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Apr 11, 2006 5:28 pm

Gold is going to $800

Apr 11, 2006 5:54 pm

So is gas.

Apr 11, 2006 7:31 pm

so what are you doing about it?

Apr 11, 2006 7:31 pm

Good I own a few rings and chains

Apr 11, 2006 8:06 pm

That's a fairly safe statement, but when?  Six months or fifty years?


As far as the near future goes, I'll believe that when I see it...give me some compelling arguments about why this is likely...I would say that lack of significant inflation is arguing against such a run-up.

Apr 11, 2006 10:19 pm
Indyone:

That's a fairly safe statement, but when?  Six months or fifty years?


As far as the near future goes, I'll believe that when I see
it...give me some compelling arguments about why this is likely...I
would say that lack of significant inflation is arguing against such a
run-up.





Great response.  Yeah man, that freaks me out!  Lets start
with looking at the relationship between Gold and the Dow average since
the early 1900's.  Where should gold be today if the spread is the
same?

Apr 11, 2006 10:53 pm

If the run-up was proportional, my guess is that gold would be a lot higher than $800 even, but the question in my mind is, SHOULD it appreciate proportionately?  I'm thinking no, since we're comparing the change in value of a relatively scarce commodity to, essentially the rate of increase in corporate earnings over the years, and those two variables aren't all that inter-related, unless the company happens to be a mining company.


Now if you adjusted the price of gold for inflation, I'm guessing that would produce a value that would be closer to a fair value, but I don't have that information at hand to be able to make a judgement call.  Interesting stuff, but all I have to contribute is an educated guess, based on pretty thin knowledge, since gold isn't my area of expertise.

Apr 11, 2006 11:07 pm

No, Gold should not track with Equities in the short run.  In
fact, we own it as hedge, as well as a non-correlated asset.  But,
we cannot argue with history.  Eanings growth?  I like it, in
fact I live by it.   What about Earnings decreases?  Do the
bear markets (Gold going up), compensate for the earingins increases to
make your position valid?  I like your response Indy.

Apr 12, 2006 12:43 am

What about the Chinese and their demand for gold, since Asians historically love it as a store of value, and are also big consumers of golf for jewelry?

How about folks in the world who are flush with petro dollars who are looking for an alternate store of value for the very long term?

What about gold as the 'canary in a coal mine' as it relates to unmeasured inflation(health care, education, etc.), and the possibility that there is simply too much liquidity sloshing around in the U.S. and Japan?

I offer these points despite the fact that I'm hardly a gold bug over the years.  I did make a couple of nice $$ in the sector last year, but took my profits too quickly.

Ohhh.....my head is starting to hurt......

Apr 12, 2006 10:10 am

My head is hurting too...the above posts pretty much sum up my limited store of knowledge on gold.  One last point, though...when everyone starts saying that something is going to the moon, that's when I make my exit.  I've heard a lot about gold going higher recently and it may very well do that, but I'm a contrarian by nature, so I'm backing away from this one.


Good stuff, but it's getting over my head...

Apr 12, 2006 10:26 am

Along with gold check out ETFs for commodities and crude oil and another that pegs the euro v's the dollar.  I like all of them.


DBC, WTI, FXE


Isn't GLD taxed at 28%   Anyone know for sure? 

Apr 12, 2006 12:22 pm

I say it hits $400 before $800.

Apr 12, 2006 1:43 pm
Indyone:

My head is hurting too...the above posts pretty much sum up my limited store of knowledge on gold.  One last point, though...when everyone starts saying that something is going to the moon, that's when I make my exit.  I've heard a lot about gold going higher recently and it may very well do that, but I'm a contrarian by nature, so I'm backing away from this one.


Good stuff, but it's getting over my head...




This is the same thing that has been going through my mind...that mostly the easy $$ has been made.  Let the silly latecomers take all the risk.

Jun 7, 2006 11:14 am

Now what do all the experts think?!!!

Jun 7, 2006 10:32 pm
Indyone:

Now what do all the experts think?!!!

Guess it all depends on whether or not you think Bennie and the feds are going to be able to stop inflation. I'm not sure they have that ability any more.

Jun 7, 2006 11:02 pm

You may have another buying opportunity at $600/oz. sometime in the next month.

Jun 8, 2006 9:44 am
Indyone:

Now what do all the experts think?!!!



I have to admit I so hate the ethos of the average goldbug, the incessant negativity, the conspiracy gibberish, the "expert" status they claim based on nothing, that I have a hard time not having that distaste color my view on the subject. In that other thread about the worst clients, I’d have to list goldbugs at or near the top of my list. If you’ve ever talked to one you’ll know what I mean.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


Having said that, I see gold as not much more than a roulette wheel. The same “Chinese demand/inflation gone wild/Washington’s crazy spending/panic among equity investors” rationale has been in place for 30 years and gold was dead, dead, dead. Based on that, I don’t bother with it and a single issue, but instead fold it into the natural resources and managed futures part of a client’s portfolio. I’d like to say that’s a reason approach on my part, but it could be my hatred of goldbugs talking….


Jun 8, 2006 7:26 pm

Managed Futures makes money by playing that roulette wheel you so succinctly disparage, yet you include it in your clients portfolios?  Sounds like your contradicting yourself MikeB.  And here's news for you (someone who has disparaged technical analysis in the past), almost every single managed futures manager out there (and certainly all the ones available under Morgan's platform) use technical analysis as their primary determinant for trades.  Maybe it's the 5% trails that influences the contradiction? 


As far as evaluating Managed Futures, how exactly do you determine what the hell you own, or what the hell they are doing with the $$.  All of the MANY prospectuses and info sheets I collected through the years have never quite answered this.....yes, yes I know they have 'proprietary trading algorithms'....whatever man. 


I think if you are consistent with the investment philosophy you believe in that you would consider Managed Futures a 'roulette wheel'. 


Oh and leave the 'studies' that show managed futures lower volatity at home, they are all bullsh*t since they average the annual volatility, which presents a VERY rosy picture of this investments volatility......I had a client who saw a 30% drop in one month and they were in a 'conservative' managed futures fund.  Needless to say, I took all the monthly returns (the kinds my clients see on their statements ) and did my own 'study' and found that these investments are much more volatile than promoted.  My client was confused why I would tell them that this investment would lower the volatility of her portfolio (yes it was 10% of the portfolio) and I had to dance with the "Well over Looong periods of times they generally perform in non correllated...blah blah blah" spiel.  Clients don't speak the slick, marketing oriented, numbers tailored to fit the case language that Wall Street speaks....when this sh*t falls apart on them because they had a false impression of what these products are designed to do (5% trails is one hint ) it's you they trusted to shoot 'em straight.


I honestly don't know how you can criticize VA's so vehemently, but turn a blind eye to managed futures for retail investors.  5% trails man?!  not 5% onetime commission and .25% annually.  Costs on these products many times will top 9% annually!  AND they are HARDER to understand since you can't DEFINITIVELY tell the client exactly how they will make money except for "Well, if the managers proprietary trading algorithm' works......"


***I'm not debating the merit of managed futures funds with the High Entry minimums and low annual fees that are marketed to pensions and those who have the capital (usually $500k for the 'reasonable' cost funds) to participate, I'm talking your average HNW retail client here......but I still think it's a roulette wheel never the less.

Jun 8, 2006 7:30 pm

MikeyB, I believe Dude just called you out... A response?????

Jun 8, 2006 11:43 pm

There are ways to be in commodities (not futures) through ETFs, commod. index funds (I like Pimco Commod). Pretty low cost and YES, non-correlating. (Don't pay 5% trails however.)