Shouldnt silver and gold be going up right now?
- Thread starter BootyBandit
- Start date
Trichter
Member
Nickoru said:
Good info, Nick. I've bolded a key sentence in your brief account which contradicts the "to tha moon" expectations of some. Those interested in the Russian collapse may also be interested in Dimitri Orlov's musings in Reinventing Collapse. His blog is here:
cluborlov.blogspot.com
metalzzz
Well-Known Member
Jan
19
2011
Human beings are creatures of emotion; we evolved that way for good reason. But if you've ever allowed your emotions to lead you into a hot investment, you probably learned the hard way that emotions are not the best guideline for building wealth.
"There is nothing new in Wall Street," said Jesse Livermore, the famous turn of the century speculator Reminiscences of a Stock Operator. "There can't be anything new, because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."
Learning to recognize and understand the recurring economic cycles that can provide a roadmap for when to buy, when to sell and when to sit tight for the ride will help you take emotion out of the calculation.
The theory behind the phases of a bull market probably originated with Dow Theory, an analytical style named for Charles H. Dow, a cofounder of Dow Jones & Co. and founder of the Wall Street Journal. Dow Theory originally was used to track business cycles but came to be used as a way to analyze the stock market.
A bull market is an up-market, the opposite of a bear market, when prices fall. The terms bull or bear market often are used to describe the entire U.S. or global securities markets, but there also can be bull or bear markets in individual stocks, commodities, bonds, currency, or hard assets such as real estate.
In many types of markets, a bull market results from prosperous economic conditions, such as higher incomes, low unemployment, high profitability and productivity and strong consumer confidence. In contrast, a precious metals bull market usually occurs when economic conditions are not so goodduring times of high unemployment, low wages, high inflation, and low consumer confidence. That's because people turn to gold and silver as a secure way to preserve and increase wealth when conditions around them seem aimed at robbing them of their wealth and security.
You'll find various descriptions of bull markets in financial literature, including some that divide the second phase into two sections to form a four-phase pattern. Our Wealth Cycles team tends to see the cycle as a three-phase pattern, as described in a 2006 article by Brent Harmes: Phase Ithe Denial Phase; Phase 2the Wall of Worry Phase; and Phase 3the Euphoria Phase.
The three phases Harmes described roughly correlate with the phases of the Primary Upward Trend described in Dow Theory: The Accumulation Phase; the Public Participation Phase; and the Excess Phase.
Phase 1, the Accumulation/Denial Phase, begins before most people realize it has begunand this is where the importance of logically recognizing patterns rather than responding emotionally becomes clear. As billionaire tycoon J. Paul Getty once said, "I buy when other people are selling."
This phase begins at the bottom of the trough, at the end of a bear market, when most people are gun-shy and shell-shocked from losses they have experienced personally or have witnessed in others. This is the phase at which the smart money gets into the market, while few have the stomach for it. It is the source of that tried-and-true investment nostrum, "Buy low, sell high." At this phase, the emotions of most people will be screaming at them to run for cover. But those who can overcome their emotions and enter the market at this stage are those who will reap the greatest returns.
Of course, recognizing the true bottom of any marketor the true beginning of any bullis easier done in hind-sight. Is Phase 1 of a bull easy to recognize when you see it? No, rather than being the rock bottom, it might only be a plateau on the way to a deeper crashand more losses for the investor who gets in now. There are ways to gauge whether the bottom is really the bottom, based on historic performance indicators.
Among the signs, as described in the article Dow Theory: The Three Phases Of Primary Trends by Chad Langager and Casey Murphy, selling pressure starts to ease and the downturn in prices levels off. At the beginning of this phase prices will bounce up and down between a ceiling and floor level, before starting to edge back up during the middle or end of the phase.
Although gold bull markets follow the same general pattern as any type of bull market, there are some characteristics that distinguish a gold bull. As Gary Rosenthal writes in December 2010:
"Although gold may double or even triple in price during this phase (which can last five or more years) the price is subject to periodic violent selloffs of 20%-30% as short term traders are easily routed by the bullion banks. During the early years the sell-offs are frequent, deep and can last for months. The gold mining stocks often decline as much as 50%, underperforming the metal in both directions. However as time goes on the frequency, intensity and duration of the sell-offs moderate as physical bullion buyers gain in strength and gradually erode the capability of the bullion banks to raid and manipulate the paper gold futures market. The mining stocks continue to react but begin to close the gap of underperformance. Phase I will come to a close when paper gold futures sell off for a few days, but the gold mining stocks give up little or no ground or even a few of the stronger issues appreciate. Of course, mass media and so called market pundits will continue to call the top in gold, which will keep most investors on the sidelines."
During Phase 2, the Wall of Worry/Public Participation Phase, the more cautious members of the public, who have been waiting for confirmation of the up-trend, begin to join the party. Trend and technical investorsthe guys who are always glued to charts and graphsnow convinced the up-turn is real, will position themselves for the long haul.
Historically Phase 2 is the longest-lasting phase of a bull market and the phase in which prices increase most dramatically.
Some economists divide Phase 2 of a bull market into two stages.
In an April 2010 article for Forbes.com, Gabriel Wisdom divides Phase 2 into Phases 2 and 3, Skepticism and Optimism. In the Skepticism phase, "While investors and the media remain concerned that markets have become over-valued simply because they're higher, you now have an opportunity to get on board this confirmed bull market while it's not even middle aged.
As Harmes describes Phase 2 in his 2006 article for GoldSilver.com:
"The financial and stock reporters on TV start to cover this new sector and interview the experts. To make it "fair" they find someone from each of the bull and bear camps. Each expert has a compelling argument as to why the other "expert" is wrong and why the price of this new market should go in the direction that they think it should. The investing public usually finds it difficult to take action at this point because there is so much uncertainty."
The latter part of Harmes' Wall of Worry phase corresponds roughly to Wisdom's Phase 3 Optimism phase. As Harmes describes it:
"Only after several years of consistent gains do the naysayers start to lighten up on their negativity and allow the participants to start feeling good about the investment they have made. When the media combines this new upbeat attitude with a chart of the gains that have happened so far then the mood shifts for the better and we enter the next stage."
As Wisdom puts it, "If you wait for optimism, you missed it."
Rosenthal writes that Phase 2 of a gold bull will be characterized by rising mining stocks, takeovers of mining companies and labor and equipment shortages in the mining sector. Wall Street analysts who have scorned gold and silver for decades will suddenly start scrambling to develop their expertise and have a voice in the growing sector.
Phase 3, the Excess/Euphoria Phase, is when the market price shoots for the moon. This is the period, usually relatively brief, when the masses pile on, all eager to reap the rewards of the latest big thing. The smart money, on the other hand, pulls out.
At this phase, the bloom is off the rose. Those who get in now will be buying near the peak of the market. A lucky few may catch a quick ride up; the sad reality is that when the fall begins, few will realize it's time to get off but will instead cling to futile hope for a return to past highs.
As with the Accumulation/Denial phase, it's easier to spot Phase 3 in retrospect than when you're in the middle of it. Langager and Murphy describe the signs to watch for:
"During this phase, a lot of attention should be placed on signs of weakness in the trend, such as strengthening downward moves. Also, if the upward moves start to show weakness, it could be another sign that the trend may be near the start of a primary downtrend."
In a gold bull, Rosenthal writes, Phase 3 is characterized by the continual launches of new precious metals funds. Price corrections will occur as COMEX periodically raises margin requirements (see our WealthCycles.com article on COMEX shenanigans in the face of the Hunt Brothers' silver investing activities). "[N]o top will be reached until the final excessive quantitative easing of fiat currencies (printed by the U.S. Federal Reserve, the European Central Bank and the Japanese Central Bank) finds its way into the gold market," Rosenthal continues.
What Phase Are We In Now?
While there are no hard-and-fast guarantees of where any market is in its cycle until one is looking back in the rear-mirror, some analysts are putting the current gold bull squarely inPhase 2.
Some of the characteristics Rosenthall describes as features of Phase 2 are occurring nowmining stocks are doing well, and there is quite a bit of merger and acquisition activity in the mining sector. Pundits and analysts are beginning to jump on the gold band wagon.
Richard Russell, founder of the Dow Theory Letters in 1958, was quotedin October 2010:
"The gold bull market will not end with a fizzle and a whimper. It will end with intense speculation and widespread interest from the funds and the public. We haven't seen that kind of activity yet, but I'm convinced that a period of wild speculation in gold lies somewhere ahead.
"This is why I continue to beg my subscribers to load up with gold. As I see it, we are nearing a period of intense speculation that will be beyond anything seen before by the last three generations of Americans. Ironically, more moneymade in the final explosion in gold than was made during the first two phases combined.
"Great bull market are seen maybe once or twice in a lifetime. The current 'stealth' gold bull market has sneaked up on most Americans. The very phrase, 'gold bull market' is sneered at by most analysts today. In fact, most of the comments on gold today come in the form of warnings; 'Gold is too high.' 'Gold is in a bubble.' 'Gold will sink back below 1000.' 'Gold is a fool's play.'
"Nonsense. Gold is moving ever-closer to its climactic speculative third phase. The negative comments about gold will only serve to make the gold bull market that much stronger. In this business, there is nothing more powerful than a primary bull market that has been denigrated, spat at, and held back for years."
Russell's remarks seem to indicate that he thinks we are in Phase 2 of the gold bull, with its warring investor emotions of skepticism, optimism and the "Wall of Worry."
While we at WealthCycles.com can't make any guarantees as to what phase this gold bull is in, we are quite comfortable in agreeing with Russell and others that this bull has not reached its peak. There is still time to reap the rewards of what Russell and Michael Maloney agree will be a once- or twice-in-a-lifetime opportunity.
19
2011
Human beings are creatures of emotion; we evolved that way for good reason. But if you've ever allowed your emotions to lead you into a hot investment, you probably learned the hard way that emotions are not the best guideline for building wealth.
"There is nothing new in Wall Street," said Jesse Livermore, the famous turn of the century speculator Reminiscences of a Stock Operator. "There can't be anything new, because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."
Learning to recognize and understand the recurring economic cycles that can provide a roadmap for when to buy, when to sell and when to sit tight for the ride will help you take emotion out of the calculation.
The theory behind the phases of a bull market probably originated with Dow Theory, an analytical style named for Charles H. Dow, a cofounder of Dow Jones & Co. and founder of the Wall Street Journal. Dow Theory originally was used to track business cycles but came to be used as a way to analyze the stock market.
A bull market is an up-market, the opposite of a bear market, when prices fall. The terms bull or bear market often are used to describe the entire U.S. or global securities markets, but there also can be bull or bear markets in individual stocks, commodities, bonds, currency, or hard assets such as real estate.
In many types of markets, a bull market results from prosperous economic conditions, such as higher incomes, low unemployment, high profitability and productivity and strong consumer confidence. In contrast, a precious metals bull market usually occurs when economic conditions are not so goodduring times of high unemployment, low wages, high inflation, and low consumer confidence. That's because people turn to gold and silver as a secure way to preserve and increase wealth when conditions around them seem aimed at robbing them of their wealth and security.
You'll find various descriptions of bull markets in financial literature, including some that divide the second phase into two sections to form a four-phase pattern. Our Wealth Cycles team tends to see the cycle as a three-phase pattern, as described in a 2006 article by Brent Harmes: Phase Ithe Denial Phase; Phase 2the Wall of Worry Phase; and Phase 3the Euphoria Phase.
The three phases Harmes described roughly correlate with the phases of the Primary Upward Trend described in Dow Theory: The Accumulation Phase; the Public Participation Phase; and the Excess Phase.
Phase 1, the Accumulation/Denial Phase, begins before most people realize it has begunand this is where the importance of logically recognizing patterns rather than responding emotionally becomes clear. As billionaire tycoon J. Paul Getty once said, "I buy when other people are selling."
This phase begins at the bottom of the trough, at the end of a bear market, when most people are gun-shy and shell-shocked from losses they have experienced personally or have witnessed in others. This is the phase at which the smart money gets into the market, while few have the stomach for it. It is the source of that tried-and-true investment nostrum, "Buy low, sell high." At this phase, the emotions of most people will be screaming at them to run for cover. But those who can overcome their emotions and enter the market at this stage are those who will reap the greatest returns.
Of course, recognizing the true bottom of any marketor the true beginning of any bullis easier done in hind-sight. Is Phase 1 of a bull easy to recognize when you see it? No, rather than being the rock bottom, it might only be a plateau on the way to a deeper crashand more losses for the investor who gets in now. There are ways to gauge whether the bottom is really the bottom, based on historic performance indicators.
Among the signs, as described in the article Dow Theory: The Three Phases Of Primary Trends by Chad Langager and Casey Murphy, selling pressure starts to ease and the downturn in prices levels off. At the beginning of this phase prices will bounce up and down between a ceiling and floor level, before starting to edge back up during the middle or end of the phase.
Although gold bull markets follow the same general pattern as any type of bull market, there are some characteristics that distinguish a gold bull. As Gary Rosenthal writes in December 2010:
"Although gold may double or even triple in price during this phase (which can last five or more years) the price is subject to periodic violent selloffs of 20%-30% as short term traders are easily routed by the bullion banks. During the early years the sell-offs are frequent, deep and can last for months. The gold mining stocks often decline as much as 50%, underperforming the metal in both directions. However as time goes on the frequency, intensity and duration of the sell-offs moderate as physical bullion buyers gain in strength and gradually erode the capability of the bullion banks to raid and manipulate the paper gold futures market. The mining stocks continue to react but begin to close the gap of underperformance. Phase I will come to a close when paper gold futures sell off for a few days, but the gold mining stocks give up little or no ground or even a few of the stronger issues appreciate. Of course, mass media and so called market pundits will continue to call the top in gold, which will keep most investors on the sidelines."
During Phase 2, the Wall of Worry/Public Participation Phase, the more cautious members of the public, who have been waiting for confirmation of the up-trend, begin to join the party. Trend and technical investorsthe guys who are always glued to charts and graphsnow convinced the up-turn is real, will position themselves for the long haul.
Historically Phase 2 is the longest-lasting phase of a bull market and the phase in which prices increase most dramatically.
Some economists divide Phase 2 of a bull market into two stages.
In an April 2010 article for Forbes.com, Gabriel Wisdom divides Phase 2 into Phases 2 and 3, Skepticism and Optimism. In the Skepticism phase, "While investors and the media remain concerned that markets have become over-valued simply because they're higher, you now have an opportunity to get on board this confirmed bull market while it's not even middle aged.
As Harmes describes Phase 2 in his 2006 article for GoldSilver.com:
"The financial and stock reporters on TV start to cover this new sector and interview the experts. To make it "fair" they find someone from each of the bull and bear camps. Each expert has a compelling argument as to why the other "expert" is wrong and why the price of this new market should go in the direction that they think it should. The investing public usually finds it difficult to take action at this point because there is so much uncertainty."
The latter part of Harmes' Wall of Worry phase corresponds roughly to Wisdom's Phase 3 Optimism phase. As Harmes describes it:
"Only after several years of consistent gains do the naysayers start to lighten up on their negativity and allow the participants to start feeling good about the investment they have made. When the media combines this new upbeat attitude with a chart of the gains that have happened so far then the mood shifts for the better and we enter the next stage."
As Wisdom puts it, "If you wait for optimism, you missed it."
Rosenthal writes that Phase 2 of a gold bull will be characterized by rising mining stocks, takeovers of mining companies and labor and equipment shortages in the mining sector. Wall Street analysts who have scorned gold and silver for decades will suddenly start scrambling to develop their expertise and have a voice in the growing sector.
Phase 3, the Excess/Euphoria Phase, is when the market price shoots for the moon. This is the period, usually relatively brief, when the masses pile on, all eager to reap the rewards of the latest big thing. The smart money, on the other hand, pulls out.
At this phase, the bloom is off the rose. Those who get in now will be buying near the peak of the market. A lucky few may catch a quick ride up; the sad reality is that when the fall begins, few will realize it's time to get off but will instead cling to futile hope for a return to past highs.
As with the Accumulation/Denial phase, it's easier to spot Phase 3 in retrospect than when you're in the middle of it. Langager and Murphy describe the signs to watch for:
"During this phase, a lot of attention should be placed on signs of weakness in the trend, such as strengthening downward moves. Also, if the upward moves start to show weakness, it could be another sign that the trend may be near the start of a primary downtrend."
In a gold bull, Rosenthal writes, Phase 3 is characterized by the continual launches of new precious metals funds. Price corrections will occur as COMEX periodically raises margin requirements (see our WealthCycles.com article on COMEX shenanigans in the face of the Hunt Brothers' silver investing activities). "[N]o top will be reached until the final excessive quantitative easing of fiat currencies (printed by the U.S. Federal Reserve, the European Central Bank and the Japanese Central Bank) finds its way into the gold market," Rosenthal continues.
What Phase Are We In Now?
While there are no hard-and-fast guarantees of where any market is in its cycle until one is looking back in the rear-mirror, some analysts are putting the current gold bull squarely inPhase 2.
Some of the characteristics Rosenthall describes as features of Phase 2 are occurring nowmining stocks are doing well, and there is quite a bit of merger and acquisition activity in the mining sector. Pundits and analysts are beginning to jump on the gold band wagon.
Richard Russell, founder of the Dow Theory Letters in 1958, was quotedin October 2010:
"The gold bull market will not end with a fizzle and a whimper. It will end with intense speculation and widespread interest from the funds and the public. We haven't seen that kind of activity yet, but I'm convinced that a period of wild speculation in gold lies somewhere ahead.
"This is why I continue to beg my subscribers to load up with gold. As I see it, we are nearing a period of intense speculation that will be beyond anything seen before by the last three generations of Americans. Ironically, more moneymade in the final explosion in gold than was made during the first two phases combined.
"Great bull market are seen maybe once or twice in a lifetime. The current 'stealth' gold bull market has sneaked up on most Americans. The very phrase, 'gold bull market' is sneered at by most analysts today. In fact, most of the comments on gold today come in the form of warnings; 'Gold is too high.' 'Gold is in a bubble.' 'Gold will sink back below 1000.' 'Gold is a fool's play.'
"Nonsense. Gold is moving ever-closer to its climactic speculative third phase. The negative comments about gold will only serve to make the gold bull market that much stronger. In this business, there is nothing more powerful than a primary bull market that has been denigrated, spat at, and held back for years."
Russell's remarks seem to indicate that he thinks we are in Phase 2 of the gold bull, with its warring investor emotions of skepticism, optimism and the "Wall of Worry."
While we at WealthCycles.com can't make any guarantees as to what phase this gold bull is in, we are quite comfortable in agreeing with Russell and others that this bull has not reached its peak. There is still time to reap the rewards of what Russell and Michael Maloney agree will be a once- or twice-in-a-lifetime opportunity.
Sargeant Argent
New Member
He is right though about republican government spending. The norm seems to be consistent cuts in health care, education, and sicial services, and increase in military spending not to mention the last few wars america has participated were under republican administration, Vietnam, Iraq part 1, Afghanistan, and Iraq part 2.
Earthjade
Member
It's not only the US government debt you need to pay attention to.
In fact, I think this is just a small (but most well publicised) sector.
It's the massive private debt that has built up all over the world, built up by banks, businesses and households.
Also, don't forget that China has been digging a pretty deep debt hole as well, all the way down to the local government level.
This is going to be pretty bad, but if you're only looking at the US government's balance sheet, you're only looking at a piece of the puzzle.
In fact, I think this is just a small (but most well publicised) sector.
It's the massive private debt that has built up all over the world, built up by banks, businesses and households.
Also, don't forget that China has been digging a pretty deep debt hole as well, all the way down to the local government level.
This is going to be pretty bad, but if you're only looking at the US government's balance sheet, you're only looking at a piece of the puzzle.
Absolutely. However the US is unique in that its currency is the reserve currency of the world with all the implications that holds in light of that economies unsustainable debt in a world wide climate of looking for "safe haven" investing.Earthjade said:
G
Guest
Guest
I think one of the pieces is to do with the Swiss franc being pegged to the Euro a few weeks back and people losing 25% of value overnight, it was seen as a safe haven along with PM's at the time and with the current scare the Franc is no longer all of a sudden a safe haven to turn to .
If people holding Francs , Gold and silver now have to liquidate some assets to cover losses in the market Francs all of a sudden are worth less and the U.S dollar is seen now as a safer bet in comparison . Gold and silver are dumped to cover the losses as a result of a now lower valued Franc.
If people holding Francs , Gold and silver now have to liquidate some assets to cover losses in the market Francs all of a sudden are worth less and the U.S dollar is seen now as a safer bet in comparison . Gold and silver are dumped to cover the losses as a result of a now lower valued Franc.
PrettyPrettyShinyShiny
Well-Known Member
Guys, the more civil, the better. Let's please not take anything personally on here, nor deliberately seek to ruffle feathers. I come on here to keep up with the happenings, not bear witness to members yelling at each other. Respect for other members should be each members number one priority.
Peace and harmony
Peace and harmony
PrettyPrettyShinyShiny
Well-Known Member
940palmtx said:
..in lotus position
940palmtx and luckylukeonline, stop taking this thread off topic.
940palmtx - that thread has been removed from the board (and contributed to the shutdown of General Discussion), that's not an invitation to bring it up in unrelated threads in the Silver subforum.
I've split out the offending posts.
940palmtx - that thread has been removed from the board (and contributed to the shutdown of General Discussion), that's not an invitation to bring it up in unrelated threads in the Silver subforum.
I've split out the offending posts.
ACK. Staying on topic. Thank you.goldpelican said: