Realcent.org

Hold on!!!!

InfleXion wrote:If you're going to sell metals the question is, in exchange for what? Bonds are tanking even with no Fed taper, just based on the hint of it, and are off multigenerational highs. Stocks are near all time highs, kind of goes against the buy low mantra. Cash may become king for a time, but the taxpayers in that kingdom can't bear the debt burden without inflation and inevitable monetary devaluation. So what's left if you want a reliable investment ... or in many cases just want to avoid getting fleeced? Nothing wrong with a little profit taking though

Looks like a dead cat bounce for the DOW/Gold ratio to me. Happened during the last cycle at least. This bounce is of course over a longer timeframe than recent market moves, rather over the last year or so (as in QE3 + QE4). If Maloney is right the DOW points and the gold price are headed for parity. Equilibrium demands it.

Note that in both of the previous cycles the DOW/Gold ratio did not truly begin to recover until after hitting a new all time low. Past performance is no guarantee of future results, yadda yadda.

There are a few flaws in that simple comparison. For one, there wasn't a DJIA as far back as 1900 as the chart suggests. Secondly, a major component of the DJIA's return is in the form of a dividend. Using the total return index is a more fair comparison. Additionally, storage fees for gold were not accounted for. Will share the same comparison with dividend adjustment using recent market data. Could discount gold's performance by the carry cost but may have to do that later.

Also, if you are looking to identify when gold is relatively cheap in comparison to the DJIA, you would favor buying gold and selling DJIA at the ratio peaks (highs), not troughs (lows).
The higher the value the more gold grams are needed (cheap) to the equivalent of the DJIA (expensive). At relatively low ratio levels, it takes fewer grams of gold (expensive) to buy the DJIA (cheap)

Cheers!

DJIA total return (Dividends Included) in gold grams-
Cheers!



With focus on more recent activity...

Jonflyfish wrote:There are a few flaws in that simple comparison. For one, there wasn't a DJIA as far back as 1900 as the chart suggests. Secondly, a major component of the DJIA's return is in the form of a dividend. Using the total return index is a more fair comparison. Additionally, storage fees for gold were not accounted for. Will share the same comparison with dividend adjustment using recent market data. Could discount gold's performance by the carry cost but may have to do that later.

Also, if you are looking to identify when gold is relatively cheap in comparison to the DJIA, you would favor buying gold and selling DJIA at the ratio peaks (highs), not troughs (lows).
The higher the value the more gold grams are needed (cheap) to the equivalent of the DJIA (expensive). At relatively low ratio levels, it takes fewer grams of gold (expensive) to buy the DJIA (cheap)

Cheers!

You bring up valid points. However, the chart is not being used to determine fair value in which case your points would certainly need to be considered. In this case they are irrelevant because the pattern is only being compared to itself to identify a trend. We could incorporate the gold fees and the DJIA dividends and the scale of the pattern would look different, but it would still provide the same type of trend (specifically the inflection points which are what truly matter) which is only relative to itself as a function of time for determining the shift in investment mentality which the factors you've detailed do not make or break.

You are also correct about wanting to buy gold at the peak and not the trough. However the trough has yet to reach fruition, assuming the pattern integrity remains intact. During the Great Depression the trough did not complete until financial leverage was unwound. We are a far cry from that situation today, and if the amount of leverage is any indication the DOW/Gold ratio, flawed as it may be for statistical purity, will be at or less than parity if the unwinding is to occur due to infinite rehypothecation of derivatives.

For those who are unaware, rehypothecation is the re-loaning of a single asset between banks to balloon their balance sheets. London is the only city in the world where there is no restriction on rehypothecation, so any time a bank appears insolvent they will work with another bank to re-loan the same asset back and forth with each subsequent loan boosting their balance sheet in the absence of any real value being added. As such there may appear up to infinity of a particular asset when there may in fact only be 1, and in order to unwind these positions that vacuous value must be provided from elsewhere on the balance sheet.

There is the additional caveat that this is the first time a global currency has been on the hook, and that debt expansion has exceeded GDP growth on a global scale to such a degree. There would of course be unforseen circumstances beyond valuation in dollar terms.

What is not unforseen is the $441 trillion in rehypothecated interest rate swap derivatives with only 1-2% backing by tangible assets. In order to unwind these positions 98-99% of that $441 trillion will need to come from other funds to dehypothecate. If unwinding is not attempted then there is still substantial risk with devaluation of those derivatives if interest rates are to rise which would exacerbate these financial black holes.

As such the integrity of the financial system is in question like never before, and the charts could all get blown to bits anyway, mine and yours included. In such a case only those with tangible assets will come out ahead since they won't have to fight with an unknown amount of other parties over who owns the underlying asset of real value.

What was I saying... 17... hmm...

Savage beating today!

One good thing about silver staying low like this is it keeps the 5 oz. America the Beautiful coins at $154.95 and Mt. Rushmore is coming up.

Whats Going On?

Ray, how much did you sell today?

FED says NO TAPERING!

aka. the fed hates the dollar and is actively advocating for its destruction.

$19.71 seems like a good buy price now *sigh*

wow! look at that move today! anybody got any insights on what the spike was caused by? I cant help but smile when I see a move that big in the positive direction.

Possibly, the debt ceiling deadline / Fed's decision to continue QE.

The Bernanke has spoken! Surprise, surprise, they can't stop propping up the financial system and ease up money printing.

Here comes the inflation boyzzz. Cause you know they say we don't have much of any yet....

I don't think I'm cut out for this paper trading I made some money today but the worst thing you can do is figure out a best case scenario. I had been doing pretty good in the markets so I decided to "gamble", for lack of a better word. Bought some Sept. 21 SLV calls yesterday for $.53 (90 contracts which was more than I should be "playing" with.) About sick this morning since they were down quite a bit. Went ahead and bought another 60 contracts @ $.21 this morning. Then logged in and saw them trading at $1.66! Home run I thought. I had a sell order in @ $1.30 on 100 contracts but then the price went back to $0.75 and I didn't get filled. After calling Scottrade they said the contracts that went at that price were on a spread order and that's why it didn't get filled. So this guy I'm talking to is really bearish the metals and I'm just relieved that I didn't lose the whole thing so I drop some at $.80 and the rest at $1.30 like originally planned. Still one hell of a return today but I left a HUGE chuck of opportunity on the table.

Don't know which is worse (well actually I do) actually being on the wrong side of that or getting out way to early and thinking about what could have been.....

mbailey1234 wrote:I don't think I'm cut out for this paper trading Don't know which is worse (well actually I do) actually being on the wrong side of that or getting out way to early and thinking about what could have been.....

We've all been there!

The Fed giveth and the Fed taketh away. This market sure is antsy.

You better move, you better dance.

She shivers me timbers...

.20 smack tonight...

natsb88 wrote:

You better move, you better dance.

Man! that is my kinda WHITE girl!! she's got that wild untamed look....I KNOW she's crazy, but with that type I always hope that's she smart too, coz that makes all the dysfunction and fighting worth it....why?.....coz you get the sweet drama of making up.

but Silver.....what i'm seeing JUST on Ebay, is a market that's pretty robust. a lot of guys throwing in the towel, but MOST of the buyers are those with multiple thousand stars....i'm just talking about American pre-65 90%'ers...I RARELY see rolls of ASES offered anymore....and 40 Kenn's you USUALLY can get a board price...which is good.

Bless all you guys, n.

neilgin1 wrote:what i'm seeing JUST on Ebay, is a market that's pretty robust. a lot of guys throwing in the towel, but MOST of the buyers are those with multiple thousand stars..

Are sellers trying to unload before prices go LOWER? Is that what you are seeing?