Human behavior and bear markets

Hiyield007

Since gold's high in August 2011 the price has declined in the vicinity of 30%. Silver has declined some 54% since its April 2011 high. Listening to all the sages today on CNBC and elsewhere I hear a lot about don't worry, be happy because prices will go back up to the highs. I was hearing the same rhetoric in mid-2000 after the NASDAQ had declined over 30% and we saw how that eventually ended. True, precious metals aren't stocks but the previous bear market in gold lasted 20 years and the last bear market in silver about as long. Respect price action and don't be clouded by your biases, be that gold, stocks, or any investing/trading vehicle.

Edit: Lumpy died today. We oldtimers fondly remember that TV character from Leave It To Beaver.
Edit: And yes I know, the NASDAQ was more of a bubble than maybe gold and silver at their highs but the point is, bear markets can last a lot longer than the soothsayers would lead you to believe.

Charles

scott

AKA "Dennis Gartman" article:
http://www.zerohedge.com/news/2013-04-15/all-abe-inspired-gold-jpy-buyers-now-underwater

http://globaleconomicanalysis.blogspot.com/2013/04/gold-silver-hammered-end-of-precious.html

As for the above chart and 1980, http://en.wikipedia.org/wiki/Paul_Volcker

mrc70

Reply to @Charles: Good post sir!

Charles

Reply to @scott: Thanks Scott. On Mr. Volcker, which activity of his do you credit the decline in gold? His role in suspending gold convertibility? For raising interest rates? Or, pressing for balanced budget? Probably all three.

hank

Reply to @Charles: Yep - Volker did gold in during the 80s. I do believe the big gold traders are the smartest lot out there. They anticipate changes like the one Volker ushered in way out ahead of most of us mere mortals. Years ahead. Has me wondering what change in the winds they might see ahead. Not nearly as smart as those boys - so wont even speculate. And nope - not selling my (now less than) 2% stake in a mining fund. It's a part of the nat-resources portion of my holdings designed to provide some balance. I'll note that the other fund in that category - Prices's PRAFX - also had a bad day - down over 4%.