Gary is back on the sidelines after the move down this morning
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Gary is back on the sidelines and is scared of what the jobs report could do to gold tomorrow. After reaching just short of $1,250 the gold price came all the way back down to $1,217.60 and is now starting to recover.
I agree again.
Weak hands? More like singed hand. Sold my puts for a 2.8% gain. Will not do anything ahead of the employment report. Probably just wait until Monday.
Cecilhenry posted this yesterday, does anyone have an opinion?
The argument seems logical that gold should get hammered and the trade is over for maybe 1-1/2 yrs.
yes i agree ! White diss f***** manipulators you never know tanks fore the info !
good info tanks !
when com a good time to BUY !
Sure I have an opinion, B. I would say Cecil is a little late to the “gold is going to crash” party. He looks set to have his heart broken on the Bitcoin thing as well. For the most part, the bear case he plays out has already taken place. Not that I would disagree we see 1000 or lower in 2014 as that is indeed what I expect but in my view the worst of the losses are behind us now and the probabilities favour a new period of ascending prices once the consolidation period has ended.
I agree, Bird.
I disagree with all the bears, but this guy is particularly unimpressive. He says: “The gold bug’s arguments haven’t played out in the last decade and the won’t in the next unless a worst case scenario of an apocalyptic nature happens.” —-
I don’t know what arguments he is referring to, but my reasons for owning gold have played out very well. Gold is still up nearly 5 times in the last decade, and this guy thinks that makes gold investors wrong?
He goes on to say: “Here are some problems with gold…
You can’t spend gold.
It isn’t subdividable.
It is finite and costly to mine, let along find.
It is a very small market when thinking about global assets.
Its not driven by theoretical values of money
Really? Gold isn’t “subdividable?” It is a “problem” that “it is finite and costly to mine, let along find.” And that “It is a very small market when thinking about global assets.”
Like gold, T-bills are held for safety and liquidity. Does he spend T-bills at Wal-Mart?
This guy is the clueless by-product of decades of Keynesian propaganda.
He also doesn’t know the difference between “dribble” and drivel, yet he spews the latter with authority.
Thanks guys for your comments. Thats what I kinda thought, think I said simalar in yesterdays post. His opinion would have had more weight had they been read a few months ago.
He may be onto a good graphite company tho.Mickey Fulp likes flake I believe.
Read Mickey’s disclaimer about any company that he recommends.
Im not saying Mickey endorsed this company, only that he likes graphite flake.
I think Mr.Fulp is great at picking winners, he has got to be one of the most well rounded logical thinking people in this industry. He seems to understand all aspects.
I also think he is truly trying to help people,including the industry, he is not pointlessly promoting.
All his stuff is free, unless you hire him specificaly.
I just like what he does, dont really know him as Ive only met him once or twice.
I think if anyone was intending on investing a million or so in any particular project, Mickey would be the guy to hire to check it out for you.
He reminds me of that Holmes on homes guy, lol Well just my opinion I guess.
Yeah, the “small market” comment got a chuckle out of me. What is interesting is that the market is getting even smaller as time goes by and may eventually become fairly illiquid (tight). When we consider Asian buying and in particular the purchases by Indians and China’s Central Bank we do need to consider that a substantial volume of freely available metal has dissapeared from the market and may not be seen again for decades, if ever. The Indian’s have been especially nororious about never selling once they have acquired. Nor do I anticipate the Chinese have any intention of offloading what they have so recently acquired. In the current environment with CB accumulations ongoing, an end to IMF and European sales and with the PBOC on a buying spree the situation will most certainly eventually arise where little physical material is generally available. So small markets make for high prices. Again though, this is a key reason why miners and those bringing new material to the marketplace will need to be taken much more seriously down the road. The miners are what will allow broad participation in golds eventual price recovery and ascent in the absence of readily available coin, bars, rounds or junk jewelry.
Good point about the miners, Bird
Thanks Al. Hope your birthday went well.
Good point, Matthew
I am not sure I would use the term “collapsing” when referring to the dollar, Gary although it is currently off its July highs by a nickel and looking to do a test at .79 sometime later in January. Gold looks destined for 1200 though despite the dollars declines. Interestingly enough it seems to be moving more sympathetically to the Yen. Not much is holding it back anymore and we came within 16 bucks this morning. Just a waiting game to see if it holds the lows or not (it won’t). Meanwhile…..back on the ranch, I am watching coffee with interest to see if it produces a double bottom near the 100 dollar mark. This overall commodity trend is all related for me.
[…] here Written by Gold […]
I hope you’re not paying Gary for his commentary. If we CLEARLY had a daily cycle low yesterday, then why bother with stops?….oh wait!….he then admits he ALREADY went back to cash ’cause he is afraid they may break his daily cycle on day zero, or they may gap it down on the employment report tomorrow and grab his stops. Glad I don’t trade off of Gary’s advice…my head would be spinning and my stomach churning.
Well okay, nobody will ever be censored for giving his/her opinion in a polite manner.
Gary: “Ouch. It looks like the manipulation has returned to the metals market and it cost us dearly when it broke the recent daily cycle low on the same day the previous cycle bottomed. I thought I had seen it all when the manipulation broke the daily cycle on day 1 after the Sept. FOMC meeting but I guess not. ”
Dude, still singing the “Manipulation” Blame Game .. all I can say is soooooo Lame
when WRONG, yet again, blame unseen-, unforeseen forces beyond our control
where the is the self-honesty and conscience in stating such nonsense, time & time & time again !?
I know that you don’t think much of Gary, but to me it seems like a valid point.
I really don’t think that he is reversing his position because he was wrong. I think that he is a big believer in manipulation and simply bringing out what he feels is going on.
Tell me where I am wrong, Bruce.
Big Al, I do like Gary … don’t know why, but I do
even if you ‘believe’ in manipulation, which I don’t aside from short term, no way for 2 years! …. I have never heard a trader cite manipulation every day since QE4 was announced & gold was sold & sold hard … any trader has heard of buy the rumor, sell the news … or its the reaction to the news, not the news
but this constant, unending whining of manipulation should be beneath any real trader who has a shred of dignity
I am not bashing anyone but I guess this is manipulation on day.
Your in your out your up your down
Stop the manipulation talk and stop the flip flops
I do agree with your and Bruce’s comments, The Greaster.
If I were Gary, I would not take a short term position. That, to me, spells nothing but trouble.
In the case of gold, I think it is simply unrealistic to think short term.
Not usre how you can have your heart broken on bitcoin when it is up about 1000% in a couple of weeks. not a bad payday
You are absolutely correct, assuming that your time frame is very short term. Do you think this will still be the case two years from now, The Greater?
James, it is great for a few people but most will never enjoy the gains off a parabolic price rise. It is impossible exactly because if everyone were to sell prices would crash. Hopefully you appreciate that anytime we have seen this kind of pattern it has ALWAYS ended with a crash and reversion to the mean. I don’t see this one playing out differently. We just cannot know how high it will go before the end comes is all. I won’t touch it though. Not liquid enough. Overpriced too.
My reason for not touching it, Bird, is that it strikes me as being too easy a system to corrupt.
Spot on Bird Man. I have to take issue with Catfish on yesterday’s Kitco Radio when he talks of those who are anti Bitcoin being ‘obnoxious snarks’. Bitcoins are a virtual currency whose great merit would appear to be that they are not backed by any Central authority and that they’re ultra secure and confidential. But when as happened earlier today bitcoins fell 28% due to the Chinese central bank’s warning about their susceptibility to money laundering, who wants to deal in a virtual currency like that?
OK, while clearly central banks will detest bitcoins for all the obvious reasons, the Royal Dutch central bank has also warned of the same thing, comparing bitcoins to the seventeenth century tulip mania but where those earlier investors at least had the consolation of retaining their tulips.
If the point of the risk factor to bitcoins needs to be made further let’s not forget how in June 2011 bitcoins trading at $17 fell to $0.01 when it was discovered hackers had stolen 25,000 of the things.
Bitcoins stand to go a lot higher as more and more consumers (entire countries) buy into them, but if they fail their final consumers then yes it’s a Ponzi scheme.
And, no catfish this time it is NOT different!
People who are scared or nervous should NOT BE IN THE MARKETS.
And SHOULD NOT BE GIVING OUT ADVICE. Even for entertainment purposes.
It is all about time frame. I, for example, can be nervous short term and I should state that. My opinions are usually very different mid to long term.
And remember, this is a discussion forum not an advice forum as we state frequently.
In the fall of 1996 I made a trip to Belmont Park racetrack to bet a horse named Ordway.
He was running in the Champagne Stakes for two year olds going one mile
I had been waiting for the horse to run for a month and was set to pounce.
My plan was to take $2000 from my wagering bankroll and bet him to win.
Sure enough the day came and I went to the track with one purpose in mind, $2000 to win on Ordway
I waited patiently and watched the earlier races only for observation and research purposes.
Finally the Champagne Stakes arrived and Ordway was 8-1. A very nice overly.
I had pegged him at 2-1, so this is a percentage advantage of 22%
Bet horses like this and you retire early.
I watched him warm up just to make sure there were no last minute red flags.
He looked perfect. He was dappled and on the muscle.
I proceeded to the window, and here’s the kicker; instead of betting $2000 to win (my plan) I only bet $1000 to win.
What made me do it? Not quite sure, perhaps some fear.
Anyway as expected Ordway ran to my expecttions and won the race.
I walked out of the track winning $8000, not a bad haul for a race that lasted 1 minute and 42 seconds.
But I had made a very bad calculated mistake. I didn’t stick to the plan.
Any young man would have considered the day a huge success, but to me it was failure, at first at least.
I didn’t stick to my plan. I let fear, or doubt cloud my judgement.
Instead of winning $16,000 I walked away winning $8,000. A significant mistake.
However in the long run it was worth it.
I learned a valuable lesson that day that more than made up for it.
Stick to the courage of your convictions.
If you are fully persuaded in your own mind, then don’t get swayed by fear, hope, greed.
Since then I size it up, if I have value and an edge I send it in, and I always stick to the courage of my convictions.
There is simply no other way to be a successful speculator.
I don’t make excuses, I don’t look for blame
I have watched close to a million dollars get shaved off my gold/silver bankroll.
I am frustrated? Yes. Am I exasperated? Yes.
But I am not scared, or nervous, or confused. And I am not looking for excuses.
There is no room for that.
Can there be manipulation? Of course.
Do I think the market is behaving irrational – Yes.
But I refuse to let that be my excuse or cloud my thinking
I live in realville
Do I know where gold is headed?, I’ve said repeatedly I have no clue.
I haven’t sold one ounce to date. I’ve actually added more gold and silver on two separate occasions since the April takedown. Can it go down further, of course.
I made my bones going against the crowd, sticking to my convictions and living or dieing with my decisions.
Great story The Greater.
Of course, I agree with your point entirely.
I always enjoy your horse analogies, James!
Ditto James – great story. However you make no mention of bookies bearing down on a successful punter’s stake. More by luck or was it an insider’s tip that I made £1200 once on a horse on odds of 6-1. But my experience from thereon was to sense I was being blacklisted!!
Doffing the hat to you.
a great lesson
My simple q today is, is the physical gold bullion market drying up anywheres in the US?
You know, like you all I read a lot about India/China buying up the physical, and that manipulation of the paper markets is distorting the spot price of gold. To me, one key metric of determining this loss of supply of real gold would be to call a broker. I’ve never bought physical before, but I call NWTM near Seattle (’cause I’m from there), and they told me a month ago there wasn’t any shortage of 1 kg bars.
Is this still the case?
Flip it around, if I thought there were shortages of 1 kg bars, I’d become a long term buyer of gold, because it means the rein of paper gold is drawing near.
Comments? Thanks much.
I think you are making a good point, Bill. Thank you.
Once gold takes off again (eventually) we should start seeing all those little “Cash for Gold” shops springing up like crazy again. Other than the pawn shops that pay just a tiny fraction of value for jewellry most of the cash gold buyers seem to have gone into hibernation. We have seen shortages in supply develop before though. Recall how junk bags and random coins for example pretty much all disappeared near the last peak and during the 79 and 80 peaks and how a flood of old jewellry went for melt in those times. The price will have to go higher than 1900 to coax much more out of the publics hands though and there are limits on how much the scrap market can produce a second time around barring pretty healthy increases on offer. We don’t have shortages now though. That is suggested by current low prices in a falling market but I am beginning to think that supply could really tighten fast if gold makes a move as the event could stimulate some serious buying by the new acquisitors (different from the last bunch that are still feeling burned by this two years plus of declines).
Some of those shops are still around Bird, at least over here.
A lot of them are still advertising “cash for gold” here too.
Bill, there has been some screaming about shortages and lineups to buy etc. All bs from what I have been able to tell. Never have I not been able to get all I wanted.
I have seen dealers out of stock for a day or two here and there but thats it.
And I have always been able to buy from another dealer when that happened.
As far as I am concerned supply has always been able to meet demand.
Eric Sprott has repeatedly said he doesnt know where the metel is coming from as his figureing is that demand is greater than world production.
Thats why I wonder about the 170,000 tons K Hudes talks about. The gold has got to be coming from somewhere.
Diamonds are hoarded to keep the price up, why not gold?
buy all you want at low premiums, does not appear to be drying up t o me’
From time to time I check in with my gold dealer and he never has any problem with inventory. Take if for what it is worth…
Thank you too, The Greater
Comment for you b, regarding Mickey.
I agree with you in that he is simply doing what he thinks is right. I have known Mickey for 5 or 6 years and I agree that he is a good person to go to for due diligence.
He discloses how much he gets paid and he discloses whether or not he has a position in a company he is discussing.
Can’t say anymore.
James your right, I do believe I have had the same experience at a card table a time or two.
For me, I think manipulation has to be taken into account, like a card cheat,I have seen many,and found they really are not that hard to beet. Of course I would never know if I lost to one tho as I didnt spot them, but I always figured my losses were on me.
I just think, that manipulation should be spoken of in a “matter of fact” way, and taken into account when we invest. That it. Gary tries to do that and thats something I apreciate about Garys opinions.
The more people that accept it and speak about it openly the greater the chance somebody actually does something to fix it. Pardon the pun. lol
Just my thinking.
Great pun b! Aside from that thank you for your comment as I have to agree with you.
Kngodelwe wants to be free, just like these articles!
fwiw, the best trader I know, called the top ….. and for a long time he has thought gold will go near $900, and he will go ‘all-in’ down there
well, time will tell
As it always does Bruce!
Extlrmeey helpful article, please write more.
Thanks for your thoughts on buying physical.
I have one other thought/question I’d appreciate your comments on. It’s gold vs. miners. While most say that miners (i.e. GDX) would outperform gold, I”m not so sure. During the Depression, Homestake outperformed gold I read. Although things were different then – we were on a gold standard, and there was no bond market. Not sure if that matters. This time around, GDX clearly outled GLD from 2001 to 2011, so that’s consistent so far. But moving forward from today, I see problems for miners – if/when we get inflation from QE entering the public domain, we should see labor costs, energy, etc. all rise. On top of that, I read it’s harder and harder to find gold – have to dig deeper, in more remote areas, and that grades are falling. Add to that increased environmental factors. In short, I think that for miners, the leverage part of gold will be offset by these negatives.
I think that for me, if we do get inflation, I”d be inclined to buy gold bars with the core (north of 80%) of our stash, and only dabble in miners. Also, if we get hyperinflation, what will happen to all the brokerage firms like Schwab, where my GDX would be held? We already saw Bear Sterns and Lehman go under. Plus some govm’ts are confiscating bank accounts.
Just all this makes me think that holding a security like GDX in a brokerage firm, plus all banks, are doomed, and that holding physical outside this banking/financial world, plus land, would be the only certain thing.
I’m sure others disagree – that focusing on miners would be better. Would like to hear your reasons why GDX would continue to outperform. Thank you.
Short version Bill…..what goes down eventually goes back up. Sometimes dramatically. Gold, silver, some resources are boom/bust oriented which means they can swing to extremes in both price and sentiments. It is why guys hold on because of the prospect of so-called 5 or 10 baggers (or better) and tremendous payoffs when the cycle finally comes back around in favour of buyers. At the moment the cycle is punishing the hell out of everyone who bought against a falling trend but as a rule once it turns around it can be pretty rewarding. Its a bit like staying single waiting for that beauty you love to finally come around. But you just dont’ know….she might marry soemone else during the wait!
Bill good thinking, those are the questions everyone struggles with.
Recently I listened to a guy named Oleary, he said hold 5% gold and only buy stocks that pay dididends. There are a few gold companies that do. Oleary is a billionare not stuck on the gold industrey at all, he will invest in anything he figures will make him money. Dragons Den or Shark Tank I think you might see him on.
Anyway, if you “hit” one of these little miners, they pay Big Time. Thats why people are in them, but make no mistake, its a gamble, due diligence can reduce risk but you wont ever get rid of risk.
Maybe let us know if you figure something out.
I don’t think 5% is enough for smaller and less sophisticated money.
Hi Mat, I am “less sophisticated”.
Altho I was a genius after that 08 crash, up until gold topped of course.
Alot of my profit went into physical silver. For me, much wiser than shares. Once I was comfortable with the amount I have, I have stuck with between 5-10% physical gold each month.
I am comfortable with that. My % of trading on the other hand has been getting smaller over the last couple years. Eventually, I have to stop tradeing and let’er ride.
Hopefully, I have cash around and I recognise a bottom when it comes.
That 5% is insurance,never to be sold, hopefully. The goal is to pass it on to kids and maybe it goes generation to generation until finally it get back to me when I re encarnate. lol
Silver, is the diferant story, now theres a story that could make a fellow a few shekels.
All other things are too much for me, to really do a good job on due diligence is actually alot of work. For me anyway, and I already have endless lists of excellent companies worthy of my investment dollars, far more than I have dollars to invest.
I guess it boils down to “itch his own”. Fer this “less sophisticated” feller 5-10% is good.
“That 5% is insurance,never to be sold, hopefully. The goal is to pass it on to kids and maybe it goes generation to generation until finally it get back to me when I re encarnate. lol
My sentiments exactly b!
I would say you’re not as unsophisticated as you think. If you have silver too, then less gold is appropriate in my opinion. For people who have nothing but conventional stocks and maybe some bonds in their 401k, I think 5% is way too little.
The 1930s were different, but the conditions that drive gold and the miners are the same. Homestake did extremely well, but the juniors did even better. The miners do best when the real price of gold is rising. Profitability is determined by the real price. The real price ($GOLD:$CCI) has plunged by about a third in the last year, so the miners have done much worse. From the 2000 low to the 2011 peak, the real price more than tripled while the nominal price more than sextupled. In the first half of 2011, the real price went vertical, rising more than 50%. This action lead the market to take on more leverage/speculative risk. For some, this meant futures; for others it meant juniors with low-grade suboptimal deposits —the kind that would quickly become worthless if the POG fell in real terms.
If we get an economic expansion (what some consider to be inflation), copper and zinc could easily outperform gold. From the 1999-2001 lows to the 2006 highs, copper, lead, and zinc went up more than 6 fold while gold didn’t quite triple. It wasn’t until the crash of 2008 that the real price of gold took off. From its June ’08 low to its January ’09 high, gold doubled against commodities in general and did much better than that against base metals including platinum.
I like the miners much better at this time, but they are no replacement for bullion. I am not currently as worried as Jim Sinclair is about brokerage risk, but I did hold half of my positions in certificate form from 2007 until 2009.
I don’t think that gold has been manipulated for two years. Just since the beginning of QE3 late last year. Prior to that we were just seeing a normal correction/consolidation after a 2 and a half year C-wave advance.
It wasn’t until after last Dec. that we started seeing these big overnight hits to break support levels and trigger technical stops.
Who is ‘they’!?! Do you have any idea how stupid you sound?
Can’t agree with you ms.
I have done a fair amount of research into this issue and talked with a lot of folks who I respect and, because of that, I really don’t think it is stupid at all.
still waiting for someone, anyone, to tell me who ‘they’ are
JP Morgan is part of “they.”
Okay here is who immediately comes to mind:
Large institutions like JP Morgan
The U.S. govt and maybe others.
Now please understand, I am not saying that “they” are trying to harm you, me and others directly.
In the case of JPM and other similar LARGE INSTITUTIONS “they” are simply making a profit dishonestly by influencing the markets unfairly.
In the cast of our govt, as I said to a pretty large audience at a GATA conference “I believe that the price of gold has an influence on people’s positive or negative feelings. High gold price people start to wonder and low gold price people just assume all is well”. High gold price could very well dramatically affect confidence levels. That is something that could be very detrimental to our economy as it is currently a house of cards based on people’s feelings more than anything else.
Pretty simple. Nothing sinister about most of it.
Even Bud Conrad has changed his views on manipulation, and has recently done a good analysis on it. It’s been obvious to me for years, but it’s good to see that more and more people are catching the common sense bug.
MS, I havnt followed but if the “they” your talking about are the people manipulating, you could if you wanted find out with your own research. Maybe start with the coinage act of …I think 1965 and a speech by president Johnston.
I have posted multiple times who “they” are and what “they” have done.
I dont no, i guess libor dont count? 85 billion a month dont count? plunge protection team dont count?
It goes on and on really. If your not concerned as Bob Moriarity says “buy bitcoin”.
I can see you getting very wealthy, pictures of full breasted women serving you drinks under palm trees on silver sanded beaches as far as the eye can see. Yup, bitcoin for sure.
Is that a guarantee b? (I mean the beaches, drinks, etc.)
sorry, that it true, you’ve only been crying manipulation for the last 16 months, not 24
There is more likely a lot of front-running of the banks gold-price fixing meetings .. someone is getting advance news of the days auction & beating them to the punch … call that manipulation if you want but the market is just reacting to supply/demand
you should thank the manipulators, for eventually too low a price will make for an even greater snapback, if anyone has any declining $USD left from gambling on gold, silver or miners
LUCK DIS http://www.youtube.com/watch?v=SSeOVf0D-VQ !!!!!!!!
Many thanks for the link Franky
” call that manipulation if you want but the market is just reacting to supply/demand”
Theoretically yes, but any questionable action, like massive shorting, in my mind falls into the category of manipulation.
Bruce, about 30 years ago I complained about manipulation. But I didnt realise it was manipulation at the time. No pewters then. My info was rather limited.
I actually think it started in 1913, at least thats the earliest I know of.
But Rothchild was wealthy I believe in 1850? and that family was not above making a shilling by hook or crook.
Gary, you should probably quit before the lynch mob starts assembling
At least he does not shove the religous crap down our throats like the guy he replaced did.
Who was that Har?
[…] Flippety-floppety (again). […]
Thanks guys for your comments.
Right now I think that Gary’s correct that the miners will probably explode out of this low, whenever that happens. And I want to participate in that. Has to be pretty soon, as Dan Norcini pointed out on his blog that, on a monthly closing basis, we’re now at the 2008 low now. HUI is at 192 today, vs. 193.87 then.
But once we get over that explosion upward in GDX, I may just go 50-50 in gold bullion vs. GDX. And if I get ANY sign of a lack of supply of gold bars in the US, I’ll start buying bullion every month, just like James Turk says.
Am still thinking though. I hate the fact that this is all happening. When people get money and power, they go insane and do stupid, selfis things, that hurt the rest of us that are honest and trying to work for a living and provide for our families. I just hate it. But, gotta protect my family is the bottom line.
You might be right, just don’t go broke in the process.
Of course you have to look out for your family!
Remember my philosophy, DIVERSIFY (This is not investment advice!)
Im at a loss….as to how / why this clown even keeps trying!
“Scared” of what the jobs report will do to gold?? Seriously??
Big Al……go try and rangle a “real trader/investor” like Forex Kong for a daily interview as you yourself are headed down the toilet along side this Gary goof.
Seriously….how many days in a row can anyone seriously continue to post this nonsense?
We listen to everybody because we are open minded. Does not mean that we agree.
This Gary clowns general market knowledge compares to that of a head of lettuce.
A real “light on your toes” head of lettuce at that.
No idea why the haters are bashing Gary so much. What would the haters prefer? A car smash at 100mph or a chance to get out and rejoin the journey at a safer, but still lucrative time? At the end of the day, if there is huge insider buying coupled with a significant drop in the dollar and a signal in Gary’s cycle methodology, gold SHOULD go up. It didn’t, it dropped, so something is clearly afoot and one can either jump out now and re-enter later or sit-tight and/or average down if gold and stocks drop. Why is that cr*p advice people? Seriously, haters, go back to pulling the legs off spiders and stop infecting these discussion boards with your bile.
Neilza, we listen to everyone and make no judgements here.
Thanks for your comment.
I think today’s reversal was nothing more than an attempt to shake out all the weak longs and that higher numbers are on the way. I count Gary as one of those ‘weak longs” and he and his readers (if there are any left) will be sitting in cash when gold finally explodes upward. Just my opinion of course but then no one is paying for my advice.
Nor mine eagleeye because I don’t claim to give any!
Been with Gary for years and the fact is he hasn’t made any money since silvers run in 2011. He used to crack jokes at newsletter writers that would blame “manipulation” for their poor traders now all does is blame manipulation. Sad.
It’s not about making money in this bear market. It’s about protecting your capital, which Gary is trying to help us do. Even the legendary Eric Sprott is down 60% so I’ve no complaints.
Down but not out, Nielza. These trends do turn back eventually. Especially at the conclusion of a multi decade period of credit expansion. Was reading Armstrong this morning and he pointed out a fascinating piece of history that is often forgotten about the last time currencies made a faceplant following a long period of sovereign debt buildup.
What he was noting was that the depression of the Thirties had more to do with debt failures of sovereigns than it had to do with the stock market collapsing. Stock markets in this case were more emblematic of the publics broad participation using massive leverage in the creation of an equities bubble that could not be sustained against the backdrop of excess debt buildup in the system globally. It is a fascinating period in history and one we rarely discuss in detail.
Between 1930 and 1933 no less than 22 countries defaulted on their debts in one form or another and that included virtaully all of South and Central America plus Mexico, the US and China. The list of affected countries also included Columbia, Cost Rica, El Salvadore, Nicaragua, Bolivia, Brazil, Chile, Dominican, Panama, Paraguay, Peru, Guatemala and Ureguay. And lets not forget Germany, the UK, Hungary, Greece and Bulgaria to round out the list. It was a global disaster.
That is one major part of the reason that gold and gold equities took on a new significance during the Thirties especially as currency devaluations became rampant, trade barriers were being errected, distortions in capital flows erupted and a subsequent inability of many countries to service debts denominated in currencies other than their own as exports dropped sharply came home to roost.
It is at times like these that money matters again and the idea of debt being sufficiently collateralized or backed by revenues supporting its creation become important to investors in more than a vague sense that genuine security exists for their investments.
Cycles repeat as we are often told and this one will be no exception. We are again living through a time when debts have grown unsustainably large for a great many countries and the worry of defaults looms for more than just the usual small countries in the world that most often suffer the risk of a large mismatch between their obligations and the incomes sufficient to service them.
As we saw in the Great Depression, once countries began to default (Mexico and Ecuador first during 1929) then those events seemed to set the stage for the conditions of a wider systemic debt collapse that eventually encompassed most of the world. The US stock market crash was itself a signalling event so we had best keep that in mind if anyone is still thinking a big fat S&P correction might bring on a necessary and overdue reset that will somehow be healthy for all markets. It also brings war.
When we look back at those difficult times though we also note something else that is important. The stock market crash of 29 in fact preceded the great bulk of the soereign defaults. So we know that when the critically important opportunity arose for investors to be positioning for best advantage that would subsequently be presented in gold equities that sentiments towards stocks could not have been more depressed.
At that point many highly leveraged investors had already been wiped out to zero and most of the surviving market was in tatters. Losses were legendary and confidence fell to extreme lows. Clearly, if you had lost your job, home, capital and even your mind following the great crash you were in no position to be jumping on a gold badwagon!
A flight to the safety of bonds and debt instruments by the refugees of equity markets was then greeted with a series of devastating defaults and failures of nation states to make good on issues. Misery was compounded on misery as both debts and their associated assets were extinguished over the ensuing years. Very few people understood the dynamics at play and fewer still took steps to prepare or even knew what to do. The importance of being free of debt and ensuring your household remains solvent during such crisis cannot therefore be overstated.
Cash matters. How you store and protect it as an investment matters too. What should have been learned over that miserable decade is that there are no safe harbours for assets and that even those that do exist often do not materialize until the months and years following significant losses in other asset classes. So it is not necessarily so easy to jump from one class to another nor to do it seamlessly and without facing risk in the holding periods that lie between them. Even cash in banks was not safe then as bank failures were what we can probably term epic.
This time around we are seeing some similarities to the last great correction. Iceland, Greece, Ireland and Cyprus have defaulted or come to the very brink and we have other equally insolvent nations propping them up with the artificially created wealth of Central Bank largesse and interventionist policy which most know is just a charade of false wealth shifting from one entity to another.
What does it really mean when a country like England, burdened by one of the highest levels of debt on earth per capita to be buying up sovereign debts and bank issues of other states already in outright default? This obviously works for only so long as every country mutually agrees to ignore the fact that monetary intervention is not the equivalent of repairs that require fiscal solutions.
We can know that debt has become insoluable in other words as soon as tax revenues and income from exports are insufficient to service the obligations of a nation in economic contraction. This idea is central to the growing problem of meeting social commitments such as pensions, health care and welfare and investors must be concerned that the resolution to our current problems, when they arrive, will be no less distressing than what was experienced in the past.
So where does gold fit in and when exactly will it be meaningful as an asset to shore up and preserve the wealth of those who can survive all of a stock market meltdown, series of bank failures and an implosion of the bond markets?
Well that is the puzzle we need to work out for ourselves. There are no easy answers to the question of wealth preservation. As they say…..history rhymes but it does not repeat. What we do know with certainty though is that debt cycles repeat themselves over the long haul and there are enough similarities that having just a little good information will allow us the insights to avoid making the biggest of mistakes.
Well Bird, maybe its as simple as owning food producing land free of debt.
There are people that are in that position, like Rogers has been saying “become a farmer”. your post was a real good read.
Thanks B. Lots more to say. More another day. Glad to hear you enjoyed it.
good post bird……………simply……..GO AND OWN NO MAN………., as they say, kiss, or keep it simple stupid(not referring to you, my friend)
or GO AND” OWE.”……NO MAN…………
There’s acute all no one at this site that is a real performer.
Bird and Matthem come to mind and Rick A of course but who the hell needs to guess minute by minute. There’s no real commitment. The gold has hers are right. Why be bullish in a bear market? Why pump gold stocks when they are falling like a kife? Bob. Moriarty is so full of shit it’s not funny. Bitcoin or gold stocks.!? There many sectors that have soured while his moose pasture has collapsed in ruin. What a fricking pumper. I employee you not to traffic his site so he can’t boast to his advertisers where he really makes his money. Have you seen the San. Fran gold rush!? Who made the money!? The guys selling picks, shovels, ass and booze. Same as the guys pumping sticks and advertising. Your all getting screwed wake the F up!!! Bob the nob pumped doom and gloom for 13 years. His recommendations lost more money than any fricken house or blue chip. Piece of shit.
Miners, especially juniors, are always volatile. You should know that anything that can return 10 to 100 times your money is very risky.
I already own three of the picks that Bob is currently pushing, but I never buy a company that he promotes. Liquidity and positive sentiment can go away quickly due to the falling profitability/NAV caused by falling metals prices. This always has a huge negative impact on the miners. Even the best, most legitimate stock pickers can be made to look inept in such an environment. The juniors are no place for a big chunk of your money or a short term investment horizon —unless you fully understand the risks and the sector.
When any well-known personality puts out free picks, in any sector, beware.
Matthew you nailed it…..I knew the risks. A correction was tolerable but when she gashed out that’s when problems arise…
Yup Bird is tops. I read the same history. And trends counter and can kill you so listening to gold bugs or some one that sell gold is a waist of time.
The irony is that the way in which the GDP and employment reports are calculated, they are increasingly suspect. (Not a conspiracy theory — more like a ‘garbage in, garbage out’ scenario).
For example, to get a true reading on economic growth, one would have to extract out the effect of the 100s of billions of dollars of deficit spending, interest rate suppression and QE. But I acknowledge that it is, what it is — so I understand Gary’s desire to seek the sidelines.
I have reached the point where I would welcome the gap down — just get through the purge already and perhaps eliminate the remainder of the weak hands. Would allow us to build a more lasting base, from which to launch.