selling UUP +16% in 6 months (DRR up 59%), buying URR, gold & silver chart & commentary updates

Six months since our last entry. The markets have gone lower, as we'd repeatedly warned would happen, and have taken a very volatile path in getting there. Gold has essentially gone sideways, and it too has taken the scenic route, moving exactly as we'd predicted both up and down. We revise our gold chart today with thanks to those who have written to ask for an update.

We were bearish China while most everyone else were raging bulls. See our December 4th 2009 posting immediately below and correlate it to these charts of the Hang Seng and of our recommendation FXP.

On December 4th we also suggested the purchase of UUP, which is a bullish position on the US Dollar. At the time US Dollar sentiment was totally bearish and we were the only commentators advising to go long the US Dollar and short the Euro (see commentary on DRR the Double Short Euro ETN dated November 18th). Readers who check the charts for those tickers find that we called the exact reversal points.

Now we're selling UUP for a gain of roughly 16%. Anyone in DRR should also sell we believe. It is up 59% since our mention.

Being short China and long the USD have been arguably the best and most comfortable positions to be in the past 6 months. Now these trades are very crowded, and as always we are nervous when the masses are on the same side of a trade as us, thus we seek to book our profits.



We remain longer-term US Dollar bulls and Euro bears, but believe an intermediate-term reversal in both is imminent. Thus we speculate via the purchase of URR, the Double Long Euro ETN which last traded at $23.14 We'll sell to close the position after any close below $22 and a following morning's open below that same $22 level.

We remain longer-term China stock market bears and continue to hold FXP as a hedge.


As for gold and silver, here is the silver 5-year chart and trends as posted in this blog over 6 months ago.




Silver today.




As is obvious, silver has not confirmed gold's new highs. Far from it. Also obvious is that silver remains in an upwards bearish wedge, and below a significant level of past resistance (in red, horizontal). It looks as though at best silver will rise to around $20 ~ $22 before a very big and protracted drop.



Gold 5-year chart and trends with Elliot Wave Labelling, as posted in this blog 6 months ago.



When we posted the above gold chart, we wrote that gold was likely to pull back to circa $1050 before rallying to new highs. That is exactly what happened, and as seen in the chart below the moves have exactly adhered to the trendlines we'd drawn.

Gold today.



Note that gold in the $1250 ~ $1350 range fulfills both the Elliot Wave labelling and the supposed "head and shoulders bottom" gold put in between early 2008 and finally breaking above $1000 decisively in mid-2009. It would also then be at the top of a bearish rising wedge illustrated bu the upper black line and lower green line. It would further coincide with silver at best rising another $2 or so, and with a near-term (but not long-term) reversal in the US Dollar.

Lastly, this also coincides with a protracted decline in global stock markets, which is still underway and likely to last years. Gold may enjoy a brief "flight to safety" at first, and has so far as the bear market has resumed, but recall in 2008 how gold collapsed along with equities. This time will not be different and the extreme positive gold sentiment also suggests we are at or near a top of some duration in gold and silver.


All speculation of course, but speculating is what we do and we do it well. In fact, we know of no other outlet at any price (much less free) that can boast a record such as ours.

Understandably this attracts attention, and those who read our December 4th entries may recall that we suffered an outage and loss of access to this blog for a few days back then. To us this was totally unacceptable. We said we'd take action and we did.

Readers have been writing to ask us if we'd quit writing about the markets. Thanks for caring. No, far from it. At that time a market newsletter of good repute but very low circulation contacted us to offer us a publication under their banner. We accepted, and our focus has understandably been put on that effort.

While we expect to maintain this blog going forward, the postings will be few and far between as our best and most timely efforts must of course go to paying subscribers of the letter we now co-write.

The results we've attained there mirror those we enjoyed for years here, and so too the accuracy and original chart work and commentary.

Readers of this blog who may be interested in subscribing to that letter may contact us via email (you will find the address below, at bottom of this post) to request a link to a special pricing offer for that publication.


In closing here we copy what we sent to our paid readers in early May, as we believe it is still very true : “Stock markets are extremely fragile. This is not the time to try to buy on dips, or to be deluded into the belief that equities or dividend yields currently, or anytime in the near future, represent value."



We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or for mentioning any stocks or companies in this blog. If we hold existing positions we divulge the fact.

This blog is merely a diary of some of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated : Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we. Please note that we only send update notifications when a trade idea is diarized or updated, not if a blog entry only contains general commentary.