Friday, October 25, 2013
Thoughts on gold and the miners
The reason I haven't yet really bought into this:
is because, despite it being Diwali, stupid Americans are only positive on gold because they think a couple inconclusive economic reports mean QE will continue on forever, therefore inflation. That is wrong.
Therefore, gold is only up because of bullshit 30-second 8:30AM moves, instead of being up on true fundamentals. And therefore, the miners' advance has a fragile basis: the next good economic news out of the US (which we will get soon enough) might be expected to cause the manipubots to puke gold $50 before the NY market opens, which would mean any position I hold overnight is potentially deadly.
So forget it. I want to be long gold when it becomes apparent Narendra Modi is the next Indian PM, and after the fallout from the November plenum is sorted through and Americans realize China isn't doooomed. Because at that point, gold will have a sound fundamental basis, and no amount of Comex shorting will be able to hold it back; the specs will see the writing on the wall and go net long, and maybe that speculative premium can become as large again as it was in 2010.
$HUI is at 244, and is up 15% or so from its recent bottom. I don't fucking care, because downside risk times downside probability is high, while the market's perceived upside risk times immediate upside probability is low.
If and when $HUI conclusively moves back towards 500, I'll be riding it. But that won't be a one-day move; it should take at least 6 months to go up 100%, maybe even over a year.
My ability to survive the downside has proven to me that I'll be able to make far more than a 100% profit on a 100% upside advance.
Til then, other things look better than the miners.