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Old 11-26-2009, 02:10 AM   #81
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Maybe, except Gold is completely unhinged from dollar moves. Since 2000 the dollar index is down 25%, Gold is up 360%. Since October 2008, the dollar is down 10%, gold is up 140%. And in January and February of this year when the dollar rose nearly 10%, gold rose by slightly less. Clearly something else is going on here.
I think what's happening has to do with the un-hedging by mining companies like Barrick and the purchasing of gold by central banks, like India. So lots of demand coming in at the same time mining companies are reaching the limits of production.
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Old 11-26-2009, 02:21 AM   #82
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As an aside, the local paper carried an article today claiming that a significant part of the run up in the price of gold was due to large producers like Barrick unwinding hedges. If so, the implication is that when the finish unwinding a sizeable part of the demand will fall away.
You're right about Barrick, but they've been unwinding for years now. Their unwinding is dwarfed by the fact that central banks are no longer selling... in fact, they're buying.

Gold is always a one-hit wonder. But when it hits, it's awesome. People have a naturally bullish instinct and don't generally know how to react to bearish circumstances.
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Old 11-26-2009, 02:24 AM   #83
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"The intent is to get something I can enjoy as a second/vacation home that will also do reasonably well over a 15-20 year holding period."
Can you go go overseas? Adelaide, Australia is in the epicenter of the world's greatest mining boom.
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Old 11-26-2009, 03:51 AM   #84
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Can you go go overseas? Adelaide, Australia is in the epicenter of the world's greatest mining boom.
I think you mean Perth.

Australia as a lot of great places to visit and live in. I'm not sure if I would pick Adelaide as a holiday home destination.
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Old 11-26-2009, 04:51 AM   #85
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I think you mean Perth.
Perth is where it was, Adelaide is where it's at. Perth had a mining boom, Adelaide has had an exploration boom. In terms of real estate, which is what the person was asking, Perth is sitting on the edge... too far, too fast. Adelaide is just ready to begin. I myself just bought a place in Adelaide CBD for $450K, and people are amazed> There are bargains still to be had in Adelaide, but not in Perth.
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Old 11-26-2009, 12:15 PM   #86
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Regarding gold, I watched a segment on the Newshour last night:

Dollar's Weakness Inspires Modern-day Gold Rush | Online NewsHour | Nov. 25, 2009 | PBS

I loved the end. There was a guy in the suit, saying the dollar will be worthless and gold is the way to go. Then they cut the gold dealer, who looks, well, not very suit-like:

Quote:
JOHN WILLIAMS: What has been done over the last couple of decades has set up the ultimate debasement of the U.S. dollar. The dollar as we know it is going to become worthless in the years ahead.

PAUL SOLMAN: But people can be wrong. I mean, the last time we were here, we were doing a story about inflation. Inflation went away. We never even did the story. Are you not at all humbled about making these predictions?

JOHN WILLIAMS: Well, I -- in my humble, most humble opinion, we have in place now everything that has been the nightmare of the people looking at this system over time.

PAUL SOLMAN: John Williams' gold dealer begs to differ.

CHARLIE MAMMOSER: Even though gold has gone up $150 in the last month, the dollar still is $1.49, $1.50 to the euro. It's not going nowhere. So, I think it's more feeding of itself. It's going up, so more people are jumping on the bandwagon. That's kind of how I see it.

PAUL SOLMAN: So, this is just a speculative bubble even, perhaps?

CHARLIE MAMMOSER: Yes, that's kind of how I see it. And I'm just wondering, when's it going to pop?
Love it.

But you really have to see Charlie Mammoser to get the full effect...
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Old 11-26-2009, 12:29 PM   #87
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.. There was a guy in the suit, saying the dollar will be worthless and gold is the way to go. Then they cut the gold dealer, who looks, well, not very suit-like:
Love it.
But you really have to see Charlie Mammoser to get the full effect...
Saw that - my gal mentioned that there are just some people that you can see having long hair - even when their hair is gone. I liked his teeth - kind of a Steve Buscemi effect.
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Old 11-26-2009, 01:34 PM   #88
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Gold is going into strong hands like hedge funds managed by John Paulson, Paul Tudor Jones, David Einhorn, Eric Mindich, David Hayman--the cream of the crop. Public institutions like central banks in India and China are big buyers too. Momentum on gold is building now, as latecomers climb on the bandwagon.


We're seeing demand for gold all over the world. Pension funds allocate about 5% as protection against the weakening dollar. Chinese citizens are encouraged by their government to hold gold, not dollars. On Nov. 18, Russia's central bank announced it would buy any and all gold its sister organization, the State Depositary for Precious Metals and Gems, was willing to see. Now the Vietnamese central bank has granted quotas to import 10 tons of gold for use by its banking system and gold traders....

Good article. Continued at:

Run With The Gold Bulls - Forbes.com
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Old 11-26-2009, 02:37 PM   #89
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For my wife and I, we've simply cut back on expenses wherever possible to offset any losses in the market. We rarely eat out, instead opting for coffees and meals at home with family and friends. Neither of us are shoppers. Entertainment is a walk on the beach, a good movie on TV or a good book. We love to visit with family and friends over a meal or a good bowl of homemade ice cream.
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Old 11-26-2009, 06:23 PM   #90
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For my wife and I, we've simply cut back on expenses wherever possible to offset any losses in the market. We rarely eat out, instead opting for coffees and meals at home with family and friends. Neither of us are shoppers. Entertainment is a walk on the beach, a good movie on TV or a good book. We love to visit with family and friends over a meal or a good bowl of homemade ice cream.
I've stopped worrying too much about the market. Sure, I have to cut out some luxuries of the past, like foreign travels. Few of us really have to worry about having a bare cupboard like people of the third world. So, why not cut back on extravagance and enjoy the simpler pleasures in life? We all got but a life to live. How much of that life should we spend worrying?
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Old 11-27-2009, 05:45 AM   #91
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We rarely eat out, instead opting for coffees and meals at home with family and friends. Neither of us are shoppers. Entertainment is a walk on the beach, a good movie on TV or a good book. We love to visit with family and friends over a meal or a good bowl of homemade ice cream.
Sounds absolutely divine... Can't wait to get there!
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Old 11-27-2009, 10:15 AM   #92
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I think what's happening has to do with the un-hedging by mining companies like Barrick and the purchasing of gold by central banks, like India. So lots of demand coming in at the same time mining companies are reaching the limits of production.
Every bubble has a plausible underlying story.

In this case I find it interesting how quickly the story changed from "the dollar is declining" to "supply / demand" once someone points to the fact that gold is appreciating many times faster than the dollar is depreciating.

If my goal is to hedge an exposure, say dollar weakness or inflation, I'd be very concerned that my hedge vehicle movements are multiples of the thing I'm trying to hedge.

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Gold is going into strong hands like hedge funds managed by John Paulson, Paul Tudor Jones, David Einhorn, Eric Mindich, David Hayman--the cream of the crop.
Strong hands, huh? In my line of work they're known as "clients". And within that category they're known as "fast money" clients. Sometimes "chimps". But never "strong hands".
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Old 11-27-2009, 10:48 AM   #93
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Seems to me there is such distortion in all markets and asset classes due to massive government intervention it is near impossible to make "rational" bets for near term investments. Gold included in this category.

Still, long term trends can be discerned and bets can be placed (i.e. inflation thesis, deflation thesis). But even in this case, the abilities of governments to follow irrational policies for much longer than expected is a real risk.

It was terribly obvious to me that the credit bubble (courtesy of Greenspan) was going to blow. What I did not anticipate was that it would carry on much longer than I thought.

Not really sure what all this means for investing in a market where risk tolerances are still dramatically out of whack. All I can say is that I have taken the approach of being very fleet on my feet (ie- more trading than owning) and not making large bets on any one investment.

Like the Sergeant on Hill Street Blues used to say: "Be careful out there..."
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Old 11-29-2009, 05:53 AM   #94
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In this case I find it interesting how quickly the story changed from "the dollar is declining" to "supply / demand" once someone points to the fact that gold is appreciating many times faster than the dollar is depreciating.
The story never changed... it's all part of the same story. A declining dollar certainly increases demand for gold, but whoever said there's a one-to-one correlation between the dollar and gold? The strongest correlation between gold and anything else is between gold and real inflation. And with the U.S. and other governments around the world holding interest rates down and printing money as fast as they can, where else can gold go but up?
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Old 11-29-2009, 06:00 AM   #95
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Like the Sergeant on Hill Street Blues used to say: "Be careful out there..."
And cover your back. I think we're at a time when we hope for the best but plan for the worse. Which brings me back to my original post. Cheers.
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Old 11-29-2009, 06:44 AM   #96
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If my goal is to hedge an exposure, say dollar weakness or inflation, I'd be very concerned that my hedge vehicle movements are multiples of the thing I'm trying to hedge.
I'm not sure what you mean by this...? Isn't that what hedging is all about?
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Old 11-29-2009, 08:55 AM   #97
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is gold even something that should be on the mind of people? im not really sure gold would have any worth to any country if its not producing well, anything... and correct me if im wrong but the world kind of depends on the u.s. and we've all seen the proof. so whether you're up to your neck in gold or not wouldnt the dollar and the u.s. still pretty much dictate what goes on?
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Old 11-29-2009, 09:45 AM   #98
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And cover your back. I think we're at a time when we hope for the best but plan for the worse. Which brings me back to my original post. Cheers.
And the answer from almost everyone is Diversification.
You don't seem to like that idea, but it is basically the best strategy to protect yourself.
No, it won't protect you in 100% of the possible situations, but it will come a lot closer than putting most of your portfolio in any one asset class.

P.S. There is nothing wrong with not liking the opinions you get. Just don't act as if your OP hasn't been answered already by many people.
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Old 11-29-2009, 10:26 AM   #99
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The strongest correlation between gold and anything else is between gold and real inflation. And with the U.S. and other governments around the world holding interest rates down and printing money as fast as they can, where else can gold go but up?
Hmmm, with US inflation up only 1.7% over the last 12 months one of the places gold can go is down.

I'm reminded of similar conversations we've had on this forum about how oil wasn't a bubble either.
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Old 11-29-2009, 11:51 AM   #100
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Well, Ultimo certainly is a gold bug. This has been a good thread and I look forward to studying the Societe Generale report. I can never get enough macroeconomics......which is the reason why I got out of Japan in the early 1990s.

Personally, if my gold doubles in value within a year, I'll probably sell. Better not to get greedy!
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