MarketWatch.com 3/16 excerpt paraphrase etc etc
The April gold contract is now ... lower than its recent high atop $1,000... losses came despite another surge in demand from exchange-traded funds. ...
Some analysts remain optimistic that gold prices will rebound soon..."With ETF demand picking up we could see gold ... back toward $1,000 an ounce," wrote James Moore, analyst at TheBullionDesk.com
Take a sheet of paper out, and on one side, make a hash mark for positive comments, the other side negative comments. You’ll find that the negative view of things not just at FR, but everywhere are overwhelmingly bearish on the economy, especially equities. After a 50%+ sell off, reaching historical sell off peaks, only a 5-10% reduction in market earnings, I’d think that the few people, Very FEW people that are bullish, will be right like THEY ALWAYS ARE. The math frankly supports a massive rally, while the heart says the world falls apart. I can assure you what the smart and stupid people are doing, the smart are buying, and even they are scared to death. Every text book, historical account of markets, would suggest that we face the greatest buying opportunities of our lives. Oh, and 12 months from now, EVERYONE will say that they KNEW things would get better, that they would not sell, and somehow they made some smart decision. And for sure, the should would could crowd will be talking too. “I could have retired if I just had bought....”
But hey, what do I know...
With what I know abotu the market, here is what I suspect. GLD is heavily owned by traders, and speculators. These folks follow trading patterns and charts. All of them, know the support line, and have stops on the line. What many of them don’t know, have not prepared for, is a gap down. Their stop orders become market orders when the trigger hits, regardless of price. So, stop at 87, might very well mean execution at 74. I’ve seen this lots of times, wtih stocks that are trader favorites. And GLD is becomign larger than life. Just look at the YHOO message board. It is one of the most commonly discussed baords. Every kook is on it...
I’ve also been made aware of instances of stop removal. People that basically have spit risk management in the face, and that is generally a tip off of downside as greed has overcome reality.
Again, I’m basically making my statements on mathematical probabilities, acknowledge full well that I could very well be wrong. But, I see some very troubling signs, that have my radar flashing red, with loud sirens.
Gold as diversification, is actually something I’ve never held much stock in. I now think that notion, is misguided. Gold’s time will come, but not until next time. This time, was a precursor, and will be left behind the unwarranted laughing stock.
I’ll watch it fall, then take it seriously later, when everyone thinks things are OK, and Obama saved the world.
Obama has nothing to do with any of this, good or bad. FR is a contra indicator frankly, and good investment decisions are being overshadowed because of him. Again, wall street is 20% politics, politics is 80% wall street. Read about deep history, you can see for yourself.
Good politics, at the wrong time is bad. Bad politics at good markets, doesn’t get beaten up. See Argentina for a fickle voting public..
Thousands of years ago, no doubt, the crops were the issue. How much does Bush or Obama have to do with crop weather? Not much eh, but in the ancient times, I’m sure that is exactly how elections were decided.