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[roguedolphin]

Interesting post from SI on Gold/Oil/China Re-peg and "Voodoo Economics"....

From: SliderOnTheBlack 7/27/2005 4:44:46 PM
Read Replies (1) of 275

$$$$ RINGING THE CASH REGISTER AND LOCKING IT IN.


But, before we get into that...and before I forget to link it:

A great Interview with John Williams on Puplava's Radio Program:


http://www.financialsense.com/Experts/2005/Williams.html


John Williams work on cutting thru hedonic manipulations on Inflation Stats and using GAPP Accounting + factoring in the unfunded liabilities of Medicare & Social Security vis a vis the Deficit; is a fundamental pillar to the entire Bullish Case for Gold going forward.

Here's his site:

http://www.gillespieresearch.com/cgi-bin/bgn


I agree with Williams on virtually all of his premises...and they are positive for Gold over the long haul... but, in Trading we must always balance the "long haul" vs. the "now" - especially if the "now" holds trading gains that are unrealized gains - as gains & profits aren't gains, or profits - untill we ring the Cash Register & sell and close out positions and put the money in the bank.

And that's what I just did... put it in the bank.

Why ?

... to borrow a favorite term of James Cramer:

We just didn't get any "Pin Action" off of the China Re-Peg.

From my contacts, the Gold Sector simply has NOT received adequate fresh inflows into the Gold Funds off of this news to break thru resistance here.

Now I am as bullish as anyone for the ultimate negative implications that China's move away from the US Dollar Peg has for the USD and the positive implications it has for Gold....along with the when, not if ultimate ramifications that the realities of inflation & the deficits as reflected in John Williams work linked above, will have..... BUT !

- no fresh cash inflows = no volume.

- no volume = no break thru resistance.

- no break thru resistance = no continuation of the rally.

- no continuation = gravity will pull us toward retracement & restest of this move.

...that leads to ANTICIPATING and not REACTING.

aka: RINGING THE CASH REGISTER & locking in the gains from this trade off of the April/May washout and that's what I've done today - Ka-Ching, rang the register and put it in the bank.

...30-40 Index points is simply too good of a trade and too much money to continue to let hang out there exposed for an overdue retracement/retest - especially with no Volume and no "Pin Action" off of the China Re-Peg.

Another significant factor here is that the Oil story is simply taking quite a bit of Natural Resource/Commodity Sector cash that would otherwise be coming into to Goldstocks.

And as I mentioned in an earlier post - the LAST Headline that the the Market wants to see immediately following the China Re-Peg, is:

"Gold/Goldstocks - Hit New Highs"

Given that the "smack down" factor is going to be high for a while and given that we didn't get any fresh cash/volume here... it's time to be a realist.

In my opinion, the Metal is simply going to have to do the heavy lifting for a while here and will need to carry the HUI Stocks over that 200 dma WALL of resistance on it's back.

I'm back to basically just a minimum core position here.

But, as a Trade, I now have 2 pretty good options:

1. Buy 'em back perhaps even cheaper and do it all over again...

2. Wait for a technical conformation and a Closing Print for the HUI at 207 or higher that holds (preferably) for 3 days in a row.

- that will take out both the prior high off of this move and the 200 dma for the HUI as well....and that is what we need.

The Cash that was out there Institutionally before the China Re-Peg... was deployed on the April/May washout. There is no reason for them to chase anything here and every reason to wait for a technical conformation that this is the start to a new upside leg that has sustainability.


This was a nice quick 40 point move off of the washout... my gains are now in the bank...and I got a helluva cheap cost basis on my core hold position....as traders, we can't ask for much more than that.

I've gotta be a realist here... we just didn't get the pop, or the cash inflows I expected.

Trading Discipline thus requires - Lock it in.


Time to let the market digest the Re-Peg... let the USD Spec Long & Gold Commercial Short position unwind a bit here... let the broad market that has been propped up & rallied here on hedonic voo-doo Economic numbers digest reality a bit...

I think we get a significant move in both Gold and Goldstocks before the years out... but, this one - is now IN THE BANK.

I am not going to risk giving back 10-15 Index points on what I feel, is now an overdue correction and retest for this move.

We got HUI 165 to 205.

...don't give it back on an overdue re-test and retracement.

We can always step back in on a technical conformation of the move to the upside.

This one's in the Bank - they aren't getting it back from me...

Slider`


Rogue