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Gold/Mining/Energy : At a bottom now for gold?
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To: Bill Murphy who wrote (1251)6/25/1998 1:19:00 PM
From: Ray Hughes  Read Replies (2) of 1911
 
Hi Bill,

I achieved some recognition in Wall Street for my commodities modelling during the 1970s and 1980s. I was a "sell-side" mining Securities Analyst. Sell-side meant that I had to justify the TIMING of investment buys and sells to portfolio managers. They would have laughed me out of town if I had talked in terms of 5 years - 10 years. If I presumed to project the timing of a price turn within a 6 months window they scoffed. Seems they wouldn't have it either way. Today they want the timing down to the month of the turn!

It frustrated me mightily because I do commodity price turns are reasonably predictable if macro assumptions are accurate. I also believe the least stressful way to make money is to hear the rumble of a steamroller coming over the hill and getting positioned where it has to hit me in a year or two. So, I'm basically in agreement with you. Get partially positioned, then leverage fully in once the rise eventually starts.

But portfolio managers and analysts get measured on quarterly performance. They won't wait years. You and I didn't make the rules but we sure have to live by them.

I claim - backed up by my publications being reported on by the Wall Street Journal in the 1970s and 1980s, so I have first class proof - is to have been the first to explain how to model inventory/consumption ratios, coupled with capacity utilization rates, to predict commodities price turning points. I think I have some experience in this matter.

Based on today's I/C and capacity utilization ratios, I don't hear the golden steamroller. But I do hear a sterling steamroller.

RH
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