Gyroscopic Investing

I guess were are in a lull where cash is king. Everything has been moving down lately,...cash, bonds, gold and equities. Who do you think will break the cycle? My guess the big surprise will be gold. Why? Look at the last number of years where the market has relentlessly moved up and gold got killed last year. The odds alone say that if PP is going to keep it's 9% year growth average, it's going to be in gold. Everything else outside of cash which earns little is not poised for anykind of major move up. Gold alone has room to the upside and gold stocks as well in a VP.

portart wrote: I guess were are in a lull where cash is king. Everything has been moving down lately,...cash, bonds, gold and equities. Who do you think will break the cycle? My guess the big surprise will be gold. Why? Look at the last number of years where the market has relentlessly moved up and gold got killed last year. The odds alone say that if PP is going to keep it's 9% year growth average, it's going to be in gold. Everything else outside of cash which earns little is not poised for anykind of major move up. Gold alone has room to the upside and gold stocks as well in a VP.

What do you think will provide the spark? A "stimulus package"? Maybe a little more "liquidity" from the Fed?

Given a few years of watching the PP, when you see all of the assets go down at once it either means the markets have lost direction (money does not know where to go) or there is going to be a significant change in direction (i.e. the stock or bond bubbles could potentially pop).  However, I've also observed that with the possible exception of 1981, these periods tend to be short lived.  I expect the markets will soon start moving (possibly up or down) and also that at least one of the four asset classes will be a beneficiary.  When the tide turns on stocks for instance, money will find refuge in bonds, gold or cash driving them up.

I will note 1981, which saw severe tightening by the fed and asset deflation, is not what we're seeing today.  The printing presses at the fed have slowed slightly, but interest rates are still near zero.  The party continues on wall street.  However, I think a lot of smart people know that stocks and bonds are out of synch with the real economy, and no one wants to be the last one with money on the table when the party ends.  Also leverage is at an all time high, so things could turn very quickly once the markets make a move - as people scramble to cover their margin calls.

I'm not smart enough to time these market moves - for example I would never have guessed the stock market could continue as long as it has without a 10-20% correction.  That's why I'm in the PP.

Something lit a fire under gold this morning. I haven't seen any news yet, I'm really behind today.

They say it's the Ukraine thing.

Lowe wrote: They say it's the Ukraine thing.

hmmm...it was a $15 spike in about 2 min which makes me think economic report.

Kshartle wrote:

Lowe wrote: They say it's the Ukraine thing.

hmmm...it was a $15 spike in about 2 min which makes me think economic report.

Come now Kshartle, you know that gold doesn't move on any news...

buddtholomew wrote:

Kshartle wrote:

Lowe wrote: They say it's the Ukraine thing.

hmmm...it was a $15 spike in about 2 min which makes me think economic report.

Come now Kshartle, you know that gold doesn't move on any news...

That's true. Usually the selloff for the day occurs in about 3-5 min everyday between 8AM-9AM then it stays pretty flat for the rest of the day.

And that is usually on no news....just some major holder hitting sell all at once of tons of gold right at the market price. This looks like the reversal program. Hopefully they just do this everyday for a couple weeks.

I'm watching GDX, feels like I am sitting on K2 with the dealer showing a face card.

buddtholomew wrote: I'm watching GDX, feels like I am sitting on K2 with the dealer showing an face card.

I'm sitting on a lot of shares of GDX and GDXJ.

Both are up nice today, with price well above a strongly rising 50 day MA and that is above a rising 200 day MA.

I feel like I'm at the poker table and just got dealt pocket aces. Let's see the flop. 

Kshartle wrote:

buddtholomew wrote:

Kshartle wrote: hmmm...it was a $15 spike in about 2 min which makes me think economic report.

Come now Kshartle, you know that gold doesn't move on any news...

That's true. Usually the selloff for the day occurs in about 3-5 min everyday between 8AM-9AM then it stays pretty flat for the rest of the day.

And that is usually on no news....just some major holder manipulator hitting sell all at once of tons of gold right at the market price. This looks like the reversal program. Hopefully they just do this everyday for a couple weeks.

Fixed your typo. 

Libertarian666 wrote:

Kshartle wrote:

buddtholomew wrote: Come now Kshartle, you know that gold doesn't move on any news...

That's true. Usually the selloff for the day occurs in about 3-5 min everyday between 8AM-9AM then it stays pretty flat for the rest of the day.

And that is usually on no news....just some major holder manipulator hitting sell all at once of tons of gold right at the market price. This looks like the reversal program. Hopefully they just do this everyday for a couple weeks.

Fixed your typo. 

Yes I think that's exactly what it is. The sellers don't even appear to care what price they get, it's just a huge dump, at the market rather than a gradual selloff at peaks.

Actually though, the longer they persist the better it is for me because I can keep buying at a suppressed price.

They will give up when the manipulation costs too much. I think only physical gold will be safe, including what is in the mines.

Harry Browne always said that the gold market was too big to manipulate.

LC475 wrote: Harry Browne always said that the gold market was too big to manipulate.

The US government fixed the price of gold and silver for decades.

The bond market and currency markets are clearly manipulated by central banks.

The bond and currency market are probably 100 times larger than the gold market.

Perhaps manipulation is the wrong word and that's why I shy away from it with regards to gold. Clearly there are large players who are short gold and who have a vested interest in seeing it go down, even if it's just to stock up at lower prices after the weak hands are shook off. The little guy was piling on in 2010 and 2011 and I think (hope) they've nearly given up.

Between 8 and 9 AM, huh? That would be just about the time when the govt bureaucrats are settling in to work! Coincidence?

If the gold market wants to shoot through the roof, there is no government on the planet that would be able to keep it under control. Anyone thinking they are controlling the gold market just has a tiger by the tail.

Reub wrote: Between 8 and 9 AM, huh? That would be just about the time when the govt bureaucrats are settling in to work! Coincidence?

Nice try, democrat scum.  Everyone knows government employees never do any work and therefore cannot affect the markets.

dragoncar wrote:

Reub wrote: Between 8 and 9 AM, huh? That would be just about the time when the govt bureaucrats are settling in to work! Coincidence?

Nice try, democrat scum.  Everyone knows government employees never do any work and therefore cannot affect the markets.

That's a very good point!

in the fascist model...govt can hire industry to do what really needs doing

Kshartle wrote:

LC475 wrote: Harry Browne always said that the gold market was too big to manipulate.

The US government fixed the price of gold and silver for decades.

The bond market and currency markets are clearly manipulated by central banks.

The bond and currency market are probably 100 times larger than the gold market.

Perhaps manipulation is the wrong word and that's why I shy away from it with regards to gold. Clearly there are large players who are short gold and who have a vested interest in seeing it go down, even if it's just to stock up at lower prices after the weak hands are shook off. The little guy was piling on in 2010 and 2011 and I think (hope) they've nearly given up.

I disagree.  None of these markets are manipulated by the central banks.  They are out of their control.  I'm with Harry Browne on this one.  The market is in charge.  The government.... isn't.

LC475 wrote:

Kshartle wrote:

LC475 wrote: Harry Browne always said that the gold market was too big to manipulate.

The US government fixed the price of gold and silver for decades.

The bond market and currency markets are clearly manipulated by central banks.

The bond and currency market are probably 100 times larger than the gold market.

Perhaps manipulation is the wrong word and that's why I shy away from it with regards to gold. Clearly there are large players who are short gold and who have a vested interest in seeing it go down, even if it's just to stock up at lower prices after the weak hands are shook off. The little guy was piling on in 2010 and 2011 and I think (hope) they've nearly given up.

I disagree.  None of these markets are manipulated by the central banks.  They are out of their control.  I'm with Harry Browne on this one.  The market is in charge.  The government.... isn't.

I suppose governments don't set short term interest rates and they don't peg currencies even though many if not most currencies are pegged to others. I suppose central banks don't print up currency and buy other currencies to change the exchange rates all the time. I suppose they don't come out and threaten to buy or sell currency if it hits certain targets.

Why do you think the Yen plummeted last year after the BoJ announced it was going to print trillions of Yen to lower it?

Why do you think the Swiss franc has been stuck at a 1.2 franc/Euro exchange rate for years when it was surging to parity right before?

Why do you think the RMB only moves up a couple % every year and the US politicians whine that China is a currency manipulator?

Why do you think the fed comes out every week and says it's not going to allow rates to rise for years and has kept them in negative real territory for 5 years.

Please tell me when HB wrote/said that governments don't manipulate the currency and bond markets. I have all his books and they say the opposite. Also the obvious reality says the opposite on a daily basis it seems.

Kshartle wrote:I suppose governments don't set short term interest rates

Nope, they don't.  The markets do.

and they don't peg currencies even though many if not most currencies are pegged to others. I suppose central banks don't print up currency and buy other currencies to change the exchange rates all the time. I suppose they don't come out and threaten to buy or sell currency if it hits certain targets.

Governments try to do many things.  That does not mean their attempts work.  Government doesn't work.

Why do you think the Yen plummeted last year after the BoJ announced it was going to print trillions of Yen to lower it?

The market.

Why do you think the Swiss franc has been stuck at a 1.2 franc/Euro exchange rate for years when it was surging to parity right before?

The market.

Why do you think the RMB only moves up a couple % every year?

Does it?

Why do you think the fed comes out every week and says it's not going to allow rates to rise for years and has kept them in negative real territory for 5 years.

Governments announce many things.  Announcing things is one of their specialties.  That does not mean that their announcements will actually come to pass.  Government doesn't work.

Please tell me when HB wrote/said that governments don't manipulate the currency and bond markets. I have all his books and they say the opposite.

It was on his radio show, multiple times.  Unfortunately audio is difficult to search.  Also, you seem extremely convinced as to your rightness.  So, even if you respect Harry Browne a great deal, it's unlikely that hearing or reading him saying something contradictory to your view would change it.  After all, you're sure that you're right.  So, I am not going to waste my time finding the episodes.  Perhaps since you have the books, you can read them and see if he can talk you out of your opinion.

For myself, I am happy to have you have your opinion.  I just have my own.

Also the obvious reality says the opposite on a daily basis it seems.

It is certainly not obvious to me.

Ohhh boy.....

Imagine there are two bridges across a river that separates two towns.

On one of the bridges you have some thugs who threaten to rob anyone who tries to cross.

Everyone knows this so they all cram onto the other bridge.

Would you say that it's the market that has decided to use the second bridge?

Governments and central banks set their short-term interest rates, as well as the reserve requirements for their banks, as well print or withdraw currency from circulation. If they declare that they will not allow rates to move above a certain level, market participants will not move against them when that level is hit because they know the central bank/government can slam them back down. It's the same with fixed or soft currency pegs like the RMB to the USD or the franc to the Euro.

You can repeat all you want that this is the market setting rates or whatever, but that's no more sensible than saying the market has decided that bridge #1 isn't worth using. The thugs have distorted the market.

Nevermind.

Kshartle wrote: Ohhh boy.....

Imagine there are two bridges across a river that separates two towns.

On one of the bridges you have some thugs who threaten to rob anyone who tries to cross.

Everyone knows this so they all cram onto the other bridge.

Would you say that it's the market that has decided to use the second bridge?

If there are two bridges, and a hurricane damages one, and everyone crams onto the other bridge… did the market decide that to use the other bridge? Or did the hurricane distort the market for bridges?

Pointedstick wrote:

Kshartle wrote: Ohhh boy.....

Imagine there are two bridges across a river that separates two towns.

On one of the bridges you have some thugs who threaten to rob anyone who tries to cross.

Everyone knows this so they all cram onto the other bridge.

Would you say that it's the market that has decided to use the second bridge?

If there are two bridges, and a hurricane damages one, and everyone crams onto the other bridge… did the market decide that to use the other bridge? Or did the hurricane distort the market for bridges?

The hurricane distorted/changed the market.

Are you saying governments are like acts of nature PS? Come on now. They are human beings that make decisions. A tiny tiny group that makes decisions that distort the markets for millions and billions of others. They are not a market participant because they are not engaging in voluntary trade. Therefore the effects of their actions are not just market participation, it's manipulation through the threat of violence.

To pretend that governments don't distort makets is just nonsensical. They create the very currency and bonds we are talking about.