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The setup for the big trade

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Tue, May 5, 2015 - 11:21am
thedukes
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Armstrong

In light of the Armstrong commentary hasn't he repeatedly stated consistently since 2009 using his modeling methods that the periods of 9/ 2015 into end of 2016 pose a great threat of volatility and uncertainty. Are his comments today to be taken in the here and now (month to month) rather than longer term time frame? Also can someone confirm or deny that the Armstrong movie (The Forecaster) is welcome and already playing in Europe while being blocked in the US?

Tue, May 5, 2015 - 11:27am
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Correction to my post

Above I wrongly stated "The only historical comparison that gold would NOT win in the last 50 years is the 1979-1980 top." This is incorrect- apparently the last time I ran these numbers was when gold was around 1600 and the S&P was at 1400... current values change this obviously, shifting a swath of the 70s and 80's from gold to stocks for better returns. Nonetheless, my point about Armstrong cherry-picking timeframes is valid, I believe.

Tue, May 5, 2015 - 11:55am (Reply to #7492)
z28
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Movie

I saw the movie in early April in Pasadena Ca. It only ran for a week at this venue. I think it ran in NYC at same time. You can access it online but it is $49.00 . I paid $5.00 with a discount for seniors .

Tue, May 5, 2015 - 3:05pm
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Pining, I haven't checked

Pining, I haven't checked your work but your thesis sounds solid. It's not like nobody made any money in gold/silver and metal leveraged investments. Some who played it right, did indeed make fortunate.

In deference to AM's good manners in not commenting specifically on other analysts, I'll stay away from thoughts on the movie, and red flags around some of the other analysis. Plus I don't want to deny anybody the journey of checking out the reviews and other chatter around on the movie other than to say I get the same feeling in my gut that I got when I walked out of Al Gore's "Inconvenient Truth" It merits great scrutiny. Nothing less, nothing more.

I guess every man's system is propriety because he mixes the ingredients to his recipes his own way. But I've gone through some of the texts for the more esoteric stuff AM was referring to, checked out the history of Dewey, the funding for his work and it's use. Nobody has anything that's not available to anyone who wants to seek it out. The trick is knowing how to put it to use. It's hard to swallow that the "powers" are not aware of these methods when it was their money that was put into this. He is not the only guy doing this stuff albeit he probably has much more notoriety than others.

The gold and silver media is an incredibly tricky information field to navigate. It's littered with all sorts of land mines of consensus opinion, poor track records, fear mongering, car salesman and plain misinformation etc... I'm fine with turning my brain off and getting a review on air conditioners from Consumer Reports but unfortunately with my money, diligence and perseverance can't be given away completely to anybody.

Wed, May 6, 2015 - 6:01am
Safety Dan
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USD Down / Gold Up

0068128001430830660.png

The shorter term looks like gold is going upwards.. 

This is one ugly USD Monthly chart. Note the potential upside. Remember what Jim Willie says about the USD? Longer term gold looks like what my previous post on DeGroot's thesis stated.. 

0073383001430830661.png

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TLT - Chart Link

Wed, May 6, 2015 - 8:32am
fslade
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Argentus - you talked in your

Argentus - you talked in your RNP 225 about potential "elephant trades" predicted by cycles analysis (major turning points for anyone unfortunate enough not to be subscribing).

These were on monthly charts. I have a question. Do you think cycles can have a similarly useful predictive power on very short timeframes, for example, 5 minute charts? On these, is the process you went through productive? Less useful? Useless or almost useless? What do you reckon?

My guess is that it will be useless, because I feel like the things that create the cycles on the higher timeframe charts can't possibly be present on the intraday timescale, and surely other non-periodic* dynamics like the interplay between the London/NY/Asia opens and closes etc. would drown out everything else, and only price action related periodicity would remain (eg. measured moves producing regular ABCD patterns and peaks separated by the same time interval). But I'm open to being surprised. For example, maybe I'm wrong in assuming measured moves are totally independent from what you are doing, maybe there is some overlap? I think this is a more complex question than I thought when I started writing this.

(*By non-periodic, I know they are of course repeated each day, but intraday there is no reason to expect these interactions to create a periodic effect).

Wed, May 6, 2015 - 10:02am
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Yes it's complex but writing

Yes it's complex but writing the post brought that to the fore so it's a good thing!

You're right about the liquidity driven moves making it difficult. It's necessary to stay with liquid markets as the time scale is made smaller. In the last 12 months I've done it (my way) down to 4 minute charts in the Eurostoxx & S&P500. In the past I've done it on tick charts on the FTSE100 but it's harder, timing drifts off on tick charts, forcing use of P&F activity techniques, and I've found that using eg bars constructed of 25 ticks or thereabouts works better.

I think in indices you should be able to get good ABCDs, bats and butterflies going in 5 to 10 minutes scale, but the chaos is large by comparison with what you are tracking. You need the smoothness liquidity brings. Stops can take care of the difference of course. If doing it right you should get out about 2-3 minutes prior to flash crash breaks, but I would back check that very carefully before working in any market.

I tell you it's possible to take 2 year swings down to 1 minute increments if you are really on the ball and in tune with the market. That's a rare thing, but it can be done from time to time, and of course make nonsense of those who claim all is random, or all is manipulated, painted charts and so on. Those people from the lands of academia or cynicism have just not figured out yet what it is they can not see in a market usually because they have not studied one enough. So they naturally ascribe market events to other causes, like news about things and so on. I hope I have clearly demonstrated over a long time that news is one system, and the price of assets are another system, they are interconnected, but not at the locomotive (market), but more like connected at the caboose (market) to locomotive (of newsflow).

But some news leads price and that is always misleading news but still so informative! Learn the liars and quietly observe but don't call them out. The intraday timing of that kind of news is revelatory. For instance what the FedHed or any other bigwig says is a reaction to the price not a leader of it, though such words may actually lead a later price counter wave which was due anyway after the prime wave faded.

Another thing about timeframes is that I suspect many underestimate the damage a market closure could do to the rest of their life - if stuck in leveraged positions during closure. And the exchange owners have no consideration about equity or straight dealing but protect their members' interests. As a result of this I believe it's wiser for the small trader/investor to use no leverage but find out how to catch the big trades I have nicknamed "elephants"! You have to remove the excitement addiction somehow, it doesn't help the end result! But apart from wanting to push the buy/sell button for an andrenalin fix, short term with liquidity swings, it works fine within limits. Try what you know best out on 4 hour, 2 hour, 1 hour, 10 and 15 minute charts for a while and see which of them works best.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Wed, May 6, 2015 - 12:45pm
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Gold vs. the S&P over 50 years

My discussion with GL yesterday about Armstrong's statement caused me to go back and crunch/plot some numbers regarding gold vs S&P, and thought I would share what I found here- apologies if this is kindergarten compared to AM's work, but perhaps file this under "learning to crawl before you can walk".

What I was interested in is basically "In what years was it more profitable to have invested in gold vs. the S&P over the last 50 years. Essentially I wanted to chart Gold not in terms of dollars, pounds, etc. but instead in terms of S&P over long periods of time. I used 50 years of data going back to 1965, and for each year I took the starting price of gold and divided into 1200 (current price of gold), did the same for the S&P (using S&P 2100), then compared to two numbers. If the two were the same (both returned equal amounts), the result was 0. If gold returned 85% more than S&P, I charted it at positive 0.85. If investing in the S&P in that year would have returned 450% more than gold, I charted it negative 4.5.

The results were a clear cycle, and formed a shape that was familiar to me from these pages:

Essentially, this is gold in S&P terms, and largely but not totally the inverse of price (the 1980 high in gold was the worst time to buy, vs buying an equal amount of S&P). Some things that jump out at me:

1. The "accumulation zone" for gold vs S&P (Brown's bottom) lasted from 1996-2006, but peaked in 1999. The cycle looks like roughly twenty years bottom to top, from 1980 (bad time to buy gold) to 2000 (great time to buy gold).

2. The real question of interpretation (to me) is the last two data points, from 2013 and 2014... because the S&P has run up so damn high, some would say artificially, those two are "forced" upwards giving the impression of the end of the cycle. I have drawn it above as if this signals we are entering a poor time to hold gold. BUT... if the cycle is not truncated as shown above, but instead continues in a "regularized" cycle pattern, then it would look like this:

If the cycles (in purple) shown on this second chart are correct, then those currently holding gold are in for great profits, and the time to shift most profitably from gold into stocks would be around 2020 to 2022 or so...

If you have followed this far, I would be interested in your opinion as to which chart (top or bottom) more accurately represents where we are, and where this cycle is going... yes, I am a goldbug and I have my biases, but I also have learned to keep my mind open to all possibilities ;-)

Wed, May 6, 2015 - 1:23pm (Reply to #7499)
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Hi Pining You're looking at a

Hi Pining

You're looking at a 40 year wave here, and very probably it's a good conclusion. But there's not enough data history to provide a reasonable idea as to the reliability of the cycle.

I suggest considering a substitution of SPX for Dow from eg the 1970s or 1980s forwards due to recent financialization of the DJIA.

If I were to email you long term SPX and gold data; would a backward extension of the chart to bring in more waves help toughen up the hypothesis sufficiently? I have DJIA back to mid 1800s, S&P500 back to early 1900s, and gold back to 1790s.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Wed, May 6, 2015 - 1:41pm
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Tomorrow is the last of a

Today and maybe tomorrow is the last of a small group of inflections for this week, what might be described alternatively as the final ripples of the end of month of April inflection complex.

We have been going sideways but the retest (downwards), by silver in particular, has held so far. Is a key level being formed?

Let's see how today's close and tomorrow go because this selling is surely not done yet. Then we will see how strong the bears are.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Wed, May 6, 2015 - 1:59pm (Reply to #7494)
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Armstrong's main piece on

Armstrong's main piece on gold branches out from back in 2009:

https://armstrongeconomics.com/wp-content/uploads/2012/03/gold-5000-11-7-09.pdf

Page 10 has the main points.

You need to note that turnings can be bullish for gold and could be a high during a bear market. Read it carefully, I think that possibly his more recent pronouncements can be better understood in the light of the above piece.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Wed, May 6, 2015 - 2:16pm
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AM

Thank you very much, I would greatly appreciate the DOW data, will PM you my email (though I think you have it from my RnP subscription).

Your offer brings up a cycles question I had when doing this, and- how do you deal with charting longer term PM cycles given the "managed" price of gold from the 1933 confiscation up to the 1968 collapse of the London Gold Pool's artificial 35$ an ounce? Even in this chart, 1965-1968 are all 35$ an ounce... and extending it back farther would simply yield flat prices (at 35$, then 23.33, then 20) at government-set price levels. I guess what I am saying is that on the surface, it looks like any natural cycles that might have existed back that far were truncated by these stringent interventions, and I am not sure how one would even chart such things... black market/private gold transactions? Is that data even available?

A second related question I had was, is it possible to "account" when charting cycles for times when a "natural" cycle swing is artificially extended or held at bay by government interventions? For example, a longer-term cycle chart of long bond interest rates might have shown a swing towards rising rates was due a few years ago, yet because the Fed is buying the heck out of the long end of the curve and artificially suppressing yield, this swing date is being (for now) delayed- do you ever "stretch" cycle curves to reflect interventions going on in the markets? Just wondering... 

Wed, May 6, 2015 - 5:22pm
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@Pining Thanks for checking

@Pining Thanks for checking under the hood and keeping it honest. I appreciate that sort of due diligence. 

@AM Thanks for posting the PDF that gives greater context for his statements on future price. $5000 gold as a peak is not an issue for me. To his credit, he has volumes of writing so it's difficult to keep track of what he said before if you don't refresh your memory. 

Wed, May 6, 2015 - 6:21pm (Reply to #7503)
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@Pining: PM sent re above

@Pining: PM sent re above post.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Thu, May 7, 2015 - 4:46am
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Gold price in Swiss franc update

I guess it is safe to say that we have broken the horizontal support that has been operating for over a year now, being 1100 francs. We are at 1078 as I type, and on a downward trajectory. Something seems to have changed in the matrix.

Gold seems to be flagging in all all major currencies. One last gasp for the bears, or the start of a new move down? I wish I knew, but the franc price has me spooked. 

Thu, May 7, 2015 - 5:24am
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@ Byz

So, which Planet were you otherwise on, back @ 15 January 2015? laugh

Obviously then, you weren't ringing the register on that play! surprise

Take a chill pill, try a view with a broader perspective and realize that the quadrillion derivative deathstar has not suddenly vanished into thin air.

Cheers, S. Rex

Thu, May 7, 2015 - 5:45am
Byzantium
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@ Spartacus

You are right and wrong.

Long term, maybe medium term, we are all PM bulls, yes?

But short term, when the derivatives complex goes down, and everything is sold to meet margin calls, PMs too may have a mini flash crash. Can you guarantee me that they will not? On what basis?

My stack is safe at the bottom of a lake. My trading account is for trading, and i am always alert to the possibility of market moves in either direction, and I have open mind and listen to all arguments. It has saved my neck in the past.

I have covered 15th Jan in an earlier post. It breached the support for about half an hour only. This time is different, we have firmly broken through it and are trending down. We are out of a franc trading range that with the exception of the brief franc melt up and thin trading between Christmas and new year, has held for over a year. This is noteworthy. Your chart shows the trading range, but not the breakdown. Make of it what you will.

Thu, May 7, 2015 - 6:24am (Reply to #7508)
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@ Byz

Byzantium wrote:

You are right and wrong.

? Is that a PM (Paradox Maxim)?

Long term, maybe medium term, we are all PM bulls, yes?

Physical PMs yes. However it is just as fun and profitable to ride the Paper Bear escalator down as it is to ride the Paper Bull escalator up.

But short term, when the derivatives complex goes down, and everything is sold to meet margin calls, PMs too may have a mini flash crash. Can you guarantee me that they will not? On what basis?

Paper PM derivatives, without a doubt. However the Strong Hands don't give a rat's a** and will be hoovering up the bargains. Such is history for eons.

My stack is safe at the bottom of a lake. My trading account is for trading, and i am always alert to the possibility of market moves in either direction, and I have open mind and listen to all arguments. It has saved my neck in the past.

I have covered 15th Jan in an earlier post. It breached the support for about half an hour only.

I was covering it Live in Real Time @ TFMR, or did you miss that?

And the Banksters are still suffering from Butthurt nearly four months later.

This time is different, we have firmly broken through it and are trending down. We are out of a franc trading range that with the exception of the brief franc melt up and thin trading between Christmas and new year, has held for over a year. This is noteworthy. Your chart shows the trading range, but not the breakdown. Make of it what you will.

I see, so is it your position now that CHF is not threatened by the Euro's present QE counterfeiting? And that the CHF will not be compelled to respond?

Is there any difficulty in grasping the significance of the following, or that you are otherwise convinced that Gold (and perhaps even Silver) absolutely will at no time in the future be declared as a Tier 1 Asset?surprise

Nevertheless Byz, make of that tiny slice of CHF in the center of the above inverted pyramid that you will, rather than wisely focusing on the top and bottom of same.

Cheers, S. Rex

Thu, May 7, 2015 - 6:32am
Byzantium
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@ Spartacus

Departure from a year long narrow trading range in a major currency is noteworthy and worth sharing on this thread, in connection with the subject of whether gold has bottomed yet. What there is to object about my sharing that relevant observation, I don't know. Well I guess that everyone can be reassured now that you personally have guaranteed that PMs can only go up from here.

Thu, May 7, 2015 - 6:41am (Reply to #7510)
Spartacus Rex
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@ Byz

Byzantium wrote:
Departure from a year long narrow trading range in a major currency is noteworthy and worth sharing on this thread, in connection with the subject of whether gold has bottomed yet. What there is to object about my sharing that relevant observation, I don't know. Well I guess that everyone can be reassured now that you personally have guaranteed that PMs can only go up from here.

O.K., I guess we can take it that you have it on high authority from the B.I.S., that fractionally reserved, counterfeited Ink & Paper will only get more valuable from here on out!

By all means keep using a counterfeited metric as your official Unit of Account/Measure! 

See you at the Finish Line cheeky

Or maybe not laugh

Cheers, S. Rex

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