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XMFSinchiruna (27.71)

Jim Sinclair's Formula

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May 27, 2009 – Comments (18)

All the way back in September in 2006, when the Dow sat above 11,300 on its way toward the 14,000 high, and while gold prices were barely holding above the $600 mark, veteran gold guru Jim Sinclair laid out his 12-point formula for how he envisioned the ongoing currency crisis playing out. I first posted his formula to my blog in December 2007, and have watched with fascination as each successive step plays out as he described.

As I interpret it, Sinclair's formula is both a play-by-play for the onset of stagflation, as well as a quintessential negative feedback loop leading to a devastating contraction of economic activity. As I re-read my Part 1 of the Top 10 Reasons to Hold Gold today, I was struck by how many of the elements I was describing reminded me of various stages of Sinclair's formula. [Incidentally, Part 2 of that article will be out early next week.] 

I want to intiate a discussion about this formula, and welcome all perspectives on the topic. If we strike a lively discussion, perhaps I'll work it into an article. For starters, I'll just lay out the 12-point formula as he presented it in 2006, and we can break it down step by step as the discussion unfolds.

Jim Sinclair's Formula:

1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.

2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella - Goldilocks situations.

3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.

4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.

5. Lower profits leads to lower Federal Tax revenues.

6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.

7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.

8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).

9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.

10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.

11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.

12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

At the end of the list he added the following two paragraphs:

Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.

I heard all this “slow business” as negative to gold talk in the 70s. It was totally wrong then. It will be exactly the same now.

 

 

What do you think?  Do you see a progression that more or less describes much of what we've experienced thus far? If so, which step do you think we're on now? He's sometimes a bit cryptic, so take a few minutes with it, and thanks again for sharing your thoughts. :)

18 Comments – Post Your Own

#1) On May 28, 2009 at 11:51 AM, GoodVibe4Ever (< 20) wrote:

Sinch - I just thought to add my thoughts in hope it might add value to your thinking.

SLV 05.28.09

Enlarge

I started long position in ZSL @ $7.85 and will add to it as long as SLV doesn't exceed $16.25. I also started a short position in GDX @ $43.15 and will build on it along the way, up or down from here.

GoodVibe

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#2) On May 28, 2009 at 12:24 PM, XMFSinchiruna (27.71) wrote:

Sorry, GoodVibe ...  not this time. Your technical analysis will lead you very far astray in this environment. Silver may hiccup a bit, and I wouldn't discount the possibility of re-testing $12 or so before launching much higher ... but I certainly wouldn't be looking to trade it. The near-term trajectory for silver is 100% UNKNOWABLE. The long-term trajectory, meanwhile, is set in stone.

Adjust you thinking while there's still time.

 

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#3) On May 28, 2009 at 12:33 PM, jesusfreakinco (28.80) wrote:

Sinch,

Those that rely solely on technicals will get what they deserve.  Technicals are one data point and need to be looked at with fundamentals and big picture thinking like the USD, global tensions, and Fed manipulation.  If trading / investing was that easy we'd all make money.  However, investing and trading are mostly a zero sum game - there has to be a loser in order for there to be a winner.

Good post.  Keep up the education for the techies.

JFC

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#4) On May 28, 2009 at 12:34 PM, catoismymotor (39.02) wrote:

Goodvibe,

Your graphs look like the Flying Spaghetti Monster! I appreciate the information.

Sinch,

Thank you for the Sinclair list. I'll have to read it more closely and consult my Magic 8 Ball to get back to you on my best guess.

I appreciate the contributions of you both.

Cato

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#5) On May 28, 2009 at 1:03 PM, FleaBagger (29.30) wrote:

Chris -

If you don't know the short-term direction for silver, you can't completely discount the possibility that GoodVibe has figured out a way to predict it with a statistically significant rate of accuracy. 

That said, I'm with you, except to say that there's a natural push towards wealth creation in private business, even though that can be distorted and undermined by government policy; if the electorate comes to its senses and elects a budget-cutting congress and president - or even a (sincerely) deregulatory congress and president - the "feedback loop" would be broken. 

Economic feedback loops are difficult to maintain, since all economic laws (as immutable as the laws of physics) tend to result in equilibrium, not spirals. Prolonged recessions/depressions/stagflations are only and always a result of government use of coercive power to distort supply and demand, stifle productivity, and misallocate capital.

So there's a chance that the electorate will wake up and smell the Collectivism, and thus break the "feedback loop." Were that to happen, gold would be in trouble.

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#6) On May 28, 2009 at 1:29 PM, catoismymotor (39.02) wrote:

Sinch,

My best guess is we are at #10. But that is only a guess.

Cato

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#7) On May 28, 2009 at 1:41 PM, GoodVibe4Ever (< 20) wrote:

Sinch - You don't need to be sorry for anything brother. Not looking for you to agree with it. The difference between our views that I trade the short term and you trade the long one.

That's why Flea is getting it. Different time frames. That doesn't mean I will be right always but I have to take calculated risk one way or the other based on what I trust trading to make money. Sometime right, sometimes wrong, but always honest. :)

Thanks for your advice and I will pass the same to you as well. Best to all of you Bulls. 

JFC - It's always enlightening to hear your thoughts especially in critical moments. And you never shy from taking action also putting your money where your mouth is. Does that mean you deserve it? I don't think. It was just a bad call that I wish just cost you only free Caps' point. Also, I don't believe wishing others ill fate (while they not only meant no harm to you but also try to help) will pave you a smooth way to happiness.

Hope this find you well.

GoodVibe

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#8) On May 28, 2009 at 4:12 PM, XMFSinchiruna (27.71) wrote:

FleaBagger

Nor can one discount my own blend of fundamental analysis with a hint of technical consideration as being equally predictive of nearer-term price movements. When GV posted his call for sub-$500 gold back in February, I countered with my expectation that $800 would not be breached, and indeed gold regained strength without even touching $850. I was able to shave some profits at $1,000 in very small amounts around my untouched core positions, and then re-purchased those same positions at $880. Had I been wrong about the short-term, and we had launched into the stratosphere on an unforeseeable macroeconomic development, I'd have been fine because my core positions remained aligned with the fundamental trend. This, rather than technical trading, is the secret to long-term investment success. Time will tell.

GoodVibe4Ever

I sure hope you can predict the trajectory of the USD as well as you claim to foresee the near-term movements in gold and silver. :) Best of luck to you and other precious metal shorts, but I've stated my warnings sufficiently.

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#9) On May 28, 2009 at 6:06 PM, XMFSinchiruna (27.71) wrote:

catoismymotor

I agree. I think we've reached the 10th step, and I think if someone can lay it all out like that in advance with that kind of understanding, then perhaps it would be in our best interest to consider the final two points very carefully.

Also from 2006, here are his pillars for his conservative target of $1,650 gold:

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#10) On May 28, 2009 at 6:55 PM, GoodVibe4Ever (< 20) wrote:

Sinch -

I didn't say or my charts said that gold is going to go sub $500. What I said and still say that gold will be going sub $700 and mid $600 where I will then look to build a long position in gold and silver if I desire to do so. Not before that. Since my call in February, gold still under that $1000 high and silver & Miners are almost flat.

Nothing goes up or down in a straight line, something that I said many times. During that time, Gold went down to $860 and silver to sub $12 and miners GDX to sub $30. I believe they will visit these lows again and make new ones before you will see your $2000+ gold or $50 silver. I Closed my last swing on a gain when I had my signals taken me out. Today, I come back to have a second round.

To be frank with you, gold and silver (short or long) are not the best investment/trading vehicle out there. I can make more money trading other instruments, which I allocate more of my capital to. 

What concern me (and this is why I post about gold and silver) that precious metal longs in general want to be right more than making money. They are attached emotionally to their views of the economy, Fed manipulation, fiat currency, etc. more than making money.

It's not about being right at the end of the day, it's about how much was your return on your invested capital comparing to the best instrument out there not the worst. 

This is maybe more important than who will be right or wrong in this call, which is something I am not concerned about. On the other hand, I really hope people see that PM are not the best place for your money at this time. Gold, silver, and miners might outperformed other lousy investments but also didn't have any return in the last 52 weeks. All of them are under their last year high (some with huge losses), which speak loud and clear that the trend is down and until they reverse this trend, I will keep my bearish views.

An investor/trader shouldn't be the least loser but at worst the least winner if not the best. This isn't Caps where you make points if you are down 40% while the S&P is down 50%

I always ask those who believe in the fundamentals behind gold and silver one question they never get to answer it honestly..

Why gold and silver are DOWN in the last 52 weeks while every reason for them to go up has been manifested and more even beyond their wildest dreams? 

If you answer this question in the spirit of "what is" instead of "what should be", I am willing to listen. 

Price is the arbiter of all matters when it comes to investing/trading unless you just want to be right more than making money. The price here no matter what fundamentals anyone can outline doesn't support the price.

TA is seeing things as they are not as we wish to see them.

Sinch, you know that all the above should be taken in the spirit of sharing not criticizing so I hope who didn't read my views before to understand that also.

Wish all of you all the best. Be happy!

PS. For the dollar, again it's not the best insrument to put my capital (long or short). But if you want to know my views, I am neutral on the US dollar while bearish on the British pound and Euro. I believe in deflation more than inflation at the moment because I see deflation and no sign of inflation, at least for now.  

GoodVibe

 

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#11) On May 28, 2009 at 8:49 PM, XMFSinchiruna (27.71) wrote:

GV... you're really quite mistaken, my friend.

"What concern me (and this is why I post about gold and silver) that precious metal longs in general want to be right more than making money. They are attached emotionally to their views of the economy, Fed manipulation, fiat currency, etc. more than making money." 

This is a mischaracterization, and a projection of individuals' motivations that you clearly do not understand. Disagree, if you wish, but please don't shoot the messenger. :) You are a different type of investor, a trader, but that gives you no right to disparage longer-term investors by questioning their motivations for investing. They may simply see the world a little differently than you. I'm content to await the gains I will reap from gold and silver while enjoying the protection they provide in the face of what's taking place on the world stage. There's nothing emotional about it, but rather strictly pragmatic. It's doesn't seem very "jah rastafari" of you to claim prescience over peoples' investing mindsets.

"This is maybe more important than who will be right or wrong in this call, which is something I am not concerned about."

Clearly!  ;)

No, not all of them are below their 2008 highs! Check your facts.

"All of them are under their last year high (some with huge losses), which speak loud and clear that the trend is down and until they reverse this trend, I will keep my bearish views."

This is 100% false. The prevailing trend for precious metals remains upward from a long-term technical basis. We remain in an extended correction within a multi-year bull market for precious metals, just as we remain locked in a technical bear market for the USD. With all due respect, check your facts.

Further, not all of them are below their 2008 highs! Check your facts.

"Why gold and silver are DOWN in the last 52 weeks while every reason for them to go up has been manifested and more even beyond their wildest dreams? If you answer this question in the spirit of "what is" instead of "what should be", I am willing to listen."

I would be happy to explain this to you if you're interested in learning. That's no brief discussion, though. That question can be answered clearly with a mountain of supporting evidence. They're also questions that have been answered repeatedly over the course of my blogging, for those who've been willing to listen all along.

"Price is the arbiter of all matters when it comes to investing/trading unless you just want to be right more than making money. The price here no matter what fundamentals anyone can outline doesn't support the price."

That is your unsupported opinion. You are mistaken, my friend. You speak with an air of authority on the subject of gold and silver, but simultaneously exhibit an incomplete understanding of the the dollar's predicament and the fundamental drivers of gold and silver.

I re-post these comments of mine from your February post:

1. Technical analysis, while informative and indeed supportive of investing success, is just as incomplete without an equally well-crafted fundamental analysis as a fundamental analysis that completely ignores the technical. I believe that long-term success in investing requires a well-balanced marriage of technical and fundamental analysis. One advantage of such a two-tiered approach is that one can lean more heavily on one than the other when the times call for it. In this period of global financial upheaval, and especially in lieu of my caveat #2 below, I believe that currently fundamental analysis must take precedence over TA with respect to charting the longer-term trajectories. TA can play an important role in calling short-term peaks and valleys, but TA will not tell us when the gold/silver bull market is over... only the fate of the USD and the completed unwinding of the largest deleveraging event ever contemplated by humankind can determine the end of the bull market. To ignore that aspect of the fundamental picture for gold and silver is pure folly, IMHO.

2.  Gold, silver, and the USD are grossly manipulated markets, and as such can not be expected to behave predictably in accordance with TA.The black-box trading by hedge funds and bullion banks has been extensively documented by the folks at GATA.org, but for an example see my blog post here which shows a minute-by-minute chart of gold and oil side-by-side on July 15, 2008. GV might well get a kick out of the fact that I proclaimed: "The charts don't lie". The venerable gold bugs at GATA have been tracking the mix of long and short gold positions of the major bullion banks on the TOCOM for years, and the body of evidence in support of rampant manipulation is irrefutable. On the silver side, although Ted Butler is a controversial figure even among gold and silver bulls, his assessments of similar evidence concerning silver are spot-on. He establishes that just two or three banks at a time control the vast majority of the open interst in COMEX silver at any given time. The case for dollar manipulation is a complicated one, and one which I look forward to discussing further somewhere else. For now, let's just record that it is my concerted opinion that the USDX does not presently reflect even the true perception of the greenback's value among the major currency traders and central banks... there is a ruse being played out with the help of players like Japan and the ECB to keep the USD viable in the face of these enormous pressures... to forestall the inevitable continuation of the currency's technical decline by whatever means necessary. Incidentally, I view the bailouts and massive federal interventions in the very same light... emergency measures to forestall the inevitable.

I agree with your comments above about analysts from companies like Goldman Sachs speaking out of two mouths to serve their own interests, and I echo your call for Fools to tune them out completely. GS, incidentally, is the worst offender on the TOCOM in shifting gold large gold positions to nudge the market in a given direction. A lack of transparency prohibits Fools from knowing whether the same procedures are at play on exchanges like the COMEX, though I certainly presume as much. While GS was touting $200 oil, my bet is that their trading house was busy shorting it.

TA presumes that market forces are indeed determining price, so the existence of manipulation in any of these markets forces us to keep this caveat in mind when reviewing TA. It doesn't render TA useless byany means, but merely adds a caveat which reminds us to limit the degree of confidence with which we act on TA.

3. Because of the unwinding of trillions of dollars in toxic derivative assets and failed USD-denominated investments over the past year, we had a massive liquidation event take hold during the second half of 2008 during which all bets are off. While TA can be right a very large percentage of the time under market conditions that fall within the long-term range characterized as "normal", I think even the most die-hard TA enthusiast would have to agree that events of this magnitude can supercede the predictive mature of TA. Last summer, for example, the best gold-market TA-focused trader in the business (Trader Dan at JSMineset) offered this chart and analysis when gold was technically oversold near $860 but forced liquidation carried it all the way down to $700. I offer this as a fine example of gold bucking TA when world-changing events unfold. The events of the past year MORE than qualify, and in my opinion compel you to integrate more fundamental analysis into your work.

4. With all due respect (which is a lot!), the snippets of fundamental discussion contained within your post are way off base. Just as I recognize your obvious expertise in TA, I hope you will recognize that the fundamental analysis of gold and silver and the events driving this multi-year bull market have become a significant area of expertise for me. 

 

Finally, GV, in my opinion your concern for deflation over inflation fails to see stagflation as a currency event rather than an economic event. You are chasing the wrong dragon, and I believe that could be coloring your bearish views towards precious metals. Take 17 minutes out of your life to listen to this Bloomberg radio interview with Jim Sinclair, and see if he gets through to you a bit. :) 

 

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#12) On May 29, 2009 at 7:17 AM, ttboydxb (28.70) wrote:

TMFSinchi,

 

Another awesome post!  I am completely onside with your views.  Have "made my bets" accordingly (plus a bit of TMV, shorting US 30 year bonds) and I have a good feeling about how I'm set up for the next 1-2 years.  Great article about J.S's formula, I had missed it.  Funny how some guys (J.Sinclair, J Rogers, P. Schiff) seem to have gotten the last 2 years right on the money, and maybe their timing hasn't been perfect for some people, but I think 10 years from now we will be seeing how right they were!  Well add your name to those greats!!  :)

 

P.S. Added your blogs to my RSS feeds so I won't miss anymore!

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#13) On May 29, 2009 at 9:22 AM, jesusfreakinco (28.80) wrote:

Sinch - keep up the good work.

 

GV - I am not skilled at TA.  Like Chris said, there are diff types of investors / traders.  I have a long-term strategy and try to manage margin to not get bowled over by short-term manipulation by the Fed which is sometimes easier said than done.  Like anyone in the market these days, I've had high highs and low lows.  That is the nature of this market.  Anyone claiming to be right all the time or perfect in TA, fundamentals, or calling stock prices is fooling themselve or... working for either S&P or Goldman Sachs and has insider information ;)

JFC

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#14) On May 29, 2009 at 11:08 AM, GoodVibe4Ever (< 20) wrote:

Sinch -

For my statement that "Price is the arbiter of all matters", how this can be "unsupported opinion"? It's a fact that gold, silver and GDX (miners) are ALL under their 52 week high despite all the strong fundamentals that support their rise. Most miners represented by GDX are down and this is a fact not an opinion. Price is the only thing that matters and I don't believe this to be an opinion. I am not trying to thump my finger in your face. All I am saying that until the trend and price changes, I am still bearish because the price doesn't match your well outlined fundamentals.

Different time frames and different trading/investing style, Sinch! Why is it hard to get? I am not saying your analysis is wrong. All I am saying is buying now is an early move. You beleive that we are done with the correction within a long term bull market for PM, I say we are not done yet from this correction. That's all. I also say, I might be wrong and all I will do then is to shift my views and follow the price.

Thanks for all the links and info. Now, you posted your case and I stated mine. Now, the reader has the pleasure to decide for themselves what they see fit to their investing/trading style. Time and price will tell if their decisions were right (for them).

Brother, I have no crystal ball or speaking in authority at anything. I just add to the reader what is making me money in hope it adds different prospective. I have nothing against PM or for them. As long as they can make me money, I am all for it. We are not in a competition, Sinch, to prove one right or another wrong. Try to believe this because this is why I am posting here. Stop your "rastafari" kind of comments that you throw now and then or simply I will stop posting here. I don't take things personally or project things on others. That said, I am entitled to highlight things from my own prospective. On the other hand, you, one day will praise me more than I deserve and the next day you call me names. Don't tax my thick skin, please.

On a good note, don't you like gold to go down to $600 so you can buy more for less? Actually, you should hope that my thinking is right. Like Buffett, who will wish prices to go down so he can load up for what he believes to be fundamentally sound at a cheaper price. Don't you think?

Best...

GoodVibe

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#15) On May 29, 2009 at 6:35 PM, XMFSinchiruna (27.71) wrote:

GV,

Take a step back, and a deep breath, my friend. There is nothing being taken personally here. To the contrary, we must always maintain a Foolish level of decorum, and most especially because the subject matter here is so very very very very very important for all Fools at this particular point in time. ;)

That being said, this is not a debate you will win.

Before we begin, let's clarify the facts:

1. From your comment #10 above: "precious metal longs in general want to be right more than making money.They are attached emotionally to their views of the economy, Fed manipulation, fiat currency, etc. more than making money."  This statement of yours possesses fatal logical flaws... pure and simple. It would be irrational for investors to prioritize being right before making money, so to suggest that so many thousands upon thousands of investors are behaving irrationally, the assumption becomes irrational. You have blogged in the past about being open minded, but I don't think that claiming to know the motivations of your fellow investors is an exercise in this. You may believe it, and that is your right, but please don't expect such mischaracterizations to go unchallenged on my blog. The wise approach would be to approach your fellow Fool with respect, and ask: "hey Fool, why DO you remain invested in precious metals despite the sustained nature of this correction?" This would yield far more fruitful results. 

2. From your comment #10 above: "I didn't say or my charts said that gold is going to go sub $500." Fact: In your chart #2 from this blog post, you indicate sub-$500 gold as ultimate support and drew an extrapolated downtrend line to below $500. 

3.  Also from comment #10: "Gold, silver, and miners might outperformed other lousy investments but also didn't have any return in the last 52 weeks. All of them are under their last year high (some with huge losses), which speak loud and clear that the trend is down and until they reverse this trend, I will keep my bearish views." Again, for the record, this statement is false, since several miners are in fact above their 52-week highs, as I established above.

4. From comment #10: "I always ask those who believe in the fundamentals behind gold and silver one question they never get to answer it honestly." That's untrue... I answered that question honestly back in February on your very own blog. See me re-posted comments in #11 above.

5. From comment #14: For my statement that "Price is the arbiter of all matters", how this can be "unsupported opinion"? The portion of your quote which I was challenging as unsupportable opinion in my comment #11 above was : "The price here no matter what fundamentals anyone can outline doesn't support the price." I have devoted hundreds of hours to my blogs and articles establishing my case to explain why higher gold and silver prices are supported by the fundamentals, and you've brought nothing more than an unsubstantiated authoritative statement to counter it? I think it's fair to say that this is unsubstantiated opinion. Your first paragraph in comment #14 above, then, is based upon a misunderstanding of my retort.

6. Also from comment #14: "You beleive that we are done with the correction within a long term bull market for PM, I say we are not done yet from this correction." The gold correction is over in most major currencies, but I have not opined that the correction is over in USD terms. The correction in USD terms, obviously, is not over until we close convincingly above the previous high. Again, it seems when you try to tell me what I believe, you get it wrong. Perhaps you might stick to just stating what you believe. To the contrary, I repeatedly said that I could see further downside before we march higher (see comment #2 above).

7. From Comment #14: "On the other hand, you, one day will praise me more than I deserve and the next day you call me names." Where have I called you names? I have not. I am engaging in a debate.

8.  From comment #14: "I just add to the reader what is making me money in hope it adds different prospective." When I look to your CAPS profile, I see 14 open short calls on gold and/or silver miners open, all of which are in the red, 5 of which have been open since January. In sum, they are underperforming the S&P500 by more than 500 points as of intraday today. I see you closed many positions in the green as well, but the tally of gains from all your closed picks of gold and silver miners yields only 425 points. Therefore, if we are to use your CAPS profile as a guide, I see no evidence that your approach to investing in precious metals is what is making you money... at least in terms of CAPS money. Meanwhile, my silverminer portfolio, begun just a few weeks before yours came online, consists primarily of gold and silver miners long positions and has outscored your portfolio, along with 95% accuracy.

9. From your comment #10: "TA is seeing things as they are and not as we wish to see them". Just a bit below that, you state: "I am neutral on the US dollar while bearish on the British pound and Euro. I believe in deflation more than inflation at the moment because I see deflation and no sign of inflation, at least for now."

That last pair is quite a combination. First of all, if you were to apply the former statement to the latter, you would have to account for this long-term chart of the USDX from a purely technical perspective. If you can do that without seeing things as you want to see them, rather than as they are, I'll be mightily impressed. :)

 

Finally, I will restate my view on the short-term ranges for gold and silver that could reasonably remain in play before the final conclusion of this sustained correction. This is not a statement of fact like those above, but rather my informed opinion based upon hundreds upon hundreds of hours of analysis both fundamental and technical. I wish no response from you on this last paragraph, since we each no the other's views on this matter.

Based upon the dollar's action, the end of the correction for gold could conceivably occur any day, but powerful forces including juiced-up bullion banks will likely seek to defend these key levels with everything at their disposal. I expect some attempts to be made to re-take the 80-level on the USDX, which would be near-term bearish for gold and silver and signal another mini-correction. However, I believe there is insufficient dollar support to drive gold and silver below their recent lows of about $870 and $12. Silver would be more likely to re-touch those lows than gold, but $12 is now firm support. I see $900 gold holding, but we have plenty of support levels beneath there if needed. I believe $800 is the absolute lowest gold could conceivably be taken, but that would only be on the heels of barely imagineable manipulation, and even so I see the probability of $800 gold being way less than 5%. Meanwhile, I would assign only about a 20% possibility of 900 being breached. The low from this latest mini-correction of about $870 would then be very strong support, with $850 like a fortress behind that.

I think we'll see $1,050 gold before the summer is over, but I stop short of calling such opinions predictions. I don't believe that the short-term can be accurately predicted by anyone at this stage of the game... given the myriad elements that are in play.

 

Finally, GV, let me close with this. Although I am not emotionally attached to being right as you suggest, there is absolutely nothing wrong with holding a set of convictions about the macroeconomic landscape and investing accordingly. Again, this may differ greatly from your approach (although you seem to hold some pretty strong opinions of your own), but it is a foul play to disparage a longer-term approach to investing just because you have a different investing style. It is all about timeframes, and I most certainly DO get that. What it is not about, is emotions. I hope you'll park your emotions at the door, and consider my response with strength and honor.

 

 

 

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#16) On May 30, 2009 at 4:53 PM, GoodVibe4Ever (< 20) wrote:

I get it, Sinch. Thanks for your valuable comments. I appreciate all you do for yourself, loved ones, and your readers. No debate needed in my side and I concede defeat even if I don't know what was the battle. I just came to post a chart and put my neck on the line for all to see in hope it might add some value and somehow I got some people up in arms. :)

And I apologize if I (unintentionally) offended anyone including you. This is always the outcome of debates. Words always offend. They never mend no matter how careful we try. This is why I would rather not debate especially with money matters, which carry the most emotional charge next to sex. I would just rather post my charts, analysis and never more.

I don't know when I will learn? But one day I will. :)

My best wishes and have a lovely weekend.

GoodVibe

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#17) On June 01, 2009 at 12:26 AM, XMFSinchiruna (27.71) wrote:

GoodVibe4Ever

Again, no offense was taken. Don't shy away from debate ... it's what makes CAPS such a terrific site. Words don't always offend .. words are the humanity's greatest gift, and used wisely have the capacity to build bridges of understanding.

 

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#18) On June 11, 2009 at 10:54 AM, jesusfreakinco (28.80) wrote:

Chris,

I think you need to repost Sinclair's formula as a new blog to awaken those that believe this time is different.

JFC

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