Tuesday, March 03, 2009

To the Gold bugs...

If you ain't trading it, you will get cracked as well. Gold should see $600s before it sees $1200. I would bet on that pretty strongly.

Frankly, you have several things going against you. #1 the dollar will remain strong for a good long while, its not that its so strong, its that everyone else is so weak.

And, booyahhead called it again at $1000! Last time he called it long it went from $1000 to $700s pretty fast. Looks like he did it again, called another top! Wheeee!

I do think Gold will come back into focus at some point when inflation comes back into play, but for now deflation is the mode of choice. EVERYTHING here is a TRADE, I called Gold again at $800ish and sold it near $1000. To me thats a great trade, I then shorted it and made about $35 on it, covering yesterday. Wish I held since it went down another $30, but thats ok, I'll live.

The inherent problem with Gold is what drives it and what will kill it and that is it has no real inherent value, its all a mind game. When people panic eventually it'll crack like everything else. Market is down and GOld is cracked here, expect more of the same over time.

There ya go, for those that asked!

Waxie

6 comments:

mauiman said...

WOW. are we actually going to rally? and sustain it? ok, maybe thats asking for too much.

ragdo said...

Capulation Volume???
Should you buy General Electric Co. (GE) ???
it smells like a bargain, it feels like a bargain .... but is it a bargain ????
What worries me is their financial department ..... how bad is it ???
OR Otherwise, let it slide into .....Oblivion.....
http://stockcharts.com/h-sc/ui?s=GE&p=D&yr=3&mn=0&dy=0&id=p33567079973

thomas said...

Huh? Since when do commodities, including gold, have no intrinsic value? Have you ever seen your grocery store carry bacon, bread, corn products, etc. for free? Are you expecting it? How about your jeweler. Does he say, "Waxie, here's your gold ring for free, it's on me!" Are you waiting for that day? If it's extracted from the bowels of the earth and processed into finished metal or cut into precious stones, grown in soil or eaten as meat, it has intrinsic value. In fact, it DEFINES intrinsic value. After all, if commodities of any sort including gold don't have intrinsic value, what does?

Gold happens to have the added feature that it has universal acceptance as money, ever since cavemen decided barter just didn't cut it anymore. Also, it can't be printed and is hugely difficult to create in a pure form, so it has a very limited supply and can't be counterfeited. It's also in demand not only as an inflation hedge but as a calamity hedge, and this is clearly supported by history. Also, history shows that calamities can and do drive gold demand hard independent of what the dollar is doing and even in deflationary cycles.

No, I'm not a gold bug and yes, it can and should be traded. In fact, it traded at $200/oz. in 2001and even at a "weak" $600 around today it has tripled. What else can you say that about? What else can you say has tripled in 8 years and still call it "weak" today? Nothing. Nothing except gold.

beach2788 said...

Waxie,

I work for Fortune500 consumer product company, we built the 2009 budget based on high comodity prices, (large companies start the process in July/August each year).
WE are blowing away numbers so far the first two months, we cut all the labor headcount costs also in 2008. But sales are not that bad and are cost way way under budget, another good March , and we will blow out 1st Qtr. If we did I am sure there are other S&P companies that will also, AND I am talking about bottom line profit year on year , NOT sales volume year on year. Thus I am doing a calendar Call spread , bought ITM May Calls, sold OTM March Calls, and will sell OTM April Calls.

jer-d said...

Hi Waxie,
Did you catch the John Stewart show 3/4 and on 8pm 3/5 (tonight) ? It is a must watch :-). He should have had you on the show. Old CNBC video clips paint a thousand words.

Erik said...

gold's toast...


chasing a falling knife goldbugs....short EVERY pop in it to 600!