Jesse touches on the idea that a disciplined buyer of physical gold will definitely come out ahead versus the emotional and prideful trader. Also, the trader will always seek the “long ball” and will miss opportunity after opportunity in the market. Many will find the golden opportunity might not be so golden after all when physical supply cannot handle the demand of those seeking to exploit the bargain basement premiums.
“Those who can make you believe absurdities, can make you commit atrocities.” Voltaire
09 May 2012
Net Asset Value Premiums of Certain Precious Metal Trusts and Funds – Miners Rally
I see you stand like greyhounds in the slips,
Straining upon the start. The game’s afoot:
Follow your spirit, and upon this charge
Cry ‘God for Harry, England, and Saint George!’
Henry V, Act 3, Sc. 1
If only investing were so dramatic, and the signals so clear, as they are to insiders by privilege, and foolhardy amateurs by the dawdling nature of their inevitable insolvency.
Those of us who place our pants on one leg at a time build positions steadily, buying on weakness, and holding those positions while the fundamental trend is intact, perhaps trimming a little here and there on excessive movements in price.
If you have not noticed, the better quality miners are running counter-trend to bullion and the equity indices today.
I am still running short broad equity indices and long gold bullion. I have added more to bullion here. I am sidelined for the short term on silver. Of course it would be nice to have a dramatic capitulative buying opportunity as we have seen a few times recently in the past, but those are only clear in hindsight, even to a seasoned trader.
Those who lose their positions entirely in the bull market have a terrible time buying back in, because they want all in at once, and at the lowest price. They are victims to their pride, for they are not disciplined, trading not only for profit but bragging rights, in service to a hard mistress, their own ego.
And so they miss opportunity after opportunity and turn sour, wishing more to join them in their regrets. I hear from them at times like this, and they are my best indicator that things are near to turning.
If you buy, then buy slowly and not for a trade but to build a position you can hold while the long term trend is in your favor.
Of course anything can happen, but the most real risk is a general liquidity panic in the manner of 2008. And as then, it would likely represent a spectacular long term buying opportunity. But timing such a thing is the very devil itself, and often a snare of pride.
I think the Fed and the central banks were caught by surprise in 2008. So they have no excuses for inaction this time around. But there is a strong element in the financial community that would like to buy real assets on the cheap with overvalued paper.
Otherwise the speculation has been largely ‘squeezed out’ of the precious metals judging by these premiums.
Still, they could go lower. We need to see the price find chart support. I will not take my hedges off again until I am sure that the price trend has changed.
And I cannot caution enough when I say that these markets are distorted by easy money and tainted by fraud, and cyncially played moreso than I have seen in many years. Such are the times in which we live.
I suspect that quite a few more entities will be taking physical delivery at these prices and that will pressure supply. That is the downside of price manipulation and why it inevitably collapses against the primary trend.