[RickAckerman] 10:03 am: From Jack G, a question about FDR’s raid on America’s safe deposit boxes: “After FDR & the Supreme Court upheld the confiscation of gold from the American public, why in the world did they ever allow it to be legal again?”

[RickAckerman] 10:03 am: Answer: Even among governments, gold falls in and out of favor. When Roosevelt was inaugurated in 1933, one of his first acts was to issue Executive Order 6102, which eliminated gold as money with one stroke of the pen. This made it possible for the government to contemplate the debasement of U.S. currency on a scale hitherto unimagined. Moreover, by confiscating all privately held gold for $20.67 an ounce, the president was able to rebuild official inventories at a 40% discount to the $35 price he would later announce as the “official” rate.

[RickAckerman] 10:03 am: The edict was tightened in 1961, when Americans were forbidden from owning gold overseas as well as at home. But thirteen years later, in 1974, it was lifted and Americans were once again allowed to hold gold in a form other than jewelry.

[RickAckerman] 10:04 am: Not surprisingly, this ushered in a period when official selling of gold would reach torrential levels, including a sale by the IMF of 25 million troy ounces at public auction.

[RickAckerman] 10:04 am: Today Americans are “allowed” to own gold bullion because this doesn’t conflict with or in any way hinder the goal of debasing the dollar even beyond the point of worthlessness.

[RickAckerman] 10:04 am: If it’s any comfort, a confiscation of gold down the road would have to be done in such a way as to make Roosevelt’s “buy-back” look benign.

[RickAckerman] 10:04 am: Since the U.S. is unlikely to peg gold at $500 or more an ounce pursuant to acquiring it, the government would practically have to steal it outright to effect a ban on private holdings. This would seem to make such a course unlikely, although we have learned to never count the government out when there are property rights to be trampled.

[RickAckerman] 10:08 am: “Novice” has asked how likely a silver (or gold) melt-up or meltdown is. “I have that concern because, everyday I'm out of the market, I wonder if I should be in so I don't miss the train.”

[RickAckerman] 10:08 am: Answer: All great bull markets have a tendency to leave doubters in the dust, so if you are truly worried about missing the train, why not ensure that you will at least be on board by acquiring a modest stake?

[RickAckerman] 10:08 am: It’s not an all-or-nothing thing, you know, and there are nearly always going to be some mining stocks that are so attractively priced that it will be difficult to get hurt.

[RickAckerman] 10:09 am: Here's one concerning coffee futures...

[RickAckerman] 10:09 am: Other than an occasional cup of joe at Starbuck’s, we don’t much concern ourselves with commerce in the bean. But since a few of you have asked me to look at coffee’s chart, I’ve done so.

[RickAckerman] 10:09 am: My gut feeling is that nothing interesting is likely to happen over the next six months. Looking at an even bigger picture, since early in 2005 the futures have made a series of descending peaks, all of which led to bottoms above the watershed low near 98 cents that was recorded in the early days in 1996.

[RickAckerman] 10:10 am: It may turn out that coffee has been basing for the last four years, but I wouldn’t bet on it. One reason I think it will go lower before it goes higher is that stochastic indicators for the monthly chart have failed to diverge from price when the last two bottoms were being formed (starting in September 2005).

[RickAckerman] 10:10 am: If I am wrong, the futures will tell me by surging above the 142.75 peak made a year ago. But until such time as that occurs I wouldn’t get too excited.

[RickAckerman] 10:10 am: There is currently a modestly bullish impulse leg on the weekly chart, but again, I am not suggesting that you get your hopes up, since it has just been countermanded by a lesser down-leg. This would seem to imply a mixed picture at best for the next 4-6 weeks.

[RickAckerman] 10:10 am: I’ve received a query concerning zinc’s prospects but lack sufficient chart data to give a comprehensive answer. However, the bull market of 2006 looks intact despite a nasty correction from November’s highs.

[RickAckerman] 10:11 am: Most immediately, the breach of a “midpoint” Hidden Pivot near 1.62 would seem to imply further slippage to at least 1.46.

[RickAckerman] 10:11 am: A quick pop above 1.78 (or so) would decisively turn the intermediate-to-long-term trend bullish. These numbers are estimates, however, and I therefore would not rely on them for trading purposes.

[RickAckerman] 10:11 am: As long as we’re talking about zinc, let me mention another niche favorite of metals junkies, palladium. An Australian who follows my daily service avidly writes as follows:

[RickAckerman] 10:11 am: “Obviously, historically it has moved with other precious metals but as shown in the earlier part of this decade it can move quite independently of the other metals with previous highs of over $1000 per ounce and then dropping off to sub $200 level and now at the $340 per ounce price point. Do you see a base forming here, or are you more conservative in regards to the future price of palladium? There have been whispers that certain fund managers are buying palladium in increasing quantities to complement their gold positions for an expected run up in 2007.”

[RickAckerman] 10:12 am: Answer: Palladium’s chart correlates poorly with other PMs and is therefore perhaps best analyzed without regard to the performance of other metals. Bottom line, although the rally from 2002’s lows just beneath $200 looks impressive, several failures last year to take out the June high near $360 suggest the bull lacks guts.

[RickAckerman] 10:12 am: TradeStation’s Palladium charts are poor in quality, so I cannot do much more than hazard a guess, but it looks as though quotes will have to come down to a ‘midpoint’ Hidden Pivot near $290 before they can base for a possible moon shot.

[RickAckerman] 10:13 am: One investor has asked whether a sustained push by Gold above the $1000 level will induce generous dividend yields.

[RickAckerman] 10:13 am: My guess is that they will be somewhat more generous in general, though not extravagant. High dividends are often symptomatic of companies lacking the imagination to find better uses for their surplus capital.

[RickAckerman] 10:13 am: If Gold were to soar above $1000, shouldn’t we expect to see the best companies acquire as much of the stuff as they can, either through acquisition or exploration? That said, there likely will be pressure on big-cap mining companies with heavy institutional sponsorship to pay more-generous dividends.

[RickAckerman] 10:14 am: This is encouraging, since it implies the creation of new impulse legs to continually renew the long-term bullish trend. Admittedly, none of the prior peaks is quite as significant as the July ’06 Matterhorn (677.50), but it is still possible for the Comex futures to surpass it, adding to the others it has already passed, to further enhance the bullish case.

[RickAckerman] 10:14 am: That said, it would be a negative if the rally begun in the first week of this year dies without having bettered the 677.50 high. By “dies,” I mean falls, without interruption, to surpass two prior lows of weekly-chart magnitude. Specifically, they lie at 603.10 and 567.00.

[RickAckerman] 10:15 am: I realize that these price points are difficult to visualize, and that’s why I would strongly encourage you to visit my site, particularly the archive, with the generous subscription terms I am offering to all those who joined in this session.

[RickAckerman] 10:15 am: Most of the charts are annotated, and they give a clear picture of my outlook for many tradable issues, including stocks, commodities and indexes.

[RickAckerman] 10:16 am: This high doesn’t look like much on a chart, but it is very significant according to my Hidden Pivot Method. When it was surpassed by 39 cents last month, it turned the entire bull run from the October 2006 low (10.730) into a single, formidable impulse leg.

[RickAckerman] 10:16 am: The rally has corrected since then, but the downtrend that effectively did this did not reach its target. This, too, is a bullish sign.

[RickAckerman] 10:17 am: I am reluctant to offer an entry strategy, since it changes from one day to the next and always takes risk rigidly in account. For instance, my minimum upside projection for the near term is 13.745, with a shot at 13.96 if the March contract goes any higher.

[RickAckerman] 10:17 am: Those two numbers alone yield perhaps half-a-dozen different strategies for either getting long, or short, or both at different times. My entries are frequently made against the trend and in many instances risk no more than a tick or two. Perhaps your style is quite different.

[RickAckerman] 10:17 am: I may get filled less often, but when trading vehicles move to my numbers, as the QQQs did yesterday, the result can be a risk:reward ratio of 1:10 or even better.

[RickAckerman] 10:17 am: By way of a specific daily recommendation, Rick’s Picks subscribers were able to buy the QQQs yesterday at the exact intraday low, 43.33, using an initial stop-loss at 43.29 (!). We never looked back, and this vehicle had traded as high as 44.19 by the end of the day.

[RickAckerman] 10:18 am: Peter, that completes the questions that were submitted to me in advance, so we can proceed with real-time questions now when you are ready...

[peterspina] 10:18 am: We will be taking a five minute break and during the second part, Rick will be answering questions from you

[peterspina] 10:26 am: Question: Hi Rick, What's your outlook for the housing market in 2007?

What's your top number for Gold and HUI? and why the HUI still lag gold? Thanks – Jeff

[RickAckerman] 10:26 am: would have ended any trade with a risk-wise trailing stop.

[RickAckerman] 10:27 am: On my list of Ten Predictions for 2007, the top surprise was...

[RickAckerman] 10:27 am: the collapse of the housing market.

[RickAckerman] 10:28 am: I do not think this market has bottomed, nor is there any good statistical evidence to suggest this is the case...

[RickAckerman] 10:28 am: The only optimistic predictions being made these days about housing are more prayerful than factual.

[RickAckerman] 10:29 am: Concerning the lag of the HUI, it is troublesome that miners in general have lagged bullion on the current move up.

[RickAckerman] 10:30 am: As far as upside targets, I try to avoid pie-in-the-sky numbers. I like to take it one rally leg at a time, and this has helped my subscribers avoid trouble and false signals in the metals.

[peterspina] 10:30 am: Question: Hi Rick, and thanks for doing this! Shortly after starting your website “Rick’s Picks” you compiled a list of gold stock companies (with help from subscribers). I remember you saying you bought PMU for your son’s account and I would like to know if you still own it and would be inclined to continue accumulation? - Dale