Posted on 04/17/2013 8:28:45 PM PDT by blam
Don’t Buy Gold
By Greg Guenthner
04/17/13
Gold’s dropping. You want to buy.
But wait just a minute…
Is your desire to buy gold now based on reasonable analysis of market conditions? Or is it simply an emotional reaction to the selloff?
Let’s turn to one of your letters for some answers:
“Short-term I can understand your premise on gold,” writes a somewhat reasonable reader.
“Markets are doing well so people head in that direction. But for the long-term, I’m a buyer. I think there’s a lot of inflation coming. So I’ll slowly buy in expecting lower priced and will be excited when they fall. But later I’ll expect higher prices and will be excited as they rise… sort of.”
Sounds like you’re grasping at straws here.
I can’t make this any clearer: You shouldn’t even consider trying to buy gold right now.
After all, you are a long-term investor, correct? Give gold a chance to consolidate or move lower. When was the last time you saw any asset class permanently recovered from a violent drop the very next day? It just doesn’t work that way…
There will be snapback rallies and more downside. Expect to wait a long, long time before a suitable base forms.
Also, think about what you just wrote: Markets are doing well so people head in that direction…
Apply this line of thinking to gold. The gold market was booming. So naturally, people headed in its direction. Investors, traders, hedge funds and your crazy coworker bought gold. People wanted to own it because of its performance. Now they are leaving. And they won’t be rushing back to buy anytime soon.
Look, I know there’s a ton of shouting going on out there about where gold might end up.
Every blogger and financial journalist with 15 free minutes and a WordPress account is publishing their own takedown of gold after its big drop.
But where were these guys last month? Where were they when gold began telegraphing trouble in February after it broke below $1,650? If had to guess, I would say they simply weren’t paying attention. It’s so easy to pile on after the fact…
However, this is not your signal to jump into gold to prove them all wrong.
The loudest howls (by far) are coming from those defending gold. They pound the table about multinational conspiracies, computer trading, and the unwashed masses selling gold for all of the wrong reasons. They’ve even blamed the charts that they loved so much over the past 10 years!
I’ll pose the same question I asked the detractors:
Where were these arguments when gold was soaring higher every month? Why has the narrative suddenly changed?
Any way you twist it, powerful emotional forces are at work. Denial is in control right now. Acceptance is a long way off…
I repeat — don’t jump back into gold. It’s too soon.
If you are well versed in trading, you could try to play a snapback move in gold futures or miners.
If that’s your game, keep tight stops and expect the unexpected. This thing is just getting started…
I know, but he did laugh about taking gold underground from one place and then sit in another.
Well done roadcat, cost averaging is an excellent plan, my target price is around $1250, and I will continue to buy all the way down to gold’s new base.
I called a coin shop in town and they only had some generic silver rounds. No silver Maple Leafs or silver Eagles.
Especially after the President's bills got shot down.
I would bet you that most of the German heirarchry had stolen gold. They knew it has value and cannot be printed to fill a wheelbarrow.
Interesting insight. Thanks for posting it. I wonder what the growth of start ups and expansion of manufacturing are compared to the cash dumped in the economy the last few years.
For consideration.
Not until they get their gun control agenda further along. They're not that suicidal. Look at the numbers of states where the states themselves are passing laws that interdict unconstitutional moves by the feds in state territory. It's gonna be tough to grab anything in a progun state with not only the citizens standing watch but the local law enforcers cocked and locked as well. To say nothing of the state national guards. Even if they were federalized I doubt they'd respond under those circumstances.
Nope.
Back in the 1930s with FDR was a different time. People back then trusted their government, while today not so much.
Back then people (even Republicans) felt that “if President Roosevelt believes turning my gold will get America going again, then by golly it is my duty as an American to turn in my gold”.
Nobody would feel that way today if Obama tried to confiscate gold, not even Liberals (though no doubt they would be highly supportive of other people turning in their gold).
It would just cost the government too much to try and find and collect everybody’s gold.
Also there’s something today the FDR didn’t have, 401Ks.
Instead of going all throughout the country trying to hunt down gold, it would much easier for some IRS bureaucrat in Washington to just withdraw all Obama needs with just a few strokes of a keyboard.
Now that Silver is under $20 and gold down to around $1250, I thought you might recall this conversation. I toldja so ;-)
I really want to buy stackable quantities but I just have this feeling I will get a chance at $15 or even $12 if I wait long enough.
The Zombie Apocalypse may be coming, but not as early as many are predicting. :-D
You’re gettin’ real close now.
Warewolf load?
The electronic money you have in the bank is so much better. In a collapse I will make you dance like a little circus poodle for a little piece of my gold, And you will do it.
My strategy was 90 percent cash, 10 percent precious metals. Reason, the debt is in uncharted territory. Pumping up asset prices (stocks, bonds, real estate) can lead to hyperinflation (too much currency) or if the asset buyers realize prices do not reflect economy, selling and deflation. Stocks is good assuming you can sell it before a black swan event unhinges the ponzi scheme or sudden announcement by central banks they can no longer print money. Looks like Fed is hinting no more printing and T bill yields are inching up, stock market and metal prices drop. My PM took a hit but they represent only 10 percent of my holdings, 90 percent is in cash/savings and the interest on those accounts will be rising. I am not dumping my metals, but buying some more just in case the Fed Reserve is told by Wall Street to QE because the interest rates and stock losses are too much to bear. Or the Fed Reserve is saying possible tapering but may be unable to do it when the time comes (stock market crash may be too hard to bear and interest rates may have risen too fast). Everything is in flux and uncharted territory, IMHO pursue both strategy, buy precious metals just in case QE cannot be abandon by Feds and cash to capture the rise in savings account interest rate and use some of it to selectively buy stocks of interest. Economy is facing headwinds, like Obamacare, higher taxes and regulations. QE may not be abandoned as fast as one thinks. Personally I hope for deflation, but the large debts held by many nations and US indicate otherwise. Right now our wealth is in the hands of the national central banks who are trying to avoid deflation and hyperinflation with too many crisis breaking out.
I noticed that too. Average dude buys gold, silver, etc. because its private and it’s tangible, and it doesn’t rot. The people criticizing it are in stocks and bonds.
Obama blew out the bond holders on GM, for unions of all things, which means bonds aren’t a hedge on stocks any more.
Stockholders? They should know more than everyone else about the actual material condition of the companies they hold, but they don’t.
The market, and I think it is generous to call it a free one, is a scary, mobbed-up place right now. I think its rigged.
If you can get tangible, non-perishable commodities and trade them, I think you should.
Lord knows were I in the top levels of the NRA, and I could see what the Usurper had planned, I’d have bet the ranch on ammunition and sold it out of my garage. You could sell almost all of what you had quickly for 10 percent below what Wal-Mart was selling it for and doubled your money.
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