GOLD

[drbubb]

Answer me this what good does your trading do, or the passing on of your knowledge, do for the humanity as a whole? Do you believe the same as Jamie Dimon that you are 'doing god's work'.

LOL

 

I think there would be much less traffic on this website, if the average GEI member thought my research and trading ideas were worthless. I suppose many people never bother to look at DrBubb's Diary, but there are still a goodly number that do, and the Trading oriented ideas on the GEI Trading Team thread have some sort of audience also.

 

I think you are stuck inside some sort of bubble, if you cannot see the value of these ideas. And I reckon your ideas may even be a little dangerous, since they do seem to me to be rather extreme, even Socialistic. This may put you at some sort of extreme end of the spectrum of members and lurkers who visit GEI. You are welcome to start a Poll here, so you can find out how many GEI folk agree with your (rather strange-sounding) view of the world.

[drbubb]

Gold has broken the downtrend : Gold chart-46period-MA

[stunlee]

Crikey. I have to say, as someone who has recently moved to full-time trading and who has hopefully retired from full-time work in his mid-30's, I do have certain ethical problems with my occupation. I am in many ways little more than a parasite and it could be considered a shame that a well educated and physically capable young man can contribute nothing to the greater good. But then I consider the fact that I was pretty much driven out of Britain by the Brown Terror, that wages in Britain and indeed the rest of Europe are for the majority very low and taxation so high that it makes actually working for a living a bit of a mug's game for the majority, the Laffer curve in action I guess. As the old song goes, Only Fools and Horses Work. Equally the rewards for the bankers do seem incommensurate with what they provide for the greater good, but how to stop it or at least moderate it is the question.

 

Great call by the way DB, yesterday everything looked like it was going down to 1550 for another test of the 200 day MDA, but this is looking very much like a market bottom now. A test of 1700 next week maybe?

[Pixel8r]

Crikey. I have to say, as someone who has recently moved to full-time trading and who has hopefully retired from full-time work in his mid-30's, I do have certain ethical problems with my occupation. I am in many ways little more than a parasite and it could be considered a shame that a well educated and physically capable young man can contribute nothing to the greater good. But then I consider the fact that I was pretty much driven out of Britain by the Brown Terror, that wages in Britain and indeed the rest of Europe are for the majority very low and taxation so high that it makes actually working for a living a bit of a mug's game for the majority, the Laffer curve in action I guess. As the old song goes, Only Fools and Horses Work. Equally the rewards for the bankers do seem incommensurate with what they provide for the greater good, but how to stop it or at least moderate it is the question.

I think that when this crisis ends that the act of short trading will be taxed much more heavily than it is currently, maybe then you will reconsider your options and put your eduction to a more productive use.

 

The taxation laws need changing to encourage long term investment and deter short term trading, it is an easy thing to do and was the system in the past. The longer you hold an investment the less tax you pay on the gain simple.

[drbubb]

... Equally the rewards for the bankers do seem incommensurate with what they provide for the greater good, but how to stop it or at least moderate it is the question.

 

Great call by the way DB, yesterday everything looked like it was going down to 1550 for another test of the 200 day MDA, but this is looking very much like a market bottom now. A test of 1700 next week maybe?

I agree with that.

Bankers are over-rewarded for what they do, especially when you consider that when they fail, they get propped up by taxpayers.

 

Here's Taib on this subject:

 

Individual traders, and even most Hedge Funds are a somewhat different matter - If they fail, no one bails them out. No one guarantees me a positive result- I can lose money, even big money, in a bad year. In fact, I can lose everything if I get reckless. That is very different than gambling with depositor funds, only to be beailed out when you lose.

 

On GEI, instead of pretending to be omniscent, and charging big fees, like hedge funds - I give away some of my best ideas for free.

 

What do I get for this free service - some great comments and posts to read, and a few silly and sometimes idiotic critiques.

[ecoface]

Gold has broken the downtrend : Gold chart-46period-MA

 

WAY Too early yet.

 

Still below 20 dma, and looks like end of Sept to me - need 2-3 days of this; sorry.

[drbubb]

I think that when this crisis ends that the act of short trading will be taxed much more heavily than it is currently, maybe then you will reconsider your options and put your eduction to a more productive use.

 

The taxation laws need changing to encourage long term investment and deter short term trading, it is an easy thing to do and was the system in the past. The longer you hold an investment the less tax you pay on the gain simple.

For US Citizens who are individual traders , like me, we pay a higher tax on short term profits.

 

But big banks, do not have a two-tiered system, and in fact they pay bonuses out of pre-tax income. Perhaps that needs changing.

 

Here's a Taib-like character in an animation

 

http://www.youtube.com/watch?v=A72cc8mM5g

[Pixel8r]

For US Citizens who are individual traders , like me, we pay a higher tax on short term profits.

 

But big banks, do not have a two-tiered system, and in fact they pay bonuses out of pre-tax income. Perhaps that needs changing.

I think there should be a system in place that means that the shorter time a trade is held for the higher level of tax is paid and the longer one is held the less is paid. To deter high frequency trading and encourage long term investment, which after all is what investment capital is supposed to be about. The trouble is the big banks are now so powerful that it is unlikely to happen, they now control the politicians via funding and lobbyists. It should be the same for everyone personal or mega bank. I think the tax could range from very high for very short term (90%) down to zero for very long term investments (0%).

 

A system similar to the old taper relief that used to be in action on Capital gains tax in the UK could be used.

 

 

 

[Kapouillax]

I think there should be a system in place that means that the shorter time a trade is held for the higher level of tax is paid and the longer one is held the less is paid.

 

I suppose that's what dividends should be for...?

[G0ldfinger]

I have only just listened to a FSN interview with Axel Merk (Merk hard currencies funds) from Sep. 16 or so. Anyway, it seemed so desperate to try and jump from one swirling turd onto the one next to it while they're all going down the toilet at the same time. Maybe he should just convert it all to a Merk Gold Fund -- problem solved.

[Manual labourer]

I think there should be a system in place that means that the shorter time a trade is held for the higher level of tax is paid and the longer one is held the less is paid. To deter high frequency trading and encourage long term investment, which after all is what investment capital is supposed to be about. The trouble is the big banks are now so powerful that it is unlikely to happen, they now control the politicians via funding and lobbyists. It should be the same for everyone personal or mega bank. I think the tax could range from very high for very short term (90%) down to zero for very long term investments (0%).

 

A system similar to the old taper relief that used to be in action on Capital gains tax in the UK could be used.

 

 

Hi Pix,

 

there is way to much control and taxation in there for me. It should be left as it is the idea of taxing people like DB because they can survive and prosper in a cut throat world at the sharpest edge of self employment is totally wrong!

 

I agree with the earlier post that hedge funds survive prosper and or fail on their performance so good luck to them.What gauls me is our goverments backing the debts of large banks with tax payer money in a futile atempt to prevent the inevitable,I don't get that bit?

 

Re Trading v investing debate, successfull short term traders are a rarity and should be valued,DB Imvho hasn't grasped the fact that he is such a rarity a by encouraging people to speculate via T/A he is taking people down a very dangerous route, on the basis a little knwoledge can be a very dangerous thing, and that by trading in and out at the wrong times some people on here could actually lose money in this potentially once in a life time metal bull run. From what I have read and understood Gold is the place to be over the coming years a a haven of safety?

 

Without doubt he is right in th fact that he has the ability to trade in and out at the right moments and therefore out perform buy and hold, however he is the exception to the rule!

 

Buy and hold as advocated by a few stars on here via fundamentals who back up their reasoning with historic ratios etc. are a much safer option to follow over the long term, for the great majority on here, and we should be very thankfull you and they do.

 

However having said that it is very good to have the medium of sites like this where we can consider the merits and dangers of both, and DB takes the time to post some of his short term trades I guess we are all adults so can choose which route to take.

 

Regards

 

ML

[Pixel8r]

Hi Pix,

 

there is way to much control and taxation in there for me. It should be left as it is the idea of taxing people like DB because they can survive and prosper in a cut throat world at the sharpest edge of self employment is totally wrong!

 

I agree with the earlier post that hedge funds survive prosper and or fail on their performance so good luck to them.What gauls me is our goverments backing the debts of large banks with tax payer money in a futile atempt to prevent the inevitable,I don't get that bit?

 

Re Trading v investing debate, successfull short term traders are a rarity and should be valued,DB Imvho hasn't grasped the fact that he is such a rarity a by encouraging people to speculate via T/A he is taking people down a very dangerous route, on the basis a little knwoledge can be a very dangerous thing, and that by trading in and out at the wrong times some people on here could actually lose money in this potentially once in a life time metal bull run. From what I have read and understood Gold is the place to be over the coming years a a haven of safety?

 

Without doubt he is right in th fact that he has the ability to trade in and out at the right moments and therefore out perform buy and hold, however he is the exception to the rule!

 

Buy and hold as advocated by a few stars on here via fundamentals who back up their reasoning with historic ratios etc. are a much safer option to follow over the long term, for the great majority on here, and we should be very thankfull you and they do.

 

However having said that it is very good to have the medium of sites like this where we can consider the merits and dangers of both, and DB takes the time to post some of his short term trades I guess we are all adults so can choose which route to take.

 

Regards

 

ML

Hi Ml,

 

What good does a trade bring to the world? It is said that it brings liquidity to a market and helps with price discovery. In the world of high frequency trading that the big investment banks are advancing further all the time, they front run real investors by seeing orders milliseconds before everyone else. So in effect this process distorts the price discovery mechanism and leads to more money being removed from real investors capital to line the pockets of bankers, so rather than bring liquidity and price discovery it actually removes both from the system.

 

The bankers have got so much power that they now control the politicians and get the laws changed so they can take even more control of things and remove more money from the people. When I am talking about raising taxes dependant on the length of time an investment is held, I am not talking specifically about people like DrBubb, I am more thinking about ways of controlling the power of the bankers. The investing of capital is required in the world to advance projects, but these days things are moving to shorter and shorter term investments down to the extreme of the high frequency trades.

 

What I am proposing is that investments are taxed primarily on the length of time they are held for, this would in effect make long term investment a much more profitable thing and extremely short term less attractive. This would encourage the building of new business, technologies & projects which everyone would benefit from, rather than just a few bankers skimming more off the top of other peoples work. Why don't you think that would be a good thing? It would still mean that people would be able to trade, if they desired, but by doing so they would actually be doing good for everyone through the taxes raised.

 

I very much agree with what you are saying about trading being a very dangerous thing for many to attempt. It shows the detachment of traders from the real world that they think it is an easy thing and that everyone should be doing it. For a start not everyone has the amount of capital required to follow the strategies that DrBubb does, by the time you scale things down and take the time required and fees into account most peoples time would be better spent doing other things. I certainly wouldn't want to live in a world full of traders all trying to outsmart each other, it would be a very cutthroat and boring world to live in.

 

Sorry I have taken this thread very much off topic, maybe one of the mods could move these posts to another thread where we could explore the idea more.

 

Pix.

 

 

[50sQuiff]

Hi Pix,

 

there is way to much control and taxation in there for me. It should be left as it is the idea of taxing people like DB because they can survive and prosper in a cut throat world at the sharpest edge of self employment is totally wrong!

 

I agree with the earlier post that hedge funds survive prosper and or fail on their performance so good luck to them.What gauls me is our goverments backing the debts of large banks with tax payer money in a futile atempt to prevent the inevitable,I don't get that bit?

 

Re Trading v investing debate, successfull short term traders are a rarity and should be valued,DB Imvho hasn't grasped the fact that he is such a rarity a by encouraging people to speculate via T/A he is taking people down a very dangerous route, on the basis a little knwoledge can be a very dangerous thing, and that by trading in and out at the wrong times some people on here could actually lose money in this potentially once in a life time metal bull run. From what I have read and understood Gold is the place to be over the coming years a a haven of safety?

 

Without doubt he is right in th fact that he has the ability to trade in and out at the right moments and therefore out perform buy and hold, however he is the exception to the rule!

 

Buy and hold as advocated by a few stars on here via fundamentals who back up their reasoning with historic ratios etc. are a much safer option to follow over the long term, for the great majority on here, and we should be very thankfull you and they do.

 

However having said that it is very good to have the medium of sites like this where we can consider the merits and dangers of both, and DB takes the time to post some of his short term trades I guess we are all adults so can choose which route to take.

 

Regards

 

ML

 

That's a very fair and accurate assessment indeed, ML. I share your sentiments.

 

Trading and speculation is a naturally occurring phenomenon in free society and free markets. There is nothing inherently evil about it. To me, the root of most trading seems to be an arbitrage of free markets and government power.

[drbubb]

Hi Ml,

 

What good does a trade bring to the world? It is said that it brings liquidity to a market and helps with price discovery. In the world of high frequency trading that the big investment banks are advancing further all the time, they front run real investors by seeing orders milliseconds before everyone else. So in effect this process distorts the price discovery mechanism and leads to more money being removed from real investors capital to line the pockets of bankers, so rather than bring liquidity and price discovery it actually removes both from the system.

There's some truth in that.

 

The High Frequency guys are trying to create an advantage for themselves, by having quicker trigger fingers and more elaborate computer-driven trading. Is that fair? I think they add little to the market, and try to extract something unfairly. I would force them to trade differently, and maybe offer something, like holding firm on their prices or paying something to cancel trades, to help "level the playing field." This is a matter of some urgency, else these sorts of traders will force out the old fashioned traders and investors, and start feeding on themselves. I am obviously playing a very different game, and trying to "earn my edge" through better research and/or better reading of technical signals, while sharing some of my own perceptions with others interested enough to visit this website.

 

Here's someone I admire, and I like the way he looks at markets:

 

“Making money is a zero-sum game, so to be successful you have to be willing to stand apart from the crowd,” Dalio says. “And you have to be right.”

 

The founder was right often enough during and after the worst financial crisis in decades starting in 2008, helping to cement his reputation as a leader in his industry. Three Bridgewater hedge funds placed among the 100 top-performing large funds in Bloomberg Markets’ annual ranking in February, including its flagship, Pure Alpha II. The No. 3 fund posted a 38 percent return for the 10-month period through October 2010.

 

INTERVIEW: http://www.charlierose.com/view/interview/11957

 

Dalio’s influence spreads beyond his elite industry. He and his colleagues regularly brief central bankers, as well as pensions and sovereign-wealth funds, on their outlook. The firm’s newsletter -- Bridgewater Daily Observations -- is required reading for macroeconomic thinkers for its prescient analysis.

 

Economic Power

In August 2007, as credit markets were tightening, the newsletter warned, “Hedge funds in general are unlikely to provide much diversification to help protect against poor performance of traditional markets.”

The next year, funds lost an average of 19 percent.

 

“You find insights that are different from what you were thinking,” says Hilda Ochoa-Brillembourg, founding president of Strategic Investment Group in Arlington, Virginia, which invests in hedge funds.

At its bucolic headquarters in Westport, Connecticut, Bridgewater devotes a great deal of resources to research. The firm’s 1,200 employees -- more than at many midsize investment banks -- help generate the data and analysis that inform bets on macroeconomic trends. In June, researchers tracked the percentage of world gross domestic product generated by Western Europe, the U.S., Africa, China and other markets to the 16th century to show long-term shifts in economic power.

 

44.8 Percent Return

“No one pursues market-based truth more aggressively than Ray,” says Britt Harris, chief investment officer of the Teacher Retirement System of Texas.

 

/more: http://www.bloomberg.com/news/2011-09-07/dalio-returns-25-on-diversified-bets-as-markets-convulse-influential-50.html

 

 

"What good does trading bring?"

 

What I am doing is not much different that what you as an investor do. Like you, I want to buy at a low price and sell at a high price, and generate a profit. I simply do it over a different time horizon, and rather than "mining excesses" in fundamental valuations, I am mining shifts in psychology when markets shift from excessive pessimism, to excessive optimism - that's something that I believe can be read from charts, once you learn how.

 

"The Service" that I am providing is allowing those who are frightened and want out, to get out at a slightly higher price than if I was not there. And at the high: I am a seller allowing those who feel they should buy, a chance to buy at a lower-than-otherwise price. I provide that price advantage to those who I trade with, whether I am right about the market or not.

 

Is this really very different than the "service" that an investor might provide to the market? But by focusing on psychology-driven swings, I see more opportunities.

[Errol]

http://expectedreturnsblog.com/will-gold-rally-into-2012/

 

Will Gold Rally Into 2012? - It is at tops and bottoms that you figure out who the consistent winners in market are. I am patiently waiting for sentiment reading on gold to reach bearish levels. Then I will be getting very aggressive against the crowd and go take a walk in the park. A monster rally unlike anything we’ve seen so far should be coming in 2012 or 2013.

[drbubb]

TRADING: WHAT VALUE ? / New thread:

http://www.greenenergyinvestors.com/index.php?showtopic=15485

 

(6)

Hi Pix,

...

Re Trading v investing debate, successfull short term traders are a rarity and should be valued,DB Imvho hasn't grasped the fact that he is such a rarity a by encouraging people to speculate via T/A he is taking people down a very dangerous route, on the basis a little knwoledge can be a very dangerous thing, and that by trading in and out at the wrong times some people on here could actually lose money in this potentially once in a life time metal bull run. From what I have read and understood Gold is the place to be over the coming years a a haven of safety?

 

Without doubt he is right in th fact that he has the ability to trade in and out at the right moments and therefore out perform buy and hold, however he is the exception to the rule!

Maybe you misunderstand me?

 

First, I do WARN people at the start of my "Beating B&H thread":

 

UPFRONT WARNING : This thread is not for everyone.

Implementing these strategies & getting the timing right requires more than skill. You need the right mental and emotional attitude (and a some real luck) to buy at the right time. And you also have to be willing to be wrong sometimes, and live with the implications of being wrong. That may mean entering trades and exiting at uncomfortable moments. If this does not sound like your "cup of tea", then stick to simpler strategies. You will sleep better.

 

WEEKLY Spreadsheet : http://tinyurl.com/beatingBH

 

Second, I think you have not yet taken on board the VERY LOW RISK nature of most of the trades that I am using on the Beating B&H thread. Essentially they are of two main types:

 

+ 1/ "Swapping out" of Silver or SLV after a run-up (and best of all, after a parabolic move up) into a similar sized position consisting of in-the-money Calls plus Cash.

 

+ 2/ "Buying insurance", by purchasing SLV puts, or calls on ZLV, in a size only to protect profits they have already made.

 

What I am NOT DOING is using options to take highly geared bets - When I Buy Calls, I generally have sufficient Cash in the account to exercise the option, so the main purpose is the LIMIT PRICE RISK so if the Silver price drops then I have less exposure to the downside.

 

If less-experienced traders get their minds around these techniques, and use them in a careful and disciplined way, ONLY TO PROTECT PROFITS that they have already made, then they will NEVER BLOW UP. At worst, they will give away some of their profits.

[bob monkhouse]

Pix, what is your issue with Bubb sharing his ideas? Have you not discussed swapping Gold to silver and back within Goldmoney accounts...could this not be misinterpreted by a novice also? Could the ramping of precious metals also be seen as dangerous, if one were to be picky? One would hope that most people on this website implicitly understand the need to DYOR with regard to any 3rd party views. Surely the point is to discuss, share and interrogate ideas for the benefit of the whole?

[Pixel8r]

Pix, what is your issue with Bubb sharing his ideas? Have you not discussed swapping Gold to silver and back within Goldmoney accounts...could this not be misinterpreted by a novice also? Could the ramping of precious metals also be seen as dangerous, if one were to be picky? One would hope that most people on this website implicitly understand the need to DYOR with regard to any 3rd party views. Surely the point is to discuss, share and interrogate ideas for the benefit of the whole?

I do not have an issue with what DrBubb does, I just raise points about what I think is wrong and needs changing to try and pull us out of this financial crisis. It just so happens that DrB takes my comments very personally and tends to blow them up.

 

My discussions above have been about the need for taxes to be raised on short term trading and reduced on long term investments, something even DrBubb has come to agree on. Sorry if my style gets a bit prickly at times, but I find it hard to read stuff about how easy investing is without reminding people that nothing is that easy.

 

 

Ramping of precious metals now theres an idea, will help me load my truck.

[warpig]

It's lengthy but well written and explains nearly everything you need to know.

 

Our scenario analysis using the Oxford Global Model shows that gold may perform especially strongly in more extreme economic scenarios featuring high inflation, a weak dollar and elevated levels of financial stress. But gold also performs well in our deflation scenario, where very high levels of financial stress triggered by sovereign defaults in the EU causes a flight to safe assets. As such, gold‟s potential role as „risk insurance‟ in a balanced investment portfolio is clear. Moreover, our optimisation analysis suggests gold‟s lack of correlation with other assets means that it has a role to play in reducing the volatility of investment portfolios even in more benign scenarios when its long-run real return is negative; gold‟s optimal portfolio allocation in our baseline scenario is 4-9%, depending on risk appetite.

These considerations may partly explain why gold‟s use as an investment vehicle appears to be rising, with investment-driven demand up to around 40% of the total in 2010 from less than 15% in 2002. With central banks becoming net buyers of gold in 2010 for the first time since the late 1980s, there seems to be evidence of a reappraisal of gold‟s value by various classes of investors.

 

Oxford Economics's - "The impact of inflation and deflation on the case for gold"

[drbubb]

...the need for taxes to be raised on short term trading and reduced on long term investments, something even DrBubb has come to agree on. Sorry if my style gets a bit prickly at times...

That's not quite accurate.

 

As an American, I must pay higher taxes on my short term gains (of less than one year), and I reluctantly accept this burden, because I think everyone should have an incentive to hold for longer term periods, not just private investors in America.

 

When we first started these "debates" many months ago, I suggested to you that you should focus your antagonism against traders on getting a more fair, and long-term oriented tax policy. That might encourage more productive investing.

[Pixel8r]

When we first started these "debates" many months ago, I suggested to you that you should focus your antagonism against traders on getting a more fair, and long-term oriented tax policy. That might encourage more productive investing.

Double post...

 

I have been talking about how this crisis has been caused by the rise in trading for years, anyone who has been around here long enough will remember. If it makes you feel better to make out that you suggested my topic of conversation go ahead, but I know that is not correct.

 

It is comments like the above that make me want to give up posting on this site. Maybe I should.

 

 

Here's a thread from 24k were I was talking about it in February 2010 and I remember talking about it on here before then. - http://www.24knews.com/viewtopic.php?f=2&t=197

[Manual labourer]

Hi Pix, Bubb,

 

If someone could move my post from ysterday and your replies to another topic I would be more than happy to reply, as it is I don't tink we should carry on this debate re taxation /trading time on a GOLD thread which is as good a gold thread as you will get on the tinternet!

 

Regards

 

ML

[Manual labourer]

It's lengthy but well written and explains nearly everything you need to know.

 

 

 

Oxford Economics's - "The impact of inflation and deflation on the case for gold"

 

 

Hi WP,

 

cheers for the Sunday read.

 

Regards

 

ML

[Pixel8r]

Hi Pix, Bubb,

 

If someone could move my post from ysterday and your replies to another topic I would be more than happy to reply, as it is I don't tink we should carry on this debate re taxation /trading time on a GOLD thread which is as good a gold thread as you will get on the tinternet!

 

Regards

 

ML

It already has been - http://www.greenenergyinvestors.com/index.php?showtopic=15485

[tinecu]

It's lengthy but well written and explains nearly everything you need to know.

 

 

 

Oxford Economics's - "The impact of inflation and deflation on the case for gold"

 

A fairly rigorous report but weren't Oxford Economics the guys that said that UK house prices were NOT over valued back in 2006/7? How on earth do they see house prices outperforming gold in a stagflationary environment? Thus far it has been the contrary.

 

They fail to see the potential hyper-inflationary scenario. Moreover their 'baseline scenario' is a 'return to normal'! How naive!