| | |
 So what do I know ? Nothing for sure. So what do I Think? I think it is an incredibly dangerous time for "Joe Schmuck" to be in the stock market, and that there are incredibly complex forces working to create a highly unstable environment in which it is extremely dangerous to rely on the elementary set of investing principles/assumptions that experience has conditioned "Joe" to take comfort in... "the system" that has worked reasonably well for Joe in the past 20 years or so. So why does all this make my head hurt? Because the underpinnings of "the economic system" that we rely on for our well-being seem to be subject to a very high degree of uncertainty ... so ... we have a situation that introduces an increased potential for something akin to earthquakes, floods etc. affecting the economies and markets of the world ... so here I am, "Joe Schmuck," trying to get a sense of my risk (am I in a quake zone, on a flood plane, is my house situated safely, oops ... is it constructed safely - how safe is safe), and gee ... is there a way to make a buck in all this? Classic risk/reward/fear/greed scenarios, that by the way ... lend themselves very well to opportunists and that call for governments and media to take extra care to responsibly manage the potential for hysteria, propelling the masses to make an already complicated situation even worse. Frankly, I have absolutely no idea where all this is heading ... nonetheless I do know that there is a tremendous volume of conflicting opinion, a great deal of emotion at play, many conflicted interests working to influence behaviours, forces working to maintain stability, forces working to capitalize on instability, etc. etc. So what do I conclude? That there is a great need for the "Joe Schmucks" of the world to be very well informed, and to look for events (facts) to emerge that tend to validate trends and probabilities ... Specifically: see a pattern of increasing evidence that strongly suggests that:
All of this, taken together, leads me to recall the pre-1980 time frame ... late sixties (low interest rates etc.) leading to the runaway inflation of the acutely aware of the potential for speed that exists today ... the Internet makes it possible for events that used to take days to transpire to unfold in minutes and seconds ... months and years become days and weeks and cycles can become tremendously compressed. So my very simple take (i.e. Joe Schmuck) tells me that I'm probably dealing with something akin to the seventies... to spare the detail ... suffice it to say that the seventies was the last period of the Gold Bull Market. So if there is a chance that history will repeat itself Precious Metals seems to be something that should account for a portion of an investment allocation ... trash cash unfortunately for lack of alternatives and risk in the market has to be a big piece of the pie until things become more clear ... etc. POG ? Well last month's range very closely approximates the early '70's price on an adjusted for inflation basis. There is about a $600 spread between that price and the 1981 high so even a move to half of that range would produce a POG above $500. The fully inflated '80 peak projected on a basis that sees the inflation of the seventies being repeated over the next 5-10 years produces a POG of about $2200 by my calculation. I've had a base position for awhile, so my risk to $250 is reasonable. If POG goes below that I suspect production just stops. Above $500 and new production probably starts to creep in (otherwise marginal stuff), but this would take awhile ... in the mean time ??? All of the contention re: manipulation etc. simply tells me that there is smoke ... potentially fire ... and in the mean time POG is showing signs of life. By the time controversial debates on the gold question get finally sorted out, it'll all be purely academic I suspect. At worst I've got a "lottery ticket" with an actual cash value ... pretty good deal I think. So there you have the view of "Joe Schmuck." Not very technically sound for sure ... not supported by any first hand knowledge of the workings or otherwise of the Gold Markets ... "Joe" just has to do something, because doing nothing doesn't work. Joe Schmuck's POG Predictions based on history repeating itself ??? A Bull market lasting 3 to 9 years.
So if I take all of the above and divide by two I get a range of $350 to 1000,which works for me etc. etc. etc. Hmmm ... Doesn't all the smoke, mirrors, uncertainty, controversy, peculation, greed, fear, and emotion, and BS make for an interesting time? As for the squeeze plays by the longs and shorts ... I'm sure somebody is doing something to somebody ... enjoy ... I'm placing a little side wager on the long side for the long term. Certainly not investment advice ... just opinions from Joe Schmuck. "bullion (BDG)" 30 May 2001 |
 |  |  |  |  |
Printer Friendly Version
Email this Article