I’m a pretty big bear on precious metals (well, all commodities really) in the near-term thanks to the slowdown in China and a strong dollar keeping a cap on pricing. Everything from gold to crude oil to copper is suffering in this scenario – and when you add in the negative sentiment around gold and the pressure due to redemptions in asset-backed funds like the SPDR Gold Trust (GLD), it’s hard to call a near-term bottom.
But the doomsday gold crowd, which seems to revel in the idea of America’s decay, always seems to find excuses to insist gold will snap back – mostly in the form of oversimplifications about the monetary system or conspiracy theories about how economic data has been falsified.
Talking rationally to crazy gold bulls is no easy task, but today StockTwits blogger Kid Dynamite has posted a killer takedown of Harvey Organ, Bill Holter, Russ Winters and others of this ilk in a great post with the great title, “Precious Metals Charlatans – Freaks of the Industry.”
The gist: These folks are either too stupid to understand how COMEX gold inventories work, or are maliciously misinterpreting data relating to a JP Morgan (JPM) warehouses in order to get attention and/or clients.
This post is a must-read for anyone who invests in gold based on what they read in the blogosphere. Kid Dynamite is very thoughtful and fact-focused in his critique – but more importantly, is spot-on in his criticism that many doomsday gold posts are simply part of the echo chamber among like-minded folks looking for validation.
This is not investing. It’s not even speculation. It’s actually pretty pathological, based on a mania where some gold investors simply have to believe what they have to believe – even if it stands in the face of actual facts and economic data.
Why be nuanced and accurate when you can be hysterical, right?
Anyway, I strongly advise anyone who invests in gold to read this Kid Dynamite post on the topic. I can’t do it justice here so please click through.
- Why gold is a popping bubble and why it won’t make a comeback. (MarketWatch)
- 7 reasons gold will keep falling. (The Slant)
- Don’t forget: Miners suck too. (The Telegraph)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.