5 replies to this topic

[greenie]

http://stockcharts.com/c-sc/sc?s=GLD:$COPPER&p=D&yr=0&mn=8&dy=0&i=t72407761145&r=4118&.png

http://stockcharts.com/c-sc/sc?s=GLD:$WTIC&p=D&yr=0&mn=8&dy=0&i=t70045218189&r=4827&.png

http://stockcharts.com/c-sc/sc?s=GLD:$CRB&p=D&yr=0&mn=8&dy=0&i=t10402501781&r=9636&.png


I guess the message from the market is clear. Gold is not a commodity.

http://www.traders-t...?...&hl=commod#

[OEXCHAOS]

Why do you think that this shows you that Gold is not a commodity? Some commodities always have relative strengtht vs. other commods.

That said, my view is that gold is a commod, but also a psuedo-currency and a "traditional/psychological" store of wealth. Your position was that it was a de facto currency, which I rebutted with "try to buy a cuppa SBUX with it". That still holds true.

So, if you scare folks enough, gold will go up, even as other commodities go down. Or, as the dollar (the worlds most coveted currency) goes down gold will go up irrespective of commods. Or, if relative demand for gold goes up, say because Indians (or any other large group of folks) are making more money than they ever had and because they trust gold more than they trust other stores of wealth and value--or because they like the way it looks and can afford it.

It's a good, subject to supply and demand. The whack-job gold bugs theorize on this all the time, usually coming to the conclusion that Armageddon is just around the corner and that gold is going to $10,000 per oz. or some such. I personally don't. I just saw it as undervalued in 1999 and I consider it to be in a longer-term Bull market now. The support is probably from the weak dollar and from increased demand from the rapidly developing world.

All of that said, I think your pairs trade was a dandy winner, though I'm still not so sure that your logic on it was all that good. Of course, sometimes (often?), logic is the enemy of a great trade.

Going to one of the other points, the way this played out implies that gold is less of just a commodity and chips are more of a commodity. Of course, this may not actualy be case.

My personal view is that you ought to view gold as a commodity/pseudo currency with a fairly strong long-term demand equation, so long as Asia doesn't implode. IF it does, and the dollar gains remarkable strength, gold might not be such a great investment. Don't over-stay your welcome, just because it has made you a lot of money (and I'm not saying sell now, either, just be open to it should something major change). If you see EVERYONE talking about how good an investment it is--in this country, that is--start lightening up. You know, I started buying miners when the Swiss were reported to be selling. I knew we were at or near a major low massive importance.

Mark

http://stockcharts.com/c-sc/sc?s=GLD:$COPPER&p=D&yr=0&mn=8&dy=0&i=t72407761145&r=4118&.png

http://stockcharts.com/c-sc/sc?s=GLD:$WTIC&p=D&yr=0&mn=8&dy=0&i=t70045218189&r=4827&.png

http://stockcharts.com/c-sc/sc?s=GLD:$CRB&p=D&yr=0&mn=8&dy=0&i=t10402501781&r=9636&.png


I guess the message from the market is clear. Gold is not a commodity.

http://www.traders-t...?...&hl=commod#

[SimpleTone]

http://stockcharts.com/c-sc/sc?s=$CRB...5355&r=5954

[OEXCHAOS]

Stuck above in all the quibbling a major point might have been lost. Greenie, that was a helluva trade and a very clear call. That deserves significant credit. Mark

[NAV]

There is nothing in your post that shows GOLD is not a commodity. Every commodity has their own cycles. LOL, i could show a chart of wheat or soybean relative to copper and show that they are not commodities as well. The simple truth is that there is massive inflation across the world fueled by cheap credit. The stock market and Gold are both pricing it and both continue to be in a bull market on the monthly charts.

Edited by NAV, 29 January 2007 - 12:24 PM.

[greenie]

There is nothing in your post that shows GOLD is not a commodity. Every commodity has their own cycles. LOL, i could show a chart of wheat or soybean relative to copper and show that they are not commodities as well.

The simple truth is that there is massive inflation across the world fueled by cheap credit. The stock market and Gold are both pricing it and both continue to be in a bull market on the monthly charts.

Well, you asked me before that if there is huge deflation and all commodities sell off, how can I make money on gold longs? We now entered the first stage of deflation that I have been expecting, started by residential housing and then commodity metals and oil. Seems like gold is doing well in this environment. The real proof will of course come when full-flaged deflation taken hold. So, the above charts are some indicators suggesting that gold may not get as easily sold off as other commercial metals.

Mark, gold is not pseudo-currency, but real currency, as long as central banks keep it as reserve. It is not a currency of trade in US, and so I cannot buy coffee with it, as much as I cannot buy coffee with Mexican peso.
It is a currency between nations. The main power of gold comes from the fact that the amount of it held with people and banks is much larger than the amount in proven reserves. The equation is opposite for copper or iron.