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An open letter to Guy Adami....
Below is an open letter to FastMoney host, Guy Adami. I would appreciate everyone forwarding this to him at fastmoneynoreply@nbcuni.com. If someone has a better email, please let me know at echocalls@aol.com.
thx
Neal
Guy,
Was it really just two weeks ago that, with gold trading around $790ish, you called for $700 gold? Now, I don't mind anyone having an opinion on an investment vehicle as long as they can back that opinion up with some reasoning. From you, I only heard the dollar is going to rally and that will sink gold. However, you failed to give a reason as to why the dollar would rally given the horrible economic climate. Fine, you made a market call. Your years of experience trading gold as head trader at Drexel give you this privilege
Fast forward two weeks, gold is skyrocketing as are the gold stocks. Gold is now upwards of $850ish, and to your credit you admit that your $700 call is wrong. However, you then go on to tell America that they should not own gold as "You could wake up one morning and it could be down $100--I have seen it before." Guy, Guy, Guy, you know as well as I do, that back in 1980, gold ran from $400 to $850 in the matter of five weeks. Like any parabolic rise, gold was going to crash back down Earth and relatively quickly. (I was only twelve years old when gold hit $850 in 1980, so I have no clue what the actual trading was like).
You also very well know this is the sixth year of the gold bull market. During these six years, gold has been on a roller coaster, zooming higher and lower on a regular basis. Lucky for the gold bugs, the trend has been higher. You also know, the economic conditions this time around are ripe for gold to go much higher. Back in 1980, the Federal Reserve had the balls to raise interest rates in order to break inflation's back--even though that meant plunging the economy into recession. Compare that to today, where Bernanke pledged to cut rates dramatically, sacrificing the dollar and stoking inflation. (Let's not even get into the mortgage mess, nor discuss the derivative disaster) Does this sound like the characteristics where gold can fall $100 in a single day? I think not.
Don't get me wrong, gold will surely have it's scary corrections like it has over these six years. Corrections which make even the most hardened gold bugs think the move is over. When one of these corrections hit, I hope you will have the class not to say "I told you so"
Now, also, over the last few weeks, the gold stocks have been on a tremendous tear. Yet, you constantly bash Newmont Mining for have a PE of 28. Now, I am not a rocket scientist, but tonight you bulled Blue Nile as something that should be owned. Now, I am sure Blue Nile is a lovely company, ran by lovely folks who love their families. But, Guy, NILE, sports a PE of 66! And, it's main business is selling jewelry. I don't think recommending a high beta stock that sells expensive discretionary items in a receding company is the way to go. But that's just me.
I can't understand why you bash NEM. It's underlying business is in a six year bull market that shows no sign of abatement. Are there cheaper gold stocks based strictly on price to earnings, definitely. But, NEM, is considered one of the best of breed, and for that, one pays up.
I also found it kind of amusing that your regular guest, Dennis Gartman just happened to mention on Wednesday's show that the party was over and he had sold half his position in gold. He also recommended that it was too late to take any new positions in the metal.
So, why the constant bashing of gold and NEM? A person less trustful than myself might think that to bash both without giving a credible reason, that person might be short these instruments and be stuck. So they go out and destroy the credibility of the investment and try to scare folks into selling.
Boy, I am sure glad I don't think that way.
Or could it be that an out of control gold price means that something economically is out of whack? Market pros also know that you do not want to see gold stocks leading the market. If this were to continue surely that would be bad for the overall markets, and bad markets would mean lower viewership for CNBC. We couldn't have that now, could we?
Guy, if you would like to discuss this with me, I can be reached at echocalls@aol.com. Please leave your phone number and we can chat.
Traderneal
thx
Neal
Guy,
Was it really just two weeks ago that, with gold trading around $790ish, you called for $700 gold? Now, I don't mind anyone having an opinion on an investment vehicle as long as they can back that opinion up with some reasoning. From you, I only heard the dollar is going to rally and that will sink gold. However, you failed to give a reason as to why the dollar would rally given the horrible economic climate. Fine, you made a market call. Your years of experience trading gold as head trader at Drexel give you this privilege
Fast forward two weeks, gold is skyrocketing as are the gold stocks. Gold is now upwards of $850ish, and to your credit you admit that your $700 call is wrong. However, you then go on to tell America that they should not own gold as "You could wake up one morning and it could be down $100--I have seen it before." Guy, Guy, Guy, you know as well as I do, that back in 1980, gold ran from $400 to $850 in the matter of five weeks. Like any parabolic rise, gold was going to crash back down Earth and relatively quickly. (I was only twelve years old when gold hit $850 in 1980, so I have no clue what the actual trading was like).
You also very well know this is the sixth year of the gold bull market. During these six years, gold has been on a roller coaster, zooming higher and lower on a regular basis. Lucky for the gold bugs, the trend has been higher. You also know, the economic conditions this time around are ripe for gold to go much higher. Back in 1980, the Federal Reserve had the balls to raise interest rates in order to break inflation's back--even though that meant plunging the economy into recession. Compare that to today, where Bernanke pledged to cut rates dramatically, sacrificing the dollar and stoking inflation. (Let's not even get into the mortgage mess, nor discuss the derivative disaster) Does this sound like the characteristics where gold can fall $100 in a single day? I think not.
Don't get me wrong, gold will surely have it's scary corrections like it has over these six years. Corrections which make even the most hardened gold bugs think the move is over. When one of these corrections hit, I hope you will have the class not to say "I told you so"
Now, also, over the last few weeks, the gold stocks have been on a tremendous tear. Yet, you constantly bash Newmont Mining for have a PE of 28. Now, I am not a rocket scientist, but tonight you bulled Blue Nile as something that should be owned. Now, I am sure Blue Nile is a lovely company, ran by lovely folks who love their families. But, Guy, NILE, sports a PE of 66! And, it's main business is selling jewelry. I don't think recommending a high beta stock that sells expensive discretionary items in a receding company is the way to go. But that's just me.
I can't understand why you bash NEM. It's underlying business is in a six year bull market that shows no sign of abatement. Are there cheaper gold stocks based strictly on price to earnings, definitely. But, NEM, is considered one of the best of breed, and for that, one pays up.
I also found it kind of amusing that your regular guest, Dennis Gartman just happened to mention on Wednesday's show that the party was over and he had sold half his position in gold. He also recommended that it was too late to take any new positions in the metal.
So, why the constant bashing of gold and NEM? A person less trustful than myself might think that to bash both without giving a credible reason, that person might be short these instruments and be stuck. So they go out and destroy the credibility of the investment and try to scare folks into selling.
Boy, I am sure glad I don't think that way.
Or could it be that an out of control gold price means that something economically is out of whack? Market pros also know that you do not want to see gold stocks leading the market. If this were to continue surely that would be bad for the overall markets, and bad markets would mean lower viewership for CNBC. We couldn't have that now, could we?
Guy, if you would like to discuss this with me, I can be reached at echocalls@aol.com. Please leave your phone number and we can chat.
Traderneal
posted by Neal | 11:12 PM
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