August 16, 2008 – Deja Vu all over again?

Well, today is August 16, the anniversary of many important events.

The day Ringo Starr replaced Pete Best in the Beatles (in 1962).

The day Elvis Presley died (in 1977).

The day John Diefenbaker died (in 1979, a great opposition leader, buy a lousy Canadian Prime Minister).

And of course my father’s birthday (every year). Happy Birthday Dad.

Oh yeah, and the day the stock market crashed last year.

Remember what we were all thinking last year? I remember, because I was on vacation last year. I capitulated in my August 10, 2007 commentary. Then I talked about my August 2007 vacation.

Then, on August 25, 2007 I confessed that I was an idiot.

One of my reasons for writing this blog is so that I can go back and see what I was thinking, and therefore hopefully not continue to repeat past mistakes.

Alas, my portfolio is down again this year, gold is getting hammered, uranium is down, and it’s looking exactly like it was looking on this day last year. Of course we remember what happened last year: August 16 was the low for the year, and a perfect buying day. Buying on August 16, 2007 was a great play, in hindsight.

Here we are today with gold having fallen from over $1,000 in February 2008 to under $800 today. Gold is trading below it’s 50 day moving average for the first time since this bull market started in 2001. This is very serious technical damage.

But:

Gold is the most manipulated market in the world, so technical indicators only tell half the story.

Gold rose when the U.S. dollar fell. It got so low that traders started switching back into it, out of gold and the Euro, causing a temporary spike. But the U.S. dollar, and the Euro, are paper currencies, backed by nothing. The tide will turn again, probably soon.

And, lest we forget, the economy sucks. U.S. inflation is very high, probably around 5% using government numbers, and more like 13% using accurate numbers. It’s equally bad in Europe, with increasing unemployment in many countries. Foreclosures are setting records in the U.S. An implosion is nearing.

It may be time to panic and sell everything, but I’m not going to. The pendulum swings both ways, and my crystal ball tells me that gold will rise again, and probably sooner than later, so I’m sitting tight.

(And with continued flooding problems at Cigar Lake, uranium will probably be a good better over the next few months as well).

For some additional perspectives, read what punter had to say this week (and here as well), and check out the silver chart posted by Depleted.

My final thought: remember last year. Bottoms are good times to be invested. Only time will tell if this is a bottom, but it’s starting to feel like that, isn’t it?

Comments always welcome on the Buy High Sell Higher Forum. See you next week.