No investment decisions should be rock solid, you should always adjust with new data. I'll admit when I'm wrong - even though I predicted wild swings and a correction, the fall from $730 to $610 was swift and hard. Just as swift and hard as the rise from $400 to $730.
I was right about it going up, I was right about it correcting and I was wrong about being able to stomach that correction.
My stop loss activated when I was in France, and I'm done for now, no pain no gain. Problem with bubbles is ya don't know when they hit the top, and the mini gold bubble hit the top a few weeks ago and then straight down. I hate stop losses, don't they always seem to activate, then the stock bounces straight north? But sometimes you gotta have 'em, especially when you're away on vaca.
I thing Big Ben is gonna show he's not a puss, and raise rates to the moon if he has to. I think he thinks he should try cosmetically at least to protect the dollar. I think too much hot speculator money rushed into gold.
And I think gold will have its day again, and soon. I'm tempted to get right back in, but no need. My theory was the weak hands get flushed out, then it's time to go back up. Put me in the weak hand column for today, could there be many more left to fold?
If you're buying to hold long term, still seems like a good move to me. Even short term this sucker could rocket anew.
But there's too much heat and attention on gold short term for me. I'm preferring my other quieter plays - cash cash cash, COP, AAPL, EBAY, YHOO, SBUX, EWC, EWJ and puts on HD, QQQQ and FAST
In the end, cash is where I want to be mainly in this mess, although nothing seems right in this meltdown.
June 10, 2006
Gold can go back up now - I'm out for now
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27 comments:
KEITH..
I Hope you can stomach AAPL. I'm surprised you are so bullish about AAPL when it is on its way down to 45. Just my opinion.
Sorry to hear about your GOLD stop loss. The ride down can be gut wrenching and waiting for it to go back up is even worse. I've been there so I can sympathize. Gold will come back strong later this year maybe in July/Aug.
In this environment, you can profit big by going short... short LEND and PLXS.
GOOD LUCK!
Good commentary on GLD Keith....forthright and honest....refreshing. This is the first I have heard of your shorts in HD, QQQQ and FAST.....you have to be real careful with shorts.....remember what happened when you tried to short homebuilders last fall.
In retrospect.....your shorts last fall were good.....you just needed to hold on during the turbulence. To me it looks like you gave up on your homebuilder shorts too early, and hung on to GLD too late.
Timing is everything, and is impossible with the stock market. Anyone who says they can time the market is a lying to themselves (otherwise they would be the richest person in the world if they put all their money where their mouth is).
With GLD down so much.....I wonder how autofx's touted Holy Grail of Investing is doing....grand I am sure.
This type of correction is indicative of the size of this bull gold cycle. With gold prices expect to hit the 1000s, large swings like this are expected. The next move up will take us past $1000. This is just phase II, just wait till we see phase III! The next couple years will be spectacular.
Not an expert in gold, but. . .
If Big Ben is an inflation hawk, then gold will go down - that simple. . .most people have been assuming hyper-inflation due to huge US deficits. . .but in a recession/depression, people buy groceries and pay the mortgage (or rent) NOT invest in gold. . .as a matter of fact, they will sell gold to buy groceries and pay the rent. . .be careful what we ask for . . . a housing bubble burst could topple the entire economy.
"Charlie said...
Maybe some in inflation protected Ibonds. The key over the next 5 years for the average joe is not to make a ton of money but to avoid losing money either through collapsing real estate or inflation, so that he has the cash to move in and clean up in 2010.
Sometimes the best way to make money is simply to avoid losing money. It think that time is coming."
That is a winner for sure. Don't have to make a lot, but keep what you have adjusting for inflation.
When Dumya was court appointed back in 2000, I instructed my financial rep to get
my holdings completely out of the market and into short term cd's and municipal bond funds. Not a savy investor here, just someone with a really bad feeling at the time. He fought me tooth and nail on this, but had to do it anyway, I pay HIS salary. 9/11 and the dot.com crash were still in the future.
These were very conservative funds, no great yields, but NO losses adjusting for inflation and actually did quite well in some areas. Some people I know (who also said that my move was stupid) were wiped out with 95% portfolio losses that they don't ever expect to get back who were flying high and bragging just 6 mos before.
Don't be greedy, hold on to what you got, be happy! He who laughs last ....etc.
This correction in precious metals was no surprise... gold and silver went up way too fast earlier, they couldn't do anything but come down later. But they won't reach the prices they had before the rally.
My personal recommendation has been and will continue to be holding both gold/silver and U.S. dollars. Of course, if you're American, that means put some of your discretionary income into metals and save the rest. It also means paying off as much of your debt as possible, because if the USD and interest rates go up and income continues to stagnate, it will only get harder to pay off the debt. (Technically, debt is a short position against the USD, which one wants to minimize at this point.)
I have even heard that it's best to have USDs as cash rather than in the bank in case there's some sort of bank run later on... although I don't expect things to get that bad. At least not yet.
to mark is san diego: even if ben keeps raising interest to fight inflation, gold will go up if countries like russia, china, etc accumulate gold. also, if ben bumps interest up while printing "Monopoly(R)" money, it will sooner or later cause gold to detach from the $ and make its bull run.. this will be magnified as other countries realize the increase in tainted Monopoly(R) money.
i beleive this gld and slvr weakness is mostly manipulation by central banks.
Agree, gold could detach. .
Although I have a lot of experience in equities and bonds, I don't have a lot of experience in gold. I don't dismiss the US's monopoly money, but higher interest rates will protect the dollar to a certain extent. As for housing - I think Big Ben is willing to kill the "speculative housing market.". ..there has been no bubble in Canton Ohio, or St. Louis, or a lot of other parts of the country, so from a political sense, the heat will come from California, Florida, and Arizona, not the "red" states in the middle of the country.
That last poster is either a genius or a raving lunatic. I'm not smart enough to know which.
I too blew out of my GLD today. Fortunately my basis is $54-55 so I still have a gain (GLD is at 60). But sorry to see 12 points go down the drain. Anyway, happy to be 100% cash, and I think we have another 20% of downside in the major indices.
Keith, at what price did you buy gold?
I always look at the chart. If the price has taken off like a rocket (gone parabolic in other words) it is too late to buy, for now.
Parabolic rises ALWAYS correct,whether its tech stocks, houses, copper or gold. But that doesn't mean the up move is over forever.
IMO That's the case now with gold. Wouldn't be surprised to see $575, since that was the launch point for the rocket ride. But then when it starts up again, the next rise will be to higher levels than 730.
I have even heard that it's best to have USDs as cash rather than in the bank in case there's some sort of bank run later on... although I don't expect things to get that bad. At least not yet.
Some cash on hand never hurts. If you're worried about bank failures, TreasuryDirect.gov is a good place to park cash. 4-week Treasury Bills.
It is best to do these things ahead of time, even if only in small measures; by the time you decide it's time to do it, it might be too late.
it's official, all the hot money has left gold.
all clear to buy from 600.
in at 630 out at 630
started tracking at 430, should have pulled the trigger then
I figure all the hot money is out by the time we hit 580 or so
as long as ben talks tough and also carries a big stick, gold doesn't have the catalyst to go north fast again unless an inflation reading comes out that is too hot, or iran does something silly
from daily reck email:
Gold dropped $18.80 yesterday to a two-month low.
We don't know whom to thank - calculating manipulators or panicking
speculators. But we have two hunches. One, that the price of gold will
probably drop below $600 before this correction is over. And two, that
anyone who sells now will feel like a genius next week and a moron a
year
from now
Don't just do something, sit there! I held on tight, because I don't believe anything has changed what I perceive to be the fundamentals. I'm going to buy more as soon as I get more money.
Bernanke raising interest rates is like putting a band-aid on cancer and pretending to do something. Not gonna work. Interest rates were north of 10% in the 70s, and inflation was still a serious problem. It's worse now.
Central banks overseas bailing on the USD, the real bubble. There is only one way for the USD to go; down.
Some cash on hand never hurts. If you're worried about bank failures, TreasuryDirect.gov is a good place to park cash. 4-week Treasury Bills.
Just the other day the IRS asked me for my bank account numbers. some scary crap.
I'm getting ready to build a deck and pool in my back yard. I'm thinking of putting a dumping valve box, similar to the one most house have for the water valve going into the building on my deck.
It's outside the house, so it will never burn. The bolts require a special wrench to open so it's somewhat secure. And who the F would ever think there is buried money in plain sight?
$10,000 cash that the government can't touch can't help ride out the rainy days.
You can't be to carefull. There are some people who are frustrated by the Constituion and believe because they are caring loving dickheads they should have the poer to over ride it. You never know when a renagade police force is going to turn their investigation into the judge jury and punishment.
How long would you last if the IRS seized your banks account and demanded you to prove your innocent pror to returning the money?
woops
$10,000 cash that the government can't touch can help ride out the rainy days.
Frustrating indeed. Got most of my positions when gold was in the $425-450 range and HUI at about 180. So, the current correction is no big deal. I did however made a not too smart move of buying a bit more during the beginning of the pullback (at $690).
I love gold bullies, they are so funny. I doubt they even realize that they are behaving just like those clueless RE speculators. "Gold never goes down, guaranteed profit".
I love gold bullies, they are so funny. I doubt they even realize that they are behaving just like those clueless RE speculators. "Gold never goes down, guaranteed profit".
I don't believe Gold Bugs say that. In fact, I have read right here that PMs are very volatile. It seems like the best thing to do is dollar cost average into the markets and then not pay attention. But that's an oxymoron as most of us blog readers try to pay attention. That's why we are here.
I understand the dumping of dollars to buy gold. Or at least the logic behind it. But gold is an infinatly exapnding resources who's quantity only grows year after year. THAT IS NOT A PRECIOUS METAL BY DEFINATION.
There a lot of talk about the money supply expand and decreasing the value of the dollar. But why won't anybody admit that all gold mine never gets destroyed and more and more is mined every year?
There are better commodities to buy.
Dogcrap and bgmanofid have positions similar to mine. Some gold (I like the 1 oz coins because they do not have as much premium as smaller denominations) squirrelled around the place is not such a bad idea. And I do mean squirrelled away, not locked up in a safe (reason alluded to below). I have been buying coins the last couple of weeks, for cash at a local dealer, and will get some more. The price may get down under $600, or it may not. My accumulation target is around 1 year of spending money at current prices. Speaking of money, I think that also having some cash around isn't such a bad idea.
This is from a guy who is not feeling squeezed and living in a relatively bubble-free location. I have a stable job but things can change overnight. Why not have a little liquidity for insurance and peace of mind? Being debt-free really helps too. Live within your means, save, have fun doing simple things.
What does worry me is the deep hole people are digging themselves into financially. What else worries me is how divided the US has become. That seemed to ease a little just after 9-11 but is back in full now. I think it will get worse when the bottom falls out. That is when guns and big dawgs may be your best hedge against the hungry have-nots. The cops cannot keep a lid on crime now. What happens when things get really bad?
Gold is starting to touch my average cost basis. However, I'm not about to bail. It is smart to be out until the Fed is done with interest rate hikes though. I believe there is a 80% chance of a 25 bps bump, and 10% chance of a 50 bps bump next meeting. The subsequent meeting so far has a 50/50 chance for another 25 bps if we get a 25 bps now. Gold could be down to $550 if all of that occurs. I'll add to the pile at that point.
Another measure is for my dad to call uncle on gold and have me dump his GLD (he bought at $712 in a frenzy). I should just be a contrarian to his advice.
I'm making more off my gold stocks now than i did in the bull run. I wait till all the sellers get out on a bad day and buy at the bottom i sell back a few hours later with great profits. Gold will be 800 by december. I'm having more fun in this correction than in bull times. Keep on selling baby!
Getting close to pulling the trigger on more gold coins. Today they are $645 for Maple leafs. That is a $40 premium on a cash transaction with no taxes.
This has been a bloody ride since the last fed meeting. Both internationally and in the US markets. Things are getting scarey.
Gold feels pretty good in troubled times. And it stashes away very nicely.
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