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Out of gold
Old 11-12-2007, 12:39 PM   #1
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Out of gold

As of Friday, I am down to $10,000 in gold equities. And $6500 of that is one stock that has received a cash tender in a friendly merger. I didn't really time the market; just one by one my small explorers were taken over.

One former holding, MNG, was selling at quite a premium to its bid, but it was a friendly takeover and there was no alternate bidder in sight, so on Friday I decided to sell out. Another, GAB (Toronto), was a rank speculation that went bad, but I had bought it so cheaply that I still got a 100%+ profit. Earlier it had been up 500%, but I felt it could eventually be a big winner. A week or so ago the company made a filing that said that their one and only mine was unlikely to be built unless the government of Romania was thrown out. Say what? The Romanian government would have to be changed? I suppose it may eventually happen, but by that time this company will likely be out of cash.

I get so inured to outrageous situations investing in small gold explorers that I was slow to catch on that this one was beyond rescue. Looking back, there were many opportunities to think it through and get out at much better prices, but I blew right by.

This is what makes speculating so addictive. Better thinking does lead to better results, unlike much of life where better thinking just gets you into more trouble. Over the years I have taken quite a bit of change out of the gold equity markets. Or more precisely, taken change away from some latecomer investor (likely an asset allocator ).

If there is a large down draft in that market, I may look for replacement candidates. Otherwise, I am out of gold. I never liked it other than I thought there were speculative possibilities. I am better attuned to the first half to 2/3 of a speculative move than to the last part.

It's nerve wracking though. Earnings always stink, there is never any income, governments are always throwing up roadblocks, expropriating, etc. However, over time I think this last aspect alone will lessen the supply of newly mined gold, and improve prices for the metal itself.

Ha
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Old 11-12-2007, 07:50 PM   #2
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Yeah my silver position just got killed today. Probably will drop some more tomorrow. Of course, I bought in last week.
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Bought gold just once ...
Old 11-12-2007, 10:17 PM   #3
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Bought gold just once ...

... back when Nixon took us off the gold standard (and made it legal for Americans to own gold again). I bought 'junk' gold coins (British soverigns, as I remember) from a service in New York City, playing about $70 for 'numismatic' items. Within a half-year, gold went from the articicial $35 an ounce to a speculative $800+, at which price I sold them (shortly thereafter, the price fell back to the $350 per oz. ranges).

That's the one and only time I made a 'killing' like that. I used the $$ to pay off school and mortgage debt and try to get out from under the debts incurred by my over-spending wife (I failed at that).

I doubt if that opportunity will ever come my way again.
As for buying gold equities (i.e., financial instruments), sorry, but no way. Far too risky.
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Old 11-13-2007, 01:49 AM   #4
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... back when Nixon took us off the gold standard (and made it legal for Americans to own gold again). I bought 'junk' gold coins (British soverigns, as I remember) from a service in New York City, playing about $70 for 'numismatic' items. Within a half-year, gold went from the articicial $35 an ounce to a speculative $800+, at which price I sold them (shortly thereafter, the price fell back to the $350 per oz. ranges).

That's the one and only time I made a 'killing' like that. I used the $$ to pay off school and mortgage debt and try to get out from under the debts incurred by my over-spending wife (I failed at that).

I doubt if that opportunity will ever come my way again.
As for buying gold equities (i.e., financial instruments), sorry, but no way. Far too risky.
Dude, your memory has some serious holes in it. When Nixon closed the gold window, (not took us off the gold standard; we weren't on the gold standard, but a bastard system called the gold-dollar standard) he did not allow Americans to own gold. The price did indeed start to rise, from $35 to $195 in December 1974, but no Americans were legally allowed to own gold during that rise. Plenty of us did make good money on South African gold stocks, though. Americans were first allowed to own gold on Jan1, 1975, (first time since Roosevelt took away that right in the 30s) and plenty of them rushed out to buy it. But unfortunately our government had in mind to teach them a lesson, and sold a lot of gold from the huge US hoard. The price broke and by August 1976 it was down to $102, its bottom. But even from that $102 bottom it was no 6 month rise to its peak. It took over three years until January 1980 for gold to get to its ultimate top of $850, which still stands as gold's all time high to date.

So maybe this was just so wonderful to you that the rise appeared to be much faster, and from a much lower base? Or?

Ha
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Old 11-13-2007, 10:54 AM   #5
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my hats off to you Ha - I've never really done well with gold
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Old 11-13-2007, 02:43 PM   #6
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Purely as a matter of interest, I note that you could play a reversal by buying puts on GDX, the gold miner etf.
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Old 11-13-2007, 05:41 PM   #7
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Thanks for sharing! Congrats for making it in the black on this one, but it only reaffirms my conviction those waters are too deep and murky for me.
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Old 11-13-2007, 07:06 PM   #8
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Purely as a matter of interest, I note that you could play a reversal by buying puts on GDX, the gold miner etf.
I don't realy have an opinion on the direction of the gold market. It can be dangerous to be short gold going into a recession, as the falling interest rates tend to dominate the falling inflation readings- if these latter are indeed falling. And gold likes falling interest rates, as that lowers the actual or inputed cost of carry.

But thanks for the idea for a shorting vehicle, should I want to do that in the future.

Ha
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