So this is it – Gold is going down in a hurry.
Precious metal miners have been correcting for a while now sort of front running the show.
I have been approached by many to comment as they know I have been playing with shiny stuff most of my trading life, they also know that one of my 2 best trades in 2012 was DUST – leveraged gold miners short ETF.
DUST has played a very important role in my YTD performance as well, but I am in process of scaling out of it, selling some of it today already. Please note that you can see some of my trades in real time on twitter, this includes DUST.
What most of my readers don’t realise that I have never been short of gold or gold stocks prior to 2012.
Yep I have been bullish the yellow metals and miners for many year, way before gold bull market started.
I believe this gives me a little edge to comment here.
I am a student of a bull market. What does it mean? It means I ultimately believe in higher stock prices overtime. This includes most of the sectors. Oops, did I just said ’most’, not all.. yes, I did.
One sector it does not include (for the next 100 years or so) is natural gas (please not this is my opinion currently; I reserve the right to change it 100 years from now). Why? Simple market metrics – supply and demand, I will not go into details here.
Another sector (as of 2012) is gold mining. I believe major correction has begun in 2012 and will continue. For how long? I have no clue. Please note that bear market in PMs you are witnessing will include massive oversold rally which can be traded.
So what is the problem here, after all bull markets and bear markets in some sectors are common and they come and go. The problem is TRADERS PSYCHOLOGY. Most of the people who hold PM stocks currently (if am talking retail) have never experienced bear markets in PMs before and have no clue how bad can it be and they will do what retail does the best – AVERAGE DOWN.
This makes me sad and worried for many of you.
Please stay safe and wait for reversal whenever it comes and confirms itself – if you try to catch a knife in PMs you will not lose a finger, but an arm and a leg and a head eventually… I have seen it many times before.
6 Responses to GOLD: The requiem
Words of wisdom, partner! There’s plenty of other sectors to trade as you said. On another note, I see RIG getting crushed on two downgrades today. I’ll add to my position once the dust settles.
Mr. P, what was your tell to switch sides last year? Gold topping out? Sentiment? I’ve been trading the sector for the last 6 years and have had the fortune to be mostly out of the game during 2012, though I did nail the summer bottom (and sold waaaay too early), but my tell was more intuitive. Hating intuition as I do, I’m eager to learn of the analysis driving your perspective.
i use stops when I trade high beta stocks like miners … they would get over and over again to the point like it had not happen before… and than of course i had that gut feeling something might be changing and probably some luck.
When i started trading DUST i had a lot of problems as I hate shorting so I would grab a little profit and get out and start over in and out (which is totally against my philosophy) untill I learned to hold this crazy etf a little longer.
Here’s some golden NUGT DUST (Gold Star post).
(p.s. I do hope $NUGT is oversold – “patience” seems like a four-letter description).
I realize now I was the only financial blogger who predicted gold collapse 2 months ahead of time… oh boy… some of you from other site remember my call to buy gold at 900 lol… guess I can do it both ways.