Few interesting observations: HUI is still up from its Low 36.01 (!!!) in late 2000 more then 589% at 248.12 at this Friday close. Emotions will let you think that everything was collapsing in the same irrational fashion moved by Fear with its indicator VIX as high as 76.94 on Friday afternoon. But from chart above you can see that Gold miners HUI are still in a Bull market, testing strong support at 200-250 area and performed a Double Bottom on a daily chart. So far Goldies HUI has given up from its high 514.89 (total increase of 1330%!!! from its Low in 2000) 52% of its incredible gains. With General Equities represented by Dow the situation is very much different: recent sell off has wiped out almost all gains from its last Low at H&S bottom formation around 8000 after Dot.com Bubble burst in late 2002. Now you can see why it was so important for PPT (Plunge Protection Team) to defend 8000 level and they smashed shorts into covering in late Friday afternoon. (That piece was written in middle of the day on Friday, they must be reading my Blog now, I do not mind: Guys please stop messing around and let the US Dollar go, leave a message and even I will tell you how to bring Gold into the Honest money again. Question is who would like or can afford to be Honest these days?) It is the last chance to keep Dow Paper Bull running in Equities with painting Double Bottom on multi year chart with Lows around 8000 mark. The question is that the real value is slipping away with US Dollar losing its ground. Gold value of Dow in 2002 and in 2008 at the same 8000 level are too very different things. I am very cynical and biased here, I went long last week at my maximum and cut all my Put protections from downside. I am 100% Long for the first time in last five years. So I am eating my own bread as usual. Even my fellow Google GOOG deserve a break now from my accusation on overvaluation. Possibility of a powerful rally even in General Equities is too high to be greedy on picking the last 10-20% from the downside. You can not manipulate markets forever and charts above are the best confirmation. Bull is a Bull in Goldies HUI and painted Paper Bull in Dow is at the life support.
Next drama will be unfolded in The Treasury Bubble: all lemmings (this time professionals) are there sitting at the cliff. Once patient (world financial system) will be pronounced more alive then dead and Risk will come back into play, "Risk Heaven" of Treasuries "backed" by more then 10 trillion debt and coming Paper for financing all these bailouts will collapse. Tripple AAA rating of USA Treasuries is backed no more then Trust and it will never come back. Last Friday action was really astonishing with Equities collapsing, Treasuries were sold as well, Gold and Silver were trashed to give more legs to Dead Cat bounce in US Dollar.
On the charts above picture is telling more then thousand words. Goldies HUI were panished by Fear during initial sell off after Dot.com collapse, but bottomed in late of 2000 and never looked back. Dow on the other hand was making low lows until late 2002. Incoming flood of liquidity will bring Gold shares value back in line with underlining commodity and then they will finally decouple from misery of over leveraged financial economy build on borrowed time. This time is over.
P.S. I have one follower now! Who is it? Is it Ben or Hank? Guys I have a nice landing spot in my garden, send me couple of choppers, please. I will give you discount from my gold mines when you will come back to Gold Standard.
DIA, SPY, QQQQ, HUI, XAU, CDNX, SLW, SSRI, AUY, RGLD, ABX, NEM, GG, SST.v, TNR.v, CZX.v, SAX.to, OK.v, FVI.v.
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