Gold will plough through $1000

… reads the headline of a Financial Times article, on the day that gold prices plummeted some $20.

Reading beyond the headline reveals a more balanced picture from the quoted precious metals analyst, who says:

This is not a table-banging recommendation to buy gold; although the balance of arguments favours a move to the upside, any deterioration in sentiment could trigger profit taking. 

I don’t read the financial press much these days, and this article reminded me why. Almost every piece boils down to ‘we with think it will go up … but it may down’, or ‘we think it could go down … but it may go up.’ It is all very tiresome and repetitive. I appreciate this is essentially what market research is all about, but I have a question:

If any piece of research is worth its salt, why publish it to the public? My answer is that it’s mostly worthless, which leads to the catch-22 is that any research that is published isn’t worth reading.

2 responses to “Gold will plough through $1000

  1. My response to that is: “What are you reading the analysis for?” A lot of guys read it for actionable trading signals, whether Do you want to know where gold will go, or do you want to know what the analysts are thinking, what factors they are considering, and how this reflects the opinions of market participants — and of course which participants they seem to cater to is important as well.

    In my opinion, calling for gold to plough through $1000 when it is essentially already there is gutless. And the $20 move to the downside was about 3%. This isn’t what a position trader would call “plummeting”. It’s similar to saying that EURUSD will plough through 1.5 when it is at 1.49 and the momentum is strong. That’s a pretty gutless call as well. I’m not interested in any of that as much as how the analysts get there — their logic, their biases, who they think they are talking to, etc. This is instructive for me.

    Now, if someone can predict a move six to twelve months out, that is impressive to me. Although I don’t trade on those time frames, if someone has a good track record of making such calls, and can articulate why, I will usually read all I can get from that person. I can still use the information, even though it’s way off of my time horizon. (The only exceptions are those “analysts” who are perma bears or bulls — they’re just selling something. They are easy to spot.)

    There is a lot of worthwhile mainstream research out there. Most of it is free, or available for a nominal charge. The timeliness of the info is phenomenonal. But again, whether it will be useful depends on your focus.

  2. That’s for putting me straight LT. I guess I just felt a bit down and pessimistic when I wrote this post. Indeed, these days it feels as if I am trading under a veil of despair. Ever since I had my trading point-of-death experience (a few weeks ago), I’ve not been able to hold any position for a prolonged period of time without feeling a sense of anxiety and hopelessness. Its probably a good time to be taking a break from it all, which I will be doing in a few days – heading off to travel the Far East for a few weeks.

    Returning to the subject of research, I previously read this stuff with a view to extract the factual information and construct a view of the world. However, with the passage of time I have come to realise that it is very difficult to pick out facts and paint my own picture without letting my own biases take hold – that is, I am not able to become independent of my own self.

    Secondly, reading through lots of research would give me some sense of bias in the mkt opinion, or so I thought. However, , I have found that it is more efficient to look to the newspapers to get a better sense of biases of thought – I don’t need to get granular on this aspect.

    …And so it is that I have moved away from reading most specific research reports. I agree that the timeliness is amazing, but as for usefulness, that is another matter.

    Bah humbug!

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