Gold (another 80's reference)....a guy that I know came up to me on Thursday and said, "Gold!" and I said what? He then proceeds to tell me that the price of gold was close to a thousand dollars an ounce and how it is time to buy. I looked him right in the eye and asked him if he was serious and with a serious face he said "Yes."
It was with a heavy heart that I asked him why was he riding a wave that everyone else is going to ride? He gave me a puzzled look. I restated my question, why do you want to get in on something that everyone else has gotten in on? His response was a priceless puzzled look. I told him, "Right now you see the price of gold is at the top of a wave and like every wave it will come crashing down. Now, don't get me wrong GOLD will never be worthless but if you go in now with a minimum $10K block at the current price (approx. $980/oz.) and when the price corrects itself, it will be lower than the starry eyed price you see now and your $10K will be worth a lot less."
He responds, "but they say it will go up."
I say, "Just like 'they' said to the Adjustable Rate Mortgage (ARM) holders that the interest rate will go down and now look at them," again another puzzled look, "What I am trying to say is that those that are talking are the ones that want you to dump your money into something so they can get out, make a profit, and leave you holding the bag."
So what did I recommend?
I recommend to my friend. Find the next wave and jump on while it is still growing and then get out just as the news media starts to leak the story to the public. He again gave me this look of utter confusion. I asked him if he had been tracking the price of gold or did he just happen to hear about the price of gold in the press? Reluctantly, he stated that he had just heard about it. Well my friend, it is time for you to start doing your homework and quit thinking like everyone else. Remember, $984 is the price of entry, the price to play. You have to give up $984 of your money just to get in the game, the last best time to have gotten in the game was on Monday, April 2, 2001 when Gold closed at $255.95. Guess what? That Gold ship has sailed!!!
I told him to look at other commodities such as foodstuff, other precious metals, and pharma. Find the next big hit, get in, and ride the wave for the long haul, get out just as it is starting to crash, which usually occurs when the media gets a hold of what is happening. Good Luck (after all isn't that what playing the market is truly all about?)!
FULL DISCLOSURE: I do not hold a position in Gold as a commodity. As of this writing, the closing price of Gold was $972.50 per troy ounce (London Fix).
and now the actual 80's reference:
let's tag this post with:
Dave Guerra, Gold, markets, Commodities Trading, ARM, rates, Spandau Ballet
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