Avoiding the Cheerleaders for Gold

Executive Lounge, Wall Street Elite / Monday, May 25th, 2015

There’s nothing that gets us more riled in this business than the incessant drone of market cheerleaders stuck on their favorite stock or asset class, even after it becomes clear that the investment has turned into a roaring loser and is heading to THE BOTTOM OF THE OCEAN!

Yes, we get emotional, and with good cause. First, we can’t stand the sight or sound of anyone so lacking in self-respect, yammering on about whatever it is they ‘love’ and ‘adore’ and ‘just you wait’ and ‘we’ll show them’ and yadayadayada…


It’s painful.

The other, obvious, reason is that it can become contagious.

There’s something altogether catchy about stupidity, and if you’re paying attention, you’ll see that it finds its followers all too easily.

Call us masochists, but we feel a benighted – call it perverse – duty to stamp out the lunacy wherever we find it.

For your sake!

Because we don’t want you, our dear readers, to suffer for it.

That said, the magnetic nature of stupidity has a way of drawing even otherwise savvy investors to itself, despite our best, most strenuous efforts to reveal it for what it is.

So we’ll throw caution to the wind once more, with the hope that even one will take heed, one soul who might otherwise have been lost will turn back from perdition and see the light.


And we’ll try to make it quick.

Nowhere is the cheerleading disease more apparent than in the precious metals arena, nowhere more visible than on the Kitco Metals Cheerleading website, and nowhere more blatant and embarrassing than in the writings of one Kira Brecht, if, indeed, that’s her real name.

Said Kira has written numerous enthusiastic and encouraging missives on the inevitable turning of gold’s near four-year bear market and the ‘obvious’ catalysts that will trigger a precious metals buying frenzy, all the while ignoring reality, as new lows are set and the trend remains clearly, inviolably southbound.

Her ‘reports’ go by the following titles:

Could “Sell Stocks in May” Prove Gold Bullish?

Are Long Term Gold-Buyers Readying for a Big Move?

Money in the Bank or Gold? Negative Interest Rates Increase Gold’s Attractiveness

Gold Investors Snap Up Bargain Level Prices: Investor Appetite is Strong

The World has Become a More Dangerous Place: Gold is a Safe Haven

The Great Partisan Divide Grows Larger: Gold Bullish

A Lousy Earnings Season Could Prove Gold Bullish

Is everything gold bullish?

Is anything gold bearish?

Are rhetorical questions a safe way to hedge a complete lack of knowledge and understanding of the precious metals market?

Again and again, and without apology, Ms Brecht (if that’s her real name) misleads her readers into believing that there’s hope for the precious metals investor, when in fact reality again and again proves her writings disastrously incorrect, and what’s worse: more and more dupes lock their hard-earned money into an asset class that has been a losing proposition for almost half a decade.

Gold is Dead Money

It won’t be the case forever, but precious metals investments have been dead money for years now, and we believe the bottom has yet to be set for gold and silver. As we’ve stated numerous times, the telltale selloff bottom has been glaringly absent from this bear market, and until we see a surge in volume, we have to stick with our hypothesis that until that time, the bear is in control.

Look here –


The gold bulls can dance and configure and gymnasticize and rhetorize all they want, but in the end, volume speaks, friends. And there’s no volume here.

That means there’s no bottom.

What about the latest steep rise in the price of silver and gold?

There could be lots of reasons for it, but one thing is certain, it came on diminishing volumes.

Figures for the month of April show16.9 million ounces of gold traded on a daily basis, down 10% from March’s numbers and the lowest readings since September 2014. Silver’s numbers were worse. Trading fell 25% on a daily basis – even as prices rose! – to the lowest levels since September, 2010.


We’re going to turn our attention now to a trade we opened on the 20th of April in a letter called Facebook Readies for a Big Move. The letter indicated that we weren’t sure which direction, but there were signs indicating a strong swing either up or down for Facebook was imminent.

Well, wouldn’t you know it, the stock traded in a range since that date, and our initiative stands to lose should the anticipated vroom fail to materialize by week’s end.

So what to do?

Well, we could try to reassure you that all is well, and that thing will pan out in the end, if we just take a longer term view and hang on tight and reset the trade all over again, and maybe throw in some rhetorical questions about what’s good for Facebook and how the latest Fed action and moves by ISIS in Syria are all FB positive.

But that, my dear Kira, wouldn’t be honest.

So we’re going to take a different tack.

The trade we initially suggested recommended you buy a near term PUT and CALL on FB, for a total debit of $1.36 – and we’d still recommend selling out of either of those options should they come back into play and be worth more than the few cents they’re now fetching.

But beyond that, we’re also going to suggest additional action.

Take a look at the chart below –


This is six months worth of action on Facebook, and as you can see, there’s good support from all three of the rising moving averages (in black). Coupled with that, the last retracement low at $74 offers additional support (in red).  Here’s what we’re going to do: 

[mepr-rule id=”994″ ifallowed=”hide”][mepr-unauthorized-message][/mepr-rule]

[mepr-rule id=”203″ ifallowed=”show” description=”wall_street_elite_members_only”]

We’re betting that $74 is therefore a good place to sell some PUTs and make back that lost premium. It’s precisely there that we should see a bounce on any weakness over the next month.

Wall Street Elite Sell recommends you consider selling four (4) FB June 26th 74.50 PUTs, now trading at $0.36, for a total credit of $1.44.

[mepr-rule id=”988″ ifallowed=”show” description=”executive_lounge_members_only”]

We’re betting that $74 is therefore a good place to sell some PUTs and make back that lost premium. It’s precisely there that we should see a bounce on any weakness over the next month.

Wall Street Elite Sell recommends you consider selling four (4) FB June 26th 74.50 PUTs, now trading at $0.36, for a total credit of $1.44.


Mind the expiry!

With kind regards,

Hugh L. O’Haynew

Leave a Reply

Your email address will not be published. Required fields are marked *