Gold and silver

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Feb 14, 2009 12:22 pm

Anybody hearing more and more from their clients that they are buying gold and silver?  I mean physically buying it and keeping it at the house?  Is this the "average investor is always wrong" playing out, or is it the average Joe starting to get nervous at the speed with which the printing presses are running?  Just starting to get more questions from people on this.

 
How about us?  Are you guys buying some?
Feb 14, 2009 12:50 pm

Starting to field more questions about gold, but haven't run into anybody buying the stuff outright. Those people usually don't speak to financial advisors. They usually point the shotgun out the door when you knock.

I do think investors will need some kind of investment that will hold up when the currency is devalued or bond prices written down. There have been times in history when a government has told its bold holders it will pay them back at a lesser rate, and I think that could very well happen. Or the govt. could trigger inflation, which would mean the same to the its bondholders.
What kind of investments would be good in that environment is an interesting question. I'm guessing oil, commodities, hard assets of any kind, farmland, maybe stock in companies that make a recession proof, cash intensive produce.
 
Feb 14, 2009 6:53 pm

Too bad it's outlawed to own large quantities of bullion. The people buying are the same people making decisions based 1am infomercials. 

Feb 14, 2009 11:39 pm

Pretty sure you can own as much as you want, since '73.  Anybody know otherwise?

Feb 15, 2009 9:34 am

A few months ago I sent all my scrap gold to sellyourgoldscraps.com

I haven't heard anything yet. I assume because I sent them so much it is just taking a long time to process. This is going to be some big windfall!

Feb 15, 2009 11:01 am

"Silver & Gold" is one of the highlights in the Christmas classic "Rudolph the Red Nosed Reindeer". Yukon Cornelius Rules!

Feb 15, 2009 10:41 pm
2wheeledbeemer:

Anybody hearing more and more from their clients that they are buying gold and silver?  I mean physically buying it and keeping it at the house?  Is this the "average investor is always wrong" playing out, or is it the average Joe starting to get nervous at the speed with which the printing presses are running?  Just starting to get more questions from people on this.

 
How about us?  Are you guys buying some?
 
We have about 5% of client assets in GLD.  Both statistic and monetary evidence would support gold should rise significantly in the coming years.  As the S&P and other equities recover, watch the price of gold carefully.  If gold outperforms then theoretically investors are still losing buying power.
 
A good guy to watch for gauging real gold "investment" value is Dennis Gartman.  I get his letter and he's one of the few I'll watch on CNBC.  He has been getting very bullish on gold since it was about 850.
 
The danger of telling clients that gold is folly is that they will remember your disinterest.  Many brokers made this mistake back in 2002-4; when gold was trading at less than 1/2 its current value.  If you want to keep clients, I suggest getting educated on the value of having some non-traditional holdings in a portfolio.
Feb 16, 2009 12:25 pm

The problem with gold, and I agree with what you're saying, is that it has not proved itself over an extended period of time.  We only have "comp" history back to the 70's.  So although we seen several cyclical bulls and bears, we have not been through too many secular markets over that period.  Really, only 2 (plus the current probable secular bear) - the 70's bear, then the bull from '82-'99. 

And if you like at the price history since the 70's, other than massive inflation in the 70's, and currently, gold was a relatively sideways-moving asset.  I think the only way you play gold is to buy and sell on the long cycles.  In the short term it is REALLY volatile.
 

 
Although, on an inflation-adjusted basis, right now might be a good time historically to still be buying gold if you believe inflation will be an issue in the years to come, due to King Obama's Stimu-flation package.
Feb 16, 2009 12:51 pm
B24:

The problem with gold, and I agree with what you're saying, is that it has not proved itself over an extended period of time.  We only have "comp" history back to the 70's.  So although we seen several cyclical bulls and bears, we have not been through too many secular markets over that period.  Really, only 2 (plus the current probable secular bear) - the 70's bear, then the bull from '82-'99. 

And if you like at the price history since the 70's, other than massive inflation in the 70's, and currently, gold was a relatively sideways-moving asset.  I think the only way you play gold is to buy and sell on the long cycles.  In the short term it is REALLY volatile.
 

 
Although, on an inflation-adjusted basis, right now might be a good time historically to still be buying gold if you believe inflation will be an issue in the years to come, due to King Obama's Stimu-flation package.
Indeed, hail to our "king.... and his dancing bear in '099
Feb 16, 2009 12:54 pm
Ferris Bueller:
B24:

A few months ago I sent all my scrap gold to sellyourgoldscraps.com
I haven't heard anything yet. I assume because I sent them so much it is just taking a long time to process. This is going to be some big windfall!



I got 5 of their envelopes and filled them with heavy rocks so they would have to pay the shipping.

 
Amazing!