Monday, August 30, 2010

The Treasury "Bubble"

A huge majority of investment "experts" and pundits watching the action unfold in the treasury markets have been treating the recent upswing in prices as its own little corner in the big picture.  Investors and advisors alike regard treasuries as relatively insulated from the rest of the markets, or at best correlated in an inverse manner.

However, when I look at treasury bonds, all I see is a tiny piece of a much larger puzzle.  Seeing the forest for the trees, as it were.  That forest is the debt saga that has grown and bloated and expanded for over 70 years, resulting in the largest financial bubble ever to grace mankind's irrational nature.

The treasury market is more like a stop in the game of hot-potato.  Investors, fund managers, pension funds, et al, are trying to find a safe place to park their cash and make some money from it.  From securitized consumer debt to corporate bonds to munis to regionals to treasuries.  The hot potato gets passed along.

Municipal bonds are a disaster waiting to happen.  This has been well-documented by some very astute observers and I won't touch on it now.  Everyone and their uncle already knows the story with securitized consumer debt - that's been old news since 2007.  State bonds are starting to become highly questionable - some states, like California, have a higher probability of default than Portugal.  Foreign sovereign debt prices have been dropping consistently as sentiment towards debt once again resumes it pessimistic shift.

The last domino to fall, then, is Treasury Bonds.

Long-lauded as a safe haven, due to the state's ability to use its monopoly on violence to gain funds and its political ties to the printing press, Treasury bonds have had quite the run of late.  Virtually no one is bearish on this final domino in the debt bubble (98% bulls registered on the DSI last week).  While we could see a pop in bond prices, this move is exhausted and near its end.

I have written before about how a deflationary environment can still drive up yields as the probability of debt repayment drops drastically with the contstriction in available free cash.  This should be the reality of the situation over the coming years.

The moral of this story is:  Treasuries aren't in a bubble - debt is in a bubble.  Treasuries are just another name for the same thing - someone taking on an obligation they cannot repay.  We are unwinding several generations of positive sentiment that morphed into a mania - this is not a slow and easy process. 

And a classic pattern to end the move in a classic "safe haven":

As you can see, this is not a pretty picture for long term Treasury holders.  The coming move is going to take millions of investors, pension funds, traders, etc. by surprise. 

As such, my recommendation is this:  Short Treasury Bonds - the longer term the bonds you can short, the better the results will be.

Have a great week!



  1. good analysis. I fully understand your rationale for the breakout of the falling wedge typically breaking higher. These are not typical times and I expect the pattern to be very similar to the period of April-oct '08 where it declined at nearly the exact slope it has declined now for the past 5 months. Then it fell off a cliff as panic set in, and the dollar soared. I am waiting for that panic where the absolute maximum number of investors herd into what they feel as safe. I am planning to buy the TBT for under $20. Or what may be an even surer play is to short the TLT and let the mathematical mechanics of etf decay work in your favor over the time it takes to crash which would likely be 6 months to a year. I am very interested in your take on the metals, and always appreciate your perspective on what ever you are looking at.

    Ed in jersey

  2. How lame is this guy? Totally wrong on gold and silver. Then goes into hiding. Sort of like David Banister who was predicting on BNN a severe fall in gold price. Save us from these "pundits"!

  3. There are many indications for the astute to figure out what gold will do, as in general trend. But only those 'elite few' (who do not have blogs, twitter, facebook, or post as analysts on websites, which are druga for the addictive masses who can't think for themselves) know the all important twist and turn points in that trend.

    The objective is to keep 'the enemy'(that is all but themselves) guessing and making errors of judgement.

    This should not be a revelation. It is the way the game is played. If you think, or have thought, that this was ever meant to be a level playing field, or run to Queensbury rules,
    then there is something lacking in your mind box.

    Can you make money? Yes. But only when you treat this as a business, Learn the hard facts, stop listening to too many pundits, accepting government statements, and published statistics.

    Instead, watch what is happening - IN THE WORLD. The US is only one small part of the whole, and its role is diminishing just as was Britain's a century ago.

    No, that does not mean the end of the US, it means it must adjust (like Britain) to it's new role in the order (new world order) of things.

    This is ONE WORLD in more ways than ONE! Get with it, join 2010, soon to be 2011

  4. Ray, where else are you posting nowadays?

  5. I meant daily or regularly. Its interesting to read you, i've learned a lot.

  6. Annonymous - not sure which anonymous you are. Are you Kylie?

    I am too busy trading in this volatile, bu exciting, gold market to post much. I do respond to a number of so called 'analysts' when something they write gets up my nose.

    This is a great time we are living in. Yes, our world is run by criminals, but once you have figured out their game, and ignore their puppets, then they are fairly predictable in the long run.

    If you play their game to THEIR rules then you can make money.

    And there is one thing to remember. 'They' have to live in this world which is getting smaller every day. As yet, ther is no other planet to escape to. So, they are not gpoing to screw things up too much.

    Nuclear wars bother them becaue they know there is no escape for them. The fall out, especially with todays weapons could reach everywhere for a long time. Consequently, they will be avoided.

    I do not beleive we will ever have a nuclear war
    if only for that reason. Also wars are going out of fashion. They are too costly, and no one wants to fight them. Those who start them do not like to fight them.

    Everything connects. We cannot ignore any part. But we must know that it all fits in.

    Like your body. You may have a problem in your neck, but it could have come from your feet, and your foots problem could have come from your diet. You have to see the connection and not focus on one area.

    Hope you see the analogy to the markets, economy, and waht is happening in our world.

    Connect all the dots. All pictures can be reduced ro pixels (dots). It takes lots of dots to make the picture. That is how to view life, as the picture unfolds.

    Have fun

    (incidentally, i am in Italy at present)

  7. There is a big market reversal coming very soon.

    Before a big turn there is always a strong move in the trend as short players are squeesed

    First to go are the weak ones, but more pile in trying to guess the top, so up it goes.

    The long term trend for some time yet for gold is UP, but, especially in such a small market (though an important one) the true professionals will not chase the price up. They will shake out the weak before moving in.

    These are often also the professional shorts who will be behind the 'correction' and know when it is to be actioned. They will make money as they push it down, then when it has run its course - BUY!

    So, where are we? We take advantage of the nervousness which causes the volitility, and be satisfied with quick small gains. Or, if you don't have the stomach for trading, stay in, hang on, and buy more when there has been a reversal.

    You will be safe as the general trend up is still secure.

    What is likely to trigger the gold down is a reversal in the main market. It will, for a time, pull down the good, bad, and down right ugly.

    Have fun
    (sorry for any errors in typing, it is a terrible, and foreign, keyboard. Not my own.)

  8. I cannot emphasise too much the need to keep your head ('when all around you are losing theirs', as Kipling said)

    It is the ubiquitous round the clook news, especially the visual that makes our world appear much worse than what it is. One bad event is repeated again and again.

    But, there has never been a better time to make money in the market once you clear your head of the rubbish and false illusions.

    Don't watch too many stocks, it is confusing.

    See it as a business. Unless you are in a position to think long term, you have to see yourself as a speculator/trader. Be satisfied, certainly as things are at present, with small gains, and cut your losses fast.

    To me, picking a long term stock trade would be more difficult than a short term one for trading.
    Keep well away from the 'pinkies' unless you like swimming with sharks and barracudas.

    And 'may the force be with you'.

  9. Ray

    what are pinkies? Do you mean pink sheet stocks? I don't think you do since you are bullish for gold and many of those are canadian that trade as pink sheet stocks in the US.

    Agree that things are not as bad for the world as the press says. Yet on the contrary, I think things are much worse for the bankrupt and insolvent US, than the main stream media says.

  10. When I say 'pinkies' yes I do mean the 'pink sheets'. Whatever trades there, I would not touch, Canadian gold stocks or not. That does not mean that there are perhaps one or two that could make money, but the risk is too high, and the odds are against you.

    (But don't let me stop you if you feel you must)

    The odds are ALWAYS against us anywhere in the financial markets once you realise what you are up against, so you have to seek out the less dangerous areas.

    Never forget, MOST people lose money in the stockmarket over time, you/we have to make sure we are not one of them. No mean feeet.

    America has been in the hands of its creditors for many years, probably since it first became the US. Who do you think financed the so called revolution (and were behind it, and for why?)

    No do not look into the history books, they will never tell you the truth.

    Britain was just the same. There would have been no such Empire without the finance. Who provided it? And for whom we have been forever in their debt.

    Did you know that the one square mile of the city of London which is the 'Financial District'
    the Queen has to ask permission to enter it?

    But enough of that. Whether one believes or not. it will not change anything.

    However, why it appears especially bad for the US
    is because they/you are having to drop from a higher place. Coming down a peg or two is always harder to take and acccept.

    The Brits had to do it, and some are still finding it hard. But the country survives, and most people live better today than their parents (in spite of what you might read at times).

    I know Brits who own two homes, whose parents did't own one, and take vacations in places their parents could not dream about.

    So do not worry too much about the US. It will survive quite well within the New World Order. But adjust, it must.

    We are in a world that is in a slow pace of evening out of nations (not people). The divide between people (rich and poor) is widening throughout the world. It is the middle classes that are suffering the most, and the US had a very large 'middle class'.

    These are things we MUST understand, because it is a trend which affects now and the future. It is the basis from which to do your financial planning. Plan things with the trend, and at least you are on the right road.

    I do not ask anyone to agree with me, but just consider, and watch how things are playing out.

    I would suggest looking for good active ETF's. This way you are protected a little from the vagaries of an individual stock within a sector.

    Watch for a trend and go with it. Do not try to guess one, and pre-empt its arrival. The Japonese built their success from nothing by taking success, and trend, and going with it.

    The Chinese have done the same.

    Just a few things to at least think about when you have nothing better to do. Anything which stimulates thought (especially about making money) I find of interest.

    Cheeers to all, friend and foe.

  11. A few words about DEBT. So many get hung up over this word, and its implications.

    Where people go wrong is treating this in a very narrow way, like one way fits all. They think (as they have been conditioned) to think - small.

    It all depends on WHO provided the loan, and how it is in their interest to handle it.

    I should have put that in capitals so it sinks home.

    A person could lend you a million dollars and put you way over your head in debt. You could even spend it wastefully.

    It could have been hoped (planned, encouraged) you would waste it

    It is only if, and when, the lender calls it in that there comes a problem.

    Now, if the lender has no need to call it in, he could have ulterior motives for keeping you in debt, then you could remain in debt for ever and a day.

    Now that is only one angle re debt. There are many. You have to look at all sides, and not just that which is obvious.

    You can control people(nations) by debt. in these scenarios debt is the weapon. You do not want them to repay it, or be able to.

    Need I go on? Start using your God given IMAGINATION, He gave you as a child, before you had it knocked out of you. Don't think BIG, THINK BIGGER. You will then have advantage over so many others because the world thinks so small.

    The people who hold most of the worlds debt, also control its money supply, and its 'real'money - GOLD .

    Think what can be done in that position. ANYTHING! You hold all the trump cards.

    All the proof you need they show you every day. You can't say they hide it from you. It is no great revalation. What do you want - a large neon sign in Times Square, and round the clock TV announcement?

    Happy days.

  12. Ray, I am the anonymous that asked where you post regularly.
    I understand perfectly what you've been saying for a while. Perhaps because its a confirmation of some of my thoughts.
    Now, as per trend identification, can you give some more precise advise on how you do that? Any clue on when to expect gold correction and why?

    Ciao e buone vacanze.

  13. Identifying trends is not too difficult. Identifying the timimg of the'twists and turns' within a trend is not so easy.

    The intention is to make them difficult, and they know how to do it. They have all the information on where the money is being placed - live time.

    Otherwise we would all be doing the same thing.

    I use 'Big Charts' for my charting. I use mainly a six month chart, but also keep an eye on a longer time period - three, and five years.

    I am mainly concerned with direction, volume, over bought and oversold, plus money flow. Oh and 200day moving average. But that is me, I have got used to them.

    The trend you can see quite clearly. The line indicates this. Trend means trend, so it has to hold for a period. There are small 'corrections, and large ones, on the way (of the trend).

    The large ones can make you believe the trend is changing, especially if you hsve taken too much notice of analysts, and the news, that has tried to convince you.

    Gold is an excellent example at present of a line showing the long term trend. Also the economic news is supporting.

    Unemployment is no longer the indicator it was. Labour intensive industry has moved abroad. Technology has been, and will continue to replace labour, at an ever increasing faster pace. THIS IS THE WORLD'S GREATEST PROBLEM NOW!

    Forget global warming. Population is increasing (more people) Need for physical labour decreasing (less work) THINK! Think of the implications in many directions.

    Old yardsticks do not work the same. IMMENSE change has taken place more than we can all take in - even I. AND IT CONTINUES.

    It would be pure luck to spot the start of a trend. I mean the very start. But because a trend MUST hold to be a trend, there is time enough for us to jump aboard and go with it.

    Hope this helps for now.

  14. Gold could drop to just below $1000 dollars and still the trend up could hold.

    Of course it would shake most gold bugs, especially if they had bought at current price.

    It would also make people nervous about getting in. Which is the idea. Otherwise how could big monsy get in such a comparatively small market without the price running back up before they do so.

    Understanding psychology is a must.


  15. Ray

    I think I have spotted a new trend. It is one that should intrigue you. Rare Earth Metals. Critical to produce new green technologies, complex advanced military weapons, all the apple, blackberry, android, type products, etc. etc.. China has undercut world production of these to the point that now they produce 97% of world supply. Last Friday due to chinese fisherman getting taken by the Japanese, China has retaliated by cuting them off from critical rare earths. All the stocks are exploding. I would like your thoughts on MCP, REE,, Lynas, Avalon, and Great Western Minerals Obviously many of these are pinkies by necessity. Yet they are ready to jump on to major exchanges with the amount of investment they are receiving. Trend or flash in the pan? Ray if you were to dismiss these simply due to pinkies, I think you are potentially missing a trend- one even your successful Japanese can't live with out. Also you can check out what Jack Lifton has to say. Your thoughts please?

    Ed in Jersey

  16. My thoughts? I think you really know before I answer.

    They were not idle words when I made them about 'pink sheets'.

    If you like this sort of thing, and if you have not already, go to 'Investors Hub' you will find a lot of 'friendly soles' there

    Sorry, but I am prepared to miss out so many questionable 'opportunities', like sure fire things, that bombard my mailbox.

    I have gone through all that some time ago, so I am talking from my own personal experience.


    Now, it appears you have to find out the hard way why I do not follow anything in the pink sheets. I also generally avoid the OTC.

    Why? From personal experience. I LEARNED THE HARD WAY. But, because I am cautious, not too badly.

    Feeling in the 'pink', then go for it. Who knows, you might just be lucky. But I will nor help to send you there, then you can't blame me

  17. ED
    Thought I would mention. To me, a couple of months is not a 'safe' trend.

    It is so typical a reaction to some politcal event that has been 'news', then later hyped.

    Now there may be some substance, but if there is a genuine trend here, then there will be some heavy profit taking before that trend continues and develops. Trends do not end quickly. Not real trends. Only hyped ones do.

    You could have made a lot of money if you had bought before the so called 'news' was flashed.

    We are going to see a lot of this developing from 'staged' incidents. There are those who do not want stability. Financiers (and I use the term loosely) do not. they make money from other's fear, and from debt.

    There are those who especially do not want China and Japan to huddle together. Reasons are obvious.

    Be aware.

  18. Ray,

    Yep, pretty much what I expected, yet I thought you might have more to say about the monoply control of china in this critical industry. Yeah the lame stream media wants us to think china and japan have problems. But isn't there history between them? I think there was a time when the Japanese weren't so nice to the chinese, and while that was a long time ago, china is not in a hurry to get over. There are a lot of assets we have that china wants now, and they appear to be on sale, but china is patient. They will wait for the real trouble to occur, then step in when our leadership is begging for foreign investment and pick over the choicest assests for pennies on the dollar.
    I don't fault them, just disgusted with USA leadership. I plan to do the same thing. I want to buy a couple of rental properties, but not in a hurry, I expect prices to fall much further.
    Thanks for your insights. I will contiue to play some positions in rare earths-not large enough to hurt, even if they went completely under. On the other hand, I think its at a stage similar to gold/silver stocks 7 yrs ago. Thanks for the suggestion of Investors Hub. I registered there and will give it a try.

    Best to you,

    Ed in Jersey

  19. History is made up of two basic words His and Story. It is the story of whoever writes it, or pays some writer to write it.

    Each nation, each culture, each religion, has its own version.

    Never forget, Japan just lost a war that almost wiped it out. It was occupied, and still is. Like Germany Japan is an 'occupied' defeated nation. They cannot think and act for themselves.

    With China it is different. TPTB are in there but not in the same way, and with quite the same control.

    Not all which you think is Japanese, is Japonese, never be fooled by the name over the door.

    ALL nations are in debt, even China, so thry are all under control of those who hold their debt.

    Not all whom you think are Chinese, or Japanese, are what you think they are.

    It is only important to see these things so that you are not fooled by how media portrays things.

    Also what goes on behind closed doors is different to what the world sees.
    This is why I pay little or no attention to them expect that they may indicate how the mass will behave who believe all the crap that is dished up up them.

    After all, markets are only moved by human behaviour. People act upon what they perceive to be, not what is.

    There is a lot of money to be made trading gold in the markets at present so why should I look elsewhere. You can make money up or down.

    I focus on Gold so that I can almost feel its heart beat. When things change, I will change, I am not married to it. But its behaviour is fine for me for now.

    If it is any consolation to you, the people who control the US, whether they have US passports (among their collection) or not, are NOT Americans. Their 'allegiance' is elsewhere. The world is their nation, all nations are merely 'States' within their nation.

    Hard to see for most people, and they never will see it. The have been well and truly conditioned not to. Also they are too interested in pop music, beer, drugs, sport, or whatever, to see what is happening to them.

    But this is not just America. Most of those who do see it, and are fighting against it, we now see as terrorists. Why? Because we have been told they are.

    These people only want to be left alone to live their own lives the way they want to. They do not want us in their countries except as tourists, if we must. Then we are as welcome as the flowers in May.

    Focus only on what is happening, and is developing a solid trend. If you are in the trend
    you will always be OK, even if you bought just before there was a correction (that kicks out the weak, and lets in the strong)

    Stop worrying about your 'leaders'. the ones you see are mere puppets. (sometimes, if you look closely, you can see the strings, or hands up their backs.)

    All the best. take care. I return to the UK tomorrow.

  20. Thought for the day. (and every day)

    If you follow the majority (which obviously the majority do) then you will be wrong over time.

    Why? Because Markets (helped by media)ensure that they are always wrong.

    If you can't figure out the reasonong behind that, and you value your money and time, stay out of ther markets

  21. Derek,

    Your mind has to be reeling now. When you turn on CNBC. I am very interested in your thoughts now on the market even if they are not in synch with what we are currently witnessing in the markets. Its been a month since you posted, today is the last day to get a post in on this wonderful Month of September- the best for the stock market since 1939? Wow, you must have a comment on that. Please comment on the attached article - similar to what I would expect to hear from you.

    Ed in Jersey

  22. Ed,

    I doubt if Derek is into giving responses. He has almost left his Blog to drift with no one at the helm.

    Here's my take
    With today's set up (virtual reality) which most people think only applies to movies and such, you do not have to have the 'real' thing.

    So, things do not necessarily act according to true supply and demand as is taught by Academia, and espoused by sausage machine produced economists.

    So much silver being sold as silver today is NOT pure silver. Don't believe me, go and get it properly tested.

    This aside, most of it is traded without the intention of those who trade ever wanting to take up delivery. So, real silver or gold hardly ever leaves the vaults.

    There is far more (digital) being traded than the real stuff that exists. Like money it can be produced by the click of a key.

    No, most people do not see this. They can't see it, they lack the imagination to see outside their little boxes life has squeezed them into.

    Unlike houses, the masses do not need gold, or silver. You cannot creates homes with the click of a key. They tend to respond to supply and demand. The masses need to buy them, and sell them. 'Genuine' bubbles can be created in property.

    Bubbles, and huge price movements need the masses to participate.

    The masses are not into gold or silver. Because most of you here search forums and sites that deal in PM, and focus your mind there, it fools you into seeing things out of perspective.

    In spite of gold's climb, there is not one mine that returns a decent dividend.By nature, because mines have a limited life they should return a good dividend, and used to do years ago.

    Even I in my earlier days have had some good gold mine checks.

    The only thing moving these mines at the moment is the 'The greater fool' theory.

    They can be moved up and down at the will of those behind the scenes. You can still make money, if you accept the game as it is played.

    You have to accept reality, and not be fooled by how you have been conditioned to believe how things work.

    Gold is mainly important because it is 'real' money by which macro deals like oil are traded.

    Silver is NOT used in this way .Silver is much more easily faked than gold, and is.

    The masses really need neither, never have, and never will.

  23. @ Ed in Jersey,

    Yes I have been following both stocks and the precious metals closely. I would say, however, that I wouldn't classify myself as "reeling" more simply genuinely surprised.

    I did write a few months ago that an alternate potential for gold, if and only if it broke through its all time high on a daily close, was that it could run all the way up to 1325 and potentially a little higher very quickly. This, while I deemed it the lower probability situation, has occurred.

    Precious metals are in terminal phase. The DSI from Tradefutures is something I pay fairly close attention to when coupled with overbought and oversold levels and momentum indicators. The story on gold is this: Each successive move higher has occurred on less internal strenght than the previous one, including the longer-term moves going back from 2008 to the low in 2000. This is not the sign of a healthy market, this is the sign of a waning trend and impending reversal.

    To Ray's comment about gold and silver in monetary terms, one can argue that almost nothing is "needed" other than food shelter and clothing for basic survival. Leaving behind the liability-shifting approach of some overlord system where prices are manipulated by a few "behind the scenes" demi-gods, when it comes down to it, gold and silver are a probability play. That probability is: When one does a basic study of history one finds that, most often out of all the other choices contained therein, people in an unhindered economy will generally choose precious metals as their means of exchange and account, and their means of storing value.

    That's not to say that other options do not exist, they most certainly do, but gold and silver will always be worth something unless there is no basic necessity to buy, in which case talking about markets would be irrelevent.

    As such, you have a higher probability of purchasing something that will be worth SOMETHING in virtually any sitation with gold and silver than you do with almost any other asset - they are unique in this regard.

    Back to "surprised", Ed. My surprise is something I shouldn't be so surprised about these days, but I marvel at just how long a trend can hold out at times, how often people are willing to chase prices higher and how stretched and one-sided a trade can get. A 95% reading in silver has preceded every major turn over the past few years. Coupled with internal momentum indicators, this is not a new trend - the final potential here could be a couple of things: A blowoff top adding a few dollars onto silver, followed by a quick reversal and large bear move (this is common for all commodities), or a quiet top that quickly accelerates into something bigger. Either way moves in stocks, debt instruments (inflows have registered huge records over the past year), precious metals and currencies will take so many by surprise.


  24. Thanks for responding Derek,glad to know you still keep an eye on things.

    " can argue that almost nothing is "needed" other than food shelter and clothing for basic survival......"

    That is perfectly true. And that is how it has been since life began in all the animal kingdom, actually 'clothing' as we humans know it only came after we stopped using that which
    nature provided. First,we 'stole' from other animals, that which nature had provided them.

    However, we humans, unlike the rest of the animal kingdom, developed life, and our 'needs' beyond the basics. We have now been 'attuned'to these other 'needs'. We actually call them 'life's necessities'. We will protest, and fight to regain them if they are taken away.

    TV's are even provided for criminals in prison. They would riot if taken away..

    No prisoner would worry if gold, or silver, was banished over night. (unless, from a 'job', he had stashed some away for when he was paroled)

    Currently, we have a two tier monetary system. Fiat for the masses, and gold for the Financial Elite's 'keeping account' system and used in MACRO economic transactions. Cannot go into the fine details here, but they are not important as long as one 'sees' the basic.

    Until the 'One World' state is completed (still a long way to go) gold will, almost certainly, retain this role.

    Once all is in place, it will not be needed. The monetary system will be all digital. The Financial Elite will control all natural resources, so gold will not be needed for even macro deals. Nations, as we know them today, will be relegated to 'States'
    within the whole. 'All for one, one for all'.

    The advantages are enormous, even with today's knowledge, to any economic/political/social controlling system,especially when, in numbers, the controlling elite (government, if you like) is small, compared with the mass. (You have to control people's 'pockets', to control them)

    None of us alive today, need worry about that day, if the thought should give you worry. Not unless they develop a super longevity pill. People alive at the time will grow into any changing system, as we all have done up to now.

  25. SURPRISED (....."but I marvel at just how long a trend can hold out at times, how often people are willing to chase prices higher and how stretched and one-sided a trade can get.."

    I am only surprised, that you are surprised, Derek. You have obviously accumalated a lot of srteetwise savvy on the way.

    There are such obvious reasons for that which 'surprises'. In a nutshell, to surprise the naive is the objective by stringing things out beyond their 'sell by' date.

    Otherwise all chart followers would be able to figure out the timing of the twists and turns.

    As I pointed out, so often, even in my recent
    contribution. Anticipating something is going to happen is not too difficult, knowing 'when' is. Timing is everything. Only those who control the issue know WHEN!

    WW2 The Germans knew we were going to invade Europe. We just kept them guessing - WHEN!

    The greates error anyone can make today in market speculation is to believe they respond to Academia's economics,and that they cannot be manipulated because of their size.

    I have one answer to those who say thus - UTTER RUBBISH! (And the markets continue to prove me right.

    Result: We won.

  26. Most of us, if we are honest, are not good mathematicians.So get you calculator handy.

    This might explain the importance of gold in our economic system.

    I explained our (not publicised) two tier monetary system.Fiat for us (masses) Gold for Elite (macro deals)

    Now you have observed that differant currencies can go up, and down.

    I will keep this very simple with 'silly' low amounts.

    At a moment in time, gold is $1000 an ounce

    The Greek drachma is two to the US dollar.

    The IMF loans Greece $1000 (That would mean, to return the loan it would cost Greece 2000 drachmas (we are leaving out interest for this analogy)

    But what if over time the Greek dracma impproved
    and the US dollar fell to where the Greek Drachma was worth $2.

    Greece would now need only 500 drachmas to repay $1000 to the IMF.

    And meanwhile gold has shot up to $2000 an ounce

    The IMF (or lender) has lost out- terribly.

    This is why although fiat money is referred to by media in the transactions. It is the fiats relationship with gold that is used.

    So, to Greece, at the time they were no loaned $1000 dollars, they were loaned one ounce of gold (the basis of all 'real'macro deals).

    When Greece returns the loan, it will have to equate to the price at the time of one ounce of gold.

    Britain borrowed money fom Rothschild to finance the war with Napoleon. He was loaned GOLD. And gold, or its equivalent value, had to be returned,win or lose the war.

    It mattered not what happened to the pound.

    Now, have fun playing around with different scenarios.You will eventually see why gold is important, and most of all WHY IT IS CONTROLLED (managed) by the Financial Elite.

    No one has ever tried to rest the gold control from them. Silver has been attacked a number of times Everyone has heard about the 'HUNTs'.

    That's a very simple explanation, but it should get across the idea.

    Have fun, things are rarely, if ever, how they are made to appear.

  27. ".....He was loaned GOLD.... "

    That should have read 'It' (Britain)was loaned gold...

    But you figured that out?

  28. Derek,

    Thx for responding. I just went short oil today using the DTO. On your Aug 8th post and graph of oil, it appears to me that oil in carving out a H&S pattern. I know you went short then at 85 and thats still a good trade. You may get another oppty to short at that price again. My position is relatively small and I will likely increase my short as oil approaches 85. My thoughts are that the dollar is oversold and will likely stage some small rebound and therefore drive oil back down. If things turn real ugly, maybe even as low as you have targeted. You still short oil? What would you do at $85 oil close short or short more?

    one other question, you said precious metals are in the terminal phase. Could you elaborate. Do you mean for this impulse move? I know you mentioned a while ago that you really like silver - me too. But I believe that a large deflationary wave could push it down again similar to fall 08, at which time I would like to load the boat for a much more dramatic rise as we experience a dollar crisis down the road. Is this a realistic scenario in your opinion?


    Ed in Jersey

  29. Hi Derek,

    I remember end of last year you strongly predicted a big fall in gold prices. Why this did not happen? Please explain! I belived you but you was TOTALLY WRONG

    Sergey, Ukraine

  30. You promised a fall to 800$ per ounce. But now it's 1320! What is wrong in your theory?

  31. Sergey Ukraine, and any others out there,

    I do not defend Derek, or any analyst/soothsayer.

    However, you should know why he was wrong, even if you did not take the trouble to read, or believe. the explanation I gave of why these analysts are wrong.

    Why should you know? Answer: COMMONSENSE!

    If they knew for certain something was going to happen, and particularly WHEN.
    They would be multimillionaires, and would not waste their time maintaining a blog.

    Derek was wrong, like so many, and will continue to have his hit and miss guesses.



    Now, if you don't see and accept this, I advise you STAY OUT of this jungle.

    Why do I continue to make money in the market? Because I bet against the analysis. Well, that's one reason. Another is, I am prepared to take small profits in times of high volatility.

    I make some errors, but when I do I get out fast. I never fight 'the tape'.

    The markets are NEVER wrong, only most of the participants are because they do not use common sense.

    Actually, I have found, there are few things so 'uncommon', as 'common sense'.

    Best wishes to all.

  32. No, I cannot tell you the day, or the time, the markets will make a big correction, but 'they' tell me one is coming soon.

    They? I mean the markets are telling me and YOU.

    The power that controls economies and markets can bring the market down anytime - even today.But, it has to be at a time convenient, as in most prifiable, to them.

    All is well planned, be assured. They did not build the greatest Financial Empire by being idiots.

    There also has to be an 'event' that can provide a reason that will be accepted by the dumb masses. So, the 'event' is also planned.

    Should this all surprise you? It should not, even if you are young you have seen enough in your lifetime to be
    aware that all is not as presented.

    Deception is such an easy, and effective, tool.

    What can we do? Be alert, and aware. Saving your money is the name of the game at present. They are waiting the moment to cream it off you.

    Happy days.

  33. For the first time,I believe. The US dollar, the Canadian dollar, and Australian dollar are almost at parity - about one to two cents only between them.

    Two world wars are raging at present

    (1) A Currency War

    (2) A 'Terrorist' war.

    Both by design. Designed by the same people to achieve a pre=determined end.

    Who will win? The same people who ALWAYS win. Who will suffer? The same people who ALWAYS suffer,especially if you don't exercise great care managing your money.

    No, you don't need a crystal ball, just use your head.


    With that hitherto unknown quantity entering into the equation, I refer to China's growing enormous reserves, and the vast Chinese (and Asian) population growing wealthier by the minute, we could have a situation which could see gold rise consideraby higher without it being anything like a bubble.

    Too many 'shorts' by those who are 'short' sighted (pun intended) could exacerbate this.

    To explain. We could have the mass of Asian population joining the buying spree as they see the price rising. They only hold back for so long until the fever takes hold.

    They are fnanatics when they smell profit.

    In the past, we had the 'Western' arm of the Financial Elite who could arrange for unloading gold from their vast reserves to bring the price down.

    But then today we have the Chinese Financial power ready to snap up that gold should we attempt to do so. Check mate!.

    Gold ss the money of the Financial Elite and used for macro deals in particular OIL, is inextricably interwoven into the international economic fabric. It cannot be bypassed.

    At present oil and gold are not much out of sync.The Arab sell oil for gold based on around 15 barrels to equate with one ounce of gold.

    At today, oil is only about seven dollars a barrel below that yardstick, which is nothing, and can easily be adjusted. So, the Arabs, or oil cartel,.will not be unduly concerned, in fact, quite happy under the prevailing world economic conditions..

    Just something that should not be overlooked if one is concerned with prognotisticating, or 'speculating'.

  35. Ray Newton, please go away! Take with you the resident herd duds you inspire. Find another free outlet for your analysis, and well intentioned BS. Find another audience that gives an 'F' about what you have to say.

    People visit this site to hear what Derek has to say. Derek is a trader, not a daily columnist/blogger.

    Ray Newton et al. please go away. Perhaps concentrate on doing something else, something that you're probably very good at, like beating your meat.

    Speed along now.

  36. Anonynous Ignoramus. A species which has a penchant for using terms of speech which are in keeping with its low order in life.

    Derek is quite capable of speaking for himself, why not treat him with the respect that you claim makes you come to his site.

    I also suggest that Derek invites comment as part of his blog. That means comment on the markets, not attacking other posters.

    I suggest you heed the terms of reference for posting here.

    When Derek tells me to stop posting, I will - gladly. I receive no financial reward.

    Such comments as yours only inspires me
    to continue, if it is only to get up your nose. It is always open season for
    Ignormus Anonymous.

  37. Ray, do you see a correction in the short term or is it a good time for buying?

  38. To Anonymous M

    First let me say, I am mainly focused on the 'GOLD' market. I keep one eye cocked on other areas because everything is interrelated, but my main focus is GOLD'
    To me, Gold is for trading - at all times, but now, in particular.

    Most definitely I see all the potential for a correction at present. But then there are big ones, and little ones. Even the little ones can be scary when they happen, especially if you have just jumped on board.

    Myself, I am prepared to take small profits when there is so much volatility. I also find options favourable while there is so much volatility. But then one needs to understand options well, starting in a small way while building understanding, and 'feel'.

    I first see the 'BIG PICTURE'. By that I mean where we are heading, and by 'we' I mean this world as a whole. It is not drifting without direction. That is the greatest fallacy to believe otherwise.

    Look at it this way. If you were flying from say, New York to London, and when you were half way across the Atlantic you were told some people had taken over the plane and were diverting it to Libya, or wherever, how would you feel?

    While you may be upset, you would be more worried if you had been told the pilot and co pilot had both died, and there was no one flying the plane.

    Me, I would rather finish up at some airport, than ditch out of control into the ocean.

    I might console myself by saying, well this is my opportunity to look around some other country.

    So, I look at the markets to see how I can use them to get where I want to go that fits into the big picture. Never fight odds that are highly against you. Leave that for Hollywood's distorted presentation of history, or patriotic
    indoctrinated idiots, hell bent on being being cannon fodder.

    Move with the winners, then the odds are less against you.

    The 'little man' has never had a better time than today, in spite of how the picture may appear. I would not swap today with any period in the past.

    Those Kings living in palaces and castles didn't even have running water, proper toilets.
    toilet rolls, or matches to light their candles or fires.

    All you need is the IMAGINATION and sound reasoning to see and use what is happening before your very eyes. Then go with the flow of the currents.

    USE THE CORRECTIONS, or FEAR, of them. View them as positive that fit in with your plans.

    Enjoy this fantastic life you have bean loaned as long as you have it. USE POSITIVE IMAGINATION!

  39. Anonymous M

    First let me say, I am mainly focused on the 'GOLD' market. I keep one eye cocked on other areas because everything is interrelated, but my main focus is GOLD'
    To me, Gold is for trading - at all times, but now, in particular.

    Most definitely I see all the potential for a correction at present. But then there are big ones, and little ones. Even the little ones can be scary when they happen, especially if you have just jumped on board.

    Myself, I am prepared to take small profits when there is so much volatility. I also find options favourable while there is so much volatility. But then one needs to understand options well, starting in a small way while building understanding, and 'feel'.

    I first see the 'BIG PICTURE'. By that I mean where we are heading, and by 'we' I mean this world as a whole. It is not drifting without direction. That is the greatest fallacy to believe otherwise.

    Look at it this way. If you were flying from say, New York to London, and when you were half way across the Atlantic you were told some people had taken over the plane and were diverting it to Libya, or wherever, how would you feel?

    While you may be upset, you would be more worried if you had been told the pilot and co pilot had both died, and there was no one flying the plane.

    Me, I would rather finish up at some airport, than ditch out of control into the ocean.

    I might console myself by saying, well this is my opportunity to look around some other country.

    So, I look at the markets to see how I can use them to get where I want to go that fits into the big picture. Never fight odds that are highly against you. Leave that for Hollywood's distorted presentation of history, or patriotic
    indoctrinated idiots, hell bent on being being cannon fodder.

    Move with the winners, then the odds are less against you.

    The 'little man' has never had a better time than today, in spite of how the picture may appear. I would not swap today with any period in the past.

    Those Kings living in palaces and castles didn't even have running water, proper toilets.
    toilet rolls, or matches to light their candles or fires.

  40. Sorry about the double post. The reason was because it told me that first could not be posted as it was too long.

    So, I clipped off the end, and posted it again.

    I am expecting the 'correction' if it does come. and so far the pointers are there, to be in November. Reason: Those who expect bad things to happen always expect them in September/October period because of the past.

    As they say - expectation can bring vexation.

    So, I look to late October, early November

    Just my hunch. (But I am alert all the time.)

  41. What you are seeing today is a classic bear squeeze, and they are using the charts to lure them into the trap.

    Most of the players are traders - momentum,swing, day, whatever.

    Bears, or short players, come in many varieties (so do real bears - don't they)

    When they are preparing for a market fall the big bears, that is the true elite professionals who are 'in the know with regards to timing' have to knock out the smaller ones first before they move in.

    The process of knocking them out works for them in two ways - it pushes the market higher as they are forced to buy back.

    The 'Elite' sell into the frenzy because they were in the early days 'bulls' who bought low.

    Then, they put on their bear skins and take the short position right around the top.

    The gold market, certainly the mines, is a small market, so a small amount of money can move the market viciously, and can create high volatility.

    This is what we are seeing.

    Have you noticed though.The mines are not all that high for the high gold price - at l;east not yet by a long way. And there is good reason for that. You figure it out.

  42. Ray thanks a lot for your thoughts.
    I wonder how you play short term and how you see possible to take small profits using instruments other than physical delivery but as secure. Do you think an intraweek strategy can be developed?

  43. M is Ray talking to himself :D

  44. Anonymous Yes, Ray IS talking to himself. I did explain once my reasoning.

    It is to reinforce in my mind what I should not forget. Constantly writing it down keeps that which is important to the forefront of my mind.

    Self talk is a key ingredient to mental balance, that is if you tell yourself the right things.

    So far, it has never let mwe down.

    Anonymous M
    It would take too long to explain, meaningfully,
    the answers to that which you ask.

    No, that is not a cop out answer. It is the truth. Trying to keep it simple is impossible, and it could easily mislead.

    As a rule, a trader should only trade when he has watched and waited for the pointers to line up.

    The temptation to trade for the sake of trading is strong, very strong, and you get careless.

    There are so many do's and don'ts. Two books I recommend, I mean, I have learned from them. (But I have also learned from the University of Hardknocks.) The books are "How I made $2,000,000 in the Stock Market", by Nicolas Darvas, and "How to trade in Stocks" by Jessie Livermore.

    I apply the psychology to my option trading, but options themselves need a lot of study, and practice, and are not for everyone.

    For trading, mastering the emotions, and having a 'business plan' is the key. Some people, in fact most people just cannot master their emotions, and/or stick to their plan.

    End of story.

  45. Ray please keep your thoughts to yourself. Talking to ones self is symptom of mental illness, not genius.

    Many of us recognize you for the self aggrandizing pipe-cleaner that you are. We of course are the ones who are not thanking you for your thoughts, but rather wishing you would pick another blog to conduct your snoozing discourses about nothing.

    I am very impressed with Derek, and I come by to see if he has any thoughts he would like to share. He is very intelligent and a pleasure to read.

    The internet is full of people like you Ray. People who for some unknown reason decide to try and enrich others, at the audiences expense. And then wonder why no one is grateful.

    Find another blog to enlighten, few here are interested in your pontification.

    Simply go away! Your butt-buddies too!

  46. Sorry for the 'typos' but I am waiting for Eye surgery as I cannot always see clearly the errors until it is posted when the improved clarity tends to reveal them.

  47. Anonymous

    Your comments I treat with the contempt they invite.

  48. To all others interested in the market. It is reaching a very
    interesting stage. Something is going on behind the scenes, something
    big,that we, as yet, do not know about. Great caution should be
    exercised to preserve your money.

    The Next few weeks should bring it to light.

  49. I agree with the guy that wishes Ray and his buds would take a hike. Hit kitco and find another blog in need of some crotch feelers.

  50. Ray STAY!

    Your words are sound market wisdom, and you fill in the time until Derek writes. The two posts signed 'Anonymous' who want you to go were written by the same person, He's a loner of low intellect, probably a redneck by his turns of phrase, we are not fooled.

    He obviously reads your posts by choice, no one forces him to do so.
    Ted in Canada

  51. I agree with Ted. Without Ray there would be no blog. I as well look forward to Dereks posts, but he needs to check in more frequently. Even if its not a complete analysis with charts and such. Just want to hear what thoughts he has on the market dynamics. These are very interesting times in the markets. These days will be the subject of many reflections as we engage in future discussions about trading. I wish I would have shorted oil at 140, and bought it back in the high 30's. Will we be saying I wish I had sold my gold or Silver in the Fall of 2010? Like I wish I had in the Fall of 08... We are at the breaking point in so many assets, stocks, Bonds, currencies, commidities. There are literraly fortunes to be made (or lost?) like no other time in history.

    Ray if you could be a little more specific and actionable in your comments they would be better received - even if wrong.

    I even liked reading Shelby's posts.

    All viewspoints are welcome if you are tying to help and not just criticze others.

    Ed in Jersey

  52. Ed, I know what specific, and actionable mean, but what do YOU mean by them in this context?

    Do you want me to say BUY 'XYZ' now, it wil soar to
    300% before October is out?

    There are enough 'hype-types' around for that.

    If I did do that sort of thing, then Anonymous would have every right to be critical.

    Perhaps, though, you mean something else???

    The Germans have a wonderful word 'Gestalt' (litersally -'shape') but in psychology meaning something seen as a whole.

    I find so many, especially, bweginners, or those naive, in the markets fail to see the interrelationships of all that must be considered in the markets.

    It always meets with conflict from the mass, their minds cannot accept this. Understandable, they have been programmed( as we all have to some extent) to think small: to see things in bits, out of context with the whole.

    This is how those with power are able to subject us. It is why there is such a small percentage of mankind who learn to think big (and whole) and become entrepreneurs. It is why we keep getting dragged through these economic messes.

    I would say that Derek understand this well. He also will understand how difficult this is to convey to the mass, so avoids it, like so do many analysts.

    I can't really blame them. But they can't win by avoidance because it comes back at them when things do not turn out as they predicted, at least, not on schedule. There are other forces at work, they have failed to tell you about.

    Hope you have followed me. If not, I understand, I have been in the game long enough.

  53. Ed wrote "Will we be saying I wish I had sold my gold or Silver in the Fall of 2010? Like I wish I had in the Fall of 08... We are at the breaking point in so many assets, stocks, Bonds, currencies, commidities. There are literraly fortunes to be made (or lost?) like no other time in history."

    It is a fantastic time right now, as you say. We must 'seize the day'. The best is yet to come Ed.

    If Gold does correct, it could be around 14% But don't hold back trying to fish on the very bottom. It will resume its climb very rapidly.

    If it doesn't, then there is something that will occur that no one not on the very 'inside' could even imagine, not if stretched to the limit.

  54. Ray crowd please stop posting and find somewhere else to submit your rants.

    Pipe Cleaners.....that is funny.

    You pipe-cleaners!

  55. I think they the group you talking about know they are not as smart as Derek and want to ride free on his coat tails. They won't go away because we can't make them. They will just keep shoveling the spam down our throats, and idiots who suck them will fan thier egos.

  56. Shake off that doom and gloom. This world is changing, but while all change brings both good and bad depending on individual situations, it will be predominantly more good than bad.

    There will always be a tendency for the media to stress the negative, because that attracts the attention, but don't let it influence you.

    There is a 'clean up' operation going on throughout the world. There is a growing realisation that we all sink or swim together.

    Outside the inner core of the 'Financial Elite' the richest man in the world, or if you prefer, one of the richest men in the world, Bill Gates is giving away 95% of his 30 0dd plus billions to his charity
    centred on world health. Not only that, he is encouraging other extremely rich individuals to do the same.

    It is not the single act, but what it is telling us that is important. You can rest assured that his 'billions' give away will not go to prop up puppet governments, or finance corruption. It is a MESSAGE to those who think only of themselves, and their love of money for the sake of it.

    How will this affect the markets? Collectively, with all the other things going on, many behind the scenes that will be revealed later, very POSITIVELY.

    We are living in a wonderful period of history. The markets a great opportunity for you to preserve, and add, to capital if you go about it seriously (businesslike), but in a happy, relaxed, frame of mind.

    I wish you all well, yes even 'anonymous'.

  57. Some good things going on behind the scenes, just i case you are wondering on what I was hinting. All which will affect the markets in a positive way.

    (1) watch for some good news coming from the Middle East that wil help to settle the tensions
    This should come to light between now and spring next year.

    (2) Good news will come from Afghanistan - same time period.

    Of course, there will be media attention on social troubles and reactions the 'the financial squeeze' that is going on around the world. It will all look, as in portrayed, much worse than it really is, as always.

    It is all part of life. We have seen it all before. But it is all under control.

    If you can't shake off a negative mind, do yourselves a favour and stay out of the markets. Fear and anxiety freeze your mind.

    As I have said before - watch the oil, and gold price, one can tell you where the other is heading.

    Once the US dollar has reached its bottom, and it is almost there, it will rebound. I have got ideas what could possibly happen here, but I won't tell you now as it will only invite more cynical comment from certain quarters. it is a positive though, that I will share. I have been buying dollars recently. I have made good money out of currencies - it is a far bigger market than all the world's stock markets together.

    Ray, go away Yes I know. There I have said it for you.

  58. M is not Ray, period. M agrees on geopolitical, anthropological and historical facts with Ray. Also with segmented society and mass naivety.
    M would like to know more, as all outsiders do, about future. M likes Ray comments on what he sees today that could trigger big picture changes.
    Also like the small rules that describes swings in general.
    Please Ray and others keep posting what you see from your prism. Do not talk about people you do not know because nobody read useless information, don't waste your time.


  59. Well, it is fast approaching. In fact, one could say, it has already begun - the seismic tremours.

    I am referring to a correction - one which could extend to next year.

    Nothing is guaranteed except death. I mean, you can even avoid taxes, but no one has avoided death,

    Though not guaranteed, the odds are stacking up daily, and insurance companies make their fortunes from backing odds.

    Ignore the signs at your peril. Caution, with a capital 'C' is needed. If it passes, so be it, but the signs point down. There may be just one or two shorts to squeeze, that could take us into November but do not bank on it.

    Howwever, the markets can be played both ways, so those with a flexible mind, it could be 'opportinity knocking'

    Take care

  60. Let me explain, I do not class the seeing of a correction as negative' It is all a necessary part
    of a markets progress in a neo-capitalistic system.

    As I have also said, markets can be played both ways. One great market player siad that he never viewed markets as either 'bear' or 'bull' as this tended to fix the mind.

    Keep the mind flexible so that you can observe, and interpret the signs that tell you market direction (trend). It is only 'negative' if you are backing the wrong trend.

  61. I don't think Ray knows how to pull his finger out of his butt hole.

    I too wish he would stop posting.

    Ray is boring.

    Ray is a cut-and-paster.

    Ray is not a friend of this blog.

    Ray is a jerk!

  62. Ray is an annoying simpleton, but he's no copy-n-paster.

    Ray is just honestly so incredibly full of BS, that he can write and the comment about his previous ramblings.

    Ray is venting on this blog, using it like a pressure relief valve. Probably because no one will actually listen to his ramblings in person. He comes here and even though no one appreciates his efforts, he comes back and writes more.

    Ray, get a girl friend. Maybe you can find one at rehab, or at the 'clinic'.

    Preach to her, she will listen and tell you how smart you are. No one else will, but some cross eyed retard might.

  63. Ever wondered why all nations must buy their oil in US Dollars, and why the Financial Elite (which has many 'homes', the US being only one, insist on this and will label (and smash if necessary) any individual nation as a 'rogue' state that even 'thinks' about changing this.

    Watch the oil, gold and dollar.

    My next post will tell you of a very interesting high possiblity that could dramatically change the world's economies.

    It could possibility account for much of what is going on now.

    But, remember 'Anonymous' you don't have to read it. Just ignore, or continue to make your
    comments if it gives you pleasure. Just be happy - it's later than you think.

    May 'the force' be with you all

  64. This is a special bulletin I want to share with my gold interested friends and 'whomever', across 'the Pond'.

    Our lunch time BBC TV news included a spot on the German economy which is in very good shape, thanks in many respects to China's thirst for their goods, especially smart luxury cars.

    But what we also saw were the very smart 'Gold' dispensing machines in public places. They put the drink dispensers in the shade.

    The German government is encouraging its citizens to buy gold. We saw many people using the machines and the neat way the gold is dispensed.

    Their use is spreading to other nations from Germany see

    Imagine if they spread all over China, and India.

    Remember, this is REAL gold, not digital

    The price is continually, and automatically, set every few hours each day

  65. ED IN JERSEY Did you buy into any of those stocks you mentioned in your earlier post in this thread?

    I did keep an eye on them since you mentioned them, and so far they have performed well - even the 'pinks'.

    I read up on the China/ Japan situation, and now other nations are kicking up about 'delays' in getting these minerals upon which apparently China, so far at least, has the monopoly.

    It is China's retaliation for all this pressure being put on her to do what they wish China to do.

    I guess, as long as this tension exists, they will do well. But once it eases, they could come down faster than they went up.

    Its a gamble. So far, so good. Hope you have done well.
    Ray N

  66. Ray

    Yes I am in an array of the REE stocks and have been since summer 09. Most have done very well. The supply crunch will last at minimum 3 years, unless we get a worldwide slow down/recession and the price of oil drops significantly.

    If on the other hand, peak oil or peak easy oil, comes to fuition and the price climbs substantially, that will push the development into the alternative energy plays such as solar, electric cars, wind, batteries, etc all of which require REEs. This does not even consider the strategic implications of these metals for the military and the necessity of a reliable source for our country to compete in the tech race of the green revolution, which now belongs to china. I don't fault China at all. They are smart, shrewd, patient, and calculated. The USA is short sighted, impatient, stupid and impulsive. I would say the same to my son if he were acting that way, when you love someone they need to hear the truth, not just blind support.

    I bought Molycorp on IPO day at 12.50, then in a couple of weeks it climbed up to 15.50. I thought 25% on a stock in a couple of weeks is pretty good, I'll take the gain and buy again on a pullback, of course it never did on its way to 34. My own inpatience and impulsivity cost me a lot, I guess I'm all american.

    My expectation is that this sector should play out much like the solar or uranium sector of 2-3 years ago. In fact, I am in the process of reloading now for uraniums next run. It should be less manic this time.
    One last trade I am waiting for is to short SPG once it breaks 100 which it almost did today. I believe we are on the verge of the long awaited commercial real estate collapse. The final "all clear" came today as General Growth properties(2nd largest mall owner in US) was given the okay to emerge from bankruptcy. Everything appears just fine, we are headed into the holiday season, and I think it may turn out worse than current expectations...

    Good luck and trading to all here, Derek if you see a problem in any of my thoughts, please let me know.

    Ed in Jersey

  67. Ed in Jersey By the way ED, I assume that is 'New Jersey'? As you know, we have a 'Jersey'.

    You say:: " I bought Molycorp on IPO day at 12.50, then in a couple of weeks it climbed up to 15.50. I thought 25% on a stock in a couple of weeks is pretty good, I'll take the gain and buy again on a pullback, of course it never did on its way to 34. My own inpatience and impulsivity cost me a lot, I guess I'm all american."

    Don't berate yourself. That is something to which we have all fallen victim, many times. Read the stories of even the greatest of traders. It is when we can master that (if ever) that we make fortunes.

    You seem to have your head screwed on, generally. I am glad you are not one of those many Americans who do not understand China, and underrate her, expecting her to collapse into rickshaw and pigtail days at any moment.

    China is even stronger economically than is portrayed, and in also militarily - in defence.

    China is pointing the way to the future whether we like it or not. When I was first there about 28 years ago, even the Chinese I knew could not see this. As and outsider I could see what was going on, but I could not convince my Chinese friends, even in Shanghai.

    The UK is embarking on building more Nuclear Energy sources.

    We have a great future ahead and it can be very exciting spotting trends - genuine, not hyped, ones.

    Good luck Ed, and to all

  68. Here is my take on what is possibly going on behind the scenes to cool
    the currency wars, and lay some old ghosts to rest.

    To me, it is a strong possibility, but not, as yet, a probability. It
    is merely one solution to the economic malaise.

    As I have mentioned before, there is, currently, a two tier monetary system - 'fiat' for
    the mass, and 'gold' for the Financial Elite in which macro economics
    is conducted.

    No nation's currency is backed by anything of tangible value. The UK is
    even going to further debase metal used in some of its coins
    (otherwise, I guess, the current metal used could outstrip the value of
    the coin in trade like the earlier US copper penny.)

    Is it possible to see the dollar once again backed by gold? Possible - yes. And
    may be the intention to make it so could be going on behind the scenes
    (where so much goes on before we hear)


    Just a few thoughts, I freely share. The future of the US, within the
    'New World Order' is a good one. I am taking a gestalt view. In fact,
    its geographical positioning could not be better. It sits right between
    the old order, and the new – West and East. It has a seaboard that can
    serve both, and is joined by the Panama canal.

    As with judging all 'real estate', it is location, location, location,
    However, it, the US, has first to endure a traumatic period, certainly
    for many of its citizens – mainly middle class, to adapt to its new
    role in the world, and to living within its means. That torch in the
    hands of Miss Liberty, is no longer a beacon to the world of 'follow
    me, and live the dream'. The 'Middle Kingdom' is dimming the light
    from that torch. China is becoming the metaphorical flame that attracts - but not,
    particularly, if at all, the " tired, poor, huddled masses yearning to breathe free............" unless, of course, they are its own, highly educated, entrepreneurial ones, scattered around the world.

    Old habits, and perceptions, though, die hard, so it will take time for
    older minds to adapt.

    Some financial stability has to be brought to our world. The rumblings
    cannot be ignored. The US has to retain the dollar as the reserve
    currency, and the dollar must regain its respect. Why it has to, is a
    long story, and not for here, and now,

    Continued -

  69. (continued from previous post)

    . Here is my take on how this can be achieved. I said 'can' not 'will'. There are other
    options, no doubt.

    There have been some considerable changes in many areas, mostly brought
    about by advances in technology. Digital, and virtual reality have
    become household words, mostly from their relevance to media

    People, however, lack the imagination to see them at work in the
    markets, and elsewhere..

    I would say that more 'virtual real' gold is being traded and therefore
    'existing digitally', than the real thing. Gold is ideal because only a
    small percentage of traders actually want 'delivery'. It doesn't really
    have to exist as long as those who hold the financial power permit the condition
    to be so.

    The dollar has never been 'attacked', or seriously threatened, no
    matter how the US economy has been traumatised, and manipulated,
    because the power that is strong enough to attack any currency (and has
    done for far less abuse) control the dollar, and it is not in their interest
    to screw up a valuable tool . It did the same for the GBP when it was 'their' designated
    reserve currency. It still receives 'their' protection from 'outside'
    potential sources. Otherwise, how could the UK be so resilient, and

    Gold has respect that has held for thousands of years. And, macro
    economics never left the gold standard. It is the currency of the
    Financial Elite (or whatever euphemism one prefers).

    Could, therefore, we be now in a process of pushing the dollar down to
    its lowest depth, along with the US economy while vital changes take effect,
    and then, creating a 'new dollar' backed with 'gold '?

    If this is timed right, and when the US economy has only one way it can
    go (ignoring 'out') and that is up a little and then settling reasonably static;
    all this along with some positive news coming out of the US politically
    and economically, little by little – peace and stability in the Middle
    East, 'brokered' naturally by the US, the same with Iran, Iraq, and
    Afghanistan all spread over a period of time, it will bring the desired

    The teeth of the Arab led oil cartel have been filed down, so there is fast becoming little need to
    of the ability to increase the price of gold if they attempted to dramatically increase the price of oil.

    The world is thirsting for more stability than the present, in more ways than one

    I see it as a strong possibility if not a probability

  70. I apologise for the spacing. It is not my fault. it is just the way is comes out for reasons unknown to me.

  71. Ray, you're pathetic! And I mean this is a nice way.

    Why don't you start your own blog? Call it 'Ray's Blog', and fill it with your insights and analysis.

    The main reason against your own blog, would be that inevitably, some Dope would commandeer it, and your voice would be miminized. Very similar to how you have been commandeering Dereks blog, and leading a one side conversation that includes everything from the Bible to the price of oil.

    I agree with those posts before that said so much bette than I, that you've worn out your welcome. And it would be nice to have some you not post.

  72. OK Derek (Anonymous), I got your message

  73. Why would anybody care about what Derek says, he chooses himself not to update..and ïf I am not mistaken he is wrong all the time, who cares. Silver has not crashed, gold has not crashed, markets have not crashed. People who shorted bec of people like Derek are soon to be broke. Just look at what he has said, this is nonsense, why wouls anybody want more?


    SHELBY, where is he?

  74. Derek should thank you Ray for keeping his blog going. You say much to make people think.

    What is really left without your thought provoking

  75. Agreed Ted. Stick around Ray.


  76. No shut up! Shelby too! Scott you too!

    You get it, I know you get it. You have a source of free advertising, and you have a few suckers like Scott. Who obviously is a dumbass.

    Ted you too!

  77. Yeah well said.

    When does Ray and Shelby have time do to all this money making?

    They should look at the picture of the guy at the top of this page, his name is Derek, and this is his blog.

    One reason he doesn't contribute more to it, is because he has to argue with barnacles like Ray and Shelby. This is the same group that a few months ago ran the 'comments' over 250!

    Two-Hundred and Fifty comments! And excluding the one or two from Derek, they were all BS. Covering topics ranging from physics to the Bible, to the F'N universe.

    I don't care if Ray is on welfare or works in some oppressive cubicle at some call-center. If he and Shelby really had anything, like money or intelligence they would not be spewing forth their gems of triangulation.

    I suppose Ray and Shelby would like us to believe they live in some penthouse overlooking wallstreet and they just want to help us share in thier vast experience and help us get rich.


    If you believe that shit, you are a sucker!

    I'd love to hit all the blogs that kitco has on their site, and see how many have posting by either Ray or Shelby. I bet they hit them all, why?

    Why do they do it? Are they really so nice that between high volumn trades they're reporting to us thier strategies? Bullshit!

    I don't know why they do it, just like I don't know why people chatter endlessly when they are so boring and predictable.

  78. "...I don't know why they do it, just like I don't know why people chatter endlessly when they are so boring and predictable. ...."

    Then practise what you preach 'dumbass' (you see, I will speak your language, it's seems the only one you understand)

    That Derek tolerates someone with your low intellect and foul mouth says much about him, and this blog.

  79. Can't speak for Shelby as I don't know him. However, I do live in a sort of penthouse, its high up, with magnificent, panoramic, views over London.

    I have a pretty good lifestyle and have travelled all over the world. I have seen more of the US than most Americans. I have seen what is happening in China, which gives one a peak into the future.

    I make my money as a trader. Whether you believe me bothers me not. I have a great life.
    But I learned the hard way.

    Love to all. May the force be with you.

  80. 'I'm for ever seeing 'bubbles........' A slight twist to an old time song. We have got 'bubble' mania now, always looking for the next one.

    They are not bubbles, to me they are 'balloons'. So what is the difference? It is a very BIG one where we are concerned. The fate of a real bubble is that its end is quick, it bursts. A balloon can be inflated slowly, and deflated slowly (or quickly, I know, if you stick a pin in it). It is that inflating it until it appears it should burst; everyone expects it to, then that slow deflation gets you.

    It's all in the timing

    Now if you had followed Derek's Treasury 'bubble' prognosis in August when he updated last and shorted those Treasury bonds, you would, at one point, have been out a lot of money, besides suffering many sleepless nights and possibly pouring your anxieties out on those you love dearest.

    Yes, such as TLT is back to where it was at the beginning of August, if you had manage to stay the course. But it would have been a scary three months you could have well done without. And TLT has still not broken its up trend.

    NEVER, repeat, NEVER, short in anticipation of a downward trend change. Wait until the trend has developed to where the odds of it continuing are in your favour. This is usually indicated by it breaking its trend line and producing lower highs, and lower lows.

    So you miss a bit of th action. Better safe than sorry. Sleeping well is worth a lot of money.

    You could, if you wish; take a long put option. At least, your risk is limited to your contract.

    The market has an ability to remain irrational for far longer than we are able to remain solvent,

    Of course, then, as Anonymous says, what do I know.
    Have a great day

  81. Ray, do you think there is a possibility that gold or silver correction will never happen? If not, whats the probability of happening soon? What do you see happening soon?

  82. I like reading "Mish" sounds a lot like what I have read of Derek, what do you think Derek, care to add any comment? He expects a pull back in gold due to deflation but is a long term bull. Interestingly he sees no real inflation on the horizon until it is the end game, and he sees no evidence that we are going to be like Zimbabwe, Weimar, or Argentina.


    Ed in Jersey

  83. Anonymous 'M' There is always a 'possibility' of anything happening in the markets. It is 'probabilities' we have to consider. And there is more than a subtle difference between the two.

    The probability of a correction now are very high over the next two or three weeks. Until towards the end of November it should be coming more apparent. There are severe warnings right now.

    It could last some time once it starts.

    Remember, you have a mid-term election next week. The powers in office will do all they can
    to avoid anything unpleasant before then.

    Absolute caution is what is needed at this time.

    What appears to be happening is that already those 'insiders' are selling in to rallies as shorts, who have been anticipating a fall, before it happens have been squeezed out of their dollars.

    With the high volatility you have a lot of day trading going on so that can distort the view.
    Even I have done some day trades, which I do not normally.

    A 'crash' from top to bottom is extremely unlikely (unlikely does not mean impossible).

    So, once the trend is broken and it starts the correction, there is time to 'play it down'.

    Hope that helps.

  84. Putting things in pperspective

    To most of us a small fraction of a percent makes little difference to our money. We can also jump in and out of the market with no impact, and that is if we had a million to play with. A million, today isn't a market ripple - unless you are an idiot playing in the 'pinks'.

    But when you are up in the billions, or round about, the sort of money (your money grouped together)that institutions have, a fraction of a percent is a lot of money. It is insitution money, today, that moves the markets, aided by thise who have the power to fix interest rates.

    Incidentally, every commodity is priced in money, except money. Money is also a commodity and it is priced in interest rates.

    Power money wll always look for the best return at the lowest, or commensurate, risk. Those at the top of this power money have strong inside connections that make them aware in advance of
    planned changes. Therefore they are able to take
    the positions accordingly.

    There is nothing sinister in this, it's business. We can't change it, it is human nature
    that has grown with life and has brought us where we are today, like it or lump it.

    Just apply your imagination and figure out how this works its way in the system. We have to learn to work WITH the system, and not fight it.
    There is no profit in fighting lost causes.

    As they say, all is fair in love and war, that is the way it has been since life as we know it began, and it ain't going to change in our lifetime, if ever.

    But if any of you think I am wrong, and your belief is otherwise, then you are fully entitled to do so, and act accordingly. I wish you all the best, sincerely.

  85. Who is the biggest loser ? Shelby or Ray? Letws take a poll. Even though he has shut up, i vote for Shelby the stuck in the filipines surrounded by people that hate him expert on everything. Maybe the filipine police got to him thats why you dont hear him anymore. Second place is of course Ray, nobody that actually makes money trading would ramble on for days and days like this loser. He orobably live in a trailer park with dial up internet eating cheetos locked away in a 4x4 room away from his fat bearded wife. This is an A+ loser but of course i think Shelby is A+++. What do you guys think? Who wins here?

  86. Don't know this Shelby, he must have been before my time here. But I vote YOU the biggest loser.

    Are you describing your own conditions, they seem they would fit.

    Ray is very informative, and makes you think outside the usual crap that gets dished up.

    I doubt his posts here take up more than a few minutes of his time. And I have found putting things in writing helps to formulate my thoughts
    and and keep me in focus.

    Derek? Where is he? He doesn't answer people's questions. Last update was August.

    Keep things going Ray.


  87. Thanks Ray,

    especially for your Post on October 24th saying:

    "NEVER, repeat, NEVER, short in anticipation of a downward trend change. Wait until the trend has developed to where the odds of it continuing are in your favour. This is usually indicated by it breaking its trend line and producing lower highs, and lower lows".

    Good advice to the Novice trader. It should be obvious, but it usually takes time and hard knocks before the message is hammered home.

    I also liked your analogy about Markets being in either a Balloon or a Bubble. Personally I think Gold is in a Balloon that will deflate for a number of reasons including a rise in the US Dollar and an end to De-hedging from mining companies in 2011. Thease are the two major trend changes that will end Gold's 5th wave rise.

  88. I appreciate your comments 'Goldbug' not just for the support, but because it is always good to know that there are others out there who are prepared to see 'outside the box' for the answers.

    Same with you Ted, and any 'silent ones' out there.

    Over the next few weeks the signs should be coming more visible where the market trend is heading. There will be still volatility caused by trading, adjusting, and attempts to throw participants off scent. All part of the game, so take it in the stride.

    There is one factor that few, if any politicians
    are talking about, or the media highlighting. It is this. Mark it well

    The greatest threat to mankind is not terrorism, global warming, or nuclear war, it is
    - Finding employment for a growing world population, in a world of virtual reality and where technology (much still waiting in the wings) is removing the need for physical, and even 'mental', labour.

    Even when the economies start reviving, it will not take up the slack that is being created now
    by growing unemployment, and population expansion.

    Why do they not discuss it like the other
    'cause and effects' they dream up? Because they do not want to risk the social unrest that loss of hope among the population of the unemployed, and the soon to be, that is being experienced.

    Unemployment means lack of money. It is even more feared than war. In fact (think about it) war was even welcomed by many at the time of the depression because it provided them with work, and income. Young unemployed even now are good recruits for the military. Even some rich liked it, because it made them richer.

    Consider this when you are trying to 'see' the future, and its trend.

  89. Some pointers to watch

    If gold goes to $1400, then expect to see oil at $77-78 a a barrel. If it doesn't, then gold will soon come back. Anything can happen over the next two or three weeks so take care.

    No, I do not see crash. 'Crashes', and 'bubbles' are not in vogue.

    'Balloons' yes, 'bubbles' that would be necessary to precede a 'crash' - no.

    best wishes to all - friend and foe.

  90. Hey dude, when are you going to update your predictions? Last I heard, silver was suppose to be heading down towards $14!!!

  91. Well, now the fun starts, I anticipate. You have seen it all before if you think back - yes it is so easy to forget.

    We all do it if we let down our guard and drink in all the hype that gets dished up, some through naivety of the analysts (who are only echoing what they have heard others say) or by those who have an ulterior motive.

    You see, the actual event, the 'change, the 'cause' doesn't really matter, it is how they want to use it that will rule the day, to begin with anyway.

    Let me explain, they could use the same excuse for the market behaviour (that they have predetermined because they are in CONTROL) whatever event occurs.

    These excuses, 'reasons', for the effects of a cause, are so interchangeable, it beggars belief how they keep getting away with it on the media, or in expensive 'newsletters'.

    Only if you believe that the people make the major decisions are you misguided and groping in the dark.

    It is always a 'win' situation for those in control. They NEVER lose. THAT IS FACT, it is life, you can bank it.
    All we can do is watch and wait for the tell tale give away signs. It can be very disconcerting at first if we are 'in'up to our necks. We have to keep our cool and watch how it plays out until........Until?

    Until the real TREND develops to a point where the odds of it continuing are in our favour.

    And, if he is honest, that is the best advice any analyst can give you. Anything else is a guessing game. If analysts offer opposing views, then some of them are bound to be correct
    purely from guess work.

    If you have a friend, ask him/her which way will the TREND develop. Whichever one he/she picks, you say the opposite. Now, one of you is bound to be right, Right? Sorry, WRONG!

    You see there are THREE possible ways a market can trend for some time - UP, DOWN, or ACROSS (flatline). (so you need a third person)

    Of course you knew that, I know, you just momentarily forgot. Moments of forgetfulness in the markets can cost you MONEY.

    However, a flatline, as we know, elsewhere, can signify 'death'. So a flatline trend in the markets should never last long, and are not common in the market leaders. Money likes LIFE! So it soon gets revived.

    Take care, and may the force be with you.

  92. Maybe Derek is smarter than some of you believe. He was aware of the 'events' taking place this month - mid term election, G20 meeting etc.,

    He wants to see how the big money that moves markets will move the trend - change, or continue.

    There are people who most definitely know. But they do not write blogs, newsletters, appear on media, twitter, facebook or in anyway tell the mass, until they have taken their positions

    That;s life, learn to live with it and make money.

  93. Sorry, in a little earlier post I wrote -

    If gold goes to $1400, then expect to see oil at $77-78 a a barrel. If it doesn't, then gold will soon come back. Anything can happen over the next two or three weeks so take care..... "

    That should have been $87=88 dollars a barrel.

    Today I see it at over $84. This tells me gold is going to hold or move up today. Nothing guaranteed, but it is a leader to watch.

    What we have to watch is that there is 'activity' (media focus) in the ME. They are now shifting 'terrorism' from Afghanistan to the Yemen. A recent 'bombmaker' is being claimed as coming from Saudi Arabia.

    Obama the dedicated 'peacemaker' has just had his wings clipped. The 'war merchants' are getting back in business. Oil has been moving up little by little. The Arabs sell their oil for gold 15-16 barrels for one ounce of gold average. (around where it is at present)

    Be ever watchful, all is interrelated.

  94. Ray, do you think correction started or this is just volatility? If so, how long this falling knife before we can grab it?

  95. Hi Derek,

    WHEN WILL YOU REPLY ON QUESTIONS TO YOU about your COMPLETELY WRONG predictions on gold price???