Market Comments

October 2nd 2008: $700 Billion Rescue is in trouble. Without this rescue there is a potential for major crisis for US. BUT wait, but Wait if this is the scenario, why Gold is not going up and why USD is going up. Scratching my head. The simple reason, US being the most transparent Nation these problems are being made public. The Real Estate bubble was widespread across the globe and rest of the world has bigger problem then United States. In addition If US dies; rest of the world also will die. Gold alone can not take over the status of 'Universal Currency', only way for the world to bring stability is creating confidence in US and USD. So what we have to do, buy USD and US Stocks slowly. I started buying today. I will buy for every 300 points down from now onwards. Let us hope this 10500 is the end of down trend. __________________________________________________ September 26th 2008: Bailout of BigBs in USA: Very important topic, what is happening 1) Big Banks wants govt to take over their losses in Mortgage investments. 2) Government is depending on Ex-Banker to find out a solution and insisting that taking over the losses of these Banks only will save USA and Rest of the World. Some are asking why should govt help? If govt wanted to help why can't govt buy the homes from the individual home owners and ask them to live as a tenants. Only because individual investors are not in a position to cut a deal with Powerful authorities. OK what is going to happen to gold: Injection of 700 Billion (may turn in to more then a trillion) will create inflation. That will turn in to higher interest rates. But we all know, showing inflation in the numbers is out dated concept. Govt will know how to modify the index components and the method of arriving at inflation and show modest inflation. AS USUAL. So those who do not believe in govt inflation numbers will continue to diversify in commodities and in gold. So Gold should go up more then anyone's imagination. August 11th 2008: ----------------- After more then a year I am updating my site. The main reason for not writing is simply because I was waiting for correction in gold and gold stocks. At last that is happening now and now the time is for reinvesting. Many may question was it worth to wait for more then one year without investing. I feel so when it comes to one sector. May be gold stocks are approaching their lows and waiting for gold to catch up. My target to start buying is when HUI is at about 300 and gold is about 750. I am thinking of buying South African Stocks first. The simple reason is USD is correcting and may appreciate against all currencies. That makes South African Rand depreciate and allow Gold companies to make little more money in their own currency when compared to USD. June 8th 2007 ------------- New Rules of Trade: "Dump stocks when economy is doing good" Are you surprised? why markets are going down when Federal Reserve Chairman claims economy is doing great. Oh, I know that means interest rates will go up by 1, 1/10 of a percent, that is why sell stocks to loose 10% over night as against 1, 1/10 of a percent per annum. Silly right. Not many acknowledge but we are in a period of stagflation. What ever what any one should do now? Just sell all and hold on to cash wait for few weeks/months. Not loosing is also a gain in bad market conditions. May 30th, 2007 -------------- Considering the past and experts let us look for gold to touch 620 and HUI to touch 280. At these levels I will add to my long term positions. May 17th, 2007 -------------- After more then two months I am updating the site. In fact since last few months US markets are moving in a direction not many are expecting. DOW is going up, up and only few say it is all because of Great US future. In fact those who are bullish are none other then permanent bulls like Abby Joseph Cohen. Excess money supply in the world particularly due to huge spending against ‘war on terror’ and “for democracy in Iraq” was the route cause of the financial and real estate asset appreciation. Now it is the ‘ROTATION’ part of it is making US stocks to appreciate. Yes rest of the world is also appreciating but new money is moving towards US assets. Students of economics know, after any WAR economies see inflation and growth due to rebuilding exercise. We are seeing the same now. Gold and Gold stocks are maintaining their control by not depreciating. In fact gold price changes are dictated by two classes of institutional investors. A) Those who think it is a currency B) those who think it is a commodity. As of now “A” class investors are at upper hand. They are dumping it because of USD appreciation. Small investors like me do nothing. Just close our eyes and don’t watch gold/gold stocks for few months. I will add further when gold drops by another $50 and accumulate heavily if it goes to $550. March 05, 2007 -------------- Let us look for news World wide recession and replace the term Recession with Stagflation as experts forgot this term. Apparently Asian countries due to excessive money supply from WAR spending are going to experience stagflation more then US and Europe. News Media is attributing the current downtrend to carry trade and excessive money supply due to easy credit. Not a single expert is attributing that this is also due to the excessive money supply to support the world peace This excessive money circulation is taking place in Asia and Middle East. This is the primary contributor for world wide appreciation of all assets (Real Estate, Stocks and Bonds) At last Financial Media started talking about rotation. After this correction US stock markets will recover. Asian Financial System will come up with scandals. That will add to the reasons why US markets are stable and transparent. That will become the peak of rotation to US. Outcome of the rotation back to US is appreciating US Dollar and appreciation US Stocks. Another reason for rotation is world peace achieved by cuts in peace spending in Asia/Middle East. That cut in spending will bring back the wealth to US and US Assets. For gold stocks and gold investors next few months are going to be a excellent times for investing. So let us start collecting funds to invest in gold and gold stocks. ------------------------------------------------------------------------------------------------- 27-Feb-2007 ----------- Evening Post 400 points correction in DOW. Once again I am restating what I was saying in 2006. We are going to see Stagflation (Higher Prices and Lower Growth). World has not seen this type of problem in the past though it was in the text books. This Stagflation will be reflected more in rest of the world and will have no or less impact in US (Because US inflation numbers will not show real inflation as the numbers are going to be adjusted to reflect the changes in consumers habits. As per Fed Chairman consumers replace their purchasing with low cost items from high cost items) This is nothing but a technical correction for US. I do remember we have seen this type of sharp correction two times in 1997/1998. US bull market continued later for two more years and ended in 2000. So take this opportunity. Wait for few days or at max three weeks and start buying Pharma, Telecom Stocks in addition to Gold stocks. ----------------------------------------------------------------------------------------------------------- 27-Feb-2007: ------------ At last we are seeing the sign that markets are willing to accept the future (now it appears as healthy correction). Allen Greenspan is talking about Recession purely because of extended period of growth. The fact that world wide appreciation of all assets classes was never seen in the past. We have to see how it unfolds. May be our wait will end soon. I personally bought few penny gold stocks with an expectation of holding for a year or more. We may see the end of wait in March 07. ------------------------------------------------------------------------------------------------------------ 23rd Feb 2007: -------------- As long as interest rates are going up, it is good for Gold and Gold stocks. Simple reason for it is the rate of increase in interest rate is always lowers then the real inflation. The difference is priced in for gold. I am biased to buy some penny stocks which are about 50% lower then their peaks for example MMG CDY ASGMF OTMN. Please let me know the stocks you know of. Yes there is a risk of further depreciation but it is worth to buy these stocks for long term, incase they melt down in the short term along with other stocks. So start buying in installments. ------------------------------------------------------------------------------------------------------------ 20th February 2007: ------------------- Last week was options expiration week and next Monday was holiday. It appears bullish investors are not giving up and were not willing to take any chance for long week end and potential geo political risks. They have loaded up and lifted gold and gold stocks. North Korea is agreeing to stop nuclear enrichment that should be very good news for global peace and that should have worked against the WAR premium to Gold. Today gold started going down. Probably the uncertain week end ended without any major disaster. Thank God. Where we stand now? I am also loosing patience in holding cash. Last week for a minute I thought I am missing the opportunity. Well today proved that ok let one opportunity go wait is better for my future. Main reason for not buying is all time peak in DOW and rest of the world markets. All markets need a correction. Why, just because they have gone up a lot more then the growth and needs correction. The longer it takes for correction, the sharper and deeper the correction will be. Who knows current bullish markets may be the result of global scandals created by excessive money circulation. Let us assume there is no problem, no scandals, what are the reasons for market to pull back? Well any one has answer for why oil has dropped back by about 10 dollars per barrel without any fundamental reasons? In my opinion, speculators are taking long term profits in gas. Same way we need speculators/investors to decide taking profits in world stock markets. That itself will work as a catalyst for markets to drop substantially. Let us wait and see. If needed to buy under valued pharma and telecom stocks. They will participate in the next bull run after anticipated and unknown correction. ------------------------------------------------------------------------------------------------------------ 08th February 2007: ------------------- Gold Stocks represented by HUI and XAU are continue to underperforming Gold and silver itself. Europe’s biggest bank, HSBC announced that its charges for Bad Housing Loans would be more then $10.5 billions due to problems in US Mortgage Book. Last year H & R Block announced similar problems. Slowly we are going to see escalating problems with US housing. Euro Zone announced that they are keeping the interest rates intact. Soon we may start hearing about the need and possibilities of cutting interest rates. Yes not .25 increases but .25 decreases. Reasons are to boost the slowing economy or to boost sentiment in housing sector. There was important news: A grand jury indicted three Army Reserve officers and two civilians Wednesday on charges they steered more than $8.6 million in Iraqi reconstruction funds to a contractor in exchange for kickbacks that included vehicles, jewelry and real estate. This is one of the reasons why world wide demand for Stocks and Real Estate. War money is chasing all assets classes around the world. Satyam Computers India’s outsourcing company announced that they are starting a data center in China. This is the beginning of over heated Indian Software Industry to look at alternative countries to cut their costs. Chinese manufactures may be also looking for other cheaper countries to have their manufacturing facilities. In my opinion we have to wait for buying opportunities for precious metal stocks and US NASDAQ Stocks. Rotation from rest of the world is way over due and we may see predictions for NASDAQ over taking its historic peak. ------------------------------------------------------------------------------------------------------------ 2nd Feb 2007: ------------- We see what we wanted to see. This is the biggest drawback of Investing in Stocks. We will do either mistake in identifying the bottoms or identifying the Tops. Recently we have indications for both directions. However gold stocks are underperforming the gold itself. That rings alarm bells. Pro for Gold is the normal permanent reasons like inflation, investors desire to diversify from USD, risk of world terror, risk of wars etc . However the reasons against are glaring and very powerful. World Stock Markets are way over heated, Money supply is extremely high, bullishness is at its peaks, more important is Ben Bernanke is not willing to raise interest rates because his indicators are saying that there is no inflation. Raising interest rates are always short of real inflation. That difference adds to the price of gold by appreciating. Many analysts are expecting correction but it is not happening. China has created correction by warning that stocks are over priced. That way Chinese are better as they wanted their investor to be practical. Recently there was news indicating that IMF wanted to sell its gold. WOW that is big news against gold and gold stocks. Let us wait for few more days or month to load up again. In the process we may miss one opportunity nothing more. ------------------------------------------------------------------------------------------------------------ 25-Jan-2007: ------------ What a battle for Gold and Commodities. Bulls are not giving up and the same time bears are fighting hard to keep them down. So what next, I am tired of this wait. Today market is showing a sign of general weakness. Dow/NASDAQ and gold stocks are looking to close down. My view for next few months is risk of stagflation. It is still a possibility no one is admitting. People either say Inflation or No inflation. But no one is talking of stagflation (higher prices and lower demand for products) This is only text book concept but it is a possibility due to excessive liquidity and fear of future. In the US if US consumers convinced that housing boom is over, they will have a fear of spending. Capital spending may still continue in anticipation of growth for few more months. Because of the plans to modify the components of CPI Index (take away the goods which have gone up and replace with lower cost goods because Mr. Fed Chairman thinks that that is the true CPI). So we will not see inflation in CPI. If Housing shows a sign of danger Fed will lean on cutting the interest rates. (Not immediately may be after two three months) For Jan and Feb we may need to hold back and look to buy from Last week of February. My first priority is to buy NASDAQ stocks and then commodities stocks. Global rotation is long over due. 10 times appreciated Asian stock markets should correct give that money back to US markets. ------------------------------------------------------------------------------------------------------------ 19-JAN-2007: Are we there yet? Cool, we are not in a hurry and I don’t think we are going to miss the opportunity. Recent economic numbers (Better for Economy and Inflation), live testimony by Ben Bernanke are an indication that there will not be a much change in the immediate future. All the issue he has pointed out is of long term implications and there is no immediate solution. If we need to infer any that is pro dollar then pro gold. The reason is he wanted to impose a financial discipline to cut deficits and encourage savings. Other news is Iraq said they want weapons then people to control the insurgency. What is that mean? If accepted that means US will pull forces and supply only the means to control the problems. Whet ever reason less War spending means less deficits good for US dollar. Jim Cramer issued a seasonal warning to sell all tech stocks. That and other strategists’ bearish outlook and the need for healthy pull back we may see a correction in general markets and that will further add to the downward trend of precious metal stocks. Let us mobilize funds to accumulate after a month or sooner. So far many are expecting to buy when HUI goes to 300 or 270 and no one is suggesting that bull market has ended. I would like to see a comment that bull market in precious metals is ended just like the one we are seeing for gas. ------------------------------------------------------------------------------------------------------------ 10-Jan-2007: Watch appreciating USD. For every country’s good USD has to appreciate. So it is in the interest of every country particularly China and India. Exporters in China needs higher USD to be competitive and to offer cheap outsourcing services India also needs higher USD. Yes every one knows that USD is worth less then it quotes but it is in the interest of every one until Asian countries translate themselves from Net Savers to Net Consumers just like US Consumers. The trend has started and it takes some time. Until then we will not see a collapse in USD. In fact if any other countries trade deficit and budget deficit is like that of US, they would have declared defaulters and would have been under tremendous Economic troubles. So all this in the short term good for those who are waiting to buy gold and gold stocks. Time will come us to buy with in few months. Until then invest in Bonds or certificate of deposits. ------------------------------------------------------------------------------------------------------------ 05-Jan-2007: Correction Time What exactly is happening in the financial markets? In simple terms we are about to get an opportunity to buy for long term in NASDAQ, gold and silver stocks. US dollar is changing its direction, why may be because it is oversold technically and fundamentally US Government has recognized the fact that they need to cut Budget Deficits. We may also hear about the plans of reducing trade deficits. These plans are blessings for world financial markets as it is going to be a Win-Win situation. US dollar appreciates resulting in cheaper Import prices and act as a subsidy for Foreign exporters. The so called generational bull market which was expected to be for 25 years is going to take a big correction. If we consider last 5 years as beginning for commodities boom we may need to see few months if not year correction. So we will get best opportunity in 2007. As I said before right time to buy gold/silver stocks is when HUI stops going down while gold itself going down. After about two weeks of buying stocks we can switch to buy gold to maximize our benefits. Last one to buy are juniors and penny stocks. Now it is the time to get rid of all penny and junior mining companies. We will have plenty of opportunity to buy back these stocks at later time for about half of the current prices (ASLRF.PK ECU.V MGN SRLM.OB CFTN.PK CDY CZN.TO SVL.V TM.V MAI.V ASM.V NPG.V ADB.V FAN.TO TNG.V GMO MMG NXG ASGMF.OB SVGAF.PK SMLCF.PK SRLM.OB OTMN.PK KS.V SDRG.OB CRDAF.PK WCPCF.PK CHDSF.PK MFN STVZF.PK IAUFF.PK FRLLF.PK ORXRF.PK GGCRF.PK IMR SHSH.PK RDFVF.PK ABMBF.PK CSFFF.PK HUSIF.PK ) As I said before those who want to buy and hold must look at NASDAQ stocks as we will suddenly hear about the switch from rest of the world to US with in few months if not weeks. ----------------------------------------------------- 03-Jan-2007: Today's market action was dramatic. In fact this drama has started yesterday in rest of the world. Gold and Silver way up and stocks were also up. However that uptick was followed by very low volumes. Today again markets including US markets tried to repeat yesterday's performance. Gradually Gold stocks Index HUI was going down and lead gold down by close of business. Let us focus more on commodities and gold stocks in 2007. What next? May be we are getting the last real meaningful correction? In 2006 we had correction which lasted for few days and it was a quick recovery. HUI 270 looked like a bottom. However HUI 270 didn't pull all juniors to lowever levels but many maintained good prices. Let us focus and look at entry points. The best entry point is the exact reverse of todays action. HUI should resist to godown or gradually go up while gold goes down by about $10 dollars per ounce. When that happen? May be with in next few months. My target is by April 2007. _________________________________________ HAPPY NEW YEAR: 29-December-2006 Majority is predicting the following for 2007. 1) Collapse of USD 2) Historic peak for Gold and commodities 3) Recession in US. All these predictions are pure fundamentals. But we all know fundamentals are just one of the reasons for market actions but they are not the 100% contributors for markets. Markets can be irrational for extended period of time. Out come of the fundamental facts is global gloom. World central banks are aware of this and are prepared for this. World markets are not yet independent; they are totally dependent on US Economy. Already we are seeing the counter measures to tackle the housing market. Stocks are showing unexpected strength. This strength in Stocks may continue to counter the potential slump to be created by Housing slow down. Asian stocks are excessively over valued when compared to the US Stocks. In 2007 we may see stock market rotation by funds diverting from Rest of the world to United States. That will directly help US dollar to appreciate and indirectly help foreign exporters. This is ideal situation for world markets to postpone the potential for slowdown. That is noting but stagflation. We will see price inflation and slower growth for most of 2007. Cement, Steal and other industrial commodities prices are showing a clear sign of price inflation. At the most we may see some correction in probably in first quarter of 2007 and then bullish stock market may continue their march towards new highs in US. Hence my predictions are exactly the opposite of majority 1) appreciation of US dollar and collapse in commodity prices. ---------------------------------------- 21-dec-2006: Those who are holding gold stocks better to get out. You will have peace of mind to enjoy holidays with family. Today’s economic numbers (GDP growth lower then projected and Chain deflator higher then expected) reconfirms that US growth is slowing down. Slowing US growth means slower demand for Asian products. US can withstand the economic downturn as US is planned and prepared for it. We can not assume the same with rest of the world. Keep watching Asian stocks. If at all you want to own shares own the shares of US like DOW, NASDAQ etc. The money from Asia needs to rotate back to US. Wait for 3 to 6 months to buy gold/silver stocks. Until then keep them in certificate of deposits. _______________________________________________ 20-Dec-2006: Gold stocks are changing hands from institutions to the Gold-bugs. On a down day, volume is down on a up day volume is increasing and that is attributed as bullish reading in forums. At this stage, no analyst is predicting that gold bull market has ended and hopping to load up after few months. So no gold bug is willing to give up. As accepted by Bernanke, we will have slower growth. India and China also came up with number predicting lower growth then expected in the past. We should not forget the fact that increasing commodity prices are nothing but a sign of inflation. Considering the current trends, US Stocks will go up for next few months to move funds from rest of the world to US. That will help USD to stop sliding or allow it to go up. If at all gold goes up it may be after more then six months. Bullishness amoung analyst's should wipeout first, then gold bugs accept it then only we will see the bottom. Until then no need to worry that we are missing out. Just hold on to your cash and put it in 3 to 6 months certificate of deposits. ___________________________ 18-Dec-2006: Todays market action particularly HUI and gold stoccks are an indication of short term pull back of about minimum 10% from current level. That means HUI can go to 300 easily with in few days. Let us accumulate cash to buy when HUI goes to 280 and add up 10% for every 10 points below HUI 280. Focus on buying big caps like NEM, HMY. --------------------------- 15-Dec-2006: Great economic numbers to shift the wealth from Asia to USA. Let us see the following: 1) CPI and Core CPI is Zero against the expected .2% increase. 2) Net Foreign Purchases 82.3Billions against expected 69.5 billions. Last month numbers are revised upward to 70.2 from 65.1. This huge increase in net foreign purchases confirms that shift is taking place from Rest of the World to US. That will be good for USD, US Stocks, US Importers. Good for Gold investors who are waiting for pull back. May be we can start buying from New Year. ----------------------------------- 14-Dec-2006: How extreme markets can go without any fundamentals or just because of demand supply? We have real life examples. Let us look at Gulf Market. Saudi Stock market started its climb in 2003 at its index of 2500. Its peak at 21000 in 2006. Saudi Markt also shown how fast markets can go down. Gone to 8000 with in 2006 from its peak of around 21000. To my surprise that fall is attributed to the fact that markets are way overvalued so coming down. No other reason. WOW Now look at other extreme in India. BSE or Bombay Stock Exchange index has gone up from about 2800 in 2003 to 14000 now. Let us look at the current Commodities Stocks in US. XOI oil index was at 400 in 2003 and now at 1240. It is at its peak even though oil has gone down from peak of 80 to current 60s. Markets are justifying $130 for Philip Dodge Stock. This $130 is after a bid to take over. Before the take over bid it was about $90. To my surprise copper is down from its peak of about $4 to current level of $3. Now let us predict the potential for DOW, NASDAQ AND HUI based on the examples of Saudi and Indian Stock Markets. If we take 2003 as base Dow can go up from about 8000 to 20000. Nasdaq from 1500 to 10000 (Because nasdaq was too low that time) HUI from current level of 330 to 2000 with in next 3 years. All this stock price inflation is just because of increase money supply. First money has gone to gulf so they have started appreciating. Gulf stocks may stop their downward trend when US pulls out of Iraq next year. By that time US stocks bubble might have already middle or in its peak. Rotation from Asia to US itself may give about 25% of future appreciation. I am waiting for the pull back to invest 100%. In the process I may miss the opportunities but I will have good sleep at night. _________________________________________________ 01st December 2006. I have not made any updates from August 2006 as there was no change in the market conditions for new investors to jump in and buy resource stocks. Instead markets have shown quick return from low levels to higher levels. Every market in the world is at overbought conditions. Since last few months, what ever bad economic news is ignored by the market and Dow/nasdaq were going up. Oil has gone down but oil stocks keeps on going up and not fallen. Copper shares have gone up substantially even when copper has gone down. All these extreams are a big mystory to many. This may be nothing but the excess liquidity pumped by War and extream bullishness in Asia. Recently Dollar is dropping beyond anybody's imagination. If this continues, then whole world may see a collpase in financial markets. Contineous drop in USD may create federal deficit in capital account too. That is going to be a disaster for world economy. Depreciation in USD may help gold to appreciate but it will drop gold stocks with all other stocks. Prudent investor should patiently wait for correction in all sectors before buying. -------------------------------------------------------- 11th August 2006. Currently all markets are at mid point indicating that they can either go up or go down. All instruments are still moving in same direction except for few hours or days. The biggest mystery is Bonds and Equities. Bonds are continuously predicting the slowdown (Lower bond yields assumes recession) unless it is a deliberate attempt to help home owners to switch from short term mortgage to 30 years mortgage. However Stocks are not convinced and trying to go up come what may. May be stocks are convinced that lower bond yields are just an attempt to help home owners. This week that upward journey is stalled and stocks are trying to go down without making individual investors to notice such downfall. Dow lost 255 points between last Friday and this Friday (11343-11088). As far as Gold and Gold stocks are concerned they are ready for correction and may go down further then the lows of June. This week HUI has lost 17 points from its peak (348-331).Those who expect that gold will take away the recent peak are missing the fact that as of today gold is just a commodity not a currency. For gold to take away the status of world reserve currency it should be stable. When can gold be stable? May be with in next 10 years? That means we will have multiple opportunities to trade in gold and gold stocks. Even Ben Bernanke is expecting that growth is slowing down. Slowing growth means less demand for commodities. Lower demand and long over due correction may drop CRB, Oil and gold down for few weeks if not months. Reality is Stagflation so commodities may go up again after short correction. As soon as the mainstream media accepts the stagflation normal market behavior may begin (commodities, commodity stocks may behave inverse to the DOW and NASDAQ). ------------------------------------------------------ 04th August 2006. Markets are determined to go up. What ever may be the results and events of world that is a reason to celebrate and lift the markets up? In the recent past many things are different from normal. Only one thing is normal, i.e. companies are punished hard for declaring results lower then the expectations. Everything else like weakening economy, higher prices (Stagflation), threat of expended War (Are we at WW III???) are cause of celebration and helping the markets to move up. Another abnormal behavior is every segment of market is going up (Bonds (Going up means expecting recession), stocks (going up means expecting growth), commodities (going up means more growth and inflation). All these can be explained without looking at logics is demand of these financial assets is more then the supply or probably short covering. What we should do? Those who are holding stocks may get out slowly to book profits and don�t look back at the market until November/December. Those who wanted to jump in should be cautious and wait in the sidelines. Probably invest in 6 months CDs and come back in Jan/Feb 07. Gold and Gold stocks are also participating in the general market by appreciating. Did we miss the opportunity? Yes those who didn�t by the dips in June definitely missed the opportunity. So do we need to jump in. Few weeks ago few technical analysts claimed that oil and gold stocks are displaying the phenomena of head and shoulder and ready to break down. Then suddenly everything changed and they have changed their opinion and recommending buying. In the past, Gold stocks used to trade opposite of Dow NASDAQ. Gold used to trade opposite of USD. Now that type of inverse relationship is not strictly followed and behaving differently. This is definitely an indication of change in general investing community. Good sign for long term for gold stocks. Recently many junior mining companies have declared results with profits. Another good sign for gold stocks. Most of them need to tap capital markets for their projects. That will make them the Investment banker friendly. We can expect to read more positive coverage by Investment bankers to support them. Probably the last of the good sign. With this many positives can�t we jump in to share the growth prospects. Yes if we don�t want to look at market for few months or year after buying. Commodities have gone up substantially and corrected for short term. They can go up further, but if they go down, they will fall like a rock. In fact gold is not moving much in Asian markets as they might have stopped trading as they did before May. Most of the recent uptrend is mainly happening in US. As gold stocks are going up along with general markets, they can go down along with general market with out any known reasons. Wait and watch is a good policy. Probably we may need to wait for next year to jump in. --------------------------------------------------------------------- 22nd July 2006 As expected last week, this week, gold has fallen in response to appreciating US dollar. This week gold has gone to 670 and later pulled back to 620. Fear of Israel/Lebanon conflict expanding to other countries has contributed to its raise. After along time Gold has moved up as a currency rather then as a commodity due to the fear of beginning of third world war. Commodities Index CRB has gone down to 340 from recent peak of 360. Its recent low is at 330 so it is probable to go down further by 10 points at the minimum. Recent Comments by �Federal Reserve Chairman Ben Bernanke that he was still concerned about inflation, particularly higher energy and commodity prices, but added that slowing economic growth should limit price pressures in the world's largest economy�. Short term over sold DOW/NASDAQ took this as a catalyst for short covering and great reports assumed that this comment is an indication of end to interest rate hikes. Higher Energy and Commodities prices and slowing economic growth in other words means �STAGFLATION� . Interest rates will not help to control this stagflation, market forces should balance themselves. Recently there was a comment by one expert that gold must continue to go up because oil/gold ratio. I didn�t get why gold price is linked to Oil. In fact we can look at anything on earth with oil and say that other thing has to go in relationship with oil. How about, Intel and Dell Stock prices when compared to oil? Oil is a commodity without which American�s can not go to work. Where as Gold is not a basic necessity. Slowing Growth has direct impact on commodities prices. Together with uncertain world (Almighty USD will go up) commodities may go down more faster then they have gone up. Gold is still traded like a commodity and being a Commodity without basic necessity of using it, it has to go down more faster then oil. Until gold trade as currency (If at all , it may happen after many years), it will have extreme ups and downs, so there is no missing out. For gold to trade as currency, it should be stable and appreciate slowly (little more then Inflation). That day is too far and may not come at all. Please suggest me to make it simple by clicking UnitedWeStand ------------------------------------------------------------------------- 14th July 2006. Gld continued its climb towards recent peak and closed on Friday at $66.12 from 62.56. At the same time HUI has gone up to 340 after peaking near 355. This week Gold stocks are predicting that gold will go down as they have underperformed gold substantially. War like situation is adding to the bullishness to gold. In fact US have too many events to monitor. It was only Iraq, then Iran, then North Korea now Israel and Lebanon (Ignoring the Gaza for a minute). What are the implications? In the past world uncertainty has helped USD to appreciate. This week USD has gone up from 85 to 86. Dow, NASDAQ have given up all the gains. Next week issues to handle are quarterly results, War and weapons apart from Economy and interest rates. As far as DOW and NASDAQ are concerned, it may be easy to assume that they will continue to go down. Either gold stocks needs to catch up with gold or Gold has to fall to justify the Stock prices. Stocks perform based on future expectation and they may continue to predict downtrend for gold for longer period of time. Examples are housing stocks. These housing stocks are way below their highs (Some are down by 50% from their peak) even though housing market has not shown any such collapse. Same way Gold stocks may under perform and gown down further along with the general stock market or due to the fear of inflation and associated higher interest rates fear. World economics are concerned about higher commodities prices. As long as they are higher, inflation fear remains. Japan has raised rates for the first time in six years. Probably the last catalyst for gold to fall is higher interest rates and appreciation in USD. Better to keep cash and wait for the right time to buy gold and gold stocks. Please suggest me to make it simple by clicking UnitedWeStand -------------------------------------------------------------------------------------- 08th July 2006. Markets were more or less stagnant this week. HUI, index of gold mining shares moved up 5 points from 334.82 to 339.45 after having a peak of 351. GLD has moved from 60.85 to 62.56. Where we can go now? If the recent fall to about $550 was not that sharp and I would have concluded that correction was over. However that was too sharp and too quick. The recovery from those levels was together with DOW, NASDAQ, WORLD STOCK markets. If we expect the correction is over for gold and gold stocks, we have to assume that correction for all markets is over and bull market will continue for every market. What are the probabilities? World markets are financed by US. Some analysts are thinking that US markets are over heated and World markets are good alternatives. However fact is world markets is way over priced then US. If stock markets must go up, US markets must go up. Periodic economic numbers are confusing and signaling for stagflation. Higher commodities prices (including gold and oil) will add to the inflation fear and force Fed to raise interst rates. One of the reasons for recent bullishness in gold is speculation/expectation of china buying gold. Last week The Governor of the UAE Central Bank, Sultan bin Nasser Al Suwaidi stated that the bank was preparing to convert up to 10 per cent of its currency reserves into gold. However other part of his statement was overlooked. Other part of his statement read �'I don't think it is appropriate to buy gold now - it is too expensive. The appropriate time might come very soon�. No central bank will buy at peak (China also will not buy at this level). Appropriate time will come very soon? What is that means, in a week or in a month or in a year??? Fundamentally technical analysis will not work for Gold, I don�t know exact reason but it is because it has too many dimensions (World market, traded in different currencies, concentration of supply etc). Gold technical analysis can be made to suite any direction we want. If you are bullish, you can show bullish technical indicators and if you are bear you can show bearish technical indicators. For the time being I am bearish (Don�t buy or sell just keep cash). Look at the chart from stockcharts.com, gold has touched 200 DMA and jumped back again to this level and currently at 50 DMA. Some bulls talk of golden cross (where 200 DMA and 50 DMA Crosses), that happened many times between 2004 June to September 2005. September 2005 has worked well and lifted the gold up from 440 levels to 750. But previous cross did nothing. Can it fall back to 200 DMA. Yes that happened many times and it has gone below 200 dma from April 2004 to August 2005. I would like to start averaging after it goes to 200 dma again assuming that gold may try to touch 450 again. So I need to spread my buying in a range of 560 � 450. Why do I need to buy, because many expects it will cross 4 figure number in 2007. Please suggest me to make it simple by clicking UnitedWeStand ------------------------------------------------------------- 30th June 2006. At last, second quarter ended with a very bullish scenario for rest of the year. So majority of the investors who were long and expecting the worst is over are ready to celebrate the fire works for Independence Day. Those who are short 100% of their funds are sweating with a margin call expectations and giving up. Let us see what happened. The ignition was the exact same reason why this correction started a month ago. Bernanke raised interest rates by quarter percent. First time market collapsed, this time market recovered almost all losses for exact same action of Bernanke. One positive aspect of this is markets started recovering in overnight Asian Trade one day before Interest rate decision in US. So that means markets are ready to go up come what may be the out come of Federal Reserve boards decision. May be short covering, may be bear trap what ever, markets have gone up more then any one individually expected. If we look at Gold Market analysts and pundits, they think it is only gold and gold stocks recovered because Gold is unique and it has nothing do with any economic reasons. However same positive result was seen in all most all over the world and in all markets. What exactly we can expect from next week and rest of the year. Let us look back at the definition of Stagflation, As per Wikipedia, Stagflation is a term in macroeconomics used to describe a period characteristic of high inflation combined with economic stagnation, unemployment, or economic recession. Are we going to see? We don�t know, because we will not have clear signals. Fed said there are indications of slowing economic growth. Later data shows increased in personal income and spending, increase in commodities (gas, gold and silver), decrease in USD. These will definitely will add to the future data on inflation. The fact of the matter is excess liquidity crated in last few years to fight against terror, natural calamities, nations rebuilding must balance. That balancing act together with stable real estate prices (Worldwide not just in US) may be the topic of next few months. Let us see how it goes. Keeping cash is the best we can do at this time. Please suggest me to make it simple by clicking UnitedWeStand --------------------------------------------------------------------- 23rd June 2006. Hopes and enthusiasm revived on gold and gold stocks. Gold from its lows of 540 (In Asia) gone above $590 and HUI from lows of about 270 to 310. So far it looks like Buy the dips rule is working very well for permanent bulls. However this dip has started at 730 for gold and 400 for HUI. This dip is not like the regular short term bull market dip. Let us look at the 5 year chart of gold. In that chart eliminate the extra-ordinary period and see where we stand today. On Sep 03, 2005 gold was at $440. Was it at $440? Can any one believe this? Since then market has lifted to prices to above $700. In that chart $560 appears to be a good support (27-Jan06 to 10-Apr-06). That support has lifted the prices back to $590 level. One reason why correction is not over is US Dollar. US dollar is correcting from oversold levels. It has made a double bottom at 84 in May and early June and currently quoting just below 87. It has maximum potential to go to 90. Gold is inversely related to US Dollar, so USD appreciation adds to the selling pressure on gold. So keep watching USD and Gold to estimate the final bottom. Click here US Dollar Chart For the time being let us be assumed that this correction is over, do we need to jump in. Otherwise we may be missing the boat? My thoughts are ok, let me miss the boat, I will wait for next opportunity? Why I am so sure that I will have next opportunity? In the past many times I thought this is the last opportunity, but I have seen many more opportunities. When gold had gone to $730, I thought ok, I missed the last opportunity. I missed the opportunity only for few months. In 1979 gold touched $850 and that was the peak not yet broken. So until gold touches that historic peak we will have at least more then one opportunity. By the time correction is really over, the discussion will be like supports are at $500, then $450, then $400 finally at $250 (Scroll down and look at 35 years chart). Please suggest me to make it simple by clicking UnitedWeStand --------------------------------------------------------------- Friday,16th June 06 Stocks are speculative whether they are commodity stocks or high tech stocks. They go up and they can go down. If they go down, they will and can go up. Stock move in one direction called primary trend with occasional deviation from that trend. Nothing can go up or down straight. When they are stable for prolonged period, no one will be interested in trading and tracking the market. Mutual funds of Stocks are no different from stocks. The degree of change is less but they have same risk. Those who don�t agree are requested to look at the performance of any of their favorite Equity mutual funds. The reason I am stating about mutual funds is few of my friends claim that they don�t invest in stocks. After asking many more questions, they say we invest in Mutual Funds (Equity Mutual Funds), they think equity mutual funds are not stocks and different from stocks. Strictly speaking they are not stocks, but in terms of investing Equity mutual funds are like stocks with less degree of risk. Less degree of risk means profits/losses are less then the actual individual stock, because they are combination of stocks (more then one stock). Whether you invest in stocks or mutual funds you must look the performance periodically but definitely not only once in a year. Commodities, Stocks have seen a sharp fall this week. Not many are worried about this sharp fall. Instead they are buying the dips. I do read Yahoo message board messages and few investors� forums to understand the psychology of investors. They are not scared yet. GLD AND ^HUI recovered from their sharp losses. Friday being expirations day for stock options and futures majority of the trades this week are either short covering or closing the long position. New investors are going to buy on Monday morning open as they assume correction was over with the sharpest fall in Wednesday. But correction is not over yet by any means. Keep tracking GDM and HUI. Financial Media is blaming Bernanke for the current state of the market even though their own colleagues are reporting that interest rates are going up in many countries and stocks all over the world are dancing in the same direction. Unfortunately few experts think that predicting the down trend or fall in prices is unpatriotic and is not a positive thinking. I could not resist talking about Jim Cramer as he is the known guru for Stocks. He said �KRY� is a speculative play. But look at the charts of any gold and silver stocks and point out which stock is not speculative? First of all Stocks are speculative and gold stocks are extremely speculative (If we define speculation as extreme ups and downs with in a short duration) Please suggest me to make it simple by clicking UnitedWeStand ------------------------------------------------ Saturday, 10th June 2006 As expected gold, gold stocks were down together. Gold Trust GLD down from 63.50 to 60.45. HUI index has gone down from 337.63 to 299.71. CRB index is at 340 close to Jan 06 level. This week, enthusiasm and non stop increase in prices expectation evaporated and investors started trying to ignore the market by staying away. This is a sign of acceptance of the down trend. Few started questing whether this is an end to bull market in commodities? Definitely those asking are new to commodities, those who are in gold and silver from last few years know this kind of extremes are quite common. This is not an end to bull market, but not an end to correction also. This correction will end when Media stops talking about gold, and when it looks like the long term trend support channels are broken down. Jim Cramer is trying to understand the Gold market and he is doing well. I respect his opinions because he is representing the High Tech investors and trying to switch from High Tech to commodities. It is very difficult to be a master of High Tech and commodities, in fact all most impossible. But he is making an attempt. When Cramer switches to commodities totally, then, we can assume the beginning for end of commodities bull market. He acknowledges his mistakes but by sticking to his recommendation on KRY he is not realizing the basics of investment. When there are many gold stocks in the market, why to stick to a company with political risk? We have to hope and pray for Venezuela to be a Business Friendly country. World is flat, proof is World Stock Markets and US Long Term Bond Rates. This is the result of �Free Trade�. Many US experts including Bernanke and CNBC Gurus like Kudlow and Cramer are not getting the reasons for appreciation of long term Bonds (Lower Yields). For ever-positive Kudlow reasoning appears to be that this is an indication of no inflation and bears are assuming that this is an indication of recession. Bernanke also raised his concern about lower long term yields. Very few are talking about Stagflation. Confusing and conflicting economic numbers are an indication of Stagflation. Recession can be controlled by injecting currency in the system; Inflation can be controlled by raising interest rates. But unfortunately there are no known theories to take control of Stagflation. To understand the real reason one has to look at World not just US. Let us take the example of China and Saudi Arabia. Recently China is allowing appreciation otherwise these two and many other countries pegged their currency to USD at fixed rate. So this implies Strong USD means Strong local currency or vise versa. Other countries currencies like Indian currencies have depreciated considerably against USD and they are still close to year 2000 levels of USD. So what are the choices for these countries to invest their funds earned by exporting to US? If they follow the advices of US experts, they have to invest in Asian markets to benefit from the growth. But they have enough investments in their own countries and they know how their neighboring countries stock market has appreciated. They also need to diversify. Assuming no reason, but to do justice to their portfolio they have to invest some portion of their funds in US and they have to park their export earnings where they have earned. So they have to buy US Stocks, Bonds, deposits and money market. When stocks are falling where to invest?? Be a very long term investor and keep holding those US Stocks for next bull market?? How many investors are investing in stocks for �dividend� yield? Same way long term bond investors are buying bonds not for yield but for capital appreciation. If USD is expected to appreciate in the short term from oversold levels, investing in Bonds also provides extra returns for these exports to US. Plase suggest me to make it simple by clicking UnitedWeStand ------------------------------------------- Friday June 2nd 2006 Fed is going to raise interest rate; no it is going to pass. Yes it is going to raise the rates. No it is not going to rise in June, it will pass. This is what happened this week. Why so much focus on interest rates? The questions we should ask is, can US Grow non stop? Can the world grow on its own, without depending too much on US? Answer can be simple, nothing can grow non stop, rest of the world needs time to grow on its own. It can not happen overnight. Every one is talking of two options Inflation or no inflation. Unfortunately dynamic world economy has too many options. What about Stagflation? As per Wikipedia, Stagflation is a term in macroeconomics used to describe a period characteristic of high inflation combined with economic stagnation, unemployment, or economic recession. Fridays� economic number may be an indication of stagflation. Non-farm pay roll number was at 75K as against the expected number of 170K. World Central banks know the way to stop recession. They know by pouring money from helicopter they can try to stop recession. That attempt may itself ignite Stagflation. Gold and commodities are continuing their correction together with Stocks, bonds. Everything is going down. In this type of market where to take shelter? Keep cash or keep it in money market funds where you can earn something. Gold stocks index HUI has recovered from 305 levels to 340 and closed at337. Non professional investors are again celebrating that this correction is over. These are the same investors who thought Stocks are not good so invest in direct commodities when gold reached 730 and HUI peaked out at 400. Now they changed their mind and thinking that stocks are good they will go up irrespective of gold supporting it. Few who are more experienced thinking that this correction is over and stocks are indicating that bottom is seen and time for gold to catch up. However from next week onwards both Gold and Gold stocks go down together may be another 75 points. Considering the past 6 years corrections which wiped out all most all the gains, correction may be over after 100 to 125 points (HUI to 240 Gold to $515 gold, just a number based on gut feeling) If economic numbers are an indication of slowdown, that is not good for either economy or for commodities. Only good for Bonds. Not in terms of yields but in terms of bond prices. Plase suggest me to make it simple by clicking UnitedWeStand _______________________________________ 26th May 2006. There was little panic seen on Tuesday when gold touched 637 and HUI under 310. Later HUI and Gold started recovering. This recovery has reignited the bullish tone and giving falls hope of completion of the correction. Investors are expecting that this correction is like that of short March 06 correction. That time bears were trapped, this time bulls are trapped. If history is of any indication, this correction is not over yet. Since last 6 years every year we have seen steep correction in gold stocks. This time it may not be much different. The big difference this time is main stream media support. We have seen a lot of talk of gold in every financial media. The biggest shift is Jim Cramer started recommending Gold stocks. WOW what a shift! This shift is the primary factor in predicting that NASDAQ TYPE bull market for gold and commodities stocks. After this correction, we will start hearing all positive stories about gold from many more analysts and investors. We all know what happens when US consumers start buying. SKY is the ONLY LIMIT. Bulls and bears must look at the 35 years chart of gold at Gold-Eagle Web site. Bulls are hoping that this time without a breathing gold will take out its historic peak. But unfortunately it may take more time and before taking out the historic peak gold may once again look back $500. $500 should be the strongest support. Whether we can jump in at $500 or not must be evaluated that time. My best guess is that time every one will be in a panic mood and no one wanted to jump in and buy at that levels. We will discuss again at that time. Ultimate end to the commodities bull market can be predicted when We hear in CNBC that �Almighty Gold� �World Reserve Currency Gold� (Basically when all attributes of USD are applied to Gold). For some this may look nonsense but look at the following:- 1) Lot of demand from China and India are main reasons for current prices of gold. But Indians know demand was there all the time, it is not new. 2) Oil Prices are going up because of Demand from China. What China they drive Bike, why do they need oil? 3) Creation of Euro was like a joke that time, now it is threatening USD. Now media is debating in single currency for USCANMEXICO (North America). Yes this is my yahoo email id. 4) Now Media is also talking about borderless North American Zone, just like that of Euro Zone. ___________________________________________________________________ Is it an end to the bull market in commodities? No WAY, it is the beginning for extra ordinary profits with in next few years. Let us see how it compares with NASDAQ. In my opinion what we are seeing is like what happened with NASDAQ between 1990-2000. NASDAQ was at 400 in Jan 1990 and has gone to 1600 by 1997 end. Those who thought that it was the end to NASDAQ missed the greatest bull market. NASDAQ peaked at 5000 in April 2000. HUI was about 185 in 1996, now peaked at 400 in May 2006, currently it is correcting and may go down to the level of 250 with in next few months. This is in no way the end of bull market but the one of the best opportunities to participate in the extra ordinary bull market just like that of NASDAQ from 1997 to 2000. ___________________________________________________________________ 24th May 2006 To day may be the first day we are experiencing the panic in Gold Bugs. This is the day gold gone to under 640 from 730 two weeks ago and HUI index of gold mining shares touching 310 after peaking out at 400. It took just 10 trading days. What should we do? Those who got stuck don�t need to worry at all. Wait for further correction of gold to about $550 and HUI to 275 and then start averaging down. Don�t expect that will be the final fall. Those who wanted to buy wait for October 2006 ----------------------------------------------------------------------------------------------- Week Ending on Friday, May 19, 2006 CRB Index (Commodities Research Bureau) This is the primary index and need to be tracked to see the over all status of all commodities prices in general. CRB Index gives us a preview of inflation index for the future. As of today I am not aware of any product to trade on this index, but I keep track of this index to get an idea on the over all status of Commodities. Index was 365.45 on May 11th and closed at 338.64 on Friday, May 19th. Its low one year ago was 293.59. Immediate target may be at 316 reached on 08th March. For CRB Data please look at http://www.crbtrader.com/data.asp?page=quote&sym=CRY0&mode=i Whether Gold is currency or commodity is like chicken and egg, We will discuss it in future updates. Gold/GLD GLD is a proxy for Gold and it equals to 1/10 of an ounce. Gold is continuing its correction by dropping like a rock. It has dropped to 65.58 from $72.26. This drop happened in just 7 trading day�s i.e about 10% drop. GLD was $53.83 on March 10, about 2 months ago. This gives us an idea that long way to for this correction to get over. It may bounce a bit next week, but not a time to jump in to buy. For GLD Chart at yahoo, please go to http://finance.yahoo.com/q/bc?s=GLD&t=1y HUI (Index of un-hedged gold mining companies) In general gold mining shares precedes the direction and depth of gold direction. If gold mining shares go up, gold may go up with next few trading days. HUI was 401 on 11th May and dropped to 321.72 on Friday, this drop is with in 8 trading days about 20% drop in 8 trading days. ___________________________________________________________________ 17th May 2006. CRB Index: (Commodity Research Bureau) CRB was about 230 in July 2004. It is going up, up, up and peaked out at 365 last week. Now it is entering a correction mode and today quoting at about 350 recent trading range low is about 330 and it may be a support for short term. However it is widely expected that it will breakdown from 330 level and go down substantially. Gold: In July 2004, gold was about $350 and peaked out at about $730 last week. Since then along with all other commodities it has started correcting, currently quoting at about $690. Technically its first support level is at around $682. It has moved down substantially from that level and came back with vengeance in yesterdays Asian Trading. It has gone back to about $715 and giving back the gains. Once that $682 support breaks to the down, its next support is expected at about $620. So lots of volatility can be expected. HUI: (Index of un-hedged gold mining stocks) HUI was at about 150 in July 2004 and peaked out at about 400. It has started its downward journey and given up 60 points in 3 days and currently quoting at 338. It has some support at these levels and has excellent support at around 275. Those who wanted to participate in the future of commodities boom, start looking at these markets and wait for the correction to over with in next six month. Plase suggest me to make it simple by clicking UnitedWeStand