Will gold sell off along with all asset classes in the coming "Ka" phase?

[FRED]

Will gold sell off along with all asset classes in the all-assets-down "Ka" phase? If so, how much?

[FRED]

Ka-Poom Gold Poll

Please vote in the Ka-Poom Gold poll.

[DemonD]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

For the record, I think 10-30% down is the range that we will hit in the next all-assets-down phase (which is why i chose the 10% option, more likely 10-25 than 25-30%).

[Tulpen]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

Will gold sell off along with all asset classes in the all-assets-down "Ka" phase? If so, how much?

Obviously if all asset classes are down then gold must be down as well, by definition.

At any rate, when stock and debt valuations collapse gold will go down as well in my opinion. I am long gold except during phases of high risk.

For instance I sold 75% of my gold last Friday. If the market recovers next week, I will buy back, if not, I expect for gold to fall hard as well. How much is really hard to say, I learned, sometimes the hard way, that guessing the bottom of something is setting yourself up from disbelieving actuality.

[jk]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

so far this month the s&p is down about 6.2%, while gld is up about 4.5% and slv is up 6.5%. of course this over only a handful of trading days, but doesn't fit your description.

from its most recent peak around oct 9 the s&p is down about 7%, gld is up about 12.5% and slv is up about 14.4%

from its prior peak around mid july, the s&p is now down about 6.4%, gld is up about 24.5% and slv is up less, about 18%

these relatively civilized drawdowns in the s&p, however, are not likely to be representative of a true bear market sell-off, fast or slow. but i am no longer so sure that pm's will sell off significantly in a big equity sell-off.

[Guest]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

Tulpen -

It's just my opinion among many others here, but I think you risk buying and selling too often.

Even if gold were a commodity (which it's not - it is increasingly becoming a cash equivalent), there are arguments for holding through the next five years with some consistency. It is very easy to get faked out endlessly by market jnks and turns - every time you think "this is it - now it goes down big" or "now it goes up big" it fakes you out and does the opposite. Some very smart players indeed, the "specs" who believe in trading in and out, don't do as well as the commercials, who always take the opposite side of the trade from the speculators. They derive a nice income from playing opposite the speculators..

Those who bought and sold metal or PM stocks in the 1970's never got much of the bull run in gold and silver. They got faked out too many times.

The result of mistiming a few wrong trades in and out of gold as the market stresses you first and then cheats you second, is a kind of short circuiting, where you make one too many mis-calls and say "ah, that's it, I'm not gonna play any more at all". Then you miss the train. There are some guys around here who not only time gold successfully, but use some highly risky vehicles, like futures. I think Bart does that, and does quite well at it. But he warns others to not mess with that unless they are quite experienced.

Unless you are at that level it's far better to trade in and out of gold as little as absolutely possible. I personally feel that due to what's happening with resource depletion, oil depletion, and the massive inflation in the cost of mining that's occurring, the notion that precious metals will go down in a massive deflation is sounds like flim-flam. Yes it may go down 15% or even 20% but if you are the kind of person that can't bear a 20% drawdown then you are not an investor. And traders need to be one hell of a lot more capable than investors.

The real risk is for unqualified traders, not unqualified investors. I don't know about you, but after seven years of handling my own investments I feel I remain thoroughly unqualified.

I know there are others here who caution me I'm being way too casual about the possibility of massive deflation dragging all assets down, but these people in my view are not factoring in the full implication of what's happening with the industrialisation of over one third of the globe. I think the popular idea that the US decline will "drag down" that growth frankly is going to be disproved completely. Of course the markets will deliver some really nasty, brutish shocks.

Personally, I loathe stocks, and my view of what's upcoming is to own few of them. I distrust all leverage. I think plain, dumb bullion will perform admirably, although after some hard peaks it may go down hard and stay down for two or even three years at some point. It will shake a lot of people out of even holding bullion.

Liquidation of debt will find a way to release it's obligations via inflation, not only in the US, but globally, as the rapidly industrialising world flys on one sputtering engine (oil will be petering out) and the increasingly integrated global economy must at all costs maintain highly inflationary growth as it unifies markets further. There will probably be multiple brief scary deflation-like interludes, but the overwhelming tred will be currencies acting like shock abosrbers for a world running out of oil.

If you believe in oil really petering out over the next 25 years, and that trend is gaining increasing acceptance by a very wide array of institutions, this is the unifying theme for the next 25 years.

iTulip's << poom / ka / poom / ka / poom >> sequence is faithfully described by one or two other of the very smartest people, at least this is my view, of others I've read. These others describe very much the same process iTulip has, with slightly varying causes. As far as I'm concerned "massive deflation with "all assets down" is a flubbed market call, and if you position for that you'll be on the wrong side of events. You need to own gold and silver without trading them - and for this you need conviction about the thesis - I N F L A T I O N .

Nobody else can give you conviction this is the right call - you have to discover it for your own reasons, or decide you don't believe it.




P.S. I noticed that Bart positioned in the votes above thinking gold would sell off no less than 10% (implying no more than 20%). I would be uncomfortable betting against Bart's call. I think he's right.

[jk]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

if you want to hedge your bets you can use options to trade around a core position. if you own gold, for example, but are afraid of a sell off, buy some puts on gdx. this cushions your downside at a fixed cost, while still allowing you to hold onto your position if you're wrong. furthermore, gdx might go down in a stock sell-off while gold holds up, so you might do ok on both sides. similarly, if you're bullish on gold but worried about too big a commitment, buy some gdx calls. fixed risk, upside exposure. you can use paas options for silver.

[Jim Nickerson]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

If one checks the charts of GDM, HUI, and XAU the RSI's are showing deterioration as the indices have recently moved higher, and the MACD histograms are about to decrease to the zero line--none of the histograms is negative yet.

Silver and gold show the RSI's have moved right up along with the recent price increases and the MACD's are pointed North, so classically the prices could continue up while the RSI and MACD deteriorate; however, at the May '06 highs once they were achieved the RSI's and MACD's turned South and kept going.

Put a $ in front of all these symbols to get the charts at stockcharts.com.

It would not surprise me to see Gold and Silver correct at least 10% of the recent moves which have occurred quickly and parabolically, and whether that occurs in conjunction with a recognizable Ka, I don't know how it will play out.

[jk]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

If one checks the charts of GDM, HUI, and XAU the RSI's are showing deterioration as the indices have recently moved higher, and the MACD histograms are about to decrease to the zero line--none of the histograms is negative yet.

Silver and gold show the RSI's have moved right up along with the recent price increases and the MACD's are pointed North, so classically the prices could continue up while the RSI and MACD deteriorate; however, at the May '06 highs once they were achieved the RSI's and MACD's turned South and kept going.

Put a $ in front of all these symbols to get the charts at stockcharts.com.

It would not surprise me to see Gold and Silver correct at least 10% of the recent moves which have occurred quickly and parabolically, and whether that occurs in conjunction with a recognizable Ka, I don't know how it will play out.

jim, does this translate as the metals looking stronger than the miners?

[Jim Nickerson]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

jim, does this translate as the metals looking stronger than the miners?

They,the metals, certainly are right now, just as I remember ole Finster saying PM stocks tend to move with stocks in general.

[GRG55]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

They,the metals, certainly are right now, just as I remember ole Finster saying PM stocks tend to move with stocks in general.

This has been the pattern for some years. Except for very brief periods the bullion has fairly consistently outperformed the mining stocks.

What is interesting is that the valuation gap between miners with reserves in the ground and the bullion price keeps creeping wider, as each setback in the bullion is accompanied by an even bigger setback in the mining stocks, and the subsequent up cycle rarely makes it all back up again. Some of the producers are still trading near the same price they were at 3 years ago.

Some commentators say that rising energy, material and labour costs continue to squeeze mining margins. Looking at the cash costs for many mining companies there's a good deal of validity to that observation. I have tried to deal with this with a "bar-bell" strategy; holding an overweight in the bullion and, at the other end of the spectrum, holding a basket of junior exploration stocks all with actual 43-101 compliant resource in the ground and (hopefully) some decent additional upside potential. These companies should be a bit "safer" than pure "moose pasture" wildcat explorers, and aren't as influenced by run-away operating costs as the producers have been.

For anyone in the camp that believes that commodities have been in a bubble, with energy and raw materials about to sell off to their "natural" price level (near the marginal cost of production), the PM producers might be a logical speculation on the premise that the opex-induced discount to bullion will start to close (after the gut-wrenching Ka correction, of course .

[touchring]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

Has anyone considered that gold is supported by the $2 trillion in sovereign funds that is getting out of dollar assets and into gold?

[Tulpen]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

Has anyone considered that gold is supported by the $2 trillion in sovereign funds that is getting out of dollar assets and into gold?

Could you show some proof of that?

[GRG55]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

Has anyone considered that gold is supported by the $2 trillion in sovereign funds that is getting out of dollar assets and into gold?

I know a few folks, including one CEO, that are with sovereign wealth fund headquartered here in the Middle East. Admittedly mine is a miniscule sample size, but they have NO mandate to hold precious metals, or any other financial instruments such as commodity futures, other than short term cash equivalents for operating purposes only. Their specific mandate is to acquire long-life cash generating assets and businesses.

By definition sovereign wealth funds are government owned. Why does any government need to have sovereign wealth fund do what their own Central Bank can do already (buy & hold gold)?

[touchring]

Re: Will gold sell off along with all asset classes in the coming "Ka" phase?

Could you show some proof of that?

I'm just making a speculation.

Also, there are not too many reliable investments today for sovereign funds. China has being making significant losses so far with their financial stock investments.