re: "Gold's Failure to Launch"
Santiago, this may surprise you, but you are 110%
correct about almost everything you just said.
I bet you didn't expect to hear that -- now did you?
But, waving the pom poms of righteous indignation
over the evils of manipulated markets, a government
by, of, and for the politicians and the evil of all
things fiat; does not change reality.
Doesn't change it for spit...and won't put a single
penny back in your recently pilfered pockets.
The only reality that the "true believers"
in gold need to know -- is the truth of the golden
rule itself:
"He who has the Gold...makes the Rules."
And Central Fiat Bankers still have more gold than
anyone else and crooked politicians still make the rules.
That's reality....deal with it.
Sometimes the truth hurts...and sometimes it hurts
really, really bad; especially after a $150 correction
in the price of gold and a 120 point implosion in the
gold stock index.
This is one of those times when reality hurts - real bad.
This is also a time that you can not afford to
be blinded by your emotions, greed, fears, or frustrations.
This is a mental game. It's all about mindset.
There is little room for emotion...and there's no
crying in trading.
The markets are not college football. Gold is not
Notre Dame. James Sinclair is not Touchdown Jesus
and Kitco.com is not the Alma Mater.
Wake the hell up people and save your pom poms for
Saturday afternoons.
-- The fallacy of fiat is not new.
-- Manipulated markets are nothing new.
-- Crooked CEO's and politicians are not new.
-- Ballooning budget deficits are not new.
-- The call for the death of the U.S. Dollar is not new.
-- Rising inflation is not new.
-- U.S. trade deficits are not new.
-- Mid-East War is not new.
Of course all of those things were positive catalysts
for the price of gold...but, they are also old news
and already in the market.
When gold bugs and energy permabulls talk about the excess
speculation in tech stocks, or the manipulation of the DOW
by the PPT... I have to laugh.
What makes gold immune from manipulation, excess
speculation, or gravity?
And that is where the problem lies...
Denial.
Denial that speculation and manipulation work both
for you and ultimately against you.
The two biggest mistakes gold bugs and energy
permabulls have made -- was in not repecting their
opponent and failing to be honest with themselves.
"Excess Speculation by any other name is
still -- Excess Speculation!"
Your opponent on any given day can be central bankers,
other traders, crooked politicians, the Fed, the PPT,
deflation, bursting housing bubbles, slowing economies,
a debt-laden zero-savings consumer, rising, or falling
gasoline, oil and natural gas prices... hedge funds
imploding in both directions....but most often -- that
familiar face staring back at you in the mirror.
Commodity permabulls got lazy, they got greedy, they
fell deep into denial about the rampant excess
speculation in commodities and they failed to respect
their opponent...and it just cost them dearly....that's reality.
What befell Mother Rock and Amaranth - also befell
gold bugs and energy permabulls:
Hubris and Greed.
The central question on whether you should buy, sell,
or hold...on whether you should be long, short or,
sitting in cash; always lies within the paramaters of
risk vs. reward.
The question you must always be asking yourself (whether)
long, or short) is simply this:
Is there a discrepancy between price and risk
and if so -- what is the primary causation for it
and what are the potential catalysts for reversing it?
NOT -- whether we have inflation, not that deficits
are ballooning, not whether fiat is evil, not whether
the US Dollar is propped up, or that Gold is being
hammered down.
EVERYONE KNOWS THE ANSWERS TO THOSE QUESTIONS!
Wake up people.
In markets with a mature level of awareness --
the question is always whether those realities are
over-priced, or under-priced into the market.
It's all about discrepancies between price
and risk -- period.
And people... not technicals, not fundamentals,
not earnings, not PE's, or PEG's, not CFPS, not debt
to book ratio's, or book values....PEOPLE and their
SENTIMENT determine those descrepancies
(READ OPPORTUNITIES)...NOTHING ELSE.
If you ever want to be something more than just
another chat room 'noob... you must control your
own emotions and become a student of human
behavior and market psychology.
Nothing has changed about people, emotion, or human
behavior since 1642 and Tulip Mania.
Nothing.
-- Markets change...but, people never do.
-- People are the key...always have been and
always will be.
-- People make markets.
-- Human behavior drives prices.
-- Emotion and sentiment determine entry and
exit points.
The most burning question for gold, energy and
commodity bulls should not have been whether there was
more inflation than stated by the CPI, or the PPI.
Not whether Fiat is a failed philosphy. Not whether
markets are being manipulated by the PPT and not whether
gold was going to close the gap to Oil.
The most burning questions for 'bugs & bulls should
have been this:
#1. Is there a discrepancy between price and
risk -- either long, or short?
#2. On a reality scale -- where is sentiment
and emotion?
#3. Have those following the present trend gotten lazy
...are they failing to adequately price in the potential catalysts
for the other side of the trade?
The one single fact that has been most ignored by
bulls and bugs is this:
That the largest re-flation and ramp of money supply
in global history led to a historic misallocation of capital
... and fueled a historic level of excess speculation.
And part of that excess speculation went into
housing and into commodities.
Hard Assets are NOT immune from speculation!
Look at what is happening in housing right now...
and look at what happened the last time we had
excess speculation in gold:
"Yellow Fever Deja Vu All Over Again?"
That chart above from the last great speculative bull
run in Gold holds many lessons.
Here's a few of them:
#1. When Central Banks talk -- ignore them.
But when they finally walk the talk and especially
when they act decisively like Paul Volker did, or
like the 17 consecutive Interest Rate hikes that
we've just had...LISTEN and ACT!
#2. Inflation, rampant increase in money supply
and the evil of Fiat currencies are not new, or unknown.
Gold fell into a 20 year bear market after it's
speculative collapse in 1980-81. Why didn't someone,
somewhere along the way, buy gold at some point --
because it was suddenly cheap in those "1980 dollars"?
I'll tell you why...because it's a moronic and
specious arguement. Gold was cheap in "1980 dollars"
for over twenty five years...and no one bought a
single ounce of it because of that reason.
Gold is in and of itself--THE indicator of inflation.
You don't reprice the indicator of inflation
-- for inflation.
#3. Gold has always been free... it's message has
always been heard and it has always been the
proverbial "Canary in the Coal Mine."
When Central Banks excessively sold gold
into the market and drove gold down to
$255 per oz -- it's message was heard!
At least by me it was... I made the leap
from "black" to yellow gold in December 2000.
Gold was screaming deflation...and Central Banks
hate deflation. Both the Japanese and American
Central Banks started a grande re-flation...
and Gold skyrocketed.
The Canary signaled deflation and
Central Banks listened.
More importantly -- they acted.
They inflated.
And Gold responded accordingly.
Those that correctly and HONESTLY read gold
-- profited greatly.
Gold worked... it did it's job.
Recently, Gold has yet again done it's job.
It signaled rampant inflation.
It's message was that the Central Banks had
over-done it...and that inflation had broken out of control.
Once again, Central Banks listened... and they
tightened liquidity and hiked US Interest Rates
-- 17 times in a row!
Gold did it's job once again.
But, sadly -- gold bugs didn't do theirs.
Dommed by their own DNA... they bought into
every conspiracy theory, into every hype-job by
the analysts and every Big Promise on
"getting rich" spun by the newsletter shylocks.
Gold did it's job... but, bugs didn't do theirs.
The moral to this now rather long-winded story?
Gold always speaks the truth... all you have
to do is listen and be honest with yourself.
Harness the emotions of greed and desire...
stay out of denial...and listen to what
gold is saying.
It really is as simple as that.
Greed & Hubris... remember those two words.
Later,
SOTB |
