Sell in May and Go Away or Buy in May and Go Away?
Bob Moriarty May 13, 2013
Actually you should do both. Buy Vancouver/Toronto and sit, sell Wall Street and sit.
We have had a major bottom in gold, silver and resource stocks. By all measures investors despise gold and won’t touch it with a ten-foot pole. That’s a really good thing.
Investing is no more complex than buying cheap and selling dear.
Many times I have tried to explain that the chart of the XAU over Gold is the most pure measure of investor psychology in the gold space. When investors love gold, they buy the metal. When investors hate gold, they sell the shares. So you can figure out where you are just by looking at the chart.
Shares are cheaper relative to gold than they have ever been in history. Ignore everything else. Shares are cheap. So buy shares in resources as well as physical gold and silver, you will never again get this opportunity. Buy cheap, sell dear, that’s all there is to it.
Meanwhile, over in Fantasy Land on Wall Street, the S&P and Dow continue to make new record nominal highs day after day. According to Leon Black of Apollo Global Management, “We are harvesting.” “We’re selling everything that’s not nailed down.” “The financing market is as good as we have ever seen it. It’s back to 2007 levels. There is no institutional memory.” Hmmm? 2007 levels? That may be a bad thing. That’s when markets topped.
In July of 2007 margin debt exploded to a record of $381.4 billion. Today it sits at $379.5. Hmmm?
If you wonder just what is happening with sentiment, Barron’s recently reported a new record high in bullishness consensus on equities with some 96% of money managers declaring themselves “bullish on stocks for the next five years.” Hmmm?
If you wander over to the SPX COTs, you can see a new record speculator long position of $55 billion, the highest since the 2007 record. Hmmm?
Ohh, someone who makes money advertising for mining companies says the shares are cheap and to buy huh?
Too bad that silly ratio chart chart does not factor in rising costs, production issues, competition from other gold storage investments, enviormental risks, worker strikes, etc. Let's just ignore all these reasons as to why the mining shares have moved lower and just focus on that crazy ignorant ratio chart? utter nonsense.