On the heels of today’s Fed’s statement, gold and silver continued to hold on to recent gains. KWN is publishing more wisdom from Jesse Livermore and it was the email below that was the trigger.
More incredible wisdom from Jesse Livermore below, but first the email…
“Fleck- I think you are right. Everyone is calling to buy the miners on a pullback. I just read one call on PAAS specifically for a major buy point below $10 which I guess could happen but with so many thinking the same thing doubtful it will. I thought the recent 7% pullback was a good buy point but who knows. I just know in a couple years it will be much higher. Never thought sitting in a position could be this difficult. That 5 year drubbing in the miners has really brainwashed me to want to sell.
I have had one of my best quarters ever. I am fearful of giving up the gains but have held my positions. I have been chopped up on the hedges (Puts) I have bought on GDX but I feel it is small insurance to pay. Typically if I hedge it doesn’t pay off. I am a terrible hedger but I want to stick to my positions so its where I am at. I am a terrible hedger because it is usually an emotional response to wanting to sell a position. I used to sell and buy back higher, now I buy a couple puts and sell at a small loss. I am still worried about my positions but convinced that its the right place to be. Gold just had its best quarter in 30 years and GS says to short it. Sounds like a buy to me 
Do you regularly hedge large gains or positions that you have conviction on? I assume it would be more of a money management approach.”
Bill Fleckenstein simply responded, “No, I don’t hedge gains.” But the above email brings up an important point about how the long bear market, which is now over, has impacted the psychology of investors in this space.
Even with the recent positive action in the gold and silver markets, what some of the gold and silver community are struggling with at this point is exercising patience. Some have been selling positions and moving to the sidelines, waiting for the next shoe to drop. While there will be pullbacks, KWN readers around the world need to understand that you don’t want to give up your position at the beginning of a new bull market…
Remember the lessons of Jesse Livermore (see below).
“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!
It is no trick at all to be right on the market. I’ve known many [traders] who were right at exactly the right time, and began buying or selling stocks when prices were at the very level that should show the greatest profit. And their experience invariably matched mine; that is, they made no real money out of it. [Traders] who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make the big money.” — Jesse Livermore
The bottom line is KWN readers need to listen to the wisdom of Jesse Livermore and exercise patience. Do not give up your positions in this new gold bull market by trying to get too cute — trading in and out of the metals and the mining stocks. Again, pullbacks will come and sometimes they will be quite dramatic, but trying to time those perfectly can leave people on the sidelines during major advances, and that would probably be more mentally taxing than just sitting through the pullbacks. Remember, in a bull market the big surprises always happen on the upside.
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