Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
I can’t quite come to grips with buying gold right now. Why? Because I had my TDI (Taxi Driver Indicator) triggered on the way home last night when the cabbie said “You gotta be long gold” and this came within a week of having my DPI (Dinner Party Indicator) triggered.
Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, provides below further reformatted and edited [..] excerpts from the Macro Man’s (http://macro-man.blogspot.com/) original article* for the sake of clarity and brevity to ensure a fast and easy read. The author goes on to say:
Moist Digit Indicator
When I run both indicators through my polemic MDI Model (Moist Digit Indicator), which involves licking your finger, sticking it in the air, and calibrating that via the BLSH algorithm (Buy Low Sell High) I can’t help but think that we aren’t far from a large [sell-off. Why? Because:]
a) the extrapolationists all have their rulers out and are calling for gold to head somewhere just outside the orbit of Pluto by 20__ (insert year here)
b) some Austrians are [claiming that] demand is strong enough to constitute panic buying
c) the World “talk it up” Gold Council has said gold demand will be “strong” this year on increased investment and higher jewelery usage and more elaborate Indian weddings.
d) open interest is screamingly high.
My assessment of the situation is that gold doesn’t look that out of whack against world real rates but when you look at it over a 10-year period the deflationistas are winning the debate … Perhaps given that both real rates and inflation expectations are now so low, the really overvalued assets are bonds … Short-term though, we have a ratcheting relationship with the risk-on/risk-off trade.
Gold is a loaded position, as stress = gold falling. So, if we are seeing a bounce in risk assets then gold should drift up again short-term, giving the taxi drivers one more hurrah … but I am wary … very wary.
Gold may be going to the moon if not Pluto, but we need to see a few taxi crashes and dinner party pregnant pauses when gold is mentioned before we really take off.
*http://seekingalpha.com/article/207292-sentiment-on-gold-deserves-some-tarnish?source=email
Editor’s Note:
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
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