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.


2 comments:

  1. My thoughts exactly...the ritual gold smack down was losing its' shock and awe factor. Best to let it stay above $1300 and let the stops at $1300 build then nail it hard.

    This game is noy done yet.

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  2. I think trying to figure out gold is almost impossible. Fundamentals don't seem to matter diddly squat in the short term and TA seems to be wrong again and again.....what to do???

    Maybe it has nothing to do with inflation or deflation or even QE. Maybe people realize gold is not going to 1000 and realize they have been played. Maybe Paulson has quit selling GLD and quit selling JPM. Maybe the supply of gold in the west is drying up. Maybe monkees will fly out of my butt. Everybody can guess but nobody really knows.

    I think just as likely, maybe people are finally just tired of swimming in bullshit, losing faith in their government and want to get out of the system.....

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