Anyone buying GOLD or GOLD miners

[Totoro]

Quote:

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

Not saying it is not possible in the US. In fact it is quite likely it will happen eventually. I'm just unconvinced personally that gold is your best protection here.

More generally, what I am struggling with is gold as being the best alternative for protection against certain tail risks.

In case of the Weimar republic or Russia or Zimbabwe, yes gold gives you a short term survival advantage. The advantage here is that it is portable and value dense. Note that you need to hold physical gold. And depending on the exact context, you would still lose a very large amount of the wealth. Trading 1k worth of gold for bread will not get you 1k equivalent in bread. In addition you are exposed to theft, robbery, and shakedowns.

Going down the list of some tail risks:

• The country you live in collapses, enters hyperinflation, rest of the world is fine but rule of law prevails: Better of with international equities, bonds vs. gold.
• Rule of law doesn't prevail: Emergency cash needed to escape the country. Here gold is useful, just like diamonds, non-perishable foods, guns and ammo. You may lose it all anyway, but its harder to disown physical items.
• Several major countries collapse: better off having farmland in a peaceful corner vs. gold, and an emergency escape plan (like an airplane fueled up and ready to go at all times). A barrel of oil may do you more good than 5 bars of gold.
• World ends: no need for anything.

[Totoro]

Quote:

Originally Posted by gerntz 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.

I worded too strongly, you are right. Chart here with real current prices:
Gold Prices - 100 Year Historical Chart | MacroTrends

It all depends on the entry and exit point. Point is that gold swings wildly, and has little to do with inflation.

The bottom in 1970 was 200 USD. Gold is a fine investment regardless almost of the time frame.

The peak in 1980 was 2000 usd, almost ten times as much. Strong inflation in the 1980s, and down you went to below 400 USD.

Whatever inflation does, gold is not correlated with it. So if inflation is your worry, find another investment to protect against it.

[Fermion]

The mining company I mentioned on here whose bonds were trading at 20% of par at the beginning of this year and had a coupon of 12.5% just got bought out. The buyout includes paying off all bonds at 100%, including accrued interest.

I at one time had $100,000 face but I sold them all this spring for about 50% of par. @#$@

[VFK57]

Quote:

Originally Posted by Fermion The mining company I mentioned on here whose bonds were trading at 20% of par at the beginning of this year and had a coupon of 12.5% just got bought out. The buyout includes paying off all bonds at 100%, including accrued interest. I at one time had $100,000 face but I sold them all this spring for about 50% of par. @#$@

In 2008 financial crises our investment condo lost almost 50% of it's value. Yet 8 years later it is not only regained everything but added 20%. Rent went up 45% (some people still believe that we are at 1% inflation as Government states). Currently my worst performed investment is POT, lost us over 20% but I still prefer to sit on it. Inflation may push all prices higher.

[gcgang]

Quote:

Originally Posted by VFK57 ?.. Currently my worst performed investment is POT, lost us over 20% but I still prefer to sit on it. Inflation may push all prices higher.

And with POT, you can just smoke it and get higher.

[VFK57]

Quote:

Originally Posted by gcgang And with POT, you can just smoke it and get higher.

Good advise but I prefer hard liquor.

[COcheesehead]

Bought some RING this morning. Currently stands up 1.37% in just a couple hours.
I think gold and gold related stocks will rise at least through the 3rd quarter, but that is just based on the 3rd quarter of election years usually being the worst for the market.

[RobLJ]

It's (FSAGX) now up 106% YTD, so it's probably about time to sell 20-25%.

Quote:

Originally Posted by RobLJ I bought GLD in early '07 in DW's rollover, fearing a crash, then sold in '09 and '10 for almost an 80% profit, wanting to purchase stocks in her account. My main account was holding cash (twice the allocation), so I placed the equivalent of DW's GLD in FSAGX (Fidelity Gold Mining fund) and eventually doubled the amount over the next two years, since the ostensible allocation was about 5% in commodities (half in PMs); the thesis was that the miners generally move 2-4x the gold price, so FSAGX was leveraged PM. The miner fund went up for a year or two, then started sinking in 2013 and 14, about 55% down, when I took some stock gains and added another 25% position, then it sank another 17% in '15. Now it's up almost 75% YTD, and I'm about even since 2006, if you factor in the original position in GLD. I considered putting a little more in in January, but since I was down about 1% in the total portfolio in 2015, I didn't have a lot of gains to take, other than some bonds I wanted to keep. So the miners are uncorrelated, but a wild, wild ride. GLD or SLV are similar but not quite as exaggerated. Take of this what you will. It's a small percentage of the portfolio, which raises the question whether it's even worth bothering. On the other hand, right now it is a sizable percentage of the ytd portfolio gains, which is similar to my experience with biotech and health, although I overweighted them at a considerably higher weight than FSAGX but thankfully harvested gains from 2012-early 2015, to the point that the gains in shares sold are almost 2x the current position. Should the FSAGX run continue through the year, I'll probably take 20-25% off the table.

[Koolau]

The small amount of physical gold (and silver) I have, I bought when it was quite low in price. Gave up some paper gains in the stock market to do so, obviously. But, back in the recent "unpleasantness", my PMs kept me more than even as my stocks plummeted. That's reason one to hold 3 to 5 percent gold. It correlates with virtually nothing on a consistent basis, BUT it often smooth portfolios when the going gets rough. Second reason to hold PMs is similar to having insurance. If you never use it, you "loose" but are happy to do so. Agree that for "normal" inflation (the only kind we on this forum have ever seen in the US) gold might or might not help. But during hyper-inflation it has always helped folks (as pointed out by others here.) It may also be good for WTSHTF. Suggest minor investment in "consumables" for the same potential (booze, flour, sugar, cooking oil, cigarettes, etc.)

Oh, by the way, in the 6 months+ since this thread opened, AU is up 30% (by my cranial calculator.) I just threw that in since it's a bad reason to invest in PMs. Of course, YMMV