new share calls.

[Aaron Sice]

DJI (dow jones index) popped 14,000 on Friday, a level not seen since pre GFC.

i expect a sell off to 13750 odd over the next few weeks, some consolidation and then a rocket to 14350 ish.

just picked up some 13700 puts, super duper cheap.

expecting a correction, then a rise.

gold will follow the slip and not follow the rise, expecting low $1500s for Au and mid 20s for Ag.

gr8 buying!

 

[datto]

2013 could be the year investors have been waiting for. ASX is also up. Banks and mining stocks up. House prices up. Can RBA keep rates low?

 

[Aaron Sice]

they have no choice.

if they dont cut the rate our dollar becomes uncompetitive.

currency wars are here, take advantage while you can.

 

[datto]

In that case the inflation genie will come out of the bottle.

 

[The Fence]

Then, so be it.

.

 

[hobo-jo]

I think a correction to those levels in the metals is very unlikely. Sentiment already in the gutter. The hammer in Gold down to $1626 was likely the low for the year.

Last few weeks I've been buying 2015 call options for SLV.

For what reason do you think we will see this correction? Yes I could see it happening in the stock market given new highs, bullish consensus, complacency everywhere, VIX very low, but why do you think the metals will go with the market and not follow the rally?

 

[Aaron Sice]

just a bull shakeout - its always the way.....slight smash, return, big smash, return, top consolidation, biggest smash, then bull run.

atthe moment, because Au and Ag are heavily paper traded, they follow sentiment and have done so for a while. if the stock market gets a smash, so too do the metals

i think were at top consolidation - call it a hunch.......but i still think gold is going to 8000 within the decade.

i hold metal and am bullish metal and am very, very happy to be proven wrong.

 

[Aaron Sice]

In that case the inflation genie will come out of the bottle.

BoJ just announced they are targeting to create inflation.

BoE just announced they "may need" inflation to cure some of the pound woes.

RBA trying to fight a stubbornly high dollar.

expect inflation. expect a lot of inflation.

grea time to be in metals, great time to be in oil, great time to be in property with deductible debt.

 

[hobo-jo]

if the stock market gets a smash, so too do the metals

That was definitely the case over most of 2012, but the last couple of months have seen an obvious divergence which makes me think we could see the smart money flow into metals if the stock market corrects significantly, as it did in late 2011... at times the metals follow the risk on trade with the markets and other times they are the safety haven with the USD...

 

[Aaron Sice]

it's hard to predict and some wierd stuff has happened, for sure.

i follow my instincts with this kind of stuff - i find the more cynical i am with my trading, the more correct my calls become.

 

[hobo-jo]

the last couple of months have seen an obvious divergence which makes me think we could see the smart money flow into metals if the stock market corrects significantly, as it did in late 2011

History doesn't always repeat, but it does rhyme

 

[oracle]

History doesn't always repeat, but it does rhyme

In that case the below chart would certainly scare me

Cheers,
Oracle.

 

[Aaron Sice]

but that was a flat period for a long time, i think people were even questioning the point of the vix and its role moving forward!

sentiment was shot and gold moved as the market started to tank on bad earnings.

it just doesnt compare to an overbought bull run.

look, im as bullish as you are with PMs, but at the end of the day, ive been playing stocks for a long time so my calls (no pun) are there. with PMs, im just putting similar scenarios together from similar past instances and coming up with a cynical outcome.

not much point arguing about it, though. i dont have money the PMs, you do....shows the level of committment to the call.

 

[hobo-jo]

In that case the below chart would certainly scare me

You would suggest measuring Gold using a statistic that the government uses to try and fool the public into thinking prices are rising less than they are you might like to consider the same measurement using a methodology which has been consistent rather than tampered with

http://www.sharelynx.com/chartstemp/FreeGoldSilverSSCPI.php

 

[oracle]

You would suggest measuring Gold using a statistic that the government uses to try and fool the public into thinking prices are rising less than they are you might like to consider the same measurement using a methodology which has been consistent rather than tampered with

The inflation figures published by the government are used by various parties within the economy which has a direct/indirect impact on us.

- RBA sets it monetary policy based on this number which is then used by banks to set their interest rate which ultimately affects most borrowers.

- Employees negotiate pay rises based on this number

- Property investors justify rent rises based on this number

- Employers raise prices of their goods and services based on this number.

Now coming back to what the price of Gold will do in future. I haven't got a clue. I don't invest in precious metals as it's outside my circle of competence. I like to invest in assets which provide an income as I believe I can value them.

Cheers,
Oracle.

 

[hobo-jo]

The inflation figures published by the government are used by various parties within the economy which has a direct/indirect impact on us.

- RBA sets it monetary policy based on this number which is then used by banks to set their interest rate which ultimately affects most borrowers.
- Employees negotiate pay rises based on this number
- Property investors justify rent rises based on this number
- Employers raise prices of their goods and services based on this number.

CPI is generally accepted as a "cost of living" measure, so what justification would you use for measuring Gold against it unless it was a consumable that we needed day to day?

As a monetary asset measuring it's growth relative to the money supply would be much more sensible IMO. Monetary inflation (increase in money supply) has been rising at a rate closer to 8-10% over the last decade in contrast to only 3% for CPI (in Australia).

I like to invest in assets which provide an income as I believe I can value them.

Fair enough, but in today's macro environment with central banks printing trillions of extra dollars & manipulating interest rates, small changes can have a big impact and those income producing assets may not perform as expected in such a heavily manipulated market.

I'm not trying to suggest that Gold is without risks, but IMO all other assets are just as suspect.

 

[Aaron Sice]

you can't lump gold with CPI - period - it's not a consumable.

you also can't view it as an investment, otherwise it's a Fail with a capital "F".

just so you know, i've just made slightly less than 150% on the puts at close this morning, and still holding.

 

[redwing]

History doesn't always repeat, but it does rhyme

I've always wondered about that one, it doesn't even rhyme

 

[one world]

You have done well on those Puts Aaron.

Looking back 30 years, US market PEs still seem relatively inexpensive.

When do you plan to cash in your winnings?

 

[hobo-jo]

I've always wondered about that one, it doesn't even rhyme

We see plenty of the same cycles, patterns & mistakes being made over and over.