Opinion on gold from the US Coin Forum
Ciccio
Posts: 1,405 ✭
I don't know SaintGuru personally and I have read him (or about him) only in the last year and a half.
Though, I am sure that this guy knows a lot about gold.
Where is right and where is wrong, in your opinion?
"For the record, those of you who have followed my posts from previous years know that I became long-term bullish in Feb. 2002 at $318/oz. I am now still "friendly" to gold but I think there's going to be a correction anyday here of at least $200/oz. I'm actually starting to sell DGP short....just 500 shares at a time...and if gold races to $1350 I'll likely be taking a small loss and tossing in the towel. There just aren't any compelling fundamental reasons for gold to go up now. There's no inflation, something I was certain would happen when the globe printed $15 trillion over the last two years. I think China and India are on the sidelines for the fist time in 5 years and will stay there for some time. India raised interest rates a week ago and that's not a sign that they are going to be buying more gold. China has a currency issue that won't go away and their economy is overheated and slowing down. Granted, it's a huge country, but their economy has had the longest, strongst growth in the last decade in history and you just can not grow at 10-15% a year and not have a serious recession."
Though, I am sure that this guy knows a lot about gold.
Where is right and where is wrong, in your opinion?
"For the record, those of you who have followed my posts from previous years know that I became long-term bullish in Feb. 2002 at $318/oz. I am now still "friendly" to gold but I think there's going to be a correction anyday here of at least $200/oz. I'm actually starting to sell DGP short....just 500 shares at a time...and if gold races to $1350 I'll likely be taking a small loss and tossing in the towel. There just aren't any compelling fundamental reasons for gold to go up now. There's no inflation, something I was certain would happen when the globe printed $15 trillion over the last two years. I think China and India are on the sidelines for the fist time in 5 years and will stay there for some time. India raised interest rates a week ago and that's not a sign that they are going to be buying more gold. China has a currency issue that won't go away and their economy is overheated and slowing down. Granted, it's a huge country, but their economy has had the longest, strongst growth in the last decade in history and you just can not grow at 10-15% a year and not have a serious recession."
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The first leg up in commodities ended early this year after about 15 months. Following about 6 months of correction they are moving up again to start the 2nd major up leg. I do feel a correction is coming within days/weeks as the recent moves in PM's, ags, base metals, etc could use a rest following a nice initial leg up. But things will be much higher come spring 2011. How can you get deflation of hard core tangible assets when we operate on a fiat system with no checks or balances and a shadow monetary system that the citizens can't even see? The last time we really had true deflation of prices was from 1930-1932 while still on a partial gold-backed system. We haven't seen such a system for 39 years. As long as Fed and Treasury can key stroke money, credit, and bonds into existence, there will be no deflation. When't the last time the calendar year CPI went negative? The inflation has been in PM's, ags (wheat, corn, soy, sugar, coffee, etc.), base metals, etc. It hasn't really been run through the consumer pricing system yet. We had inflation in the 80's and 90's but it never showed up in regular consumer goods due to the effect of cheap foreign labor. That effect is still 20 yrs overdue. Rising interest rates aren't by themselves a detriment to gold. In fact rising interests occured throughout the 1970's and helped push gold higher. Considering that gold is where it's at on mostly falling (ie gimmicked) interest rates one only has to wonder what they'll do when they start going up as they did in the later 1970's.
I think Saint Guru might be right in the very short term. I just don't see a significant pull back that lasts into next spring. A $200 drop from $1330-1350 would be fine with me as I need to add more miners to my holdings and they would help. A dollar crisis can occur as business conditions continue to stagnate or decline. And it can happen overnight. That's why you shouldn't be w/o a core PM's position. Shorting the metals into $1350 gold might just work if eventually it falls back to under $1200. DGP (2X long) and other ETF's have a lot of decay such that they lose money even when the market is just steady. I'm no expert in ETF's but being short DGP might help in minimizing the decay. As far as I know SG is a seasoned trader and no doubt knows what he is doing and what works for him. I tried putting on some shorts 2 days ago and almost got stung. I just don't like the idea of shorting a longer term bull market such as bullion, however I think shorting the miners at times is far safer since they often get dumped as the main market weakens.
roadrunner
We may not yet have the price inflation that one would expect from the Quantitative easing (dollar inflation)
But, we have an ever increasing lack of confidence.
That's not to say that Gold will not take a $200 hit. If so, it's likely to be a Cartel led take down vs. anything fundamental.
My bet is to stay long Gold.
seeing a $200 correction is no big deal in my book. The current economic climate favors gold, and until that changes, shorting
gold is a big gamble.
Oh, mercy, mercy me... things ain't like they used to be.........
I knew it would happen.
There are plenty of compelling reasons for gold to go up, including:
1. The increasing popularity and promotion of PM's. Think real estate around 2003/2004.
2. The IMF continues to sell gold off and is having no problem finding buyers - especially unlikely buyers like Bangaladesh.
3. Economic crisis in other countries (as well as our own) continues and are by no means over or settled. NO ECONOMIC problems have been solved. No sustainable remedies have been implemented.
4. The USD is still in a downtrend - what would cause it to reverse?
5. Peak production of gold has been reached and is on the decline.
5. We're toward the end - the most exciting part - of a parabolic move where it gets vertical. While it will get volatile at the end, a 15% counter move would be unlikely.
6. The trend is up. What would cause it to reverse?
7. US treasuries and bonds are overbought, and China is selling US debt. This bubble will burst eventually (although not necessarily tomorrow) and when it does, you'll want to be in gold.
8. Gold doesn't need inflation to go up - this is one of the most common misconceptions about gold.
9. Japan recently took counter measures to ensure that the yen remained weak vs. the US dollar. This is not good for the USD. Will this spark a race to the bottom? How long can Japan prop up the USD by itself?
10. Gold has done a great job of retracing all of the moves up from it's $1156 low so it doesn't "need" to retrace any time soon. But at most, a 38.2% retracement would mean a drop of $55.
11. Too many people are watching gold and waiting for a sale. Any significant decline in gold will attract buyers in droves.
Additionally, what you have to look at is why gold is up $150 over the last few months. Gold is up because of FOREIGN buying pressure. This is evidenced by the extremly low premiums on US physical gold. How else can the POG go up $150 without affecting premiums on pre-1933 gold? The buying has NOT been coming from the US. That is about to change.
The China and India arguments are common and tired. For many years "experts" have predicted falling demand from these regions and it has yet to really happen. At $500 gold experts claimed that demand would wane because they won't buy at these high prices... and the argument continued to be made as gold went from $500 to $600 to $800 to $1000 to $1200 and now at $1300. When exactly are they going to consider gold to be "too expensive?" Will a small interest rate hike really make gold unappealing to all of these buyers? They buy gold because it is culturally en-grained in their society - not to trade in and out of it.
I do think a 38.2% retracement of the move from 1156 is coming. I think that move will come from the $1330 area and will take us back down to the heave resistance and previous all-time-high level of ~1260. This will be an excellent time to load up and your last chance to do so under $1300 until the parabola pops.
Maintain the reasons for demand and gold will continue to go up.
Eliminate the reasons for demand and gold will go down.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>As PC points out shorting in a bull market has many many problems. It's very risky, but huge rewards/payouts often are. >>
Calling the market up or down typically pays the same. So if you can get in before a sudden move in either direction it pays off well. But the risk for a counter move is much higher, unless the size (and speed) of the counter move compensates. Otherwise, you wait for the counter move and jump on after it's established.
<< <i>FWIW, I do like Jay's stop. It is manageable. He is playing a 4-1 RR plan for a big pay day. He does this for a living so I do take note. However, I won't be in this trade as of today. >>
Who/what are you referring to? Can you explain?
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>To answer your question.......Saintguru. The person the OP was referring to. There are bear moves in bull markets and visaversa. His basic premise is that he likes gold to hit $1200 to $1100 first before it hits $1350. Whether I agree with it or not, I get his stance and it has nothing to do with fundamentals.......momentum works both ways. MJ >>
OK, but what does "He is playing a 4-1 RR plan for a big pay day" mean? I assume RR means RoadRunner, but I still can't piece together what a 4-1 Roadrunner plan would be.
<< <i>PC-on #8, do you include TIPS? >>
Maybe I don't understand your question, but my point is that the common perception is that gold goes up in times of deflation, but the reality is that gold goes up in all kinds of environments, and the argument can even be made that gold doesn't actually do that well in times of inflation.
I've often second guessed myself for not selling after a large spike in the price and then buying back after the dip in price.
But who can time these short term dips in a large term bull cycle?
And more importantly, why even take the chance when "I'm confident" that the price of silver will easily get to the $30 to $40 dollar an ounce range.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I think it's time to change my icon name to something like Yosemite Sam (YS) or something....I'm getting way too much credit for thinks out of my control.
But if I did have a 4-1 RR plan for a "big pay day," it would probably be at the races, and probably not be so big.
roadrunner
Yes, this should be very interesting. The newbies that haven't seen the herd stampede before will get a treat...as long as they aren't in the herd and the paper boys don't screw this up. All the stackers are going to get some entertainment, just view this as theater and you have a front row seat.
RE: Opinions...St. G is .999.
Peace