Fibonacci Financial

Posts Tagged ‘Silver’

Go to Cash NOW = Run don’t Walk!

The Commercials have been selling the Stock Indexes for 3 weeks now.  There has been a normal Bear Market retracement of the first leg down in this Bear Market in percentage & Elliot Wave terms.  Now is the time to go to cash.  The next leg down in this Bear Market will be devastating.  The Dow Jones Industrial Average will most likely go well below 6500.

The COT readings in the precious metals and daily sentiment are at a bullish extremes also.  Better prices will be forth coming.  We will add to our core holdings at much lower prices.

Where should you put your cash?  Contact us for tactics.

AGAIN

There are a wide variety of ways to participate in this opportunity ranging from the very conservative to the highly speculative.

BUT you need active guidance – Contact Us at Fibonacci Financial.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

Long Term Market Success and Wealth Accumulation Requires Patience

Currently All Markets are in Flux.

(Except recent recommendation to buy the US Dollar)

We are waiting for large declines in Gold and Silver before adding to core positions.

We are waiting for a short term decline then a final advance in the current bear market rally in stocks.  This will give us a final opportunity to liquidate stocks before the next killer decline.

While we wait, meditate on these wise words from the most famous stock trader of all time – Jesse Livermore.

“Cash was, is, and always will be – king. Always have cash in reserve. Cash is the ammunition in your gun. My biggest mistake was not in following this rule more often. Time is not money because there may be times when your money should be inactive… Often money that is just sitting can be later moved into the right situation and make a fortune. Patience-Patience-Patience. Patience was the key to success – Don’t be in a hurry.” – Jesse Livermore. How To Trade In Stocks, 1940.

Yes Dear Reader, Silver and Gold rallied after the COT Sell Signal.

One of the advantages of following the COT reports is to help determine which breakouts are the beginning of a new trend and which are not.  With the COT reports providing a sell signal on Silver, I give this rally low odds.

Also, The Commercials (insiders) set up their positions early and against short term trends.  Patience, patience

The odds still favor a failed rally attempt in the precious metals and not the start of the next major leg up in a bull market move.

FYI – while Gold and Silver represent a significant part of the Core holdings in our portfolio right now, they were acquired at substantially lower prices.

What Are All Those XXXX’s and OOOO’s on the Charts?

( No Dear Reader They Don’t Represent Hugs n Kisses! )

Several readers have indicated that they are not familiar with the point and figure charts that I use for illustration purposes in the blog.  John Murphy (world class technical analyst) provides an excellent overview of Point and Figure charting on his web site StockCharts.com.  If anyone is interested in why I use these “old fashioned” P and F charts drop a comment requesting additional information.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

I Just Received A Short Term Sell Signal From My COT Guru !!!

Therefore, my skepticism about a Silver (SLV) breakout to the upside and inflation will probably prove correct.  If Silver breaks out to the down side, we may still see an opportunity to accumulate Silver at bargain basement prices.  It may also mean that we may be getting close (most likely a few months) to the next deflationary down leg.  The main event still to come before then next Deflation Tsunami will be the end of the stock market rally which still has legs (in spite of a near term pullback or consolidation).

Stay tuned

PS: Yes I love Silver and believe at some point in the next 10 Years it will sell at least 10 times its current price.  BUT I still haven’t accumulated all I want.  Therefore, I love to see Silver GO DOWN IN PRICE !

Worst case scenario for Silver is that it doesn’t bottom out till 2012.  To me that just means 2 more years to buy it at great prices. 

While we have had  the break out of the Gold Silver ratio and of various Commodity indexes in infationary directions, we still have not seen a break out of silver.  Here is an updated point and figure chart of SLV the silver ETF.

The information regarding Commercial (insiders) and Speculator positions published in the Commitment of Trader (COT) reports on Friday still support the contention that this is a bear market rally in the precious metals also.

What Are All Those XXXX’s and OOOO’s on the Charts?

( No Dear Reader They Don’t Represent Hugs n Kisses! )

Several readers have indicated that they are not familiar with the point and figure charts that I use for illustration purposes in the blog.  John Murphy (world class technical analyst) provides an excellent overview of Point and Figure charting on his web site StockCharts.com.  If anyone is interested in why I use these “old fashioned” P and F charts drop a comment requesting additional information.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

The Second Article in the Silver Phoenix series has been published.

To read it just look for the Ezine widget towards the bottom of the right hand column.

In Your Humble Partner’s Opinion Demanding “Coin Metal Silver” Is THE Most Revolutionary Act That Can Be Performed At This Time To Move The U.S.A. Back To Sound Money.

Share Your Thoughts

It was really fun writing The Silver Phoenix Rises Again but embedded in the entertainment were some very serious, in fact revolutionary, recommendations – the take aways !

(if you haven’t read The Silver Phoenix Rises Again, please read it first)

The Primary Purpose of the article was to inspire action (your action dear reader) towards the remonetization of silver.  Remonetize silver and the remonetization of gold will follow as night follows day.  Ergo a return to sound money which is the foundation of a truly free and prosperous society.  The inimitable Harry Browne made the recommendation to always take the direct route to freedom in his classic How I Found Freedom in an Unfree World.  An example of indirect action would be to buy stock in B-Mart and plan to attend an annual shareholders meeting when you got extremely bad service.  The direct and rational action would be to walk across the street to Target.

The Political Route ? (1)

So what would be the direct route to remonetization of silver?  Join a political party and attempt to add sound money goals to the party platform (this means joining and then influencing the platform committee).  Then run for national office (House of Representatives).  IF  you win, draft legislation and stump for a consensus of rational support in congress…………………… Wrong!

The Societal Route – Individual Action (2)

The direct route would be to simply start using silver as money not just as an investment vehicle.  Currently, those of us who buy silver bullion coins or bars are using silver as a “Secondary Media of Exchange”.  To buy a candy bar or pay for services rendered we must first go to a coin shop and convert the silver (secondary media of exchange) into Money (in the US that would be Federal Reserve Notes or in colloquial terms “Dollars”).  Then we buy the candy bar or pay for services with a direct media of exchange (money) – dollars or euros or yen.  To start using silver as money (as a direct media of exchange) means to actually use it as the primary exchange item.

Actions

I am going to start paying my business partners each month with 10 ounce silver bars for up to 5% of what I owe them.  That would be paying for services with silver as money.  You could start by paying 10% of  your kids or grand childrens allowance with pre 1964 silver us coins.  This would give you the opportunity to share the history of the constitutional dollar with them.  Use it as a teaching moment to share our heritage with the next generation. (If anyone wants me to draft a short history of the constitutional silver dollar for their kids and grand children, let me know).  Be creative and share your ideas with us here.

Coin Metal

Now this is a small but vital first step.  Unfortunately, most of the physical silver out there can’t be used as coins in everyday transactions.  99.9% pure sounds great BUT it is not durable enough to be used as money.  So we need someone to start minting “coin metal” silver coins.  Coin metal silver coins would be 90% silver and 10% copper.  Each silver coin would have 1 full ounce of pure silver and .11 ounces of copper.  The coin would weigh 1.11 troy ounces and would be very durable and usable for many years in everyday transactions.  I am currently working on that project unless someone beats me to it – hint hint (I am a money manager and personal financial coach not a mint master).

Anyone interested in these “Coin Metal” silver coins please share your email address and I will keep you posted.

Silver is THE doorway to sound money – just open it and walk down the yellow brick road. 

Let freedom ring with the sound of silver in every ones pockets.

YOU HAVE THE POWER TO CHANGE HISTORY – USE IT – INFECT TWO OTHER PEOPLE WITH THE SILVER VIRUS BY SPREADING THE MONEY AROUND.

Rocky Mountain Illumi Naughty Dictionary definitions:

1 Political Science – The art of acquiring with a gun through governmental action what you can’t acquire on a voluntary basis through dialogue and a hand shake.  Always a win/lose situation.

2 Volitional Science – The art of acquiring what you want through dialogue and a hand shake.  It is always a win/win outcome.

Flash – The Gold Silver ratio Broke Down ! The Scales Tip Towards the Inflation Camp.

Vide !

Given this Breach in the Gold Silver ratio, I will be looking closely at the COT (Commitment Of Traders) report this weekend and next (unfortunately the info is for trading only through tuesday).

Frankly dear reader I am skeptical.  Let’s look at the Silver ETF SLV action.

A price Break Out in SLV that prints an X at $14.50 would force this ole poker player to exchange some of his greenbacks for silver bars.  One of Jesse Livermore’s rules was never be afraid to buy strength.  Not every poker hand is a winner but you learn to play every hand unemotionally.  Remember its not about the hand its about the game.  That is where good money management (proper asset allocation, stops, Optimal F, etc…) comes into play.  If you don’t have good money management rules – before the game ends YOU WILL LOSE.  If you make money along the way without employing good money management, you were lucky and luck runs out.

As Paul Harvey always says – Stay Tuned For News.

The Inflation vs Deflation debate rages all over the Web – So who is right ?

Last years deflationary collapse was revealed by a break out of a 2 year consolidation of the Gold/Silver ratio.  After burning itself out temporarily and yielding to the current mini bail out bubble the Gold/Silver ratio has once again entered a consolidation formation.  The breakout should indicate which tide will overwhelm the markets over the next 9 to 18 months.  My guess is that you will not find this insight anywhere else on the web.

Vide !

How does this work?  Silver was demonetized a century or so ago and now a large part of its demand comes from the industrial/jewelry sector (although the monetary demand is growing again).  Therefore it is more sensitive to a deflationary collapse.  Although the central banks and governments of the world have worked tirelessly to demonetize gold, it still is part of the monetary base of most central banks.  In spite of blatant manipulation by central banks and governments it still is less sensitive to deflation.  If the Bernanke/Obama bail out/stimulus printing presses overwhelm the collapse of toxic debt and we head into another inflationary/hyper-inflationary period, gold and silver will both break out to new highs but silver will run faster.  As the price of silver outpaces gold on a relative basis, the Gold/Silver ratio will decline.

Why should you care dear reader?

The next tide of either Inflation or Deflation will have a massive impact on your investments and wealth.  Knowing which one will dominate should dramatically alter the composition of your investments and impact your financial decisions.

The Gold/Silver ratio is one of the key indicators that I watch.

We don’t have to guess or predict the outcome of the Deflation / Inflation tug-of-war.  We just have to be alert to what the markets are telling us and reallocate our portfolios accordingly.

You saw it here first.  So, Stay Tuned ! ! !

Where Are We In The Markets and What Should We Do?

Current FF Market Model Allocation?

Category 1 – Cash

Gold and Silver are most likely in a long term up trend that started in 2001.  They peaked in 2008 and are currently working their way down and up and down to the first buying opportunity in several years.  Remember nothing goes staight up or down.  Gold should be buy below $700 and silver should be a buy below $7 (very rough guidance).  The pot at the end of this rainbow is a few months away.

PS: This is supported by Long Term precious metal cycles, Long Term trend lines going back to 2001.  The only caveat is the concern as to how they will be affected by the next killer deflationary wave.  This will be monitored as they come back down to their long term trend lines.  Also there is a chance that I will be wrong about deflation coming next.  If inflation is next the price action in the precious metals will show their hand and we will make the appropriate investment response and buy into strength ala Jesse Livermore.

Cash is KING again.  Long live the King.  The U.S. Dollar was in a bear market for several years up till September of 2008.  It is now in a multi-year bull market.  Yes Washington DC and the Fed are doing everything in their power to devalue it BUT the following factors trump their printing press profligacy in the short term anyway.  First and foremost the massive debt accumulation over the last few years is serving as a massive short squeeze against the dollar.  This now turns into a panic for dollars.  Also, in a fractional reserve fiat money system as debt collapses, a reverse leverage works and money supply in the broad sense implodes far faster than the boyz at the fed and treasury can print it.  Add to that the dollar got way over devalued against other fiat (rag money) currencies such as the euro.

PS: This is supported by Commitment of Trader COT activity, Cycle Studies, Elliot Wave action and Point and Figure chart action.

Yes then there is the Euro.  It was in a bull market for several years and got so overvalued that even famous runway models became financial geniuses.  Now it is just Euro trash for a couple of years – if it survives.  Currency unions are notoriously short lived.  Yes I can hear all of you One World conspiracy theorists howling at the moon!  FYI I have read Tragedy and Hope by Caroll Quigley (heavily annotated)and much more.  Please read The Great Wave by David Hacket Fischer for starters and then lets chat.  If the Great Wave does not get the One Worlders the Singularity will!

Category 2 – Lending (Debt Instruments)

To be continued tomorrow.   Yes dear reader for next few days I will cover a category a day.

Since we are midstream in so many markets, it seemed like a good time to start filling out the FF Market Map.

Stay tuned for more.   And remember most of the time it is best to be patient and let the market provide its bounties in its own time.  Get in a rush and you loose….

As always, if you have questions about Category 1 Cash – please drop me a comment and I will address it manana!