As you’ve no doubt noticed Trader’s Narrative is going through some technical difficulties at the moment. Thank you to all who contacted me with suggestions, advice, and words of support. I’m grateful to my readers, as always.

For the past few weeks I’ve been furiously working behind the scene trying to get my wordpress install and MySQL back on its wobbly legs but for the moment, I’ve given in and found a temporary home here.

I’ll be posting there until all is well again with a fresh install of wordpress and a new template. When things are all worked out, the content at my temporary home will then be removed and put back on this site - where it belongs. I’ll do my best to also move comments, trackbacks, etc.

So if you’ve missed me as I’ve missed my audience and the process of analyzing and writing about the markets, join me over at my temporary home.

In the following days I’ll be re-publishing the posts that I was unable to publish here for the past few weeks. These posts will be slightly dated but hopefully they will be somewhat insightful. At the same time, I’ll do my best to keep up with the flow of daily posting as usual.

In the meantime, I would appreciate your patience and indulgence. As well, if you have any suggestions for the new site, I’d love to hear them. I’m working on a redesign or Trader’s Narrative 2.0 (joking).

The NDR Crowd Sentiment poll is another important indicator which is confirming that market condition. Unlike the AAII or the Investors Intelligence surveys, the Crowd Sentiment poll from NDR is an amalgamation of several such sentiment indicators. The actual variables and formula is proprietary but the advantage it offers is that with one single indicator we can keep tabs on the whole sentiment landscape before us. There are other such aggregate sentiment indicators of course, such as TrimTabs Demand Index or SentimenTrader’s “Dumb Money/Smart Money Confidence”. But for now, let’s take a look at NDR’s Crowd Sentiment poll.

Click chart to see larger version in a new tab:

Source: Ned Davis Research

NDR considers any readings above 61.5% to be “Extremely Bullish”. So the current level of 69% qualifies as such. The last time the Crowd Sentiment poll was at similar levels was in April 2010 when it peaked at a high of 70.7%. That of course, corresponded with the intermediate market top.

The history of this indicator suggests that the S&P 500 index will have trouble going forward. According to NDR, when the Crowd Sentiment is above 61.5%, the S&P 500 index returns an average of -0.7% annually. When it is in neutral (between 55.5% and 61.5%) equities gain 5.1% annually and when it is below 55.5 they gain almost double, 9.5% per annum.

As Tim Hayes recently mentioned in an interview with Bloomberg, NDR continues to be bullish on the overall trend of the market and believes that the bull is still in effect. But they have been telling clients to expect a correction, no doubt based on this extreme reading from the Crowd Sentiment poll.

• Retail sales rose 1.2% in October, a surprisingly strong result well in excess of the consensus 0.7% forecast. Consumer spending has surprised to the high side for three consecutive months Consumer spending will be revised up a tenth or two in the third quarter and is on course to be better in the fourth quarter.

  The pick-up in consumption is not enough to materially change the economic outlook; the economy is still growing too slowly to make a dent in the unemployment rate. But it is enough to keep the expansion alive despite an impending slowdown in inventory investment. – FTN Financial – somehow the chart below is making new all time highs. Other retail sales measures (total retail sales, total less food, total less autos, etc.) are close to previous highs, but not making new highs.

Total Retail Sales Less Autos and Gas Stations

• Banks may agree to a settlement of the foreclosure issue worth ~$1 billion in the next month – Fox
• California saw “decent demand” (but not overwhelming demand) on Monday as the state started to market a $10B municipal bond deal (the state sold about 44% of the $10 billion to retail investors in its first day). The real test will come though when CA tries to sell $2 billion worth of longer-term BABs. California will be selling ~$14 billion in total over the next two weeks. WSJ/FT – a lot of muni debt will hit the market before year end
• Because of the nature of American business today, a weaker US dollar may not do much for exports and therefore may not stimulate the US economy all that much – NYT
• Fed’s dual mandate under attack – Mike Pence, chairman of the House Republican Conf, on Mon said he planned to introduce a bill that would end the Fed’s dual mandate on unemployment and inflation and force it to concentrate solely on prices – FT – this is essentially how the ECB operates.
• Treasury 30-year bond yields rose to the highest level since May as a report showed retail sales increased, a group urged the Federal Reserve to halt purchases of bonds because it may risk a surge in inflation, and Moody’s critiqued a presidential commission’s deficit-reduction plan. – Bloomberg

30 Year Treasury yields

This phenomenon sometimes happens when people have multiple positions in multiple markets in the same direction. When they start to take profits, there is no one left to buy.

• Gary Shilling, who predicted the U.S. housing collapse, says the stock market is overvalued and foresees a “significant” selloff within a year. – Bloomberg
• Richmond Fed President Jeffrey Lacker said the central bank may soon need to tighten policy even amid a high U.S. unemployment rate to avert a rise in prices similar to the 1970s. – Bloomberg
• The US should curb the Fed’s power over the money supply and return to the gold standard, James Grant, publisher of Grant’s Interest Rate Observer, wrote in a NYT opinion piece. – Bloomberg
• The benefits of open trade generally outweigh the costs, according to a report from the OECD, the International Labor Organization,the World Bank and the World Trade Organization presented at the G-20 summit. The report recommends that to sustain support for open markets, the costs must be recognized, “and policies put in place to assist workers and communities to adjust to a more competitive environment.” – OECD – Organization for Economic Cooperation & Development
• US homebuyers can borrow more cheaply than the government for the first time. – Bloomberg

30 Year Mortgage Rate vs. 30 Year Treasury Yield

This is because the ten year treasury yields are usually the benchmark for 30 year mortgage rates (not 30 year treasury yields). In QE2, the Fed is targeting ten year treasury rates more than 30 year. Thus, by holding down ten year treasury yields, the fed is effectively holding down 30 year mortgage rates.

• Dollar strong/Treasury weakness – the “anti-QE2″ trade continues – some catalysts: 1) continued pressure applied on the Fed re its asset purchase program (see this morning’s WSJ), prompting speculation Bernanke may not follow through w/the full authorization; 2) policy gap between Fed and ECB seen as narrowing (with talk of Ireland assistance); 3) growth gap between US and ECB seen widening in US favor (following the sluggish Eurozone GDP numbers released on Friday). – JPM
• Municipal debt markets received a lot of attention after their drubbing last week (the WSJ and NYT both had features discussing the sell-off in the muni market; note that there are ~2.5x the amount of muni sales scheduled for this week vs. last). – JPM

Yields on AAA 10 year Munis

• “We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment” – WSJ
• WSJ economics survey – economists don’t expect there to be a QE3. Most see growth of 2.4% in Q4 and 2.6% in the first half of 2011. Growth is seen accelerating slightly to 3% in the second half of next year. – WSJ
• Greenspan on Meet The Press warned about a potential crisis in the Treasury markets unless action is taken to cut the US budget deficit – Reuters
• Cigarette companies are ramping up efforts around the globe to combat new efforts on the part of emerging market (EM) governments to restrict the sales of tobacco products. Cigarette companies view emerging markets as critical growth opportunities as smoking rates in the US and Europe decline. – NYT
• Scientists now think sea levels could rise ~3 feet this century while other are fearful of a rise of as much as 6 feet; the former number would pose serious risks to coastal regions around the world, w/flooding becoming much more frequent, while the latter would jeopardize some of the world’s great cities – NYT – go see Venice while you can.
• Currency wars hit the Youtube mainstream in a U.S.-China rap battle animation that had more than 150,000 viewers as of Sunday. “They’re not enemies, but frenemies, with co-dependent economies,” according to the chorus. – Bloomberg/Youtube

• Ireland’s Fate Tied to Doomed Banks
• Year-end strength might begin in November
• The Next Major Disaster Developing for Bond Holders
• China buys up the world
• Why Rising Yields Aren’t Bad for Bonds
• Your weekly Conversations with Casey
• Free Steve Nison Candlestick Webinar
• Taleb on Risks of Quantitative Easing
• China consumer price index soars 4.4% in October
• A Way, Day by Day, of Gauging Prices

The above is just a sampler, for the full course meal, follow the graphic link below to news.tradersnarrative.com:

And remember to check back because interesting links are added every day of the week. If you use twitter, add @TN to get new links in real time.

Week Ahead:

Sentiment Surveys
After several weeks of flirting with the half-way mark and just peeking above it for a single week, the retail investors surveyed by the AAII finally went all in. This week’s bullish camp jumped sharply to 57.6%. That is the highest since mid-January 2007.

But while that is garnering all of the attention for most people, I prefer to look at the relative number of bulls compared to bears. And since those who are pessimistic about the stock market’s performance remained relatively stable at 28.5% the bull ratio is actually lower than it was two weeks ago.

So rather than showing the bull ratio, which I normally do, I thought we’d take a look at the 4 week moving average (if you’d like to see the bull ratio you can always click on the previous link).

As you can see from the chart, usually optimism is muted within a bear market. So the highs within the 2008 bear market are not as lofty as the ones preceding it. The biggest bout of optimism was in May 2008, the last gasp of the bulls before the unrelenting waterfall declines that proved so devastating.

There is no question though that retail investors are in an extremely bullish mood and they have been sustaining this level of enthusiasm for several weeks.

Investors Intelligence
Stock market newsletter editors have also become increasingly bullish this week with 48.4% identified as such by the weekly Investors Intelligence survey conducted by ChartCraft. That is the highest number since the first week of May 2010 when it spiked to 56%. The bears declined to just 23.1% this week. As with the AAII survey, while the bulls have increased to an extreme level, the bears have not retreated with the same intensity. So the bull/bear ratio for this survey stands almost unchanged at 2.1:1.0.

For the past 7 years, a ratio approaching 3:1 has been the ceiling for this ratio. It is possible that this may ‘reset’ or that we may be looking at a top which causes a shallow retracement. The only top that coincides with this bull/bear ratio level is the June 2009 one which pushed the S&P 500 index down 8% approximately.

Hulbert Newsletter Sentiment
In case you missed it, we discussed this alternative measure of newsletter sentiment a few days ago: Newsletter Bullish Sentiment Jumps To Extremes. For the details, check out the link.

Economic Confidence Index
Gallup’s Economic Confidence Index increased recently to -19. This is the highest level for six months:

Source: Gallup

The ECI is based on two separate surveys: the Economic Outlook (which asks Americans if economic conditions are getting better or worse) and Economic Conditions (which asks Americans to rate today’s economic conditions as ‘poor’, ‘only fair’, ‘good’ or ‘excellent’.

It may be a bit difficult to make out in the chart above but the dark green line reached a peak on April 21-23rd rising to -17 and again shortly thereafter in early May 2010 (-17 again). Looking further back first days of January 2010 again reached -17. Since then the most recent figures show a slight decrease in optimism reducing the ECI to -26.

I may be reaching a bit but both of those dates correspond to optimistic moods in the stock market and turned out to be tops.

NAAIM Survey of Manager Sentiment
After several weeks of reluctance, it appears that the active managers have finally decided to jump in with both feet. The average exposure in the NAAIM survey increased slightly to 71.5% from last week but the median exposure spiked to 97% long - a level that we had not seen since early May 2007.

This sentiment survey has a short lifespan since it started in 2006 but it has only spent 4.8% of the time above this level so this is a rather rare and extreme occurrence.

Rydex Cash Flow Ratio
This indicator is slightly different than the more familiar Rydex ratio which is a simple comparison of the assets of bull/bear funds. The Rydex Cash Flow ratio attempts to measure the ratio of cash flowing in and out of Rydex equity funds by adjusting the total assets in each fund according to the NAV gains/losses to isolate how much money was added or withdrawn. The numerator is the cumulative flow of total of money market funds as well as short oriented equity funds and the denominator is the cumulative flows of long equity funds.

Source: Decision Point

This ratio has recovered from the lows in the summer that also correspond to the lows in the S&P 500 index. But it is still at a relatively low level, especially when we compare it to the performance of the equity market itself. The participation of Rydex traders in the market can be likened more to the June and August 2010 rallies than the April one where inflows pushed the Rydex Cash Flow Ratio up to the highest level since 2005. So with equities trading considerably higher, Rydex traders are not jumping to increase their exposure. Surprisingly, they are slightly more reserved than there were in August 2010.

Hedge Fund Flows
According to the TrimTabs/Barclay Hedge survey, hedge funds had inflows of $3.8 billion for the month of September 2010. That is the third consecutive month of net inflows totalling $16.1 billion. The performance numbers were also good with 9 out of 10 hedge funds reporting that positive returns for the month of September. But a little more than half the managers are still below their high-watermark.

The gusher of inflows is explained by a survey conducted by Spectrem Group. Approximately 50% of the affluent investors (+$25 million) surveyed had investments in hedge funds, up from 35% in 2007 - before the bear market. Wealthy Americans have also upped their holdings of private equity (56%, up from 39% in 2007) and venture capital (52%, up from 37% in 2007). This renewed appetite for risk is a bit baffling since hedge funds were unable to provide a proper hedge from the bear market.

Mutual Fund Flows
According to ICI $1.1 billion was withdrawn from domestic US equity funds in the first week of November. Foreign equity funds in contrast received $1.86 billion of inflows and bond funds, $3.5 billion. According to Lipper the junk bond party continued for the 10th straight week with yet another net inflow last week: $856.9 million (from November 3rd to November 10th).

TrimTabs Demand Index which started in September 2008 and is based on 21 individual sentiment and money flow components fell to 73.9 - the first time it has been below 75 since February 2010. Previous to that, it was trading above 75 in December 2009 and in the 90’s during the summer of 2009 as the S&P 500 lifted off the bear market lows. Usually high levels correspond to market tops.

Corporate Insiders
Insider selling is at a 3 year high according to TrimTabs. For the past 60 days, TrimTabs calculates approximately $16 billion worth of shares sold by corporate insiders. To find a higher figure we have to go back to October 2007 when insider selling reached $20 billion. As well, the re-opening of the IPO market has whetted the appetite of existing public companies who are coming out with secondary share offerings. So basically, corporate insiders are not only selling their own shares to the public, they are taking advantage of these higher prices and the improved mood on Wall Street to sell more shares on behalf of the companies they control.

Option Sentiment
For some time now we’ve been observing the strange phenomena of both the retail option traders and the institutional option traders being on the long side of the market. The CBOE put call ratio (equity only) 10 day moving average is 0.55 implying that approximately twice as many calls are being purchased as puts. The ISE Sentiment index (a call put ratio) which tracks option trades by the retail crowd confirms this with a 10 day moving average of 207.30. Converted to put/call format it is 0.48 close to the CBOE ratio but slightly more bullish.

As you can see from this chart comparing the two put call ratios, usually they trace out a mirror opposite movement:

Click to see larger version in a new tab:

The OEX put call ratio had been showing a remarkable amount of call buying as well. That is until this week. The average OEX put call ratio for this week was 0.93 - almost parity. This is a almost double what it was just a few days ago on November 2nd (0.54).

It is too early to definitively say that this is the inflection point for the OEX put call ratio. Especially since the OEX put call ratio remains at very low levels. But there has clearly been a change in tone, especially when we compare it to the CBOE equity only put call ratio and the ISEE.

US Dollar
The US dollar has been quietly rallying since last Friday. It is still at very depressed levels and about to bump its head on the falling 50 day moving average. Any optimistic sentiment towards the dollar remains scarce. According to the latest Speculative Sentiment Index which tracks the retail forex positions of retail accounts as reported by the forex broker, DailyFX, shows a lack of belief in the short term rally. As an example, in response, the US dollar short positions against the British pound have doubled. So with that kind of skepticism, the dollar rally just may stick and give us contrarians the bottom that we’ve been calling for an embarrassingly long time.

Gold Sentiment
Here’s an updated chart of the Rydex Precious Metals fund assets compared to the price of gold:

By now you have plenty of reason to congratulate yourself for having boarded the gold bandwagon. The early tickets are the cheap ones, and you’ve already had quite a ride. The best of the ride, I believe, is yet to come, and it should be very good indeed. It should be so much fun that your wallet may start to feel a bit giddy – which can be dangerous. So it would be wise to consider, now, how things will be and how they will feel when the current bull market in gold reaches its “end of days.” Because it will end.

Buying at the right time is the key to building profits. Selling at the right time is the key to collecting them..

The 1980 Peak

In 1980, gold briefly touched the then record price of $850 per ounce. In terms of purchasing power, that would be $2,400 in today’s dollars. And for the value of the world’s entire gold stockpile to attain the same share of the world’s total wealth that it represented at the 1980 peak, the price would need to reach $5,800 per ounce.

But so what? Before you can look to those numbers for guidance about what the peak in gold’s bull market will look like, you need to consider how the process that drove the earlier bull market compares with what is happening today.

The earlier bull market was driven by price inflation in the world’s reserve currency, the dollar, that reached an annual rate of 14%. The more expensive it became to use dollars as a store of value (i.e., the more rapidly the dollar’s purchasing power was declining), the more attractive gold became as an alternative way to store value.

The dollar is still the world’s reserve currency. (And not just for central banks. Among individuals and private businesses that want to diversify out of their home currency, the dollar is still Number One.) And the force driving the bull market in gold is once again price inflation. But this time it isn’t actual price inflation that is on the mind of gold buyers around the world. It is the potential for price inflation that is building up. That build-up is coming from:

• Rapid expansion in the U.S. monetary base through the Federal Reserve’s asset purchases. Most of that expansion has yet to be reflected in a growth in the U.S. money supply. It is still sitting, like a charge in a capacitor, waiting for something to set it off. There was no similar liquidity bomb stored in the U.S. economy’s closet during the years leading up to 1980.
• Unprecedented growth in federal government debt, which adds to the political attractiveness of price inflation. There were federal deficits during the 1970s, but nothing like today’s – just enough to give the party out of power at any time something to talk about.
• The accumulation of U.S. Treasury debt and privately issued dollar debt in the hands of foreign investors. U.S. debt to foreigners wasn’t a factor in the years leading up to gold’s 1980 peak. This time around, it could be a powerful force for accelerating inflation. Even moderate inflation could spook foreign investors. Their sales of Treasuries and other dollar-denominated IOUs would push down the foreign exchange value of the dollar, which would raise the cost of imports coming into the U.S., which would further stimulate price inflation. A nasty feedback.

  And foreign holdings of U.S. debt operate as a second vector feeding the political attractiveness of dollar price inflation. Depreciation of the dollar can be framed as a clever way to shortchange foreign creditors. “It hurts THEM, not US” would be the slogan.

All those factors are working to make price inflation distinctly more severe than it was in the 1970s, which argues for a higher peak price for gold. When the metal does surpass its 1980 peak in purchasing power, the event is likely to be widely reported in the press. I suggest that you not attach any significance to the event. It won’t be time to sell.

Sell Signals
But the time to sell will come. Here are the signs I’ll be looking for:

Gold and gold-related financial products will be commonplace.

Even today, most financial institutions still hold the “barbarous relic” attitude toward gold. Yes, you can get GLD through any stockbroker, but with a few exceptions, the brokerage firm’s heart isn’t in it. They offer GLD for the same reason even the best seafood restaurants have a steak on the menu – they know someone will ask for one, even though that’s not what they are in business to serve.

Before the bull market is over, that attitude will change. Mainline brokerage firms won’t just have gold-related products available, they will advertise them. They will boast about them. They’ll claim to specialize in them. And it won’t be just the brokers. Your local bank will offer gold-related CDs. Your insurance company may be offering life insurance denominated in ounces.

Gold going mainstream won’t mean that the bull market is over, but it will be a sign that it’s getting long in the tooth. An early warning signal.

You’ll be hearing gold chatter wherever people talk about investing.

The inhabitants of Financial News TV Land will be talking about gold approvingly, and each of them will be trying to suggest he was early in recognizing the gold bull market. You won’t be able to get through a golf game or a cocktail party without someone talking about gold. Even your brother-in-law will want to explain it to you.

The gold standard will become respectable.

Today advocates of the gold standard are seen as standing to the good side of whacko, but not by a big margin. But as gold attracts more converts in the investment world, the politicians will want to associate themselves with it by proposing some brand or other of gold convertibility for the dollar. Respectability for the gold standard will be a sign that a majority of the people who are going to buy gold already have.

Other things will look cheap to you.

When gold nears its peak, even if you suspect that that’s what’s happening, you won’t feel certain about it. But when you start seeing investments – probably conventional stocks – that look like strong bargains, treat those sightings as a sign it’s time to start selling gold. You know the reasons that led you to buy gold. If you are tempted to sell part of your holdings to buy something whose low price seems to give it better prospects, then you probably will be selling at the right time. You could be selling to the last new buyer.

With gold now over $1,400 an ounce, where do we go from here? To stay updated on the gold bull market and the strongest gold stocks… and find out how high gold might go… and be alerted when it’s time to sell and collect your profits… check out BIG GOLD – Casey’s monthly advisory on all things precious metals and large-cap gold stocks. At only $79 per year, it’s by far the best investment you can make. Click here for a risk-free 3-month trial with money-back guarantee.

NDR has been very bullish for some time now. They actually went maximum overweight equities in early April, just ahead of the intermediate market top. And they remained with that thesis throughout the summer: NDR Continuing Bullish.

As Tim Hayes mentions, one of the primary reasons for NDR’s bullish views have been the historical performance of stocks within this specific period according to the US Presidencial cycle:

Valuation also remains relatively low. But the market is obviously overbought at the moment. So NDR wouldn’t be surprised by a short term correction within a continuing bull market.

I’m always comforted when my own views coincide with those of NDR and other technical minded luminaries like Lowry, Leuthold, etc. For the moment I’ll take the solace that it offers.

He was definitely in fine form in the summer of 2000 when he prophesied that “we’re in the first phase of a bear market that could be long, tedious, grinding and very painful. Before it’s over, I believe we’ll see big pools of money moving out of stocks and into cash.”

But since then Russell has had an especially tough time with deciphering the stock market. Especially so these past few years. He was bearish for some time but then in May 2007 Russell switched to the bullish camp and pronounced that “an unprecedented world boom lies ahead.”

It would seem that Russell has basically given up on trying to time the market’s gyrations, writing recently that “the stock market is too unsettled, too questionable, for me or my subscribers to assume an all-out bullish or bearish position.”

But he continues to be an unabashed gold bull. This is the one market he has been pounding the table about for quite a long time and he has been absolutely correct. To my chagrin, it took me far far too long to realize that gold is indeed in a secular gold bull market. And of course, the next thought after that is the dread that it will be soon over.

Russell puts those thoughts to rest writing recently:

“I’m going on the thesis that the highly speculative phase of the gold bull market lies ahead. Now I’m depending on my experience with other bull markets:

1. Most great bull markets go higher and further than almost anybody thinks possible.
2. Most bull markets progress in three psychological phases.
3. I believe the first phase of the gold bull market has passed. It’s over. This is the phase where students of great values take their initial positions.
4. I believe we are deep into the second phase of the gold bull market. This is the phase where the institutions and funds join in the bull market show.
5. Often, more money is made in the third or speculative phase of a bull market than is made in the first and second phases combined. This can mean that the late-comers to bull markets often make a fortune, more than those who had the courage to buy early in the game, but they have to have fortitude to sit in the highly volatile second/third phases.
6. Obviously, I could be wrong, but I believe that gold and silver are both still a buy.
7. I’ve said this before, but I’ll repeat it. You do not trade in-and-out in a confirmed primary bull market. You take an early position and add to your position as the bull market progresses.
8. Great bull markets don’t usually provide marvelous entry points. Those who are waiting for the ideal or “safe” place to enter the bull market in precious metals may have a long and frustrating wait.
9. In a great primary bull market, you just “shut your eyes and buy.”
10. Are you buying right or are you buying wrong? Great bull markets tend to bail you out of your mistakes. Perfect timing is nearly impossible in a great bull market. You’re either in or you’re out.
11. Great or fabulous primary bull markets may come along once or maybe twice in a generation. I believe the bull market in precious metals is just such a one — a once-in-a-generation bull market. We may never see another one to match this one in our lifetimes.
12. I started writing Dow Theory Letters 52 years ago in 1958. Three times I’ve staked my reputation and my business on a bullish market call. The first instance was in 1958, when I told my subscribers that the third phase of the bull market lay ahead, and it was time to load up on stocks. I said so in my first Barron’s article. That call and that article put me in business. I thank Barron’s late, great editor Bob Bleiberg (who had faith in me and went out on a limb for me).

    In late-1974 at the end of that horrendous bear market, I told my subscribers that I thought the bear market was over, and it was time to buy stocks.

    In the year 2000 I told subscribers that I thought the bear market in gold was over, and that it was time to buy what was left of the gold stocks and “put ‘em away.” I told my subscribers that we should treat the gold shares (many under five dollars) as perpetual warrants. “Buy ‘em and forget them.”

13. Lucky thirteen. I’m confirming what I said in 2000. Buy gold and silver, put ‘em away and sit tight. The great speculative phase of the precious metals bull market lies ahead. My advice is concentrated in four words — Buy, and be patient.”

Looking at the very long term chart of gold, the base at the millennium is apparent, as is the unrelenting march of the secular bull market. While it does deviate from time to time away from the long term trend, it quickly returns to it. Right now we are above the trend but not at an extreme point that has historically lead to regression to the mean:

Currently the price of gold is trading at 16.3% premium relative to its 200 day moving average. Historically tops have corresponded with a premium of 20%+ so we still have some room the upside in this most recent cycle. And as Russell so eloquently puts it, quite a ways still from the “highly speculative phase”.