Oldtent Archives 2007 - 2008

Snip:

“That’s why a conversation about a gold standard is needed. But could it realistically make a comeback? Anna J. Schwartz, who co-wrote with Milton Friedman the highly influential book, “A Monetary History of the United States: 1867-1960,” suggested at a 2004 gold conference at the American Institute for Economic Research that only a crisis of sufficient depth and magnitude would provoke the public to demand the stability of gold or a gold-linked currency. Such a crisis, which appeared remote at the time, may soon be upon us.”

http://www.csmonitor.com/2008/1115/p09s01-coop.html

Note: I can not help but wonder if the Saudi’s have an inkling of what is to come from the G20 meetings in the near future?
Maya @ 10:23 am on November 14, 2008
Saudi Arabia buys $3.5bn of gold in two weeks

The short answer to your argument. In any item (stock, index commodity, whatever) there are many cycles at play. Which ones will be predominant at any time and less predominant at other times is a problem. There are cycles within cycles and perhaps that could predict the answer to the above. But at any given point it is a battle of cycles.

aurum (cycles)

I spent today listening and thinking about the Nenner interviews. There is a lot I have to say, but that is for another time. For now, his point (as I understand it) is that we have just now reached the end of the deflationary cycle. (Look back to the K wave discussions here of a few months ago). I know that is not what I previously believed and argued - and for now it is up in the air. But his argument is that certain features in oil and grains masked the true nature of the deflationary situation. This might explain certain things - well I am still wrestling with the argument.

Anyway, the commodities will now (or very soon) move up and this will show that the deflationary idea is dead and the stocks will then follow and rise in the “inflationary spiral” that some of us (Rambus) posted.

aurum (Nenner)

We are surrounded by cycles.  Seasons, sun, moon, menstruation, sine waves, four stroke engines;  wherever we look we find cycles, and use them.  So, is it small wonder that we look for cycles in other things?  After all, we have looked for, and found cycles that affect the weather (sunspots) and can be used, to a certain extent, to predict weather variations.  El nino is another one.

There are plenty of things which are clearly not cyclical, though.  Our life on this planet is one.  It is a continuous journey, which has some cyclical aspects, but there is nothing to suggest that because someone visited Italy, went bankrupt, won a million dollars on lotto, got married or dug the garden on 26th March one year that these events will be repeated at all, let alone in a cycle.

So why should we expect to see rigid cycles in financial, political or social spheres?  Atheists might expect that there will be cycles in human emotions just as there are some physical cycles;  theists might expect there to be cycles because that is the way their god designed things, and they believe that god made him/herself in their image, and therefore is like them.  Sure, let’s look for them, but let’s also define what we expect the cycle to look like, and what characteristics it should have, to be accepted as a cycle.

What I want is for the cycle, if it exists, to be a useful predictor of what will happen so that it can be used for successful investing.  Therefore it must show consistent results.  It must be right every time.  There cannot be any ambiguity (are we in 2 of  4 or 3 of 5 type stuff; this is useless).  It must also, therefore, be immune to goings on in the market or political arena.  Or, alternatively, be an integral part of those arenas, which tends to imply that everything that happens was already ordained (predestinational Christians will like those cycles).  It must also be predictive.  Excuses that are available with 20/20 hindsight as to why the cycle missed the bottom by a month invalidate the concept of a cycle.  A sine wave that is not quite a sine wave is not, well, a sine wave!   A cycle which is consistently accurate only for a month into the future is great!   A seventy year cycle which calls the end of a bull run six months before it rhino horns is useless.

Gold has started a move up and the pm stocks will not be far behind.

aurum (pog)

Don’t you know just how Peter feels?  Two years of being right and still everyone’s calling the bottom, time to buy, problem will be fixed by the govt. etc.etc.

I wonder what the real idiots are saying now?

Yes sir we are fine …I am very proud of my wife holding up so well with all that has happened. Without her and the tent I would have a huge hole in my life.

Sounds like you have been keeping busy.    Glad to hear you and Farmgal are doing well.

Well..looks like we be diggin sand for a long time…..everytime you guys re-look at the waves we go backwards some more. Next look at it we will be in 4 of l….I gatta go catch some of the Mayan lords in the mountains tomorrow…and get them to contact whoever they communicate with ..to push back that Dec.2012 date so we can live to see the 3 of 3 of 3 at least Haaaaaaaaaa

Your 2011 date may ver well be it.  I didnt have time this morning to count the weeks and try to do a ratio.  I just guessed 2010 based on all the other predictions for 2010 being a bad year and an eyeball estimate on the chart.   I think I remember reading both you and Aurum suggesting a wave count similar to what I showed in the link below.  I was too stubborn (or greedy) at the time to believe it was possible.  An expensive mistake on my part.

I always enjoy your posts.  You force me to think.   I will have to go find and read the Armstrong article you mention.

Good to see you posting. What you wrote makes a lot of sense. If it lasts into 2011 it fits with what I think is an intermediate low that year in the Armstrong model.

No one would have believed four years ago that this past four years would have been like this. So another two years or so of ragged action would not surprise me. It also fits with the theme from Armstrong that we have seven good years and seven lean years.

Sinclair is saying something is going to happen to put a fire under the price of GOLD between today and 66 days from now! If recent market actions have not sent gold to his $1200 target, What would it take to move this gold bull again??? I know Sinclair has something in mind, but what??

Let today be your answer to the many question concerning whether gold will ever rise again. The answer is it will to $1200 and then onward to $1650.

I suspect that we could soon have a financial/felony experience that could land on the dollar like a piece of lead.

I suspect that the instant the USDX breaks its present up-trend line from .72 to about .89, it will look like the dollar stepped into an elevator door and found no elevator there.

I suspect that the next move in gold will witness the massive short covering in all variety of shares, both majors and juniors.

Under no circumstances give away your insurance (gold and all things gold) and if you have then for your sake buy your insurance policy back ASAP (gold and all that is gold).

Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree.

Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another.

The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left.

The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout and their responsibility to cover now goes to GE, a non-bank with no depositors.

People expect things to return to normal in 2010. That is a fairy tale.

All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control and soon.

The out of control point of major planetary dislocation is between today and 66 days from now.

One thing that I thought about today, while reading the Armstrong article again, was the meaning of volatility.

Armstrong illustrates that when time is shortened, that is when wavelength is shortened, amplitude increases. The result is greater volatility; today’s Dow Industrials, especially the last hour, is an example of this.

What does this mean, for us? Well, it can mean a lot of things. In brief it means that this is a true panic; turns occur on a dime, runs go far, both up and down, and can occur within days of each other. What happens when a lot of people panic? We are seeing this. Some become numb and freeze. Some become loquacious and just babble. Some cannot think any more with clarity. Some give up as described in the July 8 Time article about How to Survive a Disaster. Some do other things. In aggregate we see volatility.

This wolf of volatility can trend downwards, and disguise itself in the sheep’s clothing of activity.

Longer term what does it mean? I think people can read the Armstrong article for themselves and reread it a few times in order to get past the short term trading by his ideas theme, and get to the longer term message.

Funny you should mention a Wave 2 today.  I was having an email discussion with a friend this morning on that very subject.   below is a summary of my message.    Any thoughts or additions to what I wrote?

Haven’t been able to read or post much lately.  Life has been pretty busy.   My charts have been neglected and I need to catch up on them.  Hope everyone here is doing well.

y2kdon

From:
Sent: Friday, November 14, 2008 6:26 AM
To:
Subject: HUI thoughts

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1842373&cmd=show[s106815664]&disp=P

tried a different perspective this morning before the madhouse starts around here.  Above is a linear chart instead of my usual log.  Each red box is the same height.  What if we are still in major wave 2?  Waves 1,3 & 5 of major 1 are shown with the red boxes.  They are all approx 260 points in height. 

If the above is true, it is possible that we could have a run back up to 440-480 range then back down to current levels.   Take a look at minor wave 2 from Jan 2004 till May and compare it to march 2007 till present.  very similar.   So what if Major wave 2 repeats minor wave 2 for the rest of the pattern Apr 2004 to May 2005 ????  If so, it means we will be back at these levels in approx mid 2010????

This corrective pattern is also evident in the correction from July2002 thru Dec 2002

……which means we are still in BIG 2 and I think it could last until sometime 2010.  Probably drifting sideways with a possible retest of recent lows just to fake us all out.BIG wave 1 lasted from late 2000 until early 2008 so I doubt the correction is over timewise, but we may have seen the lows already.   Thats why I made the comparison to the 2004 and 2002 wave structures.

If all these assumptions are correct, this gold bull will last 20+ years.   BIG Wave I lasted 7 years and BIG wave 2 has only been going for 8 months so far.

One additional thought.  If we are in a BIG wave 2 in HUI, then its sideways action as the Dow crashes makes sense.  The flight to safety is offset by the liquidation in the general markets to raise cash as the PMs stay in the downdraft.  For PMs this means miners oscillate sideways until the Dow bottoms.

‘ Wed Nov 12, 2008 3:50pm EST ‘

‘ By Joseph A. Giannone

‘ NEW YORK (Reuters) - The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs chairman John Whitehead, said at the Reuters Global Finance Summit on Wednesday.

‘ Whitehead, 86, said the prospect of worsening consumer credit woes combined with an overtaxed federal government make him fear that the current slump is far from over.

‘ “I think it would be worse than the depression,” Whitehead said. “We’re talking about reducing the credit of the United States of America, which is the backbone of the economic system.” Whitehead encountered plenty of crises during his 38 years at the investment banking firm and was a young boy during the 1930s.

‘ Whitehead warned the country’s financial strength is at risk due to the sweeping demand for tax relief and a long list of major government spending plans. ‘

www.reuters.com/article/email/idUSTRE4AB7HT20081112