A number of subscribers have written to ask whether I think gold may have entered a bear market. It's possible, of course, but highly unlikely in my opinion.]
When you don't know the machinery that drives gold you end up saying things like:
[Some of you are evidently quite concerned, especially since there are a few well-known gurus who recently turned very bearish on bullion. One is Tom McClellan, rated by Hulbert's as the top gold timer for the last three years. He had called for an important top on April 5 and now expects a multi-year decline.]
McClellan is just another MAer. He bases his predictions on price. He thinks price predicts price. Good luck trying to do that. It has a negative expected return of -5%. You have to know the material causes for price changes and McClellan doesn't have a clue about them.
[Another bull-turned-bear is Jeff Kern, who issued a rare "triple sell signal" when precious-metals stocks plunged on Tuesday.]
There are a hundred published prognosticators. Since their predictions cover the gamut of possibility, the probability that one of them will be right is almost perfect. The public then rushes to that one to listen for the next prediction. Of course, whoever ends up being right rarely has any idea why, and so is not likely to be the "one" during the next prediction cycle.
[He sees gold falling to around $300 over the next three years. Could these guys be right? Of course. But nothing I can discern in the technical picture corroborates such a bearish outlook.]
Of course, because the "technical picture" can't give you any clue about the future. Anyone who has some experience and is objective will immediately admit this for the simple reson that otherwise you'll just get cleaned.
[I should also mention that some of those who have turned bearish on gold cite deflation as the underlying rationale, a conclusion with which I would respectfully disagree.]
There hasn't been one month of deflation in 70 years and it isn't possible given world wide CB's fixation with controlling the price of money.
[Bob Prechter, who has been a gold bear all along for this reason, is as knowledgeable as anyone about deflation, having written a book -- Conquer the Crash: You Can Survive & Prosper in a Deflationary Depression]
Writing a book doesn't mean you know a thing about the subject of the book. Prechter knows nothing about deflation, stock markets, or any of the other things he claims to know including EWT. He's a media made clown who has a horrible record. During the '80s he had a brief show in the sun and the media hopped on that. The worse thing you can do in this biz is become visible. Guys do that for one reeason: they can't make in the markets so they sell to the media.
[While I concur with most of what he has written or said on the topic, we diverge most sharply where he asserts that deflation spells much lower prices for gold]
Catch that. "Although I agree, I disagree." The guy doesn't know what he believes. He never the studied the subject so he disagrees in some unknown way with someone who hasn't a clue. Blind leading the blind.