Rosen On The Markets

THE ROSEN MARKET TIMING LETTER

PRECIOUS METALS – FOREX - STOCK INDICES - COMMODITIES

“Time is more important than price; when time is up price will reverse.”
W.D.Gann

RONALD L. ROSEN
ALISTAIR GILBERT

Crude oil is in the process of bottoming at LTD # 19 low due to arrive in December 2008. The next high is LTD # 1 due to arrive in June 2009. The standard deviation for arrival extends out to 8/12/2009. The biggest moves tend to occur on either side of # 1.

The media at all levels is informing us that a great economic depression is threatening to engulf the entire world. According to some we will be virtually destitute, with no jobs, no food, no health care and no homes to live in.

Is this what we face? Is this our future? Not in my opinion. What I do believe we face is many repeats of what we have experienced ever since President Nixon closed the gold window and severed the dollar from gold. Since that day in 1971 we have been living with an approximate 30 year cycle of inflation and disinflation. Nothing has changed with the exception that the cycle has become more extreme and the numbers are getting larger. When will it all end? I suggest that it will end well beyond our lifetimes. The cycle we are living through is intact, is functioning as expected, and will repeat many times over into the future before monetary systems ever return to a gold backed currency. Returning to a gold standard means our government relinquishing manipulative control of our monetary system. This will not be accomplished voluntarily. "Pork" is the national diet and will not change until we change.

The Doom and Gloom is getting thick and heavy on not only the business news stations but also all national television news stations. All day news stations keep talking about the current recession turning into a depression. Fear and anxiety are running rampant, at least on the news stations and I'm sure among those unfortunate people who have lost their jobs. That is not funny. However, the big anti-depression guns are not yet in sight. When they arrive and are fully loaded and fired, all will be forgiven, and by all I mean all debts and obligations that stand in the way of a "recovery." Guess who will assume those debts and obligations. One way or another we, the citizens, will assume all debts and obligations that our government and politicians deem necessary to "transfer" out of the way of recovery and growth. Our protection is of course physical gold in our possession.

People can adapt to the economic situation no matter how bad it gets. As youngsters growing up on the west side of mid town Manhattan in New York City in the 1930's, we creatively made a 500% profit every day for several years. This allowed us to purchase all the candy and chewing gum we wanted. This is the way we did it. Take a few copper penny coins and put them on the trolley car track. Wait a few minutes until the next trolley runs over the coins and "voila," you have a coin the size of a nickel. Then you proceed to the subway station and purchase your candy and gum in the candy and gum dispenser with your perfect 5 cent "slug." This worked for a number of years until one day our coins were no longer accepted by the machine. By then recovery was underway and we were more interested in girls, a much more expensive candy of a different kind.

What would make one believe that "All news is old news"? A market day like today, December 5, 2008, should be sufficient to prove that point. The worst possible economic news surfaced this morning. Auto sales have collapsed, unemployment is the highest it's been in years, and mortgage defaults reach highs. On and on the bad economic news surfaced. The market opened down and the D. J. I. A. declined over 200 points. Gloom and doom was so thick all day that one expected to hear Henny Penny screaming that the sky is falling.

"The Sky Is Falling, better known as Chicken Licken, Henny Penny or Chicken Little is an old fable about a chicken (or a hare in early versions) who believes the sky is falling. The phrase, "The sky is falling," has passed into the English language as a common idiom indicating a hysterical or mistaken belief that disaster is imminent."

By the time the markets closed the D. J. I. A. was up over 250 points. The HUI gold stock index was moving down at a rapid pace all day. It looked as though it was closing in on a new low for this corrective process. The HUI closed up for the day. Once again, all news is old news and by the time it surfaces it has been fully discounted by the markets.

"The correction in the HUI from the 519.68 high should be an A, B, C corrective pattern that unfolds in a 3 - 3 - 5 wave count. Wave A should be 3 waves down, B 3 waves up and C 5 waves down to complete the correction. All waves have taken place with the exception of the final wave [v] down. To complicate matters, the final wave [v] does not have to go below the low of 150.27 in order to complete the correction. If the HUI is about to have an explosive move up, the final wave [v] down may be stunted and fail to go lower than 150.27. How do we resolve this dilemma? Will or won't the HUI go lower than 150.27 and finally bottom or has it already bottomed?"

If the HUI closes above 253.73 it will have invaded the territory of the small corrective wave just above 248.07. This would indicate that the correction in the HUI is most likely complete and a final decline below 150.27 may not occur.

The 30 Year T-Bond is topping at LTD # 2 high. The SLTD high is arriving with LTD # 2 high. The next SLTD is a low due to arrive no later than September 2009. This indicates that the interest rate on long term paper will be rising, not declining. Inflation would cause rates to rise, not decline.

The following items are making Long Term Delta turning point lows and bottoms. This has proven to be bullish for the precious metals complex in the past.

The 30 Yr. T-Bond declining in price means interest rates will be rising, not declining. If you remember Gerald Ford's Presidency he insisted on issuing these badges for concerned citizens and officials to wear at all times.

"In what is considered to be one of the biggest government public relations blunders ever, Ford approved a plan soon after becoming president in August 1974 to have millions of red-and-white buttons printed up with the "WIN" slogan on them."

The reason it is considered to be one of the biggest government public relations blunders ever is because at the time the buttons were ready to be distributed disinflation had become the problem.

Hmmm, I wonder if by fighting deflation and recession at this point in time our government might be making the wrong move. Could inflation actually be the coming problem? That's what the charts posted in this report are telling us.

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Disclaimer: The contents of this letter represent the opinions of Ronald L. Rosen and Alistair Gilbert Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Ronald L. Rosen and Alistair Gilbert are not registered investment advisors. Information and analysis above are derived from sources and using methods believed to be reliable, but Ronald L. Rosen and Alistair Gilbert cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.