NFTRH Interim Update 12.18.12

US dollar is down hard.

US Treasury bonds are down hard.

Yen is down hard.

When risk is ‘OFF’, the precious metals are treated as a risk ‘ON’ asset and they are sold.

When risk is ‘ON’, the precious metals are treated as a risk ‘OFF’ asset and they are sold.

I do not want to be one of the voices decrying underhanded tactics that are in play and you don’t need me calling play by play on these events.  But it appears that as important currencies become more vulnerable, the anti-currency (gold) takes it on the chin.  It appears that these hits are coordinated and that is just the way it is.

Gold is at 1683 as I write, below the weekly EMA 35 (currently 1689) that we have been calling critical support to avoid a drop to the low 1600’s.  If it does not recover promptly, 1620’s becomes the target as we have noted over the last several weeks.

These hits come seemingly out of nowhere as the dollar declines and the stock market rallies.  We can understand that manipulation is part of the game, but that does not mean people who do not wish to stand in the way of it should take a full frontal assault.  They are still fighting the precious metals and obviously the implications of the CoT data are still proving very goonish indeed.

The implication is that whatever is going on behind the scenes is serving to paint the gold gold bull as over, or at least stopped in its tracks for the time being.  I have not been making a big deal about what has looked like a constructive bottoming potential for the sector because these hits tend to come out of nowhere and they do not care about bottoming processes or technical analysis.  I wanted us ready for more violence.

We remain in some form of risk mode until a bottom is confirmed and in light of the still potent shall we say ‘forces’ that continue to keep a heavy hand on the sector.  The pain that the die hard gold bugs are feeling is getting beyond description I think.  They often talk in war-like terms and that is just what they are getting now; a war.

I do not want to fight that war.  I want to capitalize on it.  The charts have held open the downside possibilities for gold and silver.  I hope that people have prepared for it.  Based on what I see today, I think it is wise to be at least even more prepared for gold 1625.  Sentiment at that level could show historical despair.  Be ready.

Meanwhile, in the model portfolio, which added funds last week I added RGLD and SLW but have overwhelmingly bought ‘regular’ stock market items that are not subject to this aggression.  I am going to try to hold RGLD and SLW unless a fatal breakdown appears imminent.  Meanwhile, I’ll continue to be a regular stock player for as long as I think the broad rally can continue.

But if you ask me, on a bigger picture risk is actually rising in the broad markets (esp. US) and reducing in the precious metals.

[edit]  At the request of a subscriber, I am going to try to update cash levels more often for anyone who cares (and most should not in my opinion, because we all manage our situations differently).

Cash in the speculation account is back to a heavy 77%.  Basically this reflects the selling of the 2 bullion funds plus SGSVF.  This could change radically at any time (an example being if it were to look like a reversal was to spring out of today’s goon fest, implying that the ‘enemy’ is running out of ammo).  Please don’t depend on me to call out signals in-day until/unless I see something that makes me have real hard conviction.  This market whipsaws and eats up precious metals bottom callers just for sport.

I have my list, I’ve checked it twice.  The 2 bullion funds are on it along with some stocks.  And other non precious metals Santa/January Effect plays are on it.

As an example, I went to look at old friend FTEK yesterday for a tax loss/January play and it had already popped.  But generally I am riding a fairly ‘normal’ model portfolio (GOOG, MSFT, MYGN, TDF, EMF, EWJ, etc.) that is actually deploying cash.  Aside from that I am trying like hell to pick the right pivot on the speculation portfolio with respect to the precious metals.

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