David Lentz

Why I'm Re-Establishing My Gold Position

While I personally am goosey as all get-out about gold, and have my finger on the trigger, once I decide to pull the trigger and sell, it would take a mindset change of earthquake proportions to get me to buy back in. I find that bad decisions are followed by more bad decisions more ofter than not, as they are rooted in a wrong understanding of the situation.

Which is not to say that I don't make mistakes, I do so all the time. Most often they are mistakes of timing, and so if I buy too early, I ride out the subsequent slide until either things turn around or I decide that I was wrong and take my lumps and exit the position.

On the sell side, I can either sell too early or too late, and I can tell you that it i only with the utmost reluctance that I buy back in following a premature sale. Better to let that opportunity go and look for others -- there is always something to buy or sell the marketplace, but dithering about a particular item is almost certainly the way for me to lose money.

But on the plus side of a decision to buy gold at this point in time, I noticed in today's WSJ a piece about how Congress was running out of time to act on the resolution to allow the IMF to dump 400M tonnes of gold, which should give gold some respite and allow it to climb along with oil over the summer. I continue to watch this, as I feel that when the IMF DOES dump its large chunk of gold, the resulting splash will drive the USD (and euro and every other paper currency) higher for many months, perhaps long enough to allow the global economies to crawl out of the global recession and begin the next cycle. THEN it will be time to exit gold.

But as I stated at the outset, I am personally very nervous about gold. It is a drop in the bucket alongside the ginormous pools of paper currencies, regardless of whether they are inflating at 8% or 18% a year.

If the Fed should ever decide it is done replenishing the vaporized credit liquidity and raise rates to combat inflation, the end is over for gold's run in this turn of the wheel. I believe that will happen, not this year, but perhaps next year or the year after. Paul Volker, where are you?

Why I'm Re-Establishing My Gold Position

Do you often change positions like this -- with a 100% liquidation followed by buying back in -- within a ten-day span?

Are you now, or have you ever been, a day-trader?

(questioner edges away slowly, putting some space between himself and the object of his questions)