Gold

[mb]

There have been several discussion recently on gold.  Just wondering what how the forum felt about it going forward?

 

[wabmester]

Can we have one more option? How about:

"There is no fundamental way to value gold, so I have no clue, and I avoid investing in things about which I have no clue."

 

[Craig]

I'm enjoying this brief moment of looking smart by having a significant stake in Vanguard's precious metals fund. It won't last ...

Though I will always keep some portion of our portfolio in precious metals. Fiat currencies have a mixed record ... not crazy ... just history.

While I will be somewhat surprised if we see $2K gold, it is certainly not impossible.

 

[Cool Dood]

I thought the topic said "God"... now that would have been an interesting poll...

 

[Lusitan]

There have been several discussion recently on gold. Just wondering what how the forum felt about it going forward?

I'm not invested in gold (apart from anything picked up in a Total Stock Market Index) but I think it will probably continue to rise over the next year or so. After that, whether it will decrease or level off, I have no opinion as of yet. For now I'll probably stay on the sidelines and learn.

Interesting I just saw this article on CNN a short while ago:

http://money.cnn.com/2006/04/06/pf/gold_investing/index.htm

 

[Cool Dood]

A lot of gold bugs here.... Can't say I see any long-term value in a thing like gold, at the moment......

 

[mb]

Can we have one more option? How about:

"There is no fundamental way to value gold, so I have no clue, and I avoid investing in things about which I have no clue."

No, you can't! That is way to logical of an answer and the price of gold is not based on logic

 

[haha]

You boys should know that I have gone from being a peckerwood to being a rich peckerwood in the last few years, by doing just what is not supposed to be done by intelligent people.

Number 1 big winner- energy. #2- Japan #3-gold. My plan is and always will be to fade hubris. I am not real smart, but I am real misanthropic, which just may work better anyway.

I would like to have the balls to let it all ride, but I am prudent enough to take most or all my original stake off. I think gold or energy could go way higher, but they could also have big setbacks. I do not think that the bull in either market is anywhere near over. Sure they are talked about now, but where is the hubris? Still at the Fed, in NASDAQ, etc.

My life will be sweet if the damn QQQQ will just stop going up.

Ha

 

[audreyh1]

I would have checked the "I have no friggin' idea." option.

Audrey

 

[brewer12345]

I'm not there yet, but I am starting to think seriously about buying some long dated puts on gold when the bull has run some more. The gold market has every indication of being in a bubble, complete with every moron throwing their lunch money into the metal.

 

[Focu$ed]

I'm not there yet, but I am starting to think seriously about buying some long dated puts on gold when the bull has run some more.  The gold market has every indication of being in a bubble, complete with every moron throwing their lunch money into the metal.

I guess I am one of those morons, but as I know virtually no one else who owns gold, silver, or precious metals stocks, I am not sure where you are finding all your "lunch money gold bugs." In fact, most people still seem to be stuck in your mindset that gold's increase is an aberation that cannot continue. We are far, far from being in a bubble.

 

[brewer12345]

I guess I am one of those morons, but as I know virtually no one else who owns gold, silver, or precious metals stocks, I am not sure where you are finding all your "lunch money gold bugs." In fact, most people still seem to be stuck in your mindset that gold's increase is an aberation that cannot continue. We are far, far from being in a bubble.

Heheh, listen to the radio shows that Goldline International does, and you will see what I am talking about.

 

[Focu$ed]

Heheh, listen to the radio shows that Goldline International does, and you will see what I am talking about.

Well of course if it is a show specifically about gold, which I assume by the name it is, then people who believe gold is returning to favor after 20+ years of being a depressed asset class, will be the ones listening and buying. If the show was called Googleline International, you would have all Google enthusiasts,no?

 

[REWahoo]

Goldline International is the same company that runs those "Make Big $ Working From Home Stuffing Envelopes" ads, right?

 

[brewer12345]

Well of course if it is a show specifically about gold, which I assume by the name it is, then people who believe gold is returning to favor after 20+ years of being a depressed asset class, will be the ones listening and buying. If the show was called Googleline International, you would have all Google enthusiasts,no? 

My specific criticism is that they people calling into the show are the same clueless retail fad-chasers who piled into dotcoms in late 1999, tried to start flipping RE in 2005, etc. They don't really understand what they are buying or how it is priced, but they have seen strong recent performance and want in, just like all the mutual fund investors who keep buying the "flavor of the month" fund. I also am amazed at the sophisticated mix of appealing to both fear AND greed that is used to pitch gold on the show. Its like the host used to be a life insurance salesman or something. Listen to the show and you might understand why I regard the gold market with suspicion.

 

[Lusitan]

My specific criticism is that they people calling into the show are the same clueless retail fad-chasers who piled into dotcoms in late 1999, tried to start flipping RE in 2005, etc.

Yeah, the gold rush right now seems highly reminiscent of the tech-rush and the real estate-rush get-rich-quick-and-easy mentality.

We know the tech-bubble popped. The jury is still out on real estate, but it seems like the bubble growth days are over at least.

I have seen those cheesy sales pitches for real estate in the past couple years and thought to myself - man, this must be a bubble when you have this kinda stuff going on ... but then of course, I watched as the bubble continued for a couple more years to my chagrin ...

My hunch is that the correction for gold is a year or two away, but that it's coming. I think the most I'll take out of this period is the understanding that a small allocation in precious metals is not a bad thing to add to my asset allocation eventually.

 

[Focu$ed]

My specific criticism is that they people calling into the show are the same clueless retail fad-chasers who piled into dotcoms in late 1999, tried to start flipping RE in 2005, etc.  They don't really understand what they are buying or how it is priced, but they have seen strong recent performance and want in, just like all the mutual fund investors who keep buying the "flavor of the month" fund.  I also am amazed at the sophisticated mix of appealing to both fear AND greed that is used to pitch gold on the show.  Its like the host used to be a life insurance salesman or something.  Listen to the show and you might understand why I regard the gold market with suspicion.

OKay, now I completely understand your concern. I believe in buying something based on an understanding of WHY it should go up, not just BECAUSE it is going up. And I hate to see anyone get sucked into spending money on something just because the person on the other end is a good talker. Sigh. Of course if you got into real estate early, I guess you did make money, by sheer luck perhaps. And in this case the people should luck out as well, because I really do understand the reasons the metals and commodities are going up, and I have an unshakeable faith that they are going higher, energy and gold and silver in particular. I have spent six years learning more about economics, monetary history, market cycles etc. until I arrived at my current convictions. And I have put my money where my convictions are and done very, very well. But even though it frustrates me that others don't "get it" I do understand why people are wary. But I believe that many people who are scorning gold and other commodities today will be buying them a year or two from now when prices are much higher, wishing they had gotten in at lower prices.

 

[Maximillion]

prices are NOT going up, the value of the Paper Currency is going down, there has been far too much printed.

The Chinese do not trust paper, read a history of their country, far too often have they been left with worthless paper, that is why they buy Gold, Real Estate, Jade.

Asian Indians prefer Silver, they wear it as Jewellry, if they have to flee from trouble, they take their assets with them.

The signs are clear, Bubble Heads will try to mask them, Inflation is ahead, high rates are coming, Bush is on his way out, Bernanke and the next guy will take the hit.

Asset Allocation, eevn if you are not totally wrong, you still are protected.

Long , Mortgage Rates, Short, Bonds.(less than 5 years).

 

[REWahoo]

...I really do understand the reasons the metals and commodities are going up, and I have an unshakeable faith that they are going higher, .... I have spent six years learning more about economics, monetary history, market cycles etc. until I arrived at my current convictions. And I have put my money where my convictions are and done very, very well. But even though it frustrates me that others don't "get it" I do understand why people are wary. But I believe that many people who are scorning gold and other commodities today will be buying them a year or two from now when prices are much higher, wishing they had gotten in at lower prices.

Focu$ed,

I both admire and fear for anyone with "unshakable faith" and who has "put...money where my convictions are...". No doubt you have done well and you should be congratulated for being in the right place at the right time.

That said, I can't help noting that if you change the two phrases I highlighted in bold in your quote above to "tech stocks", you will have rolled back the clock to 1999. But since you are convinced it's different this time, I wish you only the best in your pursuit of wealth in the commodities and metals markets.

 

[Nords]

I do understand why people are wary. But I believe that many people who are scorning gold and other commodities today will be buying them a year or two from now when prices are much higher, wishing they had gotten in at lower prices.

I'm glad to see that everyone's putting their weapons back in their holsters.  I think you guys are debating two different market forces.

There's a huge difference between being an experienced tech-stock buyer who's quietly making an ER portfolio in the industry, and then being overwhelmed by every schmuck with dollars to throw at a dot-com.  

No one's arguing against gold going up.  Technically the dollar is going down, but the result is the same.  No one is attacking your analysis, Focu$ed, and frankly gold owners should welcome the criticism that keeps gold climbing the wall of worry-- not that they have to care as long as they're keeping an eye on their circle of competence.

What Brewer & others are pointing out is that this nice quiet steady rising investment is about to be overwhelmed by the same craze that the NASDAQ had to contend with a few years ago.  Your sage fundamental analysis is about to be derailed by irrational exhuberance & investor hysteria.  You'll profit mightily, but good luck with deciding when gold & other precious metals are "fairly priced".  "Fair" is a concept that's about to be ditched in favor of "It's really different this time!"

In such an environment, I'm quite happy to step to the side and let 'em rip.  There won't be any regrets at letting this one go by, just as I didn't mind getting off the NASDAQ ride when it went over 4000.  (I watched an ER'd relative short the NASDAQ in 1997-- he margin-called himself right back into full-time employment.)  I've been doing fine with small-cap stocks & international investments that also profit from a declining dollar, but without the degree of crazed lust beginning to be seen in the precious metals sector.  And unlike you guys, I choose not to buff up our portfolio with employment cash flow.  I feel we have plenty of volatility where we are now and there's no need to eke out that last diversified bit of the efficient frontier...  

 

[Focu$ed]

prices are NOT going up, the value of the Paper Currency is going down, there has been far too much printed.

Yes, very true. Most people do not understand it in that context.

 

[unclemick]

Investing thru the 70's - if you didn't understand it - you were taught - by Mr Market.

heh heh heh heh

 

[HFWR]

Damn it, I thought we were talking about Acapulco Gold...

 

[Focu$ed]

Focu$ed,

That said, I can't help noting that if you change the two phrases I highlighted in bold in your quote above to "tech stocks", you will have rolled back the clock to 1999.  But since you are convinced it's different this time, I wish you only the best in your pursuit of wealth in the commodities and metals markets.

I hope it does not sound like I am "arguing with you" because I respect your view, and your concerns. I enjoy a lively debate as long as it doesn't degenerate into name calling, and we are not doing that.

I am not saying it is different this time. The tech boom was legitimate, too. At least some of it was. There were many stocks that produced goods and services that were in demand, even revolutionary, and they deserved to go up. A Lot. And they did. Unfortunately, there were a lot of stocks that had no worthwhile business plan and were valued based on "eyeballs" - how many people visited their sites. Stocks were brought out too soon as IPOs. Stocks ran way ahead of fair valuations, and I agree that sometimes it is hard to know what "fair" is, but PE multiples in the hundreds for companies with no current or even near-term foreseeable earnings, and no real assets, was a bit silly.

I also agree with you that eventually there will be wild enthusiasm over gold stocks which will be both good and bad. The gold and silver share market is extremely small. The entire market cap of every listed stock has been compared to one major blue-chip company. So, even a small demand can generate very large gains. Many of these stocks have been so beat up over the last couple decades, and so many companies have gone out of business altogether, that it should be expected they would make large gains now to get back anywhere near previous valuations. The metals markets and commodities in general are real tangible assets, whereas many of the dot.com companies offered little of any real value. There are fundamentals, supply and demand factors, that are responsible for my conviction that the bull market is justified. Yes, in time the market will run ahead of itself, as happens in all bull markets, but I don't believe most people would hope that there are never any more bull markets because of that tendency, so I see no reason to hope that this bull market does not evolve.

 

[camberiu]

I believe in the Austrian School of Economicas. I believe in Mises, Hayek and Murray N. Rothbard. I believe that the dolar is fiat money, and as the money supply goes up(to cover pork and wars), the green paper will become more and more liek toilet paper. That is why I bought Gold when it was bellow $400.