Is It Better To Be “Insane” Or A “Nerd” When It Comes To Metals?

They say that the definition of insanity is doing the same thing over and over, yet expecting a different result each time.  By that definition, most of the analysts and market participants in the metals world are insane.

Over the years, we have seen analysts and market participants looking towards foreign news events, quantitative easing, and various types of economic news to divine the direction for gold.  And, a significant amount of time we have seen the metals react in the completely opposite manner in which all these prognosticators expected.  

But, do they learn from these mistakes?  Does it even get them to question the basis behind their expectations?  Do they consider that maybe they are looking in the wrong places for what will identify the direction of the metals?  Absolutely not. And, when the market finally turns back up, I can assure you they will all absurdly claim victory.

So, what did they do this past week?  Yet, again, they were all looking towards the most recent string of old and dated economic news to attempt to discern the future; they all had their eyes pinned to the headlines for the recent jobs data.  It was supposed to really move gold this week according to the “expert” prognosticators. Forget about the fact that it has not helped them for as long as I can remember.  But, since everyone accepts that it is the thing to do, they all continue to pour over the same historical economic data time and again to attempt to discern what will happen in the future.  And, it failed them once again.  Yes, my friends, this is the definition of insanity.

Even Professor Hernan Cortes Douglas, former Luksic Scholar at Harvard University, former Deputy Research Administrator at the World Bank, and former Senior Economist at the IMF, has come to the same conclusion:  “Despite these failures, indeed despite repeating almost precisely those failures, economists have continued to pore over the same macroeconomic fundamentals for clues to the future . . . The historical data say that they cannot succeed.”

But, in truth, you cannot blame these “experts.”  Think back to when you were a child.  Did most children gravitate to the child who was different, or was that child shunned?   When you were a teenager, did you want to hang out with the “nerd,” or did most want to hang out with the popular kids?  

You see, being different is not easy.  Being different is not generally accepted. And, when you look at markets differently than the majority of the market, you will be viewed as the “nerd,” and you will not be generally accepted, even if the rest of the market is “insane.”

When I began providing my analysis publically, I suggested that market participants do something different.  I began suggesting that market participants ignore the news and focus on market sentiment.  So, those that read me in the early days viewed me as the proverbial “nerd” and different.  And, because of this, most of the comments I received in the early days mirrored this one I received to my first metals article: “You know nothing about markets or metals.”  So, using a different perspective actually caused me to lose credibility among most market participants simply because I was different.  

But, when my first public market call nailed the top in gold within $6 of the actual high, people began to take notice.  When we began calling more and more turns through the years in the metals, sometimes within pennies, more people began to take notice.  And, when we suggested market participants short metals after QE3 was announced, most stood in disbelief, especially after silver lost more than half its value since that time.  

After some time, it became harder and harder for many of those that read me to simply dismiss what I was saying, especially when the “cool kids” were stumbling over themselves without a clue, while taking huge losses.  It has taken 4 years, but some have started to realize that the cool kids are “insane,” whereas the “nerds” are nailing it.

So, the question you need to ask is if you are comfortable enough with yourself to make friends with the “nerds,” or do you want to be checking yourself into an asylum?  Have you ever seen the movie “Revenge of the Nerds?” Welcome to the profitable side of the metals market!

If you want to learn how we use sentiment to track the metals market, feel free to join us for a free trial at Elliottwavetrader.net.  

And, to answer all the questions we have been receiving of late from readers, our new Mining Stocks Portfolio & Coverage List is finally being launched on September 15th, and will feature a model portfolio on mining stocks.  The portfolio, with entry and exit alerts, aims to outperform the GDX. The service will also include our Coverage List of charts and analysis on the wider universe of mining stocks.  

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Courtesy of https://www.elliottwavetrader.net/