Wednesday, July 09, 2008

JBR comments and Response

*lurkers please take the time to read comments and LEAVE comments on the blog, it makes this a much better place to come......

JBR
Thanks for your comments and the link.
Maybe it will be the same with gold this time around, maybe not, since history doesn't repeat but it often does rhyme. We are no longer on the gold standard - will that make a big difference? Perhaps it will. On the gold standard, gold IS money. When not on the gold standard, gold is NOT money. Yet people are creatures of habit and emotion, and old habits die hard, so many people will still think of gold as money so it's a tough call to be sure. Interestingly, the author states: "note that spot gold and spot silver prices bottomed in the midst of the Great Depression" so gold the commodity did fall before it rose (ie, the opportunity to buy gold may be later). The author also says "gold shares began to appreciate in value before the bottom in gold and commodity prices in 1933". So one needs to distinguish between the commodity and the shares, historically with the shares leading. What makes all this speculation treacherous is of course the potential for "double dips" (ie, back to back depressions which in fact have happened before). So it seems there are speculative opportunities in gold down the road as the deflationary progression ensues, but cash still seems like a viable way to ride out the whipsaws and potential for double dips without the need to get the turning points exactly right each time. History does show that many a brilliant trader survived the initial deflationary crashes only to go bankrupt on subsequent deflationary echoes. Do you feel lucky? jbr
2:00 AM

Duratek said...
JBR,I feel LUCKY because I am in Treasury MM 100% cash. Had we seen the inflationary FED for what it was back in 2001 with dollar near 120 on the index GOLD and OIL was place to be. Financials topped well short of the OCT highs, already many shares 20% off their highs....Just finished reading a copy of the Harry Schultz Newsletter, interesting guy....has made some good calls on the golds, he seems to think the Juniors will not takes off until the "PUBLIC" LOVES GOLD, most are OBLIVIOUS to the metal.When the sucking sound from financials intensifies wont the PPT pull our all stops to inflate?The metal may not be a good investment, but it is a store house with NO debt attatched.The HON company's lead x'z out to 9 weeks (office furn)they must be short handed and closed down some production beng stupid not figuring orders placed to beat A) July price increase and B) school orders...don't think will help profits, I LIKE the company LONG TERM stock looks interesting here, might fall to lower levels though..Maybe we rally for a few weeks, bottom line each tradable bottom had certain buying power characteristics....and each BEAR MKT bottom had unmistakable selling panics to create a safer buying ZONE.....the little guy hasn't panicked yet...
.D
5:00 AM

2 comments:

Anonymous said...

D
Thanks for your comments.
If you are 100% in treasury MMF, in my opinion you are being modest since that would make you very good, not lucky. Similarly, like you, I am in T-Bills (in my name not street name, at Treasury Direct, no institutional or counterparty risk). I am smart enough to know I am not smart enough to time this. My only risk is being wrong on the deflation vs inflation call. It could happen but I doubt it will work out that way. If that turns out to be the case I will need to hedge (ie, 50% gold and 50% cash). IMHO, we are now in a phase that is not business (trading) as usual. This is the way the market works. It works the same way for long enough to condition everyone to respond to specific patterns. But then, every 80 years or so, the rules change just long enough to exert maximum pain and bankrupt the most people possible. Now is such a time. A few will take the big risks and win (more likely by luck than not) but most will lose that bet. I think we are facing an ongoing cascading of built up structural problems and devolving emotions. Discovery by the masses of the magnitude of the underlying structural problems will inevitably lead to ongoing deleveraging along with escalating anxiety, confusion, and fear punctuated with political errors (ie, "fixes" leading to horrible unintended consequences) and periodic devastating black swans. I would need to be a hell of a lot smarter than I am to trade around THAT environment. Until and unless the macro environment changes, I intend to stay hunkered down for now and keep my powder dry. My number one tip for survival: don't be greedy. jbr

Anonymous said...

JBR,

You are VERY ASTUTE and an asset to my blog, asppreciate you taking time to share your thoughts....I realize I am talking to someone who has been paying attentiion, maybe even in the financial field.

Being short is OK, not for everyone, hard to time, DUG moved sharp last 5 trading days...who called the top to oil prices to the day? Me personally, I was waiting for that one day ZUTZ move and reversal...above $150...below $125 might be sign top is in....so I am watching OIL very close...a close back above $140 may be warning...IRAN keeping many on edge...saftey to gold....

Most of my market buddies and gals own BAGS OF GOLD AND SILVER.....some looking for pullback sharp before final top is in...up sharply today to $940 area..top is %1,033.

I wont be able to see the bottom for refiners until it has past, prices keep falling....I am snooping hard there....when OIL CRASHES they should recover...gas consumption and crack spread hurting them.

GE is FRI AM and last time sparked a 500 pt move up....we continue oversold...setting 1 of 2 scenarios....a HUGE MOVE in either direction looming.

VIX to me says washout not here yet....if GE Misses a LOWERED expectation game (THEY OWN CNBC !!!) then I think the worst kind of sucking sound will be heard....but I have no crystal ball, when it becomes like Las Vegas......you "hunker down" we will get a technical all's clear not TOO FAR above eventual bottom....patience.

D