NFTRH Interim Update 11.29.12

I would like to repeat something I have mentioned in the past for newer subscribers.  If the frequency or in some cases, the nature of updates becomes ‘too much’ for more long-term orientated subscribers, please take it all with a grain of salt and do not let them rattle or upset you.  Ignore them if you will, as the weekly letter will cover things in a calmer manner.  In the less formal updates, I am just being me – a regular market participant – expressing what I see at any given time when I think the situation warrants.

I have described myself in the past as a chronic risk manager.  I simply will not be an undying devotee to any stock, market or ideology when it comes to putting my own capital in the markets.  People have overwhelmingly expressed that they want to know what my stance is at key points, whether or not that stance ends up being the right or final stance.  It is all part of risk management.

In practical terms I want to share a couple of stats with you.  From November 29, 2011 to today, November 29, 2012:

  • HUI Gold Bugs Index:  -17%
  • NFTRH Speculation Portfolio:  Flat

Now I would never tout 0% performance as being good, but when considering that I personally and my newsletter in particular have been big picture bullish on the gold stock sector I think the difference in the two percentages is directly related to the types of risk management I use.  Shoot first, ask questions later.  There is always an opportunity to position when the dust settles (no pun intended :-)).

Anyway, here is the biggest thing that came out of yesterday’s activity:


I must admit that I was becoming risk averse as the HUI-Gold Ratio (HGR) and the price of gold began to degrade against a backdrop of awful CoT data.  In hindsight, the reason I stated that days like yesterday “often get me feeling bullish in weird way” is because the data that had concerned me the day before was resolving into what should have happened; a plunge, which is now no longer hanging over our heads.

Adding to the bullish feeling is the fact that the HGR out performed.  A new low in the HGR would have forced revision to our stance, and perhaps some captains go “full speed ahead, me mates!” but that is not how this letter runs its ship.  Risk is always managed.  Parameters are always set.

So yesterday was a day with positive signs and the plan remains on course.  But I wanted to illustrate what is behind the more intensive communications once again.  Meanwhile, with HUI below the resistance area at and above 460, we are not quite out of the woods during a noisy time when policy makers are sure to take a hands on approach to managing perceptions.

Regards, Gary