Tuesday, February 16, 2021

#Confidence Review #Gold #Silver #Bitcoin

The old American idiom of a day late and dollar short is an phrase easily applied to majority's ability to time (buy or sell) US stocks. The majority, influenced more by instinctual behavioral tendency of the individual to seek acceptance of an emotionally-driven crowd than act independently in the minority, views rising and falling stocks prices as bullish and bearish. This tendency that drives them chase when probabilities favor fading relegates the majority as the consistent bagholders of history's panics and trend changes.

Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”, John Templeton

Subscriber Comments

Nominal yields and gold are NOT highly correlated. This is not my opinion but rather interpretation of actual long term data. While these types of comments probably take us off the "friends" list discussions that live stream for hours and provide just enough information to get listeners caught on the wrong side of the trade, they're necessary for real learning and understanding.

Correlation analysis of gold and long term yields defines a random relationship between the two. We can eyeball the randomness by looking at long term charts of gold and yields (chart 1 & 2). Gold can rally just as easily against rising yields as it does falling. Investors can't craft explanations that only suit one time period. Clearly something else is going on.

Chart 1

Chart 2

That something is CONFIDENCE. Confidence is why gold and silver investors listening to asinine live streams and podcasts regularly get their bottoms paddled by the invisible hand.

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