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Trading Gold utimate bubble and our own profit or loss

Discussion in 'Shares' started by wdongli, 18th Feb, 2011.

  1. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    Gold price affect the sentiment of gold buggers and speculators. Have to say it is not a market item everyone could play and get the profit they want but it is wrong for anyone who stick to some of their perceptions to ignore its great impact to the market trend and sentiment.

    Soros since last year have talked about Gold Ultimate Bubble and there are too many interpretation about it based on our mental models about the market, economy, and our personal preference. Some thought gold is hopeless even gold has been boomed for a decade. They fail to see gold is a cyclical market matter and it could be priced very high or very low. So when they deny the possibility the gold price could be up dramatically, they lose the chances to pick up the gold at $250. They simply ignore the fact $1,300 - $250 = $1,050, which means 5 baggers return without matter what you thought about. Some thought gold would be up and up but they lost too much in the correction and often than not they missed the dramatic upward leg after the correction. They believe the booming but they failed to get what they deserve for their roughly right belief in the last decade. I believe gold was in the historical boom since 2004 but I fail to fine tune and get the gut to bet on it when I should. Unfortunately I bet on Australia new gold producers at wrong time, 2007, after the collective failure of them. Fortunately then I started to know I have to get the margin of safety for anything I do in the market. The loss from the golden fishes have been compensated by some 1 - 10 baggers winners.

    How about the gold ultimate bubble? I don't believe it has been there already. Bubble especially ultimate bubble need the herd collective action in one direction but so far we could not see it happens. We need to consider what we could get if the gold ultimate bubble would be there which in my view could be in very short time or very long such as years. As market players we could not control what would happen but we could fine tune ourselves to get the right risks with the affordable capital if we are completely wrong. We all have our own preferences which we hope, believe, or expect the market, the gold, and the economy, would go but we have to know it is impossible we know all.

    I have held some of my golden fishes for years. They are the losers which in my view, if the gold ultimate bubble would be in our market horizon, would be in great discount. The world is not perfect and the economy recovery would not be perfect too. We would get some bad surprises time by time. Could we enjoy the profit that the good black swans would bring in and get the right risks when the bad black swans hit the market? Why could Buffett and Soros get the chances others just dream under the Sunshine? How could they mix the future certain and uncertain matters so well? Could we do the similar things and be happy to find a lot of people criticize we are not so good as our profit shows?