Gold breaks to 1500… Where are the gold bugs now?

  • Posted on: April 12, 2013

1) gold’s low today is a 38% retracement of the rally which started back in 2008 when gold was at 800 bucks an ounce.  Next support in Gold is 1367 and then 1237. 

The report came out friendly old crop corn and we got a good bounce in CK up to 666.  Fortunately, we only paid 200 bucks for each put, and with 14 days left of life for those options.
They still may pay off.  A lot can happen over the next 2 weeks.  I’m actually buying some more cheap puts, because I think this is a head fake rally.

Interestingly,  The rally back in CZ new crop corn was a perfect 50% retracement of the recent 40 cent sell off.5.49 3/4 is exactly half way back from this move.  March 27th high at 5.73 3/4.  The April 1st low was 5.25 1/2.    This is just enough of a rally in CZ to suck in the bulls to continue averaging losers.The January high was 6.02..Going back to September through December, we could not pierce 6.45. The contract high at 6.61 was on September 7th.

Corn dropped 1.36 20 % of its value between that contract high and the 10 month low at 5.25 1/2 posted just 9 days ago.

The average American farmer has not sold anything for 2013.  That’s how I know the lows are not in yet. Stay short.

One last word about the gold bugs.  Since about 1999/ 1998, its been a great run.  There’s a triple top at 1800.00   Where are the gold bugs talking gold at 2k, 4K, 5K an ounce.

Ditto Silver. Remember Silver at 34.00 an ounce.. How do you feel about silver at 25.  That’s 24 % off its highs. If you bought silver 2 years ago,  you’re taking the pipe along with gold.

I listen to a lot of diverse radio.  I listen to the conservative whack jobs and the liberal “progressive” whack jobs.  For years,  buying gold was seen as un American. somehow, betting against the US. Only extreme prepers. (preparing for the end of the world)  bought gold. 
then around 2011, it became the liberals on the radio touting gold too.  Their paranoia was that if Obama lost the election, the evil white males would destroy the economy, and : ergo  :::: buy gold.
One particularly obnoxious purveyor was Thom Hartman.  Here’s a guy who was spectacularly successful as a business man.  Sold his Travel company wholesale travel for a ton of dough. Good for him.  Amazing success.  But then he spends his time on the radio  relentlessly attacking anyone not progressive or liberal. An interesting dichotomy.  I personally believed he was smart, trying to become the liberal version of Rush Limbaugh,  selling the people in his target audience the entertainment that appeals to them.

In any event,  for the past 2 years I’ve been listening periodically to this guy’s show.  I am more of a middle of the road person, personally.  Both extremes make me anxious.
that being said,  i thought it was a sign that the top was in if these guys were recommending gold.

Where will they be if their followers bought gold at 1750 or above and end up selling it down at 1100 bucks if we go there?   How will they be any different than the capitalist “pigs”  they spend their days vilifying?   I just can’t get past the potential irony here.

Its just one more example of group thing and herd thinking going awry.

Have a great weekend.
CER