Take physic, pomp

On Gold (from IKN87)

The following is the first and last sections from a long piece written about the state of the gold (and therefore metals in general) market in IKN87, out last Sunday. It’s where your author is at regarding the markets right now.

For the first time in six months, I’m not so sure about gold
The note that follows is today’s main subject. It’s also long, rambling, potentially boring and a departure from the usual Weekly fare (so any new subscribers out there who get a heavy heart from today’s edition, fear not because the issues from November or December are more typical of what you can expect in the future). This note exists by way of response to feedback from the short-term market doubts raised in IKN86 last week and the way we’re not in any rush to add back exposure to equities after selling positions in (REDACTED)
We begin. Back in IKN60 dated June 27th we made a nice clear policy statement about the price of gold which was…
I think it’s going up from here.
…and then in IKN74 we reiterated the sentiment by saying
Yes, I still think gold is going up from here.
As it happens this called has turned out rather well, as gold has done more than well in the last half year, not to mention its half-sibling silver that decided to stay with its Dr. Jekyll persona and perform magnificently. And then copper and the base metals…all in all the second half of 2010 was quite a ride for us metals longs.
However, for the first time since IKN60 I’m now looking at the immediate future of the metals market and can’t help but think we may be due a correction (that’s in red because I wanted to make a point, ok?). Or we may not. The point here is that I don’t really have a good idea on the immediate future of gold the metal and there’s new found doubt about the market direction in January/February 2011. This is a different position, a change of stance from the last six months and although (try as I might) I can’t reach a conclusion and make a pro-active investment call on it all, the change from a clearly bullish “be long stay strong we’re going up” stances to this present undecided, “mu” type of attitude needs to be duly noted. To add background, let’s look at both the bullish and bearish positions and pick holes in them.
Blog back. From there we went into a long mid-section of rationales, examination of the bullish and bearish positions and mentioning this-or-that stock we cover, so here at the blog we’ll cut to the end of the article. Here’s how it concludes:
There are three positions that can be held by any investor on any potential trade at any time: Buy, hold or sell. Long, neutral, short. Like, unsure, dislike. Bull, coward, bear. For six months your author has been bullish gold, bullish those things that gold pulls with it (silver, copper all friends) and has had a full quota of cash devoted to stocks to prove. Today’s change isn’t the reactionary opposite to being bullish and we’re not worried or screaming or liquidating wholesale. All that’s happening is a step or three are getting taken backwards and a call of, “I’m more neutral, I’m not in a hurry to be long again, I’m good about holding thru on this-or-that, I’m unsure about what’s in the pipeline….I’m a goddam lilly-livered, yellowstreaked coward.”
In this binary, black and white, polemic driven world of “you’re either with us or against us”, the call of “I’m not sure” tends to be denegrated and even mocked, but your author contends that it’s a valid course of action (and that the market is run by fools for fools). There’s nothing wrong with being a fool in the market either (my stars I know because I’m one of them); all I want to do is to avoid being the greater one.


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