Use access key #2 to skip to page content.

goldminingXpert (29.60)

Just marking time

Recs

42

September 23, 2009 – Comments (71)

I sit at 40th in the CAPS game now after being #1 a mere three months ago. Will I be #1 in three months? Probably not. Will I again be in the top 5? Most likely.

Best Guesses as of today:

EOY 2009:

S&P 820, Dow 7,900, Euro 1.33, gold $890/oz, GMX point total 10,500.

Mid-summer 2010:

S&P 580, Dow 5,600, Euro 1.17, gold $840/oz.

71 Comments – Post Your Own

#1) On September 23, 2009 at 5:13 PM, Sozurmama (23.08) wrote:

What would you have to see to change your mind? I mean, if major indexes are higher at the end of the year, will you just keep pushing these predictions forward?

Report this comment
#2) On September 23, 2009 at 5:18 PM, leohaas (31.24) wrote:

Huh?  A gold bug expecting gold to go down? Please, elaborate!

Report this comment
#3) On September 23, 2009 at 5:20 PM, goldminingXpert (29.60) wrote:

I'm a gold bug?

Report this comment
#4) On September 23, 2009 at 5:24 PM, goldminingXpert (29.60) wrote:

In answer to when we will truly get an economic recovery that justifies a new bull in stocks:

 

When GDP can grow without government stimulus, extreme backing for the banking system, zero percent interest rates and copious amounts of fraud and corruption. The gov appears to be trying to ease away from ZIRP and bailout policies which will cause the artificial floor under the market to get pulled away violently.

Report this comment
#5) On September 23, 2009 at 5:37 PM, stocki711 (98.83) wrote:

I've read through a lot of your old posts. You were correct with shorting early. Perhaps you were even one of the first on this site to short. I wonder why you can't believe in a bull market or perhaps more correct now... a recovery. Our government is devoted to the prolonged recovery of our country with China having a large stake in the same recovery.

I do believe the reason is your not a contrarian investor but a social contrarian. If people believe in continued growth of America you probably don't. You probably don't believe in the amazing growth of China and I assume you don't own Chinese small caps which have impressively outperformed even the NASDAQ.

You once posted on Somali Pirates' points of view and can 31,000 skeptical scientists be wrong?. I would expect nothing but these types of articles. 31,000 are wrong. Greenhouse gasses are real and their effects on the environment will hold deadly results. Ecosystems and planetary cycles are delicately balanced. I've also seen your recs go down as you continue to push ideas that no longer align with the times. You must change with the times. Not bangwagon jump but be willing to adapt and become flexible to the market.

I don't mean this post as an attack just two people with opposite views. I look forward to hearing your view. Maybe you can show me why you believe the market is going down. I wonder if you considered the devaluation of the USD. Do you really believe are dollar is that strong? As  Johann Hari said "with all due respect..."

Report this comment
#6) On September 23, 2009 at 5:53 PM, goldminingXpert (29.60) wrote:

Wow, never expected to see Somali Pirates in a response to a blog post about investing. You see new things every day...

Report this comment
#7) On September 23, 2009 at 6:14 PM, XMFSinchiruna (27.06) wrote:

GMX,

I believe that $900 is the new cement floor beneath gold prices. A miracle of short-lived USD manipulation coupled clandestine quantitative easing could conceivably bring the $800s back into play for a heartbeat, but I consider the likelihood lower than 5%. 

It's a new fundamental environment from the one we had before the recent resurgence. China is calling the shots now with respect to the gold price.

I won't make time-specific gold forecasts to counter yours, except to say that I see a solid chance for gold to re-claim the March 2008 high very soon, placing a lid on the 18-month correction, and moving that cement floor up towards the 1,000 mark. If gold fails to break through the March high convincingly over the next few weeks, then we we'll likely test support at $980 before launching higher. There is too much buying interest for $980 to fold without a battle royale, though again in the short-term virtually anything is possible. I suppose I would add a 10-20% chance that gold could retreat to the $950 area if it fails to close a few times over the March high ($1,023).

Longer-term, the important price targets are unchanged. $1,200-$1,250 comes into play as an upside target once $1,023 is breached.$1,650 after that, and then on to $2,000. There will be major corrections along the way, and all told volatility will continue to increase as the bull market matures.

Report this comment
#8) On September 23, 2009 at 6:17 PM, awallejr (78.92) wrote:

Yet you didn't answer his questions.  All you are doing is throwing out a few predictions, just like what Alstry did with his DOW 5000-2000 by end of summer.  For your DOW 5600 by next summer you think GDP is going to contract like it did last 4thQ and 1stQ?  Do you see credit totally freezing like it did when lehman crashed?  Do you see FED pumping up interest rates and hence mortgage rates?  Do you think Governments around the world won't continue to try to stimulate in order to preclude what would have to be a WORSE crash than last March, since obviously you are predicting a lower number?

I suppose it doesn't cost you anything for just making the predictions as an anonymous blogger.

Report this comment
#9) On September 23, 2009 at 6:36 PM, kaskoosek (36.11) wrote:

Please do not post on this site. 

I am amazed how some one who has been wrong frequently still has the audacity to make nonsensical predictions. 

 

Silver is now above 16$, guess who was wrong? You.

 

Please stop hurting others around you with your hotheadedness. 

Report this comment
#10) On September 23, 2009 at 6:50 PM, Alex1963 (28.61) wrote:

Considering what an overall bearish outlook GMX has his score and ranking are still very strong. I'm surprised anyone would disparage him. Plus IMO he writes informative helpful and well thought out pieces and pretty much responds to opposing viewpoints or requests for elaboration, which is respectful in my book, altho he can at times be scathing in his replies LOL

Always good to read your stuff GMX. Even tho I do disagree with your conclusions often I certainly respect your Caps abilities

Best, Alex 

Report this comment
#11) On September 23, 2009 at 6:56 PM, kaskoosek (36.11) wrote:

stocki711

 

GMX is wrong, though I doubt the recovery is on solid footing.

Print your way to prosperity is going to bite us all in the ass. The government is the problem not the solution. 

 

Report this comment
#12) On September 23, 2009 at 7:21 PM, XMFSinchiruna (27.06) wrote:

stocki711

I submit that recovery is not a word you're likely to hear a lot of once people come to terms with the true scope of the challenges ahead.

You got me thinking about something ... though this is in no way directed towards you. When you sought to speculate about gmx's reasons for holding his particular worldview, I noticed a fascination with the structure of the underlying thought process. Interestingly, I find myself pondering the same questions with respect to those who are feeling bullish on the equity markets right now. I will not seek to speculate as to their rationale for bullishness, but I can not deny being similarly fascinated.

As you'll see in my articles, strangely envious that I can not feel so upbeat about the things I see developing on a daily basis as I conduct what amounts to non-stop research. I find myself baffled that folks can go back to business as usual so quickly ... without a paradigm shift to account for the events ... armed with nothing but green shoots, hope, normalization of business activity from first-stage panic depths, and a dollar-boosted equity rally (the USD has lost 11% of its purchasing power since the rally began).

I wish I had more of the hope part, but after reviewing the available evidence I can not find rational cause for hope of recovery before conditions deteriorate further. It's tragic, and I wish I didn't perceive this likelihood, but it's there, and I can't ignore it.

I believe strongly, as I've argued here and here a year earlier, that the financial events of 2008 warrant a completely revamped investment paradigm through which to consider potential investments. If one's strategy lacks any meaningful exposure to commodities, precious metals, and/or exposure to markets outside the U.S. to protect against future dollar devaluation, then I hasten to suggest that a paradigm shift may be required. Rationally speaking, placing all one's marbles in a wager on a sustainable U.S. recovery given the objectively identifiable challenges in place ... I think we can all agree would be immensely foolhardy.

Here's the important thing ... because within any great comminuty there will always be those who disagree with any given point of view:

It's not all or nothing, Fools!

None of us has to adhere 100% to one base of perception of the other... the beauty of reconsidering allocations is that one can even bet a small portion based upon an unforeseen scenario as a hedge. I have never suggested that anyone match my heavy degree of exposure to precious metal mining equities.

P.S.  Nominal gains in equities mean a lot less when inflation hits in the form of dollar devaluation as a currency-driven global crisis event that is the greenback's indisputable present dilemma.

Here's my article on gold from today:

The Biggest Market Opporunity: Gold

The view from the global shipping sector

Gold's Next Monster Move

Profit from China's Exploding Resource Blitz

I have long-since given up trying to convince anyone of anything ... I know people are generally strongly set in their ways. My role is merely to communicate my perspective in hopes that it is at least considered even within an alternate frame of reference and regardless of the conclusions drawn. 

Love and respect to all Fools ... this is the best investment community in the world! :)

 

Report this comment
#13) On September 23, 2009 at 8:11 PM, cthomas1017 (99.00) wrote:

GMX has his views and he has solid rationale behind them.  Can't say that the he's the best market timer in the world and time will tell how sage his outlook turned out to be right or wrong.  His posts are usually thought provoking, articulate and insightful.  It sometimes amazes me how quickly his posts can go awry or get filled with vitrol.  (How do some people turn every thing into something about global warming?  And Somali pirates?  That was a nice try at baiting GMX.  Glad he didn't fire off on that one.) 

I have seen GMX mature.  He rarely lowers himself to the attacks he gets like he once did.  For that, I'm glad that's he's comfortabe and confident in his investment strategies, and doesn't feel the need to go after people any more.  Even in his "I'm going all in" post, he took arrows.  He knew the risk going in and he could still come out pretty good with that tactic with a sizable correction.

Keep 'em coming GMX.  If they don't like you, they can do what I do when I see a HypnoToad post.  NEXT!!!

Report this comment
#14) On September 23, 2009 at 8:30 PM, kdakota630 (29.72) wrote:

cthomas1017

GMX has admitted to some bad timing on this particular call, but his timing has typically been impecible in the past.

Report this comment
#15) On September 23, 2009 at 8:58 PM, dragonLZ (99.33) wrote:

GMX is wrong again. VERY WRONG AGAIN. 

The year is not going to end like he's predicting (even though we'll get close to his numbers soon).

SELL!

Report this comment
#16) On September 23, 2009 at 9:18 PM, Option1307 (30.18) wrote:

I've always appreciated your thoughts, regardless of my personal views. Keep them coming...

Report this comment
#17) On September 23, 2009 at 9:36 PM, goldminingXpert (29.60) wrote:

Yet you didn't answer his questions.

True.

All you are doing is throwing out a few predictions, just like what Alstry did with his DOW 5000-2000 by end of summer. 

I don't like being compared to Alstry.

For your DOW 5600 by next summer you think GDP is going to contract like it did last 4thQ and 1stQ? 

The rate of GDP change has remained unswervingly negative... the government is just running a larger deficit than before which masks the private sector GDP loss (for awhile.)

Do you see credit totally freezing like it did when lehman crashed? 

It tends to get cold in the winter.

Do you see FED pumping up interest rates and hence mortgage rates? 

Interest rates will rise, even though the Fed would like them to stay low.

Do you think Governments around the world won't continue to try to stimulate in order to preclude what would have to be a WORSE crash than last March, since obviously you are predicting a lower number?

Governments are about as good at increasing the fundamental value of a stock market as I am at building functional spaceships out of legos. The more the government tinkers, the harder we crash. And Obama is tinkering. A lot.

---

TMFSinchiruna

I've quit forecasting a return to sub-$600/oz gold, however I feel a sharp correction will still occur during the next round of global credit crunch. Note the fact that my price targets on the metals keep rising...

Kasoosk said, "Please do not post on this site. "

While I don't value your opinion much, I'm sure others do, and realizing as much, I'd never ask you to quit posting here. What you or I do on a public forum is solely our own business. If you don't like my posts, quit reading.

Alex said, "Considering what an overall bearish outlook GMX has his score and ranking are still very strong. I'm surprised anyone would disparage him."

This happened last summer too. However, last summer's rally didn't carry on as long, thus the crowd's perceptions of my views never turned this antagonistic.

 

Thanks to others for the kind comments.

Report this comment
#18) On September 23, 2009 at 9:48 PM, dragonLZ (99.33) wrote:

GMX, you were very wrong in May, June, July, August..., why do you think anyone should listen to you now?

Shouldn't people listen to somebody who was right in May, June, July, August, September...? 

Report this comment
#19) On September 23, 2009 at 9:56 PM, goldminingXpert (29.60) wrote:

I ain't buying that trollbait you're selling dragon. I signed up for CAPS in 2007, draw your own conclusions from my entire track record.

Report this comment
#20) On September 23, 2009 at 10:20 PM, TigerPack1 (83.73) wrote:

EOY 2009 - Dow 10,000 - Gold $750US oz

Middle 2010 - Dow 9,700 - Gold $825US oz

I like goldminingX, he kind of reminds me of myself when I was in college.  I am confident he will learn plenty about the markets in coming years, and be wiser for it.  His comments, while often over the top, are honest and from someone very bright.  That doesn't mean he will be right 100% of the time, and I personally am happy being right 70% of the time, and dead on correct 30% of the time.

We agree on the general direction for Gold the next 6-12 months, namely DOWN.  I see the opportunity for confidence in the Federal Reserve, the economy and consequently the U.S. Dollar to GROW DRAMATICALLY from its cycle low the last 6 months.  To argue "this time is different" is quite a risky investment view, the opposite extreme, but equal in argument as the late-1990s tech boom mentality and best of all world's illusion of prosperity.  Gambling that the world has completely lost confidence in national governments and specifically the U.S. ability to deal with financial crises has a low probability (in my mind) of being a reality in the short-term.

The hyperinflation NOW argument requires a willingness by consumers and businesses to hoard commodities and real assets like never before in this great land's history.  I don't see it, yet (maybe a few years from now, at the earliest).  A total lack of confidence in our government, the banking system and our neighbors is NECESSARY for hyperinflation to have a chance of taking place in the real world.  While confidence is admittedly low in government institutions, it is not much different than the recession cycle lows I have "experienced" and memorized for future reference, including the 1990-92 recession and the technology bust.  The customers at my business, my neighbors and my family members are scared of what the future may bring, but they have not lost complete confidence in the government.  On the contrary, most of us still EXPECT the government to fix the situation and are looking for help or bailouts for ourselves.  When we collectively no longer look for the government to rescue us, because we do not trust them to do so, that's the time to buy gold and silver with whatever loose change you can find.

The M-1 money supply (cash and checking account total) is actually growing less than the 20%+ year-over-year rate of the early 1990s rebuilding phase.  I would EXPECT the actual supply of basic cash to be growing well beyond any past "normal" cycle upturn if the government was losing the battle of credit creation, as a last resort.  Any rational argument for out-of-control inflation requires more than base credit creation, Fed buying of Treasury securities, and banking reserve expansion (which have all taken place to varying degrees in past recessions).  Already the big banks are lining up to repay the TARP money back to the government and taxpayers.  I don't recall any bears on America predicting that more than half of the TARP money would be repaid in 2009 and early 2010.

The average forecast from credible economists and business experts is for as much as +6% GDP growth for the 4th Quarter ending in December vs. the September Quarter of economic output, with +2.5% to +3.0% annual rates in 2010.  Such rates would be very subpar considering the large drop in activity in 2007-2009, but should ADD income tax revenues from individuals and profitable businesses alike (business profitability and productivity is set to explode higher in 2010-2011 vs. 2009 by the way), plus SHRINK the federal deficit situation in 12-18 months markedly.

While the hole we find ourselves in is deep, it is NOT insurmountable.  The biggest "surprise" left for investors to unfold in 2009, in my estimation, is a sharp INCREASE IN CONFIDENCE IN THE U.S. GOVERNMENT's handling of the economy, on par with the unexpected/surprising jump in the stock averages globally throughout most of 2009, that completely upset conventional wisdom and mainstream thought in the first three months of the year.

When overall confidence in mankind's ability to forge ahead is restored, the gold bug story will disintegrate as will the price for the precious metals.  Given total global mining costs for gold are around $500US per ounce today, and prices almost always trade above the cost of production, a $600-$700US price target is very logical and realistic when the overloaded gold bull boat capsizes.

-Tiger's Two Cents 

Report this comment
#21) On September 23, 2009 at 10:21 PM, XMFSinchiruna (27.06) wrote:

dragonLZ

Shouldn't people listen to somebody who was right in May, June, July, August, September...?

Absolutely not! 

I was right there with GMX at the time, and declared my belief that his all-in bearish position would launch him even further past his nearest CAPS competitor. If he maintains those positions, I suspect it still could.

The equity rally is a manufactured entitiy ... manufactured by stimulus, bailouts, backstops, guarantees, loans, swaps, incentives, exemptions, and anything else needed to make it happen and create the fleeting image of recovery. It was enhanced further by an 11% devaluation in the USD. As such, it was an extremely difficult market movement to forecast a terminal morraine on.

Extreme market dislocations will occur regularly in the midst of massive intervention into capital markets. Those are the consequences of intervention ... it breeds dislocations ... generating unforeseen consequences in the form of new speculative excess and resulting market dislocation from any semblance of actual economic conditions on the ground.

I saw the same thing happen on the reverse side when precious metal miners fell to extreme depths amid a counter-trend USD rally.

Equities are experiencing first hand an enormous intervention-fed counter-cyclical rally that presents a most dangerous condition for the unprotected. The inflation impact upon share prices remains the unknown wild card, but it's safe to say that equity markets will be heading substantially lower before conditions improve in a sustainable way.

And by the way ... all this nasty vitriole against GMX is unwarranted un-CAPS-like. He deserves your respect as a champion CAPS player, a long-time constructive member of this community, and as time has worn on a more zen-like participant in the capital markets. I too do not always agree with him, which is what makes CAPS great, but I respect and admire him as a person and as a keen intellect.

Hope to see more of you around here GMX!

Report this comment
#22) On September 23, 2009 at 10:23 PM, dragonLZ (99.33) wrote:

GMX, I think your rating here on CAPS is great, but being right during the bear market (when you signed up in 2007 until March of this year), doesn't mean you will be right during a bull market (started in March...).

Of course, unless you are some kind of a genius (but based on your bad predictions in May, June..., I'm not so sure)...

p.s. I even dedicated one post to you... :)

Report this comment
#23) On September 23, 2009 at 10:40 PM, ThatRichKid (< 20) wrote:

What about hyperinflation?

 

When you put a trillion dollars into the system, everything is'nt just going to go down a little. Duh!

 

http://boards.fool.com/Message.asp?mid=27957791

Report this comment
#24) On September 23, 2009 at 11:30 PM, awallejr (78.92) wrote:

Well while my Alstry analogy wasn't designed as an insult (tho I can understand how it can be perceived as such), and in light of your responses to my questions, at best it is just prognosticating and little else.  Recessions always seem bleak, until they pass.  Of course there is always the "this time it will be different" argument, but then again it never is.

WHEN unemployment starts actually declining sometime in 2010 (1st, 2nd Q), you will sense a huge sigh of relief among many.  It won't be robust, like some think.  It will probably take longer to get it back down to under 5%  but that will be enough to keep the market going, not crashing.

As for interest rates, not seeing any rise in them any time soon. Fed simply can't without throwing things back into recession and inflation really is years away at worse.  Was Marc Farber who had us at hyperinflation by end of year.  We aren't even close to mild inflation.  2-3 years is anyone's guess.

If you ever see DOW at 5600 this time next year, do what you should have done in March and load up. 

Report this comment
#25) On September 23, 2009 at 11:43 PM, BigFatBEAR (29.23) wrote:

I REALLY hope that you're right. I'd like another shot at buying the things that I want at better prices than we're seeing.

Problem is, if equities stay overheated for a long time, I get not only get bored sitting in cash, but I also miss out on a lot of dividends. Therefore, cash is risky, and boring.

If you're right, but just a year or two too early, then being short (even with puts) is very destructive to my nest egg. Therefore, being short is risky and stressful.

However, if I go long, I have time, dividends, the status quo, and a few other factors on my side. If the market tanks after I buy (which is inevitable, really), then I can average down, at increasingly nice yields.

This is how I have to think, with my money. I hope you'll understand...

Anyway, I definitely hope to see more of you when you get some more time.

-BFB

PS. I'm beginning to think that BWP may have a decent little amount of upside, even from here. $30 within a few years doesn't seem unreasonable to me. Thoughts?

Report this comment
#26) On September 24, 2009 at 12:05 AM, goldminingXpert (29.60) wrote:

I want to unload the BWP at $25 and reload at $20 as I have done before. BWP is unlikely to go significantly over $25 for at least the next year and actually will probably go lower as people tend to sell it off when nat gas is in the dumps, which it is presently.

Report this comment
#27) On September 24, 2009 at 12:35 AM, anewbieinvestor (< 20) wrote:

GMX - What happened to your "The S&P is about to collapse" series?

Report this comment
#28) On September 24, 2009 at 12:35 AM, stocki711 (98.83) wrote:

Before anyone believes me to be bashing GMX I'll be the first to say I am floored he caught the downturn. He caught it before anyone. If he had a large amount of money in real life we would call him John Paulson. Calling the downturns is and forever will be harder than calling the upturns in my opinion. 

 I'm hearing a lot of backing of GMX because of inflation. Inflation will raise the market. The equity market will go up from here over the next 2-5 years. Inflation and a weak dollar will take us there. That is why I am so positive on our market.

I completely agree our country is in trouble and we will be japan for the next 10-15 years but inflation will make up for GDP growth. Inflation will eat your earnings but the discussion has never been if we will earn purchasing power profits. 

The point of my post was purely to get you [GMX] to defend your opinions posted. You have a lot of well thought out and defensive views that have been incredibly profitable. I've seen my parents and their friends lose 20-60% this last year in IRA's and 401(k)'s and I imagine you have done fine all the while. I saw your comment on 2011 (or arbitrary date in the future) when GDP growth may begin again. I'm more bearish on the next 15 years then the next 5. I think around 2025 we will see DOW 15000-20000 again (as in crossed and back down). I think we have spent too much money that we have crippled our growth capabilities.

I wonder if your bearish outlook has anything to do with the possibly ending of the housing credit. I think if congress expands this credit (I will buy a house) and we will cripple the housing market following the end. I agree completely that the government is the ruin of American economy. I also think a failure of AIG in the short term could kill confidence in the market and the economy and we could see your pullback. Only an AIG failure could bring us down. So we agree that this rally is not without substantial risk albiet not as large as you think (my opinion).

On a positive not shipping on land and sea has increased. The residential housing market has recovered. Americans are saving more and household debt is decreasing. If these trends continue, short term profit will decrease but America's economy will become stronger. Again the government is subsidizing the equity market with the large increase in money supply. Interest rates are 0% and will be for the next year. Also, I see a possible catalyst in the slow market share growth of natural gas powered cars. Natural gas is a domestic energy source that could increase exports, decrease imports, increase GDP and stimulate the economy with jobs and increases in the equity market. I believe there are too many possibly scenarios of a rising equity market to feel safe shorting. Although puts are your best friend. I see slow growth in the market from here and I would sell covered calls as well on low to mid beta names.

Finally, I truely hope you respond to defend your opinions. You have a lot of insight to share or you are incredibly talented at blind luck. Why is the global credit market going to contract more than it already has? Do you follow Warren Buffett or his opinions closely? The USD peaked in strength in march when America was incredibly bearish. Now we see the weakest USD in a year. 

P.S. Please don't stop posting. If I only hear opinions that agree with my own then that doesn't help and makes this site pointless.

P.P.S. The somali pirates and global warming were not meant as disrespect. I don't know your views or if you sympathize for the somali pirates or if you protest in Washington against the Kyoto Protocal. I know it made a good analgy to compare you opinions on those articles to your opinions on the markets. Nothing more nothing less

 

goldminingXpert is one of your favorites! 

Report this comment
#29) On September 24, 2009 at 12:40 AM, uclayoda87 (29.42) wrote:

GMX

Best Guesses as of today:

EOY 2009:

S&P 820, Dow 7,900, Euro 1.33, gold $890/oz, GMX point total 10,500.

Mid-summer 2010:

S&P 580, Dow 5,600, Euro 1.17, gold $840/oz.

You must believe that the US dollar index will rise significantly.  Do you feel that a market correction will trigger a repeat of last year and a flight to perceived safety, the US dollar?  Do you have another reason that the US dollar may gain in value, other than it appears to have bounced off 76 on the index?  Gold has not fallen that much recently, relative to stocks and copper.  I suspecct that gold will not fall as much this year as last year.  If Gold fall 5% or more, then I think that the buyers will come in to prevent it from going below $900/oz.  Inflation due to QE has not gone away.

Report this comment
#30) On September 24, 2009 at 1:04 AM, MGDG (34.69) wrote:

I would be careful looking at the increasing shipping. There are 10's of thousands of TEU's of product being shipped from China to the U.S. to beat the tariff's. There are no buyers for these goods and they are being kept in storage in the U.S. The Base Metals are also being shipped and stockpiled in China without demand for the actual use of the raw materials.

 

Report this comment
#31) On September 24, 2009 at 2:52 AM, kaskoosek (36.11) wrote:

Both stocki711 and uclayoda87 are correct

Do not let these guys on this site scare you off.

 

Inflation is bullish for equities in nominal terms, this is a fact. I see no reason in GMX's analysis that the market will go down. This post feels like alstry's rants.

 

Alstry believed that we were going to have deflation for ever, even though the true bankruptcy of the country occurs only when the dollar is trash and not before that. You can continue spending while the dollar is strong.

 

Politicians lack the political will to reign in spending and this is a fact. So if anyone expects a downturn in the near future, then expect even more stimulus to erode the value of your cash.

 

Let us talk about the fundamentals. I would assume that GMX is an economy major.

 

The current account deficit has exploded up recently, and this is very bearish for the dollar. Couple that with the budget deficit, then we know what the source is, it is actually QE easing and the fiscal stimulus.

 

The twin deficits are here to stay, anyone bullish on the dollar, has only the technical side to back him up. Because the FED it seems like will continue with all the purchases. They can not stop, because if they do, we will have an alstry scenario.

Report this comment
#32) On September 24, 2009 at 3:09 AM, awallejr (78.92) wrote:

stocki711: "completely agree our country is in trouble and we will be japan for the next 10-15 years.:

First, absolutely no one can even try to guess where things will be 10-15 years from now.  Second, and more germane, Japan and the US are apples to oranges. Japan's population growth was stagnant, unlike the US which will probably be double within the next 50 years.  In fact Japan has been offering payments to encourage their people in having kids. 

Report this comment
#33) On September 24, 2009 at 3:29 AM, goldminingXpert (29.60) wrote:

Very nice to see this thread has generated good commentary. My reasoning really hasn't changed since the market is about to plunge series so feel free to go back to read that for more of my general reasoning. I believe the dollar is due for a big bounce, if nothing else, merely because it is so oversold. I also feel investors are overestimating the quality of the recovery in nations such as Australia, Great Britain and New Zealand, the AUD dollar and Kiwi dollar are foolishly overvalued versus EVERYTHING, be it euros, dollars, or bananas.

Report this comment
#34) On September 24, 2009 at 3:31 AM, goldminingXpert (29.60) wrote:

kaskoosek, there is so much more to the dollar than you assume. If economics stopped at 200 level classes, you'd be correct.

Report this comment
#35) On September 24, 2009 at 3:42 AM, awallejr (78.92) wrote:

'Very nice to see this thread has generated good commentary.'

This is what I like. Not name calling, but discussion.

Report this comment
#36) On September 24, 2009 at 4:30 AM, maxhoffa (< 20) wrote:

i got on the bull early, and just sold out the last of my BAC at $17.  only equities i have now are metal-related as i want to see how this whole china thing shakes out before i give up their ghost.

i'm betting on a correction, these s&p valuations are spooky to me, so i'll sit on cash for a while and pile on when (if) the rug is yanked.  

if the market survives october i'll look at selectively ramping back into some dividend stocks, but prolly won't put all my cash back in until i see some bark on those green shoots.  this has been an awesome rally though and cured a lot of my ills, thanks for the ride.   but for now, i'm mostly out until i see pull-back related buying opportunities or stronger economic indicators.

Report this comment
#37) On September 24, 2009 at 5:11 AM, kaskoosek (36.11) wrote:

goldminingXpert

The only thing backing you up is technicals regarding the dollar bounce.

 

Give me a fundamental reason why the dollar is going to appreciate. The FED has already reiterated that it will not stop QE anytime soon.

Report this comment
#38) On September 24, 2009 at 8:31 AM, TigerPack1 (83.73) wrote:

kaskoosek,

The U.S. Dollar has not fallen much the last few years, I think the number is around 15%.  In 1986-87 the US Dollar Index of the Fed's design fell 50%!!!

I am expecting higher bond yields shortly will stall the U.S. stock advance AND enitce foreigners who have largely shunned American bonds and stocks to come back in force to capture the still HIGH real-yields from intermediate Treasuries.  The new capital flows alone into Treasuries (to finance $1+ Trillion a year in deficits) will be enough to reverse the Dollar's current downtrend against European and Asian currencies for a year or two.

As for gold and silver prices in other countries, they peaked either in the spring of 2009 or the spring of 2008 depending on which nation and currency you are talking about.  The slight rise from gold in U.S. Dollars during 2009 so far, has been completely a function of the lower drift in the value of our currency.  Supply/demand fundamentals globally for precious metals are actually working against bulls right now, as are the incredibly negative lease rates (indicating major selling and leasing by the powers that be).  ANY UPTURN IN THE DOLLAR'S VALUE will be incredibly destructive for gold and silver prices from here, and that selling could quickly turn into a selling panic as it is the "least" expected outcome by investors in the markets today.

Combine a rising U.S. Dollar value with renewed confidence in the financial system over time, and gold/silver should decline in trading value, perceived worth and price.

-Tiger's Two Cents

Report this comment
#39) On September 24, 2009 at 8:39 AM, XMFSinchiruna (27.06) wrote:

Here's my hunch, FWIW:

The dollar will rally as uninformed investors move to treasuries during the next sell-off, which will indeed bring the return of a sense of panic to Wall Street given all the speculative froth that has entered the market since March. BUT, this dollar rally will be FAR smaller and FAR shorter-lived than the previous one. I don't expect USDX to break .80, and I don't expect gold to break below $980/$950 support levels.

stocki711

Inflation will eat your earnings but the discussion has never been if we will earn purchasing power profits.

Speak for yourself ... discussion of nominal price gains in a devastatingly inflationary environment is like trying to count hens in a fox den. It's pointless. This is why I have ceased trying to pin targets upon the equity indeces as I once did. The degree of inflationary impact is impossible to forecast.

So ... instead of saying the stock market will drop X%, let me just say that volatility will rise. :)

Report this comment
#40) On September 24, 2009 at 8:45 AM, XMFSinchiruna (27.06) wrote:

TigerPack

You had some interesting comments going, and I found your scenario for near-term dollar strength an interesting perspective ...

but then you stated a falsehood that must be corrected:

Supply/demand fundamentals globally for precious metals are actually working against bulls right now.

That is simply not true ... global production has remained in a secular state of decline for years, and demand has continued to ramp up. Central banks have shifted from net sellers of gold to net buyers, and that will persist as any USD strength will be seen as a last opportunity to diversify reserve assets away from USD.

Aside from the one misstatement, yours was an interesting hypothesis.

 

Report this comment
#41) On September 24, 2009 at 9:41 AM, TigerPack1 (83.73) wrote:

TMFSinch-

In time many of your commodity long investments and intuitions will prove correct, as inflation is coming down the road.

I am just not a believer in the timing.  I prefer to buy gold when the coast is clear and NO credible reason for owning gold exists like in the 1999-2001 experience.  This bull trade is very crowded now, thereby increasing the risk of a substantial loss if events on the ground change.

I say supply/demand fundamentals are working against bulls already, simply as a function of the declining price of gold in other nations/currencies the past 3-4 months.  There must be more sellers than buyers, or more anxious sellers for this to take place.  You can argue about who is buying and selling presently, but the price chart quickly outlines the lack of balance.  The "fear trade" into gold globally at the end of 2008 into early 2009 has definitely ended in all places but the U.S.  However, in time the U.S. Dollar price of gold will cede to the overall trend, once the Dollar stabilizes or rises against foreign currencies.

-Tiger Out

Report this comment
#42) On September 24, 2009 at 11:16 AM, jesusfreakinco (29.00) wrote:

GMX,

I am curious to know why you predict gold to decline into the 800s.  I am on the side with Chris/Sinchy on the possibilities and am wondering about your arguments other than a technical bounce lower than Chris.  Do you really see a USD rally above .80 on a drop in equities?  If so, why?  I admit the USD rally last year was stronger than I anticipated, but I think the fundies and situation are much different and tend to agree with Chris/Sinchy.

Sinchy/Chris,

Thanks for keeping the dialog on track.  Many CAPS members have  input that we should all consider, even if they contradict our theories.  Those that cut down others are egomaniacs.  Even the best traders/investos have been brought to their knees in the past couple of years at one time or another.  You'd think adults would act like adults...

JFC

Report this comment
#43) On September 24, 2009 at 11:49 AM, stocki711 (98.83) wrote:

For the comment on Japan's population growth compared to the US. The US had negative growth in incoming imigrants and the average couple produces something like 2.0 offspring when 2.1 is the replacement rate and above is growth.

Also I'd like to add about global credit. The fact that in march when credit was in dire straits, companies still found large loans for 10%. Today I'm seeing companies I'm watching take out loans at 7-9%. This is nothing compared to the 80's inflation when corporate bonds hit 20%! We truely have something to fear when rates hit that level. I think one of the most important indicators for any individual stock and the overall market is the corporate bond rate. It gives you an idea of inflation and the risk banks see in a given company or country.

 Finally, on an off topic, is Moody's and all the other credit companies the reason we are in this mess? I ask because they were paid by the companies they gave ratings for. News coming out points to ratings being artificially inflated which artificially lowered the interest rate borrowed at. This substantially increases the risk for banks. Let me know if agreed. 

Report this comment
#44) On September 24, 2009 at 12:32 PM, EV38 (99.28) wrote:

I've seen a recurring theme during this thread - that the recovery has been manufactured, namely by government spending rather than economic growth.

Well, to turn this around - was the stock market decline not also manufactured? By lack of liquidity, double short ETF bubbles/Elliot Wave theories/1929 crash enthusiasts, leveraged funds collapsing, scared investors redeeming when their funds wanted to buy more etc - instead of true economic factors? 

If the credit markets didn't freeze to the extent they did would we have even seen S&P below 1000? A drop from 1400 to 1000 is still one hell of a drop to blame purely on economic factors.

People praise precision, well here was mine:

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=5780&t=01006636850306521864

Much of that blog was based on stupidity of people during the bull run rather than economic factors. Now much of my bullishness is based on the stupidity of people during a bear rather than economic factors. goldminingXpert's bear call is not taking on economic factors, but a whole plethora of stupid market participants, a much taller order in my opinion.

If the market was based purely on economic factors we'd have traded between 1000-1100 S&P for the last 7 years lol.

Report this comment
#45) On September 24, 2009 at 1:10 PM, goldminingXpert (29.60) wrote:

I expect somewhere between 81 and 86 on the dollar retrace. The dollar's fundamental health is continuing to decline, so a rally to a point as high as last year (89.6) would be unexpected. However, the anti-dollar crowd is almost as fervent as last year, so there is a lot of amateur money, particularly in the FOREX market, that is short dollars but will cover/be margined out as the dollar starts moving higher. Basically, I'm calling for a global short squeeze on the dollar -- particularly since it has been used as a carry-trade funding currency, when the dollar starts to rise and the assets purchased with the carry-trade funds (e.g. US stocks) start to fall, you're going to just hammer the plethora of hedge funds running that trade on both directions of said trade.

Report this comment
#46) On September 24, 2009 at 1:29 PM, biotechmgr (34.43) wrote:

 EV38,

The stock market decline was "manufactured" by Elliott Wave theories and double short ETFs? Those did not manufacture anything, except gains for people who understood the mass psychology of a bubble and applied the theory and the tool to create a profit.

You are correct about one thing. If the market had traded purely on economic factors then market prices would be different. But they are based on mass psychology and herding behavior, therefore they acted as they did.

And they will again. See you at much lower prices in a year.

Report this comment
#47) On September 24, 2009 at 4:00 PM, awallejr (78.92) wrote:

stocki711

Except that the raw birth numbers continue to rise.  That and coupled with continual immigration makes this country drastically different than a basically "single race" country like Japan.  See:  http://www.cbsnews.com/stories/2009/03/18/national/main4873969.shtml

Report this comment
#48) On September 24, 2009 at 6:18 PM, dragonLZ (99.33) wrote:

What will happen with the market was said here...

Report this comment
#49) On September 24, 2009 at 6:28 PM, GenericInvestor (88.56) wrote:

Can somebody tell dragonLZ that he is not the prophet he seems to think he is?

Report this comment
#50) On September 24, 2009 at 6:44 PM, DEALWITHTHEDAY (37.49) wrote:

My position is neutral.

But I have a question that I have not read much about.

In my head I am trying to figure out how the Fed and Gov will go about pulling the money back. If we print that much extra money what do you think the government will be looking for before they start pulling money back off the table. (The banks will pay back when they earn) the problems I have is the rest of the money.

Report this comment
#51) On September 24, 2009 at 6:51 PM, dragonLZ (99.33) wrote:

Generic, I will shut up as soon as I'm proven wrong by the market (unlike some who were wrong since May...)

However, ever since I started my "prophecy", I've been right. I don't think you can argue with that.

p.s. If these two down days are really the beginning of a short-term slide, that would mean I nailed it again (almost called it on the exact day... :)  

p.p.s I love this game...

Disclaimer: Not affiliated with NBA in any way... :)

Report this comment
#52) On September 24, 2009 at 8:18 PM, dragonLZ (99.33) wrote:

GMX, sorry if I killed the thread...nobody commented for almost 2 hours... :)

Report this comment
#53) On September 24, 2009 at 10:42 PM, EV38 (99.28) wrote:

#46 yes, part of the market decline can be attributed to events like that. Did FAZ just get to $200 pre-split by accident or was it blown out of proportion because shorters were giddy at the prospect of every major US bank becoming a penny stock? It was a bubble, a bear market bubble but a bubble nonetheless. Just like the S&P should never have reached above 1400, it should never have dropped below 700.

On another note I find it kind of interesting - goldminingXpert was one of the people, like me, who longed Citigroup (I did it in caps and in real life, he did it in caps dunno if anywhere else) when it hit the dollar range, or $1.50 on caps. He even took pride in being score leader for the stock against all these shorters that thought they were so brilliant continuously shorting the stock to the crapper. Now he's throwing out a number on the DOW that would imply a much lower than $1 on Citigroup. Does he actually believe his 5600 or is he just throwing out numbers for shock value?

Report this comment
#54) On September 24, 2009 at 11:37 PM, APJ4RealHoldings (36.43) wrote:

WOW

goldminingXpert

I cannot thank you enough for your blog post here.  Not for the contents of it, but for providing me the full guage of the bullish mindset.  This past month I have started to hear quite a bit of a bullish sentiment among my friends, but to see it to the degree here on CAPs is priceless.  I did a few months ago have some losses on shorting the 3x's (TNA, BGU, EDC) in real life, but it seems to be the times are ripe now based on being contrarian to sentiment. 

Anyways, GMX or anyone reading this, please if you get a chance, provide some insight or criticisms on a blog post I just put up.  It would be much appreciated.  I'd like to hear your slant, if any.

Small Banks. Potential for Riches or Rags

 

 

Report this comment
#55) On September 25, 2009 at 2:00 AM, checklist34 (99.71) wrote:

i like pie.  i like cars.  i like driving, except long highway drives. 

i like r compound tires.

i have offered six figures worth of cars in exhancge for the agreement to wash all my cars on these forums to this op in the past on a wager than the S&P did't drop below 800.  

but nobody is confident enough to actually bet.  :)

Report this comment
#56) On September 25, 2009 at 2:22 AM, ozzfan1317 (78.39) wrote:

I respect your opinion and appreciate your inputs but I disagree on a new low for the Dow. Inflation at the least will help drive us higher next year I still believe we will see DOW 11000 by years end just my opinion and worth the amount I charge.

Report this comment
#57) On September 25, 2009 at 9:44 AM, TigerPack1 (83.73) wrote:

My proprietary model of gold prices in other currencies (its true global trading value/worth) I have used for about 20 years, is again this morning trading BELOW its 200-day (40-week) moving average, after a short 3 week stint above it.

The worldwide trading of gold in local currencies today is a good 13% below the peak quote earlier in the year.

Plus, it looks like the U.S. Dollar value is perking up.

I wouldn't be surprised by a 15%-20% price decline for gold and silver priced in U.S. Dollars the next few months.  The odds of a higher quote (say above $1000US an ounce) are about equal to an all out route of greater than 20% the coming weeks!

The non-confirmation of the U.S. gold price upmove to new all-time highs on the weekly chart last Friday, when compared to gold priced in other currencies, plus the lack of any follow through to new all-time (or currency adjusted) highs for every other metal in existence, including silver and the platinum group may highlight a multi-year peak in gold and silver has been reached.

-Food for thought from a hungry Tiger

Report this comment
#58) On September 25, 2009 at 12:08 PM, goldminingXpert (29.60) wrote:

Bear markets don't have "bubbles" and the market went down for very good reasons such as the failure of two main pillars of the financial system which collapsed ... it's surprising that more of the edifice hasn't dominoed yet. WFC is next...

Report this comment
#59) On September 25, 2009 at 12:19 PM, goldminingXpert (29.60) wrote:

Darn my luck... the one time I do post at the top, I don't try to call it again for the umpteenth time. ;) The amount of bullish sentiment in the comments thread will be hilarious (or painful if you're long) when revisited in a few months. 

Report this comment
#60) On September 25, 2009 at 12:36 PM, dragonLZ (99.33) wrote:

GMX, I agree with you completely:

S&P WILL BE 580 BY MID-SUMMER 2010!

 

p.s. Had to say it, just to see how it feels to be a bear...

It doesn't feel right, it just doesn't...

Report this comment
#61) On September 25, 2009 at 1:39 PM, stocki711 (98.83) wrote:

goldminingXpert (99.97) wrote:

Bear markets don't have "bubbles"

 

Why? They are immune from falling below fair value? Interesting...

Report this comment
#62) On September 25, 2009 at 1:50 PM, EV38 (99.28) wrote:

#58 and how are you so sure WFC will fail? Just like lots of people are so sure Gold is going well past $1000, with great reasons. Doesn't mean either will happen.

And of course they do have bubbles...FAZ wasn't in a bubble at $200 pre split? The shorters like alstry weren't absolutely giddy with delight at S&P under 700? The sooner you realise both sides can have a bubble the sooner you learn something about the market and your trading strategies.

 

Report this comment
#63) On September 25, 2009 at 4:44 PM, goldminingXpert (29.60) wrote:

Bubble--A description of rapidly rising equity prices, usually in a particular sector, that some investors feel is unfounded. The term is used because, like a bubble, the prices will reach a point at which they pop and collapse violently.

 

http://www.investorwords.com/595/bubble.html

 

---

The term bubble is used because it is when things inflate rapidly and then pop. The analogy doesn't work for something that is imploding... as it is not inflating but deflating.

I find it weird that you insist on picking random fights with me over the most trivial of things. 

Report this comment
#64) On September 25, 2009 at 4:53 PM, anossov (47.36) wrote:

Hey GMX,

Thanks for posting, please know that your opinion sharing is appreciated by most. And I think these levels within these timeframes are highly probable.

I'm wondering what made you change your mind on gold? Wouldn't mid-'10 $700-$600 levels be more consistent with the stocks' levels you're giving?

 

Report this comment
#65) On September 26, 2009 at 7:08 PM, stocki711 (98.83) wrote:

I guess I am wrong so I am sorry.

I guess ice would best describe what I meant.

It contracts and contacts until freezing point when it pops to an inflated size.

I'm not trying to pick fights, I read your post incorrectly then. In hindsight the quotes were for a reason. I just disagreed that there couldnt be a bubble bear market or bubble like conditions reversed. Semantics

Report this comment
#66) On September 27, 2009 at 7:50 PM, dragonLZ (99.33) wrote:

Just marking time with this ...

Report this comment
#67) On September 28, 2009 at 10:39 AM, EV38 (99.28) wrote:

That sounds a lot like FAZ during March to me. Ok, so maybe you can't call it that because its not an equity but an ETF but its function and purpose is the exact same as any stock market bubble we've seen before. I will continue to use the term bear market bubble...maybe I can get it trademarked and I can get a licence fee for everyone that uses it once shorters realise a few years from now we won't see those levels again, at least not in nominal terms, just like we won't see NASDAQ at 5000+, in real (inflation adjusted) terms.

Report this comment
#68) On September 28, 2009 at 2:35 PM, MrSucrose (< 20) wrote:

I am not sure that the stimulus spending is going to end.  I work for the FedGov and have put about 13 million in stim spending on the street and because I was such a sucess in the first round they are giving me more money-$6 million.  Kinda scary.

Report this comment
#69) On September 28, 2009 at 2:59 PM, stocki711 (98.83) wrote:

I agree completely with EV

Report this comment
#70) On September 28, 2009 at 4:11 PM, EV38 (99.28) wrote:

How is the extra stimulus spending scary? If it is used effectively to improve society then it is not scary at all. I suppose you would know very well what its purpose is though.

People look at financial deficits because they are easy to report and quantify - there's tons of deficits that aren't so easy - a damaged environment, broken roads and other infrastructure, broken health care, education and justice systems etc. If that spending is used to effectively clean up all those issues then the spending is not so bad. If the spending is used to bail out ineffective banks or car makers whose management and labour force cannot keep up with reality then that's where it gets to be a bad long-term strategy.

Report this comment
#71) On October 16, 2009 at 1:24 AM, dragonLZ (99.33) wrote:

Are these lines gonna cross before the end of the year or not?

I doubt it, but they sure are getting closer...

p.s. Sorry. Just marking time...

Report this comment

Featured Broker Partners


Advertisement