Thursday, April 18, 2013


In Reminiscences of a Stock Operator, the bible of stock trading, Larry Livingston, the pseudonym for Jesse Livermore, the greatest stock trader of all time describes a situation where a fellow called Stratton has a corner in corn. Livingston is short corn and wheat. Wheat shows a handsome profit, but corn is a problem. Livingston wants to close out his corn shorts but knows that if he trys to close out such a large position, Stratton, as "squeezer in chief" will cost him a lot of money. So he comes up with a solution to his problem.  Livermore, knowing that the markets are correlated and move together, puts in an order to sell a large amount of oats. The orders cause a selloff in oats, as well as corn, and Livermore covers his shorts on the volume created. His problem is solved.

I have an aversion to conspiracy theories. But in this instance I feel that Goldman Sachs is part of a conspiracy to artificially cause a selloff in gold and silver that will not be sustainable. And that makes it easy to buy large amounts of gold, silver and basic commodities stocks at a low price.

I presume Goldman is short gold as they suggested in their news release a few days ago when they suggested shorting gold. I suspect they are covering their shorts.

Many of the basic materials have been declining for some time. They look to be bottoming. The U.S. economy, despite the most recent data is probably on the mend.

And the U.S. Dollar is weak by historical standards.

I think this lates downdraft in the equity markets and in the precious metals markets is a "headfake".

I think this is where the inflation really starts.

I will manage my positions so as not to take any large losses, but will position myself for inflation.


No comments:

Post a Comment

All comments are appreciated as it will give me a chance to adjust my content to any real people who may be out there. Thank you. gh