Fooled by gold again…

090804gldBeguiled by our recent trades in gold and silver we happened to think back to  our adventures in the commodity markets of the ’70s.  At Commodity Investment Service we were managing a lot of client money in addition to our own.  We made about 100 losing trades (a mild exaggeration) in silver until our clents were screaming and asking us to quit trading silver.  (In tears.)  Shortly thereafter we got long silver and were long silver in the great Hunt silver market.  We made a small fortune.

This pattern will be repeated in gold and silver.  Losses and false starts and frustrating trades and all.  And one day a fortune will be made.

If we were the Secretary of the Treasury the last thing we would want to see would be a bull market in gold.  A message from the markets that the government was in deep trouble.  So we would do everything in our power to keep the price of the precious metals down.

Does this sound like the Nixon of the ’70s who put a lid on commodities prices until he couldn’t keep a lid on and prices blew away?

To make a long story short we  bought a little gold and silver.  A small enough trade that we will ignore moves against it — call it an insurance policy.  When it makes a new high we are going to sell the ranch and bet it all on gold.

(For new readers, ignore senseless satire and wild threats.)

This Post Has 3 Comments


    hi there ,what figure would you call a new high and would it have to trade above there for a number of days to qualify betting the ranch on it. incidentally what is your eventual target for gold and silver and how far out into the future will gold peak.thanks for your time professor

  2. WHC Bassetti

    Please don’t take me seriously when I say bet the ranch. I just say these things to entertain you and myself. The nearby high is 98 or 98 in GLD. it’s not so much how much it penetrates this as how it does it. If it rockets across it by a point you’d want to b betting. A timetable is presently impossible to conjecture. The target is also difficult to compute. I’m going to be working on it.

  3. WHC Bassetti

    The new high is above the recent high (about 1000?–don’t have a chart in front of me) You would want significant strength over it — 3% would probably be sufficient. The potential high is hidden in myth and depends on how badly things are falling apart (if they do). The time span is also unknowable. I’d say the next couple of years are crucial. We could easily see it spin out of control. If you see that happening then mortgage the ranch. (Incidentally a jocular comment — betting the ranch– you should always scale into positions unless you have a direct line to the divinity or an especially dependable fortune cookie.

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