Looks like I'm on a roll!  Please see my Rapidminer 5.0 Video Tutorial #2. In this video we begin the process of recreating my original written NMT YALE/Rapidminer tutorials into version 5.0 and into a video.  This video shows how to import training and prediction data, add a classification learner, and apply the model, and get the results.

Video download link (HQ): Rapidminer 5.0 Video Tutorial #2

The data files you will need to follow along are Excel spreadsheets below:

Training data set: gold_final_input

Prediction data set: ga-gold

Well would you? Or would you wait till $1021ish?  What's everyone's long term outlook on Gold?

These are my links for January 11th:

• LaHood: Auto bailouts were a good investment – MarketWatch – U.S. Transportation Secretary Ray LaHood kicked off the Detroit auto show on Monday by telling reporters that the government's commitment to the car industry was "a good investment of taxpayer dollars." – UM, YEAH, RIGHT.
• Geithner Has Support of Obama, Democratic Lawmakers, Aides Say – Bloomberg.com – Asked yesterday for comment, White House Press Secretary Robert Gibbs said he stood by his earlier statements that the president had full confidence in Geithner. Jim Manley, a spokesman for Senate Majority Leader Harry Reid of Nevada, said “Secretary Geithner enjoys the strong support of the Senate Democratic caucus.” – ATROCIOUS!
• Stocks, Commodities Advance as China Imports Soar; Dollar Falls – Bloomberg.com – “The market doesn’t actually care if more or less Americans have jobs, it’s watching for rate hike signals,” Bill Blain, the joint head of fixed income at Matrix Corporate Capital in London, wrote in a research note. “Other aspects, such as U.S. retail sales or this morning’s dramatic growth in China’s exports, are equally valid indicators of just how strongly the global economy is recovering.” – YES, THE MARKETS DON'T CARE ABOUT THE USA, IT JUST CARES ABOUT $$$$, LIKE IT SHOULD!
• Chavez Devalues Bolivar 50%, First Time Since 2005 (Update1) – Bloomberg.com – Chavez said the bolivar will be devalued to 4.3 per dollar from 2.15 per dollar for most imports. A second, subsidized peg of 2.60 bolivars per dollar will be used for importing food, medicine and machinery intended to boost the economy’s competitiveness. – HA! SOCIALISM = SUCKS.
• New York Seeks National Effort to Curb Salt in Food – NYTimes.com – The plan, for which the city claims support from health agencies in other cities and states, sets a goal of reducing the amount of salt in packaged and restaurant food by 25 percent over the next five years. – FOR A PALEO TYPE PERSON, TOO MUCH SALT IS DEADLY. I'M SURPRISED BY HOW MUCH SALT IS IN PROCESSED FOODS>
• Pimco move to sell gilts raises spectre of a UK sovereign debt crisis – Telegraph – The American investment group said it will be a net seller of UK Government bonds this year, at the very point when the Bank of England brings its £200bn programme of purchases to and end and the Treasury attempts to raise unprecedented sums through the capital markets. – I THINK WE'LL SEE EITHER A DEFAULT IN THE POUND STERLING OR THE USD.

When I started formulating my simplified trading strategy, I tested it out on GOLD.  GOLD made a new all time high on high volume on 5/20, I entered on 5/21.  Needless to say, I caught a small portion of the trend before being stopped out.  The system worked nicely.

Here's the entry chart (the before):

And here's the exit chart (the after):

These are my links for January 6th through January 7th:

• Geithner’s New York Fed Told AIG to Limit Swaps Disclosure – Bloomberg.com – “It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year. – GOES TO SHOW YOU, THEY'RE ALL SNEAKY
• Geithner’s New York Fed Told AIG to Limit Swaps Disclosure – Bloomberg.com – “It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year. – GOES TO SHOW YOU, THEY'RE ALL SNEAKY
• Deflation in Japan: To lose one decade may be misfortune… | The Economist – What effect has this steady erosion of value had on the psychology of Japanese people? The bust did not lay waste to Japan, after all, as the Depression did to America in the 1930s. Homelessness and suicide have risen, and life has got much harder for young people seeking good jobs. But Japan still has ¥1,500 trillion ($16.3 trillion) of savings, its exporters are world-class, and many of its citizens dress, shop and eat lavishly. As a senior civil servant puts it: “Japanese people have never really felt that they are in crisis, even though the economy is slowly withering away.” – WELL WE JUST HAD A LOST DECADE OF OUR OWN.
• Off the Charts – For Stocks in the Developed World, It Was a Decade of Zeros – NYTimes.com – The United States stock market lagged even that modest return. According to the MSCI indexes, which measure virtually all stock markets using consistent criteria, an investor in the American market who reinvested all dividends — and who somehow avoided all taxes and transaction costs for the decade — would have ended 2009 with 12 percent fewer dollars than when the decade began. That is an annual return of negative 1.3 percent. – NOT IF YOU'VE BEEN TREND FOLLOWING.
• Gold Outshines All Other Assets For Past Decade – Knowing about the 18 year cycle between commodities and equities, this isn’t surprising. In fact, thanks to this long term historical pattern, we can look forward to almost another decade of the same type of outperformance. – I WONDER FOR HOW LONG REALLY?

Yeah, the Gold upward trend got busted in my system around December 8, 2009.  My stop would've been hit at $1150.53 and since I own some physical gold too, I started debating my exit strategy from that.  I'll go long in Gold again when it hits another all time high but for now I'll just sit on my hands.

I'm using a very simple trend strategy now.  I just buy all-time highs, use strict positioning sizes, and enter a volatility stop each and everytime.  I let the market tell me which stocks to buy (and when to get out) instead of a complicated neural net system.

My $GOLD trade was the beginning of my simplification of my trend strategy, it was a winner and I realized that perhaps I've been doing everything wrong.  It wasn't until November that I started entering positions, losing a bit of money here and there, and then finally honing my new strategy.

Positions sold or reduced

1. $GOLD (sold 6/3/09)
   
2. $JNJ (sold 12/22/09)
   

Current Positions

1. $DTV
   
2. $WCRX
   
3. $JNJ
   
4. $V
   

Stalking

1. $TEVA
   
2. $SWN
   

In the early part of this year, I had a discussion with a coin dealer who was selling American Eagle Gold Proof coins. He quoted me a price with a large "over the spot" spread fee. I asked him why and he said that the US mint had suspended making them and are no longer in stock.

Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. [via US Mint]

Just the other week I had a chance to talk with the same coin dealer again and he said that the spreads have come down and people are buying as much gold as they can get their hands on. I wonder what all this means? ;)

I’ve been busy rebuilding my Gold neural net model over the past few days with new data and inputs using the new version of Rapidminer.  It’s the same model I used to write my published Futures Magazine article and tinkering with it should give me new insight into the current Gold trend.  This is particularly important to me because I want to know if any future pull backs in Gold is a buying opportunity or something else.  I predominately use my trend models to find buying opportunities and this works great in Forex and Metals.

Many people I correspond with thought the Gold market was crashing when the price broke through $750 recently.  I seem to remember a lot option acitivity around the $600 level as well.  My old Gold model told me otherwise and I paid a visit to my Gold dealer earlier this month.  I’m curious to see if it will tell me to visit my Gold dealear again in October.

It figures that the Gold and Oil markets start to collapse just as I go on hiatus. My guess is that hedge funds are selling their winners to cover their losers (financials, banks, etc). This has had a nasty consequence in the currency markets with the AUDUSD collapsing from its near parity with the USD to around 0.80. Next stop for Gold could be $600 and Oil maybe $80 (wishful thinking?).

My timing models are going wild and pointing to a lot of market crosscurrents. This shouldn’t surprise me because we are in September after all and I can’t wait for October. We are at a very heavy volatility area in the S&P500 market and we could be making a low or preparing for the next leg down. If we are to go lower from here, it’ll be at least a 100 point drop in the S&P500 down to the 1100 level. How’s that for optimism? The upside potential for the S&P is around 1350 right now.

I’m still on hiatus but had to pop in to make a few comments. I should post my last video tutorial sometime but I don’t know when I’ll get to that.

You have to love Jim Rogers and the interviews he gives Bloomberg. He’s a wise man that comes across as a cranky at times but we should listen carefully to what he has to say.

“I don’t know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,” Rogers, 65, said in an interview from Singapore. “So we’re going to bail out everybody else in the world. And it ruins the Federal Reserve’s balance sheet and it makes the dollar more vulnerable and it increases inflation.” [via Bloomberg]

Commenter and blogger Kevin H posted this reply to my $5 Trillion Dollars of Debt post yesterday, “How in the world is the U.S. going to bail Fannie and Freddie out of 5 trillion? We are already in debt 9.5 trillion dollars.”

Yes, the question is “how” and “can we?” Stay long Euros, Gold, and Oil for now.

I’m back from vacation feeling refreshed, relaxed, and ready to post. I was slowly burning out from work and blogging so I needed this vacation badly. We had a lot fun and I spent most of the time with my family, driving to all sorts of kid-fun places and doing some small “fix it” projects at home. I did step out a few times to have beers with the MarketDoctor and visit with, for the first time, his gold coin dealer.

Yes, yours truly bought shiny gold and silver coins for the first time in his life (I promptly buried them next to my shotgun and 2 year supply of plastic sealed toilet paper).

All joking aside, I decided to start saving in Gold and Silver. Yes, you read that correctly, I said saving. I’m not playing the Gold and Silver market by buying and selling these coins, I’m just transfering my paper money (USD) into Gold and Silver. Essentially I’m switching one asset for another shiny and hard one.

Yes, I know I won’t be earning any interest on them but I will be maintaining my purchasing power. Right now if I park my savings in a bank account, I’ll make maybe 2% interest. That would put me in a depreciation hole faster that shit sliding down a stick, if you believe that our true inflation rate is really between 10 and 12%.

If you ask me, maintaining purchasing power wins over a 2% interest bank account in a border hyper-inflationary economy any day.