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Is the Obama Budget Proposal a buying signal for gold?
jmski52
Posts: 22,380 ✭✭✭✭✭
Most people seem to be playing the technical market signals in their buying & selling. Over the last few years, I've taken a different approach - a political type approach to my investing, instead.
When Lehman crashed, I took it as a buying signal. Each bailout and stimulus spending proposal strengthened my convictions that paper is not a good thing right now, and in each case, I lightened up on my paper holdings and bought more pms. This included my retirement money, as I took a 10% penalty and paid higher taxes just to get out.
Each move that the government makes - if I don't like it, I vote again. This new budget looks like a *whale* of a pm buy signal. As overweighted that I am, I am still considering going into metals even more. $3.6 Trillion? Gimme a break. Even if the whole thing isn't passed, it will dwarf any other budget in history.
I think that I'm definitely onto something. Your thoughts?
When Lehman crashed, I took it as a buying signal. Each bailout and stimulus spending proposal strengthened my convictions that paper is not a good thing right now, and in each case, I lightened up on my paper holdings and bought more pms. This included my retirement money, as I took a 10% penalty and paid higher taxes just to get out.
Each move that the government makes - if I don't like it, I vote again. This new budget looks like a *whale* of a pm buy signal. As overweighted that I am, I am still considering going into metals even more. $3.6 Trillion? Gimme a break. Even if the whole thing isn't passed, it will dwarf any other budget in history.
I think that I'm definitely onto something. Your thoughts?
Q: Are You Printing Money? Bernanke: Not Literally
I knew it would happen.
I knew it would happen.
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Comments
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The approach is CORRECT and is almost guaranteed to lose time-value of money.
In PMs we can be right about "fundamental values," and still lose a fortune.
It is the same approach that the hoarders used in 1980, when they decided
EVERYTHING that is being decided on this board everyday. It only took those
hoarders 27 years to break even; if they held onto their stash. If they sold b4
the pop, they lost money. More importantly, they lost the money they WOULD
have made if they had used their 1980 cash to buy/turn other asetts.
Look at the deficit issues as a percentage of GDP. Compare the 1980 ratios
with those of today. The numbers are bigger today, but hardly say that a
catastrophe is "certain."
LONGTERM PMs are great and EVERYBODY should have as much of them as
they can afford. Absent a profit-taking exit strategy, they are little more than
insurance policies against calamity.
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I am still SHORT of GLD and SLV.
I have been swing-trading around the positions and have done fine.
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$10K in gold last week is still worth about $10K today.
$10K in stocks that benefit from government actions last week is worth a LOT more today.
spelling edit
I bought a summer place and financed my ex-wife's law school education with the proceeds. Of course you have to know WHEN to sell. (I simply don't think that a sell point should be "pre-determined").
Your remarks ignore any consideration of the political and financial disaster that I stated in my question.
Any other comments?
I knew it would happen.
Any other comments? "
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I labeled the 1980 folks as "hoarders." That meant they did NOT sell.
I noted the "financial disaster" by mentioning relative GDP/Deficit ratios.
I have been warned not to make "political" comments here; so I don't.
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I see NO "disaster."
I see folks who are preparing for a "disaster" by buying some PMs that
are being pumped on every TV station in the land.
The "Jimmy Carter will socialize and bankrupt America" slogans were STRONG,
leading into 1980. Now we have a new actor that is being hit with the same
slogans. I have NO doubt that by the end of 2012, everything will be MUCH
different than it appears today.
A new guy with a new set of "prosperity through responsibility" paradigms will
appear - just as one did in 1980 - and everything will be "fine" again.
In the meantime, I know how to make friends with inflation and deflation.
Either one works for me. Like you, I have not had to do anything I did not
want to do simply because I guessed right between 1975 and 1980.
I will be fine, no matter who is in charge, and so will America.
But to answer the question: I do believe current policy is reducing the value of the dollar. That *should* result in higher prices for PMs.
--Severian the Lame
No, but I'd have to consider the experience among the top 10 worst. Worst probably was the total loss I had in my SEP-IRA in 2000. I had everything in speculative communications companies, and the whole thing went to zero.
In either case, if you don't have any experiences with which to compare your current circumstances, you don't have any way of knowing whether or not you are making any improvements, eh?
Storm, your opinions hold stock with me, and that's why I asked for further comment. Your remarks are coloured with experience, and I appreciate that.
I'm not asking for political commentary as much as I'm putting forward the idea of reacting to political developments as an investment strategy.
I knew it would happen.
Comrade, I think the "Reichstadt" is closing in on your position now.
Y/T, cheerful follower and worshiper of Chairman BHO
Ren-sheeple
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Just something to consider:
If current prices are always determined by looking forward,
why, in the face of the announcement of the most ridiculous
squandering schemes in the history of the world, can gold not
get out of its own way?
If it's because it is overbought, then the "disaster" is baked in.
If it's because there are SO MANY GREAT buying/profiting opportunities
in other venues, then the metals will remain range bound until they tank.
This isn't 1980 again and we have $683 TRILLION reasons + a pile of dead banks to prove the difference. Things will not be back to normal by 2012. I doubt we would have even seen the worst of the problems until later than that. The 1980-2007 market was the completion of the last massive credit/debt/inflationary leg that began in the 1930's. The 1971-1980 experience was just one tiny walk along that path. We now get to shakeout 75-100 years of financial abuse. And if you go to the largest macro view, we are shaking out potential a couple of hundred years of paper money abuse. $683 TRILLION in fraudulent bets is a catastrophe of the largest magnitude.
is the same approach that the hoarders used in 1980, when they decided EVERYTHING that is being decided on this board everyday. It only took those hoarders 27 years to break even; if they held onto their stash. If they sold b4 the pop, they lost money. More importantly, they lost the money they WOULD have made if they had used their 1980 cash to buy/turn other assets.
How about the people who bought and held stocks since 1997 or even 1993? Many of them broke even now, some lost most all of it all along the way in 2000. Over the next few years we get to push that timeline even further closer to 1987. At some point in the next few years I expect that even those "miserable hoarders" from 1980 will be able to say that their barbarous relics performed better than the DOW since the 1987 peak at 2722. While it won't figure in the dividends over that time, it also won't include all the companies that were tossed off the DOW or went bankrupt in those 30+ years.
$10K in gold last week is still worth about $10K today.
$10K in stocks that benefit from government actions last week is worth a LOT more today.
In case you missed it, those "govt actions" last week gave gold stocks a 25% gain in 2 days last week. Other than the insolvent mega banks, they probably saw some of the better sector gains.
$10K in gold stocks from last week is worth about 25-30% more as well. Guess it all depends on the frame of reference. Anyone trading GLD half way intelligently (just like the stocks you mention above) would have done very well as well. You make it seem as if anyone investing in gold of any sort is by definition a "hoarder" yet those playing stocks and banks are nimble traders. Everyone buys PM's at the peaks and hangs on until their deaths. I would suspect that J6P is still firmly entrenched in either the buy and hold mode (ie hoarding mode), or is totally out of the market. The stock market is closer than ever to a rigged Ponzi scheme than ever before. Just look at the action on the $BKX: shorts, ETF's, ETN's, hedge funds, etc, drive this roulette wheel. J6P must feel like he is at the local carnival trying to beat the Carney's at a game of "chance."
roadrunner
why, in the face of the announcement of the most ridiculous
squandering schemes in the history of the world, can gold not
get out of its own way?
If it's because it is overbought, then the "disaster" is baked in.
If it's because there are SO MANY GREAT buying/profiting opportunities
in other venues, then the metals will remain range bound until they tank.
As noted here and in other venues, the gold market is tiny when compared to financial paper, and my thought is that it is truly the tail of the dog. Thus, gold is not going to control anything until it is chosen as a primary component or medium.
Gold can't get out of it's own way because it's a barbarous relic - haven't you heard? Gold is just the default parameter - until the system crashes, it's not really "necessary". But that doesn't mean it isn't valuable as insurance, and right now, a good insurance policy is hard to come by (see AIG).
If gold is overbought, then what is the dollar? Egads, let's get serious here! I used to consider myself a pretty adept problem-solver, but the current data coming in simply doesn't compute - the equations are broken. There are no rules, and the old guarantees are mirages.
One could say that there are other opportunities, if you were inclined to do the analyses. I am sure that's true, in the short term. However, the rules keep changing. Given that fact, overpaying for insurance in the form of pms seems to be the most prudent path to keep from losing big and a reasonable path to coming out ahead.
I knew it would happen.
keep from losing big and a reasonable path to coming out ahead...."
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I really cannot disagree with that.
Though, it would be irresponsible of me to suggest that
folks should put all of their green eggs in the gold basket.
Some of those eggs MUST be in that basket. Most need to
look for other baskets.
why, in the face of the announcement of the most ridiculous
squandering schemes in the history of the world, can gold not
get out of its own way?
The fact is that current pricing mechanisms have been broken for too long and the supposed "foward looking" methodology that would unveil the true scope of this most ridiculous sqandering scheme in the history of the world is kept broken for very good reason. The same banksters that brought us this fraud are the same group of people regulating it and keeping the mechanisms that would blow the whistle on covered up. Again, why the need for JPM and 2 other major US banks to hold $177 TRILLION in interest rate derivatives? Why do JPM and HSBC carry almost $100 BILL in gold derivatives? If the pricing mechanisms for gold/silver as well those key economic statistics (CPI, GDP, unemployment, etc.) can be kept "minimized," then the sheeple will have no need to be alarmed, and the looting can continue. If you were the one of those who dreamt up this mess and we were being called to the carpet, how would you control the damage and keep the true magnitude of it from the public as long as possible? It seems simple enough to me.
There is no possible way to "bake in the disaster" of what $683 TRILLION of bets can do to your economy. What's currently baked in is about as accurate as to what was baked in back in early 2007 and then in 2008. The pricing mechanisms were totally wrong then, and continue to stay wrong. If you think otherwise, tell me how the market has already expertly done this considering that the people who own these derivatives don't know what they are? And using the answer, "the FED & Treasury know" doesn't cut it. At every opportunity along the way, the FED has said the problem was contained. And at each further step they were proven wrong. So why is it contained now and why is pricing now accurately baked in for the very first time since early 2007?
roadrunner