romans holiday

Nope. It is not confusing for me.

Buy & Hold for me is when I buy something other than Options or Option spreads.

I call it "Core holding" and it consists of shares like: PHYS, MNT.t, maybe GLD shares, and some physical Gold.

 

I want to look at it as a SHARE OF MY OVERALL WEALTH - like 10-20% or something.

 

If Gold prices spike up, and it rises to say, more than 20-40% (or something) of my wealth,

then I would consider selling some, and buying something cheaper to replace it.

 

xx

Can you see how your previous post is confusing. For example:

If you change your mind, and shrink the size if your core position, you can do it at a higher price

This is not what is normally meant by core buy and hold, which if anything one tries to increase. Agree? I think the confusion lies in your not thinking of your core gold in terms of liquidity, but rather in terms of investment. Hence you want to keep that investment at a certain percentage of your wealth. Someone who thinks of gold instead in terms of liquidity will 'sit on the sidelines' and watch asset prices depreciate relative to gold. They will not look to re-balance their 'portfolio' but stay with the trend as monetary value filters down into gold. Core gold [and note, gold not mining stocks etc] is also core in a monetary sense.

That would be especially true when Inflation is not rising, and when you look at a measure like Gold-in-CRB, you see that the Ratio has shot up too fast, like it did last year:

Inflation is irrelevant when gold is primarily seen in terms of liquidity, as opposed to a commodity, inflation hedge, or investment. It's this idea that yourself and Dominic have failed to grasp. It's on the basis of this idea that the investor can 'invest' a good portion in gold, sit back, and relatively relax. Because he's identified a long term trend. Nor is this complacency as the good investor always hedges.

LOL

That is EXACTLY when you want to be thinking Buy & Hold - when prices are cheap,

not when they are spiking upwards.

 

If you change your mind, and shrink the size if your core position, you can do it at a higher price.

 

In fact, I tend to think of my B&H core as a fixed US$ amount, which rise in size as my total wealth rises.

This way, when prices spike higher - I have room to sell... Especially when inflation remains tame.

You still seem to be confusing B&H with trading.

The B&H position is not about buying when prices are cheap and selling on a spike. That is trading. As mentioned the 'investor' can rationally rely on 20% appreciation year on year with B&H.

The two activities should be clearly distinguished [Long Term B&H/ Short Term trading] in order for the one to hedge the other.

If Gold was so consistent as that, then just wait for the 20% rise, and then look to sell it somewhere beyond that.

Buy it back after the inevitable correction.

 

That's something like what I do when I look at the channel

The 20% rise is in the aggregate/ trend. If you want to trade, you should look for the spike upwards which will often be greater than 20%. The spike to 1900 was an obvious example.

Still, if you're also interested in building a core [buy and hold] besides trading it helps to have some understanding or explanation of why gold is trending upwards 20% year on year. Investors [or those with a liquidity preference... the non-investor] have a rational macro picture of why something appreciates or depreciates.

It's good to see you finally getting a bit more vocal towards a buy and hold position/ building a core... though ironically after a purge of the 'buy and holders'.

PS, You missed the point of the post. It wasn't about trading gold. It was about giving a rational explanation for the 'investor' as to why gold has risen at an average of 20% odd annually.

I also see that Dominic Frisby is trying to distance himself from the most extreme of the Gold purists

 

EXCERPT: he says:

 

. . .

So this Money Morning is a kind of note to self, a warning. I have come to, I suppose, love gold - or at least the idea of it, and the glorious, free society it offers at the end of the rainbow.

 

But I shouldn't. It's just an investment. So be warned and take note: should we ever see that exponential final euphoric bull market phase, then come back and read this, sober up and sell.

....

Well, I'm no purist/ gold bug, but looks like nothing much has been learnt in the past few years about gold. As long as gold is seen as an 'investment', people will remain confused about whether or not gold is in a 'bull market'. That confusion will also lead to a 'wall of worry' towards gold.

There is a small glimmering clue about gold in Dominic's article where he mentions it rising consistently 20% odd year on year. The most coherent way to interpret this rise is in terms of appreciation. So instead of thinking of gold as an 'investment', think of it as the opposite; a form of liquidity/ a non-investment, which is steadily appreciating against assets/ investments. This view is also bolstered by the fact that liquidity strengthens in deflationary economies.

Why can't people see the obvious? Because [conventional/ established] theory determines what we see.... and most people, being herdish, won't think for themselves.

I'm really not sure about your target of 600, but I agree that we've recently had a good entry point. I bought on Friday at a price of $52.86. I decided to buy based on a belief that QE3 will push the price of silver/gold up (I also hold physical), and various SMA charts suggested a low was approaching. I got a nice move up after purchase on Friday and on Monday, while it fell back a bit today. I'm happy with the timing, and my target is only around 70. I'm not expecting to hold for long, but as always, things can change. I'm playing with money inside my "trading account" here, it's a relatively small amount and I'm happy to take on more risk than my other portfolios.

Yes, looks a good entry point.

This instrument looks like a good one to trade in the shorter period. Thought about it myself [over and above - or below - the medium term] but personally have neither the time nor inclination for the shorter term trading, or day/ week trading.

Still, may give it some thought.... and may shorter term trade a 1/3 of my medium term longs.Would then want to sell a bit on a silver spike and higher than the previous one. I guess that would be trading in the short/ medium term. It would also serve to hedge the heavy medium position.

Usually. But the mining shares are already in the gutter. Although I still have much more faith in bullion than the miners.

Yes, and not many gold bugs were predicting that. The idea was mining stocks would simply 'leverage' the rise in the gold price itself.

600 for AGQ? Given how the levered etfs work, you may lose significant value over any timeframe beyond short-term.

we'll see.

This has been discussed on my trading thread.

 

 

With AGQ close to a heavy buy order placed at 50, have bought it here with half the funds. Rest of funds still placed for 50.

Close enough to 50, so have bought with the last of my earmarked funds.

I've now pretty much exposed to precious metals with all my liquid worth, with this trade balanced against core gold. Will be keen to reduce a lot of that exposure on the next silver spike. Target of 600 odd in two years or so.

I am somewhat confused here, I was under the belief that the amount of gold regulated the amount of currency available. Was this not the reason we moved away from the gold standard and moved to the asset based model we have now? But yes I could be wrong though.

Government [international conference] would first have to decide on the level for the reserve currency when setting up the standard [other currencies could then be pegged to that]. This would be the most difficult part, with lots of moving parts here; eg. what sort of credit instruments remain, what is the amount of money in existence, will there be fractional reserve etc. There would be some kind of division of existng money into the number of ounces in existence.

Once the level was set, currency would be tied to it, regulated to the amount in whatever proportion. This would provide a potential for equilibrium in asset prices and trade.

Of course, everything would first have to turn to custard.

So really its better to play with the devil you know than the one you do not. I can see your point has merit regarding instability at the international level. But is there enough gold in existence considering the current spot price to be able to support such an attempt for a recourse back to a gold standard internationally? At this point I have no idea and is beyond my understanding. Thanks again for your response.

The amount of gold doesn't really matter. Because the rate at which currencies are fixed to it [the price] is completely arbitrary. I doubt a gold standard would halt a grinding deflation in asset prices, but it would halt monetary chaos and economic implosion. What's important is the rate at which currencies are fixed to each-other. International trade can then be stabilized on stable currencies and exchange rates.

The price of gold could be capped/ fixed where the market takes it over the next decade. At 20 odd % a year compounding that's quite a lot higher from here. I think government would step in before the 'manic phase'. Also, I don't see why governments wouldn't keep some form of fractional reserve even with a standard. If it all came to this, banks most probably will have become more regulated. Mind you, debt might have become a dirty word for a generation, which would see asset prices grind down. If the baby boomers finally panicked and started selling, there would be the property crash.

I pondered for a time thinking about what you said, and was considering whether there would be a unified cooperation on a global stage? But I feel this would have a real negative impact on various currencies and economies. Gold would be better used as some sort of wealth erosion insurance protection rather than using the old gold standard regime. Once confidence returns to paper currencies, the rush into gold will evaporate. What is needed is something completely new. Not a re-visit to a system that also failed.

Actually, the argument for a recourse to gold is based primarily on instability at the international level. As I've argued earlier, gold is the strongest symbol of money which cuts across the various cultures of developed economies. I think 'something new' or novel will be rejected simply because the attempt at a purely scientific currency [Friedmanism] would have been seen to fail by then. With the failure of theory, it's likely that economists will also be discredited. Government, in that situation, will look pragmatically for something which can work and function relatively well in the face of increasing instability.

The other thing with a proper gold standard, an international one, is the practical balancing mechanism it can provide for trade. Resorting to gold's balancing mechanism is an obvious choice for governments when you consider that it was the massive build up of trade imbalance which has endangered the global economy in the first place.

Here's a good solid British empiricist on the subject:

http://en.wikipedia.org/wiki/Price_specie_flow_mechanism

The other thing is a reverse head and shoulders shaping up on silver, and in the context of the upward mega-trend. Most clearly seen on the log chart.

The other thing is a reverse head and shoulders shaping up on silver, and in the context of the upward mega-trend. Most clearly seen on the log chart.

In the case of Argentina (when it defaulted some years back), did not the government of the day re-issued a new paper currency and pegged it equal to the then USD?

 

If then as you said regarding paper collapsing, gold would have to be pinned to a fixed value, and be void from speculation.

Yes, some kind of fixing would be involved. It would be the end of a free global market in currencies. The fixing of a currency is quite a delicate thing. If the currency is fixed at too high a rate it will only continue to deflate the economy. Besides Argentina this was the problem when Churchill decided to go back on gold after the war... he went back to the pre-war rate, radically appreciating the pound over night.

But I don't see it playing out like this. The potential problem facing the major currencies today, and on a global stage, is not their depreciation but their appreciation against financial assets [even if real consumables simultaneously become more expensive]. A forseeable disaster for markets and economies is capital flight out of assets into currencies, and then further and increasingly out of currencies into gold; gold being the prime form of liquidity.

In this situation government would be forced to step in and fix the currency to gold/ gold to currency. This may even see gold capped at where the market has taken it. If government didn't intervene, the free market could see economies implode with mass unemployment.

One can be 'for' or 'against' a gold standard in the abstract. There probably is no realizable monetary ideal [arguably a good thing], but the practical strength of a gold standard lies in its ability to provide stability in a time of flux.

Not disagreeing with the above, but is not gold's value measured against currency?

Yes and no.

No, not if gold has [effectively] become the 'bedrock' of monetary value. Think of it having the highest/ strongest symbolic function [serving a practical function] in the imagination of the species... as opposed to being the 'only natural form of money'.

Yes, but only in the sense that you can say currencies are appreciating or depreciating relative to it. Everything moves.

If paper currency were to collapse as some suggest, how would you measure gold's value? And furthermore, will there still be a buyer?

Can't see paper currencies collapsing simply because they don't really consist of 'paper' but outstanding debt. With debt deflation, the 'shorts' on the currency effectively enter a period of 'covering', which sees it appreciate relative to assets.

If paper did collapse, government would then have no choice but to somehow resort to gold as a monetary measure. But once again this only shows that gold is not 'being valued', but is that which does the valuing. Gold, and currencies then fixed to it, or some version of fractional reserve, would then price things. What prices would be, would then no doubt rely on the quantity of money available, and how high the liquidity preference remained.

The answer why the "recovery" is slow is simple yet unpleasant because nobody wants to hear it:

 

As in 1992 and 2001, the recession of 2008-09 was not allowed to run its full course. Therefore the massive and unsustainable imbalances in the economy are still present, still being propped up, and they are preventing efficient allocation of resources. The global economy will continue along a path of long term wealth destruction as long as the short term pain is continually avoided by monetary and fiscal policies.

Nice in theory, but would you have been happier to see economies crash and burn, as the 'system' was 'purged'?

Sorry, I can't take this article seriously with stupid statements like that. Broadbent obviously lives in a macro-economic Keynesian model and rather than in the real world.

And then, aren't you also living in your own macro-economic model?

So my question is now what do we use to measure real value?

1] 'Real' value, in monetary terms, is utterly arbitary and contingent. There is no absolute benchmark, it's all relative. Then think of a balancing see-saw. At times of monetary/ credit expansion, asset prices inflate/ appreciate. Then when the reaction sets in, in times of monetary contraction, the currency in turn inflates/ appreciates. Nothing is fixed, and the dynamic, one way or the other, determines what will relatively increase or decrease in monetary value.

2] With currencies themselves caught up in a global economy in flux, where currencies themselves are playthings of international investors, gold enters the frame as the strongest/ heaviest symbolic form of money [currency]. In this global context, the monetary worth of both assets and currencies should be determined relative to the primal currency of gold. In this sense we are not quite so rational and scientific as we like to think. Watch how the world plays the actual game not how it thinks.

 

"Gold is the trade of the weary"

Weary or wary?

Mind you, I'm getting weary of the short term trading discussion on the long term thread.

All for the trading discussion, but why not put it where it belongs? You'll have a much more successful forum if it observes the discipline of separate threads for separate topics.

You must be getting weary of my repeating this.

Not to worry, I won't bother repeating much of anything if the threads can't get sorted out.

A THOUGHTFUL NOTE on Gold Prices follows.

 

It says Gold is still a hold, and may be a good Buy, clsoer to key support at $1500:

Nothing much new in the 'explanations' or fundamentals there.

Saying gold is 'a good Buy, closer to key support at $1500' is pushing it when the chart is your guide and not speculation on 'fundamentals'.

1500 might be an OK buying target for someone with already a core position in gold and then looking to get a trade in. But for someone looking to build a core position, or increase it, that target is too low.... because improbable. A glance at the chart shows that with the price at these current levels is the time to buy, or start buying, averaging in etc as a large reverse head and shoulders is shaping up. This has always been bullish for the price.

I'm starting to suspect you're an egoist Dr Bubb . That is, someone who can not see something objectively, from a 'disinterested' perspective. This thread is supposed to be focused on the Long Term trend of gold as an investment and yet your posts continually, habitually, show your own short term concerns as a trader, which, let's face it, can be as often wrong as they are right [the nature of trading].

Don't you want to see your forum giving sober advice to those new to gold on how and when to buy? As you've stated, you yourself have a core in gold, so why not help rather than hinder others to build a core?

Silver's False Bullish Breaks Head Fake Technicians

 

Friday March 16, 2012 15:42

 

Interestingly, that temporary spike in silver was accompanied by at least three important bullish technical breakouts that subsequently turned out to be false signals:-

 

1. False Break of Declining Trendline

 

2. False Break of 200-day Moving Average

 

3. False Break of Double Bottom Neckline

 

http://www.kitco.com/ind/Lewis/20120316.html

An article posted yesterday commenting on the previous month's action in silver. Hardly very bright or predictive these retro 'technicians'.

This posted last month, at the time of the wave up, predicting the consolidation we see now.

http://www.greenenergyinvestors.com/index.php?showtopic=9164&view=findpost&p=241085

Thank you for saying that.

 

As everyone knows, there MAY be a problem with ETF's or Paper gold someday.

But thus far they have provided a low cost and effective trading vehicle.

 

So we can say:

+ there MAY be a problem with ETF's or Paper gold someday

+ there MAY be a dramatic collapse in Gold prices someday

 

Both of these are risks that one may choose to take or not take.

Thus far, the bigger risk has been from the downwards move in Gold,

so Paper trading effectively has been better than someone Buying gold above

$1800, or $1900 and just hoping for the best.

 

I do hope that we are seeing the beginnings of more Balance discussions here.

Balanced?

Who bought gold above $1800, or $1900? Near all who discuss gold [as opposed to hedgies that jump on bandwagons] bought before the spike above the trend and are still showing a paper profit.

Is it that difficult to discuss the Long Term theme/ trend, which you've agreed should be the focus of this thread?

50 day MA moving up with silver still coming off a bit here.

Looks like a good buying opportunity is shaping up.

50 MDA turning up. Not a dent in the 200 MDA.

Looks a good buy signal with the price below the moving averages here.

Well, the silence in response to my request is interesting.

 

The very first post on this thread (after the charts) was:

 

GET OVER IT !

 

I am happy that the mud-splashing has stopped for more than a day.

And it suits me, to spend less time on this particular thread (at least for the next week or so)

 

Therefore:

I will change the Title to include "Long Term View"... and post here less, and see what happens.

 

If it goes neglected, then no one can say that I did not give the LT-guys a chance to post here.

If they have decided to move on, well that's their choice, and I may later return with shorter term trading ideas.

 

LONG TERM GUYS, here's you chance.

Relax a little bit dude.... why take it all so seriously?

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