When the ores reach our shores

 

Click 'Next Himpunan Hijau' for details

 

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Gold - Part 5

Price movement for gold is rather well behaved

Another one month or two is likely to complete its wave 4. If wave 5 is of the same magnitude as wave 3, it can reach US$ 3,000/oz.

What can trigger the wave 5 run-up ? 

Global instability ? When investors lose faith in stocks, bonds, real estate etc.

Currency devaluation ?

Or inflation ?

Or aggressive buying by China and India ?

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Dow - The current pullback

Refer to my June 3 posting, my hypothesis for both option 1 and 2 remains valid.

For option 1 scenario, wave 2 of mega wave 7 will take months to form. Assuming a simple A-B-C formation for wave 2, the index has just completed its mini wave (i) and (ii).

For option 2, it has completed its mini wave a and b, mini wave c is likely to bring the index to about 11,500 level to complete sub-wave vi.

During his quarterly press briefing last week, Bernanke is expecting further slowdown in the US economy. China economy continues to slow further and European debts crisis is getting from bad to worst, Greek's problems remain unsolved and Spain is attracting attention with its record bond yields. With all these bearish factors Dow is still able to remain within 10% of its historical high, supported by all the money printed.  




   

RJ/CRB Commodity Index

Since the completion of its major wave B in February 2011, the index has been moving in a downtrend channel to complete its major wave C. It is currently forming the last sub-wave of its wave 3. A sharp and short-lived rebound, the wave 4, after that, before the index has its final plunge to complete the wave 5 and the major wave C.

For the chart to behave in this manner, the commodity prices have to come down particulary crude oil prices. Economic activity is expected to slow further due to the European debts crisis. World bourses in general have been trending lower and lower except the US where Dow is hovering within 10% of its historical height, thanks to the money printing by the Federal Reserve.



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After Greece

While Greece is taking a breather, Spain's borrowing cost is escalating, its 10-year bond yield set a historical high of  7.158% on Monday.

It is a well-know fact that Spain is having big trouble despite getting a 100 billion euro for its banks recently. Spain's unemployment rate is 25%, youth unemployment rate is 51%, GDP is projected to shrink 1.8% this year, house prices have dropped 30% so far and now with a bond yield exceeding 7%, Spain, with the fifth largest economy in Europe, is going to create a much bigger problem than that of Greece. At the back, following closely is the Italian debt problems. EU really needs to print a lot of euro to reinforce its firewall. But, can it work?



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Bailouts - Buying time

So, the pro-bailout conservative New Democracy Party came out as winner, capturing about 30% of the vote and 129 of the 300 Parliament seats, it needs to seek coalition partners to form a new government with at least 151 seats for a simple majority. The result does provide some breathing room to the euro zones, but even if the new government can comply with all the requirements of the creditors and can obtain the 130 billion euro rescue loans, nothing has changed except that Greece will be deeper in debts with further shrinking in its economy.

George Soros pointed out recently that EU authorities did not understand the nature of the euro crisis, "They thought it is a fiscal problem while it is more of a banking problem and a problem of competitiveness." "You cannot reduce the debt burden by shrinking the economy .........". He gives the EU three months to either take drastic action or to fall apart.

Billionaire investor, Jim Rogers, has been known to disagree with bailout mentality, believes a better solution is to let Greece goes bankrupt. Let the creditors that have been taking advantage of the high-yield government bonds to take the necessary losses. Any bailout benefits only the government and the banks only.



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From my friend's email

An employee sends a letter to his boss

Dear Bo$$

In thi$ life, we all need $omething mo$t de$perately. I think you $hould be under$tanding the need$ of worker$, I am $ure you will gue$$ what I mean and re$pond a$ $oon a$ po$$ible.

Your$ $incerely,
Employee


On the following day the employee received a reply from the manager.


Dear Employee,

I kNOw you have been working very hard NOwadays. NOthing much has changed. You must have NOticed that our office is NOt doing NOticeably well as yet.

NOw the news paper is saying the world's leading ecoNOmists are NOt sure if the United States may go into aNOther recession. After the NOvember Presidential elections things may turn bad.

I have NOthing more to add NOw. You kNOw what I mean. I kNOw you are smart eNOugh.

Your truly,
Manager.

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Stock Investment and Photography

Cut loss when something is not right

See no evil and hear no evil will lead you to .....

Too late to cry : (

Avoid herd mentality : it may be comfortable doing things together

But die together is definitely not that comfortable, Amen.

Always on the lookout

Or else you may not know how you die

Luck does play a role ...... "Eureka !!!"

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Roland Garros Champions

French Tennis Open Championship has ended with Nadal taking the Men's Singles Title for the 7th time, a new record. He defeated Djokovic 6-4, 6-3, 2-6, 7-5.

Indisputable Clay Court King

The winner of Women's Singles Title is Maria Sharapova. With this win she has won all the 4 Grand Slam Titles.

Indisputable Beauty in the world of tennis

 

After defeating Sara Errani 6-3, 6-2

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Colourful Birds

Received these beautiful images from a friend

Three Angry Birds :)

Click 'Beautiful Bird Photography' for more.

Have a nice weekend

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Transit of Venus

Two days ago when Venus moved between Earth and the Sun, we could see Venus as a small black dot moving slowly across the face of the Sun.

A NASA's photo

 Venus - A small black dot, and the Sun, wow!!!

The entire transit lasted more than 6 hours

Area where the transit was visible.

Next chance to see : December 2117

105 years from now

"See you then, bye, take care."

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Shetland Island, UK

I was told that Shetland Islands has the most beautiful bus-stops in the world. I found these from the internet.

 Rugged Coast

Scenic countryside

And see what I have found - Puffin Birds !!!

They can fly !!!!

But not these - they can't fly

Penguin colony on South Shetland Island

The famous Shetland Pony with short legs

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Dow - The magnitude of the current pullback

Dow dropped 2.2% on Friday to close the week at 12,118. For the long-term option as shown below, assuming Dow is forming a mega wave 7.

It is likely that Dow has completed its major wave 1 of mega wave 7.  Since Dow has dropped below 12231 level, the top of sub-wave (i), the current pullback cannot be sub-wave (iv) that I have assumed previously as sub-wave (i) and (iv) cannot overlap, the only logical count is a wedge formation wave v with a failure sub-wave (v) as shown.

If major wave 2 has started, low low can it goes? If it goes for a simple and sharp zigzag A-B-C formation,the maximum drop can be a 100% retracement to 6547 level. 

Another option is as shown below, the 2007 October peak is the end of super cycle wave (III), The 2009 March's low of 6547 is the major wave A and the run-up since the low is the major wave B.

Since major wave B cannot have 5 waves, under this scenario, the current pullback can be wave vi and should be able to stay above the lower trend line (11200 level) and proceed to complete major wave B with the wave vii, the last surge, before the major C starts.

Summary :  The current pullback at best it will stop at 11,200 level to complete the wave vi under Option 2. The worst Dow can have is a 100% retracement to 6547 level under Option 1.

One has to bear in mind that there are other options beside the two that I have mentioned.

For European bourses, Asian bourses and CRB (commodities in general), the downtrend continues.



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