Gyroscopic Investing

With gold seemingly in a long term bear market any predictions on the bottom?  I'll say 1000 even because I've always liked round numbers.

I don't know the number, but there will be a crescendo of pointing and laughing at the idiotic gold bugs.

Isn't the "problem" that the USD has gotten so strong. Gold in EUR, SEK, JPY etc was flat over the year until this last day.

phew! gold was down this morning  20.00  in overseas trading .  it just has no bottom it seems .  i would have though after making 5 year lows friday that would have been a bottom for a while .

Reub wrote: With gold seemingly in a long term bear market any predictions on the bottom?  I'll say 1000 even because I've always liked round numbers.

if i had to guess i would say 1k too.  everything does eventually have a bottom somewhere . the question is where .    of course the bigger question is  when does an investors money see a return and how much does that money ultimately give up had it been in something more productive all that time .

This last waterfall is not because of the dollar rising.  Sure seems like normal everyday market forces.  More supply than demand, as it has been for the past 4 years, right? 

What about demographics?  Maybe the last run up in gold was because it got easier to buy houses on credit, so home prices got bid up and other physical goods with it (b/c of renovation, maintenance, and some increased wages in construction and commercial banking).  A lot of loans were made to hispanics, who were in a demographic boom.

Anyway, after the collapse in house prices, the gold bull market persisted 2 or 3 years, because of the inertia of so many banks and investors having bought it, and being afraid to let it go, since another crisis might be around the corner.  Add in regime uncertainty with Obama.

Gold is probably going to go below 1000, into the high hundreds, and stay there for about 30 years.  If you doubt that, look at the demographic pyramids of a few developed and developing countries.  http://www.theblaze.com/stories/2014/11 ... ve-babies/

Compare the US with India or China.  The populations of the developing countries are bigger, but the bottom of their pyramids is contracting.  That is deflationary.  Now compare those nations with Nigeria, where the pyramid's base just keeps getting wider.  Of course it will eventually contract, but by then the population of the Third World will have exploded.  Uneducated laborers are deflationary, in the absence of matching educated laborers to create businesses and productive enterprises for them to work.  They will bid down wages everywhere.

So you are basically saying the PP will not work for at least the next 30 years?  If so, do you have your assets in the PP and what do you think about that?

Maybe the Greeks were artificially propping gold up with all of their turmoil. Now that that's calmed down gold can fall to its natural level.

This from Armstrong:

Gold The Panic Cycle is Here
Posted on July 20, 2015 by Martin Armstrong
Gold has opened the week in Asia with a bang – down nearly $44 at the
low of $1083. This has come right on target for our Panic Cycle this
week. Gold is headed sharply lower and it will break the $1,000 level and
everyone will then start to look for $600-700 area.
We can see our Energy Models turned negative so a washout to the
downside was in order. Everything remains on target as we move closer to
the Benchmark targets. Keep in mind that many will start to refuse to sell
and others will use this to claim prices should rally, as they are doing with
the US Mint stopping the production of silver Eagles. This is by no means
BULLISH – it will have no impact upon price.

It will work, the same way it worked in the 80s and 90s.  It will lag equity-heavy allocations but still be a decent portfolio.

I was forced to put my 401k into a Boglehead-style 60/40, by the fact that I do not have access to ETFs in it.  I am glad for the circumstances.  I do not plan to rebalance gold back to 25% in my existing PPs.  Maybe 17.5 or 20.  It's almost there already.

I can't predict the future, but I can't ignore what I do see.  The world is going to be Brazil-ified, and that is not a recipe for rising gold prices.

In August 2014 Dollars, the price of gold was under $400 in 2001. What's stopping it from visiting that point again?

www.inflationdata.com

Nothing, really.

All of this negativity is starting to make me feel bullish!

ochotona wrote: In August 2014 Dollars, the price of gold was under $400 in 2001. What's stopping it from visiting that point again?

www.inflationdata.com

What does that have to do with anything, when looking at 2001?  Why are you referencing 2001? 

2001 was the last major low, that is a useful data point in thinking about the next major low.

According to the same logic, NYSE Composite, currently 10,984 had its last major inflation adjusted low in early 2009 at a bit below 5,000.

What stops that from revisiting it?

Maybe it is a stupid question, you might say earnings growth, etc.  Are companies on average earning 2x+ what they did in 2009?

I'm just trying to figure out if it is valid to look at gold's last major low and stock's last major low in the same light?

Cortopassi wrote: According to the same logic, NYSE Composite, currently 10,984 had its last major inflation adjusted low in early 2009 at a bit below 5,000.

What stops that from revisiting it?

Maybe it is a stupid question, you might say earnings growth, etc.  Are companies on average earning 2x+ what they did in 2009?

I'm just trying to figure out if it is valid to look at gold's last major low and stock's last major low in the same light?

It is. There is nothing preventing the NYSE Composite from falling to 5,000 again.

I don't know why I thought that would make me feel better... it doesn't!

I predict that it will hit a bottom precisely when I decide to sell some gold.  Then it will rise rapidly to a new high

I don't personally see it going much below 1100, but its hard to say since there is some serious manipulation, or at least 6 sigma events going on in the market plus continued pressure on commodities from the rising dollar.

Witness yesterday's "flash crash" where someone dumped $2.7 billion dollars in paper gold sell orders in just a few seconds right before China's markets opened - it ended up halting trading not once but twice within 30 seconds:
  http://www.zerohedge.com/news/2015-07-1 ... ional-dump

And again last night a nice $550 million dollar dump right after the US markets closed:
  http://www.zerohedge.com/news/2015-07-2 ... below-1100

I know many of you including Craig don't believe the gold price can be manipulated, and that its not unusual for gold to go down in a strong dollar environment, but when I see these huge sell orders going through the entire stack of futures orders in a matter of seconds during odd hours of the night when the major markets are closed I have to scratch my head a bit.  Yes it could just be the bots doing their thing, but dropping the price of gold $50 in a few seconds with a bunch of puts is generally not a winning futures strategy if you are trying to make money.

Mortalpawn

Everyone tries to manipulate the price of any trade, in both directions. That's just a given. The problem is when individual investors ignore price action and interpret everything through a political / ideological lens. Or, even just pride... the ability to proudly say that you held fast in the PP, were a True Believer, while the Unclean fled. That is when you get hurt! That said, I do want to buy gold or platinum at $500.

$500, and not one penny higher! 

ochotona wrote: Everyone tries to manipulate the price of any trade, in both directions. That's just a given. The problem is when individual investors ignore price action and interpret everything through a political / ideological lens. Or, even just pride... the ability to proudly say that you held fast in the PP, were a True Believer, while the Unclean fled. That is when you get hurt! That said, I do want to buy gold or platinum at $500.

I'm not sure who you mean by everyone. I never try to manipulate the price of any trade in the markets, in either direction, so it can't really be "everyone".

Every big house. Not us peons.

You get the gold star! The "Desert" Portfolio is a thing in my financial planning, by the way.

Desert wrote: Here's my prediction from a couple years ago:

http://gyroscopicinvesting.com/forum/go ... /#msg64337

ochotona wrote: Every big house. Not us peons.

Ok, thanks for the clarification.