Coming To Terms With Certain PM Trends
storm888
Posts: 11,701 ✭✭✭
Whether SHORT or LONG on the wrong-side of the market, the stages are the same:
DENIAL:
This is not happening. The longs/shorts are on the wrong side of the trade.
The broker is my friend and he will not margin-call me. This will be just fine
in a few days or weeks. I don't lose until I sell/cover.
ANGER:
Lousy, filthy shorts/longs manipulated this thing. The broker is a scumbag.
The banks and politicans are all criminals. They should all be in jail.
BARGAINING:
God/Satan, if you will turn this market, I will do whatever you want. God if
you will just get me even, I promise I will never do anything like this again.
OK, just let me get half of my money back and I will stop investing.
DEPRESSION:
I am so stupid. I should have known. I am an idiot. I should die. What have
I done to my family finances? What is going to happen to me?
ACCEPTANCE:
Such is life. I can bail/cover/hold/average-down-up/whatever. I throw in
the towel now, and I will live to fight another day. I can make these losses
back. It's not the end of the world. Alrighty then.
...............................
DENIAL:
This is not happening. The longs/shorts are on the wrong side of the trade.
The broker is my friend and he will not margin-call me. This will be just fine
in a few days or weeks. I don't lose until I sell/cover.
ANGER:
Lousy, filthy shorts/longs manipulated this thing. The broker is a scumbag.
The banks and politicans are all criminals. They should all be in jail.
BARGAINING:
God/Satan, if you will turn this market, I will do whatever you want. God if
you will just get me even, I promise I will never do anything like this again.
OK, just let me get half of my money back and I will stop investing.
DEPRESSION:
I am so stupid. I should have known. I am an idiot. I should die. What have
I done to my family finances? What is going to happen to me?
ACCEPTANCE:
Such is life. I can bail/cover/hold/average-down-up/whatever. I throw in
the towel now, and I will live to fight another day. I can make these losses
back. It's not the end of the world. Alrighty then.
...............................
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
0
Comments
I'm down from my last couple buys, but I still have the physical metal, and I don't plan on dumping it in a panic since government paper and stocks will get trashed soon enough.
And since I don't pretend to be a trader who wins every trade and since I recognize my own limitations, I won't get stuck holding the bag on a margin call one day when I least expect it.
And because I keep enough cash for emergencies and have a good job that allows me to buy pms regularly, I figure that I've done a reasonably good job of providing for my family, come good times or bad.
I slept well last night.
I knew it would happen.
After a long decline, the newbie sells everything at whatever fire sale price he/she can get. There is a feeling of imminent danger when emotions overwhelm any logical thought. Newbies have been paying big premiums on Ebay and at some dealers. Many of these same newbies will likely dump their hoard below spot when the panic bottom comes.
This is often the best time to buy, so watch BST and Ebay for these kinds of sales.
" I received a phone call Tuesday, in the wake of yet another session in which gold bullion was falling, this time to its lowest level this year.
Chart of 38099902
Who, the caller wanted to know, were some of the gold bugs who were persisting in recommending gold bullion despite a two-month decline that so far has taken more than $200 off the price of an ounce of the yellow metal?
This question got me thinking about what makes a gold-oriented adviser a genuine "gold bug"?
It can't be because he has continued to be bullish on gold in the face of the decline, I realized. After all, there are plenty of stock-market timers who have remained bullish in the face of the market's recent decline, and yet I've never heard them referred to as "stock bugs."
The best answer I could come up with is that a gold bug is someone who will remain bullish on gold, come what may. Perhaps the paradigmatic illustration of this attitude came from a newsletter editor I tracked in the early 1980s, who no longer publishes a newsletter and who I therefore will not mention to spare him any additional ignominy. When asked why gold had continued to fall, despite persistent predictions that it would rise, this editor said that it was the market, not he, that had been wrong.
By this logic, of course, an adviser can avoid ever admitting he made a mistake, no matter how much money he has lost for his clients. He definitely qualified as a "gold bug."
With this in mind, I reviewed which of today's gold-oriented newsletters are edited by advisers who come closest to my definition of a "gold bug."
Several themes emerged that became telltale signs of at least gold-bug-like tendencies. One is the notion that gold's fluctuations don't really matter, since we ought to be investing in it as a long-term hedge against currency devaluation. A prominent exponent of this point of view is Richard Russell, editor of Dow Theory Letters, though he is by no means the only adviser to put forth the argument. Another is Jim Dines, editor of The Dines Letter, who calls himself the "original gold bug."
The reason this argument strikes me as evidence of gold-bug tendencies is not that I think it is wrong, but in the way that many advisers use it: The argument is far more often trotted out after gold has declined than after it has risen. When gold is shooting up in price, in contrast, we are more likely to read boasts about how much money is being made by clients who paid attention to the letters' advice and bought gold.
This argument about gold therefore takes on a "Heads I win, tails you lose" quality. In my opinion, if you're looking for an adviser who will tell you when to get in and out of gold, then that adviser should be judged according to whether he was correctly anticipated the rallies and declines. It's unfair of him to try to wriggle out from underneath an incorrectly bullish forecast by saying that fluctuations don't really matter.
Another theme that also betrays gold-bug like tendencies is the notion that a conspiracy is keeping gold's price artificially low. Once again, I don't necessarily disagree with that. But, in my opinion, it should not be used as an excuse for an incorrect forecast.
What I am looking for in an adviser, and what I presume most investors are too, is someone who can accurately and objectively assess the world as it is and, after taking all relevant factors into account, make a profitable forecast about what is going to happen. Part of that world is the possible existence of conspiracies, including governments and central banks that might want gold to decline.
Consider, for illustration, an adviser who focuses on the Chinese stock market. We all know that the market there is not entirely free, diverging in several significant respects from the pure free-enterprise model we learned in Economics 101. Any adviser worth his salt better take this into account; it would be disingenuous in the extreme for him to excuse a losing recommendation by explaining that the Chinese economy is not entirely free.
One editor who frequently argues that the government is keeping gold's price down is Howard Ruff, editor of the Ruff Times. Ruff became famous in the 1970s for recommending gold at a time when the financial establishment pooh-poohed it, and he wrote several best-selling books on the subject.
In his latest issue, dated Aug. 22, on which day the spot gold futures contract closed at $828 an ounce, Ruff wrote that he saw "no need to change" his strong recommendation to buy gold. Downturns like the one that was already well underway when he wrote that issue "are the result of government manipulation," he wrote, "and will be short-lived at best."
Ruff acknowledged that some will find his advice "hard to take." But, he said, his bullishness on gold "is my view; right or wrong I'm stuck with it." I suspect that it's because of strongly-held beliefs such as these that are in part keeping the Hulbert Gold Newsletter Sentiment Index (HGNSI) at abnormally high levels. That index reflects the average recommended gold-market exposure among a subset of gold-timing newsletters tracked by the Hulbert Financial Digest.
In recent weeks I have written several columns wondering what it would take for the editor of the average gold-timing newsletter to give up believing that gold was in a bull market. And it would appear that we still don't know.
That's because the HGNSI didn't budge at all on Tuesday, despite bullion's fall, remaining at 27.9%. To put that level in perspective, it is higher than where it stood in early August, when bullion was trading above $900 per ounce.
From a contrarian perspective, the bottom of gold's decline will come when enough of the gold timers throw in the towel. Ironically, from that perspective, the gold bugs' bullish persistence is extending the agony and postponing that eventual bottom.
<< <i>Don't forget PANIC
After a long decline, the newbie sells everything at whatever fire sale price he/she can get. There is a feeling of imminent danger when emotions overwhelm any logical thought. Newbies have been paying big premiums on Ebay and at some dealers. Many of these same newbies will likely dump their hoard below spot when the panic bottom comes.
This is often the best time to buy, so watch BST and Ebay for these kinds of sales. >>
I love PANIC.
R
instead of green footballs, i'm putting little pink footballs on all my PMs with the initials IPF....."it's paid for"
It's a classic bubble that should have been evident to anyone with any knowledge of history. How many times do we need to see this story play out? First it was internet stocks, then real estate, then precious metals and commodities.... and on and on. "Sure fire" investments which rise quickly and then flame out.
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The same folks will make the same decisions "next time."
Because.........."This time it's different."
The anti-gold bugs get to spew their "ITYS" venom for a few more weeks and months and then it's back to building towards a new all-time high. There is absolutely no doubt in my mind that gold will outperform stocks over the next several years and will hit $1500+. I've mentioned a number of times how gold corrected 50% in an 18 month span from 1974 to 1976 and that it could happen. I'm sure that fall from $200 to $100/oz wiped out many a newly minted gold bug. But the ride from $100 to $850 over the final 3-1/2 years must have been sweet. The fact that I got into gold at far lower levels than today lets me sleep fine at night. A new wave of buyers will be replacing the tired old bulls who are giving up in the face of massive FED/PPT manipulation. It's comical that a stock bull is a "positive" thing...always. Yet being pro-metals at anytime is still considering negative. And that probably can't change if gold is going to ride to $1500+.
ITYS = I told you so
roadrunner
Today's prices ($700 to $1,000 for gold and $10.00 to $20.00 for silver) are nothing, especially taken in the context of all the other things that are taking place.
Nobody stepped in to cut off the leverage (and bogus credit) that the big investment banks were using, like the CFTC did when the Hunts wanted to *legally* take delivery of the silver that they already owned back in 1980.
Yeah, let us talk about manipulation and who's doing what to whom.
I knew it would happen.
<< <i>In 1980, gold averaged around $600 and silver was probably around $30 for the year. You have to ignore the price spikes due to panic buying right before the final blowoff.
Today's prices ($700 to $1,000 for gold and $10.00 to $20.00 for silver) are nothing, especially taken in the context of all the other things that are taking place.
Nobody stepped in to cut off the leverage (and bogus credit) that the big investment banks were using, like the CFTC did when the Hunts wanted to *legally* take delivery of the silver that they already owned back in 1980.
Yeah, let us talk about manipulation and who's doing what to whom. >>
i am not sure how many times i have said this but manipulation in
the metals does not explain why every other commodity is going
down also...
lets face it, it was a classic bubble due to speculation at the end.
The strenghtening dollar is already threatening trade balances. It also
stresses emerging economies and leads to political instability. At some
point the dollar must resume it's long term trend and this will turn met-
als. The liquidity pumped into the economy will eventually manifest it-
self in inflation.
There's no certainty when it will turn but I'd be surprised if it were much
longer. Keep in mind that a major recession would call off all bets but
such an event can't be allowed so will not materialize.
The dollar is just now getting to be significantly overbought.
turn the dollar. This will probably happen on the first cold
day of winter if the human perversity index can be trusted.
the metals does not explain why every other commodity is going
down also...
The FED/PPT successfully engineered a well-planned dollar rally among many of the world's banking powers. How many bankers wanted to continue to see gold and silver high, and their own stocks suffering? Send the dollar up, and commodities generally come down. Couple this with some selective paper gold stock and paper gold/silver ETF sell offs, and you'll start hitting hedge fund and investor sell stops left and right. Rinse lather repeat with all the force you can muster. Oil, metals, agri-products, etc. It all got hammered as the dollar rallyed from the <71.00 abyss
roadrunner
<< <i> I am not sure how many times i have said this but manipulation in
the metals does not explain why every other commodity is going
down also...
The FED/PPT successfully engineered a well-planned dollar rally among many of the world's banking powers. How many bankers wanted to continue to see gold and silver high, and their own stocks suffering? Send the dollar up, and commodities generally come down. Couple this with some selective paper gold stock and paper gold/silver ETF sell offs, and you'll start hitting hedge fund and investor sell stops left and right. Rinse lather repeat with all the force you can muster. Oil, metals, agri-products, etc. It all got hammered as the dollar rallyed from the <71.00 abyss
roadrunner >>
so when people say metal manipulation... they really should speak
of currency manipulation which affected commodities?
and are we so sure the timing of this is all accurate?
did not some commodities start to slip before the dollar rallied?
it would take some research to check the timing of all this but i recollect
that some things were soft before the dollar rallying talk started.
or am i remembering things incorrectly?
also was not the talk of other countries (europe) slipping into a semi recession
the real cause of the dollar rebounding.. more so then manipulation
by large players?
As I recall, Bush made a short stopover in Saudi before the PPT got the ball rolling.
Stay tuned, the commodities will be back in earnest.
I knew it would happen.
<< <i>Whether SHORT or LONG on the wrong-side of the market, the stages are the same:
DENIAL:
This is not happening. The longs/shorts are on the wrong side of the trade.
The broker is my friend and he will not margin-call me. This will be just fine
in a few days or weeks. I don't lose until I sell/cover.
ANGER:
Lousy, filthy shorts/longs manipulated this thing. The broker is a scumbag.
The banks and politicans are all criminals. They should all be in jail.
BARGAINING:
God/Satan, if you will turn this market, I will do whatever you want. God if
you will just get me even, I promise I will never do anything like this again.
OK, just let me get half of my money back and I will stop investing.
DEPRESSION:
I am so stupid. I should have known. I am an idiot. I should die. What have
I done to my family finances? What is going to happen to me?
ACCEPTANCE:
Such is life. I can bail/cover/hold/average-down-up/whatever. I throw in
the towel now, and I will live to fight another day. I can make these losses
back. It's not the end of the world. Alrighty then.
............................... >>
Kinda like dying, ain't it?