Gold investment sentiment indicators

Gold investment
Q: Thank you for the explanation of the criteria for inclusion in the short list. You have previously indicated four criteria for calling the low in the gold market. Could we review and expand upon that. Is gold investment a bad idea? You have also indicated that there are three level of understanding this: mental, emotional and physical.
A: Yes. To assist all three levels of understanding I use four criteria for calling a low in the gold market.

  1. An extreme reading in negative sentiment indicators. This is now, January 19, 2016, at the same level it was when gold sold for $260 an ounce in 2001. I mark these criteria as met.
  2. A break in the general securities market. This is needed for new capital to enter the gold market. This is provided by a bear market in the general stock market. The DJIA is now under its previous 10 months’ trading range. This month’s worldwide panic stock market down move marks these criteria as met.
  3. Specialist short covering. This will happen when the specialists’ books have no sell orders and no new sellers are induced to enter the market when specialists drop the bid. It is when the bid price is less than the existing owners’ retention price: the price at which they would be willing to buy. This has not yet happened.
  4. Ending wave pattern. This is a subjective confirming indicator. Alone it has little predictive value. But it is very helpful for organizing and tracking alternatives. A fifth wave five-wave diagonal triangle consisting of five contracting waves that divide into three waves each would be confirming. So might a standard fifth wave. We do not have a confirming ending wave pattern yet.

Sentiment indicators are good contra-indicators. If people tell you they think gold shares are going lower, they have already sold. They say this in order to justify what they have already done. So, if 90% say gold is a bad investment, only 10% are still able to sell. Once the bid price falls below the retention price of this last 10%, there are zero sellers and this is the low marking the end of the bear and the start of a new bull market. The first leg up can be entirely short covering, but in order to have a sustained up move there must be new buyers and that requires a new bear market elsewhere. We have that in the story stocks like Tesla Motor, TSLA. We have it most dramatically in the China shares market. With a PE ratio of 62 they have a lot further to sink.

Q: What securities will you be investing in once the low in gold is in?
A: I will not be investing. I will be speculating.

Q: What criteria will you use for inclusion in your long au market speculation?
A: I will use what has been rumored to be The Fixed System. The goal here is not good investment returns but extra ordinary results base on the application of logic and fact. Economic law is not optional. It is as fixed as the law of gravity. The same can be for facts. Both are unforgiving. Blog 19 Jan16

Q: Thank you for the explanation of the criteria for inclusion in the short list. You have previously indicated four criteria for calling the low in the gold market. Could we review and expand upon that. You have also indicated that there are three level of understanding this: mental, emotional and physical.
A: Yes. To assist all three levels of understanding I use four criteria for calling a low in the gold market.

  1. An extreme reading in negative sentiment indicators. This is now, January 19, 2016, at the same level it was when gold sold for $260 an ounce in 2001. I mark these criteria as met.
  2. A break in the general securities market. This is needed for new capital to enter the gold market. This is provided by a bear market in the general stock market. The DJIA is now under its previous 10 months’ trading range. This month’s worldwide panic stock market down move marks these criteria as met.
  3. Specialist short covering. This will happen when the specialists’ books have no sell orders and no new sellers are induced to enter the market when specialists drop the bid. It is when the bid price is less than the existing owners’ retention price: the price at which they would be willing to buy. This has not yet happened.
  4. Ending wave pattern. This is a subjective confirming indicator. Alone it has little predictive value. But it is very helpful for organizing and tracking alternatives. A fifth wave five-wave diagonal triangle consisting of five contracting waves that divide into three waves each would be confirming. So might a standard fifth wave. We do not have a confirming ending wave pattern yet.

Sentiment indicators are good contra-indicators. If people tell you they think gold shares are going lower, they have already sold. They say this in order to justify what they have already done. So, if 90% say gold is a bad investment, only 10% are still able to sell. Once the bid price falls below the retention price of this last 10%, there are zero sellers and this is the low marking the end of the bear and the start of a new bull market. The first leg up can be entirely short covering, but in order to have a sustained up move there must be new buyers and that requires a new bear market elsewhere. We have that in the story stocks like Tesla Motor, TSLA. We have it most dramatically in the China shares market. With a PE ratio of 62 they have a lot further to sink.


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