Best of the Blogs

I like to read through Pinnacle members’ blogs for many different reasons. Member blogs provide great value to our community, unique insight into some unknown and often very attractive companies, a different perspective to investing and some are just downright entertaining. I don’t necessarily agree with every blog written, but that is what makes our community so great. If we all had the same opinions we’d never learn from each other and Pinnacle would be a very dull place to visit. I encourage everyone to take advantage of the wealth of knowledge our members provide in their blogs by visiting the tab at the top of every page that reads ‘Community Blogs’.

Our staff is very diligent in making sure many interesting blogs are featured on our homepage as a way to provide additional exposure for those willing to stick their neck out and share their opinions on anything to do with the market.

I’m going to share some of the best blogs I’ve read lately authored by Pinnacle members.

“Anonymous Messing With Your Stock?”

Pinnacle member SchiffKnowsBest wrote this blog. It’s a strong piece and an important one everyone should read. Click here to read the blog.

My take: Anonymous, or in other words, a buyer/seller who doesn’t want anyone to know which house they are using has been an issue long debated by many market pros. Should we allow investors to hide which house they buy or sell from in order to keep their orders to themselves (provided they aren’t insiders)? I think we should allow it. And before you get up in arms, hear me out. Buying or selling anonymously was created to level the playing field. A large buyer or seller should have the same market edge as a small buyer or seller. When small investors buy or sell shares of a company, no one cares; however, when a fund or large investor buys or sells shares in a company, everyone wants to know so they can make a quick decision and gain an edge on the market before that fund or large investor has completed their order. Buying or selling anonymously simply gives large buyers or sellers enough time to complete their transaction without others negatively affecting their order execution.

Any insider must report when they sell shares in their company. It is a transparent system and as SchiffKnowsBest stated, this information is easily attainable via insider filings. So whether an insider sells shares anonymously or not is irrelevant- they have to file an insider trading report that is public record.  If an institution owns a large chunk of a company (10% or more) they also have to file insider trading reports. So whether they sell anonymously or not, we will soon know if they have sold.  

Just about anyone can buy/sell anonymously through their broker, but very few of us have reason to. We rarely own enough shares in a company that if we sold (or bought), our entire position at once, would hurt the market. However, if you were a fund manager whose fund owned 5% of a mining company that had 100 million shares outstanding, that means you would own 5 million shares. And let’s say, for unforeseen reasons, your clients wanted to take their money out of that mining company. In other words, as the fund manager, you were forced to sell. In order to get as much of the fund’s investment back from that mining company you would have to be respectful of the market and sell without disrupting it. However, if it was known your fund used house ‘XYZ’ (for example) and investors saw you sell 100,000 shares, they might panic, which would cause a free-fall in the price that should have never happened, as it had nothing to do with the fundamentals of the company. And the same goes if a fund wanted to accumulate a large position. If the market saw a known house, that the fund uses, start to accumulate blocks of 100,000 shares, it may drive the stock price up for no good reason other than the fact that the fund was accumulating. This is not a fundamental reason for the company to increase in value; unless of course that fund was taking a position large enough to be an insider and in which case, that information would be made public via the insider trading report (within days of the transaction). The transaction would be made public after the fact, which is fair for all public market participants.

That’s my very condensed version of buying/selling anonymously. I encourage you to read SchiffKnowsBest’s blog for another perspective on the subject.

“American Politics from this Canadian's View”

This blog by Frank Tabbert is worth a read as a lot of good discussion has started in the thread of conversation. Click here to read. The Republican race is getting ugly. Name calling and character slander is an everyday thing for this group of Republican candidates. It’s a shame. If only they could run a campaign based on class, integrity and winning by presenting the best case on how they will get the world’s largest economy back on track.

“Gold Oil Ratio says Buy Gold”

This blog by scottiepimps59 makes a great case for higher gold prices by using the historic gold to oil price ratio. It’s worth a read in a time when so many talking heads (aka media fools) are declaring gold’s bubble has burst. Scottiepimps59 posted this blog on December 7, 2011 when gold was trading around the same level as it is today. Scottiepimps59 concluded with this statement in his blog “In summary:  My target for GOR is 18.80-19 range.  With a target of $110-$115 for oil, we should see gold ascend to $2,060-2185 (implied return of 20-25%).”

I agree with him entirely on a 12 month timeline. I believe gold will climb over the $2,000 an ounce mark this year.

After perusing through many community blogs over the holidays, these are some I wanted to share. I’ll be regularly writing my own blog and sharing the best of our community blogs. I encourage you to participate in our community as our members have a wealth of knowledge.  

Good night,



Community Talk

Re: Best of the Blogs

Thanks for highlighting my blog, Aaron.   

GOR fell through support at 200dma but has bounced off the historic average of around 15 and looks to be breaking out from the pennant formation in the chart I drew.  

However, this may be the result of weakness in oil.  Oil looked like it was ready to break out but continued failure around 103 is a bit discouraging.  I now expect oil to bounce off the 200dma which coincides with the 50% retracement level around $95. 

My gold chart has broken down since my blog post but my intermediate to long term outlook for gold remains very bullish. In the short term, gold will need to break the September trend line (red) to reverse and march higher.

Just a caveat, the world's policy makers are playing a dangerous game of brinksmanship, both with regards to the escalating tensions in the Middle East and to the global debt crisis.  We've delayed our war with Iran but only long enough to allow economic allies teetering on the fringe to secure alternative sources of oil (6 months).  Aside from this temporary delay, it appears neither side is willing (or able) to back down.  Likewise, there is no immediate solution for the global debt crisis.  We're down to the last bandaid and will reserve its use until the 11th hour and 59th minute... Only then will the ECB fire up their printing presses and only then will the Fed turn to theirs.  Without feasible solutions and with a confluence of crises just beyond the horizon, one should prepare by owning the ultimate hedge, Gold.  Any weakness in the interim is a buying opportunity.

Finally, while GOR has already demonstrated that gold is NOT in a bubble, one can also compare Gold against the VIX.  VIX is commonly known as the Fear Index... as opposed to a Greed Index.  Bubbles are created when Fear and Greed act together to inflate an asset class.  Given that GOR and VIX have shown strong correlation over the past year, I can reasonably conclude that Greed buyers have yet to show up in gold.  

Look familiar?