[GoldSeek.com - Moderator] 9:58 am: Welcome to the inaugural GoldSeek.com Chat with Rick Ackerman. We will be starting the first part of the chat at noon Eastern with a view-only session. Questions pre-submitted will be answered first by Rick Ackerman. During the 2nd half, we will open up the floor to your questions.

Thank you for participating,

GoldSeek.com


[RickAckerman] 9:59 am: I want to thank you all for your very enthusiastic response. We were expecting a small crowd for this first session – perhaps 20-25, which is about how many traders are in the Rick’s Picks chat room when it gets busy. However, nearly 200 people pre-registered for this session, and it will be interesting to see how many actually drop by during our hour together.

[RickAckerman] 10:00 am: I also want to thank Peter Spina and GoldSeek for hosting this discussion, which we hope to make a regular weekly event. We will be experimenting with the format in the coming weeks, but the goal is to provide as much useful information to as many participants as possible. Let me also mention that today’s entire chat session will be archived at GoldSeek so that you will be able to review the material at your leisure.

[RickAckerman] 10:00 am: Before we get rolling, let me mention that all of you are invited to take a free peek at the inside pages of my web site, www.rickackerman.com. These pages contain archival material and hundreds of annotated charts, and are usually available only to paying subscribers.

[RickAckerman] 10:01 am: However, I’ve asked my Webmaster for a pass that will give you free access today (Friday). To enter the site, use the ID ‘oneday’ and the PASSWORD ‘only’.

[RickAckerman] 10:01 am: Now to your questions. Although I am not permitted to give investment advice to individuals, I will try to answer those questions in particular that appear to be of greatest interest to the group.

[RickAckerman] 10:02 am: In the two days since we invited your queries, Gold unsurprisingly topped the list, with the HUI (aka Gold Bugs Index) garnering more interest than any other precious-metals vehicle.

[RickAckerman] 10:02 am: I don’t track the HUI closely at Rick’s Picks for one reason: There is almost no interest in the put and call options on this vehicle. I prefer trading vehicles that are optionable because that affords us considerably more leverage and flexibility. While there are puts and calls on the HUI, they are brain-dead, with extremely low open interest and almost no daily volume.

[RickAckerman] 10:03 am: Even so, we can still take a look at the HUI itself and try to predict where it’s headed. The long-term picture is obviously bullish, but the index has been consolidating over an expansive, 130-point range since May, and it is tricky to predict when the process will be completed.

[RickAckerman] 10:03 am: Significantly, the HUI has yet to become even moderately oversold, and that’s why I think the consolidation has further to go before the HUI embarks on a bull leg of at least 118 points. That’s precisely equal to half of the 236-point “impulse leg” begun in May of 2005, and it would be my minimum expectation for the next big rally.


[RickAckerman] 10:04 am: Another reason why I think further consolidation is imminent is the HUI’s failure on its last rally to surpass September’s 369.38 high. That would have created a bullish “impulse leg,” but alas, it was not to be.


[RickAckerman] 10:04 am: Despite my mild bearishness, it is always possible to find a spot to try bottom-fishing with relatively little risk. In this instance, I would do so at the nearest Hidden Pivot target below, 325.06. These pivots tend to work VERY precisely if they work at all, so you could use a stop-loss as tight as 324.99.


[RickAckerman] 10:05 am: I should tell you a little bit about my Hidden Pivot system. If you peruse the archive at Rick’s Picks, you will find hundreds of charts that have been annotated in a way unlike those you are used to. There are no trendlines, support and resistance lines, channels, oscillators or even volume. I use price action alone, because it is capable of yielding swing points that are extremely accurate.

[RickAckerman] 10:06 am: I must concede, however, that I am not especially good at predicting exactly when a price target will be reached, although it is often possible with my method to get pretty close.

[RickAckerman] 10:06 am: Someone asked whether I look at Fibonacci numbers on the time axis. The answer is no, but I’ve known some great technicians who have mastered this trick and use it very profitably.

[RickAckerman] 10:07 am: Ellliott Wave Theory is a stunningly good tool for this as well...

[RickAckerman] 10:07 am: yielding price-swing points that not only are accurate to within hundredths of a point, but time swing-points that are equally accurate.

[RickAckerman] 10:08 am: Another method, PyraPoint, looks at Gann angles on the time axis. I’ve know some people who could forecast swing points very accurately using this method. PyraPoint is embedded in the Ensign trading platform, whose creator, Howard Arrington, has helped to popularize and teach the system.

[RickAckerman] 10:08 am: Concerning the Hidden Pivot method, it is my own, developed over the last dozen or so years. It imposes an ABCD pattern on all price action, where AB is the impulse leg, BC the correction, and CD the follow-through.

[RickAckerman] 10:08 am: I would describe it as kind of a right-brain version of Elliott Wave Theory. At my seminars, I try to get students to look at stock and commodity charts as they would a painting.

[RickAckerman] 10:09 am: We look for patterns that are pleasing to the eye and which conform to certain rules. Quite often, though, it is the outwardly ugly patterns that yield the best – i.e.,, the most consistently

profitable -- results. The reason is that a price pattern’s seeming ugliness implies that the basic “ABCD-ness” of that pattern has been obscured so that only the trained eye can see how predictable it is.

[RickAckerman] 10:09 am: Now for some more analysis.

[RickAckerman] 10:10 am: Several of you wondered where the shares of Goldman Sachs [GS] are headed. This is a good question, because Goldman is one of the best proxies we have for the smoke-and-mirrors economy. By that reckoning, neither the stock market nor the economy is likely to turn south until Goldman – “the Fat Lady” of Wall Street’s grand opera – has sung.

[RickAckerman] 10:10 am: My target for the stock is 211.35, a little more than five points above the record high recorded earlier this month.

[RickAckerman] 10:10 am: The target comes from an ABCD pattern easily visible on the monthly chart, where A=94.75 (5/31/05); B=169.31 (4/28/06); and C=136.79 (6/30/06). In theory, the eventual length of the CD leg should be equal to the AB leg.

[RickAckerman] 10:11 am: Here, the pattern is so obvious that we should not expect it to work out precisely. However, the pattern is also sufficiently compelling that we should confidently expect a top – though perhaps not THE top – somewhere close to 211.35.

[RickAckerman] 10:11 am: I should also mention that stochastic indicators for Goldman look atrocious on the daily and weekly charts. Both diverge relative to price, and this has been going on for quite some time.This suggests the stock will fall hard when it finally falls, although it does not tell us when this might occur.

[RickAckerman] 10:11 am: Several of you asked about Goldcorp, one of the most popular stocks in the Rick’s Picks chat room.

[RickAckerman] 10:12 am: We’ve been looking to bottom-fish at 27.00 – a Hidden Pivot target – but the stock’s recent breach of that support suggest it could fall all the way to 26.00 before it becomes a ripe buy again.

[RickAckerman] 10:12 am: Typically, when a stock exceeds a Hidden Pivot target, we tend to infer, not that the pivot was incorrect, or that it somehow didn’t “work,” but that the trend itself is likely to continue.


[RickAckerman] 10:12 am: We can then re-target by using another point ‘A’ (i.e., the beginning of an impulse leg), or look at ABCD patterns of a higher order of magnitude, time-wise.

[RickAckerman] 10:13 am: Incidentally, doing so with the HUI would yield a minimum upside target of 457.93 – a 40% rally from these levels.

[RickAckerman] 10:13 am: We would infer the move is under way if and when the index closes, for two consecutive weekly bars, above 364.24, the exact midpoint of our projected CD leg.

[RickAckerman] 10:13 am: Incidentally, if we were keen to buy the HUI, we would attempt to do so at the midpoints of CD legs in corrective phases.

[RickAckerman] 10:14 am: If the bull is truly dominant, retracements should tend not to reach their ‘D’ targets; rather, they should fail at or near the CD leg’s projected midpoint.

[RickAckerman] 10:14 am: From a predictive standpoint, I’ve already told you to expect more consolidation in gold (and silver as well). I don’t foresee any disasters, but it wouldn’t surprise me if the HUI and precious metal future have merely marked time between now and next spring, with the HUI staying within the range 300-350.

[RickAckerman] 10:15 am: We’re not married to any particular scenario though and would become maniacally bullish on the $HUI if it were to thrust to 369.39, a single tick above last September’s high.

[RickAckerman] 10:15 am: Let’s take a look at GOOG now – another stock that evidently is on many of your minds.

[RickAckerman] 10:16 am: There’s not enough price history to yield a high-confidence rally target, at least not by my runes, but it seems highly likely that the correction begun from 513 a month ago is just that – a correction in a bull market that has further to go.

[RickAckerman] 10:16 am: I’ve suggested very tightly stopped bottom-fishing GOOG in today’s edition of my newsletter. The relevant Hidden Pivots lie at 445.89 and at 441.10, but if you want more detailed instructions, please visit www.rickackerman.com, using the ID/Password combination given above, oneday/only.

[RickAckerman] 10:16 am: To save time in this forum, I will also refer you to the Web site if you are interested in March Silver, February Gold, IBM or D.R. Horton (DHI). All are featured, with specific trading recommendations, in the “Current Touts” section of Rick’s Picks.

[RickAckerman] 10:17 am: My forecasting method works for all vehicles in all time frames, although some of them are too ornery for my taste.

[RickAckerman] 10:17 am: Wheat moves to its targets, for instance, but often by way of gaps that bypass what would in theory be my optimal buy points. Even so, we can still be confident and objective in our forecasts.

[RickAckerman] 10:18 am: March Cotton, for instance, which you’ve asked about, has been moving up since mid-November but would need to thrust past two prior peaks – 56.11 (9/26) and 57.36 (9/18) to suggest it is capable of ending the long bear market begun in April of 2005.

[RickAckerman] 10:18 am: . Stochastic indicators look promising but are getting a bit toppy, so at least a small correction seems both likely and imminent.

[RickAckerman] 10:18 am: March coffee, another commodity you asked about, has just signaled higher prices ahead by creating a robustly bullish impulse leg of daily-chart magnitude.

[RickAckerman] 10:19 am: It did so with a thrust that surpassed the required two prior peaks (which, by the way, were recorded, respectively, on 4/21/06 and 3/01/06.

[RickAckerman] 10:19 am: If my analysis is correct, then the correction in March Coffee begun last week from 130,00 should not reach its 119.15 target – should in fact turn from 123.20, a “midpoint” pivot that can be bottom-fished with a very tight stop loss.

[RickAckerman] 10:19 am: Here’s another question from you that is near and dear to my heart: “In your deflationary scenario, how does gold perform and how do gold stocks perform? Will they hold their value?” Historically, gold has performed better in times of deflation than when inflation was rampant. I expect gold to hold its purchasing power in any event, but I reject the notion that it will eventually reach the astronomical heights that some are predicting.

[RickAckerman] 10:20 am: As a hard-core deflationist, I remain firmly convinced that the coming depression will wipe out all savings, leaving insufficient capital to bid up gold to fabulous prices.

[RickAckerman] 10:20 am: Concerning deflation itself, anyone who cannot understand why it is ABSOLUTELY inevitable should peruse my archived essays on this topic at Rick’s Picks. As to which assets you should hold in a deflation, the important thing to realize is that it will NOT be a money-making opportunity – a dot-com boom in reverse. It will be a challenge even for financial geniuses to hold onto a modest fraction of their current net worth, as it will be to avoid getting burned buying seeming “bargains” that in fact will still have a long way to fall.

[RickAckerman] 10:21 am: Nearly all classes of assets will fall in value, and you will therefore want to be holding Treasury bills and notes in the two to five-year range, along with cash, physical gold and junk silver, as the process grinds on. I do not expect the dollar to be repudiated or to be hyperinflated into oblivion. If you’re interested in the reasons, of which there are many, check out my archived essays on the topic of deflation.

[RickAckerman] 10:21 am: With respect to the impact of a deflation on the stock market, I am with the extremists on this one and believe that the Dow Industrials will eventually trade below 1000, with the S&Ps falling commensurately.

[RickAckerman] 10:21 am: But I also believe it will be easier to make money playing the bear rallies than in attempting to stay short the whole way down.

[RickAckerman] 10:22 am: Here’s a related question from a GoldSeek reader: “When gold rises ‘to the moon’ and then plummets back down to earth, or worse, what form of currency will I be using to buy groceries the next day?”

[RickAckerman] 10:22 am: Junk silver would be my guess. But don’t expect someone to trade you a truckload of food for a measly gold nugget. They will tell you they can’t eat the gold, and they will be right.

[RickAckerman] 10:22 am: Another GoldSeek visitor has asked about Wall Street’s methods as regards short stock: “If I buy shares of my favorite silver company thru a brokerage house, can they take those shares and sell short my stock?”

[RickAckerman] 10:23 am: Yes, my friend, and they can and always will if you have not demanded to hold the certificates yourself. Wall Street has always made its money the old-fashioned way – by stealing it. In this case, stock certificates held in “street name” rather than in your name are absorbed into the essentially riskless insider shell game that is Wall Street.

[RickAckerman] 10:23 am: Here’s another good one: “At this time of year, many analysts are giving their opinions on what will be the greatest surprises for 2007. E.g., some are suggesting the possibility of 2.25 copper; 11,200 Dow; 20.00 sugar; 6.00 wheat; etc. What is your candidate for the greatest financial surprise for 2007?”

[RickAckerman] 10:24 am: My answer: The magnitude of the housing bust, which is only just beginning. We are headed into the Big One, the maw of deflation, and there is no way to prevent it.

[RickAckerman] 10:24 am: Inflationists blather on about how the Fed will simply monetize away the problem. This argument is so stupid that I no longer even respond to it. Check out my archive and you’ll find a dozen airtight reasons why there is NO chance the Fed will be able to reinflate.

[RickAckerman] 10:24 am: Consider just one – that, whereas a dollar of borrowing once bought a dollar of GDP growth, it is now taking upwards of $8-$10 of borrowing to create that same dollar’s worth of growth. Which is to say, we are having to borrow more and more dollars to sustain our consumption-based economy.

[RickAckerman] 10:25 am: Of course, any trend that cannot continue forever, won’t. Another argument: All of the hoped-for inflationary money growth can only occur through borrowing on some form of asset. If you believe we are about to embark on a new round of inflation, that is tantamount to saying your house is about to double in value in the space of the next few years. Do you really think that’s going to happen? Dream on! Reversing the downward spiral of home prices will take a much greater stimulus than was required to merely lift prices from the steady uptrend they were in during and after the dot-com crash.

[RickAckerman] 10:25 am: We’re just about out of time now for this part of the session, but I would strongly suggest that you visit my archive today if you want my outlook and advice for a specific stock, commodity or index. I track many precious-metal stocks for which forecasts can be accessed by way of the “All Picks By Stock” field at the top of the page.

[RickAckerman] 10:25 am: Also, if you select ‘edu’ in this pulldown window it will take you to my educational page, where I explain my techniques and methods and provide technical tips, including “Stochastics Made Easy” and the ABCs of option backspreading.

[RickAckerman] 10:26 am: Before we go into the real-time segment of this chat session, I’ll leave you with some Hidden Pivot “buy” points which you could use to attempt some tightly stopped bottom-fishing in selected precious-metal stocks.

[RickAckerman] 10:26 am: Please be aware that these numbers could change over the short- or even very short- term and that they are applicable only if mining-sector shares continue to pull back.

[GoldSeek.com - Moderator] 10:26 am: Rick, please go ahead and remind those who joined us late how they can access your website today for free.

[RickAckerman] 10:27 am: Note as well that in this case, “tightly stopped” implies a stop loss of no more than 4-8 cents.

[RickAckerman] 10:28 am: To access my web site free today, go to www.rickackerman.com and use 'oneday' as your ID, 'only' as password.

[RickAckerman] 10:28 am: I typically use extremely tight stops – a point or less, for instance, when initiating trades in the E-mini futures. I am obsessive about controlling risk, but some of my students have learned to loosen up a bit when applying my method in trading.

[RickAckerman] 10:29 am: Now for those short-term, downside Hidden Pivot targets. In some cases I will give a second target, whose attainment should be inferred if the first is breached by more than a few pennies

[RickAckerman] 10:29 am: GLD: 60.92/60.01; AU: 45.38/44.04; BGO: 4.70; CDE: 4.63; DROOY: 0.75; PMU: 0.95/0.82; GLG: 49.35 (bullish! no downside markers evident); HMY: 14.70; IAG: 8.37 (Heads up! Very close!); MGN: 4.47; NEM: 39.47 (but 46.17 print within next few days would negate short-term bear); PAAS: 23.53; PMU: difficult to read, but the fact that the recent spike to 1.30 did not exceed the April 2004 peak is not encouraging and portends a possibly lengthy period of backing and filling.

[RickAckerman] 10:29 am: Now, with Peter Spina's help, we'll try some interactive Q&A in real time...

[GoldSeek.com - Moderator] 10:30 am: We will now take a 5 minute break before the next part of our chat with Rick Ackerman continues. At this time, if you would like to submit a question, you may do so.


[traderneal] 10:30 am: what is your upside target for gold?

[RickAckerman] 10:35 am: My upside target for Gold depends on the time frame being looked at. I would suggest going to rickackerman.com and selecting 'Gold' in the pulldown field. This will give you a broad view of my expectations for Gold.

[GoldSeek.com - Moderator] 10:36 am: Question: I have to disagree with you regarding deflation - At the first true whiff of deflation, Bernanke will sacrifice the dollar and cut rates dramatically. He doesn’t want a Japanese style deflation over here. However, at some points he will have to raise rates dramatically to save the dollar.

What is your high prediction for gold?


[RickAckerman] 10:38 am: There is unfortunately no room for disagreement on deflation. Bernanke cannot possibly do enough "sacrificing" to re-inflate. I have written tens of thousands of words about this, so please visit rickackerman.com to see why all the inflationists are dead wrong. There is ZERO chance the could be right, since even if hyperinflation were possible, it could only result in a collapse that brings..deflation.



[GoldSeek.com - Moderator] 10:39 am: Question: I have been following your columns since I first encountered it at 321 gold, and now GoldSeek.com. What do you think of NEM at the 45-46 levels? Also, goldcorp, and pan american silver at current levels? Are there good price points for me to get in at? and how far do you think these stocks will go to?

[RickAckerman] 10:40 am: Incdientally, the Japanese didn;t want "Japanese-style" deflation either, but that didn't stop it from happening. Keep in mid that it happened even though the Japanese had a powerful counter-stimulus that we will not -- namkely, an insatiable U.S. consumer to export to.

[GoldSeek.com - Moderator] 10:42 am: Question: What is the bottom fishing target for silver? Thanks.

[RickAckerman] 10:42 am: There is detailed information concerning downside targets for silver in the newsletter.

[GoldSeek.com - Moderator] 10:43 am: Question: Any thoughts on the current CRB correction? Do you have any targets for corn and wheat?

[mngarrett] 10:44 am: do you still think think gold will retrace to 513 ? and if so when?

[RickAckerman] 10:44 am: Pls limit yourselves to one trading vehicle per question. Let's have a look at wheat, basis the contnuous March contract.
[RickAckerman] 10:45 am: The bull market is extremely robust...
[RickAckerman] 10:45 am: ..with upside potential to as high as 632...


[RickAckerman] 10:46 am: A move to that height would be signaled by a two-day close above the midpoint pivot, 548.6

[GoldSeek.com - Moderator] 10:46 am: Question: You mentioned a possible 40% gains in the HUI. It does not sound like a great gain considering Gold could reach 4 figures within the next 6 to 12 months. Where do you see Gold going in 2007 and since your prediction of a modest 40% gain in the HUI?
[RickAckerman] 10:48 am: I am not looking for "Great" gains in gold next year and would expect nothing better than a sideways-to-down consolidation during the first quarter or longer.


[GoldSeek.com - Moderator] 10:48 am: Question: I noiced the qqqq's are looking like a rollover down. Could you walk us thru the abcds and give us some targets?
[RickAckerman] 10:48 am: Gold is sginaling, not inflation, but DEFLATION.
[RickAckerman] 10:49 am: We hold some QQQ Jan 42 puts as a result opf a Rick's Picks recommendation, but they were intended as a speculation, a hedge against the not-very-unthinkable.

[GoldSeek.com - Moderator] 10:50 am: Question: How will gold stocks stand up during deflation as compared to the metal?
[RickAckerman] 10:50 am: Keep in mind that there have only been about a half-dozen days in the last 20 years when put-holders were feeling anything approaching exhilaration.

[RickAckerman] 10:51 am: Anywa, short-term QQQ could be bought at 42.74, a Hidden Pivot support, with a stop loss as tight as 42.69.
[RickAckerman] 10:51 am: I have used a 30m chart to come up with this projection...
[RickAckerman] 10:52 am: Withj A=44.75 (12/15)) and B=43.38.
[RickAckerman] 10:52 am: The target is 21 cents beneath today's so-far low.
[RickAckerman] 10:52 am: I think physical metal will outperform mining shares.
[RickAckerman] 10:53 am: Unlike shares, physical metal carries no "baggage".

[GoldSeek.com - Moderator] 10:54 am: Question: Your opinion on the credibilty of the following: With a falling dollar and the huge national debt(USA), foreigners will seek alternative asset classes instead of USA treasuries? The USA treasuries attracting less bidders at their auctions thus forcing rates up, thus inducing the mother of all recessions??
[RickAckerman] 10:54 am: Webmaster informs me that the password given above is now actiuve, so you can access my inside pages immediately.
[RickAckerman] 10:54 am: Looks like he has extended the validity of the password through tomorrow.

[RickAckerman] 10:55 am: Foreign investors are trapped in the dollar. If they bail out, where are they supposed to go?
[RickAckerman] 10:56 am: The mother of all recesssions is coming, but not because foreigners will have bailed out of dollars.

[GoldSeek.com - Moderator] 10:57 am: Last Question: If we are going to have deflation, why do I want physical silver? Wouldn't I just want cash?


[RickAckerman] 10:59 am: To understand the dseflation that is coming, you must put aside all of the textbook stupidity about deflation being a "decrease in the money supply." This is worthless bilge. Deflation implies an increase in the real burden of debt. That is how it will be felt, and perceived, and it is what will wreck the economy. Paradigmatically, it is this: servicing a 6% mortgage on a home (i.e.," collateral")that is decreasing in value by 3-5% a year. This is already happening, and it implies a real-rate burden for many homeowners that exceeds 10%. That is more than hedge funds are returning these days.



[RickAckerman] 11:01 am: The utility of junk silver coins in a wrecked, quasi-barter economy is not difficult to foresee. Cash will ciruclate as well, but it is not as predictable as non-numismatic silver, which will always have intrinsic value.

[RickAckerman] 11:02 am: Thank you for joining us today. It was a pleasure to conduct this session. Stay tuned to GoldSeek.com for details concerning the next session.
[GoldSeek.com - Moderator] 11:02 am: Thank you Rick for participating in our inaugural GoldSeek.com Chat.
[GoldSeek.com - Moderator] 11:02 am: We will go ahead and archive today’s chat session on GoldSeek.com later today.

Please take advantage of the opportunity Rick has given us with the 1-day free access to www.rickackerman.com

Use “oneday” as your ID, ‘only’ as your password.

We look forward to having you back Rick!
[GoldSeek.com - Moderator] 11:02 am: Please feel free to stay in the chat room after the session with Rick Ackerman has ended. If you do not have full chat functionality at this time, you will need to close the chat window and re-login at www.goldseek.com/chat

[RickAckerman] 11:02 am: Thanks for hosting the chat, Peter.


[GoldSeek.com - Moderator] 11:03 am: Thank you and Happy Holidays.