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<p>[QUOTE=&quot;NorthKorea, post: 1987944, member: 29643&quot;]I hate to corrupt your world views, but technical analysis is used by basically everyone. It&#039;s the world we live in. Computers and automated trading have made it so.</p><p><br /></p><p>The fundamentals for commodities are that when a commodity can be consumed, its demand increases. If it can&#039;t be consumed, it&#039;s value is contingent on what people are willing to accept. Technical analysis fits with commodity trading, since there is no real intrinsically derived value. With securities and debentures, you can do a sum of parts analysis to determine whether there is an arbitrage opportunity to capture against market value. With commodities, you can only assume that consumption habits will continue or change.</p><p><br /></p><p>If I gave you 100 20-kg bars of gold and asked you if I should buy or sell, what would your answer be? Unless your answer involves analysis of what the proceeds will be used for, you&#039;re really just applying a best guess model.</p><p><br /></p><p>You say that technical analysis is useless, yet you say we&#039;re in a bear market since the price was parabolic. That<b> is</b> technical analysis, whether you want to believe it or not. As with most value investors, I read Benjamin Graham&#039;s <i>The Intelligent Investor</i> and Graham and David Dodd&#039;s <i>Security Analysis</i> (both the 1934 and fifth editions). That&#039;s terrific for discovering opportunities to take advantage of market inefficiencies. You can look at the value the market places on the velocity of the assets (Price to Book) as well as perception of growth (Price to Equity) and come up with a nice short list of companies to research for investment. That doesn&#039;t really work with commodities.</p><p><br /></p><p>P:E for a commodity will generally be negative or infinite, depending upon how you define carrying costs (storage? liquidation?) and earnings potential. P:B for a commodity will generally be par or slightly above par. Simply security analysis would eliminate all commodities as potential investments. That&#039;s why you need to consider moat, future consumption demand and future supply.</p><p><br /></p><p>Commodities, since their distribution is controlled by manufacturers, are the simplest goods to apply technical analysis to. You say dealers will be driven to sell by the market, but that&#039;s not the point. Dealers don&#039;t control enough of the supply to greatly impact the market. If producers decided they wanted to produce silver at a loss, then we&#039;d see the price of silver plummet. Since logic would say that, unless you must continue to do so (either by contract to vendors or miners), producers won&#039;t intentionally operate at a loss long-term, there are logical reasons to define a bottom for a market. Unless the amount of silver extracted from 2008-2012 was enough to satisfy consumption for a decade, we&#039;re unlikely to see an extended bear market. The price may languish below $20 or even at $15, but there&#039;d be no logical driver to send it down to the prices witnessed in the 80s and 90s. Prices languishing that low would be entirely fear and deflation driven.</p><p><br /></p><p>I know you said you gave a speech on silver being a bad investment in Aug 2011. That&#039;s terrific. So, effectively, you told people four months after the peak that silver was a bad investment. For what it&#039;s worth, we were having discussions about silver being a bad investment in Mar-Apr 2011. Yes, I sold out 10 days before the peak, but I really don&#039;t mind getting out 15% before the top on a parabolic asset.</p><p><br /></p><p>Here are links to the posts that I participated in which were directly related to silver:</p><p><br /></p><p><a href="https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-2#post-1134501" class="internalLink ProxyLink" data-proxy-href="https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-2#post-1134501">https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-2#post-1134501</a></p><p><br /></p><p><a href="https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-6#post-1141557" class="internalLink ProxyLink" data-proxy-href="https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-6#post-1141557">https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-6#post-1141557</a></p><p><br /></p><p><a href="https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-18#post-1159122" class="internalLink ProxyLink" data-proxy-href="https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-18#post-1159122">https://www.cointalk.com/threads/this-is-why-no-50-silver.163365/page-18#post-1159122</a></p><p><br /></p><p>When you read my replies, you see an ignorant fool who looks at charts and guesses at things. You might be right, but my guesses tend to be close.[/QUOTE]</p><p><br /></p>

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