Thursday, August 30, 2007

P&F bullish for Dow IND

Gold/XAU Ratio 4.86
Stop for gold stock trade is HUI 300

Will remain bullish for gold stocks if DJIA continues to rally--gold stocks have been lock step with the broad markets with this latest selloff.

Tonight I am back at Horseshoe Bay Texas for long weekend of golf and visiting with my sons and 4 grandchildren. I operated starting at 7:00 Am--finished before noon. It was a long drive today from Fort Smith--tough week--doctor hospital politics are rough and tumble with survival of the fittest--much like trading gold stocks.

Wednesday, August 29, 2007

Gold Stock Buy Signal

Broad Markets confirm new rally

Gold/XAU Ratio 4.84
New Gold Stock Buy signal

Tuesday, August 28, 2007


Panic lows are hard to pick. Gold closes in at support. Gold/XAU Ratio 4.97
See warning at previous post.

Saturday, August 25, 2007

Attention Gold Bugs:

Attention Gold Bugs:
Be Afraid... Be Very Afraid
By Jeff Clark'

The entrée of large institutional players have most definitely altered the gold landscape to the point where it is no longer the same old game.

Gold Higher, Stock market Higher

Bear correction August 22
Broad Market remains in corrective mode. The market's volume didn't match the intensity of its price performance. The past week's turnover was the lightest among the major indexes since December, when the holiday season kept trading levels whisper quiet.

Danny Merkel's excellent Blog (Gold Stock Prophet) gave a buy signal Friday August 24 for the TSX triggered by a bullish percent chart.

Thursday, August 23, 2007

Markets continue correction

Bearish Dollar P&F Chart
Watch the Yen

Today was the sixth day of a rally try for the market. A big up day in higher volume than the previous session would count as a follow-through, confirming the attempted rally.

Gold/XAU Ratio 4.84

It's not over until it's over. "Mortgage loans (including the sub prime as well as other consumer debt) were packaged up and sold to the largest investors world wide, including investment banks along with private equity and hedge funds. Many of these obscure financial instruments frequently called derivatives were financed by borrowing Japanese Yen at very low interest rates. The motivation was greed… high yielding investments financed with low interest rates. As the news surfaced about the lack of quality of these investments, fear began to grip the markets causing a rush of redemptions as many investors rushed to the exits.

Many of these investments were highly leveraged and acquired with low cost borrowed funds, frequently using low interest Japanese Yen. The sudden stampede to sell these investments uncovered yet another hidden reality beyond the liquidity of the respective funds. Not only did these investment products have no ready buyers, they had inflated book prices attached entirely unrelated to market valuations.

The resulting effect was that as the big investors sought cash to repay their loans, they were basically selling anything of value including gold, silver, precious metals and blue chip shares. Thus you may have heard the reference to the unwinding of the Yen carry trade? Those borrowed funds were being repaid thus forcing the Yen higher vis a vis the US dollar and other currencies. We have seen some articles suggesting there is over $1 Trillion involved with the packaged mortgages and the Yen carry trade. Have we seen the last of the unwinding? We think not. While the sub prime mortgages seem to be getting the current attention, as more and more of the variable rate interest rate mortgages are readjusted during the coming nine months, we are sure to experience many more problems of write downs and liquidity concerns."
Dudley Baker

Wednesday, August 22, 2007

Tuesday, August 21, 2007

Markets Quiet

Gold/XAU Ratio 4.93 CEF premium/discount 10.3

I look for spot gold to test recent lows--then a rally into September for HUI--barring any other subprime--interest rate problems.

Computer problems and airconditioner failure caused me to miss posting yesterday. Biggest news is the near panic in short term interest rates. Will the Fed panic also?

"For years, greed has been the underlying force in the markets. Now fear is replacing it. Once underway, fear is an even stronger force. While central banks try to hose down the market's fear-flames with money, it doesn't change the liquidity problem. Lenders fear to lend and borrowers fear to borrow. Money "in the system" is of no real help. Someone has to borrow it. Who will?

The modern financial world runs on credit, so if fear rises to a level where fewer are willing to lend -- and fewer are brave enough to borrow -- the situation can get a lot worse before it starts improving." Harry Schultz

Saturday, August 18, 2007

Has the Bull Market Ended for Gold Stocks?

P&F is Bearish for gold stocks
Montly charts show long term Bull appears alive. I think that the fed will ease further in September

Everything is risky, and risk is everything. The most successful traders know that they are one trade away from ruin, and focus constantly on ways to embrace risk by managing it.

See this post for explanation of Long Valuation Waves

My Medical Publications
search for wills pi

One of my interesting medical jobs is serving on the editorial board of the American Journal of Otolaryngology. My published medical papers are listed below.

Items 1 - 7 of 7 One page.

Wills PI, Gedosh EA, Nichols DR.
Related Articles, Links
Head and neck manifestations of tularemia.
Laryngoscope. 1982 Jul;92(7 Pt 1):770-3.
PMID: 7087646 [PubMed - indexed for MEDLINE]
Wills PI, Vernon RP Jr.
Related Articles, Links
Complications of space infections of the head and neck.
Laryngoscope. 1981 Jul;91(7):1129-36.
PMID: 7242204 [PubMed - indexed for MEDLINE]
Wills PI, Russell RD.
Related Articles, Links
Percutaneous embolization to control intractable epistaxis.
Laryngoscope. 1979 Sep;89(9 Pt 1):1385-8.
PMID: 481044 [PubMed - indexed for MEDLINE]
Sessions RB, Wills PI, Alford BR, Harrell JE, Evans RA.
Related Articles, Links
Juvenile nasopharyngeal angiofibroma: radiographic aspects.
Laryngoscope. 1976 Jan;86(1):2-18.
PMID: 176543 [PubMed - indexed for MEDLINE]
Wills PI, Fechner RE.
Related Articles, Links
Sebaceous carcinoma. Pathologic quiz case 2.
Arch Otolaryngol. 1975 Jan;101(1):76-8. No abstract available.
PMID: 1119997 [PubMed - indexed for MEDLINE]
Wills PI, Fechner RE.
Related Articles, Links
Necrotizing sialometaplasia. Pathologic quiz case 1.
Arch Otolaryngol. 1975 Jan;101(1):76-8. No abstract available.
PMID: 1119996 [PubMed - indexed for MEDLINE]
Wills PI, Schindler WJ.
Related Articles, Links
Radiothyroxine turnover studies in mice. Effect of temperature, diet, sex and pregnancy.
Endocrinology. 1970 Jun;86(6):1272-80. No abstract available.
PMID: 5445766 [PubMed - indexed for MEDLINE]

Items 1 - 7 of 7 One page.

Display SummaryBriefAbstractAbstractPlusCitationMEDLINEXMLUI ListLinkOutASN.1Related ArticlesCited in BooksCancerChrom LinksDomain Links3D Domain LinksGEO DataSet LinksGene LinksGene (GeneRIF) LinksGenome LinksProject LinksGENSAT LinksGEO Profile LinksHomoloGene LinksCoreNucleotide LinksCoreNucleotide (RefSeq) LinksEST LinksEST (RefSeq) LinksGSS LinksGSS (RefSeq) LinksNucleotide LinksNucleotide (RefSeq) LinksOMIA LinksOMIM (calculated) LinksOMIM (cited) LinksBioAssay LinksCompound LinksCompound via MeSHCompound (Publisher) LinksSubstance LinksSubstance via MeSHSubstance (Publisher) LinksPMC LinksCited in PMCPopSet LinksProbe LinksProtein LinksProtein (RefSeq) LinksProtein Cluster LinksCited ArticlesSNP LinksStructure LinksTaxonomy via GenBankUniGene LinksUniSTS Links Show 5102050100200500Sort ByPub DateFirst AuthorLast AuthorJournalSend toTextFilePrinterClipboardE-mailRSS FeedOrder

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Friday, August 17, 2007

Fed Eases--Gold Stocks Rally

Are there signals that 1987 could repeat??? I think the Fed will opt for inflation. Once the broad financial markets stabelize I will buy a basket of gold stocks on my watch list.


Less than 40% of yesterday's loss in gold's value was repaired today, and this took place mostly as a knee-jerk reaction to the symbolic rate cut, which brought the dollar to lower levels," said Jon Nadler, analyst at Kitco Bullion Dealers, in emailed comments.
Gold/XAU Ratio 5.07 CEF Premium/(Discount): 5.92%

My Watch List
Symbol close Mkt Cap
TGB 3.86 +0.10 (2.66%) 498.03M
GSS 2.97 +0.05 (1.71%) 692.67M
GXL 0.16 +0.01 (6.67%) 18.38M
RNO 5.25 +0.13 (2.54%) 863.16M
KGC 11.31 +0.40 (3.67%) 6.69B
RGLD 29.99 +0.88 (3.02%) 859.63M
MDG 24.78 +1.12 (4.73%) 2.51B
GG 21.67 +0.11 (0.51%) 15.26B
ROY 5.85 +0.35 (6.36%) 393.62M
AEM 38.36 +1.17 (3.15%) 5.13B
GRS 8.11 +0.41 (5.32%) 952.14M
SBB 1.65 +0.11 (7.14%) 92.09M
FR 3.30 +0.03 (0.92%) 177.07M
MFN 9.09 +0.86 (10.45%) 442.12M
STM 2.24 +0.29 (14.87%) 161.76M
BVN 35.84 +2.27 (6.76%) 4.56B
AUY 9.63 +0.51 (5.59%) 3.42B
NXG 2.72 -0.12 (-4.23%) 691.41M
SHMR 10.27 +0.12 (1.18%) 166.95M

Thursday, August 16, 2007

Gold Stocks get Creamed

CEF Premium/(Discount): 7.62%
Gold/XAU Ratio 5.17

Read this NY Times article by Jim Cramer ttp:// and Bloodier

Even though these loans have been losing value for years, it wasn’t until June 2007 that any of this mattered. That’s because of what is known in the trade as the “marks,” the value of a stock or bond as it’s “marked” by a firm. You are getting poorer by the second because many of these mortgage bonds were priced way too high because nobody thought that large numbers of borrowers would ever walk away from their homes rather than pay the interest that backed the bonds. Such a disaster had happened only once, in the thirties, and that was before loans were federally secured. The buyers and sellers accounted for the bonds as if they were as reliable as cash, because as long as employment was robust—and it is—they thought they would be fine.

But now all hell’s broken loose on Wall Street because of those mismarks. This spring, as many homeowners stopped paying, the mortgage bonds—for the first time—starting losing value. Hundreds of billions in bonds that were thought to be worth more or less the price they were sold at, it turns out, are worthless. That’s triggered a chain reaction: Brokers like JPMorgan, Goldman Sachs, and Merrill Lynch that lent money to the firms that bought the bogus loans—most famously, Bear Stearns—basically foreclosed on those firms to get their cash back. But the firms, which are always running full tilt, didn’t have the money to pay up.

Wednesday, August 15, 2007


This is starting to become very very ugly. Remember,John Maynard Keyne's quote, "The market can stay irrational longer than you can stay solvent." Despite your opinion or ego don't fight the market--the market always wins.

"It's no great stretch to conclude that we're entering a cyclical deflationary credit crisis as a result of the above. If so, I would suggest investors raise cash and wait for the Fed to commence an aggressive easing policy in an attempt to raise asset price levels. My own view is that they will not lower rates until there is empirical evidence of a recession or a dramatic decrease in non-farm payroll growth and that Mr. Bernanke may want to prove that his "helicopter" moniker is a misnomer, but in the end I believe the Fed will do what it was created to do: inflate." Michael Pento


Gold/XAU Ratio 5.03 This ratio is now over 5 indicating favorable buy territory.
Today's CENTRAL FUND OF CANADA CEF Premium/(Discount)is 8.24%. Another way to track gold investors’ sentiment is by watching the CEF discount/premium. Over the last few years, a good buy signal was when the premium fell to 3-4%. When the premium reaches 12% or higher, CEF investors should be on sell alert. The chart above is monthly - many of the short term movements are smoothed. In the past couple of years the premium has approached 20% on several occasions.

Tuesday, August 14, 2007

Markets Continue Down

Gold/XAU Ratio 4.83 Remember if this ratio goes to 5.00 be ready for a buy signal.
Will the FED inject more funds into the banking system? If so look for gold and gold stocks to plunge even more. I continue to enjoy the safety of T-bills. Labor day I go back to Horseshoe Bay Texas for a long weekend--that is my pot of gold at the end of 2 weekends on call in a row.

Monday, August 13, 2007

Banks at Risk, Gold Lower

Taskeo Mines on watch list shows strength.
Gold for December delivery closed down 70 cents at $680.90 an ounce on the New York Mercantile Exchange

Gold/XAU Ratio 4.67
see this link for Bill Gross August comments and subprime mortgage problem--remember his comments July 24--see my post for that date. While in Jackson Hole 2 weeks ago I was at a meeting ofr the College of Surgeons PAC. I had a casual conversation with a banker from Knoxville Tn--he indicated that the subprime mess was just the tip of the iceberg and that when all of this is over a lot of financial people will go to jail.

Saturday, August 11, 2007

Investor skepticism is understandable--Gold Buy Signal???

Many analysts refer to copper as Dr. Copper, because it diagnoses the health of the global economy. If the economy is booming a lot of copper gets used in plumbing, wiring, circuit boards and such, causing its price to rise. Measured against copper the Dow has plunged 76.5%.

Friday gold reversed and held support--I am looking for a tradeable rally next week. Spot gold resistance is $695 with support at $661. The million dollar question is will a further downdraft in the broad market sink gold stocks also??? A new gold stock on my watch list is GXL.V--I really like the profile and prospects for this company--it could be a 10 bagger.

Is the bond market telling us what we learned from 1987 bond yields? Or is "THIS TIME IS DIFFERENT".

Central banks around Asia joined efforts in the United States and Europe to stave off a credit crunch among banks yesterday, as widening fears over losses in the U.S. housing loan market prompted investors to sell assets and commercial banks to reel in credit lines. Fear is growing concerning market risk and the chance of major market selloff. This current crisis is a 8 on the financial Richter Scale if 9/11 was rated a 10.

The perceived risk of owning U.S. corporate bonds reached its highest level since 2003 this week, and uncertainty about subprime mortgage defaults could keep the market unsettled for some time.

Spreads, the extra yields that investors demand for the risk of holding investment-grade corporate bonds, have widened by 27 basis points since the end of June to about 124 basis points, according to Lehman Brothers data. Spreads had reached 127 basis points on Tuesday, the highest since June 2003, according to Lehman Brothers.

Corporate bonds weakened again on Friday as liquidity fears swept through the markets and major central banks injected additional cash into financial systems.

Uncertainty about whether subprime fallout and turmoil in the financial sector will begin spreading through the broader economy has made investors cautious about buying corporate bonds, even at much wider spreads, traders and analysts said.

Friday, August 10, 2007


Gold/XAU Ratio 4.66

when the market flashes a distribution day within three days of a follow-through, its rally almost always fails. The Dow proved the point Friday morning as the blue chip index undercut its Aug. 1 low.

Thursday, August 9, 2007


Gold/XAU Ratio 4.64

" we have a hunch none of this came as a shock to Jeremy Grantham, who runs GMO, which manages very big bucks for institutions and affluent individuals. For in his latest quarterly letter, dated July, Jeremy pretty much advised investors to expect the worst.

He pointed out that the mushrooming growth of leveraged loans, some $545 billion globally in the first half and up a notable 60% over the corresponding '06 total, was very much reminiscent of the equivalent gain in price of the Internet and tech stocks in the opening six months of 1999.

He suggested, too, that there's an uncomfortably close affinity between all the fuss and media attention paid to the online and tech heroes then and the current hoopla over the new LBO masters of the universe. More than likely, he implied, this new gilded age will end as ignominiously as did its predecessor six years ago.

Jeremy confided that he has been trying to come up with a straightforward formulation to capture "how serious the situation is for the overstretched, overleveraged financial system." The simple statement he hit on was that, in five years, he expected that at least one major bank will go belly up and that as many as half of the hedge funds and a substantial percentage of the private-equity funds now throwing their money and weight around "will have ceased to exist."

Jeremy, who has seen it all in his 40 years in the investing business, freely acknowledged he has "often been too bearish about the U.S. equity markets in the last 12 years" (although to his credit and clients' satisfaction he has been a big bull on emerging equity markets). But, he asserted, "I think it fair to say that my language has almost never been this dire. The feeling I have today is that of watching a very slow- motion train wreck." BARRONS QUOTE THIS WEEK

Hedge Fund Failures is Fire in the Projection Room
Interest-Rates / Financial Crash
Aug 02, 2007 - 12:29 AM
By: Tim_Iacono
Earlier today, it was revealed that another hedge fund from Bear Stearns is in deep doo-doo. According to the report, they have "blocked investors from pulling money out of a third fund as losses in the credit markets expand beyond securities related to subprime mortgages" . Unlike the two Bear Stearns funds that went belly-up last month, this $850 million asset-backed fund had no leverage and virtually no exposure to subprime mortgages.

Call it systemic risk, call it what you want - whatever it is, it is spreading

Wednesday, August 8, 2007


Clive Maund gives a gold buy signal--I am still looking for a pullback to get a little better entry as gold is traditionally weak in August.

Tuesday, August 7, 2007

Fed Funds Rate Unchanged

The expected chance of a recession in the next year is 24 percent, up from June’s 15 percent, but still down from May’s value of 35 percent and April’s 38 percent.

Eduardo Mirahyes Says: July 2, 2007 at 8:52 am
In a deflationary recession, gold loses its glitter and reverts to being a commodity like any other…commodities have peaked for this cycle and are on the way down hard from here.
See my archives under “short gold and oil” for some revealing charts. If you follow Jeremy Grantham’s reasoning, all assets except cash are in bubble…including gold.

The Dow Jones industrial average spiked up 2.2% on heavier trade Monday, scoring a follow-through day. That ended the short correction and shifted the market's status back to a confirmed rally.

A follow-through is a powerful rally in one of the major market averages — the Dow, Nasdaq, New York composite or S&P 500. Volume must be heavier than that of the prior session. Ideally, turnover should be higher than average.