Gary Savage – Tue 28 Jul, 2015

A detailed look into the call for an intermediate cycle bottom in gold

Gary kicks the show off by diving in-depth into his call for an intermediate cycle bottom in gold. You can check out the chart below to see where intermediate cycles have occurred in the last couple years.

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Gold - Gary's chart

Gary SavageAl KorelinCory Fleck

  1. On July 28, 2015 at 8:56 am,
    PF says:

    Gary, what do you think of Harry Dent’s $700 target for gold? Do you think that is possible?

  2. On July 28, 2015 at 9:01 am,
    gary says:

    I tend to think the final bottom is more likely at 850 which would be the breakout above the 1980 high.

    • On July 28, 2015 at 9:27 am,
      Frank from moscow CCF says:

      That is what ARMSTRONG SAID.,,,,,,,,,but , He also, said ………”.PLAY IT BY THE NUMBERS”.

    • On July 28, 2015 at 11:05 am,
      Ron says:

      thanks Gary for the info. I find it interesting that using different methods….you, Avi and Rick all come to the same conclusion.

      • On July 28, 2015 at 12:56 pm,
        Big Al says:

        As do I Ron.

  3. On July 28, 2015 at 9:10 am,
    PF says:

    I know you’re more of a trader, but you have stated previously that gold eventually will get as high as $5000. So for a long-term investor, wouldn’t it make sense to buy-and-hold now if the downside is maybe only $200 bucks but the upside is a few thousand?

    • On July 28, 2015 at 10:00 am,
      gary says:

      $200 would be extremely painful. If miners drop from say 150 to 50 during the final leg down do you really think you would be able to survive that kind of damage to your account?

      • On July 28, 2015 at 10:08 am,
        PF says:

        I was referring only to gold itself (un-leveraged positions paid for in cash)

        • On July 28, 2015 at 12:58 pm,
          Big Al says:

          My opinion PF is that I agree with your hypothesis.

      • On July 28, 2015 at 5:53 pm,
        lawrence says:

        I can take the 200$ hit but I will kick myself if I miss the upside

  4. On July 28, 2015 at 9:17 am,
    bb says:

    PF, that’s exactly how some people think.
    Maybe think about 5-10% physical gold of INVESTABLE income, and forget about it, like you think of insurance. Hope you don’t have to cash it in.

    • On July 28, 2015 at 1:00 pm,
      Big Al says:

      That is exactly how I have always thought about it.

  5. On July 28, 2015 at 9:20 am,
    Bonzo Barzini says:

    If gold gets to 500 again I’m selling my XOM and puttiing it all into MUX and TGD.

    • On July 28, 2015 at 3:24 pm,
      Shad says:

      MUX and TGD will be awesome buys if Gold just gets down to $1000 or dips below it in the high $900’s.

  6. On July 28, 2015 at 9:20 am,
    CFS says:

    In interest of diversification may I suggest water.

    The obvious ETF is probably PHO, for which I do not own shares, although I do own shares in 2 of its components. Negatively the average P/E of its component stocks is high at about 24.
    I am not a trader, but a longer term hold type of person; basically because there are some weeks when I do not have access to the internet.

    • On July 28, 2015 at 9:35 am,
      bb says:

      Water has been a good sector for some time now.
      A while ago I posted quite a few companies related to water for anyone interested.
      No idea now where that list went, archives somewhere I guess.

      • On July 28, 2015 at 11:16 am,
        CFS says:

        With respect, bb, your statement about water being a good sector for some time is bullshit. That sector has not been outperforming the market for about a year.
        Take a look at PHO, for example, which I believe appears to be turning around.
        International water stocks, however, are not turning around yet, probably because of dollar strength.

      • On July 28, 2015 at 3:14 pm,
        Shad says:

        BB I’ve reposted that list a few times. I have it printed off at home and will repost it again later tonight. It was an excellent list of water companies. Stay tuned!

        • On July 28, 2015 at 5:51 pm,
          Shad says:

          OK BB – I found your list because I’ve had it printed off in hard-copy format since you posted it…..Dang back in September of 2014 man.
          On September 16, 2014 at 11:47 am,
          bb says:

          Artesian Resources Corporation ARTNA Water utility
          *Xylem XYL Water infrastructure company
          *SJW Corp SJW Water utility
          *Cadiz Inc CDZI Water rights
          *Lindsay Corporation LNN Agricultural irrigation systems
          *Aegion Corp. AEGN Corrosion protection for pipes
          *American Water Works AWK Water and wastewater services
          *Aqua America Inc WTR Water and wastewater services
          *Calgon Carbon Corp CCC Water filtration
          *California Water Services Group CWT Water utility
          *Connecticut Water Service Inc CTWS Water utility
          *Hawkins Inc HWKN Water treatment chemicals
          *Hyflux Ltd HYFXF Water treatment
          *Kurita Water Industries KTWIF Water treatment
          *Layne Christensen LAYN Water management services
          *Middlesex Water Company MSEX Water utility
          *Severn Trent SVTRF Water treatment
          *Suez Environment SZEVF Water treatment
          *United Utilities Group UUGRY Water utility
          *York Water Company YORW Water utility
          *Pure Cycle Corporation PCYO Water treatment
          *Veolia Environment VE Water treatment
          *GLV LVGAF Water treatment
          *H2O Innovation HEO Water treatment
          *Ashland Inc ASH Water treatment
          *American States Water AWR Water utility
          *Badger Meter BMI Water meters
          *Itron Inc ITRI Water meters
          *Mueller Water Products MWA Water pipes/valves
          *Watts Water Technologies WTS Water valves
          *Idex Corp IEX Water pumps/meters
          *Consolidated Water Co CWCO Water utility
          *Flowserve Corp FLS Water pumps/valves
          *SABESP SBS Water utility
          *Tetra Tech TTEK Water engineering
          *Energy Recovery Inc ERII Water energy reuse
          *Toray Industries TRYIF Water filtration
          *Northwest Pipe Company NWPX Water pipes
          *Gorman Rupp GRC Water pumps
          *Halosource Inc HLOUF Water treatment
          *Enviro Voraxial Technology EVTN Water treatment
          *Hydro International HYD Wastewater management
          *Waterlogic PLC WTL Water dispensers
          *Amiad Water Systems AFS Water filtration
          *Mycelx Technologies MYX Water treatment
          *Porvair PLC PRV Water filtration
          *United Envirotech UEDVF Wastewater treatment
          *Primo Water Corp PRMW Water dispensers
          *BWT AG BWT.VI Water treatment
          *Int’l WaterGuard IWG.V Water treatment
          *Clearford Industries CLI.V Water treatment
          *Aqua Pure Ventures AQE.V Water treatment
          *Seair Inc SDS.V Water treatment
          *JG Boswell BWEL Water rights/ag
          *Pico Holdings PICO Water rights/ag
          *Limoneira Company LMNR Water rights/ag
          *Two Rivers Company TURV Water rights/ag
          *Ecolab ECL Water treatment
          *Kemira KMRAF Water treatment
          *Thai Tap Water TTAPY Water utility
          *Modern Water PLC MWATF Water monitoring/filtration
          *Dee Valley Group DVW.L Water utility
          *Torrington Water TORW Water utility
          *Pennon Group PEGRF Water utility
          *Manila Water Company MWTCY Water utility
          *Rexnord Corporation RXN Water meters

          On September 16, 2014 at 2:02 pm,
          J……..THE LONG………………..OOTB says:

          Peerless Pumps.. should be on your list…………..they have a pump which converts salt water in to drinking water………

    • On July 28, 2015 at 1:03 pm,
      Big Al says:

      I have done extremely well in that industry in the past.

  7. On July 28, 2015 at 9:23 am,
    LPG says:


    Hope al’s well.

    I always forget to ask you.
    Which sentiment readings do you look at please ?



    • On July 28, 2015 at 10:01 am,
      gary says:


      The commodity updates come out on Tuesday.

  8. On July 28, 2015 at 9:26 am,
    Andrew de Berry (Rev) says:
    • On July 28, 2015 at 9:28 am,
      Frank from moscow CCF says:

      Why who would have ever thought that there would be FRAUD………………

    • On July 28, 2015 at 1:29 pm,
      Big Al says:

      Thanks Reverend!

  9. On July 28, 2015 at 9:34 am,
    Matthew says:

    I completely agree with Gary on how to play this. Whether it’s THE low or not, gold is putting in A low.

    • On July 28, 2015 at 10:09 am,
      Brian says:

      Agree. I have bought 50% (2 blocks) of my JNUG a this level. I will by the third block when the 1080-1100 channel is resolved.

    • On July 28, 2015 at 11:23 am,
      Brian says:

      This could be an $18-$27 range for JNUG – double or triple from here.

      • On July 29, 2015 at 11:21 am,
        Chad says:

        I also bought JNUG today at these levels. First time, good luck!
        But will let it ride long term!
        So Cheap!!

    • On July 28, 2015 at 3:36 pm,
      Shad says:

      Matthew – Americas Silver Corp was up nicely today.

      Americas Silver Corporation (SMNPF) -Other OTC
      0.14 Up 0.01(6.38%) 3:40PM EDT

      Personally I am up 7.9% versus the 6.38% because I bought lower than it closed yesterday, but it’s off to a good start.

      As a feedback loop for those following the Silver Crest merger with First Majestic:

      I did more digging and found out holders of Silver Crest actually get .2769 shares of AG per SVLC share they hold and the estimated value was around $1.30 Canadian. However, if First Majestic gets a nice bump due to rising metal prices, then SVLC will jump in tandem.

      I bought some at $.85 yesterday, and it closed at $.87 today. (up 2.35% personally, but I should have bought more when it dipped down at the close yesterday)

      Silvercrest Mines Inc. (SVLC) -NYSE MKT
      0.87 Up 0.05(5.52%) 4:00PM EDT

      We’ll see if it climbs further along with the First Majestic share price over the next week or two. It could easily fall with AG share-price as well, so to use one of LPG’s favorite lines…..”I’m going to have to stay nimble and well-informed”. 🙂

  10. On July 28, 2015 at 9:50 am,
    gabriel says:

    Hedge funds were maximum net long gold at the 2011 peak.
    They are maximum net short now …
    One more sign of a bottom?

    • On July 28, 2015 at 1:31 pm,
      Big Al says:

      From a non recognition. perhaps!

  11. On July 28, 2015 at 10:22 am,
    Jason says:

    Hey Frank, tell your buddy Putan I want to make $ome $$$ on RUSL this week,.

    • On July 28, 2015 at 10:50 am,
      Frank from moscow CCF says:

      Jason………the one thing the RUSL can do in go up or down……Putin said, do not bet the Chinese ranch on it………………………………………….the Claw

      • On July 28, 2015 at 10:52 am,
        Frank from moscow CCF says:

        in to is……… no way to know……..

      • On July 28, 2015 at 11:49 am,
        Jason says:

        Yeah, sucka gapped down hard on me yesterday. I’m in at $19.01.

        • On July 28, 2015 at 3:47 pm,
          Shad says:

          Tell Putin to quit wrestling bears and get to work on juicing up his economy.

  12. On July 28, 2015 at 10:25 am,
    Silverdollar says:

    I’m very clear on what you see as a strong possibility of a bounce in the very near future so no comments there. I’ve been wondering though (my wife thinks I do that too much) if you have ever seen any correlation to these fed meetings and the intermediate lows? Or for that matter, the intermediate highs?

    • On July 28, 2015 at 10:45 am,
      gary says:

      It just depends on where gold is in it’s intermediate cycle and where the sentiment levels are at.

  13. On July 28, 2015 at 11:52 am,
    Jason says:

    Gary, waiting for NUGT to blast off is like waiting for the Space Shuttle to launch with no launch clock. Lots of tension.

    • On July 28, 2015 at 12:33 pm,
      A Listener says:

      See how gold is closing each day below 1100 dollars (not all days but most)? It looks to me that we are getting a sideways consolidation that will establish 1100 dollars as major overhead resistance. Gold is marking time as well until the FOMC. Meanwhile, the bulls are lining up bets on a big rebound.

      • On July 28, 2015 at 3:45 pm,
        Shad says:

        That thought of 1100 building as overhead resistance has crossed my mind a few times, especially because it is a big round number and being under it is psychologically intimidating to the bulls. Having said that, I do still think we’ll get a bounce in PMs into August before the next leg down (more so in the miners than the metals).

        Personally I’ve put on a few positions lately but didn’t bet the farm and have done OK. I had a few good profits in JNUG recently at 22% and 33% and am up in the 3 mining positions I put on this week so far. We’ll see what the market dishes out though, as these things and change suddenly and dramatically.

        Good luck to all in their investing.

        • On July 28, 2015 at 4:43 pm,
          A Listener says:

          We have seen this over and over again as each level of round number support gets broken after a battle around the support line. The 1200 dollar mark was classic as it went on for months and months before the break finally came. But when that break finally came it took us almost directly to the next round number support and we fell below (shock!). So here we are…. again seeing a bridge burned behind the gold bugs as the price keeps marching lower. One level at a time.

          We are easily within striking distance of 1000 at this point and I think very few people hold out hope that gold will reverse and shoot higher before that level is seen.

          Is sub 1000 implausible then? Absolutely!

          There is so little vigor remaining in the gold market it is almost assured.

          • On July 28, 2015 at 4:44 pm,
            A Listener says:

            Of course I meant to write “plausible” and not “implausible”….sorry!

          • On July 28, 2015 at 5:37 pm,
            Shad says:

            Yep, that has definitely been the trend (a struggle near the round $100 levels) and then a dip down to the next.

            For the longest time (since Nov 2014) we were waiting to see IF the lows at $1131 would get tested or if they truly were the bottom…..The did get tested and failed to hold.

            I mentioned a number of times earlier in the year that if $1131 failed that the next 2 targets I had were $1044.70 and $993.20. There were also minor support levels of $1087, $1080, and $1067-$1065 that had technical support for various reasons (Fibs, trend-lines, prior peaks/troughs). Gold did hover and consolidate in that $1087-1080 zone for a little while and even dipped below it to $1076-$1077. (I never saw the $1072 low some have mentioned, but apparently it got down that low).

            For now, I think the dollar will generally weaken for the next few weeks, and this may give the PMs a boost. I think the miners will lead the charge, but again I expect it to be short lived.

            I believe the dollar will put in a temporary bottom around 94 and then climb back up in the fall, and that would halt any August bump the PMs get going, so that is where I’d be looking to sell my positions and get back out of the way again.

            Now if Gold does nosedive down again past the recent lows and does not bounce at $1067-$1065 zone or at $1044-$1045, then for me $993 is back on the menu.

            Personally I take each level as the come, incrementally, because I often swing trade up stocks, or short PMs with inverse ETFs and play the short term moves. I do agree that we haven’t seen the bottom yet though and believe the next leg down will likely close up the bear market and wash out the sentiment in the sector with a final capitulation. I’m not sold that the recent lows were it, but I’m also not opposed to making a little money on the short-term pop either. Doc seems to make the most sense to me, because then we’d just be seeing a counter-trend move back up in that falling wedge pattern, and then back down for lower lows, etc…..

    • On July 28, 2015 at 1:03 pm,
      A Listener says:

      Same with silver by the way. It is basically trading sideways but has now posted 10 trading days below 15.00 dollars meaning those will become the new resistance to overcome at a later date. So 16 dollars is a goner as is 17 if you follow and the longer it holds at these numbers the stiffer the resistance and more difficult it becomes to break out down the road.

  14. On July 28, 2015 at 12:17 pm,
    james (the lesser) says:


    These comments are written and directed for you.
    You sound like a new gold investor who is ready to take the plunge.
    That is the impression I get based on your question to Gary.
    I would be remiss if I didn’t share my thoughts and experience.
    For what it is worth here is my response.
    You can take it or leave it, but here is my two cents on the subject.

    I don’t know your background so I would start with the following:

    You need to first identify your risk tolerance.
    For example I have a very high risk tolerance, it is just the way I am wired.
    Everyone is different.
    If gold were to drop $200 to $300 how would you feel about that?
    Can you handle the downside?
    Only you can answer that question.
    I’ve lived through enough corrections to have a cast iron stomach.
    You need to know your risk tolerance.

    Secondly, you need to know your timeframe.
    How long can you afford to stay in the gold market?
    One year? Two years? Three to five years?
    Only you can answer that question.
    I have been in this market sixteen years.
    Many people might say that’s too long and in hindsight, it is.
    However I started investing in gold at a young age, and sixteen years later I am still relatively young.
    I have the luxury of being able to wait out this four year correction.
    You need to determine if you have that luxury.
    Keep in mind, no matter what other people on this site may say, there is no guarantee this corrections end is right around the corner. It could still be a year, or several years away. I don’t pretend to know.
    Anyone who says they do, avoid.

    Third, you need to know your objective
    I started in gold as a pure speculative play hoping to make a profit.
    Not to hedge anything, or for insurance.
    What is your reason to own gold?
    Is it to offset other investments?
    Is it to diversify?
    You need to know why you are doing what you are doing.

    Don’t get caught up in the trap that since gold is down it is a good time to buy.
    That’s not good enough.
    Know why you want to own gold, and know what your expectations are.

    Finally you need to know how much of your portfolio you can put towards gold.
    I went all in on gold (always remember when I say gold I am also talking about silver as well)
    Years ago. I bet big, won big, and now am losing big.
    That goes back to point number one: know your risk tolerance.
    So how much % wise do you want to invest? 5%, 10%, 20%
    Again only you can answer these questions.

    Now let’s go a little deeper.

    I am not a trader. I don’t pretend to be.
    I know very little about the mechanics of trading.
    I don’t swim in waters I don’t belong in.
    However a basic understanding of charts is essential.
    Understand moving averages, support and resistance zones, and pattern types…
    This is all good.
    This will help you to understand a little better why the price is behaving the way it is.
    At the very least you won’t be blindsided when the price moves in a certain direction.
    However I must caution you not to rely too much one the charts.
    If I learned anything in sixteen years of gold investing, it is this – gold always seems to do exactly the opposite of what you are expecting it to do.
    I’ve seen times when it looked like it would cave, and it reversed.
    I’ve seen times when it looked like it would bust out, and it tanked.
    Gold takes no prisoners.

    Based on your question you sound like a long term buy and hold investor who is interested in only acquiring the physical metal. I think this is a sensible approach.
    You could dapple a little in some miners as well since they have been so beaten, but remember they could get beaten up some more. Don’t let anyway on this site act like they have a crystal ball, they don’t.
    There are some people on this site that are real doom and gloomers betting on an end of the world scenario. Then there are other people on this site that think they have a monopoly on truth.
    Avoid them. They are bankroll killers.

    So let’s get into the heart of the matter, your question.
    There was a time I would unequivocally, with the utmost confidence, with the strongest of conviction, had recommended gold. Many people who knew I invested in gold came to me for advice, and my succinct answer was always the same “Don’t wait to buy gold, buy gold and wait”
    I would have died on that hill.
    I no longer have that conviction.
    That is not a bad thing, it just is what it is.
    When gold failed to take out $1800 for the third time something changed in the gold market.
    Now here we are $800 or so off the high.
    Just because the price is cheap(er) doesn’t mean the conviction should come back.
    There are some people on this site that are very dogmatic.
    They are taking the position gold is at or close to a bottom and they expect the next leg up
    They feel it is a cyclical bear market.
    This is reasonable. You can make a case for it.
    I could understand their position.
    However I could just as easily make a case for much lower prices for a much longer time period.
    Anyone who is not open to seeing both sides of this equation is just plain wrong.
    Why am I saying this?
    Because you need to understand you are taking on a risk, which is fine, life is about risk, just don’t have unrealistic expectations.
    Go in knowing you could lose money. If you know this going in, you will do much better, even if gold goes down $200 at first.

    So let’s get down to brass tacks
    Should you, as a long term investor buy psychical gold now?
    Assuming you answered all the questions above – you know your risk tolerance, you know your timeframe, you know your objectives then I would say:

    You can afford to wait.
    I don’t see gold getting away from you.
    Gold could still go down to $800, I think this is only a slight probability, but never the less, the possibility exists.
    No one can rule out sub $1000 – this certainly could be deemed reasonable.
    Clearly until the trend changes the pressure is on the downside.
    I do not see any immediate catalysts for higher gold prices.
    Yes there are tons of reasons for higher prices, but they are dormant right now.
    Also there are reasons for lower prices.

    So the “don’t wait to buy gold, buy gold and wait” is no longer the answer.
    You could be waiting a very long time.
    Some might say if the bottom is $1000 then you should buy now. I would strongly agree.
    However, again, no one knows $1000 is the bottom
    If we lived in a normal environment then you could make that case, based on technical reasons.
    However this market is broken bad, and we live in a new abnormal where anything goes.
    We’ve spoken a lot about the downside price.
    What about the upside?

    Where did you come up with $5000 price target?
    Did someone tell you that?
    Did you read it somewhere?
    Someone throws out a figure, based on what?
    Just like no one knows the downside price, no one knows the upside either.
    It could take years to get to $5000, if at all.
    Don’t have any expectations gold is going to $5000
    You are already not starting out right

    I would reiterate, based on my experience, I don’t not feel you need to rush into gold.
    However if you do feel there is VALUE HERE AT $1090, and you are willing to live through a few hundred point drop (if it happens, not saying it has to), and more time than you anticipated, than buy some gold.
    Another option is buy a percentage now, layer in if it goes up or down.
    Determine NOW what your course of action is, and then live with the consequences.
    That’s all anyone can do.
    Someone recently asked me if I would buy gold now.
    Honestly I wouldn’t.
    Don’t ever make a future decision based on a past mistake.
    Make the best decision you can today for the future.

    I sit on gold because I can afford to do so, I am young, still ahead, although I’ve given back a lot of the chips that were on the table, and willing to take the pain.
    Right now they are still running the race.
    If I cash my gold in now the race is over.
    We are closer to the bottom today then we have been in four years.

    Sum up the risk, if the risk reward is in your favor, bet with confidence.
    Keep making bets like this and you win

    • On July 28, 2015 at 1:37 pm,
      Big Al says:

      Thank you for taking the time to write that comment, The Greater

      Big Al

    • On July 28, 2015 at 1:55 pm,
      Silverdollar says:

      Good advice for everyone, not just PF. Thanks for making everyone who reads, think.

      • On July 28, 2015 at 9:48 pm,
        Shad says:

        Agreed. Good points to reflect on James TL.

    • On July 28, 2015 at 3:39 pm,
      bj says:

      In 1933 when FDR took us off the gold standard, 1oz of gold cost $33.00 and a barrel of oil was floating around $0.90 to $1.00; thus the oil gold ratio of around 33:1. So around at $50/barrel gold should be floating around $1600 -1,700/oz if the free market were allowed to maintain that dynamic equilibrium. Applying that ratio when oil was $120+/barrel we see where people were projecting $3500/oz and upward. But, it didn’t play out that way. Instead, those out here who were calling for $1050 gold a year or so ago made a better call than those who were calling (or maybe praying out loud) for a bottom.

  15. On July 28, 2015 at 12:35 pm,
    karl345345 says:

    Gold and gold stocks do not seem to be putting in a low. Why on earth would anyone want to buy before confirmation? Its pretty reckless advise. The big cap miners, where there is still a bit of liquidity, could lose 50% from here if gold heads down.

    I would not be surprised if we bounce around for a few days, suck in the last of the remaining bulls and then flush down for lower lows.

    Its clear the bear market rally’s are getting weaker and weaker.

    I daresay the market will bounce now, but for me, capital preservation is paramount.

    • On July 28, 2015 at 1:39 pm,
      Big Al says:

      As capital preservation is important for me!

    • On July 28, 2015 at 4:05 pm,
      A Listener says:

      I agree with you Karl. I did not like Gary’s advice one bit. He does not know where the final bottom is any better than anyone else so counseling to put all your money in was a little rash. Sounds like a recipe for more tears for the fools who listen to free internet advice.

  16. On July 28, 2015 at 12:35 pm,
    Tom says:

    Nobody knows what any security will do the next day or into any part of the future James. Thanks for helping out the newbies who might be thinking this is a bottom forming.

  17. On July 28, 2015 at 12:42 pm,
    karl345345 says:

    I see all you guys are still talking market manipulations. I suppose humans cling to anything which covers their own investment mistakes. Well lets face it, gold bugs have been wrong for four years and yet they still cannot accept that we are in a bear market.

    What will it take to drop such nonsense. gold at $850 ??

    Sorry for being rude but i am tired of such nonsense.

    • On July 28, 2015 at 4:08 pm,
      A Listener says:

      That’s not the half of it Karl. Some people here keep insisting this 5 years price collapse is just a correction in a secular bull market. They say that with a straight face when the HUI has already retraced almost 100% of its climb since 2001 !!!!

      At what point do they accept that a bear is a bear, not a bull taking a break?

  18. On July 28, 2015 at 12:51 pm,
    James (the lesser) says:


    What didn’t you understand about my advice?

  19. On July 28, 2015 at 1:00 pm,
    karl345345 says:

    James good post. I’m just adding my tuppence worth.

  20. On July 28, 2015 at 1:40 pm,
    Bob UK says:

    So the DOW had some kind of short covering rally today.

    Energy stocks seemed to bounce – hmm, not convinced that oil has bottomed yet. Think it will retest the March low first. What do you folks think?

  21. On July 28, 2015 at 1:42 pm,
    Big Al says:

    Not rude, you are just starting your opinion.

    I thought that we cleared up the “excuse factor” with Gary this morning.

    And, nobody is saying the gold market is not in a bear phase!

  22. On July 28, 2015 at 2:39 pm,
    Bill in Tokyo says:

    I’ll have to say, looking at Gary’s gold chart, this is the 1st time I’ve seen that cycles are pretty regular, a lot more regular than I had thought.

  23. On July 28, 2015 at 2:49 pm,
    Bill in Tokyo says:

    … just finished listening to the end of Gary’s thoughts.

    He summed it up perfectly I think – cycles and sentiment suggest we’re at a temporary and trade-able bottom, but that one can not rule out the possibility of more intervention. And it’s that intervention that still keeps me in cash. Especially when someone at Goldman Sachs recently said that gold’s decline “is just starting”. I mean, One car can play chicken with another car, but not with a Peterbilt 18 wheel truck.

    • On July 28, 2015 at 4:34 pm,
      A Listener says:

      Yes, I read that story. Jeffrey Currie is warning gold could fall below 1000 during the current year. And he may be right. After reviewing a group of commodity charts I am coming to the same conclusion.

      In short, we have not yet ended the declines seen in the commodities sector that began in 2011. We are still deflating in other words and the worst may be yet to come.

      The CRB Index of commodities incidentally was sitting right on long term support yesterday. A couple bucks more decline and we are looking at a death rattle for the sector as the next line of defense comes into view.

      A breach below 200 would signal the CRB Index bottom is not yet in and we would then be looking at the next major support area which is a 100% retrace back to 2001 when the CRB posted 185!

      At best I think we get a bounce here but the weakness of the response to last weeks sell off is indicating there really are not many bulls left standing. It was not that long ago that selling pressure was met almost immediately with a rush of buying.

      But no more.

      Meanwhile, both copper and platinum have charts that do not support the idea of gold relaunching anytime soon. You can see it best when viewing those charts on the monthly. The outlook is anything but rosy.

      Coffee is also threatening to break down as are others. So this in combination with gathering weakness in energy, softs, industrial metals and even one of the precious metals is quite negative and points to further declines in the CRB.

      And little of that is bullish for the PM’. Sorry to say….but this is an ongoing deflation.

      Goldman Sachs Calls For $1,000 Gold

      • On July 28, 2015 at 5:42 pm,
        Shad says:

        185 on the CRB index could be reasonable for a bottom, and timing wise we are about 6 1/2 years into the 7 year low cycle. 3 out of the last 4 CRB cycles were around 7 years, but Gary keeps mentioning 3 years. There was one 3 year cycle, but most have been 7 (including the last one from 2002-2009). Just from a timing perspective the end of 2015 is most likely, but it could stall out to early 2016 for the commodity sector. I was hoping we’d get it over with in the summer doldrums, but it looks like there is more pain to come for commodities in the future.

        • On July 28, 2015 at 6:13 pm,
          A Listener says:

          Or there is the 18 year stock market / commodity cycle. Obviously these don’t line up exactly where 3 X7 is 21 instead of 18. Three sixes will do it though so maybe this one is stretched.

          Anyway, I have an interesting read for you. It discusses the 18 year cycle and notes the end of the last equities bull market was around year 2000 which means we SHOULD be in the 15th year of a commodity bull.

          But something has gone wrong along the way. Instead of a nearly two decade commodity run we instead were treated to a repeat of a major equities bull market (the prior one was actually the longest in history and was what kicked off the gold bull in 2001….this current equities bull one is the second longest).

          But the damn thing came right in the middle of the commodity cycle!

          And that was all due to the GFC meltdown, the housing bubble burst in the US, Fed interventions, QE’s and so much more. You know the story already. So basically we are lost on the cycle right now.

          Many people still assume we will resume the commod bull but as I have pointed out in a number of charts recently we have mean-reversions in play that are wiping out 100% of the advances since 2001.

          So that bull is dead. But what does it mean in the big picture?

          Here is the article. Keep in mind it was written in 2009. It still has application today though and discusses the 18 year cycle.
          Stocks and Commodities: The 18 Year Cycle — Seeking Alpha

          • On July 28, 2015 at 9:37 pm,
            Shad says:

            That a very interesting article and I had never hear about the 18 year cycle. There was a 3 year cycle from 1999-2002, so if you had a 3 year + 7 + 7 = 17 years and they aren’t perfect so the overlap between them may make up the extra year. It may be a symptom of a larger cycle in commodities, and as the article pointed out Jim Rogers had brought it to the authors attention. Intriguing concept.

            I’m going to re-post a few thoughts from earlier this month regarding cycles in commodities and the CRB index, since it relates to this conversation:

            On July 7, 2015 at 12:26 pm,
            Shad says:

            I would think over the next month or so we may see at least a temporary bottoming in the commodity sector for an August bump. Doc has mentioned it may take until 2016 for metals to finally bottom. Who knows? We are getting very close to the 7 year mark in the CRB commodity index as mentioned, so we are finally in the window of time where we’d expect a bottom to form.

            Here’s a chart showing where the CRB is at:


  24. On July 28, 2015 at 9:39 pm,
    Shad says:

    On June 7, 2015 at 3:23 pm,
    Shad says:

    Cycles are not perfect and it may turn out to not be exactly 7 years for the CRB to bottom, and the bear market in Gold may stretch on for more than 4 years. Nobody really knows exactly when the reversal will be, but the recent gyrations in 2015 in the currency markets and bond markets and trepidation in stock market should be telling he who has the eyes to see and the ears to hear, that something is building and is going to break out in the next few months on a global scale…..

    I personally think once we get the washout in commodities for the CRB 7 year lows, that some money will come back into the commodity sector (PMs, base metals, Uranium, Oil, specialty metals, fertilizers, food & Agriculture) but this will likely be in late July or August. I’d rather be a little early to the party later this year, and if it takes until 2016 to really get going then who cares?”

    Here’s a good chart from the great site – Short Side of Long:

    • On July 28, 2015 at 9:41 pm,
      Shad says:

      On July 13, 2015 at 5:50 pm,
      Shad says:

      Here’s a good CRB chart from the great website – Short Side of Long showing how 3 of the last 4 cycles were around 7 years.

      **There was a little 3 year cycle from 1999 – 2002, but prior to that was the low zone from 1992-93 to early 1999 which was also a 7 year cycle, and prior to that a low in 1986 to that late 1992-early 1993 which was also a 7 year cycle.

      • On July 28, 2015 at 9:46 pm,
        Shad says:

        Sorry these were supposed to get attached to the discussion up above relating to commodities and the 18 year cycle in that article. Again I could see two 7 year cycles and a 3 year cycle with a little wiggle room in between or extended 7.5 year cycles coming out close to around 18.

        Regardless, Commodities are a cyclical industry and odds favor another 7 year low from 2009 to the end of 2015/early 2016, so I’d expect a bit more pain in commodities to form the bottom in the not-so-distant future. (under 12 months, likely in the next 6-8 months.)

        • On July 29, 2015 at 12:48 am,
          A Listener says:

          You can probably see the similarity between the chart from “The Short Side” you posted and Gary’s chart above. Those are intermediate highs and lows within a larger secular trend that are being indicated.

          There is no question that cycle theory has validity but a lot of the time its more art than science in its divination because no trend direction is ever written in solid stone.

          Witness our own commodity cycle since 2001 as a good example and note how it has been shortened by half just because the much longer credit-cycle was coming to a conclusion and interrupted the major commodity trend.

          Some guys obviously have better luck reading the cycle runes than others but a lot of that could just be their intuition of how the market functions rather than absolute mathematical cycle dates as put forward by Armstrong (using Pi as the basis).

          Quite a bit of cycle theory is also in conflict with ideas put forward by earlier observers of the markets. It takes time to weed out what still makes sense from what is just adding to the confusion.

          In general though I would agree its pretty important to know what part of the cycle we are on, particularly for the major trends such as ours.

          But obviously this is what is causing so much consternation amongst the mining community and metals analysts. They KNOW we should still be in a bull market but some of them just cannot adjust to the fact that we had a major trend reversal and that Super-cycle died prematurely.

          Instead it has come in as a half-cycle that was dramatic for its strength and short duration. But I have serious doubts it is going to reassert itself as a continuation of the trend from 2000 / 2001. Basically i think we will begin a new cycle altogether because what is actually taking place is entirely unknown to most living speculators.

          That is, we are in the fits and throes of a deflationary bust that has not been seen in the last 85 years (since the Great Depression). We need to keep that in mind. It is why a deflation bust takes most by surprise. They have no prior knowledge in understanding how to cope with it because it breaks the rules of the recent past.

          The credit cycle now has control as the over-riding feature of our markets and the excesses of the past will finally be cleansed without regard to smaller cyclical trends.

          That likely means we will still see an asset price collapse as yesterdays collateral against todays over-leverged borrowing that further inflated asset values will finally be reconciled with each other. Like the old saying goes…..asset prices rise and fall but debt endures.

          Soon enough we shall find out that what matters most is not how many houses, stocks and boats one owns but rather how much income they have to service their unrepayable obligations.

          • On July 29, 2015 at 4:59 am,
            Shad says:

            Yes, that is interesting point in how the credit cycle and the 2008/2009 government and central bank intervention started to interject into the normal major commodity cycle, and that it may have created a half-cycle or caused it to peter out early.

            Also a good point about how deflation overwhelmed the global markets in general, even though, with all the central bank policy many pundits predicted hyper-inflation. This deflation that has emerged the last few years after everything spring-boarded out of the 2008/2009 bottom has not been nice to the commodity sector.

            The take away for me once again, is that the artificial injection of huge sums of cash, government nationalization of banks (too big to fail), GM, bailouts, government subsidizing of shell solar companies, government stimulus through home credits, cash for clunkers, energy credits etc…. and then the Fed QEs have created a mountain of debt that can not be repaid, but also a “Franken-Market.” It is a monster that has risen on life support and stumbled higher in the general equities indexes without any corrections, and has caused true price discovery to be lost, and thrown a monkey wrench into the commodities space. I do believe within the next year, much of this Franken-Market will get torched with true market forces, and things will unravel a bit further as rate hikes, currency wars, emerging market distress, and commodity nations get pressured. I could still see the CRB bottoming near the 185 level you mentioned and then starting a new 7 year cycle, or possibly a new 18 year cycle a little early. What a mess…..

  25. On July 29, 2015 at 8:29 am,
    Paul L. says:

    Oil is breaking out and this should help gold. There were too many on the bearish side for oil and the opposite happens and now they have to cover their shorts.