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.

Gold – Big Picture Perspective

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Back in 2006 (and well before), the blogger was touting a simple
message of perspective with regard to gold. This perspective is
rooted in the idea of something of monetary value in a world so
obviously off the charts when it comes to sound stewardship of monetary
systems.

Here is an updated yearly chart of gold dating back to
the inflationary hysterics that were in play when I was a very young
man. All throughout the secular bull market we currently enjoy, we who
understand value have had to endure hatchet jobs in the media regarding
the ancient relic:

"You can't
eat gold!" as they say.

Yes, I know; why would anyone want
to eat a sound anchor to
monetary value in a (mostly) civilized world that still operates on a
currency basis? Why would anyone want to eat a heavy metal that will become the surrogate for
human monetary and trade interaction including in the things that we can eat; in the things that we do
need to survive and prosper? Gold only has all those centuries as a
civilized medium of exchange to back it up.

"A deflationary price spiral will bring gold
down and end the mania in the yellow metal!" they say.

Oh
really? Well, you have been saying that for the majority of those
green yearly candles on the right side of the chart. Your continued
doubt assures that you will finally be buying a candle well higher than
the current one. If we get a deflation, it will be an interim event and
guess what? Gold's real price is going to rise during said event, even
if its nominal price declines temporarily. Those phases are what smart
investors call 'investment opportunity'.

"But, but, but…"

No 'buts'
about it, forget your assumptions and gain some perspective.

38099902

Gold (by Gary Tanashian)

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There is a lot of controversy
stirring up with regard to what could be the "largest fraud in
history", as gold available for delivery to people who think they
actually own metal through paper intermediaries is being exposed as
being only as safe as the entities that guarantee its delivery — in
other words, not safe at all.

This is putting a scare into people
who think that owning gold is as easy as buying GLD and resting easy
with the mindset that everything is a price
play in the grand casino. While I guess I have not parroted this often
of late, the word in these
pages always has been "gold – real gold – is not about price, it is
about value".

The United
States remains a high functioning bankrupt entity, as are many other
developed nations. These nations are going 'all in' in a game with only
one outcome – an end to the system – with only the timing in question.
It appears that gold's four month long correction is being arrested
while the dynamics currently in play could easily send gold through the
intermediate target of 1300 USD, to the longer term target of 2,200 and
beyond.

Ah, but here in biiwii land we are never about hype and
over-frothed excitement, now are we? Nor are we about price. What we
are about is risk and reward, insurance and remaining on the opposite
side from panicked herds.

Take a look at recent history; economic
blow up leading to off-the-scale inflationary monetary policies have
led to the appearance of economic recovery. Wall Street and the
mainstream financial media are puffing out their feathers in all their
conventional splendor. The price casino is open once again to the
public.

Gold lived up to its true utility in the financial panic
as its VALUE – or real price – soared (to intermediate term
unsustainable levels) in relation to all other assets as the casino
emptied amid the flames. Enter the Wizard and his inflate-o-matic
monetary policy and the resultant economic rebound as the price of gold
took the correction in relation to many of the gamed assets. People who
understand value in a monetary world gone mad, just yawned. Casino
patrons however, well… it is called a herd for a reason.

Meanwhile,
there's real gold; so misunderstood, so boring… but seemingly about
to get much less so. For its part, the daily chart projects to around
1225, but who cares? It's just a price. Of more importance is its relational
value to things like the stock market, in which so many people have
put their faith once again.

Gold

10 Year Yield Inverted H&S (by Gary Tanashian)

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Excerpted from the March 28th edition of Notes From the Rabbit
Hole, NFTRH78:

When viewing the current market situation through a lens of
inflationary policy vs. natural deflationary forces seeking to correct
sublime levels of excess, a geek like me looks at the chart of the TNX
and is absolutely transfixed.

Tnx

Pictures like this, rather than the likes of the nominal Dow above are a
big reason for the ongoing ‘risk is high’ droning in NFTRH. It is no
coincidence that the risk profile was raised from the previous bullish
stance as the TNX spiked to form the neck line at 4% in late
spring/early summer, 2009.

The crux of the issue is that a
breakout from the Inverted Head & Shoulders targets 6%. A
correlated rate on the 30 year bond that we usually watch is close to 7%
off of a potential H&S of its own. The problem is that these
levels trigger our biggest picture monthly ‘line in the sand’, the 100
month exponential moving average, which changes something that has been
assumed for decades (the US government’s ability to use its treasury
bonds, its confidence, to inflate at will by selling debt and printing
money). The implication is that the change would be a secular thing,
possibly introducing a hyperinflationary spiral.

I must admit to
being confused by Captain Bernanke’s ‘damn the torpedoes’ inflationary
approach in the face of a bond market on the verge of rebellion while
certain Fed members sound increasingly hawkish tones. The wizard’s
‘backbone’ is that line – the monthly EMA 100 – under which treasury
yields have remained for all those decades of confidence. The neck line
shown above, if broken, triggers a level that busts the backbone.

We
are at an extremely high risk juncture for both hyperinflation and
deflation, because we are right on the line between the two with no
confirmation yet as to which way this thing is going to break. Some Fed
officials have expressed concerns that relate to the picture above, but
thus far, the one who matters most, Bernanke remains unconvinced that
inflation will become a problem.

US Treasury Bonds Uber Alles

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(Tim sez: please note this was written by Gary yesterday, so adjust time references accordingly)

In honor of our friends at Treasury selling their bonds (more of our
unpayable debt) yesterday and today, and in light of the fact that it
took higher rates (bonds across the board tanked yesterday) I thought I
would take a look at some iShares T-bond charts.

Up today, the
government peddles 32b
worth of 7 year notes, so the iShares 7-10 year treasury fund IEF
gets the main chart. In the lower panels are the IEI 3-7 year and TLT
long bond funds.

Before we look at the chart, a question; what
exactly does it tell us when the inflators attempt to find buyers for
their bonds (def- 1: a binding security; firm assurance: My word is my bond. 2: a sealed
instrument under which a person, corporation or government guarantees to
pay a stated sum on or before a specified day. 3: any written
obligation under seal) and with long term interest rates already
approaching 'big picture' tolerance levels (that would be the err, barn
door) rates rise strongly on auction day?

It tells me there is a
problem with a lack of confidence in the US treasury (no shit?), but
that the policy of low short rates (despite market pressures on the
freer long end and despite economic/asset recovery) and a firm 'inflate
or die' attitude to continue funding this macro experiment continues
unabated. They are pushing the tachometer into the red in a tacit
statement of "We are America, and what the F are you going to do about
it anyway?"

Is it possible that the world – given the unraveling
of the euro amid the failed experiments popping up over there with
greater frequency – is submitting to the US and the too big to fail
owner of the reserve currency simply knows it can take and take and
take? And the US' subjects just line up for more, albeit at higher
rates of interest?

Hey look, I am just a blogger trying to figure
out the meaning of some very confusing questions and conflicts, just
like you. So on to the chart. What I find here is surprisingly bullish
– for treasuries (and for the still open deflation impulse scenario).

Ief

7-10
year treasuries are in a nice symmetrical triangle, which is a
continuation pattern. No breakout yet, but if the break is to the
upside, expect a strong move with upside follow-through.

The next
panel is the home of the 5 year treasury bond and its pals on the short
to medium end. Ascending triangle – bullish continuation as long as
lower line holds. A break of the top line brings on a strong move
higher. It's just about done coiling and will break one way or the
other shortly.

Finally, in the lower panel is our long bond
proxy, the iShares TLT 20+ year fund. Below the lower trend line we go
into Wonderland, uncharted inflationary territory. But what's this?
TLT has creeped out of the weekly downtrend while holding the 'barn
door' line. There is little downside tolerance left. We are there
folks; on the cusp of having some big ongoing questions answered.
Recall that if you flip TLT over, it looks like a bullish inverted head
& shoulders. Talk about drama? —Gary

Rut Roh? (by Gary Tanashian)

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Conspiracy theorists should try to get over the conviction that Bernanke
and Geithner are buying S&P futures (or whatever) and controlling
markets in an upward direction to promote agenda.

Leading
indicators like the Russell 2000 index of small caps state that it is
just mass sentiment getting whooped up once again – perhaps with a
feeling of 'in Ben we trust (to inflate)' – but none the less, it is
wild eye speculators taking the RUT and a host of other speculative
leading markets (China notably excepted) and froth indicators higher.

Here
is a micro view of the RUT showing an interesting candle that 'could'
hint at a short term top. The opposite of a hammer (bullish) is a
Hanging Man and he ain't bullish. If confirmed, he will have come at
the end of a short term (up) trend and he will lead to some south side
exploration of support levels. We note a couple gaps lower for good
measure.

Rut

I am typically not a candlestick micro manager, but it
will be interesting to see if the day traders see what I see and turn
the party down a notch. —Gary