Gold Hype

Buy or sell gold if it is trending and do so only with a loss-limiting stop in place. Don’t buy gold because Glen Beck or George Soros promotes it (see NY Times). Excerpt:

Tongue only half in cheek, Glenn Beck advised his audience to consider “Gold, God and Guns,” while laying out three possible scenarios for the economy: recession, depression or collapse. One major advertiser on Mr. Beck’s show is Goldline, a huge California marketer of gold coins and bars that is also a sponsor of programs hosted by other prominent conservative commentators like Laura Ingraham and Mike Huckabee. Mr. Beck has said he “was a client of Goldline long before they were a client of mine,” adding: “I personally don’t buy gold as an investment. I buy it for protection.” Of course, the right hardly has a monopoly on gold. Mr. Soros, a prominent donor to liberal causes and candidates, holds more than $600 million in bullion and gold mining shares.

Call Goldline and ask about how their ‘gold exit strategy’ works. I have done it. Their response is pure comedy.

9 thoughts on “Gold Hype

  1. Agree with your thesis of buying gold when its trending up, but, there is no need for a stop to be place insofar as when the trend reverses south, that’s your ticket out of longs and into shorts. Or you can use the down-trend reversal as a “loss limiting stop,” and just go flat, but why leave the down-trend profits on the table? As Ken Kesey wrote, you’re either on the[trend following] bus or off the bus.

  2. “why leave the down-trend profits on the table?”

    Because the risk reward ratio may not be good enough. It doesn’t make sense to feel you always have to be in the market (either long or short) unless of course you are simply craving “action”. The market doesn’t care what you like or don’t like.

  3. I am obviously missing something here, gold is safe,supposedly,but am I understanding that buying gold now is bad? Is the price too high? Or is the trend wrong?

  4. Mr. Covel come on! I thought trend following was your thing? don’t deviate from your mantra just because it seems like you have a distaste for Gold! Since 1998 Gold is up over 417%, what investment has beat that? If you had moved all your money into gold you would be a happy happy happy man today. I don’t get what investors have agaisn’t gold?

  5. Andrew, I don’t think Covel has anything against Gold as part of a diversified trendfollowing portfolio. He seems to have something against the notion of gold being a risk-free holy grail money-making machine that one can go long without any exit plan.

  6. I have a buddy of mine who works as a broker for Goldline. He told me the other day that they have a 35% markup on the gold that they sell! It would take a massive upward move in the price of gold to be able to break even in your investment. Glen Beck’s claim that he buys gold not as an investment but for security may be true, but I can think of plenty of other things to put money into that have wonderful intrinsic value and aren’t bought at a 35% markup. lol

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