After a strong burst last week, Gold has done what would be expected: pull back before launching with a vengeance. The charts look great! As far as the metal itself goes, it is merely pausing and gathering strength after a huge break-out last week.
Gold and Silver mining stocks still appear sluggish. However, a look at their charts indicates a VERY bullish pattern known as a "declining pennant". Such a pattern is formed when an index, in this case the HUI or "Gold Bugs" index, makes a series of lower highs and lower lows forming a channel with a negative slope. Once the HUI breaks above the upper channel, we will be off and running! The upper bounds of the channel were tested last week and it is typical to bounce back a bit before bursting through. That's where we are today.
Once this channel is broken, which I expect in no more than 3 days, GOLD WILL NEVER LOOK BACK!
If, for some reason, you've STILL not gotten in, this may be your last ideal entry point. Once the market goes parabolic, it will be impossible to find a good spot to get in without being whipsawed. I know, since I witnessed the internet bubble in 1998-2000 as a hedge fund manager. I saw how it wreaked havoc with me and others trying to ride the bronco bull.
I will re-iterate a few things about investing in Gold.
1. Avoid the Exchange Traded Fund (ETF) with the symbol GLD. If you want a bona-fide metals backed fund, try CEF, which is roughly comprised of 55% Gold and 45% Silver.
2. If you have to buy ONE stock, make it GDXJ, another ETF, which is a basket of 40 individual Gold and Silver mining companies and will get you instant diversification. I've mentioned ECU Mining in a prior essay, and if you're looking for a real potential home run, check it out (http://markostake.blogspot.com/2010/02/ecu-silver-mining-as-good-as-it-gets_7745.html).
3. Expect increasing volatility on the way up. As the public enters, the day-to-day swings will turn your stomach.
4. Employ the trading strategy I recommended in an earlier blog to preserve your profits and reduce your stress (http://markostake.blogspot.com/2009/12/safe-way-to-trade-tricky-gold-market.html).
5. Be aware that the upcoming mania will last AT LEAST a year and possibly as long as 5 more years. Take profits from time to time as suggested in point 4, but hang on until Gold AT LEAST crosses $2,000. It may even rise to $5,000, which is the ultimate target of "Marko's Take".
6 Employ other inflation-proofing techniques in the context of your lifestyle and other investing(http://markostake.blogspot.com/2009/12/tips-on-grabbing-higher-yields.html).
This may prove to be a life-changing event for anyone poised to take advantage of it. I expect to see a whole new class of millionaires created from the upcoming mania. Let's be smart about it and not suffer the fate of the dotcom millionaires who made and then LOST EVERYTHING!
Good luck! Comments? TAKE ME ON!
Marko's Take
Our second segment on YouTube will be posted sometime today, Tuesday, February 23rd, 2009. To access the site click here: http://www.youtube.com/markostaketv
Showing posts with label investing. Show all posts
Showing posts with label investing. Show all posts
Tuesday, February 23, 2010
Saturday, February 6, 2010
Gold Reaction Or Gold Over-Reaction?
There is no more certain way to be right than to make two opposite predictions. Therefore, ONE must come true. And so it was last week with this now humble publication.
At first, as we gave an overview of the Gold market's technical picture, we formed a near-term bearish conclusion (http://markostake.blogspot.com/2010/02/technical-review-of-gold-and-silver.html). Then, two days later, we crowed that the Gold picture had brightened considerably (http://markostake.blogspot.com/2010/02/gold-picture-brightens-considerably.html).
In each case, the pronouncement turned out to have correct and incorrect elements. After the first piece, the Gold market rallied smartly. After the second piece, the Gold market plunged! Now that we've taken a big bite out of our hats, let's revisit the entire Gold situation for use from here.
The first piece was basically correct. There WERE danger signs that the correction in Gold, Silver and affiliated miners had NOT completed their retracement phase. But, the rush to follow with the second piece was pre-mature, although it, too, was somewhat correct in that the picture HAD brightened and, despite the tremendous volatility of last week, continues to strengthen.
NOW WHAT?
The danger period for Gold, Silver and mining stocks is either over or very close to over. Friday's trading witnessed a large number of mining stocks completing "outside day reversals". As an outside day refers to a bottom, it occurs when a stock or index trades LOWER than the prior day's low and then closes HIGHER than the prior day's high. Some technical analysts refer to this as an "engulphing pattern".
Going back to Friday, the outside day reversal is a VERY POWERFUL change of trend indicator!
This means that the odds of a low having been reached intra-day Friday are excellent!
The overall pattern forming is that of an A-B-C correction, where downward waves A and C are of roughly equal length and interrupted by a "counter trend" wave B.
It's time to buy. For those that are new to the site, I would like to re-iterate the better vehicles. First, I would AVOID either GLD or SLV, which claim to be backed by physical Gold and Silver, but may not be.
If you wish to invest in a bona-fide metals backed fund, try CEF which is backed by both Gold and Silver.
The only problem with CEF is that it often trades at a premium to its underlying "Net Asset Value" (NAV), so you have to be careful not to overpay.
I prefer GDXJ, an Exchange Traded Fund (ETF) basket of about 40 junior Gold and Silver mining stocks. It has a very decent selection of miners within it and for most people it will prove to be an excellent way to play the next MAJOR move higher, which ought to start any day now, if it hasn't already started.
I don't think it impossible for the precious metals market to back and fill for the next few days, especially Monday. However, I highly doubt that it will take more than 2 or 3 days to complete the entire corrective phase from $1,200.
Tomorrow, we'll revisit the stock market, which STILL looks like it is in the very early stages of waterfall decline or crash.
If you think my logic is less than golden, you know what to do. TAKE ME ON!
Marko's Take
At first, as we gave an overview of the Gold market's technical picture, we formed a near-term bearish conclusion (http://markostake.blogspot.com/2010/02/technical-review-of-gold-and-silver.html). Then, two days later, we crowed that the Gold picture had brightened considerably (http://markostake.blogspot.com/2010/02/gold-picture-brightens-considerably.html).
In each case, the pronouncement turned out to have correct and incorrect elements. After the first piece, the Gold market rallied smartly. After the second piece, the Gold market plunged! Now that we've taken a big bite out of our hats, let's revisit the entire Gold situation for use from here.
The first piece was basically correct. There WERE danger signs that the correction in Gold, Silver and affiliated miners had NOT completed their retracement phase. But, the rush to follow with the second piece was pre-mature, although it, too, was somewhat correct in that the picture HAD brightened and, despite the tremendous volatility of last week, continues to strengthen.
NOW WHAT?
The danger period for Gold, Silver and mining stocks is either over or very close to over. Friday's trading witnessed a large number of mining stocks completing "outside day reversals". As an outside day refers to a bottom, it occurs when a stock or index trades LOWER than the prior day's low and then closes HIGHER than the prior day's high. Some technical analysts refer to this as an "engulphing pattern".
Going back to Friday, the outside day reversal is a VERY POWERFUL change of trend indicator!
This means that the odds of a low having been reached intra-day Friday are excellent!
The overall pattern forming is that of an A-B-C correction, where downward waves A and C are of roughly equal length and interrupted by a "counter trend" wave B.
It's time to buy. For those that are new to the site, I would like to re-iterate the better vehicles. First, I would AVOID either GLD or SLV, which claim to be backed by physical Gold and Silver, but may not be.
If you wish to invest in a bona-fide metals backed fund, try CEF which is backed by both Gold and Silver.
The only problem with CEF is that it often trades at a premium to its underlying "Net Asset Value" (NAV), so you have to be careful not to overpay.
I prefer GDXJ, an Exchange Traded Fund (ETF) basket of about 40 junior Gold and Silver mining stocks. It has a very decent selection of miners within it and for most people it will prove to be an excellent way to play the next MAJOR move higher, which ought to start any day now, if it hasn't already started.
I don't think it impossible for the precious metals market to back and fill for the next few days, especially Monday. However, I highly doubt that it will take more than 2 or 3 days to complete the entire corrective phase from $1,200.
Tomorrow, we'll revisit the stock market, which STILL looks like it is in the very early stages of waterfall decline or crash.
If you think my logic is less than golden, you know what to do. TAKE ME ON!
Marko's Take
Wednesday, February 3, 2010
The Gold Picture Brightens Considerably
OK, so two days ago I went through a "technical analysis" review and concluded we were NOT out of the woods... yet. As to that statement, let me ammend it. While we are not out of the woods, I see a clearing and it's time to begin to add to positions or take new positions in the Gold, Silver and the mining stocks market.
As Archie Bunker would say, even the fine staff at Marko's Take is not "inflammable"!
The call we made a few weeks ago to lighten should turn out to be valuable. So should the call that a waterfall decline in stocks is squarely ahead. But for now, let's focus on the barbaric relic.
Why the change? Gold has recently bottomed twice at the $1,075 level and held. In the last two days, it has rallied sharply. An interesting pattern, known as a "pennant", is forming on the chart. So, unless Gold violates the $1,075 level, we are forming a VERY constructive launching point for the yellow metal to vault significantly higher.
What should we look for from here? Based on the chart pattern, Gold will do one of two things: either retest the $1,075 level or thereabouts again, or it will pause and shoot straight higher. While it would be normal for the re-test, it is by NO MEANS guaranteed. Therefore, waiting for a re-test may turn out to be a major mistake and prevent one from re-boarding the train at what is, in the great scheme of things, a fantastic entry point!
As of a few days ago, it was impossible to tell where this "correction" would take Gold. What makes the pennant formation so useful, is that we have an excellent "stop loss" point of $1,075, and the opportunity to hop back aboard the train at values NOT LIKELY TO BE SEEN AGAIN WITH VERY LIMITED AND SHORT TERM DOWNSIDE!!!
Marko's Take? Green Light! Strap on your seat belts and get ready for the ride of your life!
You know what to do if you think I'm full of it! TAKE ME ON!
Marko's Take
As Archie Bunker would say, even the fine staff at Marko's Take is not "inflammable"!
The call we made a few weeks ago to lighten should turn out to be valuable. So should the call that a waterfall decline in stocks is squarely ahead. But for now, let's focus on the barbaric relic.
Why the change? Gold has recently bottomed twice at the $1,075 level and held. In the last two days, it has rallied sharply. An interesting pattern, known as a "pennant", is forming on the chart. So, unless Gold violates the $1,075 level, we are forming a VERY constructive launching point for the yellow metal to vault significantly higher.
What should we look for from here? Based on the chart pattern, Gold will do one of two things: either retest the $1,075 level or thereabouts again, or it will pause and shoot straight higher. While it would be normal for the re-test, it is by NO MEANS guaranteed. Therefore, waiting for a re-test may turn out to be a major mistake and prevent one from re-boarding the train at what is, in the great scheme of things, a fantastic entry point!
As of a few days ago, it was impossible to tell where this "correction" would take Gold. What makes the pennant formation so useful, is that we have an excellent "stop loss" point of $1,075, and the opportunity to hop back aboard the train at values NOT LIKELY TO BE SEEN AGAIN WITH VERY LIMITED AND SHORT TERM DOWNSIDE!!!
Marko's Take? Green Light! Strap on your seat belts and get ready for the ride of your life!
You know what to do if you think I'm full of it! TAKE ME ON!
Marko's Take
Friday, January 29, 2010
Markets Trading Strategy Update: What To Do Now
Nothing! For the moment, the case I laid out is playing out very close to the scenario I've forseen with a couple of exceptions.
Gold is trading this morning at BELOW $1080. My hunch is that it will visit the vicinity of $1000, so I continue to recommend that investors stay as light as possible in this sector. I believe we are a few weeks away before a decent buying zone, so, for the moment, stay put. In fact, once gold miners DO fully reflect a lower Gold price, there will come a time to back up the truck, load up on selected junior mining shares and watch the fireworks unfold.
The re-nomination of Ben Bernanke, in my opinion is all the evidence we need that 2010 will turn out to be one helluva great year for Gold investors. Stay patient.
Another certainty with "Helicopter Ben's " re-appointment, is that interest rates will remain low, stupidly low.
Yesterday, Congress approved an increase in the National Debt ceiling to more than $14 TRILLION! This means that a 1% increase in interest rates across the board will increase the budget deficit by $140 Billion per year! Yup, more low rates and ANOTHER Bubble!
But, this can't go into effect until Mr. Obama recovers from his injury sustained during his "State Of the Union Address" in which he patted himself on the back so many times that the rumor is he dislocated his shoulder and is unable to sign new legislation (http://markostake.blogspot.com/2010/01/obamas-state-of-onion-address-more-you.html).
As far as the overall market goes, I continue to maintain that it is in territory that is both rarified and subject to great risk. It reminds me of Wile E. Coyote, after having stepped off the cliff, hovering in mid-air before he realizes that it's a long way down.
What makes me so suspicious about the stock market is the fact that even decent earnings have been met with a yawn. This tells me that the "good news" is fully factored in. Currently, the market is merely digesting the sudden plunge of last week - a process I expect to be very short lived. I, therefore, re-iterate, the trading postures I recommended last week (http://markostake.blogspot.com/2010/01/preparing-for-coming-waterfall.html).
Fortunately, as the result of this week's lull, it isn't too late to get prepared, and even take advantage of the misery set to befall stock market investors.
I'll make today's blog a short one. Hope you have a great weekend!
Disagree? TAKE ME ON!
Marko's Take
Gold is trading this morning at BELOW $1080. My hunch is that it will visit the vicinity of $1000, so I continue to recommend that investors stay as light as possible in this sector. I believe we are a few weeks away before a decent buying zone, so, for the moment, stay put. In fact, once gold miners DO fully reflect a lower Gold price, there will come a time to back up the truck, load up on selected junior mining shares and watch the fireworks unfold.
The re-nomination of Ben Bernanke, in my opinion is all the evidence we need that 2010 will turn out to be one helluva great year for Gold investors. Stay patient.
Another certainty with "Helicopter Ben's " re-appointment, is that interest rates will remain low, stupidly low.
Yesterday, Congress approved an increase in the National Debt ceiling to more than $14 TRILLION! This means that a 1% increase in interest rates across the board will increase the budget deficit by $140 Billion per year! Yup, more low rates and ANOTHER Bubble!
But, this can't go into effect until Mr. Obama recovers from his injury sustained during his "State Of the Union Address" in which he patted himself on the back so many times that the rumor is he dislocated his shoulder and is unable to sign new legislation (http://markostake.blogspot.com/2010/01/obamas-state-of-onion-address-more-you.html).
As far as the overall market goes, I continue to maintain that it is in territory that is both rarified and subject to great risk. It reminds me of Wile E. Coyote, after having stepped off the cliff, hovering in mid-air before he realizes that it's a long way down.
What makes me so suspicious about the stock market is the fact that even decent earnings have been met with a yawn. This tells me that the "good news" is fully factored in. Currently, the market is merely digesting the sudden plunge of last week - a process I expect to be very short lived. I, therefore, re-iterate, the trading postures I recommended last week (http://markostake.blogspot.com/2010/01/preparing-for-coming-waterfall.html).
Fortunately, as the result of this week's lull, it isn't too late to get prepared, and even take advantage of the misery set to befall stock market investors.
I'll make today's blog a short one. Hope you have a great weekend!
Disagree? TAKE ME ON!
Marko's Take
Tuesday, January 26, 2010
Helicopter Ben Survives: The Implications
Reports now show that "Helicopter" Ben Bernanke will indeed survive and be appointed to a second-term.
The derisive term "Helicopter" refers to a statement the FED chairman once made when asked about the options available for preventing a systemic financial collapse. In the statement, Bernanke said that the FED could even go so far as to consider "throwing money out of Helicopters" to get cash into people's hands.
Clearly, the statement was somewhat tongue-in-cheek, as no one actually believes that The FED would resort to such an idiotic policy. However, the fact that Mr, Bernanke implied that he would go to extremes to get funds into consumers' hands is quite telling as to his modus operandi.
Bernanke, an academic, fancies himself a student of the "Great Depression" and believes that the lessons learned from the monetary mismanagement THEN can be applied to the situation TODAY to minimize the effects of the ongoing finacial calamity. Unfortunately, Mr. Bernanke is not a student of FED policy and efficacy from 1987 through the present.
His mentor, Alan Greenspan, employed a "low interest rate" policy which fed a series of asset bubbles only to followed by devastating crashes. The first bubble, the dot com boom and bust, popped in 2000 and was followed by an 80% drop in the Nasdaq - wiping out a class of investors, creating a slew of corporate bankrupties and setting the stage for a recession.
Mr. Bernanke should really take a look at his OWN role is this utterly absurd policy as he was highly responsible for bubble number two: the real estate bubble, which along with the derivatives mess led to a virual financial system collapse in 2008. Perhaps someone can buy him a book on recent Federal Reserve history!
In any event, it is HIGHLY unlikely that "Helicopter Ben" will make the connection between below-market interest rates and the subsequent mis-allocation of resources which leads to the bubbles in the first place.
Thank God Bernanke isn't a dentist. If he was one, he'd fill one cavity, only to "accidentally" cause two new cavities. "What, me worry?"
The FED and Mr. Bernanke are no more the solutions to what ails us, than a tanker full of gasoline would be in putting out a raging inferno!
Now, the stage is re-set for a continued and misguided policy of below-market interest rates which will lead to hyper-inflation and be followed by the inevitalbe second dip into Depression.
My trading recommendations made from last Sunday's blog remain unchanged. While much of it was premised on the possible replacement of Benanke with a Paul Volcker disciple, not all of it was. A good portion of my concern had to do with factors such as the conditions of the charts, historical precedent, 4th quarter earnings reports and many other factors too numerous to give each justice.
So, for now, stay with the program. I'll be watching daily and will alert you as to whether a mid-course correction needs to be considered.
If you're a Bernanke fan and wish to take exception, TAKE ME ON!
Marko's Take
The derisive term "Helicopter" refers to a statement the FED chairman once made when asked about the options available for preventing a systemic financial collapse. In the statement, Bernanke said that the FED could even go so far as to consider "throwing money out of Helicopters" to get cash into people's hands.
Clearly, the statement was somewhat tongue-in-cheek, as no one actually believes that The FED would resort to such an idiotic policy. However, the fact that Mr, Bernanke implied that he would go to extremes to get funds into consumers' hands is quite telling as to his modus operandi.
Bernanke, an academic, fancies himself a student of the "Great Depression" and believes that the lessons learned from the monetary mismanagement THEN can be applied to the situation TODAY to minimize the effects of the ongoing finacial calamity. Unfortunately, Mr. Bernanke is not a student of FED policy and efficacy from 1987 through the present.
His mentor, Alan Greenspan, employed a "low interest rate" policy which fed a series of asset bubbles only to followed by devastating crashes. The first bubble, the dot com boom and bust, popped in 2000 and was followed by an 80% drop in the Nasdaq - wiping out a class of investors, creating a slew of corporate bankrupties and setting the stage for a recession.
Mr. Bernanke should really take a look at his OWN role is this utterly absurd policy as he was highly responsible for bubble number two: the real estate bubble, which along with the derivatives mess led to a virual financial system collapse in 2008. Perhaps someone can buy him a book on recent Federal Reserve history!
In any event, it is HIGHLY unlikely that "Helicopter Ben" will make the connection between below-market interest rates and the subsequent mis-allocation of resources which leads to the bubbles in the first place.
Thank God Bernanke isn't a dentist. If he was one, he'd fill one cavity, only to "accidentally" cause two new cavities. "What, me worry?"
The FED and Mr. Bernanke are no more the solutions to what ails us, than a tanker full of gasoline would be in putting out a raging inferno!
Now, the stage is re-set for a continued and misguided policy of below-market interest rates which will lead to hyper-inflation and be followed by the inevitalbe second dip into Depression.
My trading recommendations made from last Sunday's blog remain unchanged. While much of it was premised on the possible replacement of Benanke with a Paul Volcker disciple, not all of it was. A good portion of my concern had to do with factors such as the conditions of the charts, historical precedent, 4th quarter earnings reports and many other factors too numerous to give each justice.
So, for now, stay with the program. I'll be watching daily and will alert you as to whether a mid-course correction needs to be considered.
If you're a Bernanke fan and wish to take exception, TAKE ME ON!
Marko's Take
Sunday, January 24, 2010
Preparing For The Coming Waterfall
Now that we've laid out the background as to why investors need to re-assess tactics, we can finally move on to suggesting some options. This is the hard part. For one, every investor's risk tolerances and goals are unique. Second, factors such as age and exposure to other risks need to be taken into account. Since we can't do this on an individual basis for Marko's Take, we'll take a "rules-of-thumb" approach using the general categories of risk: "conservative", "moderate", "aggressive" and "very aggressive".
As a disclaimer, I'd like to say that I am NOT currently a registered investment advisor and am only offering an OPINION. You should NOT rely solely on what I've written, but possibly use this in conjuction with YOUR registered advisor and/or other investment professional before adopting anything written here today.
For investors who might believe themselves to be conservative, the best approach, in my opinion would be to go to cash and wait the storm out, before making any further commitments.
Moderate investors have more options. At at minimum, they should lighten on all long exposure. My own rule-of-thumb would be to reduce investments by 50%, put the rest in cash and wait the storm out.
It starts to get tricky when we approach some sort of aggressive status. I would still recommend a reduction of AT LEAST 50 % to all long positions, coupled with either a hedging strategy utilizing Exchange Traded Funds (ETFs) or Exchange Traded Notes (ETNs) to place some chips on the downside. For Gold investors, the ETN which goes by the symbol DZZ would do quite nicely. It's a double-inverse play on the price of Gold with a leverage of 2.0. In other words, DZZ is designed to GAIN 2% for every 1% loss in the price of Gold on a daily basis.
Before I go further, it is extremely important to note that ETNs involve "counter-party" risk, and any use of them should be limited to the very short term and they should be scaled back if they indeed start to generate gains. Unfortunately, if you begin to make decent money in an ETN, they get VERY volatile. Therefore, I would view them entirely as a very short term play. Diversify them, and take money "off the table" frequently.
For playing the downside in stocks, my personal view is the financial sector is in the greatest trouble AGAIN, and some very interesting ways of playing the waterfall exist. My personal favorites are FAZ, a triple-inverse ETN to the financial sector, or SKF, a double-inverse ETN.
There also exist many ways to play the downside in various indicies like the Dow, Nasdaq, or Russell 2000 - an index of "small cap" stocks. In waterfall situations, larger companies like those which make up the Dow or Nasdaq will normally perform better than the types of smaller companies which comprise the Russell. Therefore, I prefer to use TZA - another double-inverse play specifically designed to benefit from losses in the Russell 2000.
If you consider yourself very aggressive, I would lighten up on all long exposure as much as possible and use some combination of the above mentioned ETNs to create a true downward playing portfolio.
Finally, we need to consider the "what if Marko is wrong again" scenario. I believe that answer as to Gold is simple. Use a material and sustained UPWARD breach of $1,100 as your guide. I'd wait at least one day before taking action, and if such a breach does occur, I'll revisit Gold at that point.
As to stocks, I'd consider the 10,600 level of the Dow as my failsafe. In other words, should the market suddenly reverse and rally upward through 10,600 then my cascading waterfall scenario would likely become null and void. Again, should that occur or look like it might, I'll cover stocks.
Finally, it appears volatility is ready to jump and unless you have the stomache to deal with it, I'd sit this dance out. The market may "bounce" on Monday, or it could "gap" lower, I have no idea.
I hope, after reading this, you're ready for Monday.
Good luck! If you have any questions, agree or disagree, you know what to do. TAKE ME ON!
Marko's Take
As a disclaimer, I'd like to say that I am NOT currently a registered investment advisor and am only offering an OPINION. You should NOT rely solely on what I've written, but possibly use this in conjuction with YOUR registered advisor and/or other investment professional before adopting anything written here today.
For investors who might believe themselves to be conservative, the best approach, in my opinion would be to go to cash and wait the storm out, before making any further commitments.
Moderate investors have more options. At at minimum, they should lighten on all long exposure. My own rule-of-thumb would be to reduce investments by 50%, put the rest in cash and wait the storm out.
It starts to get tricky when we approach some sort of aggressive status. I would still recommend a reduction of AT LEAST 50 % to all long positions, coupled with either a hedging strategy utilizing Exchange Traded Funds (ETFs) or Exchange Traded Notes (ETNs) to place some chips on the downside. For Gold investors, the ETN which goes by the symbol DZZ would do quite nicely. It's a double-inverse play on the price of Gold with a leverage of 2.0. In other words, DZZ is designed to GAIN 2% for every 1% loss in the price of Gold on a daily basis.
Before I go further, it is extremely important to note that ETNs involve "counter-party" risk, and any use of them should be limited to the very short term and they should be scaled back if they indeed start to generate gains. Unfortunately, if you begin to make decent money in an ETN, they get VERY volatile. Therefore, I would view them entirely as a very short term play. Diversify them, and take money "off the table" frequently.
For playing the downside in stocks, my personal view is the financial sector is in the greatest trouble AGAIN, and some very interesting ways of playing the waterfall exist. My personal favorites are FAZ, a triple-inverse ETN to the financial sector, or SKF, a double-inverse ETN.
There also exist many ways to play the downside in various indicies like the Dow, Nasdaq, or Russell 2000 - an index of "small cap" stocks. In waterfall situations, larger companies like those which make up the Dow or Nasdaq will normally perform better than the types of smaller companies which comprise the Russell. Therefore, I prefer to use TZA - another double-inverse play specifically designed to benefit from losses in the Russell 2000.
If you consider yourself very aggressive, I would lighten up on all long exposure as much as possible and use some combination of the above mentioned ETNs to create a true downward playing portfolio.
Finally, we need to consider the "what if Marko is wrong again" scenario. I believe that answer as to Gold is simple. Use a material and sustained UPWARD breach of $1,100 as your guide. I'd wait at least one day before taking action, and if such a breach does occur, I'll revisit Gold at that point.
As to stocks, I'd consider the 10,600 level of the Dow as my failsafe. In other words, should the market suddenly reverse and rally upward through 10,600 then my cascading waterfall scenario would likely become null and void. Again, should that occur or look like it might, I'll cover stocks.
Finally, it appears volatility is ready to jump and unless you have the stomache to deal with it, I'd sit this dance out. The market may "bounce" on Monday, or it could "gap" lower, I have no idea.
I hope, after reading this, you're ready for Monday.
Good luck! If you have any questions, agree or disagree, you know what to do. TAKE ME ON!
Marko's Take
Tuesday, January 12, 2010
Gold: The New Rocket Man
It won't be a long, long time! Gold is massing for a potential upward vault into record territory that should last at least a year.
It may pause for a bit now and at further points in the future, but liftoff is being counted down at "Cape Carnival", as Archie Bunker might say!
The only sign that would nullify this prediction would be a sudden and sustained reversal to below $1,100.
So, let's assume for the moment that I am indeed correct. The next stop ought to be somewhere in the vicinity of $1,200. After that I don't have any idea what kind of pullback will occur.
The liftoff has plenty of fuel, amongst which is the imminent War with Iran (http://markostake.blogspot.com/2009/12/war-with-iran-imminent.html), the continued deterioration in the dollar and the growing difficulty in finding buyers for Treasuries.
If you haven't invested in Gold already, do so immediately, but don't do it in an IRA or 401-K. I realize that I've been insisting that deferred income vehicles be used, but because of multiple sources of information I've just received, which I believe to be credible, that might not be a good idea. Instead, you may try physical Gold, but don't place the gold in a safety deposit box (http://markostake.blogspot.com/2009/11/keeping-your-valuables-safesome.html).
If you buy physical gold make sure it isn't counterfeit (http://markostake.blogspot.com/2009/11/fools-gold.html).
Thanks for reading,
Marko's Take.
It may pause for a bit now and at further points in the future, but liftoff is being counted down at "Cape Carnival", as Archie Bunker might say!
The only sign that would nullify this prediction would be a sudden and sustained reversal to below $1,100.
So, let's assume for the moment that I am indeed correct. The next stop ought to be somewhere in the vicinity of $1,200. After that I don't have any idea what kind of pullback will occur.
The liftoff has plenty of fuel, amongst which is the imminent War with Iran (http://markostake.blogspot.com/2009/12/war-with-iran-imminent.html), the continued deterioration in the dollar and the growing difficulty in finding buyers for Treasuries.
If you haven't invested in Gold already, do so immediately, but don't do it in an IRA or 401-K. I realize that I've been insisting that deferred income vehicles be used, but because of multiple sources of information I've just received, which I believe to be credible, that might not be a good idea. Instead, you may try physical Gold, but don't place the gold in a safety deposit box (http://markostake.blogspot.com/2009/11/keeping-your-valuables-safesome.html).
If you buy physical gold make sure it isn't counterfeit (http://markostake.blogspot.com/2009/11/fools-gold.html).
Thanks for reading,
Marko's Take.
Tuesday, January 5, 2010
Gold's Time To Sparkle Has Just Begun!
The fireworks, which I believe will prove to be life-changing, have just started. Gold, Silver, Platinum, Palladium and virtually every commodity appears poised to launch into their final maniacal phase.
If you haven't yet invested in one of these areas, I highly recommend you do so IMMEDIATELY.
Let's review a few key indicators.
One is the Dow/Gold Ratio (DGR), which currently stands at 9.45 (10,583/1,120). In prior manias, the DGR has approached between 1 and 2.5. If this mania follows the script, an ultimate peak for Gold would be between $4,233 and $10,583! This, of course, requires that the Dow remain unchanged.
Next, we can "inflation-adjust" Gold relative to its prior peak of $850 reached in 1980. If we use the excellently revised inflation statistics computed by ShadowStats (http://www.shadowstats.com/), we arrive at a projection for Gold of approximately $7,500!
We can also revisit the HUI/Gold ratio (HGR). This ratio closed yesterday at 0.4 (447.81/1,120). The HGR typically varies between 0.4 and 0.6. Applied today, this would suggest a Gold price of about $1,850 immediately!
We can also apply the Silver/Gold Ratio (SGR). Yesterday, the SGR closed at 63.76, while as recently as November, 2008, it reached about 85. It has been as low as 17 during the last mania in Gold and Silver in 1980 ($850/$50). Applied today, that ratio would suggest a price of Silver at $65 IMMEDIATELY. And given my guesstimate of Gold's ultimate target of $5,000, Silver might reach $300!
Neither Gold nor Silver has reached anything approaching these targets ... yet. But, the case that both Gold and Silver are heading much, much higher is COMPELLING!
Tomorrow, we'll "yield" some clues as to what might become of interest rates.
Thanks for reading!
Marko's Take
If you haven't yet invested in one of these areas, I highly recommend you do so IMMEDIATELY.
Let's review a few key indicators.
One is the Dow/Gold Ratio (DGR), which currently stands at 9.45 (10,583/1,120). In prior manias, the DGR has approached between 1 and 2.5. If this mania follows the script, an ultimate peak for Gold would be between $4,233 and $10,583! This, of course, requires that the Dow remain unchanged.
Next, we can "inflation-adjust" Gold relative to its prior peak of $850 reached in 1980. If we use the excellently revised inflation statistics computed by ShadowStats (http://www.shadowstats.com/), we arrive at a projection for Gold of approximately $7,500!
We can also revisit the HUI/Gold ratio (HGR). This ratio closed yesterday at 0.4 (447.81/1,120). The HGR typically varies between 0.4 and 0.6. Applied today, this would suggest a Gold price of about $1,850 immediately!
We can also apply the Silver/Gold Ratio (SGR). Yesterday, the SGR closed at 63.76, while as recently as November, 2008, it reached about 85. It has been as low as 17 during the last mania in Gold and Silver in 1980 ($850/$50). Applied today, that ratio would suggest a price of Silver at $65 IMMEDIATELY. And given my guesstimate of Gold's ultimate target of $5,000, Silver might reach $300!
Neither Gold nor Silver has reached anything approaching these targets ... yet. But, the case that both Gold and Silver are heading much, much higher is COMPELLING!
Tomorrow, we'll "yield" some clues as to what might become of interest rates.
Thanks for reading!
Marko's Take
Tuesday, December 29, 2009
A Very Simple Trading Strategy For Gold: Version 2.0
Regular readers may recall two blogs I recently wrote: "A Very Simple Way To Trade The Very Tricky Gold Market (http://markostake.blogspot.com/2009/12/safe-way-to-trade-tricky-gold-market.html-to-t) and "Tips On Grabbing Higher Yields" (http://markostake.blogspot.com/2009/12/tips-on-grabbing-higher-yields.html).
I now wish to combine these approaches for an ever BETTER result. As you may recall from the Trading piece, I suggested a methodical approach to protect your profits while still retaining a substantial exposure to Gold. In the other piece, I suggested some risk-free approaches to earning higher yields than the paltry ones available today.
So, here's how the two combine: As you lay off your exposure to Gold via GDXJ, purchase the ETF whose trading symbol is "TIP". That way, you'll begin building a yield generating instrument in your portfolio! Keep repeating the process and you'll enhance your Gold exposure with income! Done correctly, you can not only realize tremendous riches from the Gold, but simultaneously create passive income of substantial size. It might even rise so high as to provide you with a bona-fide SALARY!!
So, once this process is completed, you might be able to retire!
Ideally, this should be done within the confines of an IRA, but as Archie Bunker would say "que seru seru"!
Now, how can you possibly beat them apples?
Tomorrow, I intend to revisit the prospects and liklihood for economic recovery since Christmas sales have now been reported.
Unless you wish to torture me with your deafening silence, "Take Me On" in the comments section below.
Marko's Take
I now wish to combine these approaches for an ever BETTER result. As you may recall from the Trading piece, I suggested a methodical approach to protect your profits while still retaining a substantial exposure to Gold. In the other piece, I suggested some risk-free approaches to earning higher yields than the paltry ones available today.
So, here's how the two combine: As you lay off your exposure to Gold via GDXJ, purchase the ETF whose trading symbol is "TIP". That way, you'll begin building a yield generating instrument in your portfolio! Keep repeating the process and you'll enhance your Gold exposure with income! Done correctly, you can not only realize tremendous riches from the Gold, but simultaneously create passive income of substantial size. It might even rise so high as to provide you with a bona-fide SALARY!!
So, once this process is completed, you might be able to retire!
Ideally, this should be done within the confines of an IRA, but as Archie Bunker would say "que seru seru"!
Now, how can you possibly beat them apples?
Tomorrow, I intend to revisit the prospects and liklihood for economic recovery since Christmas sales have now been reported.
Unless you wish to torture me with your deafening silence, "Take Me On" in the comments section below.
Marko's Take
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