Well, first of all, bull markets climb
a wall of worry. But second, there are some powerful media forces trying to
maintain the status quo. They are constantly disparaging Gold and talking
about imminent corrections, bubbles, etc. As a recent example, Warren Buffett
did a recent hit piece on Gold published in the Wall Street Journal (video talking head summary here). And, of course, there is always Jon Nadler at kitco.com to make
sure you are NEVER bullish on precious metals no matter what.
Actually, specifically, kitco.com having Jon Nadler as its spokesperson is
quite revealing and concerning. What is this company, which sells derivative
positions in Gold (a la pooled accounts), trying to accomplish? As someone
who learned all his lessons the hard way in the precious metals market, I can
attest to the fact that this company talked me out of physical metal and
encouraged me to buy a "pooled account" position in metal when I
first began to try to invest in physical metal back in 2003.
I would like to share some quotes from a recent piece by Jon Nadler. I no
longer read his commentary and haven't for years, but Bob Moriarty over at
321gold.com posted one of his pieces, so I assumed it had some value and read
it. What a mistake and waste of my time. Nadler is a plague on the Gold
community but refuses to go away. How could anyone spend more time trying to
disparage the product his company sells? The tone, the anger, the
bearishness. It's so over-the-top that it seems beyond intentional and I
believe is simply trying to make fun of those who have cast their lot with
physical metal held outside the banking system. Anyone who does business with
kitco.com knowing that Nadler is their main market commentator is asking for
trouble. When the poop hits the fan exactly, I don't know, but this is a firm
that should not be trusted primarily because they employ this fellow.
Here are quotes from his most recent piece (link here),
with my comment following each quote:
"That the latest round of price
increases in gold has been an overwhelmingly fund-engendered phenomenon is
quite obvious. More worrisome on the other hand are certain trends in the
physical markets (we covered the potential erosion in India’s 2012
imports and the decline in USA-based physical investment in 2011 in last
He sounds nervous that this is simply "hot money" chasing metal
prices and that people aren't interested in physical metal at current prices.
Gosh, maybe I should sell now and beat the herd to the exits.
"Well, you can now add Vietnam to
the roster of countries where domestic investors are suddenly
‘uncertain’ about continued, (some say endless) gains in
Ohmygosh, those Vietnamese are some of the smartest
and shrewdest Gold traders out there. If they are 'uncertain,' then I should
"In any case, gold’s
“paper” bullish sentiment is approaching certain levels (above
90% according to trade-futures.com’s Daily
Sentiment Index) from which previous sharp corrections have ensued. Silver
has some work left to do as it begins to encounter overhead resistance that
extends all the way up towards the $37.85 overhead resistance level. If and
when support near $32.62 is breached, the tenor of the market will tilt towards
Overhead resistance from here to Mars in silver - holy cow! That means the
bulls have no chance whatsoever! My gosh, we are so
close to breeching $32.62 that I better just sell now...
"That’s the best such level
of betting [in commodities- GVP] since September of last year.
However, this time, the bullish tilt (in gold for example) comes amid
expectations for economic recovery (in the USA mainly) as opposed to the
economic and financial Armageddon that many had expected to materialize for
several years now. In so many words, this is now a niche that simply does not
make room for anything but positive news. That’s when the worrying
Wow! If the world is not coming to an end and bullets and beans are not the
investment theme of the day, you're darn right I'm worried! Call kitco and tell them that I want to sell them every piece
of physical metal I own and even my neighbor's metal that I don't own, since
they understand pooling of resources and derivatives on physical metal better
than I do!
"The enthusiasm being seen in
commodity futures and options positioning is most certainly not being
mirrored in the still poorly performing mining share sector and the type of
betting going on is itself being questioned by some: “The latest
commodity flow numbers is catch-up with previous positive trends. People are
moving into them based on a string of relatively positive numbers. Whether
those will continue to carry weight is a little more questionable,”
said one money flow analyst at EPFR Global in Cambridge, Mass."
CALL MY BROKER! AN UNNAMED BROKER AT SOME FIRM I HAVE NEVER HEARD OF IS
BEARISH! Those smart Wall Street guys have been right on Gold since, well...
I guess their track record sucks, BUT YOU NEVER KNOW!
In short, I call "foul" on kitco.com for doing a disservice to the
very people they claim to try to represent and/or market to. Nadler is a
mouthpiece, albeit a lousy one, for the status quo. And if he doesn't think
so, well that is even worse. I have never seen a more bearish Gold analyst
unless paperbugs Warren Buffett and Nouriel (half-a-hit
sort-of-wonder) Roubini count as Gold analysts. And
let's not forget that Buffett would be broke right now if it weren't for
government largess coming to his rescue. And Roubini,
I assume, has already finished his Spam and has nothing left but paper to eat
(try the hot sauce, dude!).
My subscribers and I are long silver and Gold stocks and have been since catching
the bottom on February 16th. If you are looking for more reasonable advice
than that spewed by Nadler and Buffett when it comes to the precious metals,
why don't you give my low cost subscription service a try? And believe me, I can be bearish on
the precious metals sector as well when appropriate, just not as a matter of
course and not as a religious conviction that clouds every statement I make.
Until the Dow to Gold ratio gets to 2 (and we may well go below 1 this cycle), Gold will continue
to make Buffett look like the feeble has-been paper permabull
that he is (at least until he gets his next tranche of bailout money...).