On a ST basis my cycle work shows $Gold getting a little overbought here and at the same time the $USD is getting a little oversold. If those both turned you would see a $USD rebound and $Gold coming off its high here. However, we are entering a seasonally strong period for gold and the macro picture is clearly indicating dollar weakness ahead. Bottom line: In my humble opinion there is no reason to ST time a gold trade here. Resolution should be right around the corner.

RSI for $XMI "unprecedented":

http://tinyurl.com/y74eac

Thanks Mark. Its end of the year time around my firm, and I was looking to put some cash back into gold/miners beyond the positions i've been holdnig since August. RSIs are on the high side, but it sounds like you are thinking that a seasonal rally has begun....

Looks like a number of the CANROYs are under considerable pressure this AM due to the new tax plan (http://www.newswire.ca/en/releases/archive/November2006/01/c6999.html):

CNE -14%
ERF -8%
FDG -5%
HTE -13%
PDS -6%
PGH/PWE/PWI/PVX -6% to -8%

What are the boards thoughts about an American investor buying these on the pullback - especially in light of the fact that they are proposing a four year transitional delay in implementing the new rules?

Thanks,
Learn2Invest

If Gold is rising right into the ISM report and the Dollar is at support and the ISM is really really bad - I guess we could have a breakout in Gold. If the report is quite strong - Gold may have already had its rally today.

Oil's could work in golds favour also.
'Talk-TV' was telling viewers it may be time to short oil - this is often a recipe for some kind of bottom - depending on the Inventory data of course.

Regarding the Trusts, I will be trading those - particularly any that are bashed - as existing trusts aren't affected for 4 years.

Gold: Breaking out, but expect big fight at AROUND the $614 fib area as mentioned in past. The close today is important.

Here's the Canadian Trusts that have the largest weight and could be hit with the hardest selling - if you want to try to play these.

good trading...

Rank Trust Market Cap Weight
1 Canadian Oil Sands Trust $14.2 9.3%
2 PennWest Energy Trust $9.9 6.5%
3 Yellow Pages Income Fund $8.0 5.0%
4 Enerplus Resources Fund $7.5 4.9%
5 ARC Energy Trust $5.6 3.6%
6 RioCan REIT $4.9 3.1%
7 Canetic Resources Trust $4.5 2.9%
8 Pengrowth Energy Trust $6.5 2.8%
9 Bell Aliant $4.2 2.7%
10 Fording Canadian Coal $4.2 2.7%

g034,
I think we blow past 614. I am not a chartist so much of this is conjecture but inflation is very real and much worse that anyone is saying. I also think that crappy GDP figures have people ready to rotate out of this toppy market. The big boys usually try to do this in a suttle manner but when everyone has the same idea.... up up and away.

The Question is: what is the impact of the tax law change? the energy trusts to some extent are returning capital on resources sales/revs, but other businesses are passing through mostly profits?

TELK - 1st pullback buy opportunity.

Cara 100 Garmin drops 14% on earnings disappointment. Web site crashes.

http://www.garmin.com/stock/

Internal Error 500:

The server hosting the URL you have requested has reported an error. It cannot retrieve your document due to server-side problems.

Please use the links or search feature on this page to continue browsing.

you can feel fear today in the market - as yet it is not being expressed in the prices -

everything is being kept in a tight range...
somethings gotta give...

T'man-

But the 10:30am Buy Order came right on time again. Someone wants us to know that the market is underpinned, and is willing to telegraph that to the point of ridiculousness. Now, is it the Fed? The sauds? Some hedge fund with a whole lot of funny money? Just plain astute buying of bargains? I don't know. If the market is rolling over about 2:30pm I will expect them again though, just like yesterday and just like all the other days this has happened.

Signed,
Mayor of Tin Foil Hat City

MarkM

Oil has been the tell on this market all along IMO.

As long as they keep that price down - everything else can 'float along'

A lot of the 10:30 price changes were oil related.

You may be right about the buying patterns.
I suggested a little while ago that the US market is being run like a defensive Hedge Fund in reverse (long equities - short oil/commods)

The US dollar also found temporary support (intervention?) where I suggested it would yesterday. If it doesn't hold - then I guess we get that Gold breakout?

...Now on the TSX today they have been handing out 'Free Money' on the Income Trusts - Unreal!

I hope people took advantage to play the bounces on the Trusts I posted this morning. - these kind of panics don't come along often.

"Gold: Breaking out, but expect big fight at AROUND the $614 fib area as mentioned in past. The close today is important.

Posted by: g034 at November 1, 2006 9:01 AM"

SECOND THAT except I'd say that a pullback and retest of the 614 area in the coming days (on first failure) would not be unexpected.

At the center of the « euphoria » process of US voters, one will find the business bank Goldman Sachs in particular. The latter, whose former president, Henry Paulson became the US Finance Minister a few months ago, is at the origin of a technical decision that led to an artificial collapse of oil rates in the past weeks. Indeed Goldman Sachs abruptly changed the composition of his GSCI indicator (Goldman Sachs Commodity Index), a reference on Chigaco's raw materials market, thus compelling traders to sell more than 100 billion US dollars of “future� oil contracts between August and September 2006.

Moreover, the prominent influence of this business bank is also present in the “Working Group on Financial Markets�, (often called « Plunge Protection Team »), created by the Executive Order 12631 (13), with the objective “to maintain the confidence of investors�, and which, under the direction of people named there by G. W. Bush, and headed by Henry Paulson, is in a position to activate all influential Wall Street or Chicago players.

IT'S ALL FIXED.
PROPHET

Canada's Income Trusts, BCE, Plunge on New Taxes (Update4)

By Theophilos Argitis

Nov. 1 (Bloomberg) -- Shares of Canadian income trusts plunged, wiping out more than C$20 billion ($18 billion) in market value, after the government said it plans to tax the high-yield securities for the first time. BCE Inc., which planned to convert to a trust, had its biggest drop in 23 years.

Finance Minister Jim Flaherty said late yesterday he will also raise dividend tax rates for pension funds and foreign investors that own trusts. The changes would go into effect next year for new trusts, while existing securities will be exempt until 2011.

``We expected the market to be down and dirty on this -- and it is,'' said John Priestman, who runs about $5.3 billion in income trusts for Guardian Group of Funds in Toronto.

Montreal-based BCE, Canada's biggest phone company, fell C$3.49, or 11 percent, to C$28.21, at 10:46 a.m. on the Toronto Stock Exchange. The shares earlier fell as much as 14 percent, the biggest drop since the company was created in 1983. Vancouver-based Telus Corp., another trust conversion candidate, fell C$9, or 14 percent, to C$55.93.

The Canadian dollar had its biggest decline in two months as foreign investors unloaded their trusts. The S&P/TSX Capped Income Trust fell as much as 13 percent, the most since it was launched in 2002. Real Estate Investment Trusts, or REITs, were little changed as they were exempt from the tax changes.

Sector Growth

The measures threaten to shut down the fastest growing segment of the Toronto Stock Exchange, and may halt some of the C$70 billion in new trust conversions announced in recent weeks by firms such as BCE. The number of trusts in Canada has tripled to about 250, and their market value has soared 20-fold in six years to C$200 billion after firms were attracted to the tax breaks.

The decisions in recent weeks by BCE and Telus, Canada's two biggest phone companies, to become trusts may have forced the government's hand. These two firms alone would have increased the market value of trusts by C$50 billion, boosting the government's tax losses from trusts to C$800 million a year. Trusts avoid most corporate taxes by paying out their cash flow to investors in monthly dividends.

The tax measures are ``clearly disappointing,'' said BCE CEO Michael Sabia, on a conference call today. He said BCE is reviewing its conversion plans.

Flaherty ``is essentially shutting the sector down,'' said David Wolf, chief strategist at Merrill Lynch & Co. in Toronto. ``This will resonate cruelly through the Canadian income trust market.'

Surprise Move

The tax measures caught many income trust executives and investors off guard, as they expected the minority government would be unwilling to make such an unpopular change until after the next election.

``Things changed a great deal this year and we're faced with a situation where Canada was moving to an income trust economy,'' Flaherty told reporters in Ottawa last night. ``For months there has been a growing trend toward corporate tax avoidance.''

BCE, Canada's biggest phone company, has gained 15 percent over the past two months as investors anticipated a switch to the structure. The company announced plans to convert its Bell Canada unit to a trust on Oct. 11. Flaherty said the structure isn't ``suitable'' for phone companies.

``The government had to address the problem sooner or later,'' said Denis Durand, a senior partner at Jarislowsky Fraser Ltd. in Montreal, which oversees C$58.5 billion, and is ``marginally'' invested in income trusts. ``There was a concern that too many unsuitable companies and industries would try to convert and that would affect the reinvestment process.''

More Coming

Other companies that have announced plans to take advantage of the income trust structure include Dundee Wealth Management Inc., an asset-management firm, that plans to sell a minority stake in its Goodman & Co. mutual fund arm through an initial public offering of trust units. Dundee said it's reviewing the IPO plans.

``We knew there were more coming,'' Flaherty said, adding he's following moves by governments in Australia and the U.S. to curb growth in these securities. ``It's absolutely necessary to act on this issue in the interest of fairness.''

Income trusts fell because the increased taxes on payouts make them less attractive for investors. Until this year, the returns for the S&P/TSX Capped Income Trust Index, including dividends, have topped the benchmark S&P/TSX index each year since 1999.

The announcement ``is going to deliver some pretty nasty re-evaluations of all the trusts,'' Marcel Coutu, chief executive of Canadian Oil Sands, said in a telephone interview. ``We'll certainly be thinking about how it impacts us and how the trust sector is going to evolve from here.''

Corporate Taxes

The government plans to tax trusts in much the same way it taxes corporations. As a result, trusts will no longer be allowed to deduct for income taxes the payouts they make to shareholders. Income will then be taxed at a rate of 31.5 percent by 2011, the finance department said in a statement yesterday.

The changes will effectively raise the tax rates for investors in tax-sheltered retirement accounts, pension funds, and for U.S. investors. The U.S. shareholders, who pay a 15 percent withholding tax on their trust dividends, will be paying a tax rate of 41.5 percent in 2011, the government said. Tax- exempt Canadian pensions will pay 31.5 percent, according to the finance department. Individual investors would continue to pay about 46 percent on trust payouts.

Tax Rules

The income trust issue has been a political minefield in Canada over the past two years. Trusts lost billions of dollars in market value last year when the previous Liberal government said it might change the tax rules, prompting Flaherty's Conservative Party to pledge in the campaign for elections in January that it would not tax trusts if it won power.

Rather than tax trusts, the previous Liberal Party government cut dividend taxes to reduce companies' incentive to convert to trusts, a move Flaherty said didn't go far enough.

The Conservative Party lacks a majority of seats in Parliament and needs support from opposition parties to pass laws. The New Democratic Party, which had called a moratorium on new income trusts earlier this month, may be ready to support the plan, Judy Wasylycia-Leis, head of financial affairs for the party, said in a telephone interview.

To help soften the blow, Flaherty announced C$6.5 billion in additional tax cuts over six years, mostly for seniors, including a plan to allow income-splitting for pensioners as of next year.

The government also said it will cut the corporate income tax rate by one-half percentage point as of Jan. 1, 2011, and increase the age credit amount by C$1,000 to C$5,066.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net .

Last Updated: November 1, 2006 10:57 EST

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first stop is 1365 I guess

Gold:

Struggle at key resistance levels was not strong by the bears...breaking free of them for another day with a pullback finding support there will be very bullish.

$614 did in fact cause a ruckus, but not much. I thought the bears would take a stand there, but it hasn't happened yet..

Guess it's up, up and away - with pullbacks of course.

S&P 500 broke its uptrend line and now price oscillators are moving south, typically a place for ME to take gains, let's see how this goes.

Good luck.

Bellcow looking a little peaked but I want to see how she does tomorrow. I don't want to see a doji....

g034-

See how the fight for 1365 goes maybe?

I commend Mr Flaherty in taking action to end this Income Trust madness. In Canada, every bank has a brokerage arm that has been flogging this stuff for the past few years, despite the fact that, when put under the microscope, one can see that most of these devices are the result of bundling inferior assets and offering a high "yield" that is typically comprised of a large amount of return of capital. As I have said before on this blog, this is a scheme that surely Mr Ponzi would have approved. so today we see the prices crashing -but check out the bank stocks - all up nicely as they now present a better income model through assured dividends. HB&B will never loose in this game because they hold all the cards. One has to wonder to where the $ billions from these trades ( less commissions, of course ) will flow..... precious metals, energy ? My hope is that there will be such a fall-out from the I.T. issue that the feds will finally destroy the SRO's and put in place national regulation and LAWS ( not rules meant to be broken ) and punish those who steal from a trusting public that has been told they were actually investing wisely.

no one wants to buy pieces of paper today...just the yellow metal

I guess we could bounce off this support for a trade tomorrow - maybe something to do with 'strong jobs numbers' or such or oil staying below 60 - they'll find a reason...

Many here have been watching KRY. After the market closed they announced that they were going forward tomorrow with the drilling of 40 holes to confirm reserves. The news release that I read allowed as how they had received environmental endorsement for this drilling on October 26th.
Is this the key permit that everyone has been looking for? Why did they not announce the winning of this permit days ago?
The stock has popped in after hours.

Press release on stockwatch.com. Last paragraph:

The environmental permission required for the drilling was received from the Ministry of the Environment and Natural Resources in Venezuela on Oct. 26, 2006.
http://www.stockwatch.com/swnet/newsit/newsit_newsit.aspx?bid=B-614416-C:KRY&symbol=KRY&news_region=C

I think there is a differece between permit to drill and a permit mine.

KRY is up 0.24 on 154K shares in after hours... probably those who believe this is THE permit... obviously it is not, so KRY may come right back down in the morning.

Ronk
Upon what do you base that opinion?
Isn't "drilling" for feasability the first required step to mining? What could be gained by approving exploration without an intention to approve development?
Were the government to suddenly reverse course and abort KRY's efforts send a message to every foreign enterprise interested in Venezuela?
Would this not be economic suicide?
These guys may not like gringos, or the present administration, but they ain't stupid and definitely know which side of the bread the butter goes on.
Success of this mining effort would mean very real financial and political gains for Chavez...
before the coming December elections.
Let's see what happens, but I think this bodes very well for believers in KRY.

RE:

"First IVN, then USGL broke out from basing while trailing the other miners. KRY is still basing. Is it next?

Posted by: g034 at October 31, 2006 2:31 PM"

Bill - thanks for the crystal ball while you're gone ;-)

I'm watching SqueezePlay with Amanda Lang and Kevin O'Leary on RobTV on-line. Kevin might be pompous at times (well more than 'at times') but what a government toadie Amanda was while debating the new taxation of trust policy announced by the central government last night.

Doug Casey was on Rob two weeks ago and stated that despite all the bad policies put in place the US government, that the Canadians weren't all much better and both would suffer the same fate in the year's ahead. Casey now looks prophetic in the light of this tax move.

Rigdon, nothing more than common sense. What is the environmental impact of drilling holes vs open pit gold mining? Think about it and stay calm I'm long KRY and hope it does well..

Yah, they are all in a panic up here calling for a 10% correction... a 1000 point drop in the TSX
The sky is falling...

If it doesn't drop tomorrow... buy
If it holds its 50dma... buy

If it starts running though... then it could be part of a correction that was due to happen anyways - and selling will bring more selling.
And get out of the way...

To be honest - I think the behaviour of the G&M and ROB Tv was pathetic - it was like 'CNBC in reverse' - scaring everyone - hey isn't Halloween over?

IMO it will be Oil that determines the TSX's direction not the Capped Income Trust Index - they are (were?) only 160 billion of Market Cap

In fact isn't it all about oil?
If it goes back up to $65 the US market goes down
If it goes to $50 the Candian market goes down.

... lots of money to be made here...

good trading

No worries, Ronk, am very calm.
Also no big time (short term) expectations thank you very much.
These things need to play out. But drilling is drilling... foot in the door. Were Chavez and companay opposed, no 'exploratory holes' would be in discussion IMHO.
Just great to see KRY up 10% in after hours, that's all.
Good luck to all.

Re KRY: Looks to me that Chavez wants to know the size of the "permit fee" that needs to be paid. He may be crazy but he is not stupid.

Okay. I've looked at it and me officially no likee gold chart this morning. Also didn't like miners reaction yesterday as a group to higher gold price. I also told you my bellcow looked a little peaked.

Right now I feel like the little kid who knows he has done something wrong and is hoping, hoping, hoping Dad doesn't find out.

Am sticking to discipline and trading my plan. Do not be surprised at sudden reversals taking us under 614 and reassaults later. JMHO.