Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (66796)	7/25/2006 10:19:35 AM
From: Nikole Wollerstein	Respond to of 110194

NG has up to 50 bln$ US in metals in 4 deposits 1.3 offer is a joke.

To: orkrious who wrote (66796)	7/25/2006 10:37:05 AM
From: Nikole Wollerstein	Respond to of 110194

From today' "Barrick offer for NovaGold values the Company at approximately $35/oz of gold resource, without giving any additional value to NovaGold's world class copper resource.s:"

To: orkrious who wrote (66796)	7/26/2006 10:48:25 AM
From: ild	Read Replies (1) \| Respond to of 110194

pm sentiment update -- trotsky, 10:14:07 07/26/06 Wed surprisingly, traders remained unconvinced even yesterday. the XAU put/call volume ratio clocked in at a super-heavy 2.31, iow, the pessimism of option traders has actually been growing rather then receding. likewise, the Rydex pm fund suffered yet another small outflow, which pushed the CF ratio to a fresh 3-year low. i.e., it's now back at levels last seen in 2003, in fact it's closing in on 2003's low point. the remarkable thing is that bearish sentiment has intensified so much in spite of the fact that the XAU is about 90% above its lows of May 2005. while the short term trend remains unconvinving thus far and arguably the charts look at best ambiguous with a bearish bias, it is still unusual to see sentiment deteriorate so much this early in a purported down trend. this is the equivalent of everybody calling the 1994 dip in the stock market the beginning of a major bear trend. come to think of it, back in '94, everybody DID call for a major bear trend to have begun. voy.com

To: orkrious who wrote (66796)	7/26/2006 12:55:06 PM
From: ild	Respond to of 110194

@Zeal, continued -- trotsky, 11:26:05 07/26/06 Wed "Since this gold bull began, I have made a point of scanning Internet forums so I can get a read on sentiment." while it's good to be aware of anecdotal sentiment on internet fora, this is NOT a reliable replacement for quantitative indicators. besides, the contention that anecdotal sentiment is too bullish strikes me as odd as well. there have been countless calls for the correction to end with MUCH lower gold prices (i might add, these calls didn't sound entirely unreasonable for the most part - a good case was made). "Since then, anxiety in e-mails has been growing exponentially. And our subscribers run the gamut from casual individual investors to professional hedge-fund managers. The more the HUI has rallied lately, the more I hear from even the seasoned professionals wondering if it ' s time to buy in for the next upleg. This correction, due to its rallying, is creating enormous anxiety since no one wants to miss out on its next big run. " there are however two ways of looking at this. people who are "anxious to get back in" are by definition NOT in at the moment. they represent a pool of buying power on the sidelines. i expect that most have been conditioned by the previous corrections to NOT expect this one to be over (a view with which i actually sympathize at this stage). however, should the market keep rallying, their anxiety will grow. at some point their potential buying power then turns into actual buying, and buying usually has the effect of pushing prices even higher. note that money flows into gold stocks do look very good at the moment - in fact, they've looked good for quite a while now. there is no law that says all corrections will look the same. if the down-up-down structure in the XAU between February and June this year is an A-B-C correction in which 'B' made a higher high, then it is POSSIBLE (not necessarily likely, but possible) that the high from which the actual intermediate term (10 months or more) correction begins hasn't been seen yet. @Zeal -- trotsky, 11:09:30 07/26/06 Wed "Early on in both of these 2004 and 2005 corrections, the last two major ones in this bull, psychology was much like it is today. Investors and speculators were excited and eager to buy back in and people who were cautious were ridiculed in the court of public opinion." what Zeal is relating here is anecdotal evidence. what he doesn't mention is that the quantitative sentiment indicators (what they DO, not what they SAY) were telling a totally different story before those corrections. in fact, I was debated and dismissed by a lot of people on kitco in early 2004 for airing bearish views based on the indicators, so i con confirm that anecdotal and qunatitative sentiment jibed at the time. this doesn't mean that prices can't decline from here - say e.g. for a restest of the lows sometime in the fall. but it DOES mean that the downside risk is far smaller than it was in either 2004 or 2005. only if we have entered a longer term cyclical bear market this probably won't apply. however, i see no indication yet that we have entered one. hambone@fund flows -- trotsky, 10:54:48 07/26/06 Wed as far as i'm currently aware, nothing unusual has yet occurred in the broader mutual fund universe (a bit of selling of emerging market funds, but otherwise, business as usual). what needs to be said though is that the mutual fund cash-to-assets ratio stands at a paltry 4.1%, which is uncomfortably close to an all time low. this suggests that if the recent trend toward risk aversion infects the individual fund investor as well (at the moment, it's a phenomenon confined to the overleveraged hedge fund community), a small 'run on the bank' (i.e. increasing fund withdrawals) could lead to a strong decline in the stock market. this DOES represent a grave risk for the pm sector AT THE MOMENT. the current strong correlation between pm's and the Dow is grounded in those assets currently being the subject to the same liquidity on/off game. however, this is not the normal state of affairs. normal is for the gold sector to be the only stock market sector to sport a long term negative correlation with the SnP. imo what all of this boils down to is that there is a new risk factor for the short to intermediate term that we didn't have to deal with before, however, we should also expect this correlation risk to revert to its historical norm at some point. lastly, i note that sentiment indicators for the stock market at large currently ALSO suggest rally potential. lately there has been a big surge in Rydex bear fund cash flows and assets, as well as a noticeable rise in put/call ratios (smoothed ratios like the 10-dma). in fact, at the June lows, the 10-dma of the CBOE overall p/c ratio briefly spiked to a 17-year high, and the indicator remains at fairly elevated levels. it's possible that before the stock market is ready to dive again it will need to shed a few of those bears by means of an ST rally. note that there are situations when such indicators do NOT work. the most famous one is a crash - crashes happen only wenn already extreme bearish short term sentiment goes one step further and turns into a panic. this is a rare event naturally, but one should keep it in mind. also, a friend of mine argues that these days, the Rydex traders are smarter than they used to be. this may be partly true (surely they're smarter than those that were around in 1999-2000), but per experience, the indicators have remained valid over the past few years - only their range has shifted somewhat (an upward shift in the range of bear fund assets - i.e., new hi/lo yardsticks are in force).