Hi Art,
Based on the idea that "equities are not doing well, so gold and gold shares should do well", gold and gold shares should have done well both this past summer and the previous summer. They did not.
You wrote "If one assumes gold prices will remain at current levels or move up slightly, wouldn't gold mining companies with low production costs be a reasonable safe haven, at least until investment funds start adding to equity positions?". Clearly they have not been for the past 5 months, primarily (IMO) because they had been bid up during the previous 6 months. Were they overvalued and by how much? I neither know nor care because both the seasonal cycles and the technicals told me that the rally was (most likely) over. I did not play this market perfectly, but I feel that my attention to cycles and technicals helped me to make and retain some nice profits.
I disagree with your statement "Among tech stocks, almost the only significant rises in recent weeks have been war horses like IBM." QQQ is up 25% and SMH almost 40% from the lows of 3 weeks ago. RUT is also up 15%.
In the long term, I believe that fundamentals do matter and that true investors will see to it that they do. But in the short and medium term, I believe that traders control the markets, buying and selling on no other basis than "is there a reasonable likelihood of making a reasonable of money within a reasonable amount of time with a reasonable amount of risk?"... I know that I do.
I feel the need to comment on the unusual nature of our discourse. This is perhaps the 3rd or 4th time that you have asked me questions based on fundamentals and that I have answered you based on cycles and technicals. I don't mind explaining my reasoning as it also benefits me by clarifying my own thinking, but I hope that you don't expect that at some point I will explain my buying and selling in terms of fundamentals. Your questions are quite good ones, but run at right angles to my view of the markets.
Regards,
vt |
