Isn’t it typical for Rogers, who manages a Commodities Index fund, and Greer of PIMCO, who oversees a $12 billion commodities fund, to say that commodities are not in a speculative bubble.
Reuters reports this morning on Greer’s views. Greer says a bubble can only exist for an asset in short supply, and that’s why we had a RE bubble. Huh? RE was in short supply? Second, you need to lose all concept of an objective measure of value. Well, we’ve got that in commodities.
The recent runup in gold is a great example. At first, every dollar of GLD purchase resulted in x bullion placed in the vault. Lately, it takes $20 of GLD purchase to move that same bullion (or something like that). And now we’ve had a pullback in gold. As Chris J wrote, did China all of a sudden dump their gold holdings? Did Indians stop buying jewelry (perhaps yes). Is the dollar more safe now and investors are not fleeing from the dollar into gold?
The fundamental reasons that were given for the high rise in gold still exist, but the price is down. This points to a speculative bubble that popped.
But don’t depend on PIMCO or Rogers or Peter Schiff of EuroPacificCapital to give you any straight talk on the bubble. Remember, they are salespeople. Asking Jim Rogers about the future of a commodity is like asking David Lereah about the direction of home prices this year.
It’s natural for PM prices to rise and fall in their journey in this bull market. Whereas Jim Rogers says every day is a good day to buy PM, we can certainly improve our returns by exercising discipline and holding off when prices diverge sharply from the 200dma. We’ve been discussing the parabolic rise of gold in these forums, and some of us agreed we should wait to get in. I’ve never heard Rogers say we should wait to get in. Neither did Schiff.
Between reading Zeal and Chris J’s blog, this week’s correction was anticipated. I am awaiting a good time to make a purchase.
Just remember, salespeople are salespeople. They make a living off selling the product they represent. I can tell you in my industry ( trading ), the brokers are mostly wanna be traders. If any of them could make a living trading, they would clearly be doing it. It would be better than dealing with all of the stuff you deal with as a broker.
NEVER EVER EVER EVER buy or sell a stock or bond or commodity based on the advice of a broker! I cannot tell you how many times in my life I have gotten calls asking for my view on an upcoming price move from a brokerage firm. No big deal in general, but… These calls often come from the institutional sales people.
I usually ask them why they are calling me? There response is that they look through the account balances to see who is making the most money, and that is who they call. I at times was the highly paid research staff, they claimed to have.
These are the very same people that represent themselves to be experts. They are just salespeople. They make money on commissions, not being good traders.
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