisdom will make me even richer.

And with that, God bless you. Till next time.


sunnyview said...

The Commercial positions on Gold and Silver COTs would say otherwise. The timing at which commercials are stacked against gold and silver is at a time that the overall markets have peaked. This means high correlation risk. Based on this, gold is headed for a hard landing along with everything else. The beneficiaries? Maybe a final parabolic top in Bonds? Heck, I don't know. It's going to be a wild ride for the next year or two.

Tony said...

I've been a fan and follower of screwtape for some time. However, I'm done here, GM. That pinkie donut left me in a fit of convulsions. Loved the charts though :)

sunnyview said...

Just curious, are you guys a bunch a gold bug perma-bulls?

GM Jenkins said...

Though your palate is unrefined and your taste alarmingly provincial, I'm sorry to see you go, Tony.

@sunnyview: I don't think the gold bull is over, if that's what you're asking.

Anonymous said...

@Sunnyview: very good question. Actually, I might write a post about this soon, if I have time.

There are five of us, and our opinions rarely converge. For my part, I'm not a perma anything. Sometimes I'm bullish, sometimes bearish. And that counts for short, medium and long term assessments.

I change my view according to the charts, the fundamentals, sentiment and events.

Currently I own no gold or silver products. I am still short silver, but with a solid covering stop to lock in profits.

I am neutral about the future of gold. I reject almost all of the analysis on the goldogosphere about gold benefitting from currency devaluation, not least because there are many better ways to profit from such a state of affairs than buying gold. I have made way more money recently going long resource stocks than I have going long gold. VED/KAZ (FTSE) both often move 5% in a day on good news (cf. gold's 1%), and I've found positioning myself for those trades more profitable and far less stressful than worrying about the price of gold.

Will the dollar stop being a currency at some point? Yes. WIll it happen in my lifetime? Doubtful. Would gold be the natural substitute? Very doubtful. Can I profit more by trading resource stocks and putting the money in (currently) cheap land and housing? Absolutely.

PMs: Short term: bearish. Medium term: bullish. Long term: bearish.

Warren? Louis? Larry?

Warren James said...

I am bearish on silver stories having any fact behind them, and bullish on the ability for government to tax families into the dirt instead of making real change.

But I watch the gold chart with intense interest, seeing the situation is far from normal. I personally think that gold will continue to climb, so I guess that does classify me as a perma gold bull. ;p

mr pinnion said...

Blinking blimey JDA!
You slag off gold hoarders for being greedy, and you choose to store your wealth in land and housing?

It s people like you , and there s a lot about, that drive the price of land and housing up beond the reach of working class peasants like me.
You buy houses and land that you ll never live in/on, and to hell with the mess it makes of the economy (house price bubbles).
If you and your ilk were as 'greedy' as the gold horders,and stored your wealth in gold i might be able to afford a house.
Living without being able to afford (large amoumts) of gold would not affect me in the slightest.


Louis Cypher said...

It's unfortunate that due to depreciating currency etc we are forced into "investing" at all. I'm still avoiding land etc as I am still bearish on it and I think it will get cheaper. Govt's local and on high are still looking to get more cash and housing is so easy to tax.
I'm staying long physical Gold and Silver right now until I see a reason not to.
@Mr. Pinnion you have a right to your opinion but I think you should be placing the blame on the people who pull the strings. What JDA is describing is accepting the effects and rolling with. That doesn't mean the causes are acceptable. Non participation by "speculators" may make housing cheaper but that would have an even more disastrous effect on the whole economy and no one would have jobs to buy a house. Unless of course we are talking about swapping DVD players for a house in Detroit.

mr pinnion said...

Hi Louis
Yes i was simplistic, but i think JDA was as well.
However we choose to increase our wealth , speculating or buying gold, chances are if we're successful, then there s some poor bugger loosing out somewhere along the line.
In a normal world , speculating is all well and good.
In a financial system that is as corrupt and lawless as this one, speculating is not so good.
All that printed money flooding into places it shouldnt.Propping up bankrupt banks and businesses.
Misallocation of (savers/taxpayers)wealth on an epic scale.
Investing/speculating nowerdays ,is just trying to predict which bankrupt ballbag of a buisiness the Gov. is going to prop up next and to try and misallocate your small piece of wealth in it first.

The financial system is a broken sewer.
I have chosen to withdraw my tiny piece of wealth from the system by buying gold.
If JDA wants to roll with it/in it, that s fine with me.
Just don t try and throw shit at people like me who prefare to sit on the side lines.
And dont complain when all your paper wealth gets flushed with the rest of the crap. ;)


Anonymous said...

Ozzy: Wow, this has all gone a bit wrong. I think there's misunderstandings on about a million levels here. I'm not sure where to begin, but I'll try...

First, please disabuse yourself of the notion that I'm some kind of buy-to-let, slum housing, landlord blood sucker. I actually own the proud sum of 0 houses and 0 hectares of land. I move around way too much for that kind of thing.

I was being hypothetical: in much the same way as I was putting out there the idea that if gold moves, say, X% due to currency devaluation, then we should not dismiss the thought that resource stocks could move 5X% (or whatever). I think the same argument could hold for housing, or land, but I could equally have chosen a dozen other things.

As it happens, the whole point of my trading is to buy a (one) house, in the countryside, in France, without a mortgage (thus escaping from the system) and spend the rest of my life developing my twin hobbies of emerging alcoholism and cross-stitch (in that order). I have no more desire to own more than one house than I have a desire to own more than one car or more than one of GM's dwarf urchin flautists.

You're a long-time commenter on Screwtape, so I know you're aware that I have generally always kept some of my money in gold. When it was at $1,530 I was even going on to TFM to persuade people to fill their boots up! I don't own any gold products at the moment as it happens (being bearish is not a crime), but that's an anomaly, and I'm sure it'll change back soon. So surely that thought flickered through your mind when you thought I was criticising all gold buyers in my "Greed as Gold" article?

So, in summary, I've often bought gold, and never bought housing. That makes us pretty much on the same page, I guess (at least in terms of additional housing)?

I've only regretted one article I've put up on Screwtape, and that's the Greed as Gold one. Not because I disagree with it now: I absolutely don't. No, it's because it was just fundamentally misunderstood by virtually everyone. I have to hold myself responsible for that (if almost everyone interpreted it in a way that was not intended, then that's clearly the author's fault for poor expression). I still hold out hope that someone will see the subtleties of it, and join the dots, and see what it is I'm trying to say. Warren came pretty close.

I'm aware that's pretentious, but c'est la vie. But it's certainly not something worth falling out over.

Anonymous said...

@Louis: You could be right on housing/land. Although I'm looking at it from a Europe point of view rather than a North America point of view. I'm no expert, but I think you're probably right about North American housing and land. For Europe, I reckon another year or two will do it before we start moving higher again. It all comes down to overwhelming population pressure.

Warren James said...

I am getting quite interested in the definition of what has gone wrong with the financial system. If one views money as largely social contract, then the distortion is closer than we think, we just need a better way of defining the fraud.

If any amnesty is on offer, I admit to (in the past) very briefly holding an investment properly with an interest-only loan. That was prior to getting reading FOFOA and really understanding monetary principals; as soon as I realized why it was several levels of wrong, risky and stupid, stopped that as quick as possible.

But I suppose it highlights part of the problem - an entire generation has been trained in a specific mindset and it's embedded deeply in the culture - and encouraged, aided and abetted by the people running the show. What a mess.

Louis Cypher said...

@JDA I hope they keep those French properties safe from property taxes as nothing else seems safe from the taxman in France.

I haven't listed to this yet but NPR are getting into a discussion on Mortgage Interest Rate deductions and whether they will go away. Industry pundits involved.... listener beware.

If they do away with it the REIT's are toast. Most of them operate on the principle of holding a property only as long as they can deduct interest and depreciation. Most middle class homeowners depend on that deduction to bring their taxation at a federal level to a reasonable (?) level and keep their head above water. Even a minor adjustment would have serious repercussions. Uncertainty alone is enough to keep some people away from the biggest investment in their lives even though the Realtors tell us month after month we have bottomed. One of these days they might be right.

mr pinnion said...

Fall out over? Hell no.I hope not.
I m a big fan of the style and content of this site.
Rereading my last post ,it did sound a bit on the angry side, which was not my intention.I was just pointing out what i thought at the time were double standards in you view; with a few crap analogys thrown in.
Anyway, you do right not owning one of GMs DUFs.There a lot of fakes out there.Buyer beware!