Gold, Common Sense and Patience Revisited

October 6, 1999

During the first part of this year, I wrote an article for Gold-Eagle titled GOLD, COMMON SENSE AND PATIENCE. That was during the dark days for gold prices and gold bulls, when it looked like there was little or no hope for gold ownership or improved prices. I have just finished rereading what I said in that article in a similar fashion to rereading my previous three Gold-Eagle articles prior to writing Gold, Common Sense and Patience. Again I can say that for the most part what I said then is still valid today and has been at least partially vindicated by the recent events in the gold arena and the upward adjustment in gold prices.

Granted, some of the statements have been outdated by time and events. Rubin has departed the scene for example. Greenspan has dropped a little in stature and esteem by the world money interests. It has even been suggested in some circles that he may be getting senile. He seems to have forgotten his assurance to the hedge funds and others in the gold carry trade that the Central Banks stand ready to supply gold when necessary. Y2K is ominously looming on the horizon as a big problem. Martin Armstrong has probably given up on a $200 gold price.

The reason I want to revisit my article is to remind people who have read my articles that now is the time for your Patience to really come to the forefront. Why? Although this bull market which started last week had a sizable price rise, that is no reason to take profits on long term positions. The price of gold has been manipulated downward by world governments and others for twenty years. It has been severely depressed in recent years by actions of participants in the gold carry trade as well as gold producers. All this time there has been more fiat paper money spewing out from most countries in the world plus at the same time the low price of gold has been increasing demand for the precious metal.

The damage done to the gold price and the gold market will not be repaired in one week, one month or even one year. It could easily take several years to undo the damage and require prices higher than even some ardent gold believers now envision. During the weeks, months and years ahead, there will be many wild swings in the market which will cause even a gold bull to worry when prices decline after large upward adjustments in price. That is when both COMMON SENSE and PATIENCE will be required if a gold bull is to reap big gains. History is filled with early bulls in a market move that sold out too soon and missed the big move. People who try to fine tune their positions each time the market advances by taking profits, may be left behind because the market advanced much more than they expected; causing them to be reluctant to buy their position back higher than they sold out. That is a situation fraught with frustration; to be right on the direction of a market but with no position.

Have the patience to maintain at least a portion of your original position at all times until the market has had a chance to correct the many years of manipulation. Certainly, a time will come when all long positions should be exited. There will even be a time when short gold positions will be warranted and a reentry into the main stock arena will be justified. My point to you right now is this, unless I am terribly misguided, that time is not now and will not be next week, next month and maybe not next year. Have PATIENCE and stay with your long gold positions, or at the very least some of them. Adjust you position size so that market dips will not scare you out of your long position. Be in a position on dips, where you can add to your long position.

Many years ago, a wise old trader said to me. In a bull market, a participant should have a core long position and an additional trading position. It was good advice then and it is good advice to gold bulls currently. One more time regarding PATIENCE. In the days, weeks and months ahead, be patient and allow the gold bull market to work for you. It appears to be "early days" in this bull trend.

The purity of gold is measured in carat weight.

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