Give me your weak, your tired, your huddled yellow masses ~
Tis always darkest (and CHEAPEST) right before dawn !
LP re: ["The problem I see is this: what if gold can't be relied on anymore, to perform its historical role as safeguard? How many in the gold community ask that question? Hardly anyone, right?"]
It not only can, it will !
GOLD Now - more than ever is my motto here.
Primarially because we now have the lowest longterm, fundamenal expectations for net returns from Stocks & Bonds than at any time in recent market history.
Everyone from Greenspan to Bill Gross have told us this...and the numbers tell us this.
This transition phase in the Gold Bull has been expected by many....no one ever really knows exactly when, or exactly how far these shakeouts go. But, in cyclicals; no one with any experience is surprised by them; nor should they be caught flat-footed by them....and that "flatfootedness" applies to being "out" of the market as well.
Active traders can trade in & out during a downtrending market hopefully minimizing some, if not much of the downside and still maintain a core position.
Imo, that should be being done by all True Believers in Gold here.
Nothing wrong with using stops, swing trading....just don't be caught "out" when a "V" bounce occurs...then a little pullback that still isn't "technically" signaling a buy...then only to see a Rally Leg explode upward & onward and one misses the bus.
What you've just acknowledged is the near complete washout of "Sentiment"....which is ALWAYS necessary to achieve a bottom (near one, is close enough) and great re-entry valuations.
This is one of the 1,2, or 3 best re-entry points of this entire goldbull on a fundamental basis, vis a vie Bullion:Stock value ratio's.
And I think the vast majority of Individual Gold Bulls have missed the rising underlying tide that is going to support and rally gold further from this point forward.
THAT rising underlying fundamental is that the next Phase of the Gold Cycle is not going to be tied to the US Dollar.
Blasphemy you say ?
...just watch.
This is why GOLD has outperformed the stocks of late and it still may for a bit longer here...and owning the metal is never a wrong idea and this will NOT be the last period where Bullion will outperform the stocks...it will probably happen in the final blow off top as well.
The LT strong hands are in the metal and the hot/momenteum money is in the stocks - that is not a new concept.
The Bullion players are not getting shaken out like the small individual spec goldstock players are.
That is also why volume has been so low.... it's the individual momenteum player that's capitulating here...along with a little forced seling in the Gold/Nat Resource Funds. But, you are seeing the Gold Funds just slowly bleeding out stocks here....because they know they are cheap and a "V" convergence to the metal is just around the next corner. The volume patterns are telling us that the Gold Funds see tremendous value here and are only selling when they have to...and that's a good sign.
The old Gold Pro's here like Embry & Hathaway are putting remaining cash to work and they are NOT dumping core positions here.
To correctly trade the next phase of the Gold Bull - you need to KNOW what METRIC's the Long & Strong Big Money Gold Bulls are going to trade off of.
- and that metric is NOT the US Dollar.
That is why GOLD has held amazingly well into the face of this US Dollar rally that has literally crushed the goldstocks.
The Bullion Pro's are NOT trading on the same metric's that the small spec goldstock mo-mo players are.
The Big & Easy Money in this cycle so far; was made by trading goldstocks in negative correlation to the US Dollar...and that was an easy trade that everyone should have been following.
It was almost too easy...and sooner, or later than easy money train grinds to a halt.
That phase is now over.
The Next Big & Easy Money in this cycle will be made by trading on the longer and stronger negative correlation that is used by the Bullion Pro's.... and that is the combined return of stocks & bonds.
This is WHY Gold will do extremely well both an Inflationary, or even a Deflationary Environment.
What we've seen here of late is some Hedge Funds get shaken out that were:
1. Short the USD and piling on in anticipation of the Chinese RMB re-peg.
...the FED is absolutely NOT going to let this massive HOT Money just pile on, ala a Soros-esque currency raid.
2. Hedgies got whipsawed on going Long the GM Bonds and Short the Stock and that's led to some broad selling to raise cash.
3. Maybe, there is something to the rumors that a Major Hedge Fund (or more than one) is in big trouble.
- that shouldn't surprise anyone given the recent warnings from Greenspan himself, let alone the exponential rise in Derivatives since the fall of LTCM.
...when, not if - a Derivative Rogue Wave Event occurs that will rock the markets - tic' toc`
Gold & goldstocks should be rallying on this broad market weakness in both Stocks and Bonds.... THIS is a tremendous accumulation/re-entry opportunity because this divergence will ultimately violently converge...when, not if... a "V" rally awaits the goldstocks in the not so distant future.
The Fed being backed into a conundrum corner here is the best of all worlds for Gold (well, close anyway) as the Fed is facing a simultaneous battle between inflationary and deflationary pressures and that huge Debt & Credit/Derivatives Bubble looms in the wings.
This is going to cap combined returns for Stocks and Bonds and Gold will ultimately return to trading on it's best longterm negative correlation Metric...and trading inversely to of the real rate of return from capital markets is THE dominant, indisputable Metric used by the Long & Strong Bullion Bulls.
This is the basis of Summers & Barsky and the single sharpest Gold Guru that I know of... who doing a search of here on SI didn't turn up a single post ever citing his name...amazing, simply amazing...
Tic' Toc`
Got my buying shoes on for that "Wish List" going into the open...nothing has retraced far enough yet from when I re-entered Friday April 29th and Mon & Tuesday May 2nd & 3rd.
I closed nearly all ALL of my Oilpatch "puts" yesterday to raise buying power for further weakness in Goldstocks.
I was hoping to ultimately hold short for my personal target of OSX 118 as an intra-day low...but, the Risk:Reward of being Long Goldstocks here is much more attractive than being Short Oilstocks.
The OSX was never really significantly over-valued in relation to crude oil. Some individual stocks were...we got $20 short-side runs in stocks like BRY and ATW...but, it's OIL the commodity that is most overpriced here and I don't really play the commodities directly...so goodbye Energy Shorts for now.
There will be another rally....and I am still short a few Nat Gas E&P's here...just not any OSX Service/Drillers.
I'd love to do some goldstock buying today...but, I'm being patient...not chasing 5% moves down... I want to gap additional buys at least 10% and preferably 15%ish below my prior purchase points...and we're not there yet... at HUI 160-150 we will be.
...I thought HUI 170 would be a likely bottom per this post on April 16th:
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Message 21235787
[" PATIENCE will be rewarded~
PS: When sectors get shaken out... their arises opportunity out of crisis:
We get to see the wheat separated from the chaff ~
Of note:
Goldstocks still above their 200 dma:
KRY - in fact Crystallex is one of the only golds still above it's 50 & 200 dma.
RGLD.... certainly a must own...when/if it breaks
GOLD - Randgold Resources... insider buying...strong stock
NG - Nova Gold...strong Jr still over 200 dma
$64 question is - must these rollover too...before we bottom ?
Should be core holds & form a pretty good diversified base...now, if we could just get NEM on a dip sub $30 one more time...that would make a nice little re-entry basket.
1/2 way between former 150 resistance level & prior HUI 190 pullback is HUI 170.
- couldn't argue against that as a prudent reload level."]
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Well we closed at HUI 172.83 yesterday...let's see how close to 170 we ultimately bottom.
My contrarian bones are tingling with gleefull anticipation and I am sitting patiently and confidently, with the finger on the buy-trigger and waiting for additional BUYING opps.
The next phase of this Gold Bull will be ruled by the Big International Players that Jim Sinclair has alluded too...who play in the FOREX market and they will be the long & strong hands in Bullion.
They follow Summers & Barsky Models....and we are NOW separating and transitioning from the US Dollar model to the longer & stronger "Summers & Barsky" model...and for individual goldbulls...THIS is a great sector transition & buying opportunity.
We should WANT the Hot mo-mo money out of Gold...and seeing commodity plays washed out a bit here is GOOD news, very good news...and necessary to transition to the next phase of the Gold Bull...where Longer & Stronger Bullion hands prevail.
If you don't know what "Summers & Barsky" is... you'd better learn or you'll be flying blind from here on out....which is why so many are getting shaken out by the way...
Sitting patiently; locked & loaded for buy points between HUI 170 and 150 if ultimately seen...which can't be ruled out as prior resistance, often become future support.
Gap you buying power accordingly...but, don't fail to accumulate something here.
... yeah as I walk into the Valley of the Shadow of Gold Sentiment Death & Capitulation.... I fill my wheeelbarrow with discarded goldshares...it aint too heavy yet; but I'm kind of hoping that it will before I'm done ~
Good Luck and the spoils will ultimately go to the patient, the confident and the brave, True Believers.
It's now a "Barsky & Summers" Gold Bull... not just a simplistic no-brainer US Dollar play. |
