Warning, blowhard long winded post to follow, just skip it if it is annoying.
Here are my thoughts in answer to your question. I think in general cash is a good place until fall, where stocks will be the place to be. Cash as they say is a position. There is a time to pounce and a time to be careful. We are in a time to be careful in my opinion. The selloff I mentioned in my blog on Wednesday materialized the very next day in stocks and carried through today.
I have been warning people about this bearish setup in the SP 500 for those who have read my posts. My blog goes a bit into the reasoning if you are interested in reading it. This should carry us down into a buy point at the normal seasonal time Oct/Nov.
The metals binge reminds me of so many other bubbles. They go up for awhile, then once they accelerate up all of the stories about demand driven forces surface ( kind of like housing ) show up. These arguments may in fact be true, but they are all of the “different this time variety.” China is buying, the us dollar is in deep trouble etc.. Do you just go buy gold today because you think China is going to be buying alot of jewelry, or is for some other reason loading heavily on gold?
Where do you place your stop? $25, $50, $100 per ounce lower. Ok, it has dropped $30, one days action nowadays, $3000/contract in futures. Now, are you still confident because of what will happen in the next 10 years, that the market will rally tommorrow, or next week, or next month, to save you? In the meantime while your great idea could still be right, you are down 10, 20% and bleeding money, due to poor timing.
You can see that there is a bit more to it than just having an idea. Sorry to be harsh, but I hate to see people piss away hard earned money being foolish. What is so clearly apparent to the herd is rarely the correct thing to do in investing. Does anyone really think they are unique in their analysis of why to buy gold here?
Timing is the most important aspect of investing. You can have a great idea, and be correct with it, yet lose money with poor timing. Long positions needed to be placed earlier, like 4 plex did.
I just do not invest money that way. I study history, and history does not show good success on average chasing spikes up in prices of anything. It is kind of like betting, you may hit a longshot occasionally. However, betting on the favorite is the way to win most of the time.
So, I do not buy the $2000 gold argument at all, simply because it requires a complete change of what has happened historically.
I am not an economist by any stretch. I am sure there are many people here that are more qualified to analyze economic backdrops for things.
I might be wrong. As a trader you are often humbled, so maybe this will be my time. The majority of money I make is trading SP and Bonds, so that needs to be stated. I venture into other commodities, if I see a very strong opportunity. I do not chase markets.
In the old days before I learned the hard way not to do that, I did it and at times made killings. But, ultimately got hammered chasing price spikes, or fading them.
Ironically, Silver shows as of last Friday the commercials heavily long, so no peak obvious yet, but Gold is showing commercials exiting. All of the dynamics for a drop in price are lining up for Gold. Whether this drop will set up a long trade or not will not be known until later.
I try to keep things very simple. I trade to make a profit not to be right or wrong. I do not catch every move, I miss many of them. However, the ones I do play I am pretty accurate with them. This is what I strive to do.
All that mess just sums up to be, cash (T-Bills) until fall, then aggressively long stocks. No interest in metals here, if I miss a move who cares. My short term trading in my two primaries remains active each day. T-Bill position position in RE.
