Posted on 01/24/2010 6:07:38 PM PST by blam
Gold Scary Price Drop, When Every One Panics, Buy?
Commodities / Gold and Silver 2010
Jan 24, 2010 - 09:31 AM
By: Merv Burak
This week’s gold price drop almost looks scary but I’ll wait for a drop below $1075 before getting all flustered. The potential head and shoulder pattern (mentioned in previous weeks) remains in effect until then.
When All Around You are in a Panic, BUY?
A basic comment by bulls during a time of reaction is to buy as all around you are in a panic. This sounds like good advice as we are told that the masses are always wrong BUT there is a problem with this advice. All around you could be in a panic mode for a long time. When, during that time, do you buy. Or do you just keep on buying as those around you continue to panic. Sooner or later you could run out of capital and those around you may still be in panic mode. The masses are not ALWAYS wrong; they are wrong only at the bottom but are right during the long torturous periods leading to the bottom.
This is also a basic criticism of technical analysis. Many commentators are quick to point out that most technicians were still bearish at the very bottom of a market. That may be true. They would also have been bearish throughout the decline, not like so many fundamentalists that seem to always find some good things to say about a market or stock as it is plunging. Other than liars, there are very, very few analysts (technical or fundamental) who can continuously predict the bottom (or top) of any market (I am, of course, omitting those that keep predicting the bottom all the way down and will eventually finally be right).
So, what should one do during a reaction? My advice has always been to relax, sit back, have a beer and wait for the market to bottom and turn around. After the market has bottomed and turned around you could get back in with greatly reduced risk in your actions. You WILL NOT pick the bottom but then you are not taking the huge risk that the decline will not continue. The risk is always there, it’s just level of risk we are talking about. In one case the risk may still be 80% while in the other case it may only be 10%. I would be inclines to reduce my potential profit by a fraction to know my chances of success are greatly enhanced.
GOLD : LONG TERM
[snip]
yitbos
Also, for commodity speculators, they may be selling off to realize profits. Lots of reasons.
Time to buy before the ChiComs and Indians execute their buy orders.
Guys, USD is up significantly, hence the price of gold and other commodities has declined. Considering the issues in the Eurozone USD has nowhere to go but up in spite of the printing we’re doing. You just wait until Fed says they’re “thinking” about raising rates.
Silver is also dropping. So I don’t think your explanation works. It appears to me the dollar is rising.
Please what good is gold.. U need something real. What can gold do? Nothing!!
At least a house or oil is something real... You could always buy a 20-40k house or two in a college area rather than buy shiny rocks..
Is there anything Scott can't do?
There are usually false bottoms. A bell isn't rung when the real bottom has been hit.
Please what good is gold.. U need something real. What can gold do? Nothing!!
... perhaps you have misread the situation.
When you go to the store cash is very helpful. You can’t exactly bring a 1lb of gold or 1/2 a house to buy something now...
That house could burn in the coming revolution.(?)
You can’t really understand the short term swings of gold with out understanding the actions of the paper shorts. Subscribe to Ed Steer’s free daily gold letter, a publication of Casey Research for intricacies of the trade. But a familiar pattern has reemerged. Four major Wall Street Banks, headed by JP Morgan hold most of the short gold positions. Their role is to keep gold’s price in check. They can’t permanently freeze the price increase, but they can slow it down and periodically slam the price. Their net short positions are in serious money losing territory. Options expiration is coming on 1/28. To avoid losses they generally slam the gold price right up to option expiration day and sometimes the day after. This is a familiar pattern. Watch gold prices Friday and Monday.
What, is someone forcing you to buy gold?
What makes you think that house will be worth anything?
When the illegals all go home because there’s no jobs, and people default on their mortgages, and cities are going broke and raise property taxes through the roof to try to stay afloat...houses won’t be worth squat.
Is there a college in Detroit? :-)
More seriously, I can see the dollar holding against other weak currencies, but I don't see why it's strengthening against precious metals.
Gold is up about $6 from the Friday NY close at the moment.
A portable refinery no larger than two semi trailers could under some foreseeable circumstances be the most fabulous investment one could come up with, in the next few years.
It all depends on how things go.
Don’t panic. Stay the course. :)
Of course, if you have money to invest, buy low and sell high. DUH! ;)
FWIW - A local jeweler held a ‘Gold Buying Extravaganza’ this weekend to buy junk gold jewelry, sterling, etc. I was #3 in line this morning and walked away with a tidy $500.00! :) (I had a scant 15 grams of gold total, plus $20 for some cheap stones in some of the pieces.)
I sold broken gold chains, a bangle bracelet, Black Hills Gold, a few old rings (aquamarine and a star sapphire), an old wedding ring setting (minus the diamonds which became earrings long ago), a fat gold band and miscellaneous B.F.B.P. (Bling From Boyfriends Past.) ;)
The cash is going into my ‘Escape the Work-a-Day World’ fund...IOW, I’m buying more junk silver with it when prices dip once again. Which they will.
Keep your eyes open for these LOCAL sales. Deal with someone local that you trust (this local business has been here for over 50 years) and cash out what you can.
I was pleasantly surprised at what I got for bling I hadn’t worn in TEN years.
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