http://www.voanews.com/english/2006-09-06-voa73.cfm

...you have been warned!

Any opinion where gold is going, dollar up, gold down.?
Resolve?
greetings from Italy
satyen

I have heard before that semi-conductors are often a canary in the cold-mine for the equity markets.

I see a big sell-off today.

More trouble with the home builders, too. KB Home (KBH) and Beazer (BZH) both issued releases since yesterday's close guiding down earnings signficantly. Cancellation rates are now at 50%.

Hovnanian reported their earnings yesterday, too, meeting their own significantly reduced guidance.

It's been a bad week already, but I think it's going to get worse.

http://www.chicagotribune.com/business/chi-0609070210sep07,1,7210954.story?coll=chi-business-hed

It's due time General Motors (GM) and it's workforce get off their comfortable laurels and begin challenging the competition. Contrary to current popular beliefs, GM still manufacture great cars!

Long, always long, and shall remain long on GM.

BTW...as an old New Dealer, I never trusted Gold beyond the fact - it makes great jewelry. The rich has historically tried to horde the metal as an hedge against the poor. Thank heavens, they remain unsuccessful more often than not.

Re homebuilders....why do any of the recent proclamations from the HB's seem surprising? Of course there was no shortage of pundits claiming that "the bad news" is already priced in these stocks and they could not fall further.

Hmmmm ... looks like a shake out in the metals this a.m.

Thanks for the link to the IMF article, oratier, but I don't share your prejudice against gold. I'd be more interested to learn what, if any, stake the IMF has in keeping the price of metals down. My uninformed suspicion is that they have a vested interest in talking up the dollar.

Ok, Oratier, I'll bite.

As "an old New Dealer", I guess you are for a big government that prints money to pay for it's programs. That is the only thing I can take from your posts and I don't understand that logic.

Re: Rajan (the former IMF Economist), I'll put my P&L up against his any day - but you know what they say about teachers...

IMF's history is poor to say the least.

The window for Central Bank gold sales per the Washington Agreement will end on September 26th. As I have mentioned before, I expect these possible sales to put downward pressure on the price of gold WHILE physical demand heats up due to the Indian Wedding Season.

Got gold? Well, you oughta.

number2son - you are correct.

Re: "I guess you are for a big government that prints money to pay for it's programs."

I'm for efficient government. And for those among us who prefer reading revisionist history about the value of Gold... remember the Great Depression was brought on, in part, by the gold hoarding rich of the latter nineteenth century. Forcing an heroic government to confiscate their ill-gotten gains in order to stablize an economy totally out of balance.

As for the International Monetary Fund (IMF)...everyday I read commentaries on this blog about the new global economy and its efficiencies in this world market, and now... we are debating whether the IMF favors the US dollar over other world currencies. We can't have it both ways. The article is a commentary - one researcher's opinion (whom I agree with). it is not the know all, be all, do all facts some would assign to it. Just a researcher's opinion - just like mine above. Don't agree - fine, I agree with your disagreement.

http://money.cnn.com/2006/09/07/pf/moneyicr_jewelry.moneymag/index.htm

lol, headline = "no reason for price of gold to go up." article = economy slowing.

Re: "That is the only thing I can take from your posts and I don't understand that logic."

Ya gotta have been there to understand "that logic"

Re: Jewelry not likely gift this holiday season
Survey by Money Magazine and ICR also shows reluctance to spend big.

Quotes from the money.CNN article:

"but considerably fewer Americans ages 55 and over indicated they would be buying jewelry (4 percent versus 19 percent for those under age 55."...

... "Those with household incomes $75,000 and above were most likely to make a jewelry purchase above $1,500 (41 percent of those polled) as were younger Americans (30 percent of those under 35 years old) and those with at least a college degree (27 percent)."

Mmmmm, let's see...money,...young,...some education...there is method to this madness.

Just checking in.

I see that the powers that be are taking gold down a notch. I don't get too wound up anymore about these "One Day Wonders" up or down, and neither should you. If someone is hyping a move ask yourself why. They are usually invested on that side of the equation.

It has been my position that "they" would like to see it under 600 before things start turning ugly out there, not that they aren't already. (Ask the homies which I am short). So far gold is rangebound. But the range is getting smaller. The hammer is getting dropped quicker and quicker.

The market is so far playing out according to script. It's about 150 points north of where I thought it would top but I also didn't think they would blow consumer staples, health care, utes etc (defensive) as high as they did. It allowed me to hedge my "married position" in PG at 62 (Again! Thank you.) The tech bounce was expected but more enthusiastic than I would have imagined.

I see KRY is getting bids now from Venezuelan newspaper stories. And press conferences too! And right before today's hammerstrike. Gotta love some people's sense of humor.

I hope everybody took the opportunity offerred to get defensive.The consumer is up to his eyeballs in debt. Everyone has the big screen TV, the Ipod and the jacuzzi. This time I believe stimulus does not help out meaningfully. That is going to be the big surprise to the Fed. I think this plays out for awhile into 2007.

Long: Diversified equities, fully hedged. Long Bear Fund. Long miners. 46% cash.

MarkM,

Welcome back.

Gold smoked today. Is it those gubmn't agents again?

Interesting read... keep in mind however, this is just a written opinion from a freely editable enclyclopedia.

http://en.wikipedia.org/wiki/Gold_standard

Governments are not efficient.

Politicians seem to always choose to print money and spend, rather than being responsible. I guess it's the nature of the beast...

As far as I know; throughout history there has never been a gold backed currency that has failed and there has never been a fiat currency that hasn't failed.

Oratier, I'd love to sit down and talk someday. I'm sure I have much to learn. How 'bout over a beer? Maybe in the Bahamas? ;-)

I agree on the 46% cash position. But the good news is there will be some fantasic bargains in 2007.

Out of curiousity, how truelly important is this 1290 level of SP 500? To anyone who wants to answer, are there going to be alarm bells ringing on your computer to sell once this number hits?

Re: "How 'bout over a beer? Maybe in the Bahamas? ;-)"

First one is on me!

whoops...or "truly", bad spelling

re: gold

$614 = 38.2% fib support.

I'm in, Oratier.

re: "gold, I'm in"

Long or short?
If trading Gold were my thing, I'd probably be short here.

g034: good call. Jumping in too.

How about the home builders, HOV up 4.5%. Is this a gift is being handed to us?

MarkM: thanks for the informational post, good as always.

Correction:

In fairness to those apolitical Gold investors, I am holding the Exchange Traded Fund (GLD). It accounts for 3.2% of my "need" funds portfolio. I've observed over time that GLD generally moves in inverse relationships to the overall Stock Market thereby providing a fairly stable hedge to Market volatility. My position in GLD is up 9.5% y/y without a single trade. Could I have done better playing the RSI game? Maybe, maybe not. Do I have confidence in the future stability of Gold prices? Yes, but not at these levels and certainly not at the $1000\oz. level. Historical precedent just doesn't support this. And history is all we have to rely upon until a new chapter is written (for example - a possible(?) future quote... "I remember the good old days back in the year 20xx when Gold was only $1000/oz.").

I expected HOV to go up after their conference call because ... well, they always do!

Not that there was anything in the call to lend credence to the notion that the downturn is even close to ending. Quite the contrary. It's as dismal as ever.

What surprises me is how the entire sector is rallying. And shaking off the warnings from Beazer and KB Home (amazingly, their stock is up today).

This has been happening all too frequently with this sector. Crowded shorts getting put through the wringer by the hedgies I suspect.

The more things change the more things remain the same. As homebuilders peaked last July optimism reigned (with Bill a notable exception), with the "fundamentals" never better. As the chart patterns began to break down, investors were told to remain calm and hold on to their properties and stock holdings. CNBC had their real estate road shows and everybody was going to get rich by levering up and participating in the fun. Not exactly how it turned out!!!!!!!!!
Fast forward to today. Substitute the oil sector for homebuilders and then glance at the chart patterns. Fundamentals intact, but prices (the things we traders care about) look to be breaking down big time. No doubt we will get an overdue rally (maybe a hurricane inspired event) but this over owned group looks headed for a nasty spill and should be an excellent short after any advance.

Interesting that HOV wouldnt give any guidance on 2007. They are not going to even take a stab at it. I smell more blood on the streets in the spring when homeowners try to sell their properties in sping/summer 07 and realize they cant without taking a hit to their ego and gains.

This doesnt even address defaults and late payment fees.

Re my post:

"re: gold

$614 = 38.2% fib support.

I'm in, Oratier. "

I was referring to the BEER, not buying gold! Sorry for the confusion. I don't give specific trading advice here, and never will. But, it has been highly profitable to watch fibonacci levels when trading gold. First, the $614 may provide support, if not, it will provide resistance on the way back up. That's been my experience, anyway.

Thanks for the kind words. I will not be in much. There are some good "voices" now posting. "optionoracle" always has a good take. "stockman", g034, other pros also (sorry if I missed a name or two). Everyone is in fine hands.

If oil breaks down (and I've previously opined to stockman that charts say it is cycling down)that will put an extreme amount of pressure on gold in the ST. It takes awhile to divorce from the linkage and to move again on its own. Then there are the $USD, $JPY and $EUR influences. There are some bellcow stocks that I have mentioned from time to time. Watch the action in those. (No, one of them is not KRY! ;) )

Looks like the shorts got a little too aggressive today so The Boys are teaching them a lesson.

Take care.

FYI...

"Cisco To Eventually Pay Dividend

Cisco Systems Inc. (CSCO) reiterated its fiscal 2007 revenue
growth estimate of 15% to 20% and first-quarter estimate
of 19% to 21% and hinted at the possibility of a dividend to
analysts and investors.
It also reiterated its long-term revenue growth estimate of
10% to 15%, which wasn't a surprise — the company has long
maintained that figure. The notion of a dividend, however, is.
The San Jose, Calif., networking titan has long preferred stock
buybacks over a cash payout as a way of returning value to its
shareholders.
While declining to specifically address the timing of a cash
payout, Chief Financial Officer Dennis Powell said that “the question
of a dividend in the long run is not if but when.� In the past,
executives have only indicated that a dividend is a possibility.
RBC Capital analyst Mark Sue called the comment a positive
signal for the company and a good start toward an eventual"

And as the current trading strategy (whatever that may be) falls out of favor, another "old faithful" one appears out of the shadows...

The ‘Dogs' Of The Dow Forge Ahead
Proponents of the “Dogs of the Dow� investment strategy
have a lot to cheer about right now.
The strategy, which is hinged partly on the hope that blue
chips that did poorly in the preceding year will make a recovery,
is proving to be a profitable one for 2006.
The Dogs of the Dow method involves investing in the 10
components of the Dow Jones Industrial Average with the highest
dividend yield and holding those stocks for about a year.
The dividend yield is calculated by dividing a company's dividend
by its stock price. So, many of the Dow components with
the highest dividend yields have seen their share price decline
during the preceding year, making them the supposed underdogs
of the stock market.
By the end of August the so-called Dogs had total returns
of about 21% for 2006, according to data from Dow Jones
Indexes. That was well above returns of about 7.9% from the
industrial average as a whole.
The largest companies have received less attention over the
last few years as investors tried to profit from a lengthy rally in
the small-cap sector. But over the last few months uncertainty
about economic growth has been leading investors to seek safety
in larger, better-known names. So, large stocks with relatively
cheap share prices appear more attractive.
At the end of 2005, General Motors Corp. (GM), Verizon
Communications Inc. (VZ) and Merck & Co. (MRK) were
among the Dow industrials with the highest dividend yields,
making them all Dogs of the Dow. All three stocks were beaten
down sharply in 2005 for reasons related to their individual
businesses or industries. Verizon lost roughly 26%, General
Motors fell about 52%, while Merck declined a far more modest
1%. All three are bouncing back with vengeance this year.
Verizon has gained about 18% so far in 2006, and Merck has
added about 29%

Could this rally be a preamble to the 'Monday before triple witch' being usually a strong up day?

P.S. Beer in the Bahamas sounds very good.

Re: "P.S. Beer in the Bahamas sounds very good"

Maybe we can encourage Bill to plan one of those "investors' retreat". Maybe not...couldn't bear his disappointment(and financial risk) due to all the no shows.

I suspect the strength in the homebuilders is a rally to distribute prior to what will probably be bad news in the form of MBA applications on the 13th and retail sales on the 14th.

Triple-witching on the 15th is a day I don't want to miss.

ALOHA !!

It is hard to conceive that anyone can even remotely believe government can be efficient! By what standards is this efficiency measured? Government standards? The only way a governemnt can improve efficiency is by reducing its size and in today's highly political environment that is considered suicide by 99.9% of political encumbents. After all both Reps and Dems have had some sixty years or more to become efficient and reduce size and spending yet both parties have done nothing but spend more and print more. Really, how much more time and chances do we keep giving these same fat cat spenders?

Perhaps we should all learn from our ancestors who have hoarded gold in the past as security against inefficient and vastly corrupt governments and their IOU currencies. After all what are your choices when it comes to a paper currency that looses value(purchasing power)on an annual basis?

Perhaps we should contemplate just what "wealth" is since today most people have a false concept of what "true wealth" represents.

From Peter Schiff on wealth:
" ... Borrowing to produce is the way poor nations become rich. Borrowing to consume is the way rich nations become poor. By squandering borrowed money on consumption, America has no way to repay the principal of its debts, let alone the interest. Borrowing to build factories is not the economic equivalent of borrowing to buy flat panel, high definition televisions.

Don't confuse legitimate wealth creation with the mere paper appreciation of stocks and real estate. Real wealth creation refers to additions made to the capital stock or improvements made to land; such as constructing new homes, building new factories, opening new mines, laying new infrastructure, planting new farmland, etc. However, if an unimproved house simply appraises for twice its value of five years ago, how is society any wealthier as a result? The house provides no more shelter now than it did then. If stock prices rise merely as a result of multiple expansions, what real wealth has been created?

Though assets themselves may reflect wealth, their prices do not. Assets are wealth because they enable the satisfaction of human desires. In the case of factories it's the ability to produce products, in the case of houses it's the ability to provide shelter. Prices merely reflect the perceived value of those abilities and can change substantially over time. The point most people miss is that asset prices can fall just as easily as they can rise. Real wealth on the other hand, though it may depreciate if not maintained, barring natural or man made disaster, is far more lasting."

Consider debt is not wealth ... in that many people claim they own their own home ... the oft used term "homeowner" comes to mind ... yet unless the mortgage is paid off all they really own is debt!

Many here trade stocks, bonds and buy gold and silver yet who here does not have a mortgage payment every month for the next thirty years? Add in property tax and home insurance? Most of us have substantial debt not assets ... All your portfolios do is leverage your ability to service your cost of living and debt. What happens when that leverage is gone?

Oratier - "I'm for efficient government." "remember the Great Depression was brought on, in part, by the gold hoarding rich of the latter nineteenth century. Forcing an heroic government to confiscate their ill-gotten gains in order to stablize an economy totally out of balance."

You sound extremely ignorant. Have you graduated from high school yet? Yes, I'm serious. There's a saying that one armed with a little knowledge can be dangerous to himself and others.

Try connecting a few dots that show the reationship of expanding money supply and credit (monetary inflation) to rising prices of goods and services (price inflation). The Fed's game is to fight a dreaded "deflation monster" all the while creating massive inflation. The Federal Reserve's "inflation monster" is the real problem along with the government's history of spending more than it taxes. (Refer to the historic M-3 chart recently discontinued).

Statists tried to argue that the gold standard was to blame for the credit debacle which led to the Great Depression (as you suggest). If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. To correct this misunderstanding, realize that since 1913, we had been, not on a gold standard, but on a "mixed gold standard." The opposition to the gold standard (from a growing number of welfare-state advocates) was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Without spending any more time, I suggest you study some financial history, and relate what you have learned to what is taking place in today's world.

I'll leave you with this to reflect upon:

"the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan

Don Bain

Re: "You sound extremely ignorant. Have you graduated from high school yet? Yes, I'm serious. There's a saying that one armed with a little knowledge can be dangerous to himself and others."

This is the kind of ill-tempered statements from people like you that make others cringe. You don't debate - you attack. If you are a gold bug - be a gold bug, I, little me, a nobody, can't or shouldn't influence your resolve - unless there is some other hidden pathology for your outburst. Enough said. If you have issues with my opinions in the future, please ignore them and stay on your medications. I'm not your psychoanalyst, I can't help you.

BTW...one cannot sound via written communications - I repeat - stay on your medication.

Oratier - by your response - it seems accurate.

Best wishes.

Don Bain

Re: "It is hard to conceive that anyone can even remotely believe government can be efficient!"

Re: "Have you graduated from high school yet?"

My, my, my...seem to have touched some buttons today. The one thing I can safely say to this particular thread: I'm old enough, and smart enough to have become extremely wealthy believing in the optimism of the American dream. I believe in the future of this republic despite G.W. Bush and this current conservative insanity (this too shall pass). The Gold Bugs and their desire to turn the clock back on this country by a 100 years is a fallacy. Trust me, it won't happen. All the pontificating won't make it happen. The so-called "they" won't allow it. And quite frankly, I don't blame them, because the folks who advocate such policies appear through their commentaries as pseudo-anarchist. Their writing take on a shrillness that's quite disturbing. I would not want to engage them in a face-to-face conversation. That is why responsible governments choose to ignore them, hoping they fade away as just another other historical eccentric.

I trade; stocks, bonds, commodities. For each of these asset classes there are seasons. It's my firm belief that you need to understand what season we are in. IMO, we are in the season for gold and within months, we will be in the season for tech stocks. Learn how to trade all these asset classes and you will do well during so called bull and bear markets.

Oratier,

I'm sorry, but its not just that I am edgy because the markets have been unrewarding in recent days that I am hoping that Bill will vote you off the island. Your blatant attempts to raise angry rebuttal in several comments recently has made me question the validity of what you say and I, for one, do not want to waste my eyeballs on put-downs and arrogance. I would add that in the my many years of providing financial advice to whom most would consider to be the priviledged and wealthy, never have they boasted of their cleverness and wealth and remained a client for long. If, indeed, you are "old enough, and smart enough to have become extremely wealthy" perhaps its time for you to start your own blog, put your name on the banner and see who marches to your tune. As for your remark about Bill's disappointment about Bahamas no-shows I can tell you that I will certainly be there, and not just because of the wealth generation derived but also because of the money I have not lost by following this blog.

ALOHA !!

From the Cunning Realist regarding Pulte Homes and their outlook ... I love the litigation "trump card" I imagine a few disgruntled "homeowners" will try to play in the coming years ... Reminds me of obese people suing McDonalds!

READ ON:
A California man who bought more than $1.5 million worth of Del Webb homes -- but says he has an income of $30,000 a year -- has sued the company alleging breach of contract after it lowered home prices throughout Las Vegas.

The suit also names Countrywide Home Loans, alleging fraudulent lending practices.

At the end of August, Pulte reduced prices at its four Las Vegas Del Webb communities between 5 percent and 25 percent, or $50,000 to almost $160,000. Pulte also reduced prices in 18 of its 23 Pulte Home communities, with reductions ranging from $25,000 to $170,000. Pulte Homes blamed the reductions on a slowdown in demand and an over-aggressive pricing strategy.

TerryC, I don't want to prolong this particular thread any longer than necessary, but I didn't think oratier was out of line in responding to the ad hominem that challenged both his intellect and wisdom with regard to his finances. At least I would do the same. Bill may have other issues, of course, but that is between the two of them. In any case, I for one would miss oratier's experience and passion.

kaimu, the Pulte situation is a sign of things to come. I doubt it will be only a few. The running joke is that until recently anyone capable of fogging a mirror qualified for a no doc, no interest loan. Indeed, some were suggesting doing away with the mirror fogging test in order to service the untapped deceased market.

Seriously, aside from starting a deflationary trend, I expect other home builders are terrifed of lowering prices for just this reason.

That would be "no doc, interest-only loan".

FWIW, I did not find Oratier's comments arrogant (though I would have counseled omitting the "stay on your meds" comment.) Though, I must confess that had I been on the receiving end of "you sound extremely ignorant" and all of the other seemingly patronizing blather that rolled out of Don Bain's post, and most particularly had it been received on a day where hormones and the lunar phase were in conjunction (it is a full moon you know), then I can say with certitude that I would have hurled an invective (or two) that would have been considerably less polite than Oratier's responding that merely he was savy enough to be materially comfortable (I'm willing to be adopted and I'm well behaved!). Each of us has our hot buttons, proclivities and sensitivities. And given that we were unable to observe the other 80% of the communication cues, none of us were able to observe that perhaps Don B was being facetious to the point of being endearing or that Oratier, was affecting a pretext of offense. Accordingly, I vote all of us off the island. We will form a collective, buy a ridiculously cheap Pulte home, party till we drop and burn it down. Purged and cleansed of our wickedness, we will be back at the blog, the market will have recalibrated its direction in a way that brings smiles to our faces each day and all will be right with the world.

Leisa,
You are perceptive.. and apparently, a compassionate co-conspirator.
Your words are, how shall I say.. comforting...even to the wicked.
PS. Throw invectives...someone might want to catch them.

Bill - thanks for a great site. Thank you for sharing your years of experience and knowledge as you're a wealth of information! I truly am learning everday!

As a side matter: I agree w/ TerryC - Oratier's remarks about Bill having an "investor's retreat" and no one showing up was ridiculous to say the least. Arrogant and immature. I hope Bill gives him the boot as well.

As far as Leisa - I disagree whole-heartedly. Don Bain's "blather" comments seemed extremely well informed. If it appeared like "blather" to Leisa, I would think she ignorant as well. By the way, since when does the word ignorance (a lack of education on a particular matter) imply stupidity or lack of wisdom? If Oratier had any merit as a knowledgeable investor, he would have backed his position with facts instead of his childish tantrum.

Secondly, I would ask the same question to Oratier: Are you still in high school? I ask because he seems very juvenile (not meant in a derogatory manner).

I would advise Don Bain to keep posting, but to limit his comments to the markets as there are a couple of very "thin skinned" posters on this site.

Good investing!

Tech-Investor

Leisa-

I have seen your posts elsewhere but you seem to have found your "voice" here. Enjoyed your last immensely.

Gold being smacked around in London under the cover of higher $USD and lower oil. This may be the day they drive it under $600. If it comes into NY under $610 spot some stops will get triggered. Plan your trade, trade your plan folks. This smacks of desparation. The latest housing figures coming in must be grim. Everyone should be dusting off their deflation playbook and thinking about that possibility. A housing collapse could very well lead to a credit crisis. Surely the consumer should not be rationally expected to take on any more debt here and diminished paper wealth leads to him reversing the dissaving cycle.

Good trading all.

P.S. For what it is worth, I see no reason to ban "oratier".

Don Dain, Kaimu, g034, thanks for your informative comments. I thoroughly appreciate your posts. Well put. I hope that you continue to share your knowledge and are not driven off by the "drama!"