Gold?
12-07-2009, 09:42 PM
#81
Drifting
You can use statistics to make almost any argument and Bloomberg picks a peak of Gold in 1980 to make its case.
What they don't point out was that two brothers were trying to corner the silver market and that drove gold up along with silver. If Bloomberg picked almost any year besides 1980 the picture would be very much different and their argument would have been pointless. Gold was up for artificial reasons then- it is NOT up for artificial reasons this time though despite what CNBC tells you.
What they don't point out was that two brothers were trying to corner the silver market and that drove gold up along with silver. If Bloomberg picked almost any year besides 1980 the picture would be very much different and their argument would have been pointless. Gold was up for artificial reasons then- it is NOT up for artificial reasons this time though despite what CNBC tells you.
12-08-2009, 06:42 PM
#82
I feel the need...
Gold Isn’t the Best Protection Against Inflation
Economic chaos? The dollar crumbling? Central banks printing money like crazy? Probably the only real surprise about the surge in gold prices over the last few months is that it took so long to arrive.
Last week gold touched an all-time high of $1,227.50. Back in September it was still less than $1,000. Chalk that up as a victory for the gold bugs.
This week, the price is heading down, dropping below $1,200. Chalk that up as a victory for the gold skeptics, who regularly point out that the metal’s value is just a sentimental memory from a long-buried era.
In reality, while investors are right to be nervous about inflation, maybe they are catching on that it’s wrong to see gold as the best hedge against a general rise in prices. There are plenty of alternatives: equities, property, oil, luxuries or private-equity funds should prove just as effective a way of shielding yourself.
It isn’t hard to figure out why investors had been getting interested in gold again. Central banks are pumping freshly minted money into the system. A few hundred years of economic history says that eventually this will lead to inflation. It might be next year, or the year after. It doesn’t make much difference -- it will arrive sooner or later, and you’ll need to get your portfolio in shape before it does.....
Last week gold touched an all-time high of $1,227.50. Back in September it was still less than $1,000. Chalk that up as a victory for the gold bugs.
This week, the price is heading down, dropping below $1,200. Chalk that up as a victory for the gold skeptics, who regularly point out that the metal’s value is just a sentimental memory from a long-buried era.
In reality, while investors are right to be nervous about inflation, maybe they are catching on that it’s wrong to see gold as the best hedge against a general rise in prices. There are plenty of alternatives: equities, property, oil, luxuries or private-equity funds should prove just as effective a way of shielding yourself.
It isn’t hard to figure out why investors had been getting interested in gold again. Central banks are pumping freshly minted money into the system. A few hundred years of economic history says that eventually this will lead to inflation. It might be next year, or the year after. It doesn’t make much difference -- it will arrive sooner or later, and you’ll need to get your portfolio in shape before it does.....
12-09-2009, 12:19 AM
#83
Drifting
Of the items listed in Bloombergs article, I would question the properties & luxury good investments and reiterate that Silver is a better way to go based on current experience.
Silver has outperformed real estate (at least my real estate anyway) over the last 17 years. I won't bore you with the details but I'm comparing prime San Diego county SFD properties with the appreciation of a $1000 face value bag of 90% silver pre-1965 coins.
If I do the numbers, the properties appreciate by 3.75x over a 17 year window while silver appreciates about 4.3x over a shorter 15 year window.
For property appreciation, I'm dividing the estimated value of the property by the (down payment+improvements) to reach a very generous factor. The factor drops more when principle payments are included along with property taxes and maintenance performed- perhaps this factor drops to 2.9x when these costs are included. Of coarse I would really have to sell the property to know the actual value of the property- a bit extreme but I figure my estimate is +/- 50k and close enough.
If someone has an extra 15K to invest in something I would argue that silver can outperform real estate in many situations and it's very divisible. You can buy or sell the coins in smaller denominations unlike a property.
Silver has outperformed real estate (at least my real estate anyway) over the last 17 years. I won't bore you with the details but I'm comparing prime San Diego county SFD properties with the appreciation of a $1000 face value bag of 90% silver pre-1965 coins.
If I do the numbers, the properties appreciate by 3.75x over a 17 year window while silver appreciates about 4.3x over a shorter 15 year window.
For property appreciation, I'm dividing the estimated value of the property by the (down payment+improvements) to reach a very generous factor. The factor drops more when principle payments are included along with property taxes and maintenance performed- perhaps this factor drops to 2.9x when these costs are included. Of coarse I would really have to sell the property to know the actual value of the property- a bit extreme but I figure my estimate is +/- 50k and close enough.
If someone has an extra 15K to invest in something I would argue that silver can outperform real estate in many situations and it's very divisible. You can buy or sell the coins in smaller denominations unlike a property.
12-12-2009, 07:42 AM
#84
I feel the need...
I was joking with a trading buddy who tracks gold like a hound dog, when Barick announced recently of un-hedging - it was like ringing the contrarian dinner bell. When they put their hedges on, they marked the near bottom of this decades low prices and lost out on some pretty hefty profits when the run started.
http://www.businessinsider.com/barri...o-peak-2009-12
I am not a gold bug, I think it makes sense as a portion of your commodity exposure basket and broader inflation hedge, but wouldn't recommend shoving all-in and hoard boatloads of it (or any other precious metal). The current hubbub/chatter smacks too much of another bubble, I'd rather be first in/first out than vice versa.
If the shizznit were truly to hit the fan, your probably better off stocking guns/ammo and sending love letter to :water-s: Maybe he'll let you camp on fringes of his farm and guard it in exchange for a few bushels of corn and potatoes.
http://www.businessinsider.com/barri...o-peak-2009-12
I am not a gold bug, I think it makes sense as a portion of your commodity exposure basket and broader inflation hedge, but wouldn't recommend shoving all-in and hoard boatloads of it (or any other precious metal). The current hubbub/chatter smacks too much of another bubble, I'd rather be first in/first out than vice versa.
If the shizznit were truly to hit the fan, your probably better off stocking guns/ammo and sending love letter to :water-s: Maybe he'll let you camp on fringes of his farm and guard it in exchange for a few bushels of corn and potatoes.
03-01-2010, 06:19 PM
#85
I feel the need...
Soros Signals Gold Bubble as Goldman Predicts Record
George Soros is helping drive up gold prices by doubling his bet in a market even he considers a “bubble” as Goldman Sachs Group Inc., Barclays Capital and HSBC Holdings Plc predict more gains before it bursts.
Soros Fund Management LLC, which manages about $25 billion, increased its investment in SPDR Gold Trust, the world’s largest exchange-traded fund for the metal, by 152 percent in the fourth quarter, a Feb. 16 Securities and Exchange Commission filing shows. While prices have fallen 9.2 percent since reaching a record on Dec. 3, 15 of 22 analysts in a Bloomberg survey say gold will reach a new high, with the median forecast predicting a 17 percent advance to as much as $1,300 an ounce this year.
“When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,” Soros said at the World Economic Forum’s annual meeting in Davos, Switzerland, in January. “The ultimate asset bubble is gold,” he said.....
Soros Fund Management LLC, which manages about $25 billion, increased its investment in SPDR Gold Trust, the world’s largest exchange-traded fund for the metal, by 152 percent in the fourth quarter, a Feb. 16 Securities and Exchange Commission filing shows. While prices have fallen 9.2 percent since reaching a record on Dec. 3, 15 of 22 analysts in a Bloomberg survey say gold will reach a new high, with the median forecast predicting a 17 percent advance to as much as $1,300 an ounce this year.
“When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,” Soros said at the World Economic Forum’s annual meeting in Davos, Switzerland, in January. “The ultimate asset bubble is gold,” he said.....
06-14-2010, 06:12 PM
#86
I feel the need...
Gold’s 30% Surge Puzzles Bernanke, Not This Guy
June 14 (Bloomberg) -- Alan Greenspan had his conundrum. Now, Ben Bernanke has his enigma.
The behavior of long-term interest rates had the former Federal Reserve chairman scratching his head. It’s gold that puzzles the current Fed chief. Damned if Bernanke and his fellow central bankers can explain the surge by a metal John Maynard Keynes once dismissed as a “barbaric relic.”
“I don’t fully understand movements in the gold price,” Bernanke said on Capitol Hill last week.
That shocks gold bulls like Johann Santer, managing director at Superfund Financial in Tokyo. And it may be awful news for the global economy that some investors are surer than ever that the gold rally is just getting started.
It’s hard to decide what’s more frightening: that investors are losing confidence in paper money or that the shepherds of the world’s major currencies don’t get what’s going on. Gold’s climb of almost 30 percent in a year reflects fear, not just market concern over inflation or deflation risks. People have lost trust in the global financial system.
As Lehman Brothers Holdings Inc. was crashing in September 2008, Superfund was loading up on gold. At the time, Santer got his share of giggles and rolled eyeballs for predicting gold would rise to $1,500 an ounce over the next two or three years. With gold around $1,230 an ounce, no one’s laughing anymore.....
The behavior of long-term interest rates had the former Federal Reserve chairman scratching his head. It’s gold that puzzles the current Fed chief. Damned if Bernanke and his fellow central bankers can explain the surge by a metal John Maynard Keynes once dismissed as a “barbaric relic.”
“I don’t fully understand movements in the gold price,” Bernanke said on Capitol Hill last week.
That shocks gold bulls like Johann Santer, managing director at Superfund Financial in Tokyo. And it may be awful news for the global economy that some investors are surer than ever that the gold rally is just getting started.
It’s hard to decide what’s more frightening: that investors are losing confidence in paper money or that the shepherds of the world’s major currencies don’t get what’s going on. Gold’s climb of almost 30 percent in a year reflects fear, not just market concern over inflation or deflation risks. People have lost trust in the global financial system.
As Lehman Brothers Holdings Inc. was crashing in September 2008, Superfund was loading up on gold. At the time, Santer got his share of giggles and rolled eyeballs for predicting gold would rise to $1,500 an ounce over the next two or three years. With gold around $1,230 an ounce, no one’s laughing anymore.....
06-14-2010, 06:14 PM
#87
I feel the need...
Gold ‘Out of Whack’ With Commodities, Due to Fall: Chart of Day
June 14 (Bloomberg) -- Gold is “way out of whack with commodity prices” and headed for a fall, according to Brian Belski, Oppenheimer & Co.’s chief investment strategist.
The CHART OF THE DAY displays the ratio between gold’s price for immediate delivery, determined in the so-called spot market, and the Commodity Research Bureau’s spot commodity index on a monthly basis. The latter consists mainly of scrap metals, textiles, livestock and farm products.
This month’s reading of 2.93 is the second highest since 1981, as shown in the chart. The highest was 3.03 in February 2009, when spot gold ended a four-month advance by trading at more than $1,000 an ounce.
Gold dropped as much as 13 percent in the next two months before rebounding to records. The precious metal’s price peaked on June 8 at $1,252.11 an ounce, a 45 percent increase from its April 2009 low, according to data compiled by Bloomberg.
“Momentum and misguided fear appear to be behind gold’s rise,” Belski wrote today in a report that featured a similar chart. “Therefore, we do not expect the gold trade to end well.”
After taking inflation into account, the metal is more costly than at any other time since the early 1980s, he wrote. Spot gold tumbled 48 percent between 1981 and 1984. A similarly “sharp and severe” drop is likely to follow the current rally, the report said.
Top stories about gold: TNI TOP GLD <GO>
Commodity top stories: TOP CMD <GO>
Chart of the Day story menu: CHART <GO>
Charts home page: GRAPH <GO>
The CHART OF THE DAY displays the ratio between gold’s price for immediate delivery, determined in the so-called spot market, and the Commodity Research Bureau’s spot commodity index on a monthly basis. The latter consists mainly of scrap metals, textiles, livestock and farm products.
This month’s reading of 2.93 is the second highest since 1981, as shown in the chart. The highest was 3.03 in February 2009, when spot gold ended a four-month advance by trading at more than $1,000 an ounce.
Gold dropped as much as 13 percent in the next two months before rebounding to records. The precious metal’s price peaked on June 8 at $1,252.11 an ounce, a 45 percent increase from its April 2009 low, according to data compiled by Bloomberg.
“Momentum and misguided fear appear to be behind gold’s rise,” Belski wrote today in a report that featured a similar chart. “Therefore, we do not expect the gold trade to end well.”
After taking inflation into account, the metal is more costly than at any other time since the early 1980s, he wrote. Spot gold tumbled 48 percent between 1981 and 1984. A similarly “sharp and severe” drop is likely to follow the current rally, the report said.
Top stories about gold: TNI TOP GLD <GO>
Commodity top stories: TOP CMD <GO>
Chart of the Day story menu: CHART <GO>
Charts home page: GRAPH <GO>
06-18-2010, 02:05 PM
#89
The sizzle in the Steak
^^ 
all time high today.
Not much confidence in worldwide political/economics pushing the price higher.
all time high today.Not much confidence in worldwide political/economics pushing the price higher.
06-27-2010, 04:03 PM
#93
Drifting
^Until the Dow/Gold 1oz ratio drops below 5.0, I wouldn't sell gold. The ratio is now 8.2 (10,143/1255) so there is a lot more movement in either gold or the dow before the values equalize. My guess is gold will continue going up and the dow will trend lower. I'm still adding new money to Silver because it is even more undervalued than gold is now.
07-16-2010, 12:40 AM
#94
Silver has always seemed like a long term winner to me for some reason. I'd have no problem holding $100,000 worth of bullion or US coins in a vault. My hunch is the returns would be astronomical 30-40 years from now.
Gold too, but it's up there now making it harder to get into. If you bought any serious quantity 10 years ago you're a happy guy. I suspect the gold standard might make a return at some point. It's been "money" since antiquity, so history is definitely on it's side.
Gold too, but it's up there now making it harder to get into. If you bought any serious quantity 10 years ago you're a happy guy. I suspect the gold standard might make a return at some point. It's been "money" since antiquity, so history is definitely on it's side.
07-21-2010, 12:35 PM
#95
The sizzle in the Steak
ObamaCare.....not just about healthcare.....GOLD.....and tax tax tax tax tax
Gold Coin Sellers Angered by New Tax Law
Amendment Slipped Into Health Care Legislation Would Track, Tax Coin and Bullion Transactions
http://abcnews.go.com/Business/gold-...ry?id=11211611
Amendment Slipped Into Health Care Legislation Would Track, Tax Coin and Bullion Transactions
Those already outraged by the president's health care legislation now have a new bone of contention -- a scarcely noticed tack-on provision to the law that puts gold coin buyers and sellers under closer government scrutiny.
The issue is rising to the fore just as gold coin dealers are attracting attention over sales tactics.
Section 9006 of the Patient Protection and Affordable Care Act will amend the Internal Revenue Code to expand the scope of Form 1099. Currently, 1099 forms are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals.
Coin Dealers Flipping
Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.
This provision, intended to mine what the IRS deems a vast reservoir of uncollected income tax, was included in the health care legislation ostensibly as a way to pay for it. The tax code tweak is expected to raise $17 billion over the next 10 years, according to the Joint Committee on Taxation.
Taking an early and vociferous role in opposing the measure is the precious metal and coin industry, according to Diane Piret, industry affairs director for the Industry Council for Tangible Assets. The ICTA, based in Severna Park, Md., is a trade association representing an estimated 5,000 coin and bullion dealers in the United States.
"Coin dealers not only buy for their inventory from other dealers, but also with great frequency from the public," Piret said. "Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale."
So every time a member of the public sells more than $600 worth of gold to a dealer, Piret said, the transaction will have to be reported to the government by the buyer.
Pat Heller, who owns Liberty Coin Service in Lansing, Mich., deals with around 1,000 customers every week. Many are individuals looking to protect wealth in an uncertain economy, he said, while others are dealers like him.
With spot market prices for gold at nearly $1,200 an ounce, Heller estimates that he'll be filling out between 10,000 and 20,000 tax forms per year after the new law takes effect.
"I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability," he said.
An issue that combines gold coins, the Obama health care law and the IRS is bound to stir passions. Indeed, trading in gold coins and bars has surged since the financial crisis unfolded and Obama took office, metal dealers said.
The issue is rising to the fore just as gold coin dealers are attracting attention over sales tactics.
Section 9006 of the Patient Protection and Affordable Care Act will amend the Internal Revenue Code to expand the scope of Form 1099. Currently, 1099 forms are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals.
Coin Dealers Flipping
Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.
This provision, intended to mine what the IRS deems a vast reservoir of uncollected income tax, was included in the health care legislation ostensibly as a way to pay for it. The tax code tweak is expected to raise $17 billion over the next 10 years, according to the Joint Committee on Taxation.
Taking an early and vociferous role in opposing the measure is the precious metal and coin industry, according to Diane Piret, industry affairs director for the Industry Council for Tangible Assets. The ICTA, based in Severna Park, Md., is a trade association representing an estimated 5,000 coin and bullion dealers in the United States.
"Coin dealers not only buy for their inventory from other dealers, but also with great frequency from the public," Piret said. "Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale."
So every time a member of the public sells more than $600 worth of gold to a dealer, Piret said, the transaction will have to be reported to the government by the buyer.
Pat Heller, who owns Liberty Coin Service in Lansing, Mich., deals with around 1,000 customers every week. Many are individuals looking to protect wealth in an uncertain economy, he said, while others are dealers like him.
With spot market prices for gold at nearly $1,200 an ounce, Heller estimates that he'll be filling out between 10,000 and 20,000 tax forms per year after the new law takes effect.
"I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability," he said.
An issue that combines gold coins, the Obama health care law and the IRS is bound to stir passions. Indeed, trading in gold coins and bars has surged since the financial crisis unfolded and Obama took office, metal dealers said.
07-23-2010, 08:23 PM
#97
Senior Moderator
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Well then I'm screwed with my Krugerrands
07-30-2010, 05:44 PM
#98
Drifting
^ Sounds like we'll be good for a while with the 1/10 and 1/4 oz gold coins. My .25oz Pandas would need to double in value to make the $600 cutoff. It now makes sense to buy smaller size coins now.
I think there will be a big underground market if things really go bad and this law will be hard to enforce. The law will be much like many of the labor laws in affect now but still people hire workers 'under the table' and skip all the paperwork.
I think there will be a big underground market if things really go bad and this law will be hard to enforce. The law will be much like many of the labor laws in affect now but still people hire workers 'under the table' and skip all the paperwork.
, did you move money?
09-28-2010, 06:25 PM
#101
I feel the need...
‘Gold-to-Go’ taps into gold fever with ATMs
German firm plans to introduce machines in the United States this year
http://www.msnbc.msn.com/id/39383743...sonal_finance/
BERLIN — A German firm that installs and manages gold vending machines aims to introduce them into the United States this year as it expands rapidly to take advantage of demand for bullion in times of economic uncertainty.
Thomas Geissler, creator of the Gold to Go brand and chief executive of Ex Oriente Lux, told Reuters on the sidelines of the London Bullion Market Association conference that the company aims to issue a "couple of hundred" machines next year.
Gold to Go launched its first ATM in Abu Dhabi's Emirates Palace hotel in May. They are now operating in luxury hotels in Abu Dhabi, Bergamo and Madrid as well as around Germany.
"This year we will issue around 35 machines, and for next year we are looking for bigger numbers," Geissler said on Monday, standing in front of one of the ATMS, which was colored and shaped like a giant gold ingot close to 2 meters tall.....
Thomas Geissler, creator of the Gold to Go brand and chief executive of Ex Oriente Lux, told Reuters on the sidelines of the London Bullion Market Association conference that the company aims to issue a "couple of hundred" machines next year.
Gold to Go launched its first ATM in Abu Dhabi's Emirates Palace hotel in May. They are now operating in luxury hotels in Abu Dhabi, Bergamo and Madrid as well as around Germany.
"This year we will issue around 35 machines, and for next year we are looking for bigger numbers," Geissler said on Monday, standing in front of one of the ATMS, which was colored and shaped like a giant gold ingot close to 2 meters tall.....
09-28-2010, 10:07 PM
#102
Drifting
^ I saw that article and really had to wonder WHY? Sounds pretty risky walking up to an ATM to buy an oz of gold. I would much rather buy online and have a FedEx box come to the house. My guess is the the ATM cost will probably more expensive than buying Gold via Nucleo Exchange at Bullion Direct too.
09-29-2010, 09:10 AM
#103
Team Owner
It's a great icebreaker on a first date.
09-29-2010, 10:19 AM
#104
The sizzle in the Steak
Need to swap out the gold vending machine with the silver vending machine.
09-29-2010, 06:43 PM
#105
I feel the need...
^^ You know what they say about when your taxi driver/barber/shoe shine guy is asking about teh gold... 
If your looking around for inflation: too many dollars chasing too few good investment opportunities ~ voila!
If your looking around for inflation: too many dollars chasing too few good investment opportunities ~ voila!
09-29-2010, 06:59 PM
#106
The sizzle in the Steak
:wink:
10-05-2010, 06:45 PM
#107
I feel the need...
Don't Get Too Excited About Gold--It's Actually DOWN Compared To The Euro
You’ve read the news, Gold at $1320 this week and the analysts are beating each other over their heads as to where the next gold target might be. We heard everything from $1,500 to $5,000 within a few years. All that accompanied with the ongoing debate as to whether we will see continued deflation, inflation or possibly hyper-inflation. So what’s it going to be then?
The short answer is: “It depends”. Let’s forget about semantics for a minute however, and look at the general cost of living and the cost of running a business. There are a myriad of factors influencing the overall cost of running your life or your business. The best assessment of a sort of felt-inflation is a comparison of the overall cost of living with your income. In that sense, on a macro level, the majority of consumers have experienced a significant rise in the cost of living, felt-inflation if you will...
To some extent, that is reflected in the rise of some commodities and most notably in the form of the run on gold which appears to be gathering pace as we speak. Is Gold then the panacea for each of the dreaded outcomes in terms of a protection against deflation AND (hyper)inflation?
The short answer is: “It depends”. Let’s forget about semantics for a minute however, and look at the general cost of living and the cost of running a business. There are a myriad of factors influencing the overall cost of running your life or your business. The best assessment of a sort of felt-inflation is a comparison of the overall cost of living with your income. In that sense, on a macro level, the majority of consumers have experienced a significant rise in the cost of living, felt-inflation if you will...
To some extent, that is reflected in the rise of some commodities and most notably in the form of the run on gold which appears to be gathering pace as we speak. Is Gold then the panacea for each of the dreaded outcomes in terms of a protection against deflation AND (hyper)inflation?
Read more: http://www.businessinsider.com/how-m...#ixzz11WzMGvqt
10-06-2010, 12:10 AM
#108
Drifting
There's a great Martin Armstrong report on gold with price projections for the next few years. Based on historic trendlines, gold is heading higher. Armstrong is calling for a short term peak in 2011 with a price drop to shake out weak holders and then another leg higher. There's also a lot of history about gold and previous boom/bust cycles as well.
Check out the article here: http://www.martinarmstrong.org/economic_projections.htm
Check out the article here: http://www.martinarmstrong.org/economic_projections.htm
10-06-2010, 08:24 AM
#109
Team Owner
Wondering if Gold ATMs signals the top. When every Tom, Dick, and Harry want to buy, it's usually time to bail. Yesterday Cramer said gold is going to $2,000.
10-06-2010, 02:38 PM
#111
Drifting
It's for that reason that I wouldn't dare put any money into gold right now. That trade is far too crowded. I think there are far better places to put your money. So many great high-yielding dividend stocks that are paying upwards of 5%.
My personal believe is that a main reason that gold has done so well is since the creation of many of the Gold ETFs. So Mom & Pop investors can easily buy gold futures without needing to know anything about futures and without a lot of capital.
10-07-2010, 05:33 PM
#113
Drifting
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett
It's for that reason that I wouldn't dare put any money into gold right now. That trade is far too crowded. I think there are far better places to put your money. So many great high-yielding dividend stocks that are paying upwards of 5%.
My personal believe is that a main reason that gold has done so well is since the creation of many of the Gold ETFs. So Mom & Pop investors can easily buy gold futures without needing to know anything about futures and without a lot of capital.
It's for that reason that I wouldn't dare put any money into gold right now. That trade is far too crowded. I think there are far better places to put your money. So many great high-yielding dividend stocks that are paying upwards of 5%.
My personal believe is that a main reason that gold has done so well is since the creation of many of the Gold ETFs. So Mom & Pop investors can easily buy gold futures without needing to know anything about futures and without a lot of capital.
The 5% div yield stocks appear as good investments today with a Government publicized 1% inflation rate. But do you really think the inflation rate is only 1%? If it was, how come the price of other commodities (cotton, wheat, etc) are going up so much more? Look at a chart for a Agricultural ETF like DBA and see what has happened since June- you'll see a appreciation of about 20% in just 4 months. That's a lot more than Gold or Silver have done but yet the metals are in a 'Bubble'. I don't think so. The treasuries are in a bubble but yet people have no problems buying long-bonds at these low interest rates and the government seems to have no problems selling more and more debt.
This bubble logic makes no sense to me and I would love to have someone explain the Gold is in a bubble logic to me because I'm not seeing it. At a DOW=10,948.6 and Gold=1333.7, it still takes 8.2oz of Gold to equal one Dow and that makes gold very undervalued since it really should be closer to 5. So gold is either very undervalued or the Dow is very overvalued- eventually this ratio will equalize to 5 or 6. My money is on Gold going up.
Some of those 5%+ yield stocks pay that type of yield for a reason and are suspect for dropping in value if they should miss earnings. A 5% div yield could then become a better deal as a 10% yield after a 20% drop in share price but that wouldn't be a great investment now would it? You would have lost 20% to have a 10% yield that is likely to get cut.
The rule is to diversify and not put all your money in any specific investment. As stated, I don't see any problem having a 20% exposure to gold and silver even at these current elevated prices- particularly Silver at the moment.
10-07-2010, 06:34 PM
#114
I feel the need...
The bubble is explained by ZIRP. Central Banks are essentially forcing investors to speculate. A wall of cash earning (near) zero has to go somewhere. That's not to say the bubble can't run for quite some time though.
10-07-2010, 08:34 PM
#115
Drifting
Gold is up for a lot of reasons. I think gold is up more because of FEAR as opposed to GREED this time around. People and countries are fearful about current monetary policy and are attracted to holding gold. You really should read that link I posted a couple days ago and you might change this perspective of Gold being up only because of a bunch of greedy people that don't know anything about investing. I don't think that is the case this time. The ETFs have been around for years so there has been ample time for noob investors to drive prices up. It should be no surprise about the current ramp up in price movement, since it coincides with talk about QE2 the last couple of weeks. QE2 = inflation and a more extended period of slow growth for the economy.
All assets can drop in value, including gold. So your logic about stocks doesn't really hold any value since gold doesn't pay a dividend and the value of gold can drop.
But I agree, any proper portfolio should be diversified. It's the people who are buying gold because they think the dollar will eventually be worth nothing. There is a pretty good blog entry talking about that.
http://www.thesimpledollar.com/2010/...t-devastation/
If you want to “hedge” against some sort of imagined financial apocalypse based on a very negative view of the future, don’t use gold as that hedge. Instead, spend your time building skills. Store up some dry food in your basement. Set up a generator. Become as self-sufficient as you can. These things will help you whether “financial apocalypse” happens or not.
10-08-2010, 07:47 AM
#116
Drifting
Hey Pete- I agree with most of what you are writing. Gold going up in the last bull market makes a lot of sense if you factor historic ratios of Dow to Gold. If the Dow goes up, gold will generally go up as well. I think this latest run in gold is simply a move for gold to catch up to the Dow at this moment and of coarse the FEAR/WORRY issues also apply. As with the near-zero interest rates on savings, it makes it very easy to hold a commodity that doesn't pay dividends but has moved up in value.
The other thing about Gold is that it is compact in value so someone can transport a large quantity of value pretty easy in case they wish to relocate for some reason.
The other thing about Gold is that it is compact in value so someone can transport a large quantity of value pretty easy in case they wish to relocate for some reason.
10-08-2010, 08:07 AM
#117
Drifting
One other thought on the bubble idea... Gold and Silver are acting like many other commodities in its price movement. I follow my advice and also diversify in things other than stocks and gold too.
I'm fortunate to hold a position in SGG (sugar ishare) and look at that chart since June- the SGG chart looks much more of a bubble than Gold does but yet there are factors responsible for why Sugar is going up: increased demand from abroad & crop issues. But less than a year ago sugar was in the dumps and all the analyst were dissing it. The so-called experts are not always right and I am very selective in what blogs or web sites I use for financial advice.
I'm fortunate to hold a position in SGG (sugar ishare) and look at that chart since June- the SGG chart looks much more of a bubble than Gold does but yet there are factors responsible for why Sugar is going up: increased demand from abroad & crop issues. But less than a year ago sugar was in the dumps and all the analyst were dissing it. The so-called experts are not always right and I am very selective in what blogs or web sites I use for financial advice.
10-19-2010, 11:43 PM
#118
Drifting
Well today Gold and Silver experienced the biggest daily price drop in some time. But both Gold and Silver haven't even breached their 20 day exponential moving averages so the uptrend is still very much intact from a technical perspective. I wouldn't get worried until the 50 day EMA gets violated on either commodity. I took today's drop opportunity to buy some more SLV in various accounts.
SLV is now priced at $22.85 so we can all see if buying today was a wise move or not in a couple months time.
I imagine some of today's drop is based on China's interest rate hike to 2.5% and some of the drop is just nervous holders thinking they need to sell because these commodities are said to be in a 'bubble'.
On a side note, SGG (sugar) @ $81.69 was one of the few commodities moving higher today so there are other ways to make money on the inflation premise. SGG looks like it's going to test a earlier 2010 high at 84/85- that should be interesting.
SLV is now priced at $22.85 so we can all see if buying today was a wise move or not in a couple months time.
I imagine some of today's drop is based on China's interest rate hike to 2.5% and some of the drop is just nervous holders thinking they need to sell because these commodities are said to be in a 'bubble'.
On a side note, SGG (sugar) @ $81.69 was one of the few commodities moving higher today so there are other ways to make money on the inflation premise. SGG looks like it's going to test a earlier 2010 high at 84/85- that should be interesting.
10-22-2010, 01:05 PM
#119
Moderator Alumnus
Beware of bubbles. Tulips, the dotcom boom and pre-credit crunch real estate have a lot in common; they are assets that were in vogue, became overbought and eventually fell to earth. And now it’s gold.
Historically, two-thirds of gold demand comes from the jewellery industry and from countries like India and China. The remaining demand is generated by investors, manufacturing and the dental industry. But over the last four years, gold has staged a spectacular price rise and won many new investors. Everyone from hedge funds to individuals has jumped in, seeing gold as a way to improve portfolio diversification. Today portfolios often allocate 5 per cent or more to gold. A decade ago such an allocation in sound investment circles would have been heresy.
Market dynamics have changed too, with investors playing a larger part in what is driving prices higher. Now private investors hold over 30,000 tons of gold, more than the entire holdings of all the central banks on the planet. In short, gold fever has arrived on both Wall Street and Main Street. But all fevers eventually break.
The 2010 gold bubble is fuelled by a combination of five main factors: historically cheap cost of borrowing, a prolonged bull market, early profiteers, marketing hype and the risk being ignored. Investors claim that the current market high of $1,380 an ounce is not overpriced, but a reflection of global economic uncertainty, high unemployment and a decline in currency values. Gold is acting, as it should, as a hedge.
Investors also point to the 1980 bubble, when gold peaked at $850 an ounce and plummeted by 60 per cent in one year, as an aberration. Inflation was then over 13 per cent and short-term interest rates were above 16 per cent. Today none of this exists. Gold enthusiasts note the 1980 pre-bust price in today’s dollars and say gold must climb to $2,100 before hitting such dangerous levels. But such logic is flawed in that it assumes that 1980 is a good benchmark for the future. Ignored is the 20-year period from 1980 to 2000 when money invested in gold was dead money.
Today price is increasingly being determined by investors’ insatiable appetite for gold. But what happens when the shine wears off? It is always tricky to know when a bubble is set to burst, although price and investor sentiment can sometimes help to cut through this fog. And investor demand has now reached mania levels. In early October the Daily Sentiment Index of futures traders indicated that while only 3 per cent were bullish on the US dollar, 95 per cent were bullish on gold. When everyone in the market is on the starboard side of the boat, you should watch out.
Despite their human origins, most bubbles are not easily spotted until it is too late. The dotcom bubble took four years to burst; the real estate bubble six. The last speculative gold bubble, in 1980, took four years to implode, while this latest reincarnation is seven years in the making. This bubble will likely be pricked only when economic outlooks improve and unemployment figures in countries like the US drop below 8 per cent. This might come in 2011, but it could take much longer.
Unlike previous asset bubbles gold is a tiny fraction of total global investment capital. When the bubble pops, it will represent less than 2 per cent of the world’s total. Those most hurt will be the investors who are the last ones out. These tend to be the smaller investors – just as in the real estate bubble, those who can least afford to lose. However, in the aftermath of the credit crunch we have entered into an era in which global systemic risk is high and unpredictable. Even small events, seemingly unrelated, can trigger larger financial events.
If there is a silver lining to this bubble, when it does go bust, and gold prices plummet, it will be a sign that the global economy has snapped back from economic chaos to prosperity. This will signal job growth, stable currencies, a stop to US Federal Reserve quantitative easing. Then there will be little reason to own gold. In the end, speculators will relearn an age-old lesson: gold in times of financial stability is hazardous to investor health. Like tulips, it is pretty to the eye but does not provide lasting sustenance.
http://www.ft.com/cms/s/0/63f30036-d...44feabdc0.html
Historically, two-thirds of gold demand comes from the jewellery industry and from countries like India and China. The remaining demand is generated by investors, manufacturing and the dental industry. But over the last four years, gold has staged a spectacular price rise and won many new investors. Everyone from hedge funds to individuals has jumped in, seeing gold as a way to improve portfolio diversification. Today portfolios often allocate 5 per cent or more to gold. A decade ago such an allocation in sound investment circles would have been heresy.
Market dynamics have changed too, with investors playing a larger part in what is driving prices higher. Now private investors hold over 30,000 tons of gold, more than the entire holdings of all the central banks on the planet. In short, gold fever has arrived on both Wall Street and Main Street. But all fevers eventually break.
The 2010 gold bubble is fuelled by a combination of five main factors: historically cheap cost of borrowing, a prolonged bull market, early profiteers, marketing hype and the risk being ignored. Investors claim that the current market high of $1,380 an ounce is not overpriced, but a reflection of global economic uncertainty, high unemployment and a decline in currency values. Gold is acting, as it should, as a hedge.
Investors also point to the 1980 bubble, when gold peaked at $850 an ounce and plummeted by 60 per cent in one year, as an aberration. Inflation was then over 13 per cent and short-term interest rates were above 16 per cent. Today none of this exists. Gold enthusiasts note the 1980 pre-bust price in today’s dollars and say gold must climb to $2,100 before hitting such dangerous levels. But such logic is flawed in that it assumes that 1980 is a good benchmark for the future. Ignored is the 20-year period from 1980 to 2000 when money invested in gold was dead money.
Today price is increasingly being determined by investors’ insatiable appetite for gold. But what happens when the shine wears off? It is always tricky to know when a bubble is set to burst, although price and investor sentiment can sometimes help to cut through this fog. And investor demand has now reached mania levels. In early October the Daily Sentiment Index of futures traders indicated that while only 3 per cent were bullish on the US dollar, 95 per cent were bullish on gold. When everyone in the market is on the starboard side of the boat, you should watch out.
Despite their human origins, most bubbles are not easily spotted until it is too late. The dotcom bubble took four years to burst; the real estate bubble six. The last speculative gold bubble, in 1980, took four years to implode, while this latest reincarnation is seven years in the making. This bubble will likely be pricked only when economic outlooks improve and unemployment figures in countries like the US drop below 8 per cent. This might come in 2011, but it could take much longer.
Unlike previous asset bubbles gold is a tiny fraction of total global investment capital. When the bubble pops, it will represent less than 2 per cent of the world’s total. Those most hurt will be the investors who are the last ones out. These tend to be the smaller investors – just as in the real estate bubble, those who can least afford to lose. However, in the aftermath of the credit crunch we have entered into an era in which global systemic risk is high and unpredictable. Even small events, seemingly unrelated, can trigger larger financial events.
If there is a silver lining to this bubble, when it does go bust, and gold prices plummet, it will be a sign that the global economy has snapped back from economic chaos to prosperity. This will signal job growth, stable currencies, a stop to US Federal Reserve quantitative easing. Then there will be little reason to own gold. In the end, speculators will relearn an age-old lesson: gold in times of financial stability is hazardous to investor health. Like tulips, it is pretty to the eye but does not provide lasting sustenance.
http://www.ft.com/cms/s/0/63f30036-d...44feabdc0.html
10-23-2010, 01:43 AM
#120
Senior Moderator
Join Date: May 2003
Location: Better Neighborhood, Arizona
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Gold will fall the day after the election 