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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: Little Joe who wrote (18817)	8/30/2003 7:49:46 PM
From: russwinter	Read Replies (2) \| Respond to of 39344

I'm specifically addressing the HUI here, as I don't own either physical gold or XAU (large hedged majors, i.e insurance companies). HUI represents in general the kind of leveraged to gold issue I either own, have sold or will sell. To me this is now "going parabolic" or very very close to it. In otherwords the next move up if it occurs quickly and without a nice pullback or consolidation, hits my "serious parabolic" definition, but certainly readers can decide for themselves; stockcharts.com^hui,uu[l,a]daclniay[p][vc60][iUa12,26,9]&pref=G <Did you mean short 62, 609 gold contracts?> Commercials are net short 137,088 gold contracts, a record. They are net short 62,609 S&P contracts, a high number. commitmentsoftraders.com <As you know my views on the commercials are that anyone who followed their lead would be broke..> Most of the time I consider this indicator just noise. However a net buying of say greater than 40,000, and net selling of greater than 75,000 gets my attention. 137,088 REALLY gets it. I've gone back over the record on the extremes and it looks compelling to me. BTW, it helped me identify the HUI bottom around 40 in late 2000(go back to the old progenitor thread and you will see me pounding the table about it), and I feel it signaled the late 02-early 03 correction well. <Everybody's bullish on gold.> OK, on reflection, maybe that one is overstated. Let's just say the financial types are much more friendly toward gold and use it regularly as a trading vehicle. It is clearly a favorite of the hedge funds now, especially on their reflation playbook. As far as the public, I haven't had much trouble convincing friends and family in taking good sized positions, but that may be an exception. <I think the crux of your argument is that we are near the end of the creation of liquidity by the FED..> If you read carefully I didn't say we are near the END of the liquidity pump. I simply said the rate of change will slow, or correct some off this unsustainable track. And since a lot of people have placed bets on this unabated liquidity growth, that's where the disconnect or surprise will occur. Even the fed funds future market is starting to recognize that, and as I've posted earlier the Eurodollar market certainly has in the forwards. I've posted both at the Epic Credit and Bond Bubble tool kit should you care to track it. Here's fed funds: cbot.com Right now, the market is basically saying no chance for a 25 bp increase through Jan. Feb, 04 are priced at 98.90 or 1.10%, or about a 40% chance of a rate increase, March is 98.82%, that's 72% likelihood, April is 98.77, that's 92%, May is 98.57% for 72% chance of a 50 bp increase. and June is 98.52% nearly a 100% chance of a 50 p increase. Now I say even at this level the market is too optimistic about low rates. Watch for this to continue go against the Fed. At some point soon it will signal what I'm suggesting. Another signal that things are too loose is gold itself. A higher move from here would start to set inflation sirens off, if it hasn't already. The note and bond market as Lance Lewis stated is another.