Oct 6 2013, 03:09
Disclosure: I am long SLV. (More…)
I have seen a few interesting comments to my latest articles pointing out the need for more traditional “fundamental analysis” in my articles. So, rather than discussing market sentiment, I would imagine they would want me to discuss the metals’ relationship to the dollar, QE infusions, the effect of the government shut down, or the buying or lack thereof in other countries, etc.
But, can you really derive any useful information from any of those factors that can assist you in the directional movements of the metals? I think not, especially since they have all led investors astray for the last two years.
First, many believe that the dollar and the metals have some form of inverse relationship. Well, has anyone actually looked at the two over the last month? Both have been in a downtrend. But, do any “fundamentalists” discuss this? I have not seen any. This fact just gets swept under the rug, since it does not fit within their overall perspective, and there are no reasonable answers to this phenomena. But, this is simply because markets are not “reasonable” entities, but emotional ones, and each market should be analyzed based upon its own merits. Relying on these so-called “correlations” will only leave you high and dry when they disappear just as quickly as they seemingly appeared. In fact, what if the metals are setting up to rally along with the dollar? Think about that one.
Next, everyone expected that QE infusions would simply send the metals skyrocketing. Well, I think we have all hopefully come to terms with the fallacy of this expectation.
Recently, everyone believed that the shutting down of the government would cause everyone to run to the metals, thereby causing them to skyrocket. Well, the actual shut down has begun, and we see no appreciable changes in the metals.
But, yet, everyone wants me to discuss these “non-factors!?” For some reason, everyone still believes these issues will unlock the “holy grail” to the directional cues in the metals. In truth, you have dozens of other authors who discuss these issues ad nauseum. They come to you with their long term biases and spin each of these scenarios into the perspective they currently hold.
But, sorry folks, this is simply not for me. I will not waste my time with such useless conjecture, as it has not helped anyone be able to determine the immediate direction of the metals. In fact, it has led to more investors being caught on the wrong side of the market more often than not over the last two years. In fact, if you look back upon the last two years, even if you knew the news before it came out, you still would have likely been wrong about the next trend for the metals. Think about that too.
Read the full article at Seeking Alpha