For the last several months, and, in fact, for the last several years, I have been writing how I take exception with the common perspectives in the metals world. The great majority of metals enthusiasts and analysts were suggesting that a stock market crash was upon us, and the metals are going to soar because of it. In fact, many suggested that the rally in gold was actually portending a stock market crash.
Now that the stock market has strongly broken out to new all-time highs – which, clearly, they did not expect, it seems many of these same analysts are still looking higher in the metals. As one who seeks out intellectual honesty in markets and analysis, this has clearly left me scratching my head.
For those that base their analysis on intermarket relationships, or some fundamental perspective that the metals are a safe haven, how can they maintain an intellectually honest perspective and still look higher in the metals? Should they not be telling you to short the metals? That would be the intellectually honest perspective for them to take.
I sincerely hope those reading this begin to see the true lack of honesty in the state of metals analysis today. What you read is simply an analyst who “hopes” gold will go higher, and really cares not for the reason. If their reason is wrong, they will simply look for another reason to be able to claim gold is going higher. To me, this is quite clear since once their reason is invalidated, their directional perspective is not. Is this truly “analysis?” Or, is it simply “hoping,” and finding the flavor of the day to support their perspective?
As I have said many times, our equity market is trying to toss off as many bulls as possible before it runs higher to 2500SPX. But, I would not be suggesting shorting gold because of it. The only reason one should short gold is if it breaks its current uptrend, and not because of some “reason.”
So, isn’t time we become honest with our investments and our perspectives about markets? Markets are not driven by logic, otherwise, we would all be seeking out logicians to divine market direction. Rather, markets are emotionally driven, and one needs to understand how sentiment drives markets in order to be able to maintain an intellectually honest, and more accurate, perspective of how markets really work.