Don't need to be a prophet -- here it is...
...plain & simple.
A couple of things on that chart should jump out at people.
#1 is it's simplicity.
Technical Analysis doesn't have to be smoke & mirrors and a bunch of techno-geek, mumble-jumble.
That's really a pretty simple chart to follow.
You need to know if you're in a rally phase, a consolidation phase, or a corrective phase...all of which can be found within a broader bull, or bear market.
The next thing that should jump out is the declining size of each succeeding HUI rally (blue dotted lines) in percentage terms and the expanding size in "time" of the consolidation phase (red circles).
The HUI rallies have declined from +128% to +92%, to +67%, to +55% and the time duration of each successive consolidation phase (red circles) has grown longer in time.
Now what does that tell you?
A young healthy, vibrant market...or, a tired mature one?
Gold is doing it's job here.
It is sounding the alarm on inflation and excess money creation.
I am a believer in sound money and gold's role as final arbiter on inflation.
I also believe that -- "inflation is always and everywhere a monetary phenomenon."
While the Fed is hiding M3 and Bernanke inherited Greenspans serial asset bubble creation...he still has an eye on inflation and don't buy all the "Helicopter Ben" crapola... You all know those comments were made within the context of stopping deflation.
And when you tell me that the Fed is printing money -- you aren't telling me anything that I and 2 Billion other people (and gold) don't already know.
Everyone on Earth is printing money.
The Russians, the Chinese, the Japanese, the Europeans... are all expanding the money supply.
If gold always tracked expansions in money supply -- then why did it enter a 20 year bear market from 1980 to 2000 -- all the while global central banks expanded the money supply?
Why didn' the market reprice gold in 1980 dollar terms in 1992, or 1998? What happened in 2000 -- when it fell to $255? Why didn't the market reprice it in 1980-dollar terms then?
There is one thing that I do know...and it's this:
The single greatest myth amongst gold bugs is:
That you can base gold's upside potential based upon re-pricing the 1980 highs for Gold on a dollar-adjusted basis...ie: these calls for $2000 gold being equal to $800 in 1980.
No greater fallacy has even been mouthed.
You don't reprice gold for inflation.
Gold is the pricing mechanism for inflation and it's doing it's job just fine here.
You don't re-price the mechanism.
Print that out, or tattoo it on your forehead where you can see it in the mirror each morning...and you'll perhaps get to "keep" a nice chunk of the money you've made.
If Gold goes to $2,000 it won't be because the market one day decided to re-price it in 1980 dollars - after 27 years of not doing so.
The other mistake the 'bugs are making is in under-estimating the enemy:
"If you are ignorant of both your enemy and yourself, then you are a fool and certain to be defeated in every battle.
If you know yourself, but not your enemy, for every battle won, you will suffer a loss.
If you know your enemy and yourself, you will win every battle."
PS: Take a look at those little green cirlces on that chart.
If you're good... make that -- if you're real good -- you'll be able to figure out when and/or if -- the next breakout is coming.
But, then again... will you want be riding gold, or another stronger, faster, fresher horse?
Remember when Silver doubled and Palladium tripled the returns of gold over the 6-9 months post the Katrina commodity speculation?
Look at what Corn, Wheat and Beans have done verus Gold of late. I didn't spend 30 days in Gurney-freekin-no-where Illinois staring at grain charts under lock & key and radio-silence for nothing. (still lot's to learn - these people are freeks...seriously).
Money moves....and smart money is always one step ahead of the game.
There's always opportunity somewhere: subprimes are cratering faster than gold is rising...many will/are going to zero. Cityscape deja vu all over again. And remember -- GreenTree brought down Conseco and The Money Store nearly brought down FirstUnion. There's only one business worse than the airline business... subprime.
Oh... and about that $12 Billion in Cash...
It ain't all bad news...
Yeah...Neocon pockets were lined -- whodathunkthat 'eh?
But, thankfully some of it made it's way to the good ole CIA...and the greedy little pockets of some well placed Iranians, Frenchmen, Chinese and Russians who have given us the plans & spec's on Iran's Nuclear facilities. Don't need a ground War - we can take them out with bombing runs and the Neocon's know the Dem's know it.
Also reportedly a cool $1B+ in cash floating around trying to suck up any stray suitcase nukes, or WMD's offered on the free market....and that sure beats a bunch of bridges to no-where, or more Farm subsidies for the Sam Donaldson's of the world...
A lot of money chasing/hedging War in Iran...have to respect it and the Neocon's potential "Hail Mary" desperation play come the 2008 Election, but the Old Man, James Baker and the Old Guard have different idea's...
Won't be boring...and by chance -- have you noticed all those billboards and PSA announcments vis a vis: ready.gov ?
Remember -- Dow puts vastly outperformed Gold calls -- post 911.
Good Night...and remember tha Put's don't bite...
Slider
And PS:
Why haven't any of the newsletter writers, or pundits told 'bugs the truth about how much of Gold's move has been from the dehedging of the Barrick's et al?
Barrick bought more Gold to close out it's hedges than the Bank of England dumped.
CB's didn't sell their full allotment... and the damn IMF needs to raise cash & pay debt....bugs may want to chew on that for a while.
And the 2008 Elections grow nearer day by day...do not fail to factor that into the equation. There's a lot of Limosine Liberals who want a pound of flesh... |
