Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Fractal Hunting at a Crossroad (by nummy)

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Folks, sorry about the color scheme in some of my charts.  I am partially colorblind in one eye (have trouble seeing green … no pun intended) so that is why my bars are white or black.  Anyway, I'd like to discuss my trader psychology of the moment.  At the end of a fairly successful week, I find myself in cash because of my indecision on what's next.  It feels like we are at a crossroads here.  We've been offered another chance to decide between the red pill and the blue pill (for those unfamiliar with the Matrix reference, red pill = reality, blue pill = la-la land).

2009-10-30-TOS_CHARTS_DX_EW1

So far, my /DX EW counts have been agreeing fairly well with the recent bottoming action in /DX implying further downside in equities and (some) commodities.  /DX has broken an ending diagonal triangle and seems to be breaking an 8-month (red) channel … and it has done this with volume.  I have been waiting months for this and this recent action in the USD supports the case for markets taking the red pill and coming back down to reality (albeit possibly slowly).

Being short equities, short (some) commodities, and long the USD is a contrary position to the superfluous bullishness of the past 8 months.  However, the contrarian to my contrarian is screaming at me … telling me the powers that be will keep knocking the red pill out of our hands everytime we try and take it and will force feed us the blue pill again.  This is what I think more blue pill action may look like in SPX.

2009-10-30-TOS_CHARTS_SPX

I went fractal hunting for a down-up-down pattern that ended up being a local minimum (hilighted in the dark gray).  Something from mid-May caught my attention; a similar down-up-down pattern.  If this May/June fractal repeats itself, we could end up seeing a head-and-shoulders-oid  topping formation.  Anyway, just my 2 cents … I'm hoping we take the red pill but it could go either way so I'm staying nimble.

Gold vs Silver..Why The Debate? (by Market Sniper)

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It is mildly amusing that when the precious metals markets are in confirmed up trends that the perennial debate of whether it is best to own gold or silver always comes to the fore. Both gold and silver, historically, have been money (merely utility in exchange). Gold in nature is approximately 15 times as scarce as silver. All the gold mined since the dawn of man, if molded into a cube, is said to fit inside a baseball diamond. Silver would nearly fill the stadium.

China, now the world’s largest gold producer, had silver standard as gold was more plentiful in China than silver. A bias that the West took full advantage of up through the 1870’s. Silver imports by the Spanish Empire from their New World holdings were so large that it collapsed the European silver market. England, then on a bi-metalic standard, quickly switched to a pure gold standard. The Spanish Empire never recovered from the experience.

In the United States, the debate raged incessantly as to how the ratio would be “fixed” after the discovery of the Comstock Lode with western mining interests best known champion, Senator Williams Jennings Bryant, being the foremost proponent of a lower ratio. Seems it is an old debate. The good news is, you can own both. If/When the world returns to honest, stable money, you will need both. Gold for the larger acquisitions and silver to make change.

While we await such an event, ratio trade the two metals to increase your holdings of precious metals.The ratio fluctuates wildly over time. In the 1970’s and 1980’s I used 28:1 and 40:1 as points that I would switch. At 40:1 I would be in silver. When the ratio dropped down to 28:1 I would exchange silver holdings for gold. Each time I switched, my stack of precious metals would increase in size even after dealing with the spread. Find a precious metals dealer who will work with you on that. You maybe able to locate one that will only charge the spread on one of the metals and not both when you switch.

Since then, the ratio has moved up. At one point it was even at 100:1. I now use 45:1 and 70:1 as switch points. See your tax accountant as to the benefits of such a program. Think 1031 Tax Deferred Exchange. For those who do not want to break the rear axle of your automobile moving your silver when it comes time to switch, think about using ETF’s that solely reflect the price of the two metals. There are a variety of ways to accomplish this. From being in just one or the other to being long one and short the other.

IF your objective is to accumulate the actual physical metals, do not use ETF’s as a substitute for physical ownership. Rather, take profits from your switching trades and purchase the actual metals themselves. Gold vs. Silver? No debate, accumulate both.

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