Gold Goes Preppy
Graceland Updates 4am-7am
Sep 20, 2011
- I believe that some college kids were called "preppies", and some probably still are. I want you to get a little "preppy" about the gold and gold-related markets.
- Curling up in the fetal position and cursing banks and the government for not sending gold stocks and silver to the stratosphere is not going to help make you any richer, and it may harm you emotionally as well.
- There is a time to stare intently into the quote machine. That time is when gold is soaring day after day, as it did into $1900. You sell a little into powerful strength, and party a lot.
- Unfortunately, each time gold or the items related to gold begin to make such moves to the upside, I get emails explaining why price needs to be chased, "before it really gets away".
- We all feel that same feeling. The question is whether such feelings should be bought, sold, or ignored. My response is always that the investor should commit the amount of market sin required to kill the emotional urge at hand.
- Most analysts continue to get flooded with emails now, asking, "when will the gold juniors finally start rising, what is the gold bullion price that is required to make it happen?"
- There is no answer, and the question itself is financially flawed and financially dangerous to the investor who is asking the question, but few care. Like a child lost in a dark forest, they don't stay where they are. They continue screaming into the dark, "where I am, somebody help me!".That action only makes the situation drastically worse.
- Most investors are unconsciously demanding that all liquidity flows in the greatest debt crisis in the history of the world be immediately re-directed at gold juniors. That's not going to be happening. Facts like the continued bull market in bonds are totally ignored by team "gimme the parabola, and gimme it now!" The bottom line for gold stock investors is that you are in a gulag and the only road to victory is endurance.
- You can ask your captors when you are getting out until you are blue in the face, but that won't help, because your captors, the leveraged hedge funds who are short your stocks, have no intention whatsoever of releasing you, let alone giving you a timeline for victory. The last thing on their minds is you beating them. To think otherwise is complete financial madness.
- Real survivors of real gulags did whatever it took to survive. Mental games are one big key to making it out alive. Gold stock investors need different themes of the day to manage the dreariness of time.
- Right now, you are in what is supposedly the "seasonally strong" period for gold and gold stocks, yet the juniors, which rose 100-400% last year in many cases, can't seem to get anything going. Friday seemed promising, and then yesterday the hedge funds seem to throw everyone back into the hot box yesterday.
- When the gold stocks are crashing hard, and you personally feel like liquidating, the "tactic in play" must be to get away from the machine or person that enables you to liquidate, and stay away.
- In plain English, liquidation of your gold stocks is booked failure. That's a horrific action, particularly if it comes after years in the gulag of time. Look into your market mirror. Do you see a person enveloped with urges to engage in booked failure? No. There is simply a decent level of frustration and emotional dejection. The key in this case is to "get preppy".
- Yesterday I talked about the need to keep different assets in different accounts. Do you have rooms in your house, or do you hire a bulldozer and jam it all in one room. "One account for everything!" - Joe Golf Ball Advisor, Sep 20, 2011. That is a very dangerous approach to your finances.
- When everything is jammed in a single financial room, if 7 investments are down and 3 are up, you still feel like crap, because you devolve into a dejected ball of melted jello, blubbering, "It's all going down, what does it matter if 3 are up!" Yes, but it was that same lack of attention to detail that you paid to your accounts when you bought that caused the current situation.
- By isolating gold juniors from your other investments you build a wall around your other investments, so you are less likely to "steal" risk capital from them, to buy juniors during a hot streak in the juniors sector.
- While you can't destroy the feelings of greed in a hot streak, you can work professionally to prevent yourself from engaging in crazed movements of risk capital when it happens. Isolating your investments from each other should be the first order of business for all investors when you enter the investment arena.
- Let's "get preppy" with gold, right here, right now. Click here now to view gold in the $1700-$1900 trading range box. Yesterday I highlighted the breakout above the thick green downtrend line as, "a positive event but not a buy signal".
- The gold price declined back into the tiny down channel, and that's when you should have "gone preppy". Walk away from the trading screen. Do something else when price is moving against you. Get some fresh air, come back, and look for your next positive event. If you stare into the quote machine waiting for the juniors rise, you risk liquidating just before it happens.
- Click here now to view this morning's first "gold positive" event. The gold price pulled back to the black HSR (horizontal support/resistance) line. From here, I expect price to bounce. It's not a grand turn call, but something to keep me positive, a mental game to keep me emotionally strong.
- Now, click here now to view the outcome of that little mental game. The gold price bounces, and I'm happy as a clam. Mission accomplished, while other analysts and investors are screaming at the hedge funds, "make my juniors rise now, stop shorting now!" Instead of liquidating so your juniors go vertical, the hedge fund managers hold a laughing contest, paid for by you. Get out of that mindset before you destroy yourself.
- Click here now to watch the Dow rip apart team shorty pants. I don't see any benefit to buying the Dow, which is rising on the (mistaken) view of institutional money managers that rising oil prices indicate an improving economy. Even they admit that if oil went above $150 it could be a nightmare situation.
- At the same time, the Dow "short-a-holics" are trying to short companies like McDonalds, Wal-Mart, Exxon, Home Depot, and Chevron off the board with their crazed "get the Dow, and get it now!" play.
- This is the era of gold. Oil is likely to follow gold much higher, as will all commodities, over a long period of time. Buy gold stocks, buy oil stocks, hold your ground and do what it takes to stay in the "preppy zone". Leave the Dow alone. Just walk away from the situation, whether you think it should be shorted or bought. The crisis has barely started, and will likely run for decades. Gold remains your ticket to wealth, and you need to be careful about just how much bullion you offload to get on the gold stocks greed train, because there are big legs to this crisis that have yet to unfold!
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