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Unloved

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February 11, 2011 – Comments (24)

Like I have said so many times before, I like talking about Gold when it is unloved, not when it is a momentum toy and everyone is talking about it. Like I wrote in my last post: Gold.

But I think the 4th wave is done and momentum is about to swing back to up. Again, I don't really care. The short term moves in Gold are noise to me. I think this bull market in Gold is far from done.

I am just keeping tabs on Gold's bull market. And I think it has much further to go.

ENLARGE

24 Comments – Post Your Own

#1) On February 11, 2011 at 4:12 PM, checklist34 (99.73) wrote:

I know I occasionally throw out silly or catty comments about gold and the imminent death of the dollar and of the US and all that, but in all seriousness:

how can you say gold is unloved?  besides the peak of the bubble in the early 80's it has the highest investor interest ever.  paulson has a massive dedicated gold fund.  The GLD was briefly rivaling the SPY for biggest ETF and holds more gold than all but like 4 central banks.  Gold ETFs exist everywhere, gold advertising exist everywhere.

There's a gold stand in THE LOCAL SHOPPING MALL IN A TOWN OF <100,000 PEOPLE IN THE MIDDLE OF NOWHERE.  I have pictures of it. 

Its on commercials all the time, constantly.  

Its got to be the #1 loved thing among bloggers and posters and seeking alphaers and stuff.  

The love for gold is so widespread that if you came down to earth right now having been on a 30 year space cruise, you'd think, just from reading headlines, that the gold you bought for $1000 just before you left had been a great investment the whole time.  

Its a gigantic 10 year momentum trade with legions of followers...

want to bet that if I made a blog that said "switching to gold, i'll tell you why" 30 people who don't frequently post in my blogs would rush in to welcome me to the club?

how can you straight-faced call it unloved?

not trying to be critical, but honestly, how can gold be considered unloved? 

 

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#2) On February 11, 2011 at 4:13 PM, checklist34 (99.73) wrote:

rec for making my dander rise, lol

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#3) On February 11, 2011 at 4:26 PM, truthisntstupid (93.47) wrote:

The guy in the space ship would think it was a great investment if he was gone 32 or 33 years or more...30 years, not so much.  If he was gone 20 years, he'd have done pretty good, but not as good as he would if he had been gone 10 years...if he was gone 10 years,  he'd have done better than if he was gone 32 years,

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#4) On February 11, 2011 at 4:32 PM, 100ozRound (29.42) wrote:

What's the number on that 0% Fib?  is it 1539 or 1639?

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#5) On February 11, 2011 at 4:35 PM, truthisntstupid (93.47) wrote:

checklist, that's a good idea for a blog...

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#6) On February 11, 2011 at 4:38 PM, NEMnyWtch (< 20) wrote:

Thx binv - I got my head handed to me for adding gold to the portfolio the other day because it's been sliding.  My response was, "Would you rather I buy it at it's high?"  I agree with your call.

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#7) On February 11, 2011 at 4:40 PM, binve (< 20) wrote:

checklist34,

What I mean by 'unloved' is that lots of people have called 'the top' in Gold at every peak. There were tons of people calling a Triple Top in Gold! Just a couple of months ago.

I agree Gold is very loved. I fully acknowledge every point you make.

I also posit it is very much hated, or 'unloved'. I think they are about equal in the number of proponents.

You can say the Gold loving crowd is larger than the Gold hating crowd. But I think that smacks of selection bias. There are plenty of posts from both groups out there.

However, the point of the post and the post title is I hate talking about Gold when it is breaking out and making all time highs. I am not playing it as a momentum trade. I much prefer talking about it after a pullback and there have been a number of 'Gold has peaked' posts. Basically when it is 'unloved'.

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#8) On February 11, 2011 at 4:41 PM, binve (< 20) wrote:

100ozRound ,

Hey man! 1539 by how I measure the cup and handle..

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#9) On February 11, 2011 at 4:42 PM, binve (< 20) wrote:

NEMnyWtch,

Exactly :) We are definitely thinking along the same lines :)..

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#10) On February 11, 2011 at 6:10 PM, checklist34 (99.73) wrote:

binve, selection bias raises an extremely good and interesting point...  if it pleases the court, I shall debate

1.  somebody count pro-gold and anti-gold blogs on this CAPs game forum.  And then subjectively assess whether they were like ragingly pro or ragingly anti.  I'd wager you'd find pro-gold outweighed consdierably, and if some omniscient entity came down to judge perfectly the content, a great deal more hyperbole and so forth in the pro gold

2.  ditto seeking alpha

3.  count the number of long-gold -vs- short-gold hedge funds out there, and then contrast that to the number of long -vs- short hedge funds out there

4.  count the number of infomercials and ads and websites devoted to pro-gold relative to anti-gold or caution gold

I don't see how an objective assessment wouldn't back up my sentiment, but i COMPLETELY acknowledge your extremely good point about the bias...

do you think that bigtime momo traders, backed by a large amount of sentiment supporting them, are maybe more sensitive to anti-their-sentiment commentary and notice it more?

So maybe the pro-gold crowd is quite a bit prone to bias... ?

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#11) On February 11, 2011 at 6:24 PM, binve (< 20) wrote:

checklist34,

Fair enough :)

>>So maybe the pro-gold crowd is quite a bit prone to bias... ?

I have never suggested otherwise..

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#12) On February 11, 2011 at 7:27 PM, MoneyWorksforMe (< 20) wrote:

IF and when most of the issues fueling the increase in precious metal prices are in the beginning process of being removed, I will begin unwinding my gold and silver mining positions. This isn't even close to happening...

Over the past few years the fundamental drivers of precious metals have remained firmly in tact, growing in tandem with the fractures in the global economy, which lie quietly beneath the facade of a "rapidly strengthening and growing economy." There is no momentum to face these problems with the masses too drunk on excess liquidity to realize the serious problems that are becoming increasingly intractable right before their eyes.

Binve, you are indeed correct. Gold is far from loved. Most people have no idea how much it has appreciated over the past decade...At most I would consider the number of bulls to bears at roughly 1:1, while the number of US equity bulls is probably close to four times that...

It is people like Checklist34 who are unable to focus on the drivers of the price of gold rather than the price itself that have been calling tops in gold for each of the past five years, and wondering why it still hasn't gone down...

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#13) On February 11, 2011 at 8:04 PM, Munchies101 (99.45) wrote:

Gold guy: Buy gold, it’s going up, waaaayyy up!

 

Other guy: Why do you say that?

 

Gold guy: Because of the fundamentals and technical’s surrounding gold.

 

Other guy: What about the possibility gold is overvalued? It’s been going on a rip lately.

 

Gold guy: Forget value. The economy is crashing, the recovery is a fraud and your dollars are becoming worthless. In a few years your money will just be green pieces of paper in your wallet.

 

Other guy: But we’ve had countless recessions before, a few that were worse, and we’ve made it out just fine. What makes you think this one is different?

 

Gold guy: The fundamentals.

 

Other guy: That makes no sense. You just claim that gold has an infinite value because you don’t believe in the fiat system.

 

Gold guy: You make no sense. Your greenbacks have nothing backing them besides a fraudulent economy that gives you an illusion to their value.

 

Other guy: I hate you

 

Gold guy: I hate you more.

 

THE END

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#14) On February 11, 2011 at 8:14 PM, truthisntstupid (93.47) wrote:

Date of the conversation in comment #13:   1980

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#15) On February 12, 2011 at 10:49 AM, leohaas (31.21) wrote:

Recs for the original post, all of checklist34's comments, and #13 and 14.

Disclosure: long physical gold at the time of writing.

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#16) On February 12, 2011 at 11:23 AM, Momentum21 (44.33) wrote:

 binve - Cramer said last night that folks should be 20% allocated to Gold/Miners. He has been extremely bullish lately. I actually don't use Cramer as my contrarian indicator anymore so I am officially lost. : )

I might consider sucking it up and getting back into SLW.

I own a nice piece of HAWK at 7.39 so I will trade it in when it gets back to 10. ; )

What is your favorite play right now?  

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#17) On February 12, 2011 at 11:33 AM, MoneyWorksforMe (< 20) wrote:

1980 is at least a year or two away...If I had to pinpoint an historical analog, we are in September of 1978. This is based on Gold and US equity charts, comparing the eight years 1974-1981, to 2004- 2011....

And if you want to use history as a predictor of future gold prices, we will need to see ~10% correction in the stock market before we see a 1980 type move in gold prices...

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#18) On February 13, 2011 at 8:49 AM, workfor (< 20) wrote:

"The bottom-line is just that those who refuse to see the world for what it is, hate gold for any rise in price warns them they are wrong. If they tell you gold is dead, listen to what they are trying to sell you. It is usually government debt. These people are insane for just how do they expect to keep the debt game going forever? The music stops some day eventually". Martin Armstrong

As to temporary gold price corrections Martin Armstrong says"the fundamentalists will be pounding their chests yelling at the top of their lungs SEE! GOLD IS DEAD! LONG LIVE EVERYTHING ELSE!."

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#19) On February 14, 2011 at 9:06 AM, binve (< 20) wrote:

MoneyWorksforMe,

Thanks

leohaas ,

Thanks

Momentum21,

lol! Yeah, I haven't payed attention to Cramer for a long time. I used to use him as contrarion, but I can't handle the noise :)

As far as any GSMs, that is a tough call. Gold and especially Silver has had a very nice run the last 8 months or so. I have very large positions that I established years ago (and especially in 2008). I am not itching to chase anything. And as much as I love SLW (and I do) I would much rather wait for a decent pullback. What if it never comes? I don't have good advice for that situation.

HAWK is carving out an intersting bottom here. Unfortunately, when I look at it, instead of a triple bottom, I see a descending triangle (Each down spike at the same level, but each subsequent up move makes a lower high). I am not in HAWK at the moment. I have traded it twice since my last post on it. I never stayed in very long because it is not consolidating gains. If it closes above 8.10, I might trade it until I see another daily swing high (I don't trust it beyond that). If it reaches the 200 day MA, then before a swing high, then I might give it more leeway to run. But, until it does that, it is either in a descending triangle (in which case 7.50 will be taken out to the downside with a target of 5 or so), or it could be in a trading range between 10 and 7.50. But it really needs to make both higher highs and higher lows for me to think it is doing any real bottoming, and that hasn't happened yet.

Favorite play? I honestly don't have one now. There is no way I would be short the market (not with real money at any rate). Everything is trending strongly. I still maintain that this is a speculative rally, and not an inflationary one: http://marketthoughtsandanalysis.blogspot.com/2011/02/follow-up-qe-is-not-inflationary.html. So right now, I am simply following my trend system. It says to be long, so I am long (broad market ETFs). I don't trust individual issues here. There are many quality companies (like COP) that I own, because I have for years. But would I establish opening positions here? Not a chance. So right now I am just trading the trend..

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#20) On February 14, 2011 at 9:20 AM, Momentum21 (44.33) wrote:

The triangle just punched through the triple bottom on HAWK. 

HERO had their own assessment of HAWK's liquidation value...$3.62. Oh well...glad one of us was out... 

 

 

 

 

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#21) On February 14, 2011 at 9:58 AM, binve (< 20) wrote:

Holy crap!! I didn't even hear about that, I was just checking the chart I have of HAWK when I was writing the response (based on Friday's close). That is just insane.

Well, I guess they are trading at HERO's estimated liquidation value right now. Maybe they go BK and get sold for scrap, but mabye not. I am going to continue watching this one.

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#22) On February 14, 2011 at 10:10 AM, Momentum21 (44.33) wrote:

the stock just moved higher...my guess is that shares will be exchanged to HERO at the time of the purchase??? that would explain this "premium" being priced in due to HERO shares taking off...

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#23) On February 14, 2011 at 10:14 AM, binve (< 20) wrote:

Yeah, that sounds about right.

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#24) On April 21, 2011 at 8:59 AM, Munchies101 (99.45) wrote:

Ok this is ridiculous. I honestly can’t take the wise ass comments from the gold guys anymore so I’m going to make my own.

What analysis can you do for a rock? Pretty much all your analysis is going to have gold in the denominator and some random thing in the numerator. Grow up, that’s not analysis. “According to the amount of pickles in existence on the planet, gold should be worth $4trillion dollars a bar.”

Start spouting something other than technicals and fundamentals. Oh wait you can’t, gold doesn’t have value.

Also I’m so sick of you confusing results with sound thought processes. Just because it went the direction you want it to go doesn’t mean your underlying thesis was correct.

Sinch, I’m so sick of you being the piper that is leading these people to eventual collapse. I feel like many of us have laid forth valid opinions and they get dismissed or worse ganged up on by your cult.

I’m sick of macroeconomic arguments, absolutely sick of them. It’s like your trying to predict the future in your crystal ball of doom. You can’t predict the future. What happens if the fed increases interest rates and all these idiots lose money Sinch? Are you just gonna say “whoops my bad guys, you should have deleveraged your speculative position.”

Once again, I’m going to post something I posted on Binves blog once:

Gold guy: Buy gold, it’s going up, waaaayyy up!

 

Other guy: Why do you say that?

 

Gold guy: Because of the fundamentals and technical’s surrounding gold.

 

Other guy: What about the possibility gold is overvalued? It’s been going on a rip lately.

 

Gold guy: Forget value. The economy is crashing, the recovery is a fraud and your dollars are becoming worthless. In a few years your money will just be green pieces of paper in your wallet.

 

Other guy: But we’ve had countless recessions before, a few that were worse, and we’ve made it out just fine. What makes you think this one is different?

 

Gold guy: The fundamentals.

 

Other guy: That makes no sense. You just claim that gold has an infinite value because you don’t believe in the fiat system.

 

Gold guy: You make no sense. Your greenbacks have nothing backing them besides a fraudulent economy that gives you an illusion to their value.

 

Other guy: I hate you

 

Gold guy: I hate you more.

 

THE END

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