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In spite of what another notable is saying, LPG says that he believes the bottom has been put in for gold.

Big Al
February 12, 2016

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Discussion
46 Comments
    Feb 12, 2016 12:03 AM

    Hey . . . be in if you like . . . just set some good, conservative stops . . .

    LPG
    Feb 12, 2016 12:06 AM

    Phil,

    I don’t trade gold. I own it. Period.
    If it goes to $1300, $1400, or back to $1200, $1100, $1000, $900, $800, please believe me: i couldn’t care less. Really. And I mean R-E-A-L-L-Y.

    Best,

    LPG

    LPG
    Feb 12, 2016 12:09 AM

    For those who missed it yday – and my apologies if this has been posted already:

    Below is a link to Kyle Bass/Hayman Capital latest letter to investors.
    It discusses the Chinese banking system.
    A MUST READ in my book, curtesy of Zero:

    http://www.zerohedge.com/news/2016-02-12/here-liquidation-just-sent-shockwaves-through-crude-oil-market

    GL to all investing/trading.

    LPG

      Feb 12, 2016 12:20 PM

      Thanks for posting this LPG.

      OK, numpty question coming – if there are big liquidations out of bearish oil ETFs surely that means that those bailing out of the bearish oil ETFs now believe that oil has bottomed?

      Or is that just wrong?

        LPG
        Feb 12, 2016 12:02 PM

        Hello Bob,

        Hope all’s well.

        Re: ETFs, something that has occurred once in a while with some of them is that there’s a discrepancy between their net asset value (NAV) and their market price. Sometimes, the price-NAV disconnect/gap has to correct…. and sometimes, it’s painful for those longs as the NAV is way below the price.
        So it can occur that some long are bailing out as they suddenly realize they way overpaid compared to what they theoretically should have paid, and that what they own is worth much less than what they thought –> so a liquidation event CAN be due to that sudden recognition.

        Re: your specific question re: oil ETFs, I have no clue.
        As I mentioned yesterday to a senior executive of an investment bank in the Middle-Est, I almost “PRAY” every day for oil to go down below $20/bbl. Coz I think it would be a no-brainer long below that level. But I think Mr. Market will not be kind enough to propose such an opportunity.

        So although ….
        1) I understand that some big players can really “get stupid” and continue to act so that the price moves below $20
        2) Cushing storage capacity is apparently almost full – implying that downside pressure on WTI is probably “real”
        … my gut feeling is telling me that we are very very close – in time – to a bottom (if we haven’t made it yesterday, Thursday).

        I remain extremely open to the idea that i could be 100% wrong on that opinion, and by a wide margin (ie that the bottom could be both far away in time, and far away in price). But this is how I feel.
        I’ve got a few things in my head – that I don’t really wanna discuss here as it would take too much time – that give me this feeling. And I’ll leave it there.

        The more important fact is that the market, rightfully so, doesn’t really care about what I think.
        So if you wonder what I’m gonna do, here it is:
        I’m likely gonna deploy more capital next week on USO.
        I’ve been “lucky” playing a few moves on this one over the past few weeks (Richard’s a witness), and next week, I intend to deploy more capital.
        For me to deploy more capital into USO, it has to go below $8 again.

        We shall see.

        Best you, and wishing you a pleasant WE.

        LPG

          Feb 12, 2016 12:32 PM

          Thanks for explaining that LPG and thanks for sharing your views on where oil is.

          Like yourself, I would like oil to go down to the low 20s… but I am seriously pondering whether we have already bottomed.

          Speaking of USO, would you ever consider going for the leveraged UCO ETF?

            LPG
            Feb 12, 2016 12:34 PM

            Bob,

            Re: ETF for multi-days or multi-weeks holdings, I try to always look at (1) what they are made off, (2) what they are supposed to replicate, and (3) what is the tracking error vs. the underlying.
            I note that for intraday trading, the (1) and (2) suffice.

            Re: any levered oil ETF for a multi-day swing holding, I PERSONALLY would not go for them AS LONG AS I don’t have a clear view/strong conviction on the direction of the instrument, at least on a multi-day basis.
            The reason is simple: if I don’t have a clear view on oil for a few days, then I shouldn’t touch any oil ETF. And I should touch a levered ETF EVEN LESS .
            If the levered ETF is for intraday trading, that’s “another story”.

            Stating the obvious, one just has to be cognizant that w. a 2x or 3x levered ETF, when one is wrong, one doesn’t get slapped 1 time, but 2x or 3x harder. 🙂 So stating the obvious again… risk management is paramount x2 x3 🙂 .

            If you have a strong conviction on an instrument, whatever it is, IMHO, you should go for it. But risk management is paramount, Always. Always. A-L-W-A-Y-S. (I always wonder if i stress that enough… 🙂 🙂 🙂 ).

            Re: UCO specifically…
            I don’t know what type of holding period you have in mind… but if it is to hold it for a few say… weeks… (let’s say you think the bottom is in in oil and you jump in at the exact time/level when/where oil bottoms) and IF oil moves up from the bottom in a up/down up/down up/down manner…. then the returns you’re gonna get from UCO over these few weeks of holding period could be far less than what you should expect. Keep this in mind.

            PERSONALLY, on oil, I really have no feel/clue of where the bottom ZONE can be.
            My issue is that I’ve read very recently that APPARENTLY, a bunch of US producers could sustain lower prices than expected, for longer than expected…. i.e. the pain threshold on oil could be lower than what I initially envisaged.
            That could be pure BS… but that got/gets me thinking (A LOT).
            Sounds familiar ?
            Remember all the silver producers who were saying in 2012 “If silver goes to $20, the industry will go broke coz we can’t produce below that price!” —> a bunch of producers have been making money w. silver at c. $16 in 2015. Their claim in 2012 was all BS… and if anyone had considered the floor on silver was around $20… well… guess that there was a serious disappointment.

            So I am again, very open-minded to the fact that the bottom could very well be in the <$20/bbl region. I know it sounds crazy. But for me, risk management is #1.
            So I am likely gonna start to deploy some capital again in USO next week, if Mr. Market gives me the opportunity to send USO < $8 [the lower the better]. Assuming the price is to my liking, I'm gonna go w. specific size, w. ample room to grow it.
            Once I have some strong conviction that the low is in, then I can start to add to my position in size/press more. And to have a strong conviction that the low of some sort is in, I'm looking at several things:
            1) newsflow on the oil arena re: production cuts (voluntary or involuntary)
            2) newsflow on the oil arena re: players bankruptcies or commodity house(s) bankruptcies
            3) any major macro event which could have asset classes read-accross/implications (ex: a large Yuan deval)
            4) storage levels at Cushing going down
            5) Middle East Geopolitics
            6) any potential int'al conference that would be hastily put together to deal about global financial issues – esp. related to the USD.
            7) any rumors of the 1) to 6) above.

            *********

            I didn't get interested in oil on the long side until it was 1) close to the $30 and 2) close to Iran sanctions lift [I had both the time and price factors combined], which gave me better asymmetric risk, which I appreciated/valued.
            However, having better risk reward at $30/bbl vs. $50/bbl doesn't mean that there's no risk. So for me, no big size as starters until I have strong conviction it has bottomed, hence no levered ETF.

            But that's me. As you know, I'm a simple man.

            Best to you,

            LPG

            LPG
            Feb 12, 2016 12:22 PM

            Here’s the latest along the lines of what I said that (Quote) “that got/gets me thinking (A LOT)”

            http://www.financialsense.com/contributors/gary-shilling/price-war-oil-10-20-barrel

            Best to all,

            LPG

            Feb 13, 2016 13:09 AM

            LPG – Great Oil commentary. Much appreciated. I share many of your same views when trading ETFs, with the caveat, that if I think there is a big impulse wave up in an asset or breakdown heading for an asset, then I’ll actually hold a triple-leveraged ETF over 3-5 day (even a week or so). I will also mention that this is very rare in any asset class where I have that kind of conviction in a sustained move for 3-5 days in one general direction. Like you said, most times with the 3x Leveraged ETFs, it is just a day trade of a few hours…..sometimes just 45 minutes at the open or 10 minutes at the close……

            Hope all is well my good man!

            Feb 14, 2016 14:13 PM

            Thanks LPG – thanks for taking the time to write your thoughts on the matter. I found it all very interesting and informative.

          Feb 13, 2016 13:03 AM

          LPG – I’m tempted to start wading in to Oil as well, and when oil hit $26.07 on Thursday, I was wondering if that was it?

          Regardless, if Oil gets down below $25/bbl then I’m interested starting to build a position.

    Feb 12, 2016 12:11 AM

    I’ll be fully Convinced that the “bottom” is in when we see the 6×24 monthly moving average crossover in both Ag/Au. The chart that tells it all the last 3years!

      LPG
      Feb 12, 2016 12:28 AM

      Marty,

      I’ve read your comments a few times over the past few weeks when you mention the use of these specific indicators. FWIW, I find your views interesting. Truly.

      As I’ve said, since yday, for me, the low is in.
      And I can be proven wrong on that, and that’s OK with me. Really.

      Again for me, the important is that if someone feels that he needs to protect his/her wealth further, the cheaper the insurance cost , the better it is. So the lower the price of gold, the better.

      I’ve repeated that view constantly on the show.
      I know it’s not “sexy” to say that, and maybe I am misunderstood, but for me, this is how I see things. I’m not trying to time the bottom. This is a futile exercise. Only fools things they can time bottoms and tops repeatedly.

      Every year, when I pay the insurance for my car, I HOPE the price goes down – not up. And I also hope that I will not need to use that insurance – as otherwise it means something bad happened to my beloved car.
      –> So for me, gold has the same function. Exactly the same.

      I am aware that this is not a “sexy” view, it’s boring as hell… but this is how I see things. If I wanna make 10%, 20%, 30%, 50% on capital, PM stocks are much better/more appropriate “vehicles” (pun intended) for that, and in much shorter time frames.

      So again, for me, given the way I look at things technically, the low is in.
      Am I right, am I wrong? Honestly, I really don’t care. Does the market care about what I think ? Nope.
      What I do care about though is wealth preservation and this starts by protection. And wealth protection, to me, starts w. having enough of my overall wealth invested in the metal and to continue to sleep well if/when SHTF. Because as Doug Casey would say: “sometimes, it’s better to be 1yr, 1mth, 1week early than 1mn too late. When the door is shut, it’s shut”.

      I’m a simple guy, so these are just my 2cts.

      Best,

      LPG

        Feb 12, 2016 12:02 PM

        Thanks LPG. I wholeheartedly agree with all that you say. I bought my 1st Au /Ag oz’ s in 1976. Still own all the Ag.1/3 of my net worth is in the metals from 1998 – 2003. Still have it all. I can tell you are a constant learner. I started in 1995 with the the McAlvany Intelligence letter by as brilliant and well versed writer that I’ve come across. He since is in full time missionary work, yet his son David has carried on in his shoes par excellence, with the weekly audio every Wednesday – the McAlvany weekly commentary, archived.
        Money management is the 1st rule of investing.
        Stay Prudent!
        Marty

          LPG
          Feb 12, 2016 12:36 PM

          Marty,

          Quick question for you, that crossed my mind.

          Historically, have you “back tested” these monthly moving averages crosses that you often refer to ?

          If so, could you please provide examples of the instruments in which they’ve been able to successfully confirm bottoms in place ? I’m eager to take a look.

          Cheers & Best,

          LPG

            Feb 13, 2016 13:44 AM

            Hi LPG,
            6×24 monthly MA is my highest guideline in all sectors, followed by the RSI. Just look at the risk protection it has provided these last 15 years if you had paid close attention. I was fortunate to sit under a CMT in 2003-2004 for 13 – 2 hour teachings that cost me maybe $500. Look for yourself the 6×24 monthly in the Dow, S&P, Nasdaq, oil, Gold, TLT, to a lesser degree in the tiny easily influenced silver market, and even less in NGAS, I believe the only word for the 6×24 monthly is -AMAZING! It’s been tough sitting in 54% cash from mid 2014 to late 2015. Still 18% cash just waiting on the gold crossover for a large part of the remaining 18%.
            For me it was KISS – Keep It Simple Stupid

            LPG
            Feb 13, 2016 13:08 AM

            Marty,

            Thanks for the follow-up re: the 6×24 monthly MAs… Will take a close look.

            Re: cash, there’s no issue w. that: S.Klarman at Beaupost has had an average cash position ( if i’m not mistaken) of about 40% over the past 30yrs in his fund. That fund is probably in the top 3 performing ones over the past 30yrs globally.

            Best to you & Thanks again,

            LPG

            Feb 13, 2016 13:22 AM

            Thanks for asking that question LPG, and thanks Marty for the answer. Very interesting MA. Is it improper to call it a 144 month MA?

            Feb 13, 2016 13:29 AM

            Thanks Marty, that’s a little conservative for me but I like it and it’s still valuable. I’ll be watching it.

            http://schrts.co/QlgmpP

            Feb 13, 2016 13:31 AM

            Ex, he’s talking about using the 6 and the 24 MA and waiting for the 6 to cross above the 24.

            Feb 13, 2016 13:47 AM

            I’m sure the 24 and 96 weekly MAs would work just as well:

            http://schrts.co/Wz65p1

            Feb 13, 2016 13:59 AM

            I think I prefer the quicker signal provided by using the 13 week EMA with the 96 week MA. Take a look at how much earlier the 13 EMA gave a sell signal in February 2013. It also remained an important resistance as the crash continued and became a battle line after that.

            http://schrts.co/FddsPI

            Still, since all turns start on the lesser charts, that’s where I’d prefer to look first. I like the bigger charts for more confirmation, which is important to how I choose to play the move.

            Feb 13, 2016 13:05 AM

            On the monthly chart, I would use the 3 month EMA with your 24 month MA. Notice that even in the crash of 2008, it did not give a false sell signal. So it looks very good and will get you in way before the 6 month MA will.

            http://schrts.co/yxFfnq

            Feb 13, 2016 13:35 PM

            Oh got it. Thanks for the clarification Matthew. I was thinking the 144 month MA seemed like a long time 🙂

            Feb 14, 2016 14:09 PM

            Thanks Matt for the abundance you provide in all your charts. I am always learning, teachable & correctable. No doubt we are more than the Feb Au close to see that crossover. I’m thrilled with my gains implemented since before Christmas.
            My largest $ holding is still PVG – Pretium, even though underperforming, I’m happy to have entered again @ 4.26 and a stink bid @ $4, the low recently. As well as FSM, TAHO & NSU near their recent bottoms. I have my own trading model developed & fine tuned these last 12 years with a primary focus on RSI, then Stochastics.

            Feb 14, 2016 14:28 PM

            Thanks Marty; my intention was not to correct but to add something for consideration. There could easily be something about your 6 MA that I have missed and is superior.

        Feb 12, 2016 12:18 PM

        LPG….This dumb, humble irish fella is in the same camp as you…Ask AL he has known me for a few years now.

          LPG
          Feb 12, 2016 12:19 PM

          Hello Irishtony,
          Hope all’s well on your end.
          Best & wishing you a pleasant WE.
          LPG

          Feb 13, 2016 13:17 AM

          IrishT – I agree with you on the being Irish part, but on the other two…..not so much….

          🙂

          Cheers!

      Feb 12, 2016 12:36 PM

      If you really need convincing, look at the same chart over the 15 year timeframe for , gold, silver and the S&P. Pretty Obvious, isn’t it.

    cmc
    Feb 12, 2016 12:41 AM

    Seems most everyone is saying the bottom is in for gold, and that makes me nervous.

      Feb 12, 2016 12:19 PM

      cmc…don’t be.

      Feb 12, 2016 12:57 PM

      Everyone on this forum is NOT “Everyone”, if you know what I mean.

    Feb 12, 2016 12:41 AM

    DITTO……..WITH LPG.

    CFS
    Feb 12, 2016 12:51 AM

    Looked SILJ this morning?

      Feb 13, 2016 13:31 AM

      CFS – I can only post these as 200 day charts (which is frustrating), but if you right click on the “200 days” button, and reset the time horizon to “Past Month”, then it shows how SILJ really outperformed SIL and spot Silver in a big way coming out of the Mid-Jan lows in the miners.

      http://stockcharts.com/freecharts/perf.php?$SILVER,SIL,SILJ#

        Feb 13, 2016 13:37 AM

        Even the “past 3 months” shows SILJ out-performing. It is good confirmation, because I like the makeup and weighting of shares in SILJ quite a bit.

    CFS
    Feb 12, 2016 12:56 AM

    SGDJ up 10% on high volume.

    Feb 12, 2016 12:01 PM

    Listen to Wayne Allyn Root on SGT to make you both laugh and cry.

    http://tunein.com/radio/Financial-Survival-Network-p415063/

    Feb 12, 2016 12:13 PM

    If gold does not close above €1300 we’re still in a bear market as far as I am concerned.

    Feb 12, 2016 12:51 PM

    GOOD WEEK……..another week up for Gold………..1164 to 1239……money in the bank.

    Feb 12, 2016 12:28 PM

    Sorry guys gold is absolutely needed for catastrophic systic risk th the entire now GLOBAL fiat currency system!!!! The only reason! I have been holding it for decades that is foolish. It’s sn insurance policy against idiot bankers and their ilk. We NOW have that in spades.. With a nudge from a friend I have been accumulating physical gold and silver to survive this collapse and monetary shift…if u don’t own any PMs the GOOD Lordvhelp ya because I cant. This is a coming paradigm shift and transfer of wealth. This is THE REASON u own metals…it’s not needed until it desparately is…..then it’s tooooo late!!

    Feb 12, 2016 12:30 PM

    Sorry my about all the typos I am a iPhone neophyte😱

    Feb 15, 2016 15:40 AM

    Very true, St. Marc