Buck Up Goldbugggers ! Here's a pep talk from Jim Sinclair...
financialsense.com
RE: Get A Grip, Man! (Q & A Format)
From: Jim Sinclair
Date: Thursday, October 16, 2002
Q: Now that the number 5 requirement finally kicks in, and in style (bonds crash), gold stocks crash and gold plummets. Money simply flows into paper stocks again. Seems that Andy Smith has a point that it’s hopeless. Charts break down on all sides. What a dismal performance! Don’t understand it any more.
A: Is that a statement or a question? I will approach it as if it is a question, although I doubt that.
The 5th Element may be in, but I doubt it. I doubt it because I do not believe we are, at this point in time, reversing the bear equities market, but only reacting to an oversold condition. We cannot rule out the possibility that the bond market breakdown at this point is a product of flight of capital that flew into the bonds and is now flying out and into equities. I have explained to you about the absolute requirement that money managers be in any appreciating market to protect their employment. Money that has been put to sleep in bonds is today being pulled out and employed in general equities. That is NOT the 5th Element, which is a product of overseas selling of bonds on a dollar depreciation vs. bonds market level sell-side decision.
Today's multi-hundred point rally is on the back of IBM's poor earnings report. When IBM warned the Street $50 higher that they were going to experience poor earnings in the next quarter, would it not have made sense to have overestimated the decline in earnings so that you could better them? Well, IBM bettered their significantly reduced earning prediction. That is what gave us our second dose of near $300 DJII one day up-move. Total Madness? Does anyone really expect improved earning across the board for DJII companies into 2003? Hardly. The level this equities market goes to will be a product of how it handles the neckline of the head and shoulders formation that it is approaching from the bottom side at approximately 8,320. On the high today, that neckline was hit. I refer you to figure #24 on page #85 of Technical Analysis by Edwards & McGee. This chart is of MCA Inc., February through August of 1986. Also note figure #25 on page #86. Both will demonstrate what I am speaking about.
Now, as far as gold is concerned and Mr. Smith's supposed frustration, what has changed fundamentally?
1. Is the dollar back in a sustained and defined long-term bull market?
2. Does the general public have renewed faith in paper as a long-term storehouse of value?
3. Has the US Current Account balance shifted back toward equilibrium on it's way to surplus?
4. Has the general commodity market returned to its previous bear nature across the board?
5. Is the bond market on the threshold of a new bull market phase?
No. Nothing has changed at all except the price of the Dow as a result of IBM's poor earnings.
Yes, the price of gold has changed, but that is just in line with the enthusiasm for equities and reaction of the sort that you are experiencing. I have over 300 emails on my computer today alone. They sound very much like yours.
The real question is why are you in gold in the first place? If your answer is to make money, then there are many better ways of speculating. Short big Dow rallies for instance. How about my mention of being long on Coffee back when it was 49 cents?
If your answer is to insure the balance of your assets by owning a portion of a gold-related asset, then why in the world have you made such a maniacally depressed statement about gold without one shred of fundamental evidence that the situation has changed? It simply has not.
My contribution, if there is any for the gold community, is that having done this for so many years I am able to maintain balance both in the good and bad times for gold. It is therefore an ability to add balance to your thinking. I have also been around long enough to be able to separate the crooks from the good guys. Finally, I know this market well and can share that with you. It is not my purpose to educate speculators to be better speculators. I will avoid questions that refer to this and people who are doing that. I intend to help the investor by transferring as much of my talents as I can.
Calm down. Think straight. Act disciplined. And stop being stampeded on the up and down side. Get a grip, man. |
