Friday, March 26, 2010

The Long Term HUI

One of the tools I use in forecasting is the Elliott Wave theory - this, coupled with indicators in sentiment and momentum, along with measuring the disconnect between fundamentals and reality, allow me to get a clearer picture of where the market is today and where it is most probably headed tomorrow.

The two highest probability wave counts for the HUI Index both indicate at least a near term decline in the price of gold stocks, both also indicate that gold should begin the largest bulk of its bull market within the next 24 months.

If the first scenario plays out (which in the context of a deflationary period is the most probable), the HUI will make a much lower-low than where it stands today.  If the second scenario plays out, the HUI will make a lower low, but will resume a bull market much sooner, and start from a much higher point.

Scenario I

Scenario II

As for the rest of the markets, the nearer term pictures is not as clear as the US Dollar and precious metals.  The move upward from March 2009, however, does not look impulsive unless one stretches to impose an impulsive structure onto them, and as such the primary degree trend still appears to be down.

How long it will take to hit the top and resume the long term bear market is not entirely clear, however with more retail investors piling onto this rally every day, the safest bet is less time than more.

Have a great weekend!

Derek Blain


  1. $HUI:$GOLD compared in prior 2001 reflation, shows that deflation is winning (gold is gaining relative strength to gold stocks):

  2. Scenario 3 just goes up without the dip as seen in 1&2

  3. My broad view is crushing deflation (declining assets, purchasing power) combined with inflation (negative real interest rates), and capital controls/seizure to sustain socialism, position in physical precious metals and long-term invest for next epoch technological shift.


  4. this guys forecasts are less useful than dental floss at a Willie Nelson concert. you fools, the commies are in control now. game over.

  5. Oh gee, what i said weeks ago....


  6. deflation...wrong! Declining assets...wrong!
    Negative real interest rates? Yes for now but not for long. Buy PMs, land and food. Even select real estate will go up. Remember..location! And most in the correct currency ...C$. Jerry

  7. Jerry I did not write "negative interest rates", I wrote "negative *REAL* interest rates". We will have negative REAL interest rates until gold peaks in value and until socialism has been defeated. Because to have positive REAL interest rates, would mean to let all the defaults (and over indebted "useless eaters") go bust and to reset the western economies to 3rd world status. Positive REAL interest rates would mean that no one is bailed out, no one is given welfare, all the fat is chopped off, so only the lean and mean part of the economy can grow fast. It would end all of the mis-allocation and put billions of people in their deserved place as "nearly worthless eaters" (so they could change or starve, and the former with God inspired community). So it is extremely unlikely we will see positive REAL interest rates. We will see world war before that, because socialism is deeply engrained and will go on until it fails into fascism.

    We do have some offsetting growth of capitalism in developing world, which mitigates and extends the time that the socialism parasite can live on.

    I did not write "deflation", I wrote "deflation of assets and purchasing power" and monetary "inflation measured as negative REAL interest rates". How can any one argue that we don't have deflation of the RELATIVE value of stocks, houses, and other leveraged assets. Jerry you would have to blind to look at $SPY:$GOLD chart and tell me that S&P500 has not declined in value (purchasing power!) relative to gold (money)!

    Did I really need to explain that?

    The trap of land is that it can keep its value in inflation (energy cost is too high a component of the food profit) and the C$ is going to be worse than the dollar under deflation because of its resource dependence.

    Only technology offers us any hope out of this mess. Otherwise hold tight to the most liquid asset (gold) and pray. And try to be productive in technology paradigm shifts that could defeat the socialism faster.

    You will not be able to win by sitting in your easy chair, with a cigar and land, as socialism spreads every where. This will take everything down. Even gold could become so dangerous, we will throw it into the street. As I said, pray we are not in the final tribulations, and that this socialism is breakable early enough. I do see hope with nanotechnology and the internet. Google's move to uncensor for China is pointing towards the internet breaking the back of the socialism. The big push will come from P2P commercialization, which will then be unstoppable by courts and govts.


  8. deflationary period?
    With all due respect, I'm gonna have to disagree with you on this one.
    Obamanomics translates to IN-flation.

  9. The proof of western deflation is that everything that is not purchased by the developing world, is declining in price relative to gold.

    Period. Read the above paragraph over and over until the fact sinks in.

    And the above is accelerating, as I showed with the chart of $HUI:$GOLD (comparing gold stocks to gold during 2001 and 2008 reflations).

    Resource economics such as Canada and Australia are booming, but I say these are bubbles because the BRICs are not on a sustainable path. They've tried to move too fast, in China's case using slave (not free market, market access control over) labor (a Yuan peg) to try to undo decades of socialism unnaturally fast while maintaining control of the privileged, i.e. massive mis-allocation of resources. In Brazil, also have massive govt central planning boondoggles in the making. Ditto Russia.

    The only inflation is monetary, but these is not being captured by most assets, rather we have deflation as these are declining against gold (money). This will accelerate as the socialism is accelerating. The only defense the common man has against those in control of the fiat system, is gold. They are ratcheting the economy lower and seizing all the assets at fire sale prices relative to gold:

    They are not buying gold. They were accumulating at < $300. They are now using the fiat system to accumulate all the secured assets and turn the former "owners" (mortgagees) into renters and slaves.

    There is no scarcity of energy, land, or any other natural resources except for precious metals. These artificial scarcity bubbles are being manufactured by the debt bubble and its decline into socialism. Keep your eye on the relative price of things to gold, and this will paint an accurate picture of inflation versus deflation.


  10. Yes a deflationary period. Here are 20 reasons.

    Of course later down the road the inflation will kick in.

  11. >>>"The only inflation is monetary, but these is not being captured by most assets, rather we have deflation as these are declining against gold (money). This will accelerate as the socialism is accelerating. The only defense the common man has against those in control of the fiat system, is gold. They are ratcheting the economy lower and seizing all the assets at fire sale prices relative to gold:"

    Yes and this is what fools many people into believing that hyperinflation is on deck and next at bat. You are also correct in that salvation lies in personal possession of the specie, gold/silver.

    I wonder how many Americans have read Greenspan's essay, "Gold and Economic Freedom"? The title alone offers a glimpse at the truth. "Deficit spending is a scheme to confiscate the wealth"(of we citizens)

    As for socialism, that would be impossible under a "gold-standard" but few seem to realize that the central bank (The Fed) rules over us and controls our money supply which is now a fiat system of IOU's.

    It is the Fed's debasement paradigm that has been the pricinciple avenue for socialism in the last century yet so many blame Obama (alone). Where was the outcry when Ronald Reagan the so-called Conservative, was spending over $3 trillion through massive deficit spending? Or GW Bush with his twin wars on borrowed money, his "tax cuts" (without any off set government spending) or his Medicare Prescription Drug Bill? Wow! all these "Tea-Party" people must not realize reality and that the great "Republican" lie is that they are somehow not as "socialist" as the Democrats. In a nutshell, the central bank controls our money supply, therefore they rule us and they own both the President and Congress. Ignorance has divided this country in half and our usury masters look down upon us and smile.


  12. Contrary to what most people believe, mining company stocks did not prosper during the Great Depression for as long as gold was money up to 1933:

    The 1970s was primarily inflationary, with most everything the westerners were buying was increasing faster in price than gold, until the very end when gold price choked off mis-allocation, and there was high REAL interest rates to choke off the gold price. But this was possible, because the USA was not a debtor nation. And the boomers were in their prime working years (30s). Neither is the case today. We are now in a massively deflationary period. Run away from stocks, including mining stocks, as they will increasingly lose relative strength to gold. The only money to be made in these paper assets are buying and shorting ONLY the extreme ranges of volatility. The daily, weekly, and monthly volatility can not be consistently played to out-perform buy&hold of gold.


  13. For example, one would have been wise to sell gold on the Oct 2008 crash, and buy mining stocks or silver. One should have moved to cash at $1200 & $19, and now should be scaling back in to gold, or to silver/stocks if one believes there is another reflation wave higher before the next implosion wave.

    And at no time should one sell their core position in precious metals, as eventually capital controls are going to be put in place, and only physical precious metals will potentially escape unscathed.


  14. Your 20 reasons link fails to mention that 80 million boomers (50% the working age population) are retiring in USA. Even if they don't retire, they are beyond their most productive years. I don't even think Einstein was productive beyond 60, it is just a fact of physical and mental decline. That is only for USA, these demographic time bombs are occurring in Europe, Japan, and then in China by 2020.

    Using only the current trajectory, USA national debt goes to $20 trillion this decade, but USA only collects $2 trillion in taxes, with a huge decline to come from retirement of 50% of the working age population. Also the 2nd wave of mortgage defaults including commercial (currently in a valley or lull) will be worse than 2007/8 and peak again by 2011, and will cause a re-adjustment of that $20 trillion projection significantly upwards. So in order for us to get POSTIVE REAL interest rates, we would need something north of 10%, but the USA is bankrupt in that scenario, because even if tax rates are doubled or tripled, there won't be enough taxes to pay the interest on the national debt. And that is just national debt, not including local and state and personal and corporate debts. This situation exists in much of the western world. The developing world has better fundamentals for debt and savings, except their economies are also in bubbles linked to the western debt bubble.

    There will be massive deflation relative to gold, because the govts/banks will massively monetarily inflate. But this monetary inflation will only be captured by those who hold the gold. Remember "he who has the gold, makes the rules".


  15. Oh and I forgot the most important reason deflation is the trend. We have no scarcity of labor in the world, as automation is increasing at an exponential rate.

    Manufacturing costs will continue to decline towards zero, until things cost nearly the same as the raw materials cost when produced in million unit volumes.

    The next trend is to bring the volume down so that "zero manufacturing cost" can be applied to diverse niches. This social networking or design engineering is what can employ the world and lift us out of this deflation. This is why I say technology is so important now, especially nanotechnology and networking/collaboration/cloud software (what I am working on,


  16. Folks the industrial revolution is dying. We need to move to the next wave of the information revolution, which is P2P networked collaborative. The client-server model must die. Nano and biotech is really just software. Everyone will become involved in software, even if they don't realize it because there will be clever user interfaces for people to design with. Watch the western youth, the smart ones get it already. There is a reason they embrace social networking and gadgets. We old folk don't get it yet.

    And moving back to the agricultural revolution is not the solution (which is why land is not the winner in this epoch).


  17. Greece crisis is not solved, they kicked the can down the road a bit, but bond speculators will observe that there is not insurance that Greece will be bailed out, and now Greece is prevented from going to the IMF earlier. Besides Greece needs 24 billion euros by May, and IMF would provide at most 11 billion. I think speculators will drive the spreads back up on the Greece bond issues, and call the bluff of the EU, because the EMU does not have legal authority to do these bailouts and German voters will not accept it. Either way, the contagion is spreading and we could see the Euro plunge again soon.

    Deflationary forces are spreading. Central banks can't push on a string without causing hyperinflation. Relative to gold everything western is deflating. The only point of debate is will (has) there be (been) sufficient/timely monetary inflation to drive gold up from here. Or do we get a significant correction now, which drags gold down too (but less than all other western assets)?


  18. What we have in Europe and USA is that the accumulated deficits from 15+ years of exporting jobs to developing world, are unable to be financed. The derivative swaps used to hide this reality are now unable to sustain the ponzi scheme. To prevent the inevitable deflation, those remaining sovereigns with some headroom before reaching "banana republic" debt ratios, have chosen to ruin their ratios to kick the can down the road a little bit longer. This will finally bust the larger sovereigns around 2011 - 2014. Then there will be fighting, because that is all people know how to do when there is no solution any more.

    We need a technology solution to this unemployment and we need it fast!


  19. Blain says Au is going down soon, which is a "bet- the-farm" guarantee that it's immediately about to take off to Jupiter. Get in NOW with everything you have.

  20. HI DEREK




  21. Mining stocks had been losing relative strength, now reversal to the 50 DMA, but looks like may bounce and resume trend from last week:


    However, relative to silver does not yet show such potential:



  22. Derek, gold stocks are not going back to 2008 levels, I think you missed the incredible buying opportunity and are hoping for another one, I sense "sour grapes" on your part.

    We have the dollar index at 82 and gold over $1100oz, with your line of thinking, gold should be at 800oz with the dollar at this level, not going to happen. Bit the bullet and start buying gold here, it will seem cheap in six months!!!!

  23. Sell silver?

  24. what the heck sell your sell. only you know what do why ask other people or follow others.

  25. It was a question, based on the notion that silver is very volatile, and silver is making what looks to be a very emotional move upwards, given that other comparables are relatively weak. However, it was a question, because maybe silver is leading the other comparables towards new bull stage. But what is bothering me is that the EU has set Greece up for possible a massive failure next week, when it goes to the bond market to raise funds. If spreads do not moderate as expected, it may reveal that the EU is disintegrating and has no solution to the crisis. Also the USA markets has a loss of breadth similar to just before the February sell-off. Also it is not normal for selloffs to be tested only once. And it is normal for reflations to have a significant consolidation phase about now, with multiple selloffs to consolidate a bottom. However, gold has been relatively strong against dollar rises, so this is bullish. We have many conflicting signals, and gold is in a horizontal triangular wedge, that will soon break one way or the other. If this breaks down, I expect silver to take a severe beating, but brief. If it breaks to the upside, then silver could go much higher and was leading.

    Does anyone have any information to present for either scenario?


  26. Stop even thinking about the EU breaking up. This only comes from the US media fed masses.

    The Americam people will deny they are influenced by their 'misinformation' spreading media, yet echo its drivel whenever given the opportunity on such sites as this.

    There is not even the slightest chance of that happening.

    But if you want to include that in your thinking along with the other media trash that is dished up. then you will have only youself to blame for poor judgment in your trading decisions.

    There are many people in my country the UK that do not like us being part of the EU - and we do not have the Euro.

    But then the vast majority of the British people did not want us to go to war against Iraq. Infact I do not know anyone who did. Even most of our politicians were against it. Hundreds of thousands marched, headed by pipe bands, through the streets to voice their protest.

    The people decide nothing. The people do not rule their countries - anywhere.

    The creation of the EU was not thought up by the people, nor decided by them.

    I will let you into something which goes against all you were taught in your history lesson at school. It was not the American people who started the American Revolution, or decided its end.. It had nothing to do with tea or tax.

    And the American people are no more 'free' today than the Canadians next door who have a divided country in many respects, yet they never had a civil war, and their citizens are liked in every corner of the world. No Canadian pretends to be an American when they travel abroad

    I mention these things not to be disparaging in any way. I just want you
    to counter the brainwashing you get. If you do not you will find it tough going in our fast changing world.

    You have to let go, just as the Brits had to let go from their days of glory.

    We must keep nationalism for the sports field. It has no part today in how we perceive the world if we are going use the change to advantage. (more big changes are to come)

    The trend is your friend, don't fight it, life is too short.

    The same applies to how you view Gold and Silver.

    Incidentally, have you seen any expensive TV advertising by companies begging you to sell them your silver?


    What is a billion in these days when we ralk of trillions of debt?

    Here is the question and I don't care if you don'twant to post your answer, just ask and answer it to yourself.

    If you had the control of $10 billion
    where would you put it today?

    When you can answer that intelligently,
    and prudently, then you have all the qualities of becoming as wealthy as you desire.

    You see, when we try to figure out the market within the context of our meagre
    surplus finances (and I don;t care if that is a few millions, pounds or dollars), we fail to see the problems, and options, that attract and affect the amounts of money that engage the international markets of today, and the economies in which they function.

  28. Any dip will be shallow and should be bought:

    Ray, if I had $10 billion, I would try to find the most efficient way to put it in the largest quantity of entrepreneur's hands that I could manage efficiently. But I wouldn't just suddenly have $10 billion, I would have already developed my system in order to reach that level. But remember the greatest rates of growth occur with the smallest capital. I can buy a Coke and sell it on a hot day, to double the investment in a day, which is 1,500,000,000,000,...with 107 zeros percent compounded annual growth (assuming in the tropics with 365 hot days per year). Obviously this rate of growth slows as the # of Cokes I have to sell per hot day increases.

    The EU either disintegrates or the threat and crisis of disintegration forces a more complete union where all the debts of the member countries are shared and then governance is unified. I do actually think the latter is what will happen, because socialism is increasing, which is what TPTB want and have achieved by feeding westerners an excessively lifestyle of debt. My point in prior post is that the interim threat of disintegration and/or the socialization of the weaker country debts, either way is going to diminish the viability of the Euro relative to gold.

    See what TPTB want is for the westerners to huddle together in their fiat corral, moving towards a unified financial&political union, trying to hold on to their unsustainable debt-based lifestyle, while the fiats and the boomer finances fundamentally weaken relative to gold.


  29. Nevertheless, silver is very volatile, and my point above remained that if I can sell at $17.50 and re-purchase nearer to $15, that would be a win. However, earlier I had written never sell your core position in precious metals, and I was not implying that silver was going into some long-term crash. I was just saying that I have some reasons to speculate that the Feb dip was not the low of this consolidation.

    Ray you are often writing about what you think readers do not know. I also know the American Revolution and US Civil War was instigated by the banksters (at that time from Europe). How about just say what you know, rather than make false assumptions about what other people know and think. I stopped watching TV 15 years ago. I rarely read the mass media. You are preaching to someone who long ago understood.


  30. It is understood that anyone who had the control of owning or managing $10 billion would already have the exceptional ability, and financial acumen, to justify that position. Therefore munch implied in the question would be irrelevant.

    The whole point of the question here was to shift the thinking, our thinking, to a far higher plain to help us see things from the viewpoint of those who really move the markets by putting their money, BIG money, where it is well balanced in risk and return.

    For example, WE can jump in and out of a low cap and make a return on our money in a week, that would take a few years in the bank at current interest rates.(and I do)

    Yes, we can buy something on Ebay, then sell it again on Ebay, by improving the 'presentation' and make a good profit with little trouble.

    But you don't do this with $10 billion. It is not easy to think like a billionaire, and that is one of the reasons they are rare. Handling that kind of money forces you to see the BIG PICTURE, which the mass find difficult, or they simply do not see the need.

    We are conditioned to think small, though most do not realise this.

    The world that is being created, which was encapsulated in the theme title of the Chinese Olympics 'One World. One Dream' will function, when in the final stage, under a sort of 'inverted communism'. This is too much to explain here, and it would be way over most people's heads, and imagination, so there would be too many wanting to shoot the messenger (moi).

    You could get some, I said some, idea from the way China is run. However, the Chinese are not the planners, and there will even be changes there..

    It has a long long way to go yet, and there are many stages. The EU is just one stage which is being molded little by little.

    Elections are a farce. I could say I have never voted in my life, But that would be incorrect because by not voting, I am voting.
    I am telling them I am not playing their 'fixed' game and giving a farce credibility.

    There is one simple action that could bring a quick change, and no one would have to fire a shot, or put their life, or anyone's life at risk. That is if all the people refuse to vote.

    Of course that will never happen, and I guess, if it did they would bring in a law to force you to vote. You see, they need you to give them credibility as a cover for their skullduggery

    And then the ones you elect are only 'actors' working to a prepared script. The one's who write the script we have no control over - ever.

    Enough of this sh*t, Just open your eyes, everyone, and you won't need anyone to point it out.

    But it will provide a lot of those answers to your questions about why things are as they are.

    Good, or bad? It all depends on one's point of view, and how you adapt.

  31. As I expected, the Greece bond issue was under-subscribed and the spreads rose back to the level they were before Friday's surprise (non-)"bailout" announcement:

    Ray, billionaires and TPTB exist, because human nature disobeys the wisdom in the Bible, specifically:

    * 1 Samuel 8 - God advises never to ask for a govt

    * 2nd Commandment - never idolize any man or thing on earth

    * Proverbs 22:26–27 - never make contracts, surety, insurance, or other forms of promises in the future (because man can't control future, only God/nature can).

    Humans want to assure their happiness. They refuse to be at mercy of random nature. TPTB are mathematically necessary, because of this human fault.

    And billionaires are just like shephards, herding the sheep who have chosen to be herded, because they pray to insurance.

    See money is really irrelevant in the bigger picture. That is perhaps the next revelation for your life Ray? Then one thinks about what they can and should be doing, and money is only like a tool, that one uses but does not care about or whorEship.


  32. Point being, that I don't want to be a $billionaire, because I don't want to herd people as sheep. So if I became a $billionaire (lets say one of my software projects was a Google), then I would turn the capital back over to society as quickly as possible-- if right now, I would probably do it by causing a default in the silver market, which would break the back of socialism and set TPTB back a few decades in their plans. But obviously, this is why they carefully monitor anyone who attains a billionaire level and you won't be able to reach that level if they haven't already vetted you.

    That is why I am working on a new software idea where the capital does not come to me. It is in theory unmonitorable/unstoppable and it could kill the socialism.


  33. Anonymous, I wish you would put a name to your posts - I mean ANY name. It is hard to respond when so many use that

    If you know those things as you say, then you also know that you are an exception to the rule, and I compliment you.

    I accept that there exceptions. But our posts are read by many. In fact more than we realise because so few actually post.

    Don't take comments personally. I am not unique in my views, but I have been around long enough to know that these views can spark controversy which is not my intention.
    All I am really saying is that - perhaps there is another point of view to be considered.

    Though I admit I do lay it on about the brainwashing MSM (Main Stream Media). They are a weapon of mass distraction (and destruction).

  34. As previously mentioned, Stewart Thompson agrees that mining companies will probably be a poor investment if you buy&hold during this epoch:

    Ray, I am signing my posts with "-S", short for "-Shelby". Or if I provide a link to a post I have made at my forum, which shows it is me (my photo is there).

    The mass media exists because human nature desires one. People want to be herded, because they want to feel re-assured. Humans want no risk or random outcomes. They want to be "safe". Of course, the Bible explained that there is no safety other than God, and scientifically this is just restatement of the 1856 law of thermodynamics and entropy/disorder, which says the "universe is trending to maximum disorder". Realize the universe is a closed system, because it encloses everything.

    Thus humans want to go against the trend of the universe, they want more order in everything. But order is the opposite of what nature wants. Nature wants to break things down into the smallest independent parts and allow more diverse random interactions.

    TPTB simply give the humans the illusion they crave, and extract the wave energy from the randomness. The downfall of the TPTB is that they fight against nature too, by aggregating power and wealth. Nature will be the most brutal to them in the end. This was all predicted in the Bible 2000 years ago. Read Revelation, and 2 Timothy, etc.


  35. I have developed a workable "Theory of Everything" which is able to explain infinity as maximum disorder. Einstein ignored the complex planes in the Lorentz equations from which he derived Relativity, this is why it doesn't mesh with quantum theory. You see I won a big debate at Wikipedia for Shannon-Nyquist Sampling theorem, in which I have shown that science knows nothing with certainty, because in order to know that what you have measured is not opposed of the result you got, you have to sample it infinite times (otherwise you get unknowable levels of aliasing error). The scientific community builds illusions just like the masses do, and refuse to admit that they can do nothing about the inherent disorder in everything.

    Any way, no one can explain what happens in a blackhole, but I did. The blackhole is a window into maximum (or very great) disorder. You see as something approaches maximum disorder, then it no longer exists, so you can never quite get there. Thus infinity is explained.

    We live on a very narrow plane of consciousness, there are infinite parallel realities we can explore right now. Virtual reality will be taking us there. Humans will be able to live in their illusions and they will be just as real as any reality. You won't even need your body anymore, you will experience everything as it is real, but you won't realize your body is stored in some tank hooked up to computer.

    The body is expendable. The computer can eventually capture the thought processes of our minds and let them live eternally.

    So what are we? Do we then have no reason to exist?

    Money is really a very narrow and stupid concern. We only need it because TPTB have fed us our illusion of scarcity and physical needs.

    Interestingly I discovered some clues that 666 in Revelation may be a "pay in blood" system. It is interesting that humans will have the technology to live in illusions completely devoid of God, other humans, and control over their body.

    Indeed Ray, there will be many facets of this new world order going forward.


  36. -S you are worst than blain i don't even read your post because they are too long and you made your points in the past.