Monthly Digger - May 2008

[Charmin]

Jim Puplava at Financialsense.com believes this will be the last call you'll get for the beep - beep of the backing up truck coming to your door to load up on juniors. Yes, it's probably an Aden Sisters "D" decline as it may stretch out a bit into the dog days of summer, and what Puplava calls the future crisis window of 2009-2012 for energy. Don't turn that ringer off, you may miss a number of important calls over the coming months. As you know, the government has done a terrific job of depreciating wages and cash through inflation and maybe now people realize the crisis and the lies that have been bestowed upon them.

 

Aden Sisters

"In a worst case D decline, gold could fall 22% (like it did in 2006), which would take it to the $780 level. If it declines by 15% (like it did in 2003), the weakness could end near $850. If gold holds above $840, it?ll be incredibly strong." http://www.kitco.com/ind/aden/aden.html

[Gold Majestic]

<Jim Puplava at Financialsense.com believes this will be the last call you'll get for the beep - beep of the backing up truck coming to your door to load up on juniors.>

 

Agree with Puplava! Yet another great opportunity for those with some patience and foresight.

Still like to see the SPX break out above 1400 or for gold stocks to exhibit a stronger divergence from the broad markets.

[Gold Majestic]

As of today, so many charts are indicating a screaming buy point for gold stocks.

[dharma]

my take as well, gold is cheap. it is cheap in its historical relationship to oil. its only a matter of time w/this last cut, before countries blink. the dolar is toast. as the last nem report showed, mining is a good biz. and as the consumer is unable to consume, mining will look relatively better. my crystal ball is cloudy, but a rally to 1k here would not surprise me, nor would a retest of these lows in dog days of summer. i can wait, and wait i will , our payday is coming and it will be in spades, just hope this board doesnt get dilluted!

you home yet gold majestic. appreciate your input around here

good calls by ageka, bv and cg. great wealth of talent on this board. now lets get ready to ride! good work guys

also sinclair, i was wondering what the miners were like prior to 79, and on his board today he had comparison charts. so this is also a repeat. from 79 onwards my experience is intact. dharma

[Charmin]

I vote for the "If gold holds above $840, it?ll be incredibly strong" scenario.

[Gold Majestic]

The Fed is going to stop lowering interest rates because the Credit Crisis is over!

 

And therefore, the US Dollar is going to rally!

 

Sell Gold!!! Sell it!!! Sell it now!!! It?s in a Bubble!!!!

 

You'd think the ills affecting the dollar had been miraculously fixed. That Paul Volcker was coming back as Fed Chairman to replace Bernanke and push rates above 18%, that Americans owned more of foreigners' assets than foreigners owned of ours, that oil prices were headed back down to '80's price levels, that our soaring deficits problems were being addressed, that the credit crisis was over, that . . . on and on.

 

Well apparently, the fundamentally challenged cognoscenti got it wrong again as ignorance continues to reign supreme. And I have to admit, I love it! We?re very fortunate that so many ?fundamentals is a waste of time? self-proclaimed TA experts are running amuck on the internet. Sure makes it easier to cash in over the longer term. Granted, understanding the fundamentals takes a little effort and a modest capacity for synthesizing information into an investment strategy. To our advantage, these ?investors? lacking these modest abilities continue to discredit the importance of market fundamentals. They?ve tried in vain to connect the dots but failed and thus pronounced them useless. You?ve seen these people on the late night television ads proudly announcing their successes following some bozo?s ?trading parameters.? ?Understanding the fundamentals is not necessary!? they shout, ?It?s a complete waste of time,? says another. ?It will harm your profits,? ?Charts tell all!,? proclaims a third and other such incredible nonsense.

 

Wise investors that invest in companies in various sectors as distinguished from the amateurs that ?play? the markets, have no argument with the importance of understanding the fundamentals of any market before investing. Fundamentals, are the foundation for identifying undervalued market sectors and specific undervalued companies, the step used before deploying technical analysis for the timing of entry and exits in those undervalued companies.

 

It?s hard to argue with the long-term success of a fundamentalist investor such as Warren Buffet. And it?s easy to point out the failed TA ?gurus? who severely lack understanding of market fundamentals. Take the gold market sector for instance, Robert Prechter?s count has been a complete distaster. Back in 2000, few took the time to understand the bullish fundamentals for gold, and the gold bear crowd at that time (the vast majority of market participants) extolled the virtues of E-wave analysis and Prechter?s bearish count on gold. They proclaimed, ?Fundamentals are rubbish,? Charts tell all,? etc. It took these "good sense challenged" investors (a few of the less denser ones) years before they finally started to come around, well after huge profits were made.

 

As most are aware, Prechter has been interpreting the price action since January 1980 as an unfinished complex corrective pattern and has continued to call for a severe decline to historical new lows. Upon every subsequent higher-high top, Prechter, instead of admitting he was wrong, would change his EW labeling to attempt to validate his bearish (wrong) count. It's gotten to the point (years ago already) of being completely ridiculous. We?ve seen the same convoluted ?And, If, Buts? constantly changing their counts, sometimes even attempting to cover all bases. You know the routine, IF Up then Up, But IF Down then Down, And IF Not Up And Not Down then Consolidation Sideways. But one thing we can be sure to count on is that these self-appointed "TA geniuses" are always quick to point out what the wave structure WAS, AFTER THE FACT.

 

What are these guys lacking? An ability to synthesize the basic underlying market fundamentals that determine DIRECTION. THEN you apply basic technical analysis to determine TIMING. I know, way too simple, but for some, simple is relative. The ?fundamentals are a waste of time? crowd keeps harping about how efficient the markets are and as a result that using fundamentals to predict trends in the market is pointless. Well, to these fools, I say, try to take that argument to Buffet. But I will reiterate what I have said before on this thread about Elliott Wave Theory. When it is applied and interpreted, properly grounded in sector fundamentals, especially with a longer-term view, it can be amazingly accurate.

 

And speaking of fundamentals . . . contrary to the above panic stricken crowd pronouncements that have permeated current market thinking,

 

GOLD UP! DOLLAR DOWN!

 

Yes, the selling was obviously overdone.

 

Congratulations to the usual prescient ones here that continue to accumulate on weakness. It continues to be a no-brainer understanding the Fed?s agenda to create a beneficial financial landscape to help the banks, a positively sloped Yield Curve (see chart posted a day or two ago). And TO LEAVE IT THAT WAY FOR SOME TIME TO COME to give them the opportunity to earn ?risk free? profits on the carry trade. After all, it?s still plainly clear to see the litany of ongoing loan losses yet to come, the result of years of reckless lending, and the continued decline in housing prices. And of course, commercial real estate has been the next shoe to drop with default rates rising there as well. Reverse course now and the Fed loses credibility, signaling they haven?t known what they?ve been doing these past few months. In my opinion, the Fed will continue to remain loose for awhile to come, a ? point cut, then a pause, then perhaps another ? point cut. The awful case-shiller housing report indicating we're only half-way down the road to a turn around, that home prices dropped 12.7% year over year and home foreclosures more than doubled in 1st Qtr vs. 1st Qtr ?07, awful consumer confidence report dropping to its lowest point in five years, etc.

 

US Dollar Chart attached uses the bear market RSI 20-60 DAYS signaling yet another dismal rally attempt failing to clear 73.

 

goobsout

[Gold Majestic]

my take as well, gold is cheap. it is cheap in its historical relationship to oil. its only a matter of time w/this last cut, before countries blink. the dolar is toast. as the last nem report showed, mining is a good biz. and as the consumer is unable to consume, mining will look relatively better.  my crystal ball is cloudy, but a rally to 1k here would not surprise me, nor would a retest of these lows in dog days of summer.  i can wait, and wait i will , our payday is coming and it will be in spades, just hope this board doesnt get dilluted!

you home yet gold majestic. appreciate your input around here

good calls by ageka, bv  and cg.  great wealth of talent on this board. now lets get ready to ride! good work guys

also sinclair, i was wondering what the miners were like prior to 79, and on his board today he had comparison charts. so this is also a repeat. from 79 onwards my experience is intact.  dharma

660360[/snapback]

 

Yes dharma, arrived this morning but didn't get much sleep. Great to be back to a cooler climate.

 

And yes, great calls by many of the posters here including yourself!

This is quite a bunch of astute investors. Look forward to catching up.

 

gooberoutfortheevening

[Charmin]

GLD confluence still holding at 1/3 pullback from the August 2007 low

 

http://www.StockSharePublishing.com/ChartL..._1209613672.png

[Ageka]

I finished my charts and made my personal prognosis

My crystal ball says the worst is over but...we will suffer a double bottom or worse in 107 days . So in between maybe a last chance to re align the portfolio and to add the last new positions

 

Please note that I changed the stoch settings to half cycle ; unless you do that you will not be able to reproduce the charts

[Ageka]

I never believed I would be looking at 850 but unless the slow stochs change my minde I am

 

I updated this chart ; you have not seen this weekly in three years since Seven just disappeared . He learned me how to make it afterwards for 2 years .

[Ageka]

The daily seems to say ok buy till the end of the 107 nominal cycle

[Ageka]

How nice

since my crystal ball they pushed down gold below 856 allready

hear you guys afterwards I want you to go to 999 and down again

[Whadda I Do Whadda I Do]

What was I thinking? I should have bought SBUX this morning, that's where the future growth is.

 

I don't mind spot at $850 (it was a nice run to $1000) but the mining charts are going to be in need of repair.

[dharma]

well here we are may 1 and gold is still making lower lows. now we have rsi divergences set up. this ends today or tomorrow. but i suspect these lows are again tested in july, and perhaps broken. corrections are designed to confuse and confound folks as to the direction of the trend. after all the hoopla of hitting 1k there is still alot of bullishness. this will be abated by the action that will occur over the next few months. this is not a sprint. this market still has years to express itself. the key will be to ride the trend. and not lose sight of that. i have read the last chapter, it ends in a parabolic blowoff. between here and there it will be confusing. there are and have been top callers on this board already. and to a certain extent they have been correct. ie, there have been many tops, and that will continue. but the summit is years in the distance. and until you see the end that i have laid out here, it will not be THE TOP. this is not a religion for me , but rather a recognition of a fiat system that has reached its limits. it needs major support from other countries. the consumer is finished, his personal atm has topped out and will suffer the worst decline of all asset classes. so w/ the market for consumer stuff out of buyers. the rats will jump ship. the die is cast. it will require patience. dharma

[Private Skidmark]

My order for AUY JAN '09 12.5 calls was filled. And there's an uneasiness in my stomach. That might just mean it could be a good trade. I entered a good till canceled limit order to sell them at 7.5, assuming AUY will reach 20 at some point before expiration. That would make a triple plus. We'll see if that happens.