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One of The Little People Speaks Up

Michael Wheelock
May 4, 2005

It's time for one of the "Little People" [
see BWP] to speak up about gold and gold stocks. I'm not exactly new to investing: I rode the Gold Bull in the 70's and did incredibly well. I only listened to two of the "Golden Geezers" in those days but that was enough. Then one morning in January 1980 I watched bullion spike into the mid-$800's and knew that we had seen the top. How did I know? Intuition told me that trees don't grow to the sky.

The 2001 Gold Bull produced totally different results for me. The main reason why is because I read everything gold-related that I could get my hands on. That was my first mistake. My second mistake was to believe it. I stayed out of bullion last summer because a certain advisor stated rather eloquently that bullion was going down. Instead it went up. I stayed in gold after it formed a double top last spring because a certain advisor said that bullion was going to $480 or else he'd stop publishing his free daily gold commentary. I held a certain blue chip gold stock that went nowhere for two and a half years while bullion went up 35% because a certain investment letter that I actually paid for advised us to. The same advisor was bullish on gold -- especially at the top -- but recently suggested that his readers should sell.

Bullion would have to double from these levels to compensate for all the money I have lost by following so many advisors.

But education costs money. Tuition is super-expensive. It's been worth losing money because I've finally re-learned how to trade the market. Not just the gold market but any market. And here's what I've learned.

1. Our system may appear to be dysfunctional to some but it certainly is resilient. Despite all our faults we may last a great deal longer than many gold bugs think.

2. There's only one market. Every security behaves the same way. Buying when the blood is running in the streets and selling when you want to marry your investments is the only trading strategy that works consistently. Special pleading, dynamite fundamentals, and even mathematics do not change the laws of market physics. Terror and lust for money create the extremes that generate profits for those with daring.

3. Surrendering your seniority to an advisor - or anyone - because you think they are smart will cost you plenty. Advisors are people just like you and I. They make mistakes and are burdened with the need to be right and keep the cash flowing in. If you listen to other people you may not listen to yourself. The only weapon you have in the market is your own intuition. If you surrender your ability to know people will take your money consistently.

4. If you stop using your time depending on other people's comments and chart interpretations, and use that time to stare at the charts you will develop your own opinions. Your own opinions can make you rich. Everyone has something to sell you or something to give you so that they can be right. Their opinions cloud your mind and prevent you from having your own thoughts. Can you concentrate in a room full of screaming people? I can't, so I have learned to protect myself and get my own information by shutting out as much input as possible. My bottom line developed an uptrend when I made that decision.

The current gold stock crash is no different from any other smash. When the blood is running in the streets, and panic rules, the bottom will come in. When investors sell stocks at any cost and throw value out the window it will be time to buy gold stocks again. How did I find that out? By ignoring everyone's opinion and watching the markets as they undulate through cycles that are as ancient as human society itself.

I hope that I don't run into too many of you at the bottom!

Michael Wheelock
email:
mickhum@yahoo.com

321gold Inc