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Going to be an interesting week.

Big Al
January 19, 2015

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Discussion
57 Comments
    Jan 19, 2015 19:25 AM
    Jan 19, 2015 19:43 AM

    Here in the UK there are mixed feelings on what QE for the EU will do for the Euro – some commentators think that QE will drive down the Euro, others think that it will drive up the Euro.

    To have such a split just goes to show how unsure the reaction to EU QE will be. Normally, there would be more of a consensus view from the financial commentators.

    Speaking for myself, regarding the possibility of a falling USD and the affect on the price of gold, I am kicking myself for not buying into the mining ETFs just prior to Christmas. But, once the New Year came, the combination of gold AND the USD both rising daily meant that it was more and more risky to buy in via Sterling or Euros because of the currency exchange rate charges from Sterling/Euro to USD.

    I mention this because I think, if the USD falls against either or both the Euro and Sterling, that you will actually see more people buying into gold, silver and the US listed miners.

    Personally, I woud love to see a drop in the price of gold in the coming week or two as I would see that as a buying opportunity.

    Finally, I suppose the other thing to look at is oil and what affect a falling USD will have on WTI.

    Jan 19, 2015 19:50 AM

    Cory,

    Your

    Jan 19, 2015 19:56 AM

    Just for your information. Chinese stock market down on government crack down on creation of margin accounts. They seems determined not allowing speculation. It is hard to be a Chinese investor. It is why people speculate in housing. Former premium almost killed the stock market by ordering a few slaughtering measures to cool the market in 2007 after he knew several big manufacturers put their money into stock market instead of reinvesting on their own production.

      Jan 19, 2015 19:58 AM

      Sorry former Premier Wen, not premium. Chinese stock droped from its peak of 6200 in Novemer 2007 to 1800 a year later.

    Jan 19, 2015 19:00 AM

    I think reversals in the euro and usd will act as jet fuel for the dollar price of gold.
    $GOLD:UDN is near a 20 month high and is overbought, but still looks like it can go higher.
    http://stockcharts.com/h-sc/ui?s=$GOLD:UDN&p=W&yr=3&mn=0&dy=0&id=p88357272705&a=376633968&listNum=1
    Gold priced in dollars has lots of room to fly even though it is overbought on the daily chart.

      Jan 19, 2015 19:03 AM

      +1

      I agree and you beat me to the punch that dollars in gold are behind and need to catch up. Im also expecting miners to outperform gold on this next run. So gold can climb slowly or idle and miners play catch up.

        Jan 19, 2015 19:11 AM

        Yes, it would be fine with me if gold would slow down, but I don’t think it’s going to —well, except priced in silver! Silver is just getting started. On Friday, it went up 3.5 times more than gold (4.9% vs. 1.4%). I expect plenty more days like that, but not every single day, of course.

          Jan 19, 2015 19:33 PM

          It would be fine with me as well gentleman! lol

          Matt do you see miners outperforming silver?

            Jan 19, 2015 19:25 PM

            Yes, particularly the good juniors.

    Jan 19, 2015 19:01 AM

    Cory,

    Im expecting gold to rise in dollars. It needs to catch up. It will rise against all currencies.

    I just want to mention that gold had been going down for a long period of time with the euro. Pull up a chart Al/cory and take a look at the double top in euro in 2001 july/august. Do you know what else topped? Gold. Then follow the 3 years plus they both fell down together. How can anyone tell me there is no correlation. Gold on November 5th puts is bottom on the bear trap of 1137 and decoupled itself ahead of euro bottom. Mark my words, euro will bottom this month and rise with gold. I suspect ecb will trigger this.

    Gold is going to 1350+on this run. Dollar will remain down/choppy and equities will take another beating.

    BDC
    Jan 19, 2015 19:03 AM

    Panic on the Titanic
    may not have helped;
    but, it matched the reality
    of that fatality.

    Jan 19, 2015 19:24 AM

    The Fix is In: Why Gold Price Manipulation is Now a Global Effort – James Rickards

    A lot of people think about gold as a percentage of total reserves. So countries have reserves. What percentage of your reserves consist of gold? For example, a lot of people are surprised to learn that the United States has 70 percent of its reserves in gold. China has about 1 percent of its reserves in gold. So people look at that and think that’s the imbalance. But that’s not a very meaningful figure in my view.

    http://dailyreckoning.com/fix-gold-price-manipulation-now-global-effort/

      Jan 19, 2015 19:33 AM

      Yeah, it does not exactly mean China is short on gold as much as it means they have a mountain of reserves!

        Jan 19, 2015 19:39 AM

        Joke:

        A very rich man dies. Before he died he figured a way to take all of his gold with him in the afterlife. After St. Peter grants him passage into heaven Peter nudges his co-worker and says, “Why does this guy think we need more paving stones?”

    Jan 19, 2015 19:39 AM

    “We talk money and logistics with Walter Burien today.”

    http://youtu.be/nG_BtGL9dOY?t=1h33m47s

    Great interview with Walter J Burien, Jr. (from Dec)
    Starts at 1hr34m as linked.
    I like the way John B puts the interview on auto pilot and lets it run, with very few interruptions.

    Jan 19, 2015 19:44 AM

    Nice interview. Sounds good to me Gary. Good call.

    Jan 19, 2015 19:45 AM

    What I was expecting last week should happen this week..Im very bearish wti and believe we get a weekly close between 38-42 this week. I thought it would happen last week but im certain it will this week.

      Jan 19, 2015 19:03 AM

      Not sure youare bearish on oil in the short term or long term. I heard yesterday from a friend who has been working in Suadi Arabia for several years that Saudi have doubled the drilling effort since early last year, which is good for his income. It is to say that the drop in price is due to supply increase not demand decline. This is also confirmed by the Chinese oil import number. Chinese oil import has increased 20% compared to last year in December. At sametime, a lot of production will come off by current stoppage of drilling in Canada, US and other places in the world. Since there is not much above ground inventory, the demand and supply balance will push the price up. As a person working in oil gas, I know if you run your fields in high rate, they will be damage and kill future production. That is why Canada and US have agencies to control the exploration/production. The main reason is to make sure the production is maximized. There are many ways an oil pool can die if flow rate is too high, especially for older fields.

      Jan 19, 2015 19:04 AM

      Glen, I will be impressed if you are right. I expect the opposite. In fact, I think we might have seen the bottom.

        Jan 19, 2015 19:11 AM

        I hope not Matthew. I have been light on oil and now it is the chance for me to fill up. But I need to sell some PM first.

        Jan 19, 2015 19:17 AM

        I think we have a date in the thirties for oil. There is just too much around. Recession coming to Alberta but not a very deep or long one IMHO.

        An off note: back up your data on your computers from time to time. Mine crashed but I got almost all my data back after a few days of shopping around and reinstalling software. Could have lost ten years of family photos.

          Jan 19, 2015 19:22 AM

          Dan, make sure to copy photos into mass storage. Otherwise you wife will be mader than mad.

            Jan 19, 2015 19:29 AM

            I have a mass storage that I can’t access. I was lucky and could use the drive as a slave instead of master and found all my data. Will study the mass storage user guide so I don’t have to go through this again. All is well… (;-)

            Jan 19, 2015 19:38 AM

            USB is very cheap now.

            Jan 19, 2015 19:43 AM

            She’s always mad at me; it is just to what degree. (;-) USB and DVDs and a mass storage backup.

          Jan 19, 2015 19:06 PM

          Do a solid state drive which is same thing as usb as it uses same chips as usb and it’s way bigger then usb drive

        Jan 19, 2015 19:43 AM

        Matt,

        My reasoning is more based on 2008 patterns and double bottoms across the boards with commodities/gold/miners pattern. You can add crb into that mix along with most currencies and I see a pattern/cycle. I personally find it very hard to believe we have come this far into the 40’s not to see 30’s at least one time.

        I believe it’s been deflation that has driven wti down this far and I’ve harped about it many times for a very long time. That has been the driver in my books. Now the difference is I don’t believe we have deflation across the board on everything and groceries where a big part of the not going down in prices up here in canada.

        This last year when wti began to aggressively come down I noticed a change in consumer spending at the front lines. I make it a habit of going to my local shopping mall and walk around on what should be busy days. The conclusion was a ratio of 60-65% if not higher people walking around without any items purchased. Mostly going to snoop and buying a discounted lunch at the food court with families of 5-6 at times. Kinda like there lets go out to do something and walk around but not spend because times are clearly tuff.

        Demand has fallen from what I see and so I differ from lawrence’s views. Demand drops prices and that is what has happened. Demand for gold went down and dropped it’s prices in my view and now that cost of fuel/diesel/energy have come down, demand is forward thinking and gold is going back up. This is the prime example in my books of deflation is truly what sparks gold and puts its bottom in. The inflation will kick in after once gold is already in an upward trend.

          Jan 19, 2015 19:47 AM

          Matt,

          Everything I have said is in relation to forward thinking. So gold is forward thinking and my belief is that it knows or big money knows massive stimulus is on the way. It is the only way this ponzi scheme can continue.

          Jan 19, 2015 19:53 AM

          Glen, you don’t have to guess demand, there are numbers. I saw the demand increased last year by 0.5% at 93.5 million barrel a day. The problem is that Saudi and US have jointly over produced about 2.5 million barrel a day since July. Price is set by the margin. The new number should come very soon. A lot of time, reverse engineering get you wrong conclusion especially when there is politics come into play. I posted Chinese demand the other day. The demand was up hugely. China is the biggest importer by far.

            Jan 19, 2015 19:02 AM

            Lawrence Im more of a visual person and the eyes never lie. It has done me good for the duration of my investing career. I personally don’t trust numbers given out as I believe most are skewed to benefit the 1-3% of wealth. This is no knock on you or your way of looking at numbers. Im not sure how you base them but I have a hard time trusting. Can you blame me?

            Jan 19, 2015 19:12 AM

            Glen, Good to be a visual person. I am more analytical person. Here is an independent research by Hong kong iFeng (Phoenix) Financial News for month by month Chinese crude import. You can see a clear up trend. You can also see a big drop in 2009 but not this time. The import in December is 13% compared to november and 20% higher than a year ago.

            http://tinypic.com/r/5cix08/8

            Jan 19, 2015 19:28 AM

            Lawrence,

            I value independent research companies as much as I value gold mining analyst with a grain of salt. Please and don’t take this offensively your numbers may be on the ball but is it not only taking china into account on that chart? U.S imports from world wide have been declining at an alarming rate. Some may suggest that the U.S is now producing more on its own but I don’t agree with much of that story.

            World wide from what iam seeing economies are struggling and deflating hence lower oil prices around the world hence demand down. That’s my view and im sticking to it 🙂

            Jan 19, 2015 19:10 PM

            Every one is entittled to his opinion. However, we should keep in mind that price is a balance of supply and demand. If you get the trend of supply and demand, you can derive the price. However, when you look on the price alone, you have loss of information in math. So it is impossible to reverse the derivation. There is no way to know the price down is due to supply increase or demand decline or both increase but one is more than the other. Working as scientist and engineer for my life, I usually find other information to figure out one variable.

          Jan 19, 2015 19:19 AM

          Thanks for the reply. I’m just basing my doubts about your call for a big slide this week on the charts. If we do go lower, I think it will have to happen later.

          I like to be precise with definitions and have noticed that deflation is used to mean many things. Economic contraction is deflationary, but is not deflation itself. Under the current monetary systems of the world, it results in more inflation not deflation. Real GDP peaked in 1999/2000 and we’ve had almost nothing but inflation since in currency terms and almost nothing but price deflation in gold terms. Note that it is only due to inflation that gold could fall 40% and become so oversold yet still be priced 5 times higher than it was in ’99/’00. The same goes for oil, copper, and all commodities.
          Oil is at a 21 year low when priced in gold. That is the deflation that is being hidden by inflation of the currencies. I think we will see $76 oil this year.

            Jan 19, 2015 19:41 AM

            Thanks for your response.. Although im calculating oil lower into end of month, im expecting end year to be much higher. Im not in the camp of extended long period of wti for years to come at 50-60. Not me.

            There is a very good possibility Oil could have bottomed but i will stick to what has worked for me thus far and I believe rsi 30 will act as resistance to oil. I agree that we could go up as well only to fall back down later.

            I guess we shall see.

            Jan 19, 2015 19:21 PM

            glenfidish i also think oil drop will recover in 12-15 months after it bottoms.
            I do not think it has bottomed yet. Volume says no and no long tails or hammers.
            This oil drop was engineered so it’s synthetic and nothing to do with deflation. If one believes that one can say same thing about gold price in last 3 years which we know was also synthetic. If one believes it’s synthetic it will go back up relatively quickly. Let me know what you guys think and why or why not?

            Jan 20, 2015 20:10 AM

            Stewie,

            I guess we differ on the subjest but that’s ok 🙂 we all have our own beliefs of why gold went down and oil etc. The main thing is we both believe they will go back up lol..

            cheers and I read your other post. No offense taken. Thanks for your opinion. This is one moment in the charts were I think RSI and all other indicators will get very stretched possibly taking gold faster then we can imagine towards 1350-1400. My 1285-1292 came true today. Exactly how I told doc it would happen. Not bad 🙂

        Jan 19, 2015 19:04 PM

        Matt there was no washout in wtic yet. Volume is not significantly higher then it should be in wash out scenario. Also no hammers with long tails. I dunno but i think washout has to materialize. What you guys think?

      Jan 19, 2015 19:01 PM

      That would be wonderful on wtic. I’m hopping for slight sub 40s. Do you expect any further downside in crude? If so any number as final bottom?

    Jan 19, 2015 19:19 AM

    Gary has got a pretty good batting average since I’ve been listening to him.

    The global play has forced most investors in the dollar and gold.
    Both are about the get hammered!

    Gold short term
    Dollar long term

      Jan 19, 2015 19:09 PM

      He has been getting better and better. It is a sign of an intelligent guy that he adapts quickly. Part of it is he had to adjust to a lot of criticism in the past.

    Jan 19, 2015 19:16 PM

    Some people’s batting average is that of michael jordans which did not pan out that well.

    I’ve always maintained Gary is good and I follow his cycles more often then none. Adapting quickly we can all do, being a step ahead not all can. This has been evident the past two months and going.

      Jan 19, 2015 19:28 PM

      I find people in the investment world are so of the most flexible thinkers because they have perhaps learned the hard way that being rigid is a sure fire way to losses. The average Joe Bloke is a poor adapter though. Don’t you notice Glen? People as a rule just tend to dig in their heels when they are wrong rather than shift up the gears and accept they made an error and move on. There is something very unique about how successful traders think and respond to day to day events. It comes across in other areas of their lives too once it is a habit. Its just my observation, but outside of the arts community, education and trading rooms people strike me as pretty inflexible and not all that creative.

        Jan 19, 2015 19:47 PM

        Bird,

        Maintaining an open mind is also intelligent. We are not all perfect and myself have made mistakes I did not see coming. The rule of thumb is try to be right more often then none. I personally see a trend that has developed and for me it has been working. That is what I share from my angle. If and when another abgle/direction arises, I will be able to adjust and acknowledge trend has changed. For now many refuse to acknowledge that they were on the wrong side of the trade in gold. That tells me adaptability can also be used selfishly to what one wants to see and not what is truly happening.

        We must all be honest in our approach.

        Always nice talking

          Jan 19, 2015 19:12 PM

          True enough Glen. Maybe that’s why some people in the gold sphere have received such heavy criticism in the past from other investors. They do sometimes seem to lack the virtue of flexibility that is essential when making trading decisions. I agree with you 100% that keeping an open mind is important. I will rarely ever criticize anyone who admits they missed a call. We all miss calls. That’s the nature of the game. Some self analysis goes a long way though and so does humility because investing is tortuously complex even at the best of times. I know I really appreciate the guys who walk away from a bad call and just say so without letting it become an impediment to whatever it is they do next. The guys who adapt fastest get the highest praise in my books. Better to be smart, wrong and solvent than correct and broke sometimes.

    Matthew…………….has anyone given you credit for the post on the gdxj…..and the volume…………….thanks j……………………….

      Jan 19, 2015 19:49 PM

      Thanks J, you know, I can’t remember! But that’s ok, between the generosity of some here and the magic of compounding interest, I’m now lighting my cigars with +1s 😮

    Jan 19, 2015 19:06 PM

    The European nations are having trouble stabilizing their currency and this is a direct result of the low interest rate policy that is present in the ECB and also The US. The US wants to see a stable European currency but their hands are tied. The Europeans can’t raise rates to support their currency and the US can’t lower rates any further by entering negative rate territory without possibly destabilizing the dollar. Lower rates would produce more excess speculation in the stock market. If Draghi wants to pump billions of Euro’s into The ECB this would in mind weaken the European market after the euphoria had warn off as it did with Abenomics.
    The intervention should stop and they should allow the various currencies to seek their own level. Any changes they make at this stage just seems to deepen the crisis, and the last thing the market needs is another ill conceived intervention.

    Jan 19, 2015 19:24 PM

    Glenfidish and Matthew i have replied to several of your threads. I figured it would be easier if you see it at the bottom too. Please let me know what you guys think. You guys think similar to how i think and we’re on same path with slightly different approaches which is actually cool. Anyway. Let me know and good luck to us. lol

    Jan 20, 2015 20:15 AM

    Stewie,

    As I told matt, I’d be suprised if wti did not test the 30’s. I’ve been one of the most bearish going back to last year when gary and bird were calling for higher oil. So my track record has been pretty decent when up against those two titans. Matt believe it may have bottomed and may put in a lower low later. Im ok with that as well.

    For myself wti has a date for a lower low. 35-40 wti..

    Jan 20, 2015 20:17 AM

    Stewie,

    Look at the fake out yesterday on crb index. Today it has reversed aggressively down and is now targeting 210 next.

    I expect wti to do the same.