Is yesterday’s weakness in mining stocks telling us something
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You got that right. Indeed its true that nobody cares. Just read CNBC business news ratings have crashed and hit the gutter. So in fact, 300 million people in North America don’t know and don’t care and don’t tune it to what is being reported in the business sphere anymore.
What is that a comment on though? Even a drunken Justin Beiber gets millions of views!
‘Bird, you’re a GENIUS! That’s it! Get Justin B. to Tweet he’s bought just ONE ounce of gold. It’d be $5000 the NEXT day.
Yeah, that probably would start pushing up sales. Got to get Hollywood pushing the bling angle.
Interesting Bird. Does the lack of interest in CNBC bode well for the stock market if those people get interested again? Or is it just because all those people ran out of cash?
The discussion continues…
Let me start by saying this discussion is not to argue with anyone’s position or to score points, but rather to present a counter argument, and one I believe is becoming more and more valid.
It is also to give people more food for thought to help make some serious decisions
Al says…
“They (the Chinese) are doing it because either they believe that, in fact, it is the currency of last resort or that at some point in the future it will appreciate in price to a level greater than that of today.”
So Al’s long term bull case, and many others as well, is based on China and India demand for gold.
The theory is the Chinese are buying gold because they anticipate it will be of greater value sometime in the future than it is today.
Is this a valid position?
Let’s look at the big picture.
The Central Banks.
It is true the central banks of the world have all become net buyers of gold these last few years.
HOWEVER IT IS NOT IN ANY CENTRAL BANKS INTEREST FOR HIGHER GOLD PRICES.
THE CHINESE CAN BUY ALL THE GOLD THEY WANT, BUT THE CHINESE DO NOT WANT HIGHER GOLD PRICES.
The central banks buy a little gold to meet some minimum reserve requirements they are obligated to have and achieve some diversity. They are not hoarding gold expecting higher gold prices.
In fact they are doing the exact opposite – suppressing gold to keep the FIAT PONZI SCHEME ALIVE AND WELL.
Now I must ask the question – in the past the Chinese were not that smart, to put it kindly, when they accumulated a mountain of US $. They cut there own feet out from under themselves with an inane policy.
Are we now to believe they are so much wiser by accumulating gold?
Past performance usually is a good indicator of future results.
I also have to ask when the US had 8k tons of gold did that cause the gold price to rocket?
Why would it matter if China now holds the 8k tons of gold? It doesn’t
India
Indian has slacked off for a few years now.
Also India is the most astute gold buyer in the world, they will not over pay for gold.
They have proven in the past they will not pay more then $1500 for an ounce of gold.
This is bearish.
Now let’s focus on the citizens.
There is no hard evidence that Chinese citizens are rushing out buying gold.
There is also no hard evidence that the Chinese government is encouraging their citizens to buy gold.
This is another one of those classic examples of if you say something often enough and long enough it becomes truth.
Too many things on the internet get bandied around as if it is true when in fact there is no evidence to support it.
In summary I do not see the international demand for gold anything more than normal financial dealings, and not some bullish case for to the moon gold, or even modestly rising prices.
It is time to stop drinking the Cool Aid
For the sake of transparency I state once again I have not sold an ounce of my gold, and don’t expect to anytime soon.
However this is not because I expect rising prices, or am using gold for insurance.
It is just because I already lived through the pain for three years and saw gold go down $700,
so I believe I am nearer to the bottom than not. I don’t think another $700 will be shaved off of the price of gold. When the bottom will come no one knows. Could be 1, 3,5 even 10 years.
The play is dead. Now it’s just hit the exit at the first available opportunity
James, Chinese are buying gold mostly for savings and show off their wealth to friends. How you can see this is that they buy jewelry not bullions. I went to the central store in Beijing last summer and saw the Jewelry sections (four stories large building) were packed and the bullion section (only 20 feet wide counter) was quiet. So, one of your pillars is inaccurate. Once you purchase jewelry, you won’t see it back to the market any time soon. Actually it is common for mothers to pass their jewelry to daughters or in laws.
Chinese central bank buys gold to diversity from their huge foreign reserve. Their buying decision is price insensitive.
Chinese central bank had to buy treasury since US government demands it, otherwise they will be shut out of US market. It is not by choice. It is the agreement for China to join WTO. If China stops, US will impose tariffs immediately. China also has a currency bonding strategy. If US defaults, China will lose the 1.5 trillion reserves but US will lose their world reserve status plus all it earned for the last century and becomes Argentina.
China ran out of gold during the period last spring. So you can see the demand. I did not see from Western media. My parents told me.
Chinese government does not encourage people to buy or sell gold. If they do, people will not listen since people are very suspicious to government motivation.
Indian demand is artificially suppressed by import restriction. Their premium is high. There might be some secrete agreement but we don’t know. I knew that Rupee was attacked brutally before they put in the restriction. Then it appreciates right after that. It sounds strange to me.
Hope this clarify some of your points. BTW, if you think the play is dead, it might be better to give it up. Buy some real estate or stocks.
Do Indians even make $1500 month………I do not think they are astute, or they would not let all the cows poop in their drinking water………there are over 900,000 Indians who do not even have a toilet……….So, gold may not be on their want list.
A few years ago., I read the main thing Indians want is a car, and not a Three wheel motor cycle., it is a thing of prestige………So, I am not counting on the idea that the Indians are that sharp…………………IMHO……….
but,,,,then again……….the Americans are mighty dumb for allowing the printing press, and bunch of feds to feed the poo to us…………..
btw…..great comments….and I will miss your presents………….ootb
Funny Jerry. But you are correct poverty is pretty bad for a lot of people there.
Gold (and silver0 wont move to upside with great ferocity until the BRICS and their “associate” countries say so..the market is a GIGANTIC STRUGGLE of epic proportions between the EAST vs WEST – CREDITORS VS. DEBTORS..if you cant figure out the eventual champion than you SHOULDNT be in GOLD and SILVER…this is very, very simple folks; be positioned or be a victim. Finally, this site is now a 90% angle on very, very short-term trading tactics and philosophies…that is fine..but, not really what I wanted to see on a consistent basis……..my tine here will continue to be concentrated but short.
ALL THE BEST to everyone,
SD Marc
Hi Marc, I trade the short term but am far more committed to the long term, big picture. Those who are appropriately positioned for the big move will make a lot more money than any trader.
Yes SD, a lot of us are short term at this time. The longs have sold and quit quite some time back. That is just an outcome of a trendless market that is still in a bear rather than being a statement on gold itself though. There really is not a better choice if you are not yet committed enough to gold markets and miners to take the plunge and go long again against such an unstable backdrop. Call it a defensive strategy that keeps us involved. What else could we be doing?
Remember…………Jessie L………..”I made a lot of money , by setting on my hands”,,,,
Yep…..Jerry!!
ditto……SD Marc…all the best…
ditto……….
I disagree, the bottom did not fall out of the miners, the bottom of a two month top fell out and triggered a bunch of sell stops.
The action in my riskiest juniors told a different story. As I mentioned yesterday, the riskiest one (with more debt than market cap) jumped 100% on 25 times the average volume and no news. It remains well bid today. Why? Someone wants serious leverage to a rising gold price. The last time this stock acted this way, was at the lows of late last year.
Thanks, Matthew.
To clarify, I am disagreeing with Gary in the above comment.
tech analysis works because people use it and people use it because it works. The problem with this is that everyone knows what technical levels everyone else is looking at. Long term buyers of the miners would welcome the technical breaks to shake the fast money out
I agree; that’s why I never use a sell stop. I look at TA as one of many tools. I use it more to guide my actions in the present. I never sell a breakdown and I never buy a breakout. I am much more likely to do the opposite in both cases. I was a buyer yesterday and today; I was a bigger buyer near the lows in December and May/June. The bigger the weakness, the bigger the buys.
I agree with two things. Never use sell stops. The bigger the weakness/correction the bigger the buys 🙂
Sell stops should be used at the top or the time you are very comfortable.
i too will be stepping away for a long while again.
there really isnt anymore that needs to be said
i will leave you with one more episode from the great old show, the Twilight Zone.
Rod Serling was a creative genius, here’s some food for thought.
maybe he knew something we dont know…
That’s a great episode James, many thanks for sharing the link.
A man has to do , what a man has to do…………….Time waits for no man…….UNCLE WALLY 1988
I have two tickets to Wally World…real cheap…..first come…..
Drifting is not good…………….waste of time………
Where do you see the gdxj going to at 1240 gold Gary? …and if it drops below 1240? At the next resistance?
Gary talked about goldman’s $1050 target, implying that since they have targetted this price, the market will be manipulated towards it lol. But he forgot to mention that goldman are very bullish on the miners!
So much for the conspiracy nonsense.
The degenerates of finance that manage the casino of crimex have painted a masterpiece on the christmas gold and silver charts over the summer. Their talents must be a “god” given gift.
The Pake put turned their tables over today. Nice daily “hammers” on the GDX & NUGT.
Monday could be a crispy critter day.
What is a Pake?
Pake is Island pidgin english for “chang”……Chinese.
My sense of things:
Gold will do nothing for the rest of the year. And probably next year. These markets are controlled and it matters not what any fundamentals say.
Very few people really care about gold to begin with, so the manipulation doesnt bother many people.