David says "good bye!"
By David Zgodzinski
June 11, 2001
After four years, this is my last column for Silicon Investor.
Writing for such a tough crowd, where every reader is also a writer and trader, has been a privilege and a challenge.
I enjoyed every bit of it.
Thank-you for the great posts that are the best source of market insight anywhere.
Dave Zgodzinski ++++++++++++++++++++++++++++++
This is the turn for tech. Back on the rails after a healthy correction, leaner and meaner. Chip companies, telecom manufacturers and computer companies and even a few Internet outfits are ready to rebound after a long bear market.
Or not.
Gold is the anti-tech. And many of the goldbugs on the threads are tech bears who believe that the manufacturing capacity of the vast technology industry is still too high. In fact, most goldbugs believe that the financial technology of credit and leverage and equity appreciation and baby boomers retiring happily ever after is one of those myths that will have an unhappy ending.
Gold started to rally again at the beginning of April. There have been persistent rumors about a wave of short-covering that will be unleashed any day now. There are regular worries about the fate of the dollar with a softening U.S. economy. So gold made a nice move, about 16 percent higher in a month and a half. And many gold stocks did even better, having started to rally before the price of the metal. SliderOnTheBlack pointed out the strength of the gold sector to the Strictly: Drilling and oil-field services thread. . .
Gold miners have outperformed every single oilpatch index & the broad market indicies by a factor of 6 to 15 times since last fall... that's been a while folks... you'd think the chihuahua crowd would see that chart & finally throw in the denial-towel & admit that GOLD was a MONSTER PLAY - a literal homerun into a sea of deadmoney
We were right, very right & they were wrong - dead wrong & THAT my friends is the ONLY reason this thread has just a few posters... because the blind-perma bulls didn't want to hear the truth, they couldn't take us continually pointing out their Bullshit & Lies & they couldn't take the reality of that GOLD homerun return for the last 7 months!
SliderOnTheBlack added. . .
In this game; the majority never wins & is NEVER right... you'd think they'd get it by now... ?
But despite a brief flirtation with higher prices, as it has done so often in the past, gold has fallen back since the middle of May. And as the price of the precious metal dropped almost as quickly as it rose, there are those who take pity on the poor goldbugs who appeared to have been caught up in the enthusiasm of yet another bear market rally -- a bear market that has lasted 20 years. William H Hueb wrote to the Gold Price Monitor thread on June 6. . .
There is just no cure for gold fever!
Darleen Shurgot replied. . .
A burn is treated with a cold compress. Gold will have its time but there is going to be many delays due to the rapid knowledge the world shares.
The goldbugs believe in the intrinsic value of the metal. And they see the sharp setbacks after the blistering rallies as natural skepticism or perhaps even orchestrated pressure by short-sellers and central banks to keep the price down. On June 3, Bull RidaH commented on the blind faith of some goldbugs. . .
I noticed the same giddy posts about gold & gold stocks on the MITA thread over the past few weeks. It's as if they just met their dream girl and are ready to walk down the aisle... And the more it falls, the more they love it.
The sentiment reeks of bullish complacency, and is comparable to masses of people hypnotized by Jimmy Jones and mixin up da Kool-Aid when signs of his corruption abounded.
Hutch dismissed the bugs. . .
Gold Dead, sooner you realize that, the better off you'll be....It's range bound until all Central Banks sell it.
Many goldbugs accept their reputation as weirdos and figure it comes with the territory. Bear markets that last 20 years can make bulls look foolish at best and as fpembleton described on June 6. . .
Anytime I mention anything to anyone about gold, I'm thought of as a speculative fruit cake. Bre-X is still written and talked about on a regular basis. It's still on everyone’s minds and will be especially as the price of gold starts to creep up, - and little start-ups start showing their speculative little faces.
But even with the same quick rally and sharp pullback routine that has frustrated the gold market for years, some of the goldbugs have begun to show more conviction of late. The depth of the tech malaise has emboldened the fans of this ancient investment vehicle, the gold buggy.
Goldbugs may have been seen as losers for many years, but they are no longer the only laughingstock as investors in technology companies have been feeling the pain too. tippet chided the tech bulls on the CLOWN-FREE ZONE... sorry, no clowns allowed thread. . .
Yeah, though I walk through the valley of declining expectations ...
I will fear no myths ...
Thy repos and rate cuts will comfort me ...
I will dwell in the blessed RANGE forever ...
There my SOXX will not wear out ...
And I will find my Rock (solid technical support)
Despite a backdrop of growing confidence in the sector, the price of the metal dropped hard in the middle of May on news that commercial traders were heavily short on the futures exchanges. Evidently the mining companies and others in the business were selling into the rally. Many goldbugs felt like they were being squashed against the windshield of big trucks from the European central banks, on their way to market with thousands of tons of gold. There was a wave of bailing. Gersh wrote to the Gold Price Monitor thread on June 7. . .
bailed out!!
Homestake Mining next entry target $5.00
Canuck Dave wrote. . .
I dumped all my precious metals stocks Monday. After 18 months, I'm plumb out of patience.
Canuck Dave added. . .
Whoever is attempting to demoneterize gold appears to be winning right now. My most likely scenario is a shakeout in both gold and silver prices accompanied by a last surge by the US dollar, and then the fun starts. But, being 'all cash', I'll trade what I see. All I see right now is there's no particular reason to go in. Gold won't go from 260 to 400 in 5 minutes.
And michael finsterwald wrote on June 7. . .
I am out. The next step in my gold therapy program is to stop watching it all together,
That sense of hopelessness after the first pullback from a sharp rise is exactly the opposite of the buy-the-dip fervor that has greeted every drop in tech stocks over the past year. heinz blasnik liked the negativity. . .
Too many people have suddenly turned bearish on gold and gold shares. that's typical for new bull markets: they are widely disbelieved. scores of former bulls have turned bearish or 'neutral' (which amounts to the same thing)...Kaplan, Russell, Drakulich, Sandspring, Shartsis..to name a few. the contrarian conclusion is that they are very likely wrong.
And jrinvestor wrote to the Gold Price Monitor thread. . .
Sure is quiet here. Could this be the indicator that price of gold is going to take off? I feel today or tomorrow. Looks like the DOW is ready to take the big plunge.
And sure enough, the very next day, gold began to rally right around noon, and it didn’t stop climbing till the market closed, up $7.30 on the day. Coincidentally it was a lousy day for the Dow and the Nasdaq with the NYSE computers suffering a software glitch that caused the exchange to cease trading for an hour and a half just prior to lunch. marginmike asked. . .
WHy is Gold in such a rush today? Dollar bleeding?
davidd replied. . .
nope; dollar strong today. testing highs. Weird stuff man.
But he added in another post. . .
But the bonds are getting nicely SMACKED! Go figure: stocks and bonds down, gold up. HMMMM?
marginmike wondered again. . .
could this be an Option manipulated attack on GOLD puts?
But B.REVERE rode in with this theory. . .
Gold pushing at resistance here 268. Lost confidence in the financial system (two posts still not open at nyse incLuding IBM)CAN AFFECT THE DOLLAR AND WILL AFFECT GOLD.
B.REVERE added. . .
Institutional money moves markets. If there is a perception that liquidity stocks like IBM can't be traded then the money will start flowing out of the system. This is a major event that will undermine the confidence of institutional investors.
steve susko warned the goldbugs who had lost heart. . .
buy it all back ... you gonna miss out big time.
michael finsterwald, his cure apparently discarded, wrote. . .
Got it this morning
Gold fever is a peculiar disease. Jumper gave some historical perspective on May 31. . .
The great Inka people were often confused by the Spanish, who had a burning lust for gold, silver, and the baby jesus. Now and then when the Inka warriors would nab a stinking Spaniard they would melt some gold and pour it down the throat of the surprised soldier. While performing this task the Inkas would yell "You like it, you can eat it" until the subject exploded.
Goldbugs had another case of indigestion as the metal dropped back sharply again on Monday following Friday’s sharp jump. The weeks to come will be a critical time for gold and gold stocks, as it will be for the technology business and the titans of the Nasdaq. There is a rumbling in the gold market sending seismic jitters onto the charts, and it seems that it wants to break loose. But if the big sellers can keep it down, the bulls will certainly lose heart again and more frustration will take hold, possibly for many months until some central banks stop their selling.
But if the rally in technology fails and another rate cut doesn’t seem to be working the magic that it’s supposed to, there may be more pain for the stock market as a whole. As Earlie described on June 10. . .
Investors are currently paying astronomical prices for tech stocks in the hope that revenue and profit growth will once again return to the 30-40% growth witnessed half a decade ago. This is more than "highly unlikely". Many former "darling stocks" operate in areas that have been fully commoditized, and end market saturation is a nasty reality. It's like agonizing over a lost love,..... he/she is probably not going to return.
If the stock markets do head south again, there will likely be more serious repercussions in the economy and in the foreign exchange markets than we’ve seen thus far. And gold may find a larger following as investors take a hard look at what is valuable and what is not.
Discussion Threads
Strictly: Drilling and oil-field services
Gold Price Monitor
CLOWN-FREE ZONE... sorry, no clowns allowed
SI Members Featured
SliderOnTheBlack
William H Hueb
Darleen Shurgot
Bull RidaH
Hutch
fpembleton
tippet
Gersh
Canuck Dave
michael finsterwald
jrinvestor
marginmike
davidd
B.REVERE
steve susko
Jumper
Earlie
David Zgodzinski is an ex-petroleum geologist, ex-stockbroker, ex-machinery broker and ex-journalist who now reads the threads for a living. His company, Market-Animals Ltd., started publishing online stock market information in 1989.
Are there some new developments on your thread? Radical personalities? Hot New technologies? Takeovers? Scandals?
Please let us know. All stories are welcome.
Dave Zgodzinski |
