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I am going to short gold

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May 22, 2009 – Comments (28)

I am going to short gold.  With alot of money.  Not on CAPS (well, maybe here on the CAPs game) but in real ife.  Alot of money.  Short.

Because gold has limited uses, if a doomsday scenario plays out where society crumbles believe me nobody is paying up for gold.  Food and bullets maybe. 

But since thats not coming, and since its really only fear that drives gold (well, fear and trends) because the substance doesn't nearly have uses enough to justify its current price...

slowly at 1000, very slowly, a little more at 1200, and heavily above that I'm shorting gold.  In real life.  If possible with a levereaged Bull gold ETF.

And thats a fact, folks.

28 Comments – Post Your Own

#1) On May 22, 2009 at 12:37 AM, ChrisGraley (29.89) wrote:

Wow! Good luck with that.

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#2) On May 22, 2009 at 12:38 AM, Harold71 (22.09) wrote:

Good luck. 

 

I expect you and many others to panic cover that short.

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#3) On May 22, 2009 at 12:46 AM, NOTvuffett (< 20) wrote:

Put the proceeds into pork bellies check, lol.

 

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#4) On May 22, 2009 at 1:00 AM, awallejr (81.20) wrote:

Well check I wish you luck.  I have no rooting interest either way.  I just look at gold as an inflation hedge.  Wish you would play the oil play instead (buy some BP July 45 or 50 calls for example), but real money is real money and up to you to play it as you see fit.

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#5) On May 22, 2009 at 1:02 AM, biggestfool88 (< 20) wrote:

If you think it is going to reach 1200 why not go long on it until 1200 then go short?

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#6) On May 22, 2009 at 1:16 AM, streetflame (30.50) wrote:

I don't like gold but I really don't like this trade right now.

If you must, I would stick with shorting GG, HMY, IAG or AUY instead of physical gold.  Combine a worse than average company with a worse than average commodity market for a free multiplier effect.

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#7) On May 22, 2009 at 1:38 AM, FleaBagger (28.77) wrote:

Yeah, nice. Just buy lots of 30-year treasuries, because gold is going down and the dollar is going up, up, up!

TMF

(To everyone except checklist34: that was sarcasm.)

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#8) On May 22, 2009 at 2:51 AM, Vet67to82 (< 20) wrote:

The USA IS 12 trillion OUT ON A LIMB ... RISKING LOSING ITS aaa CREDIT RATING ... AND COMMODITIES ARE GOING TO BE THE HOT SECTOR ALL THIS SUMMER ...

Under these circumstances ... gold is a hedge against uncertainty.  The gold miners will stand to out earn the S&P in the rise through $1200 and miners that have closed out their hedge books will surely return to long term hedging at those prices assuring a GROWING profit stream even as gold prices correct or decline. 

  The idea of Short selling based on PRICE alone is a BAD idea.  

 You need to pay attention to details, the market direction --  including momentum, cash flow, money flow, On Balance volume, the sector direction, the industry direction ... and then the company or commodity direction.  Gold can be over priced and STILL move up on momentum, speculation , and greed ... not to leave out fear ... the fear of being left OUT.  Shorting the miners ... only to find out later they have re-opened hedging is a recipe for financial disaster.  If you short a miner that hedges out 5 - 10 years at $1200 and gold drops to $800 ... you and everyone who followed you LOSE 'cuz earnings, thanks to the hedge book, are going to beat expectations. 

 You need to do the fundamentals, then the charts ...  and if your HOMEWORK says to short ... I'm with ya ... otherwise ... lotsa luck fella ...  

 

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#9) On May 22, 2009 at 8:10 AM, willmaster01 (< 20) wrote:

pfffff goood luck

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#10) On May 22, 2009 at 8:35 AM, EggplantWizard (99.48) wrote:

This seems like just a TMMSinch trolling attempt... But if you're serious -- good luck. It might work, Gold does look a little "frothy" -- but fundamentallly, the US Dollar looks like an even bigger bubble, so I wouldn't want to be on the wrong side of that trade....

There are better commodities to go long, IMO, but I urge you to at least attempt to learn a bit about fractional reserve banking and the history of gold as a monetary commodity before you short it with real dollars.

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#11) On May 22, 2009 at 8:37 AM, XMFSinchiruna (27.53) wrote:

You are going to lose money... real money.

Since your post exhibits an uninformed conceptualization of gold and its relevance as a currency, may I recommend that you consider staying neutral on gold instread?

Anyway, I've already posted my cautions against such a dangerous bet multiple times, so I will not waste my time here, but I'm on record with my opinion that this is among the worst ideas I can possibly imagine under the circumstnces.

Of course, with the volatility I could foresee going forward, you just might get lucky and score a wide channel... but the long side is the way to play a long-term fundamental up-trend.

Good luck.

 

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#12) On May 22, 2009 at 8:37 AM, binve (< 20) wrote:

checklist34,

I really hope you do not do that. I am a gold investor. I am also not a 'gold bug'. I do not hold gold because I do not believe there will be a 'Doomsday'. And if there were a Doomsday, gold is probably the worst investment. Here is a reply of mine to madcow. Please read it, it might give you a different perspective on why many of us invest in gold. I wish you all the best.

---------------

I have been patiently waiting and waiting and waiting for the time I feel it is right to buy long term again.

I know what you mean. Because ulitimately, I too would rather be a bull. And for the VERY long term (next several decades) I am. I have stated that in my investment account that I am in gold and oil. Why? Because I am bullish on the very long term prospects for the economy of the US and the world.

.... Now that might seem odd, because aren't all the people who invest in gold assuming the world will end? The answer is no, at least for this gold investor. I invest in gold not because the world might end, but I invest because I firmly believe it WILL NOT!!. If I was uber-bearish for the very long term, I would build a bunker underground, stocked with years of food and buy guns. Gold? For the end of the world? It makes no sense. Why would a useless shiny metal rock be something to collect if civilization ends?

It is the same thing with fiat currency (such as the US dollar). If you really thought the world would end, why collect little pieces of green paper with faces on it? How is that possibly useful? If there is no government to give you goods in exchange for it, then there are better items for a bunker mentality.

So I invest in gold because I am an optimist.

I am not bullish on the US government. I think they will inflate the dollar into worthlessness (or devalue it highly at least). But ultimately economies WILL recover, and I want to trade my gold in for something useful. Shares in a profitable alternative energy company, or a water from seawater plant to sustain drought countries, or any number of productive future endeavours.

Gold is simply a way to maintain purchasing power as the worlds economy goes through this large contraction. So as an optimist, you should invest in gold :) Just my $0.02 (silver coins of course, not actual pennies ... :) )

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#13) On May 22, 2009 at 9:19 AM, jamasony2 (< 20) wrote:

You might go long another commodity at the same time, just to reduce the risk of currency changes blowing you out of the water.  Maybe long oil or grains.  I believe that you are correct in gold being overvalued, but there are too many factors beyond your control (e.g. misguided governments) for outright shorting to not be dangerous.  The power of governments are directed by a few people, and they can be as irrational as anyone (with large effects on the prices of the things you're shorting/buying).

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#14) On May 22, 2009 at 9:44 AM, RVAspeculator (30.07) wrote:

This poster thinks gold is going to 1200...  so do I...    We are on the same side of the trade.

I don't short something now that I think is going to be 20% higher in the near term.

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#15) On May 22, 2009 at 11:01 AM, EggplantWizard (99.48) wrote:

" jamasony2 (71.02) wrote:

You might go long another commodity at the same time, just to reduce the risk of currency changes blowing you out of the water.  Maybe long oil or grains.  I believe that you are correct in gold being overvalued, but there are too many factors beyond your control (e.g. misguided governments) for outright shorting to not be dangerous.  The power of governments are directed by a few people, and they can be as irrational as anyone (with large effects on the prices of the things you're shorting/buying)."

 

I agree completely with this.

 

If you really feel the need to short gold, at least take the proceeds and buy a diversified basket of commodities with it -- it takes the currency issue out of the equation.

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#16) On May 22, 2009 at 11:21 AM, dividendhound (< 20) wrote:

I'd probably just ignore gold altogether as being too uncertain, rather than short it.  People love it even though you can't do too much with it and even though jewelry isn't a high priority on anyone's list - it's got that "history" of being a currency, also, that lends it more value than it really should have.     

 

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#17) On May 22, 2009 at 11:32 AM, binve (< 20) wrote:

Ragingsamosa, LOL!

.it's got that "history" of being a currency, also, that lends it more value than it really should have.

Well, gold has been a currency for more that 4000 years. It has only not been a currency for 40 years.

I say thats a pretty strong track record. :)

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#18) On May 23, 2009 at 2:21 AM, checklist34 (99.73) wrote:

folks, I don't think I posted this... 

I had an array of old chums at my house last night and we drank a spot of jack, and I don't know who typed this up, but its not me.  lol  sorry about that. 

Ironically, this has 10 rec's and 17 comments, and most of my blogs get less than that.  Maybe that'll raise my CAPs score.  Who can say.  I guess I'm not all that interesting and should be more controversial, lol. 

Now all that noted, gold is certainly extremely in fashion right now, and in general things that are extremely in fashion do not tend to be good investments over the long haul...  things that are OUT of fasion DO tend to be good investments ove rthe long haul. 

So whomever typed this may well be onto something, but shorting gold hasn't been a part of my strategy. 

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#19) On May 23, 2009 at 2:39 AM, checklist34 (99.73) wrote:

I'm intrigued by this idea now. I honestly don't think I posted that, I don't even know the name of a gold ETF or a gold stock, except IAG which I owned in part of my portfolio that I didn't manage at the time.

How the heck would one short gold? Can you short the physical substance? Like can I short sell oil or gold w/o using some #$^$#^$%&&^@# ETF?

If one was to short gold, I like the idea of shorting the weakest gold stock out there, as streetflame suggests. And if one wants to make a bullish play on a commodity, buying a weakish stock that needs higher prices to live is a levered way to do it also.

Right now I'm getting long some commodity stocks as an inflation hedge. Miners and such. Names currently out of favor and all of that rigamarole.

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#20) On May 23, 2009 at 2:44 AM, robstuck (< 20) wrote:

read this..

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=198792&t=01003075054241437309

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#21) On May 23, 2009 at 3:02 AM, arabianmoney (< 20) wrote:

You are going to lose a lot of money then! But then people constantly make the wrong investment decisions for stupid reasons.

Gold is looking stronger for some very sound reasons - do you think the dollar is going to recover? Is the US economy now on a roll? What about inflation? See:

http://arabianmoney.net/2009/05/23/will-gold-pass-1000-an-ounce-next-week/

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#22) On May 23, 2009 at 3:54 AM, checklist34 (99.73) wrote:

robstuck, you're right about welfare.  thats the end game.  if welfare continues, continues to increase, the US fails just like Europe.  Fails fails fails fails fails.  Welfare here takes many forms

1.  straight freebies.  why should an american have to work?  we're rich!  damn thos erich corporations and those evil rich checklists, make them pay!  make them pay big!  I am obama, here me roar!  they get 1 vote, anybody on welfare gets 1 vote, so screw 'em!  make them pay!

2.  Affirmative action.  Jobs given OR TAKEN not by talent or ability, but by skin color or gender.  Wild, runaway, government enforced reverse discrimination. 

3.  Overwhelming dominance for 50 years of leftist liberal anything.  Enviro anything, it wins.  Socialist anything, it wins.  Wins wins wins.  The lefties always argue to spend public money on zero-return projects, or negative-return projects.  Like anti-nuclear in the 80's and 90/s, followed, and blinding is the irony, by panic about CO2 now and how we all need to drive a battery.  The panic is always catered too, and thats expensive.

But you're wrong about the US.  Imagine for a moment 19th century Germany.  Imagine a group of villagers talking about American, the New World or whateve rthey would have claled it. One was all excited, said he was going there, one was skeptical, said screw that.  Which one moved here?  The dreamer, the optimist... We became what we have been because we have collected the most optimistic people from around the world.  We collected them because we offered a CHANCE, not a certainty, not freebie handouts California-style, but a CHANCE.

All humans were created equal and should have an equal CHANCE, their talents and results certainly vary. 

All, and I mean all, the US has to do to dominate for another 100 years is offer that chance better than any other country.  And if we do we will continue to collect the dreamers and optimists, the ambitious, and the talented.

Its socialism and welfare that impair our ability and tendency to collect those.  Teh higher the welfare rate, the lower the quality of immigrants. 

 

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#23) On May 23, 2009 at 7:27 PM, selfdestruct2 (33.73) wrote:

OK, well put.

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#24) On May 25, 2009 at 2:11 AM, alexxlea (52.84) wrote:

Having bought SLW at 3.10, I think it's very dangerous to short anything that might be of interest when people start losing their minds over the amount of asset bleed they'll be facing.

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#25) On May 28, 2009 at 11:22 AM, camarodan64 (97.83) wrote:

go long gold now, short above $1950

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#26) On May 29, 2009 at 6:15 PM, cbwang888 (25.41) wrote:

gold will soon be $USD 1500/oz because USD will be trashed.

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#27) On May 10, 2011 at 4:51 AM, camarodan64 (97.83) wrote:

see comment 25

 

it was all a dream

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#28) On October 29, 2013 at 2:51 AM, camarodan64 (97.83) wrote:

see comment 25

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