Gold is currently sitting at $1,614, so we watch and we wait.
Gold is pretty much unchanged this evening at around $1,612. Gold stocks are having a fairly good day so we may have to start thinking about selling into the strength soon, but the time has not quite come for that yet. It will be strange to see these positions in the black again and I am sure that when it is time to take some profit we will regret not buying more when the prices were low. This, however, is what it is like to invest.
The trick is to understand that you cannot KNOW where price is going. Really understand and believe that fact. If you have a feeling that price will correct to ‘X’ and then rebound up to ‘Y’ and it does just that, remind yourself that coincidences do sometimes happen – next time it will most probably not.
Gold is currently sitting at $1,613 an ounce. We will initiate some weak selling if/when gold hits $1,630, but not before.
It should be noted that when we talk about selling into strength we are refer to non-core holdings. These are quite separate from our core holdings, which we purchased at much lower prices and intend to hold for as long as gold continues to be a worthwhile asset.
Non-core holdings are for trading – buying into weakness and selling into strength. This method is the logical conclusion of admitting to ourselves that we don’t know where the market is going in the short to medium term and try as we might, we are never going to be able put all our money into market bottoms and sell everything at market tops.
We believe that this bull market in gold is going to continue for many years to come and that by the time it is finished, gold is going to be priced many times what it is now. We will therefore NEVER sell our core holdings in order to be “in the market” when this time comes.
Non-core holdings are used to utilise market volatility along the way. When the price falls we buy more, increasing our total holding. As price increases we sell non-core holdings, generating profits – not forgetting that our overall wealth is also increasing due to the core holdings.
This is the only way we have found to consistently make money in the market.
Well gold finished the week at just under $1,604 so no change in our position.
We at barbarous relic are still convinced about the long-term prospects for gold and are comfortable in the belief that one day, in the not too distant future, gold will be trading well above $2,000 and quite probably above $3,000, $4,000 or $5,000. Why do we believe this? Well, for a number of reason really. We intend to develop this site and add a number of articles which we feel with explain this position in the necessary detail.
Have a good weekend.
We have been waiting for the U.S. jobs report to be published. According to the Labour Department, payrolls climbed more than forecast in July, boosted by a pickup in employment at automakers. Payrolls increased by a seasonally adjusted 163,000, but the unemployment rate increased slightly to 8.3%.
We expect that the initial reaction will be a slight sell off as the initial thought will be that the economy must be picking up and QE3 may not happen. When people ponder that “one swallow does not a summer make” then we will probably see gold settle back to around $1,600. We could be wrong, and in a way we hope we are – a big sell off would be another opportunity to accumulate more gold.
Well the Federal Reserve made their statement yesterday and they announced that they are ready to take further action to create monetary stimulus – but not quite yet. The Fed said it will “closely monitor” the economy and will “provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions”.
This reads to us at barbarous relic that the board is somewhat divided. Most members are almost certainly in favour of further stimulus now, but are holding out a little longer in order to appease a minority. The initial reaction in the gold market was a slight drop, to just under $1,600, but gold is back up this morning to $1,602.
There seemed to us to be fairly widespread expectation of action yesterday, so the somewhat muted reaction to the “bad news” is an indication of the strength of the gold market at the moment. It “feels” to us that this protracted correction is coming to and end and that we may soon be testing the $1,900s high again this year. In one way we are happy about this prospect – it is always nice to see your holdings increasing in value. On the other hand, as Warren Buffet said, a net buyer of hamburgers would be happy when the price on hamburgers is low and unhappy if prices rise too high. As net buyers of gold we should be happy with low prices.
The point is that the price of the ultimate asset, gold, is out of our control. What we MUST do is respond correctly to whatever price we are given – buy into weakness and sell into strength.
Gold is still round the $1615 level. We are happy to sit here and see what unfolds over the next couple of days. If the Fed comes out and hints at further monetary easing then gold will almost certainly surge ahead. If they suggest that the US economy is able to grow under current policy conditions then we might see price testing the $1500 lows.
At the end of the day, we at Barbarous Relic are quite happy to admit that we do not know where price is going in the medium term. In fact, we keep repeating to ourselves this actuality. It is very dangerous to believe that you do know where price is going because you will then be forced to act upon it – and you will probably lose money.
So we are happy to see where price goes next. If there is further price weakness then we will buy more gold (light weakness means light buying and strong weakness means strong buying). If the next leg up in the gold bull occurs, then we will use the same philosophy to sell into that strength. We have found this is the only way to consistently make money in the markets.