Riding The Gravy Train

Beating the market is fun and profitable. This is how we do it.

Tuesday, April 16, 2013

A Normal Week In Gold, Silver and Bitcoin

There's much chatter about the past couple days of trading in gold and silver.  This gold chart explains why (a silver chart would look essentially identical):

However these are the charts that should've set people off, which we posted on February 20.  In that post we stated: "We remain long-term very bearish on gold and silver.  The breaking point may be imminent."

And the panic selling should've happened in early March, per this Silver Study.

Even though we predicted it, many will wonder how we dare to call the recent action in gold and silver "normal"?  Because it is. 

Recall tech stocks, uranium, rare earths, real estate, oil many times, gold and silver 30 years ago, even Beanie Babies, the career path of New Kids On The Block, or any other mania you wish.  They all look like this:

The creator of that graphic is unknown to us, however what we do know is that it didn't take a genius to create it because this is a very common pattern.  A Bitcoin chart of the past month also looks exactly like it, as Bitcoin is down 45% from this morning and down about 70% from last week. 

That familiar pattern is what lead us to state in this post from February 18th: "Sooner or later there will be a proverbial stampede for the exits and shares in gold-related ETF's, along with their physical holdings, will be dumped hard and fast.  At that time, something like this past week's big plunge in gold and gold miners will be looked back upon fondly as the good old days."

That familiar pattern is also what led us to state in this post from September of 2011: "We feel completely certain that the silver bull market is over for a very long time to come, and quite possibly gold has topped too. "

Experience helps too, as does some common-sense.  And certainly we're not the only ones to get it right.  Credit where due.

The important take-away is that unless you learn about human nature and the natural cycle of fear & greed booms & busts, along with market history, you are doomed to buy at the top and sell at the bottom during every cycle. 

Perhaps you got in early, but borrowed to go "all in" at the top and coerced family and friends to do the same.  It's probably not the first time you've made this mistake and it's likely not the last unless you take responsibility and discard the ridiculous "massive short position" and conspiracy theories. 

This pattern is predictable and profitable.  Ignore these facts and be delusional to your continued detriment. 

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