Gold is now in the $600s. So much for protection… Looks like a fresh off the press 30 year treasury yielding less than inflation is kicking gold’s shiny buttocks.
My gold exposure has been mining equities, it’s been quite a ride… double whammy with market and commodity exposure. I didn’t think through how deflation works, because I was too concentrated on central bank actions, and missed the asset popping driver of deflation. Today doesn’t seem bad though, for some reason. Not sure why. Maybe the wave comes in the afternoon.
Gold and Mining over the long term, will be great! I’d get some at these prices down here…
Gold and Mining over the long term, will be great! I’d get some at these prices down here…
Yes, I agree, so I haven’t sold. Wish I’d sold part when I was up 94% on that position. It’s gone from up 94% to down 30% in about 6 weeks. Boy I feel dumb, but these markets are whippin’ everyone’s butt.
Thoughts on whether gold has hit a bottom? Haven’t seen it this low for a long time… Been thinking about stocking up for future production use (jewelery production).
redvolve, I’ve heard internet rumors that it’s hard to actually get physical gold. Is that true? I called around and everybody said it was bogus.
bchad, do you have a gold ETF or gold & mining ETF?
Actually company exposure - Goldcorp (GG). Embarrassing… I want to shift to ETFs but haven’t found how best I want to time it. Basically, I’ve worked for 20 years with a broker who was a friend for 10 years before that. For most of that time, he knew a lot more than me about this stuff, and did reasonably well, particularly with getting me to start retirement planning, I usually deferred to his judgement. However, I’m getting to the point where I feel I know more about portfolio management and strategy than him, although he’s not a bad stock picker. I need to move away from him, because the transaction costs don’t make sense to run things the way I want to. But I like him, his individual picks are usually good, and we have a long, mostly positive history. Friendship is costing me a lot. I do have some money in a trading account, and that’s been in cash + TIPS, and that account is freer for me to implement strategy, but right now the sensible strategy has been cash.
virginCFAhooker Wrote: ------------------------------------------------------- > redvolve, I’ve heard internet rumors that it’s > hard to actually get physical gold. Is that true? > I called around and everybody said it was bogus. No, not true.
Why is gold considered so safe by the average investor? Look at the volatility. When I tell some of our clients that gold can fall in value significantly and quickly they act like I am crazy!
I think the reason is that they feel that gold cannot possibly fall to zero, and they discount the possibility that gold is already overpriced.
nearly 80% of gold moves can be attributed to inflation and the value of the USD, which is really just two sides of the same coin. Short term panics (financial/geopolitical) can influence the price over the short term, but long term, it’s going to move with the greenback. Will it go up? Perhaps, but you’d have to see the flight to quality/USD trade unwind. It is really interesting to see the disconnect betw/ currency valuations and monetary policies, which threw me for a loop. As to commodities, I hear a lot of bullish commentary about these valuations. True, they’ve been beaten with the double whammy: currency and economy. But, again, I don’t understand the bull call. My world view is a global recession. Commodities are high beta, so… If you like the economy, then I say go long commodities. Historically, pricing power evaporates for producers when demand declines. It’s tough for me to see how a name like FCX can support their capex, when they earn $1.60/lb and pay $1.25.
Are commodities high beta? I thought they were relatively uncorrelated, other than energy. If they are uncorrelated, then there must be a LOT of volatility to get a high beta.
sorry, mismatch of terms. commodity prices are highly correlated to global GDP.
bchadwick Wrote: ------------------------------------------------------- > Are commodities high beta? I thought they were > relatively uncorrelated, other than energy. If > they are uncorrelated, then there must be a LOT of > volatility to get a high beta. Forget beta, it’s all about inflation in this case. I think all this money being printed by the US and Europe to fix the credit mess ( trillions) will eventually lead to higher inflation. I’m holding on to my IAU shares for the long term.
we definitely have deflation in the short to medium term as people discover that there is no cash or credit available to buy stuff and prices go down. Then in the medium to long term, government policies are likely to try to get us out of it by stimulating inflation, which has the advantage of making the real value of debt decrease (but screws lenders).
It was going to 2000 
gold miners issue a ton of debt, so they are done in this market. central banks are selling gold to raise cash to improve liquidity. strange, all the historical correlations that have worked in the past arent working today. We were long a ton of gold miners and they ahve been a disaster…scenario played out but the stocks/gold arent acting like we thought.
My 2c worth: - stengthening USD generally causes a USD fall in the gold price - the liquidation of commodity holdings (incl precious metals) by hedge funds - gold does well in an inflationary environment, which is not what we’re facing at the moment (yet) I reckon gold will do well once hedge fund selling stops and the USD starts falling as the printing press chickens come home to roost.