Gold Market Speculation

NYC - Financial District: NYSE - Gold Market Speculation

Definition of speculation

  1. :  an act or instance of speculating: such as

    a :  assumption of unusual business risk in hopes of obtaining commensurate gain

    b :  a transaction involving such speculation

Market Mavens

Jesse Lauriston Livermore Jesse Livermore Jesse Livermore, also known as the Boy Plunger and the Great Bear of Wall Street, was famed for making and losing several multimillion-dollar fortunes and short selling during the stock market crashes in 1907 and 1929. During his lifetime, Livermore gained and lost several multimillion-dollar fortunes. He sometimes played hunches, famously selling Union Pacific railroad short right before the 1906 San Francisco earthquake. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. Adjusted for inflation, $100 million in 1929, equals about $1.39 billion in 2016. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Born: July 26, 1877 Died: November 28, 1940 (aged 63) Cause of death: Suicide (assisted?)
Jim Sinclair Jim Sinclair Jim Sinclair is primarily a precious metals specialist and a commodities and foreign currency trader. From 1981 to 1984, Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker. He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation (commodity clearing firm) and Global Arbitrage (derivative dealer in metals and currencies). Sinclair is a long term bull and has been so for the past 50 years. He rejects the short term trading method.
Rob Arnot Rob Arnott An investor, editor and writer who focuses on articles about quantitative investing. He serves as Chairman and CEO of Research Affiliates, LLC, which advises on over $160 billion in institutional investment assets. He edited CFA Institute's Financial Analysts Journal from 2002–2006, and has edited three books on equity management and tactical asset allocation. He is a co-author of the book The Fundamental Index: A Better Way to Invest, and co-editor of three other books relating to asset allocation and equity market investing. Arnott has received seven Graham and Dodd Scrolls and Awards, awarded annually by the CFA Institute for best articles of the year, and has received three Bernstein-Fabozzi/Jacobs-Levy awards from the Journal of Portfolio Management and Institutional Investor magazine. He is advising a percentage of available capital always be positioned in gold. He is a long term bull.
Axel Merk Axel Merk President & CIO of Merk Investments, LLC, Axel is an expert on hard money, macro trends and international investing. He is considered the authority on currencies. His insight and expertise have allowed him to foresee major economic developments: As early as 2003, he pinpointed the macro trend of U.S. dollar volatility while warning about the building of the credit bubble. In 2005, Axel Merk positioned his clients to move out of real estate and protect them against a faltering U.S. dollar by investing in hard currencies and gold. In early 2007, he wisely cautioned that volatility would surge, causing a painful global credit contraction affecting all asset classes. The S&P 500 on average was negative for those seven calendar years of Presidential transition. The average return in Presidential transition years is +14.8% for gold and -0.9% for the S&P 500.
Michael Belkin Michael Belkin Previously, Mr. Belkin was a vice-president and quantitative strategist in global equity proprietary trading at Salomon Brothers. Financial Market Strategist & Author of The Belkin Report – A weekly global forecasting service since 1992 which has become the trusted resource to advise managers of hedge funds, pension funds, investment banks, mutual funds, sovereign wealth funds and family offices throughout North America, Europe and Asia. He thinks we are at or near the low for this first pullback in an ongoing bull market that started one year ago. He expects much higher prices.
Rick Rule Rick Rule Director, President, and Chief Executive Officer of Sprott US Holdings, Inc. Sprott Asset Management USA Inc., an SEC Registered Investment Adviser offering managed accounts; and Resource Capital Investment Corporation, an SEC Registered Investment Adviser managing partnerships. He has not expressed any direct opinion short term. Long term he is bullish.
Harry Dent Harry Dent An American financial newsletter writer. His 2009 book, The Great Depression Ahead, appeared on the New York Times Bestseller List. On December 10, 2016, Dent predicted that the Dow Jones Industrial average could fall 17,000 points as a result of Donald Trump's election win. Less than two weeks later, Dent reversed his opinion and thinks there is short term growth for the US stock market, but demographic forces will keep the economic growth stagnant in the longer term. Gold will be at $700 by 2017 and $400 longer term.
Jim Rickards Jim Rickards Rickards worked on Wall Street for 35 years. Rickards was the senior managing director for market intelligence at Omnis, Inc., a consulting firm. He is a regular commentator on finance, and is the author of The New York Times bestseller Currency Wars: The Making of the Next Global Crisis, published in 2011, The Death of Money: The Coming Collapse of the International Monetary System, published in 2014, and The New Case for Gold, published in 2016. He sees the India move against large denomination bills as a war on cash and a prelude to a war on gold. Buy it while you can is his advice.
Peter Schiff Peter Schiff An American investment broker, investor, author, financial commentator, and radio personality. He is CEO and chief global strategist of Euro Pacific Capital Inc. He is founder of Euro Pacific Canada Inc., a Canadian registered global brokerage firm headquartered in Toronto, with offices in Burlington, Ontario; Montreal; Vancouver; and Tokyo. He is also founder and chairman of Euro Pacific Bank Ltd., offshore bank based in St. Vincent and the Grenadines; founder, CEO, and chairman of Euro Pacific Asset Management, LLC., an asset management company founded in Newport Beach, currently relocated to San Juan, Puerto Rico, since 2013; and founder and chairman of SchiffGold, a precious metals dealer based in Manhattan. In the long term a multiple of today’s price. His economic analysis is first rate but he does tend to be a permabull on gold.
David Stockman David Stockman A former businessman and U.S. politician who served as a Republican U.S. Representative from the state of Michigan (1977–1981) and as the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan. After leaving government, Stockman joined the Wall St. investment bank Salomon Brothers and later became a partner of the New York–based private equity company, the Blackstone Group. His record was mixed at Blackstone, with some very good investments, such as American Axle, but also failures, including Haynes International and Republic Technologies. During 1999, after Blackstone CEO Stephen A. Schwarzman curtailed Stockman's role in managing the investments he had developed, Stockman resigned from Blackstone to start his own private equity fund company, Heartland Industrial Partners, L.P., based in Greenwich, Connecticut. He thinks that the price, long term, will protect investors from central bank money printing and so views gold as a hedge appropriate for the average investor.
Martin Armstrong Martin Armstrong The former chairman of Princeton Economics International Ltd. Armstrong is the developer of the Economic Confidence Model based on business cycles and pi. He is known for claiming to have predicted the crash of 1987 to the very day. Using his theory that boom-bust cycles occur once every 3,141 days, or 8.6 years (the number pi multiplied by 1000). Armstrong claimed in 1999 to have predicted the Nikkei's collapse in 1989 and Russia's financial collapse in 1998. Positive DJIA and negative gold
Gerald Celente Gerald Celente Publisher of the Trends Journal, business consultant and author who makes predictions about the global financial markets and other events of historical importance. In December 2007 Celente wrote, "Failing banks, busted brokerages, toppled corporate giants, bankrupt cities, states in default, foreign creditors cashing out of US securities ... whatever the spark, the stage is set for panic in the streets" and "Just as the Twin Towers collapsed from the top down, so too will the U.S. economy ... when the giant firms fall, they’ll crush the man on the street." He has also predicted tax revolts. In November 2008 Celente appeared on Fox Business Network and predicted economic depression, tax rebellions and food riots in the U.S. by 2012. Celente also predicted an "economic 9/11" and a "panic of 2008". He expects that once it reaches $1,400 that it quickly will go over $2,000. That has been his view for over half a year now.
Marc Faber Marc Faber Swiss investor based in Thailand. Faber is publisher of the Gloom Boom & Doom Report newsletter and is the director of Marc Faber Ltd, which acts as an investment advisor and fund manager. During the 1970s, Faber worked for White Weld & Company Limited in New York City, Zurich, and Hong Kong. He moved to Hong Kong in 1973. He was a managing director at Drexel Burnham Lambert Ltd Hong Kong from the beginning of 1978 until the firm's collapse in 1990. In 1990, he set up his own business, Marc Faber Limited. Faber now resides in Chiang Mai, Thailand, though he keeps a small office in Hong Kong. Faber has been recommending the purchase of gold shares for about a year now. He thinks that the shares are now a good buy. He has not indicated that the current market correction is over.
Arthur Fixed Arthur Fixed His three most successful speculations were: Shorting the USA stock market during the 1987 crash Being long on real estate from 1994 to 2007 Shorting the Internet bubble in 2001 Gold market segmentation gives us precise ways to check for specialist short covering. The difference in market segments and timing between lower, middle, and upper class financial activity is inherent in human action. It conforms to knowable economic law that doesn’t change with time and can therefore be a reliable predictor of lucrative price gaps. Calls will be bullishly long and we expect profits in excess of 100%. Previous results were achieved using highly speculative stock options. It is up to the client to determine how to use our advice.

The Fixed System (option trading service) offered is as follows.

All securities and cash stay with your broker or bank. We provide you with buy and sell orders. The client transmits these orders to his bank or broker for execution. Our fee is twenty-five percent of profits in excess of fifteen percent per annum.

Q: What is the Fixed System?
A: The Fixed System is the application of economic law in a manner consistent with the scientific method to profit from price changes.

Q: What do you mean by scientific method?
A: Using observation to establish facts and then logic to reach useful conclusions that follow from the factually correct premises.

Q: What do you mean by economic law?
A: A useful description of human action related to economic activity. See Human Action by Ludwig von Mises and Man, Economy, and State by Murray Rothbard.

Q: Where do I begin if I want information about how to apply economic law?
A: Start with The Art of Speculation during Civil War — Sun Tzu Meets Jesse Livermore.

Q: These three books amount to over 2,000 pages and the material is sometimes difficult. Do I need to understand all of it before I can use the Fixed System?
A: No, but you’ll get better results if you do. If you want to base your speculation on facts and not falsehoods, on valid conclusions and not fallacious reasoning, then read and study these three books.

Q: Which of the three should I read first?
A: Start with the Q&A in Sun Tzu Meets Jesse Livermore (Appendix A). Then read the entire book, then Mises, and then Rothbard.

Q: I understand that all value is subjective and that in a market economy, the current price will be bid up to the expectation of future price less cost of carry. The same process occurs in reverse when market participants expect the future price to be lower. You use four criteria to measure this and to call the low in the gold market:

  1. a break to the downside in the general securities market
  2. extremely negative sentiment indicators
  3. ending wave pattern
  4. specialist short covering

Is all of this part of the Fixed System?

A: Yes. That all value is subjective is a fundamental law of economics. The system is fixed, constant, because economic law and facts are fixed, constant. You can ignore the facts and law, but you will still be subject to them and suffer the results of ignorance. Economic law is just as binding as the law of gravity.

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Photo credit: wallyg via Visual hunt / CC BY-NC-ND

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