my short-term gold short seems to be unchanged,
but i just put on a position in the TSX financials bear (HFD), just to see how the next few days of volatility pans out.

i really enjoy this site and have made it part of my morning reading list, i appreciate the time that has been put into this blog.

thanks,

dr. c

To trade...is the voluntary exchange of goods, services, or both. Trade is also called commerce. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services.

To gamble....wagering money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods.

LOL,,,Many of us have our trading screens set up with 3 min, 1 hr, daily charts, etc., lev II, raw data, etc.

Looks like a slot machine !

fwiw,
TIE may be a good short term position, reportedly heavy inside buying and the mkt is relatively weak.
At one time did this stock have a following here?

I have enough metal, concentrated on the yellow miners who have more than enough problems of their own.

Quote from a technician that shares Bill's view on the importance of MACD's. Jack Steinman of The Informed Trader.

The key to trying to pick bottoms, and folks they are not easy to do, is to rely on the technical's and especially those macd's on the daily charts. Yes the 60 minute charts are useful but really only for the very near term. To pick bottoms, if you're fortunate enough, you need to rely strongly on those daily macd's. There is truly no other way to do it from my long term experience. What I wanted to see was how the pullback off the move up from the bottom would be. Would the Macd fall apart or would it hold. The reason I maintain my bullish view of no full retest is that the macd's on the move up were impulsive and not reflexive. It wasn't just your run of the mill move off the bottom. There was real oomph behind that move and that had to be respected. Again, i may end up being wrong but I won't change my mind here based on what I'm seeing. The daily macd's say the bottom is in. Just my view.

The psychology of it all.

Looking at human behavior, one can see the power of intermittent reinforcement.

The gaming industry knows this well and uses it to its advantage with various slots, crap tables, and card games. People continue to play and the power makes them return again and again.

It applies to many things in life, even something like golf . There are rock stars (Alice Cooper), sports figures (Lawrence Taylor (football)) who left alcohol, and drug addiction and traded it for golf addiction, again the power of intermittent reinforcement.

Looking at the markets today, I would say there are a lot of traders, who succumb to the power of intermittent reinforcement. The challenge is to be successful.

Among miners, AUY showing some strength today, not sure why.

Seamus,
AUY started yesterday, went to 10.68. I sold in the premkt and reloaded lower. Just sold at 11 as very short term RSI/stoch turned down. Mine is not to question why....but to pull the trigger when I'm in the green.

Now I see they're turning up again...

"intermittent reinforcement" is THE most powerful reinforcement schedule, more powerful than continuous reinforcement. T'em pigeons used to peck their beaks raw. I think women know that power too.

By Ian Katz

Aug. 29 (Bloomberg) -- Top private-equity and hedge fund managers made more in 10 minutes than average-paid U.S. workers earned all of last year, according to a new study from two research groups.

The 20 highest-paid fund managers made an average of $657.5 million, or 22,255 times the U.S. average annual salary of $29,500, said the study, released today by Institute for Policy Studies and United for a Fair Economy. The study cited data from the U.S. Labor Department and Forbes magazine.

``The fact that these pay levels for fund managers are so out-of-sight is going to drive up pay at publicly traded companies,'' said Sarah Anderson, director of the global economy program at the Washington-based Institute for Policy Studies and a co-author of the study. ``There are people out there with a straight face claiming that public company executives are underpaid.''

The private equity boom in the past year has pushed the pay ceiling for fund managers ``further into the economic stratosphere,'' the study said.

Chief executive officers at large U.S. corporations averaged $10.8 million in pay last year, the study said, citing an Associated Press survey. Their weekly pay of $207,700 was about seven times the average worker's annual salary.

10-Minutes' Work

The study's authors said top hedge-fund managers are making more in a fraction of an hour than a typical worker makes in a year. The hedge-fund chiefs average $12.6 million a week, or $210,700 an hour based on a 60-hour week. That's $35,100 every 10 minutes, compared with $29,500 a year for the average worker.

The Institute for Policy Studies is a liberal non-profit research group that promotes alternatives to the ``corporate- driven approach to globalization.'' United for a Fair Economy, based in Boston, ``raises awareness that concentrated wealth and power undermine the economy'' and corrupts democracy, according to its Web site.

In 2006, the 20 highest-paid fund managers also made 3,315 times the average pay for the top 20 officials in the U.S. government's executive branch, including the president, the study said.

Hedge-fund compensation is ``fee-based and directly attributable to a firm's assets under management and performance,'' John G. Gaine, president of the Managed Funds Association, the Washington-based lobbying group for hedge funds, said in an e-mailed statement.

Hedge funds are mostly private and unregulated pools of capital where managers can buy or sell any assets, participating substantially in the profits of the money invested.

Jasper, I've followed TIE for a while. Simmons has been a buyer of TIE for a long time and maybe it will move in response. But I just happened to close my position today on modest strength. I'm raising cash in preparation for next week.

I sold because TIE is mired in a downtrend that shows no clear sign of reversing.

But I also closed my AUY position yesterday, so I suppose this means TIE is due for a strong run. ;)

South American Gold (SAG) which is one of Bill's "penny dreadful" considerations has finally broken out of the muck. The stock has been stuck in a 3.5 to 4.0 cent range for a couple of months now. Today it hit 4.5 cents with 5 million shares traded. I hope it holds and continues upward. There is no news. Long SAG.

XAU is alright on low volume. I'd like to see a close above 139.68, a point away. We seem stalled....

Closed AUY waiting for better entry.

XAU heading for the 50 day MA? AUY was a bit disconnected from XAU yesterday but I don't see it staying up today if XAU is weakening.

If one were a Caracas insider, mightn’t it be tempting to undertake an accumulation prior to announcing the licencia? But through an intermediary, si? And in dribs and drabs, nothing to alert the volume hawks.

Hello everyone,

Who is watching RIO?

Dear Bill, if you check in perhaps you can rehash blurb on RIO this am ? Am a bit slow on the uptake and can never quite get subtle hints most of the time. what is the ST outlook in your opinion?? meaning your 2 or 4 months. Oblige if you may and welcome others opine too.

Thank you, IA

Tech is one of few sectors well over 200ema. Bill mentioned tech as likely to be one of the key movers and the mkt has been validating. Not much discussion here....from the cara 100 adbe already made its move, now sdnk...macd just went positive earlier today, now slightly negative but rsi has a nice diverence. Not having much tech exposure I acquired a position.

Prices in gold will only see a major boost once the near futures and the spot price are less than ~$4. Right now, they are about ~$9+. This is a significant change over a month ago, when the gold basis was around ~$11+.

There's a lot more bullion in circulation than acknowledged at first, keeping the gold basis wide and vulnerable to shorting activity.

Part of the scenario to play itself out could be a rout in emerging markets, especially Brazil or Mexico, changing that base metals positive paradigm for good. The credit crunch might see its effect there first. This will also mean a flight to the larger indexes.

This could also mean problems on the foreign exchange. Take it as a sign if the Swiss are pointing the fingers at the Americans over lending practises, it means there are already problems on the foreign exchange.

Bill,

I hesitate to ask, but what the heck. HMY looks like the poster child of trouble in the gold miners..as you pointed out...but in the report that you shared the analyst cites HMY as an outperformer based on excessive price decline. I have tried to use the data from BMO reports but personally find it all a little confusing, particularly when comparing to performance ratings by BMO. Do you have any thoughts on HMY and the outperformance rating? Disclosure: Long hmy.

When using google to relocate the BMO reports I did see a seeking alpha post by you dated august 10, 2007. Much more readable. Readers here may find it helpful.

Fransix,

Can you clarify the spread you refer to: Prices in gold will only see a major boost once the near futures and the spot price are less than ~$4. Right now, they are about ~$9+. This is a significant change over a month ago, when the gold basis was around ~$11+.

Is the near future October minus the spot?

Thank you.

CWTR Coldwater Creek down 4.32 to 13.07.

FranSix:
To quote you earlier" There's a lot more bullion in circulation than acknowledged at first, keeping the gold basis wide and vulnerable to shorting activity."
You obviously follow gold quite closely, so perhaps you can explain what's going on with gold lease rates.

Based upon the little chart on kitco.com, I interpret that as a shortage of gold, with the shortage more severe in the further months.

TIA

voices.com is a really nice idea Bill and very nicely done. Try some of the awesome voices. Congratulations to them indeed.

dr.csoa said; "my short-term gold short seems to be unchanged..."

Posted by dr.csoa at August 30, 2007 9:53 AM

Dr, please enlighten us with your investment thesis (fundamental or technical) behind getting short gold now.

Thank you

Hello all,

I dialed the phone number of the VP of Investor Relations for Crystallex yesterday. "Richard Marshall" he said in a hurried sounding voice. I said "I'm impressed, You actually answered the phone". Yes I had a real human on the phone.

Anyway, even though I did not receive any breaking news, he did clarify some of the environmental issues I keep hearing about. Those issues mostly have to do with other miners and mining sites and are not holding up the Crystallex permit. He said the people of the Las Cristinas area are "banging pots and pans together", wanting to get the mine started. He said that this wait is not uncommon, although difficult, when wading through the Venezuela licensing process.

I could hear tension in his voice, which I chose to believe had more to do with him bracing himself for another uncomfortable phone call as well as bing very busy. I'm sure he is a little bit nervous, as the outcome is mostly out of their hands now. After a moment he became quite personable.

After a few moments, I told him I appreciated his time, which I really do, and said goodbye. It seems that people don't answer the phone when they know they can't give the answer, the person calling would like. It's my first impulse. I give him credit for taking a few minutes to chat.

Oh well; i'm still way underwater in KRY and patiently waiting???????

Bill; thanks for taking your time to help and teach. This is a great site. I've been studying and experimenting with your RSI (7) and MACD info. Also researching about options including Write Puts, etc. This is fun stuff right now.

Take care,
Rookie

re above:

no problem.

have been investing/trading for only a few years, and it has been almost entirely in gold. i have been looking at gold charts for hours everyday that time, reading obsesively each and every gold related story or writer i could find.

eventually i realized i was worshiping false idols by not taking what great minds were teaching but still doing what i felt was right at the end of the day. i was simply parroting what various icons said and when they disagreed i froze.

ive never been short gold and its very difficult when i have been married to a long position for a while now. since early 2006 i am sitting on very little to show for my work, thanks to the most recent plunge but here is my unbaised analysis,
i am by no means a market technician or analyst,
im not even a real doctor....

im canadian, so i am short gold shares via XGD Bear ETF, and it is a short term play. in the event of another mini-plunge i have yet to see any reasonable argument to support that there will be a rush to gold. recall how many said this would happen prior to the first dump...

m a long term gold bull. at the moment i feel gold shares could be pulled down along with the market (especially financials) in the event of a plunge or even a gradual downward drift as malaise or fear sets in. i feel the risk/reward favours a panic short position vs. a mid-term long position in hopes of a bounce.

that being said, geo-political turmoil or rate cut announcements could give gold the wings it needs to take off, ive just given up the year long hope of the sudden explosion in the gold price that saw me hold on positions far too long.

i consider the last market plunge tuition and hope i come away from this somewhat sharper.

best of luck.

dr. csoa MD

S&P options conspiracy theorists take note:

http://www.thestreet.com/newsanalysis/optionsfutures/10377063.html

thanks for the response.

you are not short gold, you are short gold shares.

I'm still waiting on just ONE trader short of gold to respond why they are short.

"Seems to have gone by in a blur of sailboats and motor yachts."

That's the nature of tropical storms, Bill.

dr. csoa MD and g034 and Bill and ???

It seems I know less every day. Could be that i'm just getting too old.
Just when I think i've got a couple of rules figured out, they seem to change the darned rules.

My old Rule 1: Market goes down and Gold goes up.
New Rule 1: Market goes down and Gold goes down or up. Mostly down.

My old rule 2: Print bizillions of dollars and Inflation goes up, Gold goes Up, and Dollar goes down.
New Rule 2: Print Bizillions of dollars and, and I'm getting a headache. I have no idea. Maybe we make offers to other countries that they can't refuse so the'll keep taking our wooden nickels?

I sure wish I had a printing press.

Thanks everyone,
Rookie

Knowledge is power, Power is victory, Victory is ...well here it means wealth. Bill, Jasper, Craig and all the others who post, thanks for sharing your knowledge.

I have successfully lost over 75% of my portfolio on my own (largely by watching kry calls expire worthless.) Hard way to learn rule #1 of cut your losses. I've read many articles and books recently on capital preservation since the losses and this rule is now firmly ingrained in my brain.It has become my new mantra. Sad how I've known of this rule in the past but failed to act with real money on the table. Please don't let this happen to you. In my search to recover, I decided to learn about technical analysis(I've read many books on fundamental investing but nothing on T/A) I've come across this site and it has become my favorite, I look forward to the book by Mr. Cara. Which books have helped you the most? Luckily, I have time to recover from the losses, as a very small time investor(had $24,000 in Ira's, now it is down to $6200) I'm in my mid 30's, completely debt free(including a 175,000 home the wife and I paid off in less than 5 years) we have 10grand in cash waiting add to the IRA's and save 1 grand a month that won't be touched until I figure out how to pull my head out of my a**. Your help is greatly appreciated. Maybe I should change my posted name to Red arrow!

Rookie,
I've also been questioning my "religious" beliefs. Personally, I find strength and comfort from my experience that "it is never different this time"!

I love it Fred.
Thanks

Green Arrow,
The best loss that I ever took was on 10 Wheat call options back in the mid 90's. I lost 13K on those expired options. The benefit though was that I learned to cut my losses VERY early. The problem with options is that you have a limited time to own them. It is better to just buy the stock so that you have unlimited time to let it come to you if it goes in the red for a period of time. Like many on this board that are waiting out their KRY that is underwater, we stopped being traders in that position to becoming investors in that stock. Losses like yours in the end make you a better investor/trader. That experience will "jade" you to surface information and allow you to maintain a skeptical approach to the market gurus and brokers that "sell" you into positions.

yes you are right i am short shares, not bullion,
and have a massive short on financials but hope to pull the trigger with a small profit on either side as these are short term trades for me.

i dont enjoy being short something i have been long of for so long, but im going with my own assesmet of the situation having all respect for the great advice offered here and on other sites.

if the POG pushes past $685 on strong volume i will be back to a long position.

dr.csoa/dr.cosa (for some reason your last post signed off with the latter)-

not clear on whether you are short XGD as a hedge against existing long positions in miners (which i can understand), or simply betting on a ST drop in the miners...IMO the risk/reward of a simple short right now is even at best...the August 16 rout clearly had the feel of "forced selling," and the story posted yesterday re HMY selling its stake in GFI may be the first of many that will eventually lend credence to that theory...why not sit on the sidelines while waiting for gold to hit your target rather than risk losing money?

Green Arrow,
I would imagine there are a number of investors here that have made some serious mistake when they first started investing. Mine occurred back in 2000-01 and were with mutual funds bought from the bank. Basically, I got the sales job from an advisor at the bank. However, ever since this event I have been actively learning everything I can about markets, risks, and how to keep my emotions out of trades.
Anyway, if you want to look at mistakes other investors have made you can find them at the Motely Fools site.
Take heart, Bill gives some very good advice. Follow his buy decision using RSI, and don't put all you eggs in one basket. There are allways good investment in the market.

Green Arrow

The key is money management. Set risk reward ratios(I think it will move to here but I will only accept this loss). Capital preservation is PARAMOUNT. Read Alex Elder. Avoid emotion at all costs: fear, greed,hope,the talking heads, etc. Do Not watch CNBC, trade prices only, the news, the real news, will be reflected in the prices. Paper trade, or virtual trade,with a system until it proves itself and you feel comfortable. You will be amazed at how much you learn about yourself. As others here have stated "Plan the trade(entry and exit)and Trade the Plan". Best of wishes to you and yours.

Green Arrow,
Losing most of your money in the market sucks. Many of us here have our own tragic stories. I lost 80% of my net worth between 2000 and 2002 by not diversifying enough and averaging down my tech losers. It was a few shekels more than you lost but, I'm sure that your pain is just as great. You sound like you have a good head on your shoulders and you are financially well positioned. I believe that if you follow Bill's disciplined approach of buying excellent companies at favourable prices, and make regular contributions to your fund, you will be able to build a prosperous core portfolio which will dwarf your current %18,000 loss.

2nd_ave:

i am pure short gold at the moment,
i exited my XGD positions over the past while before and after the plunge, YRI/AUY as well among them.

i agree its quite risky but ive been risky going long gold for some time without trading the ups and downs and looking at a 2 year chart of the XGD you can see how generally unprofitable that would be.

im in no position to claim that this is the smart ST move right now, im going with many hours of analysis and consideration.

im ready to be long with the POG north of $685 on strong volume. i fear a loss of confidence in Financials (both in canada and the US)could have such severe consequences, that id rather risk shorting them at the moment in case the worst happens, than bottom pick in hopes we start grinding upward. (for now)

if the fed cuts rates i believe the POG will take flight, i can wait till then, as ive been waiting for the past 1.5 years for that to happen since the run up beyond 700 last spring....

good luck.

green arrow-

i recall my first trade being something along the same lines...when you're young, it's easier to convince yourself that diversification is a great way to PRESERVE capital, but that concentrating your bets is the fastest route to GETTING it in the first place-you don't realize until later that books are only written about the guys who bet big and won, and that it won't apply to you!

my take on your post is mostly positive: you had the grit to jump into the deep end, you're willing to admit you made a mistake, and you seem to have worked things out to the point where you are able to start over...

the 18K hit can seem depressing now, but based on your comments it should only set you back a few months, and it won't change your lifestyle (whereas a 75% hit 15-20 years from now will be a life-altering event)...shouldn't take more than a little foresight to realize the loss will easily help you earn/avoid losing many times that amount in the future..wouldn't jump right back in-take the time to come up with a solid plan for the next trade...good luck!

I want to thank all of you that replied to my post. After seeing it in writing I wanted to throw up. I really appreciate the positive comments. I'm trying to figure my way out of this mess and I guess the first step is to admit my mistakes and try to not repeat them. In the long term I see gold, energy, and commodities going up, the dollar going down. In the short term I can see gold going either way depending on the ppt, energy will spike if Bush makes a run at Iran before leaving. With Paulson making decisions I can't see gs or the financials being left holding the bag of any sorts, so a rate cut in Sept or before makes sense. But then how does that fit into the amero? so maybe not(and that is if the amero plans even exist,which I don't know,just another piece on the table to confuse me). The anniversary of Sept. 11 is coming up, and msm is talking up a storm as if preparing for some sort of event, normally this should just be disregarded but massive puts against sept s&p 500 makes one wonder, is it an interest rate play or does someone know something I am not privy to? I can see goog spiking huge if in the next 30 days we get a rate cut followed by a positive news release of the google phone. Any day the subprime(to me this includes all real estate -alt a, prime would be rated subprime 15ys ago.)mess could cause a huge sell off, but then with blood flowing down the street, isn't now the time to be in? Besides the kry debacle, I lost on cfc, imb, and a few financial puts by being a few months too early. Didn't expect the lying to get them trough the 2nd quarter, another lesson learned the hard way I guess. My decision making is completely frayed at this point, not sure what to look at. Thank you all again for the help, your positives words have helped more than you can imagine. I look forward to taking your advice, hitting the books and turning this around.

Green arrow,
take a look see, perhaps you'll find it helps.
http://tinyurl.com/34bbb6

try not to replay the details in your head too much. Stay in the where you are now, and go onwards from there.

All the best to you as of now.

Green Arrow,

I agree with the comments to you above. My piece of advice is to read all of Dr Alexander Elders books. They certainly helped me.

I also learnt by distingusihing between Investing and trading which requires having separate investing plans and trading plans. I will elaborate on this later.

Anyone,

used this at Scottrade? does it do what they claim? Thanks much.

Scottrade SmartTextT can summarize complicated information into a plain English explanation that's easy for you to understand.

You'll spend less time deciphering extensive data and more time finding your ideal investment opportunities!

Green Arrow:
This is an opportunity to get right. I've lost plenty. There is lot's of good advice in the above posts.

Don't try to get rich quick, take it slow and steady. Buy three or four quality Cara 100 co's preferably that pay good dividends when they get a buy alert. Take your time. You may only own one or two at first. It may take some time to build positions. Maybe speculate with 5% of your portfolio on risky trades like KRY.

By buying low and building positions slowly you will be able to build your confidence (and balance) again. As your balance builds then diversify into more stocks/sectors.

Definitely follow Bill's Advice and post ideas to the list so others can help.

Green Arrow:

I'm still too wet behind the ears to offer any trading advice. I'm still on the steep part of the learning curve.

When I see someone that's willing to share things their embarrassed about, and then willing to listen to feed-back, I think this person has matured beyond most. You'll be just fine.

I have seen some amazing things happen when I've asked for help; especially when I didn't want to ask for help. Somtimes it's as if the universe gets on board to help.

Thanks for helping to remind me of these principles. I probably should ask for help again one of these day's.

Bill: Once again, what a great community you have gathered together here. They care.

Take care,
Rookie

Bill,

For what it's worth it might be good for the community and for green arrow if you were to give him some one on one time. I think there are many readers who could glean lots of applicable knowledge from such a case study. (Edited for too personal information of course.)