Anyone buying GOLD or GOLD miners

[VFK57]

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Originally Posted by gerntz I clearly don't know what the obvious reasons the majority of ER's don't like Au are since I'm in at 9% with no plans to reduce.

Why I said majority is because of another related to Gold topic I started last month http://www.early-retirement.org/foru...ncy-81379.html
I had many negative replies against Gold. Personally I also keep some Gold holdings as insurance against possible rapid dollar decline.

[ESRwannabe]

I would consider buying the gold/silver ETN's that sell covered calls. You'd have an income stream that way.

Credit Suisse X-Links Gold Cov Call ETN (GLDI)

GLDI Credit Suisse X-Links Gold Cov Call ETN ETF GLDI Quote Price News

Credit Suisse X-Links Silver CovCall ETN (SLVO)

SLVO Credit Suisse X-Links Silver CovCall ETN ETF SLVO Quote Price News

Pretty good yields on them and you get to own gold/silver for your asset allocation.

[Totoro]

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Originally Posted by Fermion Or maybe I am selling shovels and boots to the miners like the days of old.

Pretty sure Buffett indeed referred to the physical gold.

Gold itself doesn't make sense to him (and me). You dig it up, move it someplace and pay people to stand around it. (paraphrasing here). It doesn't produce anything.

Could be worse though, like diamonds ..

[SoReady]

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Originally Posted by ESRwannabe I would consider buying the gold/silver ETN's that sell covered calls. You'd have an income stream that way. Credit Suisse X-Links Gold Cov Call ETN (GLDI) GLDI Credit Suisse X-Links Gold Cov Call ETN ETF GLDI Quote Price News Credit Suisse X-Links Silver CovCall ETN (SLVO) SLVO Credit Suisse X-Links Silver CovCall ETN ETF SLVO Quote Price News Pretty good yields on them and you get to own gold/silver for your asset allocation.

How does a cover call fund work? This looks interesting, but I would need to investigate/understand it more before committing any funds.

[gerntz]

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Originally Posted by Totoro Pretty sure Buffett indeed referred to the physical gold. Gold itself doesn't make sense to him (and me). You dig it up, move it someplace and pay people to stand around it. (paraphrasing here). It doesn't produce anything.

I don't see holding US$ or putting it in a low-paying account as better. Au is just another type of cash to me that protects against fiat currency inflation. Ultimately, I can't see that not happening with the budget imbalances. I'm quite willing to risk I'm wrong.

[nash031]

My only problem with gold is that people think it's special. It isn't. Like everything else, it is only worth what someone pays for it. It's a relatively useless metal, but for some reason it gets outsize attention and thus is prone to huge swings in value based on people's feelings and emotions.

[VFK57]

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Originally Posted by nash031 My only problem with gold is that people think it's special. It isn't. Like everything else, it is only worth what someone pays for it. It's a relatively useless metal, but for some reason it gets outsize attention and thus is prone to huge swings in value based on people's feelings and emotions.

You should check major economies Gold reserves (USA, Germany, France, Italy, Japan, China etc), none of them sold or planning to sell their physical Gold holdings. There are two desperately needing cash countries (Venezuela and Ukraine) which sold their Gold last year in order to pay for needed imports. China continues to grow their Gold reserve. If Gold is not "special" hard currency then why Central Banks do not dispose of it?

[gerntz]

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Originally Posted by nash031 My only problem with gold is that people think it's special. It isn't. Like everything else, it is only worth what someone pays for it. It's a relatively useless metal, but for some reason it gets outsize attention and thus is prone to huge swings in value based on people's feelings and emotions.

For 5000+ years people have thought Au special. Perhaps that will change tomorrow. I guess it's the shine + color. I don't know anyone wearing US$ on the fingers.

[nash031]

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Originally Posted by VFK57 You should check major economies Gold reserves (USA, Germany, France, Italy, Japan, China etc), none of them sold or planning to sell their physical Gold holdings. There are two desperately needing cash countries (Venezuela and Ukraine) which sold their Gold last year in order to pay for needed imports. China continues to grow their Gold reserve. If Gold is not "special" hard currency then why Central Banks do not dispose of it?

As an investor, it is not special. In fact, I say it is less special. I cannot look at gold and see its intrinsic value, determine when it is undervalued and overvalued and make decisions on whether to buy or sell based on that value. The price of gold is tied strictly to the emotions behind it, as well as the emotions seen in markets world wide, and in some small measure to its availability... but primarily, its price (and value) are driven by emotion. Thus, I cannot accurately predict its value other than to try to guess the appetite of the world in the near future for gold. That strikes me as speculative market timing, which is not for me.

I can achieve similar returns via other means. I understand others hold it as a hedge against oblivion and market crashes.

You're hooked, I got it. Not for me, thanks.

[gerntz]

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Originally Posted by nash031 As an investor, it is not special. In fact, I say it is less special. I cannot look at gold and see its intrinsic value, determine when it is undervalued and overvalued and make decisions on whether to buy or sell based on that value. The price of gold is tied strictly to the emotions behind it, as well as the emotions seen in markets world wide, and in some small measure to its availability... but primarily, its price (and value) are driven by emotion. Thus, I cannot accurately predict its value other than to try to guess the appetite of the world in the near future for gold. That strikes me as speculative market timing, which is not for me. I can achieve similar returns via other means. I understand others hold it as a hedge against oblivion and market crashes. You're hooked, I got it. Not for me, thanks.

I can't predict the future value of anything. Good for you that you can. Equity prices are often driven by emotion, not intrinsic value. Net, Au is just something else I can't predict. I'm far from hooked. I just want to spread my chances around widely. Can't see the market timing aspect to it if you buy & hold.

[nash031]

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Originally Posted by gerntz I can't predict the future value of anything. Good for you that you can. Equity prices are often driven by emotion, not intrinsic value. Net, Au is just something else I can't predict. I'm far from hooked. I just want to spread my chances around widely. Can't see the market timing aspect to it if you buy & hold.

I never said I could predict the future value of anything. What I can do is evaluate some assets as "undervalued" at their current prices, and invest in those with a better degree of certainty that they will return to their true/intrinsic value. Companies own assets which have value that's easily defined, and companies sometimes sell at prices per share lower than their true value.

I don't think you can pin an intrinsic value on gold, since its value is solely derived based on what someone will pay for it. In that regard, it is the same as any other commodity - which is why I say it's not special - and I avoid commodity investing for the reason stated above.

To each their own.

By the way, I didn't quote you, nor was my post directed at you, nor do I particularly disagree with anything you said. VFK started another thread about currency wars. He's pretty clearly hooked, IMO.

[VFK57]

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Originally Posted by nash031 I never said I could predict the future value of anything. What I can do is evaluate some assets as "undervalued" at their current prices, and invest in those with a better degree of certainty that they will return to their true/intrinsic value. Companies own assets which have value that's easily defined, and companies sometimes sell at prices per share lower than their true value. I don't think you can pin an intrinsic value on gold, since its value is solely derived based on what someone will pay for it. In that regard, it is the same as any other commodity - which is why I say it's not special - and I avoid commodity investing for the reason stated above. To each their own. By the way, I didn't quote you, nor was my post directed at you, nor do I particularly disagree with anything you said. VFK started another thread about currency wars. He's pretty clearly hooked, IMO.

I am not hooked to anything. Same as many early retirees here I am diversifying my AA and think that PMs should be there. It is a smallest part of my AA but I plan to keep it.

[Totoro]

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Originally Posted by VFK57 If Gold is not "special" hard currency then why Central Banks do not dispose of it?

Lots of possible reasons. One is that you cannot dump a large amount without destroying the market. Gold is mostly sentiment so there is no strong floor.

Another is that as a country having too much foreign currency has political implications.

Having gold can also be a defense mechanism vs. currency speculation by others, especially if you are unstable to begin with (Russia, Venezuela).

And then there is inertia. You dug the pit anyway, and the stuff is lying there. No rush to move it anywhere.

Also, as a central bank holding reserves in equities isn't really an option. Negative interest rates on cash (before inflation).

None of these apply to retail investors.

[nash031]

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Originally Posted by VFK57 I am not hooked to anything. Same as many early retirees here I am diversifying my AA and think that PMs should be there. It is a smallest part of my AA but I plan to keep it.

And no one is trying to tell you to do otherwise.

[Totoro]

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Originally Posted by gerntz I don't see holding US$ or putting it in a low-paying account as better. Au is just another type of cash to me that protects against fiat currency inflation. Ultimately, I can't see that not happening with the budget imbalances. I'm quite willing to risk I'm wrong.

Looking at the numbers I don't see Au as giving inflation protection. It's uncorrelated and loses money over the long term.
Forbes Welcome

Why not TIPS then, or indeed equities?

To each his own obviously.

[VFK57]

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Originally Posted by Totoro Looking at the numbers I don't see Au as giving inflation protection. It's uncorrelated and loses money over the long term. Forbes Welcome Why not TIPS then, or indeed equities? To each his own obviously.

It looks like you are closing your eyes on history. In 1913 Germany was the leading world economy and it would be laughable if someone would suggest that by 1919 one will need a cart loaded with paper marks in order to purchase a loaf of bread. In 1988 USSR most people would not believe that thousands of paper rubles would be worthless to buy anything in 1992. Yet in both cases Gold coins or jewelry would buy you needed food or services. My daughter in law had experienced the above condition in former Soviet republic of Georgia (her family survived selling Gold jewelry). I do not think similar condition would happen here but please compare the Gold prices vs high inflation here in US. How sure you are that high inflation is not possible here?

[nash031]

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Originally Posted by VFK57 How sure you are that high inflation is not possible here?

High inflation is absolutely possible here, but that does not necessarily mean gold is the best hedge against it. I understand that you have been convinced that it is by people who some of us view as nothing more than salesmen. In such a case, it's better to agree to disagree and let it go.

To answer the question you posed in the OP: no, I am not buying gold nor miners for reasons previously stated. Now I'm going to take my own advice...

[Whisper66]

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Originally Posted by moneymaker If anyone lives by the motto of buying when everyone is scared, isn't now a good time to buy Gold or Gold miners (GDX/GDXJ)? Thoughts?

Moneymaker - I'm assuming by your question that you feel many are scared now or likely to be in the near future?. Can you expand on what you think people may be scared of?

I've thought about having gold as a hedge against the US going into really serious financial or social turmoil,....but decided that the risk of such an event was low enough I wouldn't apply savings to protect against it. At the moment, I don't see anything going on that I would have classified as serious enough financial or social turmoil to get me wishing I had a gold hedge and thus my question.

[gerntz]

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Originally Posted by Totoro Looking at the numbers I don't see Au as giving inflation protection. It's uncorrelated and loses money over the long term. Forbes Welcome Why not TIPS then, or indeed equities? To each his own obviously.

Yes, to each own.

I don't see how you conclude it loses money over long term when Au was $35/oz when allowed to float around 1975. I'd rather have $1200 than $35.

As I said, it's a form of cash, not an investment. Money markets are the closest thing to holding cash $ that I know of.

I have no idea what TIPS compound interest rate have been since their inception to know if I'd like TIPS. My bond holdings are mainly munis & short/medium funds.

[VFK57]

This is very balancing article on why China is building it's Gold reserve and should you keep at least small portion of your assets in Gold. The author surely is not a so-called Gold bug: Why China is loading up on gold - Business Insider