I have seen it all before and I suspect a good number of readers have as well. Emotion is piqued, info and dis-info are flying fast and furious. Stock market promoters are pitching the end of the 'credit crisis' is in view. Commodities are [IMO rightfully] getting slammed as that bubble deflates and finally... precious metals are under siege.
Experience is a good thing to have and I am not talking about last summer when - due to holding a core of gold stocks - I was down significantly at this time but finished the year with a respectable 11% gain. What I considered 'wrong' with last year was gold and gold stocks rising and falling with everything else; stock market, commodity complex, etc. My discomfort with that situation was noted in this space many times.
This time around, watching the hopeful stock market puff out its chest while the PM's take a continued drubbing, we realize the positive market correlation is being remedied. The Gold-Oil Ratio is still on track as well. This reminds me very much of the 2001-2004 time frame, before gold got caught up in the go-go 'inflation trade' where everything went up; houses, stocks, commodities, developing nations and human greed/ignorance. PM's are now contrary to hopeful markets for better or worse, just as they should be.
I did some selling to raise cash earlier this month (another familiar experience is that it never seems like enough ;-) and in hindsight it isn't) but I have been here before. Last August's puke fest and the buying I did was responsible for the yearly profits. But more importantly, I remember the volatile and sometimes painful periods back in '02-'04 (I came along in '02). Back then, as precious metals were going along their jagged, market-contrary path I learned that returns could be diminished by over-trading as opposed to holding quality miners for longer periods.
Last year I dumped the heavy trading routine as the fundamentals began to change in the global 'all one inflation trade' casino but one must always have significant cash to take advantage of opportunities. The trick is in divining opportunity vs. knife catching when looking to bottom feed. The charts have been laid out in an ongoing manner with short and long term parameters. We are near the point where support gives way to panic. The wash-rinse-repeat cycle turned on high. Know and believe in your fundamentals and experience - which may well be different from mine - and keep emotion under wraps.
