i wonder what this guy thinks now

  1. 708 Posts.
    The oversupply argument is hilarious....
    This guy wrote this in June 01. Wonder what he is thinking now?

    >Gold’s pathetic wheel-spinning continues

    By: Harold McMillan


    Posted: 2001/06/11 Mon 16:00 ZE2 | © Mineweb 1997-2002


    The world caught alight on Friday because gold put on $7.30 an ounce. Big deal, but the blind media keeps following this metal as though it’s important. Nothing could be less true, but 20 years of evidence to the contrary is not enough, apparently.
    -
    Gold rallied on Friday because of an options close-out, not because it has some inherent quality that will make it a prize possession. Like any other commodity it must be traded based on the facts. The fact is hideous oversupply.

    My firm has traded on that knowledge for 15 of the last 20 years, selling short at every opportunity – and that is what a price spike is nowadays. Indeed, it has been the easiest money in the world to be short gold with a handful of conspiricists adamantly long. It’s just a pity that the underlying equities were not more liquid because then the fleecing would be doubly good.

    There have been times of concern where gold has run high, but we’re always assured that it will revert to type. It always behaves. Not because there are nasty bankers making it behave, but because they know how to read and play a market.

    The point that the conspiracy club doesn’t get is that people don’t like or need gold anymore. The majority of every major OECD nation is quite satisfied with paper money. There has not been a serious panic since 1929 and the last memorable monetary crisis was in 1923. We may suffer a little inflation as a consequence, but the world has grown into a better place for reasonably well-managed fiat currencies.

    Those who bet against gold retaining its monetary role have been handsomely rewarded for 20 years. There’s not a better reason to be involved in the gold trade when you know that the odds are so in your favour. It’s just insensible for anyone to have been long gold at any point except during brief rallies. And even there, the signals are telegraphed weeks ahead so loading up on equity call options is a wonderful fillip.

    I love gold for no other reason than it gives security of income. Its movements are obvious and predictable, unlike telecommunications and technology. So my message to the long side is stop being so emotional. Trade long, short and in the middle.

    Gold is nothing special and it’s not going to $600 anytime soon. And even if it does, it’s not going to stay there indefinitely.


 
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