This came from CMT Ken Tower at Cyber Trader and was in Michael Kahn's regular Wednesday Barron's Online column.
"...people seem comfortable losing money slowly."
I don't know why I was so amused by this but I was.
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2 comments:
Reminds me of the old folk warning that if you throw a frog in boiling water he will quickly jump out but if you put a frog in a pan of cold water and raise the temperature very slowly the gradual warming will make the frog doze happily and the frog will eventually cook to death without ever waking up.
Like many folk tales it's factually untrue (the frog will jump out unless the container prevents it) but still conveys an important message about complacency and/or gradually growing threat in a very graphic manner.
Speaking of which, Bill Cara graphically illustrates that major global markets have actually been 'falling' when priced in gold. Available http://www.billcara.com/archives/2006/04/priced_in_gold.html
RW
:"Speaking of which, Bill Cara graphically illustrates that major global markets have actually been 'falling' when priced in gold."
There's not much of a real estate boom if priced in gold either. Once one takes that frame of reference, the entire landscape of the markets changes. I think it's useful to look from that perspective and from other currencies like Euros. Until very recently, gold was falling in terms of euros while it rose in dollars.
Another perspective: Inflation is the rise in the money supply that leads to higher prices, not higher prices themselves. The Fed looks at actual prices and throws on a huge series of adjustments. Declares there is no inflation. Whereas, M3 could be viewed as the real rate of inflation (or correlated to it), and M3 is clearly on a steep rise and the Fed is now going to hide that data. Their policies are revealed for a fraud when one starts looking at them from these different perspectives (ie gold).
Yesterday I looked at the metals and find silver at 42% above the 200DMA and gold about 19% over the 200DMA. What makes sense to me is if we are looking at data in terms of "gold and not the dollar", use the 200DMA for the gold price.
BTW, last time silver was that extended it has a vicious blow off, and I expect to see a repeat very soon. Expect to see that event take wind out of the rest of the metals commodities as well over the short run. At the bottom of that, jump in with both feet IMHO. Spent last eve on Telechart 2005 and don't see many signs of the blowoff in other metals stocks except a few like CUP. Hang on and enjoy the ride!
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