another point on leverage if your using leverage for Australian gold stocks then sell now and take your loss , if your using leverage then youve got an excellent chance of doing all of your money. (Sorry but its true)
Remember banks talk to each other all day every day they can tell how many of you are there holding leverage, where your margin calls are , where your stop losses are, your sitting ducks waiting for duck season.
please note one of the only TA guys worth listening to on HC just wiped himself out completely (Madmac) using leverage
if for instance one you leveraged guys get hit with a $700 gold pull back some of the gold stocks could fall by 30% way before you even got to $700
if your tempted to kick in the Visa card when your margined called then you need close down your trading account and go to gamblers anonymous , youve got better odds going to star city and playing poker than you have doing that.
please also note that any technical commentary here is based on notional values of currency, for instance if you currency adjust the DJIA you will see that the DJIA has been in decline since 1999, unadjusted for currency it looks like a double top with a steep decline, looked at from AUD its in a complete bear, similarly some of the declines seen in our market adjusted in USD are not so bad, some of the gold stocks like NCM look positively fabulous if re adjusted in USD terms. Why are some of the AUD bank stocks dropping more than some of the USD bank stocks? if you currency adjust their price in USD you will see a completely different picture
Globally integrated markets are just that we cant ignore currency as it provides the real picture rather than our notional AUD one
Gold range could be , best case 890-900, medium case 800-830, worst case 700, gold timing is completely impossible to predict more than a couple of days ahead of time, thats why you need to integrate all factors in your decisions, for instance if gold bounces back to say a 1000 and short positions also rise in say NCM, LGL, SGX you might reconsider jumping on the boat, similarly if the shorts are declining the price is declining then its potentially a good entry point
now work your way down the the daily trades, notice that they rarely buy , they transfer in shares from parts unknown
now if you correlate the shorts
http://www.asx.com.au/data/shortsell.txt
yes the asx should provide historical data as well (if anyone has a source of historical shorts please post it :))
and then correlate with daily gold price moves its fairly obvious that their shareholding is to play the price toward those shorts
the same is happening with all stocks not just gold so its not a sector phenomena
where is the gold price going?
I could argue a case with considerable references either way and sound very convincing , a) gold will rise immediately from 900 (more USD weakness, more investment bank failures, falling , Fed failure to correct credit crunch b)gold falls of a cliff (central banks combine to stop falling USD as per their action to save the euro in 2002, lower interest rates halts or slows the housing crunch, fed agreeing to take mortgage securities as collateral eases crisis etc etc
generally speaking thats all that most market commentators do, they borrow your watch and tell you the time, read any of the papers today and they all have perfectly good at offering an explanation for what happened yesterday, reading this kind of information is useless
TA guys I like ?
Tim Wood @
http://www.cyclesman.com/
Bob Prechter (Prechter provides a global market forcasting service)
http://www.elliottwave.com/
Prectherr has some critics because reads markets with currency adjustment, so for the ill informed he looks like hes making poor calls when in reality his calls are great from a currency adjusted perspective
Think about the cost vs reward of investing in these services, if your not willing to invest at least a $100 a month on this type of information then your not being serious about making a return on your investments
Beware of reading USD commentators without putting on your AUD glasses. Beware of generalizations and cherry picking commentary, Sinclair for instance is often quoted here , folks cherry pick particular comments and ignore his overall context.
I couple of weeks ago I went and read his entire archive of commentary, he is consistently telling his USD readers to buy gold and silver because the US economy is going to meltdown and that folks should be predominantly investing in physical gold, he makes a few comments about the juniors being undervalued and folks here go "all in" on specs and wonder why they are loosing. Jim's telling US investors stuff , if he was talking to AUD investors he would tell us different stuff, he would almost certainly laugh at folks who go "all in" on any sector
Remember the ability to stay out of the market often makes more money than to be fully invested. Relate you trading strategy to your time commitment. Treat with any relgious commentary as just that, one of my favorites is , "USD is fiat, US is expanding money supply, USD will collapse, AUD is fiat, RBA is expanding money supply, all fiats will collapse, gold will reign supreme "
all fiats will collapse? against what will they collapse? gold? listen if all fiats did collapse (and thats never happened in history) and we reverted to a gold standard currency then the first thing the government would do would be to regulate the price of gold, thats what happens under a gold standard currency base, governments regulate the price of gold and I cant see us paying for a slab of VB with chunks of gold.
or another is the cherry picking of examples from the past, charts of companies like Homestake in the 1930's . Like most stocks, Homestake declined off its peak of 1928 by 52%, stayed flat through 1930 and began a rise that saw it peak at $495 (a 500%+ appreciation from 1929) in 1935. During that period it paid out $128 in dividends, including a 1935 payout of $56 per share. The rise in the price of gold from $20.67 to $35 per ounce during this period obviously was the lead contributor. The other fact was that due to the great depression it lowered its costs by 63% and tripled production between 1932-1935
Homestake is used as an example by the gold bug community, as to why one should own gold stocks in times of currency turmoil and inflation. Certainly it was a great performer during the early thirties. That cannot be denied. But what is overlooked is that it was some time before the share price started to move up. Very few predicted the rise in the gold price and there was very little buying before the fact. Which means that buying gold stocks as a hedge is not a historical precedent. As the gold price increased so did the Homestake share price, but it was nearly three years after October 1929 that it began its rapid climb to $495.
So a better precedent might if you bought say buy NCM today at $31.00 and by 2009 it went to $15.00 and in about 2011 it began its rise to $75 by 2014. Im not saying this examples are at all relevant I am just saying be careful of folks who tell stories that lend weight to their theme.
Beware of historical analysis, folks will tell you that all fiat currencies collapse , well theres heaps of example in history where gold standards have collapsed as well, the Spaniards (America) discovered the gold of the Americas bought it back to Europe and got fat and lazy and paid the Dutch in gold to supply them with everything, the Dutch (China) got really good at making things and the Spaniards forgot how to, eventually hyperinflation took over Europe and the Spanish empire fell. The deflationary collapse of the US in the 30s occurred under a gold standard. The reason I have bracketed China and America is that empires collapse and transit to new leadership under all kinds of currency regimes.
and if you do get hit with a big downturn and your locked in then sit it out, go kick the cat, turn off the computer and just wait till things turn in your favor.
