re: HUI & Gold pullback?
We were due.
The HUI had a helluva move going from HUI 274 on April 17th,
to HUI 404 this Monday. That's a +47% move in just 6 weeks.
And the HUI is still up 120%+ from the October/November lows,
with lots of doubles, and triples in individual stocks.
Nothing has changed in the long term underlying fundamentals
for gold. A generational "perfect storm" continues to build
on the horizon.
But, smackdowns via intervention and manipulation, and high
volatility from sector rotation among the momentum traders
hasn't gone away. And it isn't going to go away anytime soon.
So concerning both volatility and smackdowns, you have two
choices. You can either use them, or be used by them...
Anticipate them, or get caught by surprise and have to react
to them.
I mentioned last Thursday about becoming "Pavlovian" in
expecting an imminent smackdown, because "they had not
forgotten about the canary in the coal mine."
Message 25676173
We had a chance to back & fill into the silver move and some
laggard plays. And as I mentioned, I think the next catalyst on
the horizon for gold will come with the mid-session review in
July. If US deficits exceed $1.7 Trillion (and I think
they will) the US Dollar gets mugged again and pm's will fly.
It was in everyone's best interest that the Dollar's rapid
descent was slowed. Both Hillary Clinton and Geithner have
made hat-in-hand trips to China, and Obama is in Saudi Arabia
as I type... probably sealing a deal where Goldman & Company
will spike crude oil on London's ICE exchange, creating an
increase in US State & Federal Tax Revenue... and a windfall
for the Saudi's and OPEC Oil producers, allowing them to
recycle the windfall back into US Treasuries and support
the dollar.
A win-win all around, except for the American people.
And concerning anticipating smackdowns...
Remember Volcker's greatest regret from the Carter/Reagan days?
It was loosing control of the gold price and letting it rise too high.
Volcker is once again in the White House as an adviser, and
so is the Co-Chief Architect of the gold suppression & leasing
scheme of the 1990's - Larry Summers.
As long as they have any ability to do so, they will not make
the same mistake twice.
So even with negative real rates, quantitative easing, stimulus
packages and reckless central banks... until they lose control
of the bond market... they will keep a lid on gold.
Canbyte raised an interesting question on my blog about
Ted Butler's recent article, and the ongoing gold & silver
suppression.
Here's the article:
news.silverseek.com
And here's my answer from this morning:
sliderontheblack.com
Ted Butler:
“The 4 big shorts accounted for all the new short selling in
silver and nearly all the new short selling in gold, and that
includes all the other traders in every category - commercial,
non-commercial, and non-reporting. Both before the recent
rally commenced and since, there would be no commercial short
position, at all, in silver and a tiny total commercial short
position in gold, were it not for the four large traders. A
very few big traders exist on one side of the market - the
classic hallmark of manipulation. Nothing new here.”
The last sentence may be the most important.
Anticipate the smackdowns. And since the bankster-gangsters
are still in control of the game you have two choices…
You can either use them, or be used by them.
Buy some puts for insurance when we get these parabolic
rallies, and make some money in both directions. Get paid
on the smackdowns.
And don’t be afraid of taking profits into strength.
Scale out into strength, just as you would scale in on weakness.
The last 3 years have been dominated by long drawn out trading
ranges, followed by hard, fast moves on both the rallies, and
the corrections.
When you take profits into these rallies, take “some” of the
money and buy some deep out of the money calls.
Your exposure is minimized, your risk is clearly defined, and
you retain leveraged upside to any remaining move.
-----------
I've pretty much stuck to my guns and my plan here...
Message 25660010
"If it ain't broke... don't go trying to fix it. And when
it gives you a "trading range" trade, stick with it,until the
market takes you out of it... because that eliminates your
greatest enemy -- emotion."
I took a little off as we reached the top of the current range
at HUI 360-370, some more off at 400, raising stops up behind
the move. And I got most of those stops run today.
But, that's what stops are for. To eliminate emotion. So let them do their job.
And remember, you can't profitably buy pullbacks, unless you
already sold into strength.
So now we have two options. Wait patiently to see whether the
pullback turns into a correction. And plan re-entries for
both put sales, and adding back shares, or buying some calls.
Or, if we don't get a deep enough pullback. Buy the technical
breakout to new highs on strength.
Again, if it ain't broke, don't go trying to fix it. Selling
puts into deep pullbacks has been a literal license to print
money given the still strong underlying fundamentals for gold.
The one thing you don't want to do, is give back a huge chunk
of a major move, or an entire move, if a pullback turns into
a correction.
Gold has now had three runs at $1000 in this cycle.
And it's met resistance and/or intervention each time.
Shame on you if you don't have a plan in place.
Fool me once - shame on you.
Fool me twice, or thrice - shame on me.
Now that doesn't mean that you don't give gold a chance,
or that you dump everything. It means you anticipate, and
you have a plan in place to protect your gains, but also
keeping some remaining upside leverage to new highs.
The Dollar had a sharp correction and the news has been
very Gold friendly of late. It's rather obvious that
the US wants a lower dollar, but it also wants a controlled
descent - not a crash.
So do the Chinese. And that's why these two articles appeared
in the Financial Times on Monday.
Message 25690792
The Chinese were negatively talking their own book and shot
themselves in the foot, as the market believed them, and
started pounding the Dollar and US Bonds.
Confucius say:
"People who invent gun powder must learn not to shoot self in foot."
So where do we go from here?
Well, I believe the best bet is to keep taking what the
market gives you. And if it keeps giving you trading ranges
in which you can keep banking 100 to 250 point moves...
why not take what the market gives you?
The alternative, is that one day... gold is going to go
parabolic (to some target no one seems to agree upon) and
that you will have never been shaken out by the brutal
corrections like we had in March to May of 2006, and
again last September.... and that you'll be able to perfectly
time the top, and walk away vindicated and rich beyond your
wildest dreams.
Sadly, when the ultimate catalyst comes for gold's final
launch... the problem may well be, that you won't be able to
get your money, or your gold back out of the market.
Chew on that one for a while...
There are things you need to be doing, and preparations you
need to be making in this world today.
And those take money. Lots of money actually. And letting it
all ride on "Red 21" isn't going to get you there.
Mo later,
S.O.T.B.
Oh... and PS:
Here's a chart none of the permabulls will show you, or talk about...
....................."Always Anticipate -- Never React"
While I believe that gold will ultimately go to new highs,
I don't rule out another deflationary leg down. And above all,
I refuse to get caught by one, and give everything back.
Always be thinking outside the box.
You don't leave home without insurance on your car, your home,
and your families health.
Why would you not do the same for your portfolio and your
physical gold holdings?
My mantra in the world we now find ourselves in, is this...
"Trade Paper To Accumulate Physical"
...and that means physical in hand.
No bank safety deposit box.
No brokerage accounts.
No bullion banks.
In YOUR hands only.
And you need to be continually taking profits out of this
market. Both for buying and accumulating physical gold, and
making some of the common sense preparations for what is
unfolding in the world today.
Remember the wise words of Bill On The Hill...
"You Can't Eat Gold"
You can't protect your family with it either.
And if the worse case scenario unfolds... you don't want to
get caught with a high percentage of your net worth caught
in the market, and unable to get it out, when you need it most.
So don't be afraid of pulling profits out of the market
and putting that money to good use outside of the market,
and making common sense preparations for you and your family.
And shame on you, if you don't buy cheap paper insurance
for your accumulated physical gold & silver.
There are still tremendous debts and assets to be liquidated
in this market. And if political and economic pressure is put
on the US, to not do further stimulus spending, or to fund
additional bailouts... only a fool would argue against the
possibility of another deflationary leg down in the US, and
global economies.
Deep out of the money puts are cheap insurance here, and
for those who trade options... there has never been a better
time to think about LEAP STRANGLES.
Remember:
"Think Like A Bankster-Gangster & Trade Like A Thief In The Night." |
