Global Macro Trading Journal

Quote from trefoil:

Your charts show NEM and GG bottoming when I said. ABX didn't, but at the time they were the known hedgers.
What was your point?
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You said gold miners "turned in November of 2000."

There is a difference between a bottom and a turn.

If you are trying to say that a bottom and a turn are the same thing, then gold "turned" a year earlier, in the Fall of 1999, when the announcement of a 5-year moratorium on European gold sales caused the gold price to surge roughly 33% in the space of a week.

It's also telling that, in the 2008 financial crisis, gold held above its baseline 2007 levels at the lowest point, whereas GG hit 2005 valuations, and NEM and ABX hit 2003 valuations.

At any rate, I think the monthly charts tell enough of a story -- the gold miners have enough internal drama as such to go their own way. I'd be willing to wager a meaningful sum that a rigorous statistical study of gold stocks as leading indicator for gold price disconfirms the hypothesis.
 
Quote from trefoil:


Despite that, the miners began a sustained run in November of 2000. For no reason that anyone at the time could come up with. Gold prices only confirmed that later.
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Again, Fall of 1999... gold price surging 33% in roughly a week or so on European moratorium... I'll never forget that move, because it was my biggest percentage trading gain ever (+500% gains -- on the whole trading account, not just the trade -- as floor traders and market makers short deep OTM gold options got absolutely fried).

There were plenty of reasons to be hugely bullish gold prior to Nov 2000, in a big picture, "secular turn" kind of way... By late 1999, the commodity bear market cycle had reached epic proportions.

I remember earlier in '99 when England announced a huge gold sale (under that idiot Gordon Brown), causing gold to drop $10 an ounce in one day (when the price was less than a fifth what it is now) on its way to $250. There was a pervasive sense that it was just never going to end, that commodities, and precious metals, were going to keep plunging in value forever -- the kind of "all hope is lost" type sentiment that you get near the extremes of the extremes.

And then you had that crazyass moratorium spike -- right around my birthday, best birthday present ever -- signaling "something is happening."

And then you had news that "the Maestro" (Greenspan) was pumping extra liquidity into markets in anticipation of Y2K concerns.

And then, when the Nasdaq finally began to crash in earnest, circa (surprise!) November 2000, it was no great leap to extrapolate a reversal of hugely dollar-supportive capital flows as the world stopped buying U.S. tech stocks hand over fist, and to further extrapolate Greenspan riding to the easy money rescue as he always did.

I would thus argue, contrary to your recollection, that gold gave a "signal" (the '99 surge) well BEFORE gold stocks moved... and furthermore that there were plenty of macro reasons for positioning and anticipating around what looked to be a pivotal turn... and even if you take ABX out of the equation (which feels like cheating), it would have been hard to make a chart-based conviction case for gold stocks having "bottomed" prior to later breakout confirmation on l-t charts, with the macro being ahead-of-the-curve supportive the whole time (rather than gold stocks themselves as some sort of lead indicator).
 
Quote from darkhorse:

Again, Fall of 1999... gold price surging 33% in roughly a week or so on European moratorium... I'll never forget that move, because it was my biggest percentage trading gain ever (+500% gains -- on the whole trading account, not just the trade -- as floor traders and market makers short deep OTM gold options got absolutely fried).

There were plenty of reasons to be hugely bullish gold prior to Nov 2000, in a big picture, "secular turn" kind of way... By late 1999, the commodity bear market cycle had reached epic proportions.

I remember earlier in '99 when England announced a huge gold sale (under that idiot Gordon Brown), causing gold to drop $10 an ounce in one day (when the price was less than a fifth what it is now) on its way to $250. There was a pervasive sense that it was just never going to end, that commodities, and precious metals, were going to keep plunging in value forever -- the kind of "all hope is lost" type sentiment that you get near the extremes of the extremes.

And then you had that crazyass moratorium spike -- right around my birthday, best birthday present ever -- signaling "something is happening."

And then you had news that "the Maestro" (Greenspan) was pumping extra liquidity into markets in anticipation of Y2K concerns.

And then, when the Nasdaq finally began to crash in earnest, circa (surprise!) November 2000, it was no great leap to extrapolate a reversal of hugely dollar-supportive capital flows as the world stopped buying U.S. tech stocks hand over fist, and to further extrapolate Greenspan riding to the easy money rescue as he always did.

I would thus argue, contrary to your recollection, that gold gave a "signal" (the '99 surge) well BEFORE gold stocks moved... and furthermore that there were plenty of macro reasons for positioning and anticipating around what looked to be a pivotal turn... and even if you take ABX out of the equation (which feels like cheating), it would have been hard to make a chart-based conviction case for gold stocks having "bottomed" prior to later breakout confirmation on l-t charts, with the macro being ahead-of-the-curve supportive the whole time (rather than gold stocks themselves as some sort of lead indicator).
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I remember the fall of 99 very well as well. It was literally years before the highs made then were broken.
It was a false breakout. Kudos on having made money on it, but anyone buying those highs was looking at dead money for a very very long time.
Go to Kitco's Historical Charts, then look for gold. Do the 1995 - 2012 chart. Try to find that breakout. It's there, but the larger picture is a huge bowl where the breakout high wasn't busted until the end of 2002. Gold stocks were up a huge amount from their Nov 2000 lows by then.
 
Quote from trefoil:


Go to Kitco's Historical Charts, then look for gold. Do the 1995 - 2012 chart. Try to find that breakout. It's there, but the larger picture is a huge bowl where the breakout high wasn't busted until the end of 2002. Gold stocks were up a huge amount from their Nov 2000 lows by then.
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Well sure... it wasn't a chart-based confirmation that the gold bull market had begun in earnest -- but rather a loud and clear heads up that the bear market extremes were in.

Also, between October of 2000 and October of 2002 the gold price went from $272 per ounce to $348 per ounce, an increase of 28 percent.

More importantly, further macro conviction would have developed during this period that gold had phase shifted to a higher plateau with greatly improved future prospects, given Greenspan's commitment to post-crash easing policies, and a change in credit flows that no longer favored the $USD.

Given that gold stocks are leveraged to the price of gold, one would certainly expect a magnification of movements in percentage terms vis a vis the above. But again, this is not the same thing as leading.

Sounds like we can just agree to disagree, but I would still maintain that, rather than gold miners leading gold, it would be more accurate to say that the macro leads gold, and gold miners offer a leveraged reflection of gold's prospects in relation to the macro -- diluted by strong mitigating factors such as production cost, quality of management, quality of deal finance terms, ROI on new properties acquired, hedging programs, geopolitical risks, and so on.
 
I'm going to go on a limb and say the "Spain bailout rally" is near an end, and the next day or two should provide excellent opportunities to enter/add to shorts.

They've managed to clear oversold conditions in the market, squeeze the late shorts and presumably alleviate fear to a degree, yet obviously nothing fundamental has changed and I would expect things to worsen again pretty quick barring new monetary interventions.
 
Quote from Specterx:

I'm going to go on a limb and say the "Spain bailout rally" is near an end, and the next day or two should provide excellent opportunities to enter/add to shorts.

They've managed to clear oversold conditions in the market, squeeze the late shorts and presumably alleviate fear to a degree, yet obviously nothing fundamental has changed and I would expect things to worsen again pretty quick barring new monetary interventions.
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If the trend is still down, then I agree this is probably the best time to re-short this market [assuming ~1340 when market opens]. I really don't see the Fed coming in aggressively with more easing unless SPX breaches 1200 level, so an exit somewhat above this would be ideal because the risk of intervention increases massively below that.
 
I remember when the Bank of England sold their gold at $250ish. Me and a market-following friend of mine joked to each other that now Gordon Brown had given up and puked out his position, that would probably be the bottom. Little did we realise that it was, in fact, the bottom :D
 
Quote from Ghost of Cutten:

I remember when the Bank of England sold their gold at $250ish. Me and a market-following friend of mine joked to each other that now Gordon Brown had given up and puked out his position, that would probably be the bottom. Little did we realise that it was, in fact, the bottom :D
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Yeah... I remember the day it was announced, that $10 move was jaw dropping w/ gold below $300 / oz. I think there was another $20 or $30 left -- if I recall they sold at an average of $275 -- but definitely the big psychological washout.
 
Gains are being given up because like every other bailout for the last 4 years, you can't solve a problem of too much debt by piling on more debt. This is truly sad and pathetic and I feel for the people of Spain who just took on another €100B of obligations to make sure senior bank bondholders get paid off at par.
 
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