The Barbarous Relic Strikes Back

A client called in two weeks ago asking for more detail on how he could hold his account in Gold versus cash and Treasury (see here).  We gave him all of the necessary info, but before putting his plan into action – warned that he could be getting in at the top.

That was $100/oz ago, down around $1,600 per oz……

 While it is by now an old story, the magnitude of the move in Gold remains impressive, and appears to be accelerating. [past performance is not necessarily indicative of future results]

Gold Move

#of Days

$1600 to $1700

18

$1500 to $1600

66

$1400 to $1500

139

We remain more in Warren Buffet’s camp regarding Gold, and continue to fear getting in at these levels  (my mother asked me how Gold was doing the other day for a classic contrary indicator). But it is getting harder and harder to ignore the yellow metal.

Luckily for those in systematic multi-market programs like Accela Capital Management Global Short TermAuctos Capital Management Global DiversifiedClarke Capital Management Inc.  WorldwideHoffman Asset Management Inc. James River Capital Corp. Navigator Program, and Robinson Langley don’t care whether Gold is a true store of value, the political statement of owning gold, or whether it is the new reserve currency. All they care about is that the market broke out to the upside, and that it remains above its moving average (signaling an uptrend). Until it comes down, these types of programs will keep holding Gold – not because they are afraid of inflation, devaluation of the US Dollar, or revolts; but because their models say to hold long until the trend is broken.  They didn’t brilliantly predict this crisis and Gold’s reaction to it – they simply followed their models. It isn’t sexy, but it’s the truth.

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Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.

The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex, and is not intended as investment advice, or an offer or solicitation for the purchase or sale of any financial instrument. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts. Opinions expressed are that of the author.

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The mention of general asset class performance (i.e. managed futures did well, stocks were down, bonds were up) is based on Attain’s direct experience in those asset classes, estimates of performance of dozens of CTAs followed by Attain, and averaging of various indices designed to track said asset classes.

It should be noted that past market performance is not indicative of future market movement.No market data or other information is warranted by Attain Capital Management as to completeness or accuracy, express or implied, and is subject to change without notice.

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