Well, the hate mail has started regarding gold and as usual, I get all the arrows. Sorry, but gold is still a market. It rises and falls according to supply and demand and right now the market is overbought. When I was given a institutional conference in Tokyo, an individual bribed his way in. He came up to me and apologized but said he just had to speak to me. He bought the Nikkei 225 on the very day of the high and invested $50 million. What was remarkable, was his confession that it was his first purchase of stock in his life. He was in his 60’s. I had met the guy that actually bought the high in a bubble. I asked him what made him buy on that fateful day. He said brokers had called him every year and said the Nikkei always goes up in January at least 5%. He watched for about 7 years. In the euphoria of 1989, he got caught up and this time be bought the high.
Markets decline NOT because of manipulations, huge short players, or other theories that government itself uses and begins every investigation with such presumptions. Anyone pointing to manipulations that overpower markets is making an excuse as to why they are wrong. It is IMPOSSIBLE to alter a trend. You cannot manipulate a bull market into a bear market just as government CANNOT stimulate an economy reversing a economy decline. Manipulations can ONLY go with the trend and when against the trend, can mitigate it reducing volatility to some degree, but that extends the cycle for what must take place (liquidation) is only dragged out – LOOK AT JAPAN.
Markets decline BECAUSE everyone who has EVER thought about buying has bought. There is no more reservoir of potential buyers to pick up the ball and take to the goal post. Consequently, the market falls because it has lost the momentum to sustain the rally. This is simply how ALL markets move. We are here to LEARN how to trade, and to DISCOVER what makes the world tick. I am not here to solicit your money for trading or sell you bullion regardless of its form. You can blame me for your failed theories, or you can say – this is about making money and surviving.
We are in the throes of a major economic change. There is NOTHING like this that you can pull a chart out from even the last 200 years and say – oh look at that. There is NOBODY who has spent as much money reconstructing the global economy in a forensic manner to reveal what makes the world REALLY tick rather than prove some predetermined theory that will not stand the test of time. Yes, many institutions use our material. Many do their own thing. What they do say is this – they NEVER want to be betting against the computer left on the wrong side of the trend. True, our computer has become a fail-safe system that has saved many major portfolios. This is NOT my personal opinion. This is quantitative modeling to determine the trend.
We have recreated money supply even for Rome and gathered prices on commodities and labor as well as interest rates from as far back as Babylonian times. What is revealed without inconsistency in every empire we have reconstructed, is that trends are always the trend. They cannot be altered just as Marx’s ideas or eliminating the business cycle with Communism failed. Keynes who declared free markets were dead and government could manipulate the economy to constant prosperity fell to dust. Even Paul Volcker admitted in his Rediscovery of the Business Cycle that such ideas of New Economics failed. How markets moved in ancient times is no different from today for it is not the market that matters, it is the players – human nature simply never changes.
Shallow correlations such as those of “fiat” money offer no help. They do not stand the test of research. Asia has always had “fiat” money since the 3rd century BC and the people have accepted it and the monetary system did not hyperinflate. This nonsense is like medieval doctors who assumed all disease was like a poison in the blood so the cure is to bleed the patient. Initially some recovered so obviously the treatment worked and the miracle cure was discovered. When the patient died, it was not because they bled to death, but because they didn’t bleed them soon enough. It has NEVER been simply “fiat” currency for everything is always “fiat” to varying degrees. FDR devalued the dollar declaring gold was now not $20.67 but $35. That is still “fiat” for the state is dictating the value of money regardless what it is. It ain’t the FIAT – it is the fiscal mismanagement of politicians. We had a gold standard from 1944 to 1971. It failed! Claiming the gold standard will solve all problems is like bleeding patients. There is a lot more to it than what constitutes money at the moment.
It is time to set primitive biases aside and let the facts lead you to understanding. So yes, we said Japan was at the 23 year mark and it would reverse. Yes we warned that gold made a 13 year temporary high. Then they look at Soros and surmise he made a billion on the yen and has now reduced his exposure to gold. What follows, is always blaming me for the failed theories of others.
Be very careful someone is not telling you to buy so others can sell to you covertly. NEVER get married to a trading position. Perhaps it is time to listen to someone who is not selling you something. Maybe it is time to understand trading. At the Princeton World Economic Conference March 18-19, the fate of the metals will be discussed as well as How to Trade a Panic techniques. If you sell highs and buy when the decline is over instead only buy and average in against losses, you may find that you can buy more from a position of strength rather than weakness. Remember, the standard sales pitch of stock brokers trained by management was to pitch averaging in and never sell because nobody can predict the future. That advice work real good in the Great Depression.