I’m Nibbling at Some Gold in Here
May 18th, 2007WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Gold got slammed. Why?
Let me consult my Magic 8-Ball…
Sure, there’s dollar rebound news, but my guess is that guys needed to buy oil, and since it gapped up, they had to swap some paper gold for black gold.
I see the sharp divergence of gold and oil right here as a bit of a glitch in the Matrix. This is very volatile in here. House to house and close quarters battle. Not for the faint of heart, or risk averse.
That said, I’m picking up a few apples that have been shaken loose in here, just off the session low of 653.30, with that $650 support intact. They might even run the stops a bit below $650, for the fun of it. Be careful going long here, this is known as trying to catch a falling knife.
I’m just looking for opportunities to acquire a little pot of gold as a hedge against our cash savings.
Note: I use BullionVault to do this. It’s excellent.
WEEEEE!!! Thanks Kevin!
Uh I didn’t think it would happen this fast.
Any advice now?
Mike,
I have no idea what you’ve done, what your goals are, what your exposure is, what your experience is… I’m not a financial adviser.
In the post, I said, “This is very volatile in here. House to house and close quarters battle. Not for the faint of heart, or risk averse.” I’m not speculating. I’m buying and forgetting about it. I’m a hedger here, not a trader. I have no stops in because I’m accumulating. I’m not using large amounts of money.
Mike, I’m going to say that if you’re having to ask what now? you should not be trading this.
Maybe it’s a mistake to put out calls like that. I only do it when I see a really weird setup. I put warnings on these posts for a reason. Just because I happened to be right doesn’t matter. I could just have easily been wrong. What if that thing had gapped down $20 bucks? It still easily could.
Imagine you were about to walk into gun battle. Five minutes into it, would you ask someone, “What do I do now?”
That’s what this is: War. Either you’re going to take money from Them, or They’re going to take money from you.
Take your profit and think seriously about how risky this is, your exposure, your goals. If you had done that, you wouldn’t have any questions. You would execute without hesitation.
This could be a dead cat bounce right here. There’s no way to know. I saw opportunity when that $650 support didn’t get taken out.
What was/is the premise?
Buying the dips on an ascending triangle.
I really don’t care what it does. I’m not selling any time soon.
Kevin go easy on the guy! Looks like he just got his cherry popped. 🙂
For the non traders (buying gold for the long term without leverage), here is a way to think about it:
1) Until the gold cartel really got going in the mid 1990s, platinum was usually cheaper than gold. Platinum is about $1300 now
2) Since 1945, the average ratio of the gold price to the S&P 500 index is 1.18. The S&P is about 1500 now.
Therefore, gold is currently extremely undervalued compared to these other assets. Merely a mean reversion would bring $1800 gold. The price action can be volatile, true. But, a buy and hold gold investor could just ignore the price of gold and buy some every month as long as gold is cheaper than the S&P 500. History says you will prevail as relative valuations do what they always do and revert through the historical mean and beyond to the other extreme.
On the other hand, when you can buy the DJIA with an ounce of gold, do it. Likewise, when a nice farmlet with good house, land, and water costs only 100oz of gold, buy it. Those are the best deals there will ever be.
How much do you want for that magic 8 ball you’re always talking about?
Seriously, would you mind explaining how you did this?
http://investing.reuters.co.uk/news/articleinvesting.aspx?type=goldMktRpt&storyID=2007-05-18T102133Z_01_L18119176_RTRIDST_0_MARKETS-PRECIOUS-UPDATE-3.XML
Gold bounces off 2-mo low as buyers return
Fri May 18, 2007 11:21 AM BST
By Clare Black
LONDON, May 18 (Reuters) – Gold moved tentatively higher on Friday in Europe, as prices at two-month lows attracted physical buyers back to the market and a stabilisation in base metals prices bolstered sentiment, traders said.
Spot gold fell as low as $653.40 an ounce the previous day, its weakest since March 20, It rose to $660.05/660.55 as of 1000 GMT, compared with $657.30/658.80 late in New York.
“The market is very whippy,” said David Holmes, director of precious metals sales at Dresdner Kleinwort. “The market had begun to focus on ‘how low can it go’…and then the funds have come in this morning and bought it.”
“We’ve also seen some physical demand for gold this morning.”
Traders said firm oil prices and a steadier tone in the base metals markets also helped sentiment.
“Gold seems like it will test higher. Copper seems bid so that should add to confidence,” a trader said.
Don’t you think its a better idea to be holding physical gold rather than having it in some electronic account? You could keep it at home or in a safe deposit box somewhere that you trust.
Electronic gold/silver makes me nervous for some reason. I guess its cause I work in IT and I know how wrong IT systems can go.
I have been so tempted to put some of my excess cash into Bullionvault or GoldMoney but something in the back of my head keeps saying don’t do it.
Don’t hate me for saying this, just telling you my view on these interesting time…;-)
@ Samanon
I used to trade my own account to survive. I don’t do that anymore at all, but the skills I developed during those years are still intact.
The dollar was surging. Oil was surging. Gold was collapsing???
If you’ve got a nose for bullshit, the stench was thick on that one. Absolute bullshit. Sure, it makes sense when the dollar goes up and gold goes down. It doesn’t make sense for both the dollar and oil to go up and gold to go down.
Some guys got stuck on the wrong end of that oil/dollar thing and they had to dump gold in a big way.
Of course, nonsense like this happens all the time. What caused me to pull the trigger when I did? Well, that dollar/gold/oil caper happened to go down with gold right near the major $650 support. Bring up a gold chart, draw a line under the bottoms = Uptrend intact.
Nonsense cranks down near a major support?! Media talking about funds dumping gold, etc. Blah blah.
Thanks for shaking the apples off the tree boys. I’ll gather up a few of those.
BUT I’M NOT A TRADER ANYMORE!
I’m not looking to scalp this on the pop. If I was a trader, that’s what I would have done already. Nope. I’m holding gold/hedging my cash.
Why not blindly buy, as Alek says?
I agree with what he says, but I spent too many years doing this the hard way. My brain has been hardwired to look for quality setups/entries.
If I don’t like the setup, I’ll wait for a better shot.
But that thing earlier today… Like I said, I only mention stuff like this when things go fully cockeyed and a window of opportunity opens up.
I love this buy and hold stuff. Not caring where it goes after I’m in. Being able to walk outside and take a leak on my lemon tree without worrying about what the trade is doing. Ahhhhhh…
@ SW
I’m pleased to say that I left my IT career behind when I left the U.S. over a year ago. I’ve worked in lots of IT roles in organizations as small as, well, me alone all the way up to a Wall Street bank. I hear what you’re saying. The reality, though, is that we have to rely on information systems for some things. While the fake/fiat/ponzi scheme money system is still operational, computers are necessary at the tactical level.
By all means, devise a strategic plan that is not dependent on computers. My wife and I have:
http://farmlet.co.nz/
I don’t have any problem with using computers for tactical maneuvers. Everything I’m describing here is TACTICAL. I don’t rely on any of this shit for strategic considerations, because, like you, I’ve seen what it’s like on the inside.
We have debated the physical possession vs. vaulted options to death on these threads:
https://cryptogon.com/?p=525
https://cryptogon.com/?p=548
A safe deposit box at a bank, however, would be a VERY stupid option. If your home country bans gold, the first place they will go will be the safe deposit boxes.
Again, I’m not a gold bug. I’m using a small amount of it as a hedge against some cash. That’s it. BullionVault is ideal for this.
Oh what I would do to leave IT and this terrible feeling of wage slavery.
I have to give you ten out of ten for leaving the rat race and becoming self sufficient. I wish I had the guts (and knowledge) to do that.
I have a safe deposit box, but not with a bank. I REALLY don’t like banks at all and wouldn’t trust them with anything valuable of mine (I try to minimise the amount of cash I have in my account).
I live a debt free life currently (I can’t stand debt and won’t get a bond to pay off a house, some people think I am mad for this way of thinking) and save a fairly good chunk of my salary every month. I am just beginning to wonder if I am saving it correctly. I don’t like cash. I like gold/silver but its difficult to store safely. Stocks are still paper money and risky.
Maybe I should be liquidating my precious metals and purchasing a piece of land in a country far far away.
Damn this is overwhelming and a tough topic to fully understand.
@SW: Well, you’ve taken the first, and most important, step: becoming debt free. Well Done! Beyond that its really hard for them to get to you (though there are subtle and insidious ways).
Where to put the money? Wrong thinking, IMHO. The whole Plan is to get OFF the money train. Unhook from the drug. Spend it on infrastructure that can/will support you no matter what. Even that is not a sure thing, since the Black Shirts can come along anyway, and you’re screwed no matter /what/ you’ve done to prepare. But, in an obscure enough, low threat enough, unappreciated enough place,…. maybe…
Thanks Mike. I understand what you are saying but I don’t even know where to start…;-(
I did come across a really interesting show I will start watching this week called:
It’s Not Easy Being Green (http://www.bbc.co.uk/bbctwo/noise/?id=easy_green)
Its about a family that wanted to grow their own food and not rely on fossil fuels. Can’t wait to watch it.
Maybe it will teach me something and help me get started as I am at the stage of feeling overwhelmed and not knowing where to start this journey!
hi SW, just a thought here, but the cuban model of self sufficiency in a ‘cut off’ society really is quite something. agricultural methods alone are worth the weight in gold. a brief trip to (or investigation of) cuba may spur some ideas
http://www.cityfarmer.org/CubaSpringPhotos.html
just a thought to further some others. good luck and good hunting.