I Have Gone Short Gold

[Extradry Martini]

Another NY morning smackdown. Maybe you should try trading that instead EDM. It's like clockwork.

Well, you must be making a lot of money from this brilliant theory of yours, aren't you? No? Why not? My goodness you get some kookie stuff in this forum sometimes.

[endgame]

Jeez... right, erm ok.

Gold has little utility except as a means of exchange, for which it derives its legitmacy from the fact that it is shiny and rare. That it why it has no intrinsic value - it's value is based on faith, much as the value of money is, as I said earlier. But you cannot eat it, it does not provide shelter and it is not a medicine of any kind. This is not say of course that it is not valued all the same - it is currently at $911.

I will not respond to any more posts of yours on this. If you can't understand it, it's not my problem and you are simply wasting my time.

How can you say gold has no intrinsic value? Its used in dentistry, electronic & jewelery. You could rule out the intrinsic value of many commodities based on your resoning. Its main value is derived from its historical application as money. Perhaps you are a smart guy with your fancy trading but its smart guys like you who got us into this mess. So that tends to make your arguements void. Also, you should show some respect for members, such as Narco and Errol. Im not impressed with your disrespectful attitude towards them. If you are right about gold falling back to $700 then your reasoning may be right and due respect to you or the IMF might sell and then you would be right but for the wrong reasons. If gold goes up and you are wrong then I will add you to my ignore list filed under "To55er"

regards, Azazel

Edited May 8, 2009 by endgame

[Errol]

its smart guys like you who got us into this mess.

This is very true. Far too many people (not aimed at EDM) around devising complicated vehicles for mortgages and other financial products. Lawyers, Bankers etc etc. All of them were far too smart for their own good.

Edited May 8, 2009 by Errol

[whojamaflip]

This is very true. Far too many people (not aimed at EDM) around devising complicated vehicles for mortgages and other financial products. Lawyers, Bankers etc etc. All of them were far too smart for their own good.

the mess was liar loans.

sure smart people took liar loans, but mostly it was the stupid people.

[Avon]

Jeez... right, erm ok.

Gold has little utility except as a means of exchange, for which it derives its legitmacy from the fact that it is shiny and rare. That it why it has no intrinsic value - it's value is based on faith, much as the value of money is, as I said earlier. But you cannot eat it, it does not provide shelter and it is not a medicine of any kind. This is not say of course that it is not valued all the same - it is currently at $911.

I will not respond to any more posts of yours on this. If you can't understand it, it's not my problem and you are simply wasting my time.

Christ, I've given you the benefit of the doubt until now, despite all the claptrap about imaginary, and unverifiable, concepts such as 'breakout zones', 'flat top triangles' or whatever. But this is stupid. If you look in any decent dictionary, you'll find that 'intrinsically valuable' means valuable in and of itself, whereas 'instrumentally valuable' means valuable because of its use-value or in other words the extent to which it services other values. So it's absurd to say that gold has no intrinsic value because it does not service other values (can't use it for nourishment, health, shelter). People like it for what it is, absurdly or not, which definitionally makes it intrinsically valuable (for them). I suggest you improve your own grasp of epistemology, metaphysics and aesthetics before you lay into others. Edited May 8, 2009 by Avon

[Avon]

Yes I do. (as does anyone else who knows the first principles of technical analysis).

Erm, ok. Well done!

Geez, that's lame. (1) Yes, I have an answer. But I'm not telling you what it is. But if you had read the book(s) I had then you would see that it's a really great answer. Self-evident and the basis of a wonderful system of imaginary ideas that also do not need to be questioned because the book said they exist. (2) Concedes point that you can read any pattern or shape you want to in any historical dataset support the conclusions you wish to support.

Given (1) and (2), why are you still posting?

[Errol]

[debt_scared]

I have just bought a July (it actually expires end of June) 840/800/760/720 gold put condor. It pays out on a maximum 6-1 basis, but I can't lose more than my stake.

The reasoning is simple. The price of gold is high right now because of recent aversion to banks. That is probably now slowly reversing. On top of that, the world and his wife is long of gold expecting it to rise for now tired and easily-accessible fundamental reasons which if they ever happen are stories for 2 or 3 years time, not now. Technically*, I believe that gold has entered some form of bear trend (lower highs and lower lows), and we are reasonably close to the top of the channel.

Of course, I could easily be wrong - I only put my confidence ratio on this trade at 3:2. But by doing this in a bought put (which are absurdly cheap - an argument for the bear tyrade in itself) structure, I don't mind too much if it goes wrong - and if the bulls do turn out to be right, then it could rise by a lot, but that makes no difference to me.

However, given that my confidence ratio of 3:2 and my payout ratio of 6:1 give me a risk/return ratio of 9:1, I can't afford not to put it on. On top of this, if the market starts trading my way in a significant way, then it will raise my confidence ratios enough to start adding to the position. I'll let you know in a few months time how I got on.

Edit1: I wrote this in a hurry before leaving last night and wrote the expiry month wrong. The options are July options, exiring end of June, on the August futures contract (now corrected above).

Edit2: I forgot to mention that part of the reason for thinking this is that gold did not rally - at all - on Monday when the swine flu news hit all the other markets. If something can't rally on good news (for it) then it doesn't suggest to me that it is going up for any other reason...

I hope you didn't bet too much on this. It's not looking great atm

[Errol]

Gold amy well drop soon as the next wave of deleveraging hits. We can laugh as the fools (weak holders) sell gold and flock into the 'safety' of treasuries etc. LOL.

[DiggerUK]

HELP

Just gone under 600 an ounce.

Buy or hold on.

We are nearly at the end of our second bottle of wine!!!

[roman holiday]

HELP

Just gone under 600 an ounce.

Buy or hold on.

We are nearly at the end of our second bottle of wine!!!

Pawn your wine.

[Number79]

Bump.

Where is EDM lately? Are you still shorting gold?

[endgame]

Bump.

Where is EDM lately? Are you still shorting gold?

Stop teasing the bears while they are licking thier wounds.

[azogar]

Bump.

Where is EDM lately? Are you still shorting gold?

even though edm's calls were in $, I presume his funds are in £?

hence, the change is not as marked

[Errol]

The price still may drop but the current action (in the last week or two) just underlines why it is so hard to trade.

It could just as easily go well over $1000 as drop back to $850.

[Errol]

HELP

Just gone under 600 an ounce.

Buy or hold on.

We are nearly at the end of our second bottle of wine!!!

If you are this panicky about such irrelevant movements you should not be in gold.

SELL.

[endgame]

If you are this panicky about such irrelevant movements you should not be in gold.

SELL.

Its easier to say that when you are sitting on large gains when you started buying at the lows.

[Number79]

even though edm's calls were in $, I presume his funds are in £?

hence, the change is not as marked

only if you do not have the sense to be trading £/$ aswell.

[Georgia O'Keeffe]

Perhaps - I have no view on this.

TDL

i use a number of different technical indicators but for longer term views predominantly waves because they work very well for me, its clear to me that the first leg up in the gold bull market is from feb 01 to Dec 07 and since then it has been tracing out a corrective consolidation pattern. Now when i look at the gold chart with monthly data points The high in Dec 07 does not have any divergences in the technical indicators, as such imy favoured projection of this correction is an expanding flat,

EM

It had a massive divergence on the weekly and daily chart though, and the 08 peak looks terrible from that perspective in all 3 periodicities...

TDL

i also like the idea that March 08 thru to now is developing an inverse H&S which gives me the 1250 projection.

EM

Now, this is one thing I really can't see - if you are measuring March 08 to now, you have a stronger right shoulder than left shoulder which invalidates it. On top of that, the formation is a trend reversal pattern and the market was trending up, not down prior to March 08, and the neckline is ascending, not descending. On top of that, the first rule of a head and shoulders formation is that it doesn't exist until the neckline is broken. So, it looks like you're barking up the wrong tree here.

TDL

I then expect the 500-550 price as the last part of the expanding flat probably sometime in 2010 or 11 this will complete, which will be a bog standard fib retracement of the whole wave 1 rally, at that point i think gold will go through the roof, ive had this "expanding flat" view on gold for about 6 months and up to now nothing has happened to invalidate it

EM

Again, I have nothing to say either way on this.

TDL

The above also ties in with my stock market view nicely which i see as about to turn down and head to a new final low circa 3000 over the coming months that will lead to the mother of all bear market rallies taking it back over 5000 in the first half of 2010 before it then collapses and heads sub 1000

EM

I would not assume higher gold prices correlate with falling stock markets if I were you - they have been correlating with sharply falling bank stock prices - this is not the same thing for all the reasons I give elsewhere in this thread. Be careful.

Lol, better luck next time eh, oh yeah and be careful!

Edited May 21, 2009 by T De Lempicka

[DiggerUK]

Errol,

Panicky ?

Get out of gold ?

Sell ?

Moi ?

Well, honey bunch, we're long and large and staying that way.

Surprised that you should view pound going to 1.59 US as an irrelevance, the best for six months.

What currency move would you see as relevant, all your pearls of wisdom appreciated.

As the pog$ has gone skyward we are still at 600 GBP, not exactly a bonus buying time.

If pog hadn't moved we could now stack at 570, possibly less.

Perhaps you enjoy paying high prices, I'll sell you all I have for any silly price you offer.

We haven't averaged under 532 an ounce by panicking.

As to pawning the wine, well really !!!

That would have been a criminal waste of a Barolo 2004, I think anyone who did that should have their stack chopped off.

[Extradry Martini]

I’ve been away from the forum for a while, but given what has happened, I thought I’d come back and do a quick update

Well, it looked like my gold call was pretty spectacularly wrong (for now at the very least – my options are worthless and it doesn’t look like they’ll be worth anything any time soon). Right now, it looks like what is driving it is purely the dollar (though this could change)- as I mentioned a few weeks ago in this thread, I have believed for some time that there was going to be a major break higher in EUR/USD around now. Well, that has begun and I think we are going to 1.50 and possibly even to test the previous highs of 1.60 over the coming weeks. (If you are going to be disciplined about it, though, wait for a decent pull-back from any given high point of 0.025 or so).

So, I no longer hold the view that gold is going down, but it’s not for a gold reason, but for a dollar reason. Versus sterling, as we know, it has not really moved. If we are at or near the highs of the risk rally (epitomised by the stock market rally) – and with treasury bond yields rising and the dollar falling, that is likely in my view – we start to focus on recession, and indeed the economic data get worse once more, then it may be time to revisit this view, but do it by selling gold versus euros and/or sterling. But that is for some time in the future.

Well done all of you who said it was going up, you were right.

(Those of you who said it was going up for reasons other than a fall in the dollar, you were - up until now at least - wrong, but let’s hope you bought it against the dollar, not with sterling, and you won't care)

[Extradry Martini]

How can you say gold has no intrinsic value? Its used in dentistry, electronic & jewelery. You could rule out the intrinsic value of many commodities based on your resoning.

Yes, it does have uses at the margin, but it is marginal.

Its main value is derived from its historical application as money. Perhaps you are a smart guy with your fancy trading but its smart guys like you who got us into this mess. So that tends to make your arguements void.

Erm, let me get this point of yours straight. The reasoning goes like this:

1. EDM appears intelligent

2. Some intelligent people did a stupid thing

3. Therefore nothing that EDM says can be right

Hahaha - good bit of reasoning! Gives the phrase “ad hominem argument” a whole new meaning.

Also, you should show some respect for members, such as Narco and Errol. Im not impressed with your disrespectful attitude towards them.

Did you see Narco’s first post in this thread? I am always respectful to those who show me respect. Those who are disrespectful to me do not deserve my respect – especially when they justify it with the cods that Narco has come up with. The point is that they are disrespectful because they believe that it helps their argument. I am disrespectful because having bothered to think things through, I come up with a sound argument and others try to discredit what I say not by attacking the argument, but by trying to attack me (as you just did above). Pathetic really.

If you are right about gold falling back to $700 then your reasoning may be right and due respect to you or the IMF might sell and then you would be right but for the wrong reasons. If gold goes up and you are wrong then I will add you to my ignore list filed under "To55er"

regards, Azazel

Well, I was wrong – so you can put my name in any list you like, I simply do not care what you think about me. If you had contributed to the argument rather than writing nonsense like the post above, I might, but you didn’t, so I don’t. I think you and I are done here.

One final point – if you think you can debase what I say in future purely because I got a trade wrong (by the way I’ve had plenty go wrong – it’s why I trade in small size to begin with), then you only appear as someone who knows nothing about trading, nothing about reasoning and nothing about yourself. After all, only if you have never made a single mistake ever can you logically keep your own name off that juvenile little list of yours – but then again, reasoning doesn’t appear to be a strong point in you.

Edited May 22, 2009 by Extradry Martini

[Extradry Martini]

This is very true. Far too many people (not aimed at EDM) around devising complicated vehicles for mortgages and other financial products. Lawyers, Bankers etc etc. All of them were far too smart for their own good.

Very intelligent people (some of them) behaving very stupidly, indeed.

Christ, I've given you the benefit of the doubt until now, despite all the claptrap about imaginary, and unverifiable, concepts such as 'breakout zones', 'flat top triangles' or whatever.

If you had begun on this subject with a little humility, I might have been bothered to explain the basics of technical analysis to you. The fact that you didn’t made me disinclined to do so. You still obviously know absolutely nothing about it and I still cannot be bothered to go through first principles with you. I suggest you go and do some reading on it before you make any more of a fool of yourself.

But this is stupid. If you look in any decent dictionary, you'll find that 'intrinsically valuable' means valuable in and of itself, whereas 'instrumentally valuable' means valuable because of its use-value or in other words the extent to which it services other values. So it's absurd to say that gold has no intrinsic value because it does not service other values (can't use it for nourishment, health, shelter). People like it for what it is, absurdly or not, which definitionally makes it intrinsically valuable (for them). I suggest you improve your own grasp of epistemology, metaphysics and aesthetics before you lay into others.

Is this the best you can do – quote the dictionary at me? How pathetic – you think that pedantry gives you a better “grasp of epistemology, metaphysics and aesthetics”?

My point was, and still is, that the value of gold is based on faith much as that of money and the banking system is. This is obvious and should have been obvious both to you and to the other poster. That I have been trading the stuff in the market should have also made it obvious to you both that I understand that gold has a value. The fact that none of this was obvious to you is not my problem.

Geez, that's lame. (1) Yes, I have an answer. But I'm not telling you what it is. But if you had read the book(s) I had then you would see that it's a really great answer. Self-evident and the basis of a wonderful system of imaginary ideas that also do not need to be questioned because the book said they exist. (2) Concedes point that you can read any pattern or shape you want to in any historical dataset support the conclusions you wish to support.

Given (1) and (2), why are you still posting?

Well you can see my answer above for this. I will make two more points here. Firstly, technical analysis is based on sound psychological principle (again, just look it up – I can’t be bothered going through it with you) which some people call behavioural analysis. The second point is that, like economics and fundamental analysis, it is not an exact science by any means and the more people come to the same conclusions using the same technique, the less reliable it becomes. Really, the more you take this puerile approach the more arrogant and ignorant you appear. I’d lay off it if I were you.

[Extradry Martini]

I hope you didn't bet too much on this. It's not looking great atm

No I didn’t. I never bet big unless my perceived risk/reward ratio is very high, and it certainly wasn’t then. In general, I start small and if it goes my way, I add on pull-backs.

Gold amy well drop soon as the next wave of deleveraging hits. We can laugh as the fools (weak holders) sell gold and flock into the 'safety' of treasuries etc. LOL.

Yes, treasuries are looking very soggy right now – it now seems that the USD, equities and bonds can all fall together. Having been bullish equities until now, I think this development is very bad for them and I’m going to be looking for places to sell them.

Bump.

Where is EDM lately? Are you still shorting gold?

Now why would I want to do that?

Actually, I did mean that slightly seriously. I started off by buying a small amount of put options and selling a small amount of futures. I was stopped out on my futures at 914, and as I said at the time I would watch to see if there was a good point to put the trade on again. The price then went up in a straight line. I don’t simply sell again just because it has gone higher – I need to have a good reason to think that it had turned or was turning. On top of that, gold was going up because of a process – the falling USD - which I expect to continue (and indeed am positioned for). So, there is literally no reason why I would want to have been still shorting gold.

even though edm's calls were in $, I presume his funds are in £?

hence, the change is not as marked

No, I was trading futures and options, denominated in dollars. As I said when it happened I was stopped out at 914, so I haven’t been short all this time – which would have been lunacy, quite frankly.

Lol, better luck next time eh, oh yeah and be careful!

It’s funny this – I was out of position ages ago and posted in this thread when I did it, yet so many people think I am still short. Doesn’t matter though…

However, one thing I would say here is: I would be careful in extrapolating one bad market call into a permanent ad hominem argument*. The fact is that I, like all other speculators get the market wrong many, many times. This is unavoidable The trick is making more money from getting the market right than you lose from getting it wrong. I know people who actually make many more bad calls than the do good calls, but their style of trading and their discipline make them extremely successful traders.

*As it happens, the reason why I have been away from the forum is because I have been having an extremely good few weeks of trading – not least because of the fall in the USD, which I called a few weeks back in this thread. But that was the last few weeks – tomorrow I could lose money, we are only as good as our next trade.

[endgame]

Extradry Martini, sorry if was rude to you. I appreciate your postings but you made me worry about my own situation and that stressed me out as you seem to be a smart guy, where as I'm just a fool. I went into gold at about £400 so although Im doing ok, a fall as you suggested could have wiped my gains out. The fundamentals for gold look good to me and there is plenty of articles around saying that gold is very bullish at the moment with head and shoulders formation and cup with handle, rising demand and breakouts to $1300+ on the cards. Where ever you look there are experts saying one thing and more saying the opposite. So I go with gut feeling whilst trying to base that on reading whats going down. You may well prove to be right, I would not be suprised if gold fell in the summer especially now the pound is stronger against the dollar, but it will be back up with a vengance in the winter, IMO.

Thanks for having the humility to say you were wrong and hey, dont take me too seriously, I'm just pond life. Croak!