Wednesday, February 18, 2009

Midas Torch (Cramer is a rally killer)

Note to self: Don't buy gold anytime soon. Look for any decent short entry on AEM instead.

I'll be fair, Jim Cramer is not a complete douche. An absolute boilhead and a pain to listen to, but no idiot. He's full of reasonable insights and (ham-handed) advice.

But face it - the man is a rally killer. Where he sets his sights on specific opportunities, as in names of specific equities - that is where I move to the other side of the ship. The man is a inverse genius.

Even after his followers have bid-up his pics the minute his mouth opens, the performance track record using the prior-to-pump price is just dismal.

Gold has made another huge run and it is a rather popular choice these days - a logical investment since all the world is printing money and ballooning respective balance sheets, right? Once this little deflation thing is back in the corner we'll see rampant inflation and gold will climb to $1,500, on its way to $2,000.

Okay, fine, perhaps, sure.

The last time gold had made a big run higher, Cramer repeatedly pushed to viewers they should buy AUY (granted he did clarify AUY was more speculative than an ABX and more conservative investors should look that way instead). But for some months Cramer pushed and pushed this Yamana GOLD. It was gold + growth and he was lathered-up over it.

When Cramer invites a ceo to Mad Money, I will not go long that stock. When Cramer invites a ceo 2 or 3 times to Mad Money, I am getting short. AUY was simply doomed.

Tonight's plug on (current gold stock of choice, no more mention of AUY these days) AEM is not his first. It's come out of his mouth several times and a featured promo-plug now more than once. I do not know if tonight was the first ceo/cfo appearance, but the message to me is clear. Put it on the get-short list and don't ever buy this stock again.

Let Cramer's crowd make the money...[call me silly]

Oh, regarding gold going ever-higher (similar to the argument in early '08 in fact) - the thesis that fiscal turmoil in so many nations will create a catalyst for hundreds and hundreds of dollar-gains to come? Again, sure. But think of this for a moment:

Reportedly, the 3rd largest holder of gold reserves on the planet is the IMF. That is the same IMF who is going to be coming to the rescue of Eastern Europe, loaning ginormous amounts of capital to these nations in peril.

How in Gold's name are they going to raise enough money?

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