I have been saying for the last two years that the metals would retrace more than 50% and I thought quite a bit more than that. It is funny how we are not hearing virtually anything about the crash in the metals. The line on the chart is where the 50% decline point lies, we are getting pretty close. It is another example of the media being so invested in pushing a story. A 5% gain is an explosive up move but a 50% decline is not worth talking about apparently. How would you like to be "that guy" who bought at the highs, paid the standard 20% markup on top of the spot price? He is already upside down more than 50%, close to 70%.
That is not a typo. This is where everyone said to go for safe haven, a close to 70% loss is a safe haven? It is a good thing it has never gone to zero like the ads say. I don't think the pet rock ever went to zero either. This is not an I told you so article although it may sound like it. The point is that commodities mean revert, ALWAYS. Just because Sean Hannity, Oliver North, a myriad of actors and the Gold Bugs have told you these markets will rise forever, it does not absolve you from doing your own home work. If you bought at 5k I hate to say it but you got what you deserve, it was like buying a condo in Florida to day trade it back in 2005, no different at all. Once we get down to the 2002 levels or close to them in the metals, that will be the opposite, a great buying spot for a reversion back up. At that point everyone will be overly negative. That is commodities and I don't understand how people constantly get hoodwinked on these stories, they are all the same. I am not celebrating I could still be wrong about the total reversion but I am not wrong about it historically having always happened. If we don't wind up all the way back down it will be a first.
I don't know if we will just accelerate down or meander our way back down there over a longer period of time and I don't care. I never signed off on this ruse to begin with. At the moment the bulls do have a line in the sand that they could buy against hoping their story about it being different this time turns out to be true. For all I know they are right and I am wrong, but the 50% or close now retracement from the highs already makes my point. The Bugs said this could never happen and they said the same thing about real estate. I think the total lack of coverage of this 50% drop speaks for itself.
I wish I had caught this last move down but I did not. This market chopped sideways forever it seemed before breaking down. I did say yesterday that although I was looking for a buy in Gold, I thought it was likely to follow Silver which was breaking down. The net of it is the setup for this drop did not meet my rules so I missed it. I know of no technique that catches all the moves I wish I did. My comments on this market have mostly been targeted at those who are too heavily weighted in their portfolios in the metals because of the media push to sell these things to you as a safe haven option.
I am sooooo tempted to try and short the Bernanke's here but it has just been suicide to try and short this thing over the last 6 months. The Russell is the one to short if you want to take a shot at it. We have 18 POMO days this month so it is not going to be easy to get a good short going but never say never.