Oldtent Archives 2010

are looking weak now in after market. good follow through tomorrow would be bearish.

rno

I want the best ever link to music - youtube or whatever.

A challenge.

aurum

Where is my mind tonight? I should have also posted on this UCO stuff that even if we are where I think we are - we will revisit this area in the future with the correction of IMO the first wave up. And that is another buy point - perhaps better depending on your time frame.

At parties all this stuff is in my mind - so why sometimes I seem to be in another world.

aurum (UCO)

Friday, February 26, 2010

Gold Stock Fractal Dreamin’ - On the Threshold

Looking for repetitive patterns, or fractals, in markets is something I enjoy. I know I need another hobby, but knowing what’s happened in the past and what is possible based on historical precedents can help one to make speculative decisions and anticipate future movements. Sometimes it works, sometimes it doesn’t…

I still think we are in for a VERY strong move in Gold mining stocks to the upside. I still believe a valid construct for analyzing what may come next is the 2001-2002 time frame. If so, we are on the threshold of that big move I am dreaming of as someone who is all in on both Gold and Gold stocks at this point (as well as a little silver and some silver miner exposure). Now hope don’t make it so and isn’t a very good investment strategy, to be sure. But the fundamentals are there and are as strong as they have been during this entire secular bull market based on the “real” price of Gold (i.e. Gold price divided by a basket of commodities).

Anyhoo, here’s an 11 year weekly log scale chart of the $HUI Gold mining index divided by the price of Gold ($HUI:$GOLD) to show where I think we are:

I know it’s a busy chart with too many marks on it and keep in mind that I am only a casual tinkerer when it comes to labeling price movements using Elliott Wave theory, but the implications are important if they are correct. Remember that the $HUI is an unhedged Gold stock index and it underperformed the price of Gold for FIVE YEARS before the capitulation lows in the $HUI:$GOLD ratio during the Great Fall Panic of 2008. After a 5 year bear market in the $HUI:$GOLD ratio, we are highly unlikely to see Gold stocks continue to underperform after only a one year bull market in this ratio. The real price of Gold tells us that the profitability of Gold miners is there on an operating margin basis. Though not all Gold miners will be in a position to cash in on this new margin expansion, others will and the sector as a whole should be set to benefit in a big way.

It is also important to remember that this stage of the Gold bull market, which has shifted from stealth to middle stage, will have even more power behind it. When big institutional money moves in (e.g., Soros, Paulson, Tudor Jones, Einhorn, Northwestern Mutual Life, China, India), this is bullish. It doesn’t mean the trade is too crowded, it means the bull market is about to become easier to ride. And who will all these big investors sell to? They will sell to the public and the Gold permabulls, but not until the price of their investments is much higher than it is now. Do you really believe that Soros and Paulson are doubling down on their bullish bets at the exact top?

Only when there is widespread public participation can a mania or bubble occur. Think internet or housing bubbles. Selling your Gold jewelry at 20 cents on the dollar to pay the rent ain’t a sign of a bubble, it is a sign that people are broke and desperate.

And don’t forget that the final stage of a bubble can last for a year or more and entails a dramatic vertical spike of greater than 50% that dwarfs previous phases/up moves of the preceding bull market before the bubble pops. In other words, the 20% gain last fall in the Gold price is not even close to constituting a bubble dynamic in our “modern,” unrestrained, fiat, debt-based monetary system. In the last secular Gold bull market, the final Gold price spike was 300% or so higher in ONE year (and silver was around 700%!!!). Now I understand that this cannot possibly happen again according to “experts” who told us Gold would never break out over $1000/oz. and now that it did the Gold price is about to collapse any second, but why would anyone care what these experts have to say?

I remain wildly bullish on all things precious and metal and think we are getting awfully close to a powerful breakout for both Gold and Gold stocks in U.S. Dollar terms. Of course, those who calculate prices in Euros are already enjoying historic secular new nominal highs in the price of Gold. New highs are coming for the Gold price in U.S. Dollar terms shortly in my opinion and I believe this will occur before the spring is over.

I believe Gold stocks will provide good leverage on the next multi-month move higher in the Gold price. I have already put my money where my electronic pen is, so I am as biased as can be. Once the Dow to Gold ratio gets to 2, I will be starting to sell my physical Gold. I plan on taking the proceeds from selling my physical Gold and buying Gold stocks (surprised?) for their final run, as Gold stocks should top out after the metal if the last two secular Gold bull markets are a good guide.

Gold stocks are historically significantly undervalued (see chart at the end of this post for proof) and a simple reversion to the mean should provide explosive profits in the Gold mining sector during 2010. I plan to be along for the ride.

Don’t trust him or any other mouthpiece on TV or radio. They are payed a lot of money to do and say what they are told. And if anyone thinks otherwise, you not paying close enough attention. Imho.

It’s all noise on all the channels.

http://thehill.com/opinion/columnists/dick-morris/66149-canadas-healthcare-disaster

Unless of course you are a high govie official with a heart murmur, then there is the option of paying cash in Miama Fl for your treatment. Looks like congress (DEMS) will be soon voting for this type of HC.

Also congradulations to the Men’s Canadian Curling team, not to be overshadowed by Hockey, another geat golden accomplishment

Great game, not so great ending for the American team but well played game with a bit of regulation heroics and overtime heroics. Crosby only 22, hard to believe.

And to the overall job Canadians did in the rest of the sports very nice job indeed.

I wish all hockey was played without the fighting, it is truly remarkable to watch these great athletes on ICE SKATES do what they do.  Their talents are so underappreciated.

I guess my Canadian wife owns the bragging rights of the house …….for now!

the beans were just to get your system ready for a real redneck feast. chili-con-carni a-la-mode, honey and catsup, and bologna and whipped cream. that should do you for about a 2 megaton blast!!!

rno

Canadians played strong and Clean

 One Thing about about Beck that I see happinin is that more people are being brought into the discusion about how things should be ,,how we got where we are,,,and what the fix might be,,, Beck has made just barely enough progress awarness wise that I have to cut him some  slak,,,But,, I have seen the Patiot movement get to wraped up in people while not havin enough conviction of the Principles only to be let down or worse led astray at critical times,,,The truth will come out I have no fear,,I hope with all my heart that Beck is better than the flip flopping politicians,,, only time will tell,,, How much time do we have left????

Also, of course, when you draw the box - if the bottom breaks wait a day or two or three - a retest will occur (usually) and if that fails bail - if that retest fails not good.

Of course you know all that - just reminding myself what to do.

aurum

to Otis Spann.

aurum

Fortunately, my wife is Canadian and both my kids born there. So no crocodile tears for those Amerikanskies. Nope, none. They were out-played by the Cannucks.

I could wack you…Those beans ..man o man…Farmgal and I went through a practice at Ascension Church in Denton Tx. this morning and were told to suit up…but somewhere along the gospel I felt the rumblings of rno beans coming on ….thank God the cassack was tight …which gave me time to run down the stairs and cleanse the air so to speak…all those fine southern gals in the choir would surely have gone postal on me once they regained conciousness…..I dodged a bullet today…
Go gold …we are going to run up….

Yes the Jamacian is an unwanted partner in the gravel pit…Hopefully we can take him out with our last parlimentary maneuvers during the meeting of Feb 13th in Oklahoma.

Watched it with our fireplace and Margaux. Congrats to the Canadians.

aurum

It is just a guess now. If I will entering or adding I would use the box trading idea and set the box around the recent congestion and buy after a break of the box and a retest.

Also it is a double long and very risky as you know.

aurum

It was wonderful hockey.

Cheers, TQ

Hold on a minute …the gold medal could be in question….seems upon further review Crosby had his cup on backwards ..giving more freedom of movement while skating..direct violation of Olympic Rule 135 …goal could be negated and overtime re-started at 8 pm….and worse yet Canada will start shorthanded for two miutes…

I hold calls…will buy more at the open tomorrow.

Congratulations - they did well !  Enjoy the closing ceremony.