Bill,
Like you say, why would any of these countries take our twenty wooden nickles of payment on the USD! I am perplexed that the meltdown has not occured yet, but its just a matter of time before
Ben & Hanks, Dog & Pony show becomes so stale, that markets turn toxic. Of course HB&B, and friends and family should be out of markets by then, while the rest of the population here in the good old USA takes it in the neck!

Hi Bill,

Thanks for putting the Junior stock valuation spreadsheet on your daily report the last couple of days. Any comments or suggestions from readers would be greatly appredciated.

I know it is not real pretty or sophisticated. But that is the point. It was meant to be a simple tool to act as a due diligence checklist as well as provide a reasonable valuation of the stock.

The idea was that then any one of the Cara Community could use the checklist and valuation to investigate any Junior mining stock they were interested in and report their findings to the readers. By doing this the Cara Community could hone in on the stocks that look as though they had the best potential and lowest risk.

Any red hot looking stocks could then be zeroed in on and verified by other readers. If readers came up with significantly different evaluations, then discussion could be held over where the differences occurred in the asssumptions etc and other readers could make their own judgement based on the discussion.

I think that this would be a great way for the Cara Community to share their knowledge in an objective fashion and come up with a great short list of high potential Junior mining stocks for the Cara Community to invest in or add to a Cara Mining Stock list.

This is a chance for some of you in the Cara Community to evaluate Kaimu's stocks such as ECU.TO PMV.V & CNU.V against my GIX.V and Moab's KDX.V

So it will only take say a dozen of us to evaluate one or two of our favorite stocks each and we should have a valuable list in no time.

An example is that I bought Firestone Ventures FV.V over a year ago at $0.42 because I thought it had great potential and I have some sentimental value in and have been holding ever since. Yesterday was a good day for FV.V and if I had a list of stocks and objective values for their potential price i could rank it against the others. I could decide to cash in my Buffet type profits now and move into something else that now has more potential or whether this stock still has good upside compared to other stocks.

To this end I will value 1 or 2 stocks over the next week and share my valuations with the cara Community. I hope there are some others out there who also take up the challenge.

Even stocks that don't value too well should still be shared, because it may save others a lot of work investigating it. These stocks could then still be put on a watch list in case they have any future developments.

Anyway Avagoodweekend

Jobs number bullish.

Hi,

What a spike on the USD once the number was known!!

Odds for a rate cut on halloween are now more distant...how can the sell side keep on pumping this market?

Attn: JogyP & Prieur

Thanks for the help yesterday with my question about RSI. It was very helpful...I appreciate it.

Bill,

As I examine the charts of many gold stocks, I see a lot of charts that appear to be overbought. I don't disagree with your gold thesis. But I wouldn't underestimate the potential strength of a corrective downdraft in gold stocks. In other words, just 'cause it's a "correction" that doesn't mean that the Cara Crew (us readers) want to be in gold stocks for that potential downmove. Also, that very interesting safe harbor article attached by a reader last night makes for fascinating reading. It points out that gold doesn't have to tank for gold stocks to suffer mightily, based on the way they had anticiapated drastic price increases in the yellow metal.

n2son- jobs report is just what we needed to start pulling in the fence-sitters...until we get more "exuberance" (and less skepticism), hard to get the kind of correction we're all waiting for...

fxi gapping up to 188...

Hello Bill,

When looking at the RSI of BHP Billiton and Rio Tinto i see Daily RSI dropping below 70 while Weekly and Monthly are still above 70. Looks like the party is over.

Greetings.
Scotman

Hi...Bill;

Re: AussieonTop Spredsheet Recommendations....

I would like to recommend a junior stock for the spreadsheet that I have owned since inception...Premier Gold PG on Toronto...

It's wedged nicely in betwwen GEA and G in Red Lake....right in the middle of the major gold trend...The PG website covers the trend and drilling results....I like the Red Lake gold trend....But don't take my word for it I think you'll find that Mr. Rob McEwen is pretty hot on the area as well...Mr.McEwen has taken a position in Rubicon resources whose properties are all around the afore-mentioned gold trend...

Cheers........D.B.

2nd, agreed. I'm pleased with myself for closing my DXD position late yesterday. Given all the anticipation around todays numbers, having a position either way was simply a gamble.

I'm looking forward to this presenting a good buying opportunity in the miners. I'll also be watching the indexes as they will inevitably test their highs.

This should be an "interesting" day.

US Dollar:
Countries have to balance the value of a lower dollar with regards to their currency vs. their ability to sell their products to the world largest consumer. Central banks need to buy dollars for their countries economic health if they want to do business in the USA. This USD collapse "concept" doesn't make good business sense. Business is too self serving to collude in some type of concerted dollar bash.

Scotsman...
Look at the bid/ask this AM on BHP. The daily rsi (short term) can change quickly.

All depends on your timeline. If you are
ST, then daily is for ST in and out. If longer term, then go with longer charts and use longer rsi reading. Since these are above 70 and daily will build today due to stronger bi/ask, the overall rsi isn't that weak.

Shark,
I like your concept of playing small for the fun of it.

Did anyone read the jobs report, particularly the "adjustment" to the August numbers.

To wit: August was revised higher by 118,000, the government said. Instead of falling by 4,000 in August, payrolls rose 89,000 after revisions.

Did anyone else cough up their morning coffee and shout WTF?!!?

Thanks Craig, that RSI (ST) info helped.
Thanks everyone for your trading strategies.

Re: the CITI gold report, the link for which was posted by Onlineaces last night...

an interesting observation on p7:

"Official Sales ran hot in 2007, offset by rapid de-hedging – Gold undoubtedly
faced headwinds this year from resurgent central bank selling, which was
clearly timed to cap the Gold price. Our sense is that central banks have been
forced to choose between global recession or sacrificing control of Gold, and
have chosen the perceived lesser of two evils. This re-flationary dynamic also
seems to be playing out in Oil markets."

regards

joey

This is why I said I don't chase "One Day Wonders". Gold and miners are in a downtrend and the miners did not show any enthusiasm to yesterday's pop. A one day rise is noise, not information.

Let's see how Friday and Monday go folks. Then we may be able to see something about gold and miners. As always, JMHO.

I usually try and add constructive investment comment, but please allow me to deviate somewhat (and perhaps also add a smile to your faces).

Follow the link and have a look at the very humorous video clip below, and see for yourself the mettle of a typical (South African) Springbok rugby team supporter. (For those unfamiliar with the sport, suffice to describe it as a more physical version of grid iron.) With this type of support, how can the team not be crowned as the world champions?

http://investmentpostcards.wordpress.com/2007/10/05/we-are-the-champions-%e2%80%a6/

don't see gold and the miners selling off...maybe it gets harder to throw people off when they've had time to practice ;)

NOT.V @ 3.75...

took some profits in gold monday,
and placed a small gold-miners short position yesterday, it was a slightly in the red at market close but is now slightly in the green.

ive been staring at the XGD so much the past while, i cant help but be discouraged by its divergence to the POG in general, it seems to fall harder than gold during weak periods, and i have further concerns about what an overall market sell-off will do to gold shares.

it seems likes its loose loose for gold shares as a whole (without being a stock picker) am i missing something about the shares supposed leverage to the POG that is at some point supposed to take effect because i dont see it as of yet...

I don't mean to be too conspiratorial, but last month's numbers and these numbers seem all too convenient for me. Last month we get a horrible number that gives the Fed a reason enough to "shock and awe" with a 50 point cut. Fair enough. This month, after the dollar gets crushed as a result of last month's Fed action, we not only get a good number, but last month's gets revised away. Go USD. All too nuts for me.

i don't know...the dollar up/gold down reaction seems too predictable...maybe it goes the other way this time?

NG sector selling off...keeping an eye on NBR (down 3%) and UNG (down 1.5%)...

Umm..where is the truth:
...gold equities now tied to broad mkt
...no one trusts gov figures
...global consumer demand up
...the fix is in, the cara community is hoarding

jasper- if you're still holding, i'm actually thinking the contrarian trade (with the jobs report out of the way and gold holding right now)is to start looking for a new high in GDX...

I must say, this gold price is hard to figure. The jobs number comes up strong and gold is down 9 bucks. what's changed in the last hour?

Despite everything, my pick this week, MNG is doing very nicely and is, i guess, a buy here.

Coincidentally, the Idiot In Chief is scheduled to speak about the economy this morning.

I wouldn't trust this administration if they said the sky were blue.

Hi,

Well, what I am seeing is some light unloading going on after the price jumps.

I am also seeing the SPX unable to breakout, and the continental Europeans (DAX, CAC), exactly at the same levels where they were before this thing.

Further: how can the market follow such unreliable numbers? What kind of a country do you have there? Sends shivers down my spine...

How far tis this from "real" investing?

Cheers,

I have an IRA that I want to invest. I'm interested in 7 to 10% appreciation over 10 years, with a maximum risk of losing 10% of my portfolio. Does anyone have ideas for asset allocation... treasuries, A-rated bonds, blue chip stocks, various indexes etc. etc... and the percentage of each? Thanks!

2nd ave,
yes, still holding and surprised..gfi looked strong in premarket, which offered some hope...yesterday i added more slw and gdx...impressed at the testing of the 20dma..but MarkM is absolutely right, not a lot of data points...why isn't oil participating?...who knows what it will be end of the day.

PhyllisM,

As Bill has been suggesting: go for gold.

Nothing else will work for you in a market like this.

The updates that I get on TA of the domestic mkt pts to increasing short term divergences in price and rsi; anticipates massive resistance at 1556. As traders these guys are trimming and waiting for a strong breakout. In my own port, I'm a little myopic. I like seeing green.

There has to be a recursive relationship between the dollar and gold. (or perhaps since gold moves in along with several commodities at the same time, it gets included in large shorting operations) Short of gold(related commodities) operations probably result in a demand for dollars.

As for the junior mining sector, anybody anxiously waiting for results from their respective plays might consider that the timing is good for seeing the fruits of their labours for Cambridge House.

http://www.cambridgehouse.ca/ch_tor2007.html

PhyllisM: See the header at the top of this page.
There is a ton of needed information there and at the trader wizard site.

fransix- what i meant to say is maybe this time the dollar goes down/gold up despite the usual "interpretation" of the jobs number...

maromatics,

Would putting all my money in one place, gold, be a good idea 10 years from now? I'm reading various opinions about gold.

Thanks for your suggestion.

jasper-

My model (for those who care) say SOME divergences but not like those that had me in here waving my arms and shouting last time. I can see short term weakness and the potential for a shallow pullback but I am not seeing anything more right now.

It's a high risk market with housing and credit issues impacting fundamentals. Risktaking is strong but not superstrong. Technicals are weakening but not hugely divergent. Headline risk is nowhere near as high as during the selloff.

The USD/CAD exchange rate is really mind blowing. Looking at the chart since the Feb/Mar. area, the USD has fallen from appx. 1:1.18 to today 1:0.98 against the CAD. Someone who would have decided 6 months ago just to shift all of their cash from USD to CAD would be sitting on outsized gains just from the currency exchange.

With that said, should we really be all that surprised about the run in US indices? Aren't a lot of these gains a mirage against the backdrop of the plummeting currency?

Take a look at a yahoo chart of the USD/CAD exchange versus the ^DJI. See any correlation?

Two things: There was a good article by Clive Maund at www.kitco.com on the COT report for gold. He said the weekly short position of the commercials is at a high for the year. The last time it was like that, he says he ignored it and it took him months to dig himself out of the ensuing result for his positions. Based on that, I immediately dumped by gold and am now waiting to get back in. Other technical indicators such as MACD and RSI were saying dump gold as well.

The other thing concerns stop losses on foreign stocks. I found out yesterday that for my account at Smith Barney, they have been canceling all my stoplosses on foreign stocks! They say they cannot enter stoplosses on foreign stocks whose symbols end in f, such nas LMRXF. (Before that, they had told me that they could only enter stop losses for one day.) Is this typical for brokers? Needless to say, it makes exit strategies really hard to execute.

NXG: 2.68
NXG did not partcipated in the recent PM rally Since a govt panel recommended its Kemess mine Expansion plan be rejected.
http://biz.yahoo.com/bw/070917/20070917006610.html?.v=1

Looks like a good buy at these levels. Intersted in hearing other opinions.

Prieur

V e r y F u n n y V i d e o !

Thanks for the link........

Bill,

Yes, I am fairly new to self-trading and I do need to learn a lot.

I appreciate your response and the links to other information.

NXG...probably a buy here, I might wait for more strength, more volume coming in to the upside daily, but the ten day hourly and it's indicators look promising. I remember your grz pick, and my accountant thanks you for it. Will be watching this one closely Mr. JogyP.

NXG...probably a buy here, I might wait for more strength, more volume coming in to the upside daily, but the ten day hourly and it's indicators look promising. I remember your GRZ pick, and I thank you for it. Will be watching this one closely, JogyP.

interesting early history of money in the US:

http://freakonomics.blogs.nytimes.com/2007/10/04/a-criminal-history-of-the-us-dollar-a-qa-on-a-nation-of-counterfeiters/

apologies for the lack of tinyurl. my workplace (high school) doesn't allow it.

somebody in a previous post said this already, but it bears repeating: if August jobs were part of the rationale for cutting 50bps, then what now with the revision higher? If the economy is not slowing, who exactly was the cut for? Every number printed seems to be the best of all possible outcomes given the current situation (jobs, ISM, GDP). It all seems too good to be true.

interesting early history of money in the US:

http://freakonomics.blogs.nytimes.com/2007/10/04/a-criminal-history-of-the-us-dollar-a-qa-on-a-nation-of-counterfeiters/

apologies for the lack of tinyurl. my workplace (high school) doesn't allow it.

somebody in a previous post said this already, but it bears repeating: if August jobs were part of the rationale for cutting 50bps, then what now with the revision higher? If the economy is not slowing, who exactly was the cut for? Every number printed seems to be the best of all possible outcomes given the current situation (jobs, ISM, GDP). It all seems too good to be true.

sorry for the double. got the http 500 error message.

Out of GFI premarket position from a couple AM's ago (and additional buys lower) at 18.04.

Took me longer 2nd, but it was worth it.

Prieur, that was good!

http://investmentpostcards.wordpress.com/2007/10/05/we-are-the-champions-%e2%80%a6/

I can't bear to watch those chases usually (I always identify with an underdog), but that was very funny.

Aussieontop -

I am not a fan of KDX.V - I think you mean Kodiak Exploration KXL.V. I just took a brief look at them yesterday and saw they gave out 3,400,000 options to management a week before releasing drill results, giving them a 100% gain in one week. That turned me off right away.

My holdings are ECU.TO, NUS.TO, ARU.TO, EXM.V, WHY.V, VAL.V and NAK. Valgold looks particularly good based on valuation and potential.

I've been trading GSS and MMG as well.

Thanks for the spreadsheet.

Reloaded smaller position GFI @17.90 (A bit larger than a Sharkie sized one)!

PhyllisM,
I expect some blow back from the board as I post this because you can never diversify away all risk, especially as asset classes move in correlation with this integrated economy of ours. This is not what this board is about at all though, here we try and find individual companies who are strong and trade their prices by purchasing them when they become out of favor via the RSI mechanism and selling them when they are overvalued by that same RSI mechanism. You can see the Cara 100 through the links above.

However here is a recommendation from Mebane Faber who writes over at worldbeta.blogspot. He is more interested in hedge funds but here is a list of etf's that he recommends that follows endowment funds like Harvard and Yale's You just re-balance at year end.

Global Equities 27%, (IOO, EEW, DGT)
Emerging Equities 8% (EEM, GMM, VWO)
Global Bonds 20% (BND, AGG, lots of CEFs )
Emerging Market Bonds 5% (ESD, EED)
Global Real Estate 14% (IYR, RWX)
Commodities 17% (DBC, GSG, GSP)
Managed Futures 9% (RYMFX)

Craig (and Bill),

Thanks for your reaction. Since i am an investor for months and i am using the RSI system Bill recommends I see that stocks like BHP and China Mobile are in the Distribution Zone and i think i should puss the Sell button because daily RSI has dropped below 70. The big question is when to get back into these stocks. I don't think we'll see RSI Monthly at 30 very soon.

Thanks.
Scotman

craig- good things to those who wait..

BMD-stealth move up...staying in until they announce their plans...hard to sell when they're out in the open about trying to boost the share price...since it's costs that are getting in their way, would guess that a buy-out by a large oil company would take care of their problems...they're still sitting on valuable property with commodities required by the oil sands industry..

Goldman Sachs Oct. 4, '07 view on Walgreens (WAG)

CURRENT VIEW: Our expectation for a smooth cycling of last year's generic boom
appears overly optimistic. However, we do not regard these issues as structural,
believing that the long-term growth story at Walgreen is intact. We still see 3-5 year
EPS growth at 13%-15%, especially if the Take Care clinic business is the growth
vehicle we think it is. We normally dislike reacting to a company event with a ratings
change. However, we do believe that EPS is likely to be solidly below-trend over the
next 2-3 quarters as the company cycles very strong generic-driven results last year and
only gradually reins in operating expenses. Indeed, we see EPS growing just 2.6% in
1H2008 before rebounding to 16.6% in 2H2008. The shares are indicated down 10% at
$42. That would place the P/E at 18.5 adjusted calendar 2008 EPS, a not inexpensive
level. We would also note that many investors had viewed Walgreen and the whole
drug retail sector as a place to hide in a slowing consumer spending environment and
that "defensiveness" has been eliminated, to a degree. We see the shares now treading
water over the next 6-9 months and believe investors seeking "defensive growth" would
be better served by CVS/Caremark (trades at a 16 P/E), which we continue to rate a
Buy. We are lowering our DCF and risk/reward derived price target by 17% to $46.
Risks to our price target include greater than expected gross margin reimbursement
pressure.
-------------------------------------
Argus INVESTMENT THESIS 10/05/07:

We are maintaining our BUY rating on Walgreen Co. (NYSE:
WAG) with a reduced target price of $50, down from $53. Like
most analysts, we were surprised at the weakness of the company's
fourth-quarter earnings and we are working to determine how
much of the problem is temporary and how much is likely to be the
result of a permanent reduction in the profitability of generics.
We have made what we believe to be prudent reductions in our
EPS estimates and our five-year growth rate. We looked at the
valuation under a range of scenarios. Based on a current price of
about $40, we see enough upside in the shares to justify a BUY
rating on a risk-adjusted basis.
If we didn't already have a BUY on the shares, we would
probably consider a contrarian upgrade on the current weakness.
To be sure, we would prefer to have more data concerning what
changed permanently in the quarter, and will make every effort to
obtain this information.
One reasonably encouraging sign is that rival CVS maintained its earnings guidance, suggesting that some of the weakness in
WAG's results may have been due to Walgreen-specific issues in
expense management.
We are not taking this lightly. We are cutting our EPS estimate
for the year ahead and are also making a small reduction to our
five-year growth rate forecast. If the challenges the company is
facing prove greater than we have considered in our modeling and
scenario analysis, we will make the appropriate additional
reductions in our estimates and ratings.
-------------------------
I'm currently selling some Jan 08 40 and Apr 08 37.5 puts and looking for a bottom to purchase some shares.

TK increased its dividend...liking ocean transports and no etf rep,I was waiting for this one to show support at 50dma...not exactly a value buy but I think potential longer term hold.

The transport I passed on is ALEX....out of Hawaii with an AG twist...pineapples. Liked the chart but if one is going to hold thru earning reports kind of important to really have faith in the fundies.

TcolemanUF,

I apologize for posting something inappropriate here.

Thanks for what you told me. I will add it to what I need to read and learn.

I want to re-emphasize Bill's point....the essence of toptrader9's question is certainly not anywhere near me! To each his own timeline and level of risk.

Tcoleman-

No blowback here. Mebane Faber writes an interesting column if sometimes a bit breezy and brief for the subject matter. That portfolio has a lot of nice elements.

Buy and hold is difficult here, I agree with Bill. We are very late stage in this bull market and the valuations are deceivingly moderate. The Bear takes away over 50% of the bull market gain so the indifference I see to risk here is surprising.

Phyllis- Only inappropriate in the sense that the tenor of the blog is not along the lines of your question. But as you will see, many are willing to help.

I didn't see it as innapproriate. That's why I sent her to the header, where a broader presentation of the market and cycles is presented. "Buy gold" while perhaps pertinent to quite a few here, needed a moderated response to someone asking a longer term allocation question. She will likely find this will be a more nuanced answer based on the information she uncovers here. She will probably need to pick through the daily reports more than be attentive to the day traders here in the daily discourse.

Dang! Has anyone had a look at the handsome mug in the header? WOW! Nice tan! I like it!

Nor did I intend to burn you. I remember fondly my first days in this wonderful world that Mr. Cara created for people to learn with discourse from people stretched around the globe it seemed to immense at first but after reading through his links and the traderwizard website I became more and more comfortable. Bill has even created a trading bible that is due out anytime now. "Lessons from the Trader Wizard" I started where everyone does trying to make sense of it all and keeping a diversified portfolio. Now I am more comfortable switching through various asset classes and being nimble.

Bill does a great job of teaching how to fish instead of just bringing you the Akami. Please do not misinterpret my comments I only meant to help.

AEM is quickly going up right now....

It looks like Bill found the ... wait a minute, when did Juan change his name to Bill? http://en.wikipedia.org/wiki/Image:Juan_Ponce_de_Le%C3%B3n.jpg

AEM's 52 week high about to be tested...

You're looking good Bill!

TcolemanUF

I follow Mebane...from time to time. A wonder at spread sheets and back testing very interesting tactical asset allocations models which are my primary interest. I disagree with his assumption that the little guy can emulate endowment investing. All about access; it's just not the same. Roger Nusbaum recently did a critique which is point on. Meb really falls more into the lazy port model..see the links below. Actually, not a bad idea to have a lazy port as a core that stays fully invested. Google: lazy portfolio and a lot will come up.

http://tinyurl.com/2bkyfg
http://www.sdrone.net/portfolios.html

Bill -

I completely agree with you that the Fed. interference is a fascinating piece of not-so-subtle traffic control. Yet I can't shake the impression that this late-summer volte-face from the Fed. without clear warning has damaged one of the tenets of modern central banking i.e. credible transparency. While it works to prop up the markets in the short run, I fear that the effectiveness of verbal guidance may have been dulled for a long time: why should I believe what they say when they may change their minds on a dime? This added active participant in the market is disruptive because of a new uncertain behavior to discount into prices.

All this potential damage for what I believe is a short term stunt to delay the adjustment by a few months until the presidential campaign is under way in earnest (late Spring) and the blame to market correction can be shifted onto the candidates and their irresponsible policy proposals, not on the current administration.

JML

jasper-

I see that you follow Illinois politics. I was in Big Jim Thompson's Governor's Office WAY BACK in the day.

Bill,
If copy/paste is against Blog rules pls. delete.I don't know how to do link to. Sorry.

I read this on the Kitco board and am wondering if anyone thinks it is a strange piece.

"Gold Is a Bad Hedge, Questionable Investment: Michael R. Sesit

By Michael R. Sesit

Oct. 5 (Bloomberg) -- One of the enduring dogmas of global finance holds that gold is a safe-haven asset. The precious metal is billed as a hedge against inflation, the ultimate insurance policy against geopolitical risk and protection during periods of financial-market turmoil.

With the credit crisis and the Federal Reserve's response to it -- cutting the federal funds and discount rates and injecting huge sums into the banking system -- the emphasis on gold's value has lately focused on market dislocations and inflation. Although with Iran and the Middle East, not to mention other hotspots, the specter of political risk is ever present.

Investors -- and there are many of them -- who buy into these suppositions might as well believe in the tooth fairy.

Here's why. Gold reached a record high of $850 an ounce in January 1980. If since then the spot price of bullion kept pace with U.S. inflation as measured by the consumer-price index, gold would now be selling for $2,119.84. Instead, it stood at $732.05 in London trading yesterday, only about a third of what it should be if it were truly an effective inflation hedge.

History shows that since 1988, the correlation between bullion and U.S. inflation expectations is just 36 percent, according to Goldman Sachs Group Inc. That means the price of gold rises and falls with inflation expectations 36 percent of the time. The relationship between gold and U.S. consumer-price inflation is less, at only 23 percent. And the metal's correlation with U.S. core inflation, which excludes food and energy costs, is even lower, at 7 percent.

Out of Sync

``Gold is often described as an inflation hedge, but in fact there are few instances in the past 20 years when gold has moved in sync with either core or headline inflation,'' says James Gutman, a London-based commodity economist at Goldman Sachs International. Thus, gold ``should not be used as an inflation hedge,'' he says.

Investors seeking protection from inflation would have been better off in the U.S. stock market. On Jan. 30, 1980, the Standard & Poor's 500 Index stood at 115.20. Adjusting the index to compensate for the increase in the CPI since then would put it at 287.30 today. Yet on Oct. 3, the S&P 500 closed at 1539.59, more than five times the inflation-break-even level.

As for political risk, the inflationary expectations associated with the Sept. 11 terrorist attacks on the U.S. -- arguably the most dire threat to American security since the 1962 Cuban Missile Crisis, or even World War II -- had no lasting impact on the price of gold.

Sept. 11 Effect

For instance, gold was selling at $276.25 an ounce on Aug. 31, 2001, less than two weeks before the attacks; after rising to as high as $295.10, bullion was back at $274.25 on Oct. 23.

Whatever effect inflation has on gold is transmitted through the dollar's exchange rate. Since 1988, gold has moved in tandem with a basket of currencies consisting of the Australian and Canadian dollars, South African rand, euro, yen and Indian rupee 91 percent of the time, according to Goldman Sachs. And dollar weakness is often associated with inflation.

Even so, there is little to explain movements in gold prices once the currency relationship is accounted for, Gutman says.

In any event, with the 1997 introduction of Treasury Inflation Protected Securities (TIPS) in the U.S. and similar products in other countries, there's no reason to use gold as an inflation hedge. TIPS are U.S. Treasury bonds whose principal increases at the same rate as the CPI. The interest payment is then calculated from the inflated principal and paid at maturity.

Fed Rate Cuts

What's more, inflation isn't a problem currently, even though the Fed last month cut its fed funds rate by half a percentage point to 4.75 percent, and traders are betting there's a 70 percent chance it will fall to 4.50 percent later this month. American consumers expect a U.S. inflation rate of 3.1 percent in a year, according to the Reuters/University of Michigan preliminary September index of consumer sentiment.

Still, the CPI fell to 2 percent year-over-year in August, down from 2.4 percent in July and 2.7 percent in June. ``It's far too early to expect higher inflation,'' says David Abramson, Montreal-based chief currency and commodity strategist at BCA Research Ltd.

Gold has been on a roll. It's up 15 percent so far this year, climbed to a 27-year high of $747.90 an ounce on Oct. 1 and is on course to rally for the seventh consecutive year. Behind its rise has been the abundance of global liquidity and, more recently, the Fed's relaxed monetary policy and weaker dollar.

`Right Reasons'

Bullion has also benefited from strong jewelry demand in emerging-market countries such as China and India; shrinking global mine production, especially in South Africa; reduced net central bank gold sales; and the growth of gold exchange-traded funds, which make it easy for individuals to invest in gold and which have $17.7 billion in assets, according to Morgan Stanley.

This shows that although gold may be a poor hedge, it isn't necessarily a lousy investment. ``It should be invested in for the right reasons,'' Gutman says.

Nonetheless, bullion has no direct link to economic growth as do other commodities, doesn't earn a return, offers limited hedging advantages and hasn't kept pace with inflation. Moreover, the world's biggest holders of gold, major central banks, aren't overly eager to keep owning it.

For investors who decide to hold gold, things may not be as easy as the past few years.

To contact the writer of this column: Michael R. Sesit in Paris at at msesit@bloomberg.net

Last Updated: October 4, 2007 19:36 EDT"

TcolemanUf,
In the port you mention I like how the megacaps with dividends help to balance commodities....a cef that fits into this asset class is BQY. Did Mebane suggest this model or is this one of your own? I'd be curious for a link if from Mebane. thx

I actually like URZ here. It's broken it's downtrend, moved up smartly, and seems to have corrected on declining volume. I bought 100 shares, will add as and if it moves up.

A question for day/short-term traders. I was wondering how many plays you would generally have on. I am playing with nickels instead of dimes, and want to move up a step, but I feel better about more small positions than fewer larger ones. Yesterday I watched three positions and felt like that was the most I could keep an eye on. Today I have one position and it is like watching paint dry. Your advice is appreciated
Thanks in advance

Ivanhoe Mining
IVN-t
IVN-n

Up 6.09%.Mongolia play.Riding the jockey/promoter here Robert Friedland ( TOXIC BOB in other circles).

To quote Bill July 11-2006 "At the end of the day, if you are nimble, you ought to do well. The mining property of Ivanhoe Mining is apparently an excellent one, and Friedland is a superb promoter. The wild card is Mongolia."

Bob made me some good money in my home province of Newfoundland....sale of Voiseys Bay to Inco. Up approx 30 % and holding on IVN.

I am down 40% in a small holding of his other "promotion " Ivanhoe Energy.(presently holding but definitely not a recommendation.)

Any posters here have any new reports,target prices,etc for IVN.

Bill,

Am I correct in determining that there's something about today's "strong" jobs number and potential dollar strength that the gold market isn't believing?

Also, I was waiting forr the shake-out to go long, but we didn't get much of one, yet.

As to the above question (jsaxman), your comment about watching paint dry is interesting. This activity is interesting much in the way that being a cop or astronaut may be. There are long periods of boredom and inactivity punctuated by occasional moments of opportunity, and perhaps, terror. I used to feel an indescribable joy at winning in the markets, which attenuates over time. But I wouldn't want to think that you're doing this for entertainment.

As a guideline I would say, don't add another position if your first or second isn't doing well.

Does anyone have a fundamental take on NXG?

MarkM, AEM your Bellcow is sure flying high.

For me it's one or two, usually related trades in co's I already track and I'm familiar with the trading range.

I still have my position in gs and plan on getting out when sma 10 crosses sma 20, or rsi7 goes under 70(unless someone has a better suggestion). The technicals really take away emotional part of it and I wish I had that mindset a few months earlier. Spending most of my day reading various TA educational sites, and constantly check back here for the updated comments. I've learned so much from this site, I can't even begin to express my gratitude, so simply, Thank You!

jasper- may want to take x% off the table and reload later...just my take on things right now...

Thanks for your comments about number of positions.

The advice to be patient is well taken. Just looking for ideas. I used to play Blackjack more often - I memorized the strategy, was a moderately successful card counter, and found my long term reward worked out to be around $10/hour. When I raised the average bet by double, my fear of losing seemed to overwhelm my rational self and I started making mistakes. I thought it was better to consider the game as occasional entertainment.

So far the rewards of trading versus buy and hold seem to be in the $50 to $100/hour range for me. I have read about strategy and money management but so far haven't learned much about time management. I believe I need to put more time into strategy setup and less into "watching". Birddogging positions seems to be more successful than putting on stop losses and preset exits since I haven't been getting stopped out of good positions.

Jasper,
This was a straight lift from Mebane's website but it something I forward to me friends who are just coming out of grad school and finally have some money of their own (but no sense). I have been a big fan of the lazy portfolio ever since I was introduced to them by Kirk from thekirkreport. I do agree with other posters and Bill that it may be late in the bull to use these techniques effectively.

http://tinyurl.com/yw5wtu

Mebane has become a must read for me but he is a bit more opaque than Bill. One of the more clear examples he offered recently He looks for arbitrage opportunities like shorting SNF a closed end fund that track Spanish stocks at a 20% premium while buying the EWP ETF. This would have returned about 10%, if my math is correct, since 8/29.

Shark NXG

From Scotia Capital:
One year target 3.5 ie 32.6 % return...sector underperform,risk high.,asset val. $3.14,cash hoarde expected to be $385 million at end of year,eps2007e .33 .SEPT 09/07 report.

Hope this helps!

MarkM:

Why is AEM a 'tell' or Bellcow for you?

regards
joey

Bill,

the new pic is 100 times better, good change!

Shark OPPS....NGX

The bellcow is mooing isn't she? :) So far I am not being allowed to fully reload. I am in gold but have only a 1/4 position in miners. I need to see the ratio change more than it did for me to get aggressive again.

joey- watch the miners during the selloffs to see which one traders DO NOT want to throw away. That's your bellcow on the way back up.

I find myself in an emotional tizzy. Trying hard not to get sucked into this melt up as it appears greed driven not and not based in reality but geez is it hard not listening to the little guy sitting on my shoulder saying

"Psst..your not making money here bub, get in the game, throw some $$ in the market, everyone's making money out there but you!, whatta waiting for!. You know the global economy is on fire"

Anyone else have this person sitting on their shoulder?

Shark;Report is for NGX not NXG

Ok tell me about NXG someone. Is this a broken company? I'm not in love with the down-gap, but as I said it's interesting.

JogyP, are you in this one now? what do you know about their problems? I'm a technician but I like to take other stuff into account.

Finallly, Bill, you were right, about gold, and about the Bahamas weather. You've lost what, 30 pounds this summer? Looking at my profile in the mirror, I can see that yours truly needs to winter in the islands.

PhyllisM,

You should always diversfy your portfolio, especialy a retirement focused portfolio (that is what you guys in the US call 401k right?).

But it is VERY difficult to suggest what can happen in 10 years time. You must manage it in the meanwhile, or hire someone to do it for you.

geckojb,

When you feel like doing something stupid, put your hand inside the kitchen drawer, close the drawer untill it hurts, and count to ten. If it still feels good, then go ahead.

Blowoffs like this tend to end very badly.

Further, I still see that the SPX cannot breakout, and that volume is light.

Do you want to be the last standing dancer when the music stops and there are no chairs left?

Anyone else have this person sitting on their shoulder?

Posted by: geckojb at October 5, 2007 1:20 PM

Yes !! but saying sell GFI and wait for pullback monday.

the guy is a joker!!!

UNG- scaling in at 39.78 for the winter...

Shark
NXG/NGX Northgate Minerals.Same company .Scotia capital report is valid.

Sorry for the confusion

NXG canadian symbol is a company called Nexgenrx.

NXG:
Shark - I bought NXG at 3.05, 2.92 and 2.68 and I am holding until it goes above 3.

Here is why I am holding it.
" even without Kemess North, the company’s net asset value (NAV) at a discount of 6% comes closer to C$3.50-C$5.15 per share with a premium on gold assets."
http://www.resourceinvestor.com/pebble.asp?relid=36000

Gotcha...Hey, did anyone get in on Mirimar Mining in the last few days? I hope you did, cause it's been and should be awesome. I have been waiting for the tooth fairy to come and hit the "buy" button for me.

Gotcha...Hey, did anyone get in on Mirimar Mining in the last few days? I hope you did, cause it's been and should be awesome. I have been waiting for the tooth fairy to come and hit the "buy" button for me.

Hi,

And again, one more failed shot at a breakout failed SPX.

It simply cannot breakout.

Please excuse my last sentence.

Corrected:

"And again, one more failed shot at a breakout on the SPX"

craig- what a play on GFI, wish i'd followed you in..

PhyllisM,

You can't really just put something away for 10 years, but you can go with one of the "lazy portfolio's" (U.S.) or "couch potato portfolio's" (Canada) where you only need to make 1 decision per year and you can get reasonable returns.

Just search in Google for these.

2nd,
Trying to not be too smug. Bendan got after us for that last week.

Let's just say my wife is on the way to the salon.....it comes, it goes!

I had some luck this week. Could have done better had I held this AM and added another 500 on the dip instead of taking profits on 1500 and reloading 500 at 17.90. However, I have no right to a coulda, shoulda, woulda.

MarkM:
I appreciate the the 'bellcow' lesson. I'm working at learning...

Look at the following 200 day comparative chart:

http://stockcharts.com/charts/performance/perf.html?$XAU,AEM,ABX,$GOLD,bvn

Maybe ABX is a better bellcow?

regards
joey

jogyp- taking your lead on NXG and opening a position...

UNG- adding at 39.32...

GFI out at 18.32. I can't see getting much above that for the day and it's a Friday.

Geckojb,
That's the chaseit devil.

He's right, if you buy, all those other people will make $$$.....yours. Stuff that sucker in your pocket for a down day.

Sep 18, 2007 13:33 EDT
Northgate Minerals

Canaccord Adams analysts Steven Butler and John Vinnal continue to rate the shares of Northgate Minerals Corp. (TSX-NGX, $3.23) a hold. However, they have lowered their target price to US$3.50 from $4.00.

Yesterday, an environmental review panel recommended that the federal and provincial environment ministers not approve Northgate’s Kemess North copper/gold project near Prince George, B.C. The panel said that the project would not be in the public interest as the risks of adverse environmental and social effects outweigh the potential economic and social benefits.

The analysts already believed the project was at risk on economic grounds. However, they note that the review panel's recommendation now reduces the option value of Kemess North. As a result, they expect weakness in Northgate’s share price.

Taking into consideration the review panel’s decision, the analysts have lowered their estimated net asset value for Kemess North to US$0.19 a share from $0.32 a share.

Still, the analysts continue to rate the shares a hold. "[We] believe that the company may now more aggressively pursue merger and acquisition opportunities," they say, "as development of the Kemess North project appears unlikely."

Northgate Minerals Corp. is a gold and copper mining company. Its assets include the Kemess South mine, the proposed Kemess North project and the Young-Davidson Gold project.

bb-

The trouble with lazy or couch potato portfolios is that they make no differentiation as to where valuations are. Valuations cannot tell you squat about where the market goes in the short or intermediate term but they can long term. I would call 10 years long term. And I would not be a buy and holder at these valuations.

Anyone watching their scrolls? The parade of banks "coming clean" is reaching deluge proportions. The market is forgiving and absolving today. It's all good.

NGX/NXG

On balance volume is on a very steep downslope!Suggesting more downside to come...IMHO.
Will wait before taking a position.

2nd_ave

Many thanks for last week’s BMD wink and link; we’re holding to see what develops. Realize blackballed and benighted RIMM is impolite table talk in these here parts, but will say we feel lucky today. Wish we could be as lucky figuring out Active Trader Pro.

Revolving consumer credit growth kept accelerating in August.

http://www.federalreserve.gov/releases/g19/Current/

JML

Revolving consumer credit growth kept accelerating in August.

http://www.federalreserve.gov/releases/g19/Current/

JML

It'll probably have to wait till next week, but if present trends continue, and if it can clear 7 bucks and stay there, GMO looks to be breaking out.

PAL also showed plenty of moxy today and yesterday, I really should have bought this one, and that may continue.

Bill, have an awesome weekend! Everybody, do the same!

US GOLD
UXG-t
Any thoughts on how low this thing will go.It has fallen thru lower Bollinger band.

2nd - What would you do with BMD here at 1.83

What is the group's overall opinion of....

UXG?

UXG. It's been here before. Had not so hot drill results and a not so good investors call.
I'm holding but down almost to my stop.
Ignoring fear here.....

Thanks Craig..... that'll help me sleep tonight!
:-)

BTW, if UXG starts to feel like Jassie Livermore's dead body, I'll dump that sucker and buy something going up.

Anyone riding the FXI today? Holy bell cow!
EWZ also on a rip.

jogyp- at this point, just waiting for BMD to announce something...if it bumps up against your basis and you want out, see no problem with that either...

Thank you Bill, that is certainly appreciated.

I suspect it is just a time thing as some UXG investors have been holding a long time waiting for something exciting to happen. Today's news was OK, but not exciting, so I suspect there is just some willingness to move on to look at other opportunities.

Yeah, down 6 or 7% just doesn't look as good as parking it in any number of today's 5-6% gainers.
I can't blame them.

The report was very straightforward and upfront.
Maybe some "investors" want to, or get used to hearing more "nuancing". None of that from Rob, which is refreshing. He just told it like it is.
I'm not so down it's going to keep me up at night.

Thank you for the report Bill. It helps.

Bill,

In a nutshell, what does it takes for a company to make your Cara 100 list? Just curious and wanting to learn... Is there any specific data that you look for when evaluating the companies? And how do you go about finding them?

Awesome price action in gold today.

If I am reading this correctly, the CAD finished the week at 1.02 (!). The DJIA going higher seems like a make believe story (Americans think the stocks are going up). If the USD keeps dropping, wouldn't the DJIA just keep going higher?

SDA closed at 60.2, almost unbelievable. Bovespa was up 3%. Bill did point out how well these foreign companies would do in the US market.

My impression was similar. The chart no longer says "down" to me. At its most neutral interpretation it says "sideways chop". Further strength will put it firmly back in positive territory. And the bounce off the MA was decisive.

So the market's "tricks" has not allowed me to reload at lower levels. Sometimes you get to double dip; sometimes you don't. (But still room to maneuver before it passes my former exit.)

Good luck and good trading all.

Re GMO,
agree with shark, break-out above $7 to me means something else is up, because its going to be a while before they're producing. Bought it when it was a BB stock, sold too early but still got a nice return.
Current moly holding is Golden Phoenix GPMX.OB, very high grade, small size ore body in pre-production stage. Mentioned it once before, but I don't want to tout it - definitely do your own DD.

" As Bill has been suggesting: go for gold.

Nothing else will work for you in a market like this."

I had hoped that puts would work well in the financial and housing sectors; but they are truly drowning I come up to the (majority) December expiry. Anyone expecting any doom and gloom?

Dear Cyderman,

Regarding GSS, thank you for agreeing with me. I do want to clarify that I did not say that a breakout above 7 meant "something else is up", meaning perhaps a potential takeover, about which I know nothing. I meant to suggest that a breakout above 7 would suggest a return toward, and perhaps ultimately through, the old highs.

Recently I had been figuring this stock to head back DOWN in it's range, based on volume (lack of) and tepid, to my way of thinking, price action. However, if today it has been said that everything's ok, then everything's ok and this is going higher. And I believe every word of it:).

Drinks are on me Bill.

Bill...thanks for the info that you shared with us in regards to your talk with Rob McEwen.

I'll stay pat with my UXG.

I closed my UXG position this morning after reading the company's 8-K filing (and press release). I continue to admire McEwen's integrity. He was forthright about the drill results being mediocre.

I've been listening to the various Denver Gold Forum recordings this week as time has permitted. I was impressed by the presentations from Vista, Miramar, Western Goldfields and Silver Wheaton. But then again, I even found the Crystallex story compelling ... so what do I know?

shark,
my apologies, it does read as though I was putting my thoughts into your mouth. Price action in GMO is certainly stronger than I'd expected (hoped) - I was looking for a chance to buy back in at the 3 year trendline around $4. On-balance volume is still not very supportive, so I'm not a buyer at this price which likely means its up, up and away from here.