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Robert Wagner
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Professional Credentials: The reports that I write are my personal research and opinions. They are not associated with any firm or organization, and are not intended to be taken as investment recommendations or advice. They combine my passions in economics, finance, writing and education, and... More
  • Another Gold Rally Bites The Dust 6 comments
    Sep 12, 2013 1:51 PM | about stocks: SLV, GLD

    I hate writing these bearish gold articles, I really do, but I feel obligated because of all the negative comments I get from the emotional gold bugs. I'll write an article that turns out to be pretty accurate, and yet I'll get mauled in the comments. This creates a situation where I can either be silenced by my critics, and do a disservice to the non-emotional gold bugs that want serious analysis on gold, or I can keep publishing my analysis and let the readers read the comments as evidence of how just wrong and misguided the gold bullies really are. They provide a permanent record of consistently wrong calls going on over 2 years now. Gold peaked around $2,000, and has pretty much followed the classic pattern of a burst bubble ever sense then. That opinion may not be popular, I won't get invited to any of Peter Schiff's cocktail parties, but it has been dead on for the last 2 years, and will likely continue into the future. I'm not writing articles to make friends with the gold bugs, I'm writing articles to provide analysis for objective people considering buying gold as an investment.

    I've written many bearish articles on gold warning investors that the path of least resistance in gold is down. Recently gold had a rally, and I warned investors not to buy into the "dead cat bounce." Unfortunately I had written so many bearish articles on gold by that time that it was relegated to the Netherworld of the Instablog. I recently followed up that Instablog posting with "The Gold Dead Cat Bounce is Dying" and "The Gold Dead Cat Bounce is Dying Again." Today, Yahoo has a video out titled "Another Gold Rally Bites the Dust," that pretty much makes the points I've made in all my previous articles.

    Key Points from the Video:

    1) The recent gold rally is dying, and breaking the short-term uptrend that started at in early July.

    2) The recent gold rally was based upon an "safety" trade, which has faded. Safety trades are unlikely to reverse long-term trends. They provide short-term pops.

    3) Gold suffers by comparison, and as stability returns to the markets, gold will fall further. The opportunity cost of holding non-yielding gold increases as other options perform better.

    4) Emotions drive gold, but emotions aren't the basis of a solid investment strategy. Emotions are temporary and volatile.

    5) It doesn't help gold to have analysts calling it a "stupid yellow metal," and highlighting how many nasty e-mails or Twitter responses they get for expressing their views. This emotional aspect and predictable vitriol from gold enthusiasts makes analyzing gold unique, and unfortunatly it prevents serious discussion on this topic. I experience the same vitriol when I write about the "green economy."

    In conclusion; emotions and attacking people that publish bearish articles on gold isn't enough to sustain a long-term rally in the metal. Gold is simply in a post-bubble bear market, and gold investors should expect a series of bear market rallies, but they should use them as opportunities to exit their positions not to add to them. All the pillars that have supported the gold bull market are proving to have been made out of sand, and it is highly unlikely another 2008 Black Swan event will drive gold/SPDR Gold Trust (NYSEARCA:GLD) or silver/iShares Silver Trust (NYSEARCA:SLV) back to new highs anytime soon. Gold is simply yesterday's news, and the market's attention is shifting elsewhere. That opinion may not make me friends with the gold bugs, but it has been right for over 2 years, and I see nothing to make me think it won't continue to be right going forward.

    Disclaimer: This article is not an investment recommendation. Any analysis presented in this article is illustrative in nature, is based on an incomplete set of information and has limitations to its accuracy, and is not meant to be relied upon for investment decisions. Please consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author's best judgment as of the date of publication, and are subject to change without notice.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: SLV, GLD
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Comments (6)
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  • DougRonald
    , contributor
    Comments (206) | Send Message
     
    Robert, thanks for this viewpoint. I own gold, but I don't sleep with it.

     

    And seriously, what's to analyze about gold? The price is either bought up or sold down, and you can perhaps see where demand changes and supply changes are located. You can speculate about the correlation with the greenback, or debt, but that's about it.

     

    As opinions about the world's fiat currencies ebb and flow, so goes gold, imo...
    12 Sep 2013, 03:27 PM Reply Like
  • justin.zhou10
    , contributor
    Comments (159) | Send Message
     
    "emotions and attacking people that publish bearish articles on gold isn't enough to sustain a long-term rally in the metal. "

     

    Wow, not many people here today. I, for one, changed to a bull for 1 or 2 days. I may regret what I did. Just trying to lift the morale of the gold bugs a little bit :).
    12 Sep 2013, 05:34 PM Reply Like
  • Robert Wagner
    , contributor
    Comments (2298) | Send Message
     
    Author’s reply » Gold is breaking $1,320. This videos covers a lot about gold.
    http://yhoo.it/1eLbxdN
    13 Sep 2013, 09:44 AM Reply Like
  • justin.zhou10
    , contributor
    Comments (159) | Send Message
     
    Recent data points from both Europe and US were showing weakness.
    The Fed tapering should be on the light side. There were attempts to push gold under 1300, so far in wane. I guess we may need to settle that after the Fed meeting.
    13 Sep 2013, 10:22 AM Reply Like
  • eagle1003
    , contributor
    Comments (1794) | Send Message
     
    No comments from the goldbug gallery today? Dave must be too busy eating crow.
    13 Sep 2013, 11:49 AM Reply Like
  • theshareminator
    , contributor
    Comments (15) | Send Message
     
    Robert - your statement "In conclusion; emotions and attacking people that publish bearish articles on gold isn't enough to sustain a long-term rally in the metal" confuses me as so far as I am aware, what people write here or anywhere else for that matter has little to no effect on the price of gold.

     

    Also I'm curious as to whether your articles concerning gold, which are well written and explained reflect only your views for the short term technical outlook?

     

    Judging by your sentence "All the pillars that have supported the gold bull market are proving to have been made out of sand, and it is highly unlikely another 2008 Black Swan event will drive gold/SPDR Gold Trust (GLD) or silver/iShares Silver Trust (SLV) back to new highs anytime soon" you are not concerned with China's increasing demand for gold, nor the US debt ceiling, nor the Euro debacle, all three of which are not currently in the focus of the media. The latter two have previously created great unrest in the markets when the media's spotlight was on them.

     

    I would be interested to hear your views concerning what is widely believed to the manipulation of the gold price. According to some sources JPM are partly to blame

     

    http://bit.ly/16C6e93

     

    It is a controversial subject but I am not a gold bug for the record and more than happy to discuss these topics with yourself or anyone, I won't bite like others you mentioned.
    26 Sep 2013, 10:08 AM Reply Like
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