Bill:

I remember you once told that "to understand where the global equities are going, simply follow the russian market"

OK, here we go, have a look at 6 months Russian RTS Index.
http://stock.rbc.ru/demo/rts.1/daily/RTSI.eng.shtml?show=6M

This is the most crystal clear "Head and Shoulder" one will ever see.

Indeed the bear is in full swing. Of course I rely upon you to enlighten when the bearish trend will reverse.

Cheers,
Anil Passi

I'm reminded of that line from _The Terminatior_:

"It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever..."

Of course it does stop, but bears are unrelenting in their viciousness.

Wow, the Nikkei got whalloped - down over 4%. And the PPI core is higher than expected. More food for the bear.

Gold is down $24.30 to $582.50... this market is making me sick. Any thoughts on when the bleeding is going to stop on this one? Maybe on the inflation data today? I'm starting to think I should just take Russell's advice and stop looking at the market until the end of the summer. This Gold bull is really doing everything it can to get rid of the weak hands...

Levels I want to accumulate gold and miners-GLD 57.5, RGLD 23.5, NEM 46-46.5, ABX 25.5, GOLD 16, HMY 11.5-12. Time to step up if they give them away this morning. Don't need to reach- let them come to you.

JTS

I was only 99% convinced that a bear market was upon us until yesterday when i caught a bit of Kudlow. If any one can recall the name Robert Battapaglia, he of the "Tech stocks will go up forever fame ", he was on the show yesterday and was totally bullish just the way he was on cnbc before the tech crash. This guy is a PIG, yes the capital letters are justified, and if he is on there stating bullish views then its best we take his words to mean the opposite. Anyways on your question, in my readings it has been suggested that when the USD hits .88 it will begin its way back down leading to a recovery in pm s, it currently sits at .86.17 . Also there is very strong support for the metal at the 555 to 575 range. I believe that Bill has mentioned all of this in the past also, he is also stating not to get scared out of your positions, he is the expert on this, i am not, this will turn around. You can check the data daily on kitco.com for the USD and also check the archives on kitco contributed commentaries for the for the support on gold, June 5 06, Clive Maund.

tgifbipo, I appreciate the comments and have stayed long in both the physical and some shares. Staying long in my uranium shares as well, which has also been gut-wrenching to say the least. Anyone have thoughts on uranium investments in this bear market? Since you can't buy physical uranium, the shares are the only other investment vehicle that I know of.

Thanks.

Thanks very much for all of the expert insights that you share with us, Bill!

I regretted not having gotten into gold before the huge price run-up, but now I'm very glad to have waited (not exactly patiently!) for a steep correction and another chance at a lower-price opportunity.

Also, I just found out when you posted his bio the other day that Dino Kos and I have the same undergrad alma mater. Now I'm trying to remember if he was one of those people I used to see hunched over Samuelson's economics book for hours at the library while I was there studying chemistry.

Interesting action in gold... intermediate trend up is now broken to downside. Next stop? Looks like that weekly RSI of 30 not so far fetched... 500-550? Yes I'd say even the strong hands are growing weak at this point.

MarkM, g034... thoughts on trend break?

ALOHA !!

As I see it the USD Index is in a head and shoulders formation. If the USD goes over 90 it could mean a dollar rally ... if you believe TA means anything in manipulated markets! Please just remember who puts out all this government data that the whole World bases its financial futures on ... does anyone really believe there are no hidden agendas here? How many versions of the CPI do you need to see to figure that out? How many disappearing M3s do we need to see? How many Federal Reserve terms like "deep storage" do you need to ponder or IMF double bookings?

I urge those of you who value your long term finacial future to understand that your best interest is not part of the equation here in the BIG MONEY WORLD of geopolitics and banking. This downturn will turn around and when it does think seriously before you plunge your money into a gold or silver ETF. Gold and silver as insurance against a monetary collapse will not be there for you in an ETF. That is exactly how the "custodians" of your paper gold like it!

READ ON:
From Barron's
Saturday, June 10, 2006

James Turk asserts that exchange-traded funds,
streetTRACKS Gold Shares in particular, "don't audit the gold to prove it really exists."

Turk's statement has absolutely no basis in fact. He
has repeatedly made this spurious claim and one has to
question his motive for doing so. The truth is that
the gold is held in allocated form, which means
specific numbered physical gold bars registered in the
name of the trust held within the accounts of the
custodian, HSBC.

The Securities and Exchange Commission and the
Sarbanes-Oxley Law require management to assess and
report on the effectiveness of internal controls. Our
auditors are required to report on our
representations.

Our internal controls and outside audit processes
include an independent physical count of the gold,
which takes place twice a year. The trust employs BSI
Inspectorate, an independent firm, to count the gold
and provide certificates of the count. The trust
employed Ernst & Young to review and test these
physical count procedures as part of their obligations
under Sarbanes-Oxley.

In connection with its assignment, E&Y visited the
vault to test audit controls and procedures and to
observe the physical count in October 2005.

Our independent registered public accounting firm,
Deloitte & Touche, rendered unqualified opinions on
the internal controls for financial reporting and on
the financial statements. Its auditing procedures
included physical observation of the gold held at our
custodian, plus confirmations from our custodian and
BSI Inspectorate of its existence.

Stuart Thomas, Managing Director
World Gold Trust Services
New York City

* * *

James Turk's reply as published by Barron's: The
prospectus discloses "gold may be held by one or more
subcustodians. ... the Custodian and the Trustee do
not require any direct or indirect subcustodians to be
insured or bonded. ... neither the Trustee nor
the Custodian oversees or monitors the activities of
subcustodians. ... [and] the Trustee may have no right
to visit the premises of any subcustodian." Neither
Stuart Thomas nor the fund's 10K disclose the weight
of gold stored in subcustodians, which
presumably could be all of the trust's gold.

* * *

James Turk's full reply to Barron's: Mr. Thomas states
that "E&Y visited the vault" and that there was "a
physical observation of the gold held at our
custodian," as if only one vault were involved.
However, the prospectus discloses that in addition to
gold stored with the Custodian, "gold may be held by
one or more subcustodians," "the Custodian and the
Trustee do not require any direct or indirect
subcustodians to be insured or bonded," "neither
the Trustee nor the Custodian oversees or monitors the
activities of subcustodians," and "gold held by the
Custodian's currently selected subcustodians and by
subcustodians of subcustodians may be held in
vaults located in England or in other locations."

It is noteworthy that the 10K records the principal
asset of the fund as "Investment in Gold" and not
simply "gold." I point out this distinction because
auditors are responsible for verifying that assets
exist. If the asset were recorded as "gold," the
auditor would need to inspect the vault of the
subcustodians to prove the gold there really exists.
But the prospectus discloses: "The Trustee may have no
right to visit the premises of any subcustodian for
the purposes of examining the Trust's gold or any
records maintained by the subcustodian, and no
subcustodian will be obligated to cooperate in any review the Trustee may wish to conduct of the
facilities, procedures, records or creditworthiness of such subcustodian."

Neither Mr. Thomas nor the fund's 10K discloses the
weight of gold stored in the subcustodians, which
presumably could be all of the Trust's gold.

Regarding the auditor's "obligations under
Sarbanes-Oxley," the prospectus does not represent that the gold, whether in the Custodian or subcustodians, is audited or verified by an
independent third party to prove that it exists. Thus, it is reasonable to expect that the auditor would provide an unqualified opinion.

Lastly, though Mr. Thomas questions my motive, it is clear and straightforward. I wish to use my significant experience in this area to highlight the risks one incurs by buying paper representations of gold rather than gold itself.

Respectfully,

James Turk
GoldMoney

stockman-

I am a bit incredulous at the sheer SWIFTNESS of this decline and its PERSISTENCE. I mean an intraday rally of $7 looks huge now. Amazing.

The inflation/deflation conundrum is what is running through my mind. At some point, a housing collapse means everyone puts away their pocketbooks. If the consumer refuses to spend ALL prices collapse. Then the Fed has to pour in liquidity in the Japanese formula. It's worked before BUT it has worked this past two years with greatly decreasing effectiveness. It has leaked all over the place instead of into the one area that the Fed hopes and prays it sticks :CAPEX.

I think half the people are running from inflation. The other half are running from deflation. We won't know what happens for awhile yet (months).

All-

I hope no one is out there trying to buy these BS "rallies". There is still MAJOR selling pressure out there. Until we have a capitulation day on huge volume it won't be worked off. (And who was thinking this morning that the rest of the world could reprice by 4% and we could take our markets UP?)

There has been no discussion of the PPI data on this thread. The consensus was that the PPI less food & energy would rise by 0.2%, but we got 0.3%. Meanwhile overall PPI rose by 0.2% rather than the expected 0.5%.

Would you consider these numbers inline with what the Fed would need to consider pausing rate hikes? Gold has collapsed painfully, and it's a shame that not all of us are experienced enough to exit all of our positions at the right time. But if CPI numbers clearly show that the Fed will continue, would it not be prudent to cut losses and exit Gold for now?

I'm in agreement with MarkM-watching the housing stocks go down day after day, JBL hammered 26% today, the tape action is positively horrid. Oil stocks look vulnerable here, and if they join the bear in earnest the decline will accelerate. Rallies will appear out of nowhere and be extremely sharp and short lived. Throughout the Nasdaq bear market of 2000-2002, some of the biggest percentage up days ever punctuated the selloff. After the inevitable 2-3 day rallies run their course, shorts can be put out. Yes this market is very oversold, but some very large debacles occured from an extremely oversold market-ala Oct. 1987.

Here in SF, home of high priced housing, I am wondering how this market movement will affect the housing boom/bust. Probably depends on how long/how deep it goes.

optionoracle-

I am expecting you bought GLD at 575 then or, seeing the tape, did you decide to hold off? :)

Drillers are getting absolutely creamed, I agree. All the oils. Gee, no hurricane to save them today.

I am looking at XBD as my tell. If it craters then I think that's all she wrote.

We are rallying again boys. Whooo-hoo. There are VALUES out there!

I live in the Bay Area, too, and I have watched practically gape-mouthed at the rise in housing prices. My own home included. Affordability is so low right now, and so many people across the country are leveraged beyond their means, I have little hope this will end easily or without pain.

The Harvard University Joint Center for Housing Studies has a new report (see http://walkthrough.nytimes.com/?8dpc), suggesting that "one in ten homeowners face higher mortgage payments this year."

MarkM-yes I bought GLD at 57.5 and will buy some more around 55.5 and 53.5. Bought RGLD 23.5 and GOLD 16.5. If GLD breaks 53 I will exit and look to purchase around the 49 level. For GLD to break 53 I assume the stock market will have cratered so hopefully short positions in equities will cushion any GLD losses. My stop is much larger than normal due to the volatility, but I'd really like to up my gold weighting in this area. Getting stopped out is just part of the game. If and when you are looking for emerging market exposure TRF might be worth nibbling between 45-48 for a trade; that will mark 50% off its early May high of 96.95.

optionoracle,

That is interesting. And at what level are you selling GLD? (or not?)

thx.

SiO2-it depends where the decline botoms. If today is the low (fat chance!) I would begin scaling out around 63. However, in real life one has to assess the market each day and make adjustments to their trading style. One strategy may work well in a trending market, while another outperforms in a range boung environment. I would add in this volatile market to place stops after making a trade-not mental stops, too emotionally taxing. Losses happen and doesn't mean your system is flawed-just keep your losses to a tolerable amount and move on.

Can anyone educate me a bit on the bounce in the miners from 11am to noon? After falling ~5% after the open, they made a lot of it back (in some instances back to even), despite the spot price of gold continuing to tank. Is this just the added volatility at work?

dead cat bounce.

rusticuf:

I think they were just trading in sympathy to the major market indices (check them out). Remember the miners correlate not just to their underlying metals, but also to the broader equity markets.

optionoracle-

If GLD does not divorce itself from the general stockmarket chalk one up for the deflation scenario.

tc- Even with that though, the miners have stiffened here. Ratio vastly improved GLD:GDM. So more than just SP500 action.

Mark, do you ever sleep? And, in all seriousness, I do see the miners as rebounding slightly, but I'm not confident we've seen then end of the bloodletting.

The thing with trying to invest in gold or anything else is, why should it be any less painful than owning stocks?

Gold may be heading for 8000 (lol) or 200, but you can be sure you will be tortured as a long or short no matter what the target.

The market is an instrument of PAIN.