Editor’s Note: This is an article about biases of Financial reporters and media in general. It is NOT an investment
article. No one should NOT invest or consider any investment based on
any information contained in or inferred from this article or any
portion of it. All investment decisions or conclusions should be
discussed with your investment advisor and should be subject to your
suitability requirements and risk tolerances .
This is our third article on Gold and the Indian practice of buying as much Gold as possible. It is a fashion among European-American reporters to make fun of this practice as backward or outmoded. And, of course, English-Educated Indian commentators ape these comments.
But the truly smart and savvy commentators in America have praised Indians for buying Gold. Witness the tweet on Thursday, August 22, by James Rickards, Senior Managing Director of Tangent Capital and author of the national best seller Currency Wars:
- @JamesGRickards – While PhD’s mocked Indian women w/gold necklaces, the women look like the smart ones now. They are preserving wealth in a Rupee collapse.
Our readers didn’t need Jim Rickards to salute the smarts of Indian buyers of Gold. They remember our first illustration on March 23, 2013 of an Indian family investing 1 million Rupees in 1974 in Gold:
- “So an Indian
family with one million Indian rupees in savings would have seen their
value drop from U.S. dollar 133,333 in 1974 to 18,181 dollars today, a
drop in wealth of 84%. Had the same Indian family bought gold with that
million rupees in 1974 (at $361 per ounce), it would be worth $581,717 today (at $1,575 per ounce).” - “This difference of
having $581,717 versus having $18,181 is the difference between an
Indian family keeping their million rupees in gold versus keeping it in
Indian rupees“
On July 27, 2013, we considered a more near term illustration:
- “We considered the hypothetical case of an Indian family who invested a million Rupees (approx. $17,000) on January 1, 2008 in Gold, in US Dollars or in the Sensex, the index for Indian stocks. What is the result of these three investments as of Thursday, July 25, 2013?”
- “US $ investment has appreciated by 50.69%; Gold investment has appreciated by 133.60% while the Sensex investment has gone down by 4.26%.”
- “This
demonstrated once again that Gold remains the best investment for
Indians. No wonder the demand for Gold never goes down in India in good times and accelerates dramatically during uncertain or slowing economic conditions.”
There is another characteristic of Indians that is often derided by European-American commentators and therefore by English-Educated Indians. That is the habit of consulting planetary movements when analyzing choices. This study, called Jyotis Shastra, goes back to the earliest days of Indian thinking and formed one of the six Vedanga, auxiliary disciplines to the Ved. This, we suggest, is not to be confused with what is popularly known as Astrology.
The above reference to Jyotis Shastra and this article about Gold were triggered by a very interesting article published on Thursday, August 22, by Tom McClellan, Editor of The McClellan Market Report. Their website is named after the McClellan Oscillator, probably one of the most well known tools in technical analysis of financial markets.
The McClellan article titled Gold’s 13-1/2 Month Cycle is a study of the price pattern of Gold over the past couple of decades. We include some excerpts below:
- There is a dominant cycle in gold prices lasting about 13-1/2 months, measured bottom to bottom… The latest instance of this cycle’s major bottoms was ideally due in May 2013. It arrived a month late in June, but that is not outside the normal tolerance for punctuality. With the major cycle bottom evidently in, gold is now in the advancing phase of this cycle, which is when the most robust advances usually take place. … Coming up sometime around November 2013, we can reasonably expect the next occurrence of a mid-cycle low, which tends to appear just as the sine wave representation is reaching its cycle top.
OK, but what about the cycles of the Moon? McClellan explains:
- “I mentioned that I don’t know why gold exhibits this very regular 13-1/2 month cycle. But I do know that there is a very real and important anchor which seems to control its regularity. You may have noticed that these charts show a rather funny looking representation of a sine wave cycle, with bars instead of a wiggly line. Those bars have an important meaning: They represent the distance between the earth and moon on the day of the full moon. So the 13-1/2 month cycle which is evident in gold prices just happens to match up really well with the lunar apogee-perigee cycle. Or at least it has for a couple of decades, which ought to be long enough to establish it as a real phenomenon.”
We ONLY present the above to illustrate that the ancient Indian discipline of studying planetary movements is not as backward or outmoded as many reporters & commentators mock it. We must also state clearly that forecasting based on such comparison of different entities is a very inexact science. No one should act on any material presented above without much greater study and without discussions & advise from their investment advisors.
Notice that Tom McClellan himself tells us that he doesn’t know why gold exhibits the above 13-1/2 month cycle. This is very disturbing to financial reporters who are more comfortable in ascribing reasons to why stocks rise or fall on any given day, week, month or year. In response, McClellan quotes the late Mike Epstein, a NYSE floor trader who became the president of the Market Technicians Association and an adjunct professor at MIT:
- “This is one of the most important points I’ve had to learn. For me, at least, “why” Is the most expensive and LEAST VALUABLE information. When you get “why” wrong (and act accordingly) you lose lots of money. You only can know “why” for sure after the fact (when it is useless). You gotta learn to live with the reality that there are (and the market knows) things that are beyond the individual(you)’s ken. The search for “why,” whether right or wrong, can just as easily lead you to irrelevancies, or, worse yet, to valid data that will not impact on the market.”
What’s our bottom line?
- Indians who buy gold have been proven winners over both the short term and the long term. They have been much smarter than those who mock them, whether the mockers are PhD’s, Western reporters or their English-Educated Indian followers.
- Secondly, no one really understands whether or how planetary or solar-lunar phenomena affect us humans on earth. We didn’t know about the very interesting correlation between lunar cycles and the price of Gold in US Dollars on earth until Tom McClellan educated us. Another well known market timer is Arch Crawford of Crawford Perspectives who uses planetary cycles to determine his market-timing strategy. So the ancient Indian science of Jyotis Shastra might actually carry important insights for us today.
In short, when you see reporters mock Indian practices, mock them back with confidence.
Editor’s PS: We would like to specifically commend Robert McMillan of Reuters for his open mind and prompt action about planets & investing. We saw a tweet about an article about some Indian investors buying stocks with the help of Astrology. We told them that many American investors also practice astrology based investing. Mr. McMillan promptly researched the names we provided and delivered a MarketWatch article to his Reuters colleagues. Thanks and well done, Mr. McMillan. We hope many others follow your example.
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