I get emailed any number of things on a daily basis – in between brokers begging for business and land rats who do not understand that four bedrooms and a pool does not mean a one bedroom bedsit I get some weird shit relating to trading. The latest piece of oddness to hit my inbox concerns and article entitled Dont Give Up On Gold. You can read the entire piece you can read the entire piece over at TraderPlus
The reason this piece interested me is because of the title and the ensuing plaintiff cry of the article. It assumes that investors/traders are in a relationship with an instrument which has always intrigued me as a bias. It assumes that if you dont have gold or even worse are short gold that somehow you have given up on your relationship much like you would give up on a spouse or wayward child. This linking of emotion to investing is one of the most telling cognitive flaws that traders can have. I used to be constantly amazed at the number of times when I was a broker that I would urge someone to sell XYZ share only to be told that they couldn’t possibly do that. There was a perception among these people that the instrument somehow knew that they owned it and its feelings would be hurt if they dumped it. Humans can take anthropomorphising too far.
However back to the notion of gold as an investment. It doesn’t matter what narrative you try to assemble it is still obvious that gold has been locked in a long term downtrend for sometime and at present this does not seem to be in any hurry to reverse. Only when and if this downtrend is reversed will gold become a long trade.
