Monday, March 25, 2013


I have written about the alleged safe haven status of Gold now for a couple of years and maybe just maybe I am finally reaching some people. I am sure the Gold bugs will bash me or roll their eye brows labeling me a doubting Thomas, a traitor, a dumb ass. He is someone who knows nothing about economics. Perhaps I am all of these perhaps I am none. Perhaps I am someone who just studies history and has no agenda. There is one reason and only one reason why I say this whole alleged relationship is a fraud, it is not in the data, AT ALL.

Does that mean things can't change and at some point in the future it will become a place where everyone goes for safety? Of course not. All I am saying now is all I have ever said, there is no historical basis of any kind to support this supposed safe haven status alleged to accompany Gold.

Gold is a commodity and as a result it moves up and down and mean reverts. The next snot nose brat that tells me other wise I just might back fist. I will envision him as Wasendorf or that common theif Bodenstein ( see todays news on his fees for PFG ). Look at the chart above during the crisis of 2008, Gold went up and down in direct correlation to the cash S&P 500. It was no safe haven. If you think you should have money in Gold by all means put some there, but it is no lock for a rally during a bad economic period, never has been and never will be. It has gone up and down historically independently of crisis periods. At times it has risen and at times it has fallen. Sorry folks those are the facts just look at some charts after you back fist the snot nose kid who is running his mouth.

I bring this up today because I came across a couple of articles that were remarking about how surprising it was that Gold was down today when all hell was breaking loose in the Euro. It was not a surprise to me at all. I did not expect it to go down or up. I just did not expect it to react to that news and it did not. I am seeing the short term trend as up in Gold, so I have been looking for a buying spot recently. I have not seen one yet. It has nothing to do with the economy at all.

I still maintain a state of shock over the comments that have come to me over Cyprus, but they in and of themselves tell me what I need to know and why what I am going to do with my money is the right thing to do. It apparently is ok for people with more money to have it confiscated as long as it is not yours. After all we have to do something! There was an article that was referred in a post from yesterday that I read and it was another person saying it was essentially ok for people with over 100K in the local currency ( I think about 130k US equivalent ) to have 40% of their money confiscated and the rest frozen indefinitely making it essentially a 100% loss for the time being. You pinheads who have not been through a PFG type of thing have no idea how hard it is to live when you have mouths to feed and bills to pay, when your money is just gone the next day when you wake up. For these people in Cyprus it is no different AT ALL than it was for victims of PFG types of things. They woke up one day with their money frozen indefinitely and wondering if and when they will ever get any back. They have people and families relying upon them and now what are they to do. Don't give me that rich people garbage, grow up! I was rich until PFG too. Trust me B of A or Wells Fargo don't give a damn why you can't pay them, they want their money now or else. Someday it could be you and it would serve you right if nobody cared. This is not directed specifically at any of the posters. Most of you I know and you are nice people who perhaps don't quite understand the devastating effect these things can have on you because you have not experienced them. Trust me you don't want to. If we all give in and accept these types of things as ok it just makes the landscape for doing the wrong thing that much more conducive to doing it. At the end of the day if you have had all your money taken whether or not it is by a criminal or a bank it does not matter to your creditors, they still have to be paid.

Those of you that think this is ok ought to be ashamed of your selves. Those of you who think this is an isolated incident that means nothing for any other place should also be ashamed of your selves. I know what I am going to do and I am taking action now. This is a shot across the bow and there will not likely be someone with a bull horn on the corner telling you to do something next time this type of thing happens. Hint: Gold is not the answer. This is a rap on this topic we are not going to discuss it any more and I may have already covered it too much.

I am getting some short term indications of a possible selling spot in stocks. I do not have any triggers. We were trying to short the ES in the trading service today but were not filled. For those who want a experienced stock traders views on things I suggest reading Trading Markets.com articles by Kevin Haggerty. He is one of my early mentors and about the best there is for stock market swings. He has kids who work on the floor and he also advises major funds on stock trading. He only posts an article about once a week or so. He has an interesting long term view of things.

Good Trading and I will take deep breaths after taking a few swings tonight. I apologize if I offended anyone but I felt these things needed to be stated. I think Newsletter readers are going to like this months edition, I have been working on it the last couple of days.


Vikas said...

Looking forward to the newsletter Chris, the last few newsletters have drastically affected and improved my trading (and trading results).

TraderJ said...

hi Chris. I don't see any ES trades in today's Swing trading service sent to my email. Do you remember it wrongly?


TraderJ said...

hi Chris. I don't see any ES trades in today's Swing trading service. Do you remember it wrongly or I didn't receive the full email? Thanks.


Chris Johnston said...

TraderJ the trade was in the Naz not the ES and there is not one for today it was for Mondays trading. If you did not get that please let me know.

Vikas glad to hear that knowing you what I have this month in Trading School is going to be interesting to you I think.

Kurt - your comment is not showing but I agree with what you said. I don't feel too confident in Gold period but certainly not in any way confident in a paper version of it, that could POOF! The more I look at things the more the banking system worries me.

Kurt said...

Thanks Chris - I could get into more details on why physical gold is not the same as other commodities but it is too off topic here - as far as trading is concerned, you are 100% right.

Chris Johnston said...

Kurt history in no way supports the it is different this time argument for Gold. It may in fact wind up being different this time but I bet on history and against the it is different this time arguments, it is a higher probability trade in general.

If you are a gold bull by all means have at it we all have to make our own decisions

We can differ on that and still be friends :)

Kurt said...

Chris I will give this one more shot for fun or maybe food for thought.

1 - The history you show relates to gold when traded as a commodity, something that has only existed very recently, a few decades really. What you talk about applied to gold as it is traded now, as Rick Santelli recently pointed out, "securitized gold" he called it. When you say "this time being different" - there was no other time that gold traded this way (unlike grains, traded this way for many hundreds/possiblt thousands even years)

2 - The stock to flow of gold is completely unique - very little gold moves compared to the "stock" of gold that exists. This is why traditional commodities need futures, but gold does not. In this way, the true price of gold is suppressed (not in a conspiracy way, but because it no longer trades and is being used for its purpose as a store of wealth, except in certain behind-the-scenes ways)

3 - Read some of the interesting discussions about gold, banking, and finance from the 40's through to the 70's and later. There is an article on it at http://fofoa.blogspot.com/

4 - Gold is still used by Nations and central banks as an ultimate reserve. The EU now marks gold to market. Ever consider why and what it means?

5 - what happens when dollars are no longer needed to buy oil? What happens when the 40+ year US trade deficit remains but no one wants or needs dollars any longer?

Chris Johnston said...

you can lead a horse to water but you can't make em drink