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Saturday, April 23, 2011

April 23, 2010: Bob Brinker on Gold, Silver and Oil

April 23, 2011....Let's briefly review what Bob Brinker has said about buying gold, silver or oil.


Brinker hasn't talked about the recent rise in oil prices very much on the program. I suspect that he would certainly do that if the stock market started declining significantly, like it did in 2008 and early 2009.

In 2008, Brinker said that the stock market was directly (inversely) correlated to the rise in oil prices -- calling it a "wild card." He meant that the rise in oil prices was directly linked to stock market declines. Just the opposite actually happened after he made that declaration, as you can see by reading some of the archived blog summaries from June through the fall of 2008. Instead of acting inversely, the two acted in tandem.

June 28, 2008, Bob Brinker said:
“Here on Moneytalk, if you have been with us, you know we have been talking about the importance of oil prices and energy here on our Moneytalk broadcast. And we see the importance of oil prices in today’s economy --we see it with a direct correlation......"

July 19, 2008,
Brinker spun the oil and stock markets like tops. I set the record straight with hard numbers: Bob Brinker said: “Another interesting week in Wall Street. And of course, one thing came as no surprise. The price of oil went down and the stock market went up. Oil prices taking their biggest tumble since 2004 – lost about $16 a barrel, but still trading at the ridiculously high price of $128.88 per barrel. (Honeybee EC: Oil closed at $128.02 per barrel for the FIRST TIME on May 20, 2008. The S&P closed at 1413.40 the SAME DAY. Last Friday, the S&P closed at 1260.68....oops!)

Brinker continued:
"Stock market scoring some nice gains for the week -- S&P 500 chalking up a 1.7% gain. For the month of July amidst a great deal of volatility related to what’s been going on with oil prices, for the month of July the S&P has lost 1½% not counting cash dividend income that accrues each month.…………The Nasdaq had a very good week – gaining close to 2% for the week just past.........(Honeybee EC: Brinker has never talked about the fact that June was the worst month for the S&P in 50+ years. It dropped 9% in that one month alone, taking it firmly into the bear market territory that Brinker's timing model is supposed to predict, and almost 100 points below Brinker's most recent all-money-in buy-signal of "low-1300's"...oops!)

July, 2008, Brinker said:
"Now I wish I could tell you what the price of oil is going to be in a week, a month, a year. I don’t know. I have no way of knowing and I think only a fool would try to forecast the price of a barrel of oil in the world we live in…….”

David Korn comments on Brinker's oil views:
"A few comments here. First, Bob is now basically dismissing the predictions of energy expert Charlie Maxwell, who had been a frequent gueston the program. During the Moneytalk broadcasts in 2006-2007, Charlie was predicting that the price of a barrel of oil would trade in the $50-$77 range. For a while, that prediction was spot on, so much so that Bob would tell callers who asked him that he agreed with Charlie's prediction. With the price of oil now double that, the prediction clearly was way too low and Bob has now acknowledged the inability to predict oil prices.

This is not something new for Bob. He has previously changed his opinion on whether interest rates can be predicted (now opting for the view that they can't), and he seems to have given up on picking any new individual stocks.

The last refuge is the stock market in general. With his position that you can't predict where oil prices are going, given Bob's view that it the stock market is going to react to oil prices, the logical conclusion is that you can't predict where the stock market is going. But there was no indication this weekend that Bob has given up on market timing, or his model for that matter."

July 13, 2008 (S&P 500 @ 1239.49 -- Oil at 144.95) Moneytalk Bob Brinker said: “One of the topics we’ve been talking about on Moneytalk is what has been going on in the stock market and how that has been related to the price of a barrel of oil and the correlation that we’ve been discussing on Moneytalk. I think the stock market really is marching to the drummer known as oil right now. I think oil prices are the ax right now in the stock market."

Oil was about $125 per barrel when Brinker wrote the following: August 5, 2008 Marketimer, Page 3; Paragraph 3; "In Summary, we continue to regard oil prices as the key variable for stock prices." (Honey EC: Some may wonder how Brinker could think oil was the "key variable" back then and have spent the last two years having guest-speakers on Moneytalk spouting off about all the things that caused the financial collapse in 2008. How clueless is "America's most trusted financial advisor"?)


In the May, 2009 issue of Marketimer, Brinker
added GLD to his list off-the-books stock and ETF picks.

David Korn offers some words of caution about that. He wrote: "I need to give my subscribers a little warning here about this recommendation by Bob. Since he listed the GLD shares in the "individual issues" section of his newsletter, they are not included in the performance of his model portfolios. To that extent, they get relegated to the QQQQ status If they go up, Bob can brag about it, but if they go down, it doesn't affect his published performance figure and you probably won't hear him talk about it further. If you listen carefully, Bob is saying he is recommending it to people who WANT to hedge their portfolio against inflation, not because HE thinks there is going to be inflation."

To put those comments in perspective, in 2007, David Korn wrote:
"Bob has been steadfastly BEARISH on gold for as long as I have been doing my newsletter."

April 17, 2011, Moneytalk, Bob Brinker said:
"So to try to make a specific forecast on what's going to be the next speculative appetite in gold and silver is very difficult. And I say this even though on this program on a number of occasions, I've recommended both gold and silver as a hedge for those who want to have a hedge in their portfolio. Specifically, I've recommended the exchange-traded-fund, GLD for gold, backed by gold bullion and the exchange-traded-fund SLV backed by silver bullion.

So even though I've made that recommendation for those who want to have a hedge and those investments have done extremely well, I still have to come back to square and silver are speculative assets.....I'd hold exposure in the 4% area. If I were investing in gold, I would not have more than 4% in gold. If I were investing in silver, I would not have more than 4% in silver.....of your total portfolio.....If you had them both, you would be doubling up because they have a very high correlation over time. Recently, silver has done better than gold, but there have been plenty of times when gold has done better than silver."

Brinker has changed his tune so much over the past few months that the truth is unrecognizable in what he tells callers about his gold and silver "recommendations."

In January 2010, Moneytalk, Brinker said:
"There's been no change in my views that I've expressed frequently in recent years on Moneytalk, that if you're going to do anything in that area, my preferred vehicle for that is the Exchange Traded Fund which happens to be the second largest in the world, ticker symbol GLD. Because I think the GLD shares are an excellent way to provide a vehicle for those who want to have a hedge in the gold market.

Now my views have not changed. I view gold as a speculation. When I hear people saying buy gold, it's going to two or three thousand, I'm always amazed when I hear this kind of discussion because I don't know how they know that. By definition, the
price of gold is a speculation. And if you want to speculate on gold and use it as a small hedge in your portfolio, then it is your right to do so. But no matter how you look at it, it's a speculation.

When you buy shares in a common stock, if you are an investor, you buy because you think there's an increasing earnings and dividend streams..... But when you buy gold, you don't have that increased earnings and dividend stream because gold does not pay dividends.
Gold bullion bars just sit and you pay for storage. So the bottom line is, it's speculation on what others will pay for a bar of gold. " (Honey EC: Please notice that in January of last year, he was still using the term, "if you are going to" which he had used for all the previous decades on the program. And note that his attitude was much more negative.)

November 7, 2010, Brinker said:
"Hedging the portfolio against decline in foreign exchange, and there is a way to do that. It is a speculation, but there is a way to do it. And that is to put some GLD, the Exchange Traded Fund for gold in your portfolio, a few percentage point perhaps, if you elect to do this. And that will give you a precious metal in the name of gold bullion-hedge in your portfolio against the dollar."


Brinker first told Moneytalk listeners that SLV could be used as a hedge in place of GLD in November 2010:

Brinker said:
"As far as silver is concerned, I think it could be considered as an alternative form of hedging in a portfolio......The preferred way for those who wish to have a silver hedge in their portfolio would be the Exchange Traded Fund that holds the silver bullion -- that trades under the symbol SLV.....the Ishares Silver Trust."

So to sum it up: After the gold and silver trains left the station, Bob Brinker got on board just enough to give himself bragging rights if the prices went up. And he did it in such a way that if prices went down, he could either bury what he said completely -- or claim that he didn't actually say that he recommended gold or silver but only recommended GLD and SLV as the "preferred way" to buy them. He of course, is totally against buying numismatic precious metal coins, as he has said several times.


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