| Author |
 Replies: 7 / Views: 1,181 |
|
|
Pillar of the Community
United States
667 Posts |
The best time to buy gold is when stock prices fall, not when they are rising as they are now. Research from Trinity College showed that, over time, gold's value increases the most for 15 days after a stock market crash. That's because panicked investors sell their stocks, and buy gold. However, sell the gold before the 15 days are up. After that, gold returns to its normal value. How many days has it been now?  |
|
|
|
Pillar of the Community
United States
4008 Posts |
I don't know how many days. I am still working on 'what is the definition of a crash?'. With all the volatility that is in the market these days, a 400 to 500 point swing from one day to the next is no longer considered a crash. It seems to be the "new normal".  Speaking of which... I saw an interview on CNBC this morning with two major stock investors. Their view was that the loss of the "up-tick rule" was the primary thing that allows this high frequency trading that is going on these days to occur. They also said that this HFT is not contributing a thing to either the stock market or the economy. I agree with that. Buzzing in and out of shares on a micro-second basis is not helping anyone but the people doing it. While the market is losing billions of shareholder value, they are able to make a few millions in profit. I think that their profit at the expense of everyone else is more expensive than the market can bear. If this keeps up, volatility will be like a vibration in an engine that eventually shakes the engine to pieces. At that point, all of the investors who are not doing the HFT thing will have left the US stock market. I can see signs of that happening already. :-/ |
|
Pillar of the Community
United States
3670 Posts |
History, charts, all huge we know and most cases very key to study, as we all know history an patterns repeat themselves.  However, we are into uncharted territory, which means the charts of the past could be cancelled out. We ever had this much debt, or world economic turmoil at the same time? Has gold ever been to 1845 before, and what would your late grandfather had said if you told him of those prices in 2012, would he have believed it? However, lol.... At the end of the movie K-pax, a clever film an book about a space traveler who came to visit Earth from another planet called K-pax, the main character played by Kevin Spacey said at the end of the film that the Universe is expanding, and one day it will implode back apon itself. And once again start over again. And everything you do in this life, you will be destine to repeat again over and over again throughout eternity. So you better get it right this time around, cause this time is all you have.... I like that theory, but if we are in the 2nd run by chance, for the life of me, I can't recall if gold kept climbing or crashed like a rock in the days to come the first time around, lol.... Edited by Silverhawk74
08/19/2011 02:04 am
|
|
Bedrock of the Community
Australia
21788 Posts |
mkfarm: There are many influences on the gold price. You have mentioned one of the many important influences.
|
|
Valued Member
United States
302 Posts |
I define a crash in a couple of ways.
First, any single daily drop which erases all gains over the last 10 days. Typically daily crashes are in the range of 15% to 30% in a single day. After a crash like that many things can happen. Witness the silver crash a few weeks ago. Crashed 30%, then sideways for weeks, most likely getting prepared for another 30% single day drop. Daily crashes do not typically follow through and continue dropping without first going through a "consolidation phase." Another example is the "Flash crash" in the stock market earlier this year.
Longer term, I define a crash as being when the market drops 40% off of a high 56 days previously. Often there are daily crashes within this time frame and lots of major volatility both up and down culminating in a severe daily crash on or near the 56th day. The 1929, 1987, and 2008 stock market crashes all dropped almost exactly 40% off of a high exactly 56 days earlier near Labor Day. All had severe daily crashes near the end before bottoming out and turning up.
Labor Day seems to be the key for many crashes. If we see rising prices, with possible new recent highs, going into Labor Day weekend, there is a chance we will see a 40% decline in the next 56 days. Needless to say, I am carefully monitoring the markets as we approach Labor Day. The market action I have seen recently does SUGGEST that a crash of some sort MAY be around the corner.
|
|
Rest in Peace
United States
9104 Posts |
Crashes and dead cat bounces are caused by the same problem, with slightly different timing--over-reaction.
Take an item worth 50. It goes to 100 before people start realizing that's way more than it should sell for. People start selling, and those who may not have run the numbers for awhile (or just realized they've made great profits) all dump it.
All the way past its "true value" of 50 to 40, which anyone can agree is a bargain.
Bargain hunters realize it's way too low, and do a lot of buying, taking it back to 60, the "dead cat bounce", and it falls back to 50, maybe a bit lower.
The principles are they same on single stocks, the DJIA, or commodities. People run scared, oversell, then eventually start thinking again and buy back in.
|
|
Valued Member
United States
362 Posts |
A lot of it does seem to be understanding the mentalities of people, I just wish I was more educated on these subjects
|
|
Pillar of the Community
United States
4008 Posts |
Quote:
A lot of it does seem to be understanding the mentalities of people, I just wish I was more educated on these subjects Yes it does. Many years ago, a co-worker and I came up with the philosophy of "Duckism". The theory was that people in groups, such as the stock market, will behave in the very same way as a flock of ducks. They are completely governed by alternating cycles of fear and greed. We would feed them pieces of bread in the local park. They wanted the bread but were afraid of getting too close to those big nasty humans. They also did not want another duck to slip in and grab a morsel that they could have gotten but were too afraid to do so. It was funny watching them and comparing their actions to those of people. There were LOTS of similarities. We even assigned the names of people we knew to certain ducks that seemed to behave like them. |
| |
Replies: 7 / Views: 1,181 |
|
Posted 08/19/2011 02:00 am
