jimsioi...re: reads, guesses & prognostications
["Second, I don't believe its all about Iraq, certainly not in the NG market nor with regard to the inventory levels of Crude."]
...I was referring to just the move in Gold - being "all" about pending War with Iraq.
I agree that the NG & Oil markets are not entirely "all" about Iraq...obviously NG isn't, but I guess I do disagree a bit about the Oil markets; as a significant "War/Supply Disruption" Risk premium has existed for sometime now in the Crude markets...and with the OSX hovering around 80ish; what I've been saying for sometime now concerning OSX stocks still holds true:
A Recession (especially the global variety) will always trump any & all War/Risk premiums and even supply level & price fundamentals in the Crude Markets.
The OSX (and XOI for that matter) stocks reflect an ongoing global recession...it's shocked the diehard Oilpatch Bulls that we could have $30 crude ($5+NG) & OSX 80....(shouldn't have, sadly enough...but has...).
Those that stayed on the NG side like yourself...played the only game available in the patch...good move.
Back to all things "Yellow"
...I think the recent run in POG and Gold stocks was virtually "ALL" about pending War with Iraq.
...has to be.
The vast majority of market players, fund managers, analysts & economists expect 10,15, even 20% returns in the DOW & S&P next year... and they still do not have a mid/longterm positive view for gold, or its role in a broadbased portfolio.
They Bulls are battered and bruised, but they have NOT capitulated yet and they have NOT moved to Gold in any meaningfull way & most importantly; there has been very little broadbased sentiment shift among money mangers, or the general public towards gold.
The Bulls still believe... they still do not see DOW 5,000, or S&P 500, or USD 80 as a possibility...and untill they do; Gold isn't going substantially higher imho.
We ran too far, too fast & too easy here of late from that last pullback to 115ish to 150 & POG $305ish.
Yes; POG moved and the Gold stocks moved accordlingly and yes; I acknowledge all the fundamental underlying catalysts for a longterm multi-year Gold Bull that those still positive shorterm on POG & Gold stocks list here - but, where I disagree, is whether or not that is the reason for this last move.
Imho; that is the reason we didn't see more Gold Bulls taking significant profits/selling here... but, it was NOT the reason new money came into gold & gold stocks.
They still do not believe and they still do not see the light....and untill they do... this move was a profit taking trade and we AINT going significantly higher anytime soon.
I exited and took profits from the Jan to May run last year... good nearly all of the entire move from XAU 45 days & the $255 POG bottom to HUI 150 and sold it.
To get a fast & easy "HUI 105 to 150" move again here and to not take PROFITS on the SAME 35-45 points that I already banked 6 months ago - is a NO BRAINER on any & all risk to reward metrics.
...add these 35-45 "Fast & East" HUI points to the May exit at HUI 140-150 many of us took last May & in reality; we've already banked a HUI move to 185 and have those profits locked in the register.... cash, safe & secure.
I'll always take 5-10% of my profits and buy a few outlying, out of the money calls in case I'm wrong and miss any potential unforseen Rogue Wave Event driven breakout to new highs... but, in reality; this market has endured USD 100, DOW 7000's, the collapse of LTCM, Russia, Brazil, Sept 11th and on & on and they didn' run Gold, or the Gold stocks any higher than where we find ourselves today folks... and if that doesn't walk, talk & smell like a profit taking opp here at HUI 150 !~?!?!?! ... then I don't know what does (vbg) ?
In my "read" - what we've just seen is the window dressing with Gold/Goldstocks of some portfolio's and others ran to Gold & Gold stocks as a hedge to pending War with Iraq and ran up Crude Oil as well.... just like they did the last time pre-Gulf War.
And where the "trade" comes into play here on taking heavy Gold/Gold stock profits; is in correctly "reading" not only "WHAT" happened here in the Gold Stocks & POG, but "WHY" it happened.
This was a "trading" opportunity and a no-brainer profit taking opp imho.
Remember this....
The Blind Bulls & non-Gold believers saw Sept 11th, they saw LTCM, they saw the collapse of Russia, they've seen USD 100 already, they've seen the DOW crash into the 7000's and GOLD and the HUI never went any higher over the last few years than where we are now.
Are a broader base of investors starting to see the collapse of the fundamental underpinnings of the USD, the uncontrolled runaway US Account Deficit, are they starting to realize the unprecedented coming misallocation of capial that is going to have to be re-directed to Homeland Security & the War on Terrorism, are they starting to realize that market valuation multiples are simply insane here based on every historic valuation metric ?
...yes; some are.
- but, not enough.
What we saw happen in October was a prelude to what is coming this spring & summer.... ie: the Mother of All "Prop-Job" - Flag Waving, Feel Good Rallys.
All of Wall Street will be trotting out Charts form the Original Gulf War showing what they will call "faux" moves in Gold & Oil - only to be followed by a significant Bull Market Rally.
We WILL see & hear innumerable "the bottom is in", the recession is over", the next Bull Market has Started" comments all over the media.
People want to believe, they want to feel good.... neither real fear, or capitulation has gripped the Investing Public....yet.
We do NOT have the pessimism that was seen in the 80-81 recession... no where near it... and the Bulls still have the WILLINGNESS, the ABILITY (read cash) and soon will have the "READYNESS" factor post "Victory in Iraq"... and anytime the opposing force is READY, WILLING and ABLE... you'd better plan your trades/moves accordingly.
My "read" (call it a guess if you want) is that this is a prudent, Risk to Reward- profit taking opp in the Gold Bull here...and a virtual no-brainer one at that; especially to anyone who sold into the May top at HUI 140-150 last year....as we just got a "been there & done that" 35 point freebie trade on a Silver Platter presented here imho.
We are at an interim pause (that will refresh in due time)... to where we need to shake out those that merely "hedged" War with Iraq & the Terrorist Threat, along with those momenteum players & those who chose to do a little window dressing in their portfolio's.... and that shakeout is coming...
My "read" is that it will usually take 2 waves down to accomplish the shakeout and base where the stronghanded, longterm GOLD players step up again.... and imho that is HUI 95-105ish and GOLD $300-307ish.
When, not if... we'll re-test those levels imho... and I belive we'll retest those levels as Gold is sold, profits taken & we see the Post Victory in Iraq - Feel Good, Patriotic-Flag Waving Rally that is coming this spring/summer.
That final shakeout along with the broadmarket shorting opps that will avail themselves once again (DOW 9300-9500ish imho) will be the next High Reward/Low-Moderate Risk play for the Bears here.
...as usual:
- Always beat the Crowd to the Party; but never, ever - NEVER, be caught hanging around at last call.
- Pigs get Fat, but Hogs get slaughtered.
- The High Reward-Low Risk Opps in playing these commodity cycles in in levering/trading the middle 75% sweetspot of those cyclical moves.
PS: I'd be taking NG profits heavy, hard & fast here... for traders, they'll be a broad market longsided play coming soon and then a very sweet short opp and re-entry play for Gold.... then from the 2H 2003 into 2004.... REALITY will start to grip the market and the investing public... and the best of the rest of the Gold Story unfolds...and we begin that painfull, capitulatory march toward USD 80, DOW 5000 & S&P 500.
PSS George Cole... War with Iraq is INEVITABLE and even with a coup/overthrow of Saddam, we'll be an occupying force and will be setting up a new Government in Iraq; as well as physically controlling/securing those Oil Fields... all part of the WAR ON TERRORISM....GUARANDAMNTEED.
- Securing those Oil Fields is Economic Insurance for the Economies of the Free World, especially ours and is a fundamental pillar of US Policy... nothing Saddam does is going to change that... we're going, we're controlling - end of subject..... it's a done-deal Policy Decision.... we can NOT let Terrorist Control, or attacks of the ME Oil Supply throw the US & The World Economy into a deeper recession...that card is being taken away as a fundamental policy decision and we WILL have a longterm physical presence in the ME Oil Fields for sometime to come...and Russia will get their piece of the cheese as well... and cheap Oil is coming folks... has to, to drive the revival of the Global Economy and offset the huge misallocation of Global Capital required to fight the coming dedade(s) long war on Terrorism.
Oil is Money.... follow the money. GW's re-election bid & the Global Economies could not withstand an OPEC, Fundamental Islamic led or Terrorist created Oil Shock...that card must be taken away... and Saddam is a financeer & sponsor of Global Terrorism... and his currency was Oil... take away his money and the largest credit line for terror in the World was just cut off. |
