zyphen

Found this entry penned by "zyphen" on a blog which otherwise isn't worth linking to.

Submitted by Zyphen on September 28, 2011 - 2:30pm.

I've followed this blog off and on for a long time (since a year before it moved). While I often do not agree with the reasoning behind why moves occur, I do like to compare notes on support/resistance levels with this "Turd" fellow and other traders/bloggers in the PM game.

I just want to make a few observations here to help out some would-be traders and overleveraged perma-bulls:

1. The market is always right. Why? Because you're in it. It doesn't care about your rationalizations or reasoning. The price is what it is because the market says so. End of discussion.

2. Everyone on here is small-time. All of you put together won't make a fraction of a cent of difference in the price of gold. You can buy all the physical you want from all the small time dealers you can find. It doesn't matter. What moves the price are banks and sovereign funds. If there's a "conspiracy" to keep the price down, then there had to have been a big "conspiracy" to move the price up because news flash: you didn't matter at all in that move. As a plankton in the sea, you just want to be lucky enough to ride that wave when the tide comes in. At least people who kept talking up China and asian funds are thinking right in terms of scale. Do the rest of you honestly think that gold has gone parabolic off your meager interests? A lot of that so-called "Evil Empire" is made up of buyers. People who question the JPM naked short rumours are asking the right questions. How can smart money be so dumb? The answer: they're not.

3. Gold is moving with the market, not opposite it. All those fantasies about gold holding up when everything else tanks? Where's your evidence? We're moving in tandem with the general market (and overall worse off). The market is telling you plain as day that when the shit hits the fan (in terms of Greece or whatever else comes down the pipeline) that it'll just be a repeat of 2008. Gold and Silver will tank along with everything else. Cash is still going to be king until the market says otherwise.

4. Physical market? That'll never BE the market unless the global economy actually collapses. If you're 100% in physical, it's because you are betting that armageddon occurs. Even noted gold bugs like Marc Faber only recommend 25% allocation. Why? Because it's an insurance policy, not an investment. Frankly, if you think it's the end of the world and there will be anarchy, why stop at gold? Bypass that and go directly for the goods you'd trade that gold for: food, weapons, water, gas, etc.

5. Opportunity Cost. Relative Value. Paper has value because people believe it has value. Gold has value because people believe it has value. Of course it matters when and at what price you exchange one for the other because you could have gotten a LOT MORE of that other if you did the exchange at the right time. That's the entire point of the market or any market. Right now, people trust paper more. You go to a store, they want paper (or plastic). If you're willing to wait years and don't want to do anything with your money in terms of other investments or purchases, carry on. Otherwise, you'd better pay attention to what the market is telling you. And the market is saying it doesn't like PMs right now.