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"DrBubb" on Gold shares etc. (Oct.'12 interview on FBB)


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"DrBubb" on Gold shares etc. (interview on FBB)

 

On his recent trip to London, trader Michael Hampton discusses gold, the stock market and the financial outlook.

Good news ... though he sees a correction in the short term, Mike is bullish about gold and gold stocks.

Here's a link to his charts. *

 

Hampton believes that the upcoming presidential election in the United States is going to an big impact on both gold and the stock market. The seasonal cycle calls for a correction in the gold market in October that could result in a significant low as early as this week. Once that's out of the way Hampton expects a pretty decent upside move in the gold price.

 

The four-year cycle in gold indicates that the year after the US elections on average sees a doubling of the gold price.

His outlook for the stock market is not as bullish , as the liquidity injections of central banks seem to have a diminishing impact after each additional round. Therefore owning call options on gold or gold shares versus puts on stock indices could be an interesting trade.

 

PLAY OR DOWNLOAD HERE

 

LINK TO PROGRAMME HERE

 

 

mjhd.jpg

 

*Charts

Sure.

 

Here's the Bernanke Racetrack chart

 

benrace.gif

 

 

I think we discussed two others, but I am a bit too jet-lagged to recall what they were.

 

Long term GDX, or HUI maybe?

 

Monthly HUI ... update

 

huim.gif

 

HUI is very roughly about 10X GDX - and has a longer history

 

GDX / etf for Major Gold shares ... update

 

gdx.gif

 

 

Ratio : 9.55

HUI : 489.99 = $5.54

GDX: $51.31 - $0.35

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I was very lucky to have had a chance for a conversation with Rod McEwan of almost one hour at this year's Mines & Money- Hong Kong

 

I think I posted my notes of that conversation on GEI, and when I can find them, I will repost them here.

 

One of the most interesting things he said was that Gold stocks tend to Double during the year after the presidential election.

If we see it again, it might take GDX from its 2012 low near 40 to about 80 or higher, and HUI to about 800

 

GDX:

gdx.gif

 

In August, we saw the latest opportunity to Buy GLD versus SPY

 

benrace2.gif

 

In London, Dom and I also spoke about some of the ideas in his book, and I hope he can post that Podcast later too.

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(A duplicate post from DrBubb's Diary):

 

Another Gold stock index, XAU, has already made an "a" low, and a "b" high, and looks set to soon make a "c" low

 

XAU / PHLX Gold/Silver Index ... update

 

 

xau.gif

 

XAU : 185.15 +0.25

Open: 184.49 / High: 185.22 / Low: 181.93

Percent Change: +0.13%

 

(It's interesting to see that index close up +0.13%, on a day when GDX was : -0.04%, and GLD was: - 1.01% )

 

It could be this week, near $180... with a small possibility that we have seen the XAU and GDX low already

 

 

Here's a long term chart for the same index

 

XAU / PHLX Gold/Silver Index ... update

 

xault.gif

 

 

xault2.png

 

XAU link: http://stockcharts.com/h-sc/ui?s=$XAU&p=M&st=1980-10-15&en=(today)&id=p20623278061&a=280554429

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About GEI's Gold calls.

 

I tend to be more accurate on my Buy Calls, than my sell Calls - as this may confirm

 

KWN:

"Today King World News is reporting on the stunning developments taking place in the gold and silver markets. Acclaimed commodity trader Dan Norcini told KWN that in the metals markets, “... we’ve had a huge amount of short covering.” Norcini also stated, “Those shorts got hit hard this week, and a lot of them ran for the exits. These guys got caught with their pants down.”

 

Hmm.

 

Why don't they talk about something more important, like:

GLD/ Gold has run up to an important Resistance level, and will need Fresh Buying to punch through it

 

GLD ... update

 

gld.png

 

KWN is heavily biased (as a Bull)

 

They always give the Bullish news, and you don't here about the Bearish parts of the story until AFTERWARDS, when the price is lower, and they are trying to talk it back up again.

 

Is that type of "news" really helpful?

On GEI I try to do better, and talk about things that will move the market BEFORE the move occurs.

 

I though we would push through it, and it soon did.

That level of GLD-$160 now probably represents very strong support, and the worst case low for this move.

I do not think it will go that low, since there are now good support levels above there - like $166-167, and others

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Here's no 2 of many.

 

Greece From The Inside

 

Dominic Frisby talks to Athens resident, former bond trader and business man, Stratos Manolas.

Greece faces a dire social situation with an unemployment rate of 25%, a rise in poverty, illegal immigration and capital flight.

In the years leading up to the debt crisis, Greek politicians gladly took EU subsidies without assuring the productive use of those funds, which lead to an increase in debt and corruption. At the same time the regulatory setup in Greece has hindered the entrepreneurial spirit of the country. While the latest reforms were necessary and had good elements, Manolas criticises the implementation of reforms, and how the IMF forced them upon the people.

The majority of Greeks still favour staying in the euro. Manolas states that a move to the drachma and the subsequent power to manage their own currency could lead to the postponement of necessary structural adjustments. They agree that the eurozone will continue to “muddle through”. Amid the gloom though, Manolas sees some positive signals for investing in Greece.

PLAY LINK HERE

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Good one.

It's good to see Stratos commenting - and I will look forward to hearing what he has to say

 

I heard him make a comment about Greek Bond prices doubling whilst I was in London, and this supports it:

 

GREEK BOND prices are rising, despite austerity - points out an article in the WSJ

 

... highest level since a debt restructuring - to about 17.2% yield, from a high near 31%.

 

greekbond.png

 

German Finance minister Schauble has said that he doesnt think Greece will default on its debt.

"There's been a sea-change in sentiment since June..."

== ==

 

What the article does not mention is that it is very expensive to be short high-yield instruments like this

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How would CDNX (the Canadian Venture Index) fare in my Bullish scenario?

 

Maybe rather well - It could double from the recent low of 1,200

 

CDNX / Venture Index ... update

 

cdnx.gif

 

It need not do that well, but if GDX doubles from the $40 Low of 2012, then CDNX could hit $2400, $2600-2800 (top of channel),

or even the old high near $3400.

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Could it be another channel?

 

I think he regularly records voiceovers for the BBC. But I am also aware that he has been doing work for other channels. When I was in London I had a chance to hear him record a short change for a spot that he did for a Travel show - but I don't think it was the Beeb.

 

I wonder how long it takes before these ads are used?

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I listened to the 2nd pod cast today.

I really enjoyed it. there were some very good points made about sound money. Plus some good ideas on how we can go forward from were we are now to get a sound money system going.

 

Great pod cast guys! Keep up the good work.

Here's the Link for that one - I haven't listened yet, but I was there

 

Michael Hampton and Dominic Frisby discuss sound money

 

MP3: Link-to-Download

 

 

On his recent trip to London, trader Michael Hampton discusses some of the issues raised in Dominic Frisby's book.

They discuss the importance of sound money, the shrinking of the middle class and currency competition.

 

Dominic Frisby states that the extraordinarily uneven distribution of wealth in country’s like Britain and America is a consequence of our system of money. Those who receive the newly created money first benefit over those who don’t – a process which compounds over time and leads to an ever greater concentration of wealth among the top 1%. They also point out that government redistribution of wealth – whether via inflation or through welfare payments – is placing incredible pressure on the middle classes, who are finding themselves squeezed like never before.

 

(I might give it a thread of its own - if there's enough interest in the subject of Sound Money )

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My Money followed my Mouth this week - see DrB's Diary

EXCERPT

Cheap "Gold upside" through GLD Call Options ?

 

Essentially, I have bought In-the-Money Calls on GLD on over $1,000,000 worth of Gold.

 

I am now long: GLD. Jan $170 calls - Now worth $3.75 ($375 per 100 share Call)

 

If I had 50 such calls, they would:

 

+ Be worth $3.75 x$100 x50 = $18,750

+ Control 5,000 shares of GLD worth : $167.00 x 5,000 = $835,000

 

In fact, I have a slightly larger number than that, which allows me to control Gold worth 7-figures.

 

GLD- Jan.$170C ... update

 

gld170cjan13.gif

 

With GLD now at $167.00 or so, they are worth No Intrinsic Value (today),

but a tiny move up in Gold will put these Call options in the money.

 

And I control a GLD/Gold position worth over $1 milllion for only 2.25% of the Face Amount

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  • 2 months later...

"A Christmas low" ?

 

MP3 : http://commoditywatch.podbean.com/mf/web/4am2u/2012-10-14-GMY-DF-E-56.mp3

 

In the interview, I spoke about a possible a-b-c completing around Christmas time: GLD-chart

 

gldm.gif

 

The volume on that recent low is higher than I would like to see,

so maybe it will need to be retested in the next few days?

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  • 2 weeks later...

(From the time of the Podcast)

 

GDX / etf for Major Gold shares ... update

 

gdx.gif

Ratio : 9.55

HUI : 489.99 = $5.54

GDX: $51.31 - $0.35

 

 

(UPDATE: xx Jan. 2013) ... latest update

 

gdx.gif

Ratio : 9.544

HUI : 432.65 + $0.62

GDX: $45.33 + $0.19

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