Here's a link to my new, rather specialized, blog: (My Ubuntu Evil Empire Escape). The real purpose of this post is to give the search engines a link to the blog. This is probably not of interest to the typical World-Of-Wallstreet reader.
MontyHigh, www.worldofwallstreet.us
There are no magnet known to man comparable to those using rare-earths. A discovery of a comparable material would be a major scientific break-thru of the Nobel Prize winning variety. Heard about that lately.
Toyota must be really desparate as far as Rare-Earth supply goes that they are trying to bluff the Chinese like this. I flat out missed the first big run in Rare-Earths. Maybe its time to buy some neodymium-rich near-term producers for a Toyota-inspired takeover play.
MontyHigh, www.worldofwallstreet.us
There's a quite a pile of Interventionals coming up. Here's the outlook for Gold Interventionals for the next week plus:
Well, that's my short-term trading outlook based on the Interventionals. I expect I'll hedge some of my Gold call options beginning sometime Tuesday (probably near the 4PM close) and exit on Friday at the close with a little more short-term trading as things go along.
Gold has had a good 10%ish ($150ish) run from the lows around $1525 to nearly $1570 in just a couple of weeks and a few day pullback seems like something to prepare for. Got any dry powder?
MontyHigh, www.worldofwallstreet.us
I have great respect for Jim Rickards, Sr. Managing Director for Tangent Capital, and I find that his latest King World News podcasts (click here) has a lot of valuable information. But, you can't believe everything you think you hear even from someone you genuinely admire.
Allow me to be a little bit picky. Here's a quote from the interview beginning at 18:23 sec mark: "By the way, in the last eleven years gold has hit the annual high in the first half of the year, I believe, ten out of eleven times. Check that. I'm highly certain its almost every time."
Well, that sounded interesting and tradeable to me, so I decided to check it out. I dumped the daily historical data for GLD into a spreadsheet (click Download 20120115gldhighofyear) and produced the graph that follows:
The graph provides the price of gold (using GLD as a proxy) and, the high of the that year. As you can see, the high for the year (which I presume is the same as Rickard's "annual high") occurred in the first half of the year only twice out of seven times. So, it seems that Rickards (at least as I understand him), is flat out wrong on this one. I'll be happy to retract this statement in all humility if I got it wrong or misinterpreted his statement.
The lesson I take away from this is "It's worth your time to check out as much of what an expert says as you can prior to using his analysis as the basis for an investment or trade."
Actually the above graph seems very bullish to me and here's why:
Every year for the last six years the Gold's high of the year has exceeded the previous year's high. That means we should see an all time high for Gold in 2012 (1911$+) provided the trend continues. This trend probably continues back at least a decade, but the data set I'm using only goes back to 2005.
Here's another graph inspired by Rickards' getting me thinking about annual highs:
We see that in each of the previous six years we convenient have data for that Gold ended the year higher than the annual high of the preceding year. This analysis suggests, again assuming the previous trend remains intact, that my previous forecast (click here) for the 2012 price of gold closing price of "a little over $1800" was too conservative. In the graph above, the only year where the closing price of gold was even close to the prior year's high was 2008. So, if we think (as I do) that 2012 will not have a 2008 type financial crisis and the gold bull market remains intact, then the forecast closing price for 2012 should be substantially above $1900.
The graph that follows looks at the percentage gain of the high of one year relative to the high of the prior year and the percentage gain of the close of one year relative to the high of the previous year.
Using the above graph we can estimate the high of 2012 will be between 18% and 35% higher than this year's high price giving a 2012 high price target of between $2255 and $2580. Seems high, doesn't it?
Using the above graph we can estimate the closing price of 2012 will be between 4% and 20% higher than 2011's high price with the higher likelihood of the closing price being 18% or higher (4 out of 6 years). Those prices are $1987, $2293 and $2255/oz respectively.
With this post I increase my estimated closing price of gold for 2012 to $2255/oz. It will be interesting to test this estimate with the results from 2002, 2003 and 2005. I may follow up this post with another completing the analysis.
I hope you find this discussion useful.
MontyHigh, www.worldofwallstreet.us
I found that finance.yahoo.com historical downloads (e.g. http://finance.yahoo.com/q/hp?s=GLD&a=00&b=1&c=2005&d=00&e=15&f=2012&g=d) came with the date formatted as YYYY-MM-DD, (e.g. 2012-01-14) and that my preferred spreadsheet program, LibreOffice Calc, couldn't parse that date format.
So, I wrote a little Ruby programming language script to do it (click Download yfcsvfix.rb to download the script). Of course, you'll need the Ruby interpreter on your PC to run the script (click here to go to the Ruby Download page).
Running the ycsvfix.rb with no command line parameters provides the documentation for the program. Here's that documentation:
yfcsvfix <inpath> <outpath>
yfcsvfix takes a finance.yahoo.com historical price csv download
and changes the format of the first field from YYYY-MM-DD to MM/DD/YYYY.
When <outpath> is not provided the file at <inpath> is overwritten.
yfcsvfix also changes the order that CSV records appear outputting them
with the oldest records first.
I'm publishing this simple program into the public domain. No guarantees are made of its correctness or absence of bugs.
Here's the source code:
puts "yfcsvfix <inpath> <outpath>"
puts " yfcsvfix takes a finance.yahoo.com historical price csv download"
puts "and changes the format of the first field from YYYY-MM-DD to MM/DD/YYYY."
puts "When <outpath> is not provided the file at <inpath> is overwritten."
puts "yfcsvfix also changes the order that CSV records appear outputting them "
puts "with the oldest records first."
if (ARGV[0])
# Read the file in ar
hdr = nil
ar = Array.new
File.open(ARGV[0], "r") do |fin|
while line = fin.gets
if (hdr)
ar << line
else
hdr = line
end
end
end
ar = ar.sort
outpath = ARGV[0]
if ARGV.length > 1
outpath = ARGV[1]
end
puts "outpath=" + outpath
File.open(outpath, "w") do |fout|
fout.puts hdr
ar.each do |line|
sp = line.split(',')
dsp = sp[0].split('-')
odsp = dsp[1] + '/' + dsp[2] + '/' + dsp[0]
oln = odsp + ',' + sp[1] + ',' + sp[2] + ',' + sp[3] + ',' + sp[4] + ',' + sp[5] + ',' + sp[6]
fout.puts oln
end
end
end
Hope someone finds this useful. Leave me a comment if you do as it will encourage me to keep sharing what I make.
MontyHigh, www.worldofwallstreet.us
This King World News with Michael Pento (click here) is one I can recommend.
The really interesting part starts are around 7 minutes in. The really interesting idea is his proposal for a simple way to trade the current markets. He proposes:
Anybody who has been paying attention is aware that either the risk trade is ON or the risk trade is OFF, so Pento's proposal is not exactly new. The cool part about the proposal, from my perspective, is having two default portfolios set up and ready to go ahead of time. With the portfolios prepared ahead of time you can take plenty of time to get them right and then focus on getting the timing right on when to use them.
So, here's my challenge. Help me work out the following:
What goes in the inflation portfolio?
What goes in the deflation portfolio?
Are there any core positions?
Leave me a comment with your thoughts. If I get the time I'll put my own thoughts on this up in a separate post.
MontyHigh, www.worldofwallstreet.us
Here's a dressed up version of an email I just sent out to my two brothers and sister. I'm running about 40% of my 80-something mother's retirement money (the part not locked up in trusts):
"Here's a good piece by the best of the mainstream investment columnists: http://www.hussman.net/wmc/wmc120103.htm. Being mainstream, Hussman does not take into account out of the mainstream risks, including.:
The key fact in this piece is that the best you can expect from passive, 100% invested in the stock-market investing for the next decade is 4.9% returns minus management fees and taxes compounded annually. I believe Hussman is talking about real returns computed by deflating with the bogus government manipulated CPI numbers, but I'm not sure.
There are a few takeaways from this article:
MontyHigh, www.worldofwallstreet.us
MontyHigh
I hear many different voices in the gold community discuss the idea that the "Banksters" are manipulating the price of gold. There is an interesting difference of opinion regarding the end-game of this manipulation.
Some voices, Bill Murphy being one of them, claim that the Banksters are leveraged short the price of gold (and silver) and that eventually (e.g. when they've sold all their physical as part of the price suppression scheme) the price of gold will shoot to the moon with the Banksters in ruins.
Other voices, including Jim Sinclair, Catherine Austin Fitts, Stewart Thompson claim that the Banksters, while managing the price of gold, are firmly in control and aren't going to lose control anytime soon. Instead they manage the price to produce extra volatility to take the leveraged trader's money. Sinclair and Thompson claim that nobody is going to make more money from the gold bull market than the Banksters and Thompson in particular mocks the idea that the Banksters a net short gold and silver.
Thompson in particular is trying to buy when the Banksters buy (that would be now) and sell when the Banksters sold (that would be above $1800 this fall).
I've recently come around to the Sinclair, Fitts, Thompson view. We may see various financial institutions go bankrupt and governments lose power and/or default on debt, but I don't expect to see the mainstream powers-that-be behind the scenes (let's call them the banksters) fundamentally lose their grip or their wealth.
How about you? Do you think "THEY" are losing it soon?
MontyHigh, www.worldofwallstreet.us
NOTE: This piece was written during the Christmas holiday. As I publish it on Dec 29 after three hard down days, I see that the lows I was calling for January or February are happening right now.
Its that time of year and so I'll take a twirl with my own 2012 outlook focusing on where my money is: Gold. I'm writing this as I do my analysis so you'll be seeing my thinking as it takes shape. The basis for my thinking is three key ideas:
The above chart summarizes my view of the 20xx Gold Bull Market to date:
The above chart shows how I identified the four above-trend runs. The above-trend runs all culminate with a rise to more than 20% above the 150-day moving average (top red line). Its worth noting that apart from above-trend run corrections the price of gold has fallen no more than 8% below the moving average throughout the bull market (lower green line).
The charts I'm looking at today are all logarithmic scale. That means we can compare percentage price changes by comparing the height of rectangles on the chart. The chart above has for each of the prior corrections a rectangle giving the price change from top to bottom. It also has a rectangle that can be used to estimate the end of 2012 price of gold. This rectangle gives the price change from the high a little more than a year and a quarter out. That's how long it will be from the 2011 high to the end of 2012. I've made a copy of each of these rectangles and moved them to start at the 2011 high. This allows us to see what will happen if the 2011 correction follows one of the earlier corrections. For the 2006 and 2008 corrections this price is less than the previous high. The correction we're having now lasted at least that long prior achieving all-time highs in 2006 and 2008, but not in 2009.
The above chart gives a closer look at the three prior corrections and what they would mean for the current correction. The table that follows gives the numbers.
The above table suggests that the bottom may not be in for the current correction especially if the current correction is like 2008.
Let's look at the 2008 correction a little more closely. The low price of gold, prior to the Lehman brother's bankrucpy was 21% down from the high, a value very close to the 2006 drop. I would argue that the powers-that-be lost control for a few months during the 2008 crisis starting with the Lehman Brothers bankrupcy. I don't expect them to lose control in 2012, but who really knows.
Here's the previous table with the assumption that the Aug 2008 lows were the lows for 2008 (that is, without the post-Lehman brothers collapse). Now the 2008 correction looks a lot like the 2006 correction.
The 2006 and 2008-without-Lehman scenarios are the pattern for my best guess outlook for the price of gold for 2012:
Well, that's my outlook with the reasoning behind it. I wouldn't call it bearish, but its certainly not as bullish as many of the predictions I expect you are hearing. I heard one analyst call for $2500 gold in 2012. I'm not the only analyst within the gold-bug community with modest expectations for gold 2012. Even the ever-cheer-leading Eric King could not elicit a bullish-sounding outlook from Pierre Lassonde who is expecting the average price of gold for 2012 end up below the average price for 2011 (click here). I believe Martin Armstrong expects further weakness in early 2011 as well.
The next couple of months are quite strategic. In fact, I think that next Monday, January 2, is very strategic, but the reasoning behind that is for another post. The annual percentage gain from the trend line of the first graph in this post is around 23%/year. If gold can regain and hold the recent uptrend from the first chart in this graph (see above) the target price for the end of 2012 becomes $2020/oz. If it rises above the trend line by some amount (say $75) the target rises accordingly.
It hasn't regained that trend line yet so I'm sticking with my earlier prection. My best guess outlook for the price of gold for 2012:
While I don't need links to predictions without any substantial reasoning / analysis behind it, I'd be obliged if you'd leave a comment with a link to any other analysts who both provide a quantitative outlook and the reasoning behind it.
MontyHigh, www.worldofwallstreet.us
Recent Comments