Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
We would dollar cost average into CEF, but with caution. We agree with some smart folks who believe gold has a long ways to go, over the next few years. Obviously there will be some pullbacks along the way.
The only way that oil is going much higher is if we really are bumping into some sort of "peakish" oil ceiling, or as I've noted before, getting to the point where peak "cheap to get" oil is here. Otherwise, you hear people talking about $5/6 a gallon average oil in this country - I don't think we get there at least from a demand perspective.
OK, so gold's at 1500 and silver is at 48 - so what. As Bob said, DCA or scale into a position and you can do that at ANY price. Ignore the price as it's completely relative. Just focus on what you pay and what it does thereafter.
Let's say you wanted to have a $10K position in gold from here. Sokay, buy the first 2500 and watch it for a week or so. If and ONLY if it goes up, add another 2500. If it's flat sit and keep watching. If it drops more than your stop loss (say 10%) sell.
Now let's say it goes up again. Buy the last 5000 and continue to watch it. Set mental stop losses however because you must have an exit strategy. If it pulls back 10%, sell 25%. If it continues to slide, sell some more.
You Scale in and you Scale out. Similar to a DCA approach but a DCA approach is always buying regardless of Captain Price and while that's good for a 401K, I prefer to scale in to speculations. And by this I mean that I'm only buying on the uptick - only adding to winning plays. You never, ever, ever average down on a speculation. Too risky that it's actually a trend reversal. You want to go with the trend.
And to put things in perspective, a real all time inflation adjusted high for gold would be around $2300 and for silver around $130.
And to put things in perspective, a real all time inflation adjusted high for gold would be around $2300 and for silver around $130.
I have to call this as a gold bug BS! Those prices are as measured from the previous peak of these metals. Why do you assume those top prices were correct. If they were correct that why did POG dropped for 20 years before rising again.
If you take long term averages, the prices should be much lower than now. Gold and silver price is up so much because of speculative demand. The price movement in these cannot be explained with weak dollar or any other sane metric.
This sort of argument is like why tech stocks should reach to sky in 2000 and why real estate should go up in 2007.
I was stating that to put things in perspective, new inflation adjusted all time highs for gold and silver would be in the 2300 and 130 range. I didn't say that this was an equilibrium price or a justified price, just that when we're all watching CNBC and they talk about 1530 being a new all time high, it's NOMINAL high and that for either gold or silver to really hit new highs, they will both have to go higher.
Now. That said, I sincerely believe we'll see both gold and silver surpass these numbers and sooner than later.
Oh, and I believe that I've been touting gold and silver since around 2002 on FA and for the record, I never owned any gold before around that time. I've collected coins for over 15 years and I've owned silver in small quantities, but never much in a bullion sense either before this trend began.
I'm just your everyday momentum investor who found a nice steady trend.
Ron, good for you that you rode this trend. I am just opposed to using previous peaks of gold and silver as a justification of why the trend should continue. I think previous peak has no basis. Especially for silver when Hunt brothers have cornered the market.
Look, I am trying to take advantage of the madness of people by small daily in-outs of silver. One day, this madness is going to end and those holding huge amounts will be sorry that they did not sell earlier. It did happen to a number of times. It is going to happen again. This time is not different!
Well, Investor, you are correct and silver mania will come to an end. So will gold mania and so did dot.com and real estate . . . and tulips.
I'm not sure I'd call this current market manic, however. AND, between now and the day silver mania comes to an end could be a long way off.
I'm just an old momentum player and not a market timer. I have to wait for a trend to change before I make changes to my investments. When gold and silver pull back, if the correction exceeds my stop losses, I'll start reducing my speculative position.
Isn't the current gold and silver spike all about dollar devaluation? You can buy the same amount of stuff now you used to buy a long time ago with a silver dollar but you can buy a lot less with a paper dollar.
That's the nut. Gold and silver (and oil, cotton, wheat, corn, etc.) have not changed in price. The unit of measure that the price is measured in - the dollar - has.
90% circulated U.S. silver coinage (up until 1964) is selling for meltvalue at around 30 times face value. Let's see - back in the late 50's and early 60's, I could go to the store and buy a loaf of bread with a quarter. That same silver quarter today will net me $7.50 in U.S. dollars.
The attractiveness of gold in these days of fiat currency devaluation is as a store of value. When all else fails, it holds its value. Politicians and central bankers can tell us all day long that we're no longer on the gold standard. feh. Of course we are - gov'ts may not be but the people are TYVM. What you're seeing with gold at 1550 or so, is just that simple fact - the gold standard.
FWIW -- Buffett and Munger had a few interesting comments on gold at the Berkshire Hathaway meeting. To paraphrase:
1. (From Buffett): Total world value of gold would be a cube 67x67 (meters?); for the same price to purchase that cube, you could buy all the arable farm land in the US and 10 Exxon Mobiles and still have a trillion left over.
2. (From Munger): Seems silly to buy something that only has value if the world goes to hell. . . seems silly to buy something whose only return comes if some bigger fool is willing to pay a higher price for it (I suppose, in contrast to something which generates real value and cash flow).
3. (From Buffett): Best best for the average investor is ownership stakes in solid companies that make essentials and generate cash flow (but note: Buffett says he would not want to hold utility companies in an inflationary environment).
Just offering the above as food for thought, rono (I've always appreciated your posts and input): I hold a commidities fund (5% of portfolio) and am thinking of buying more. With that said, I'm always looking for the bear case for commodities, however, and Uncle Warren (yes, he's held silver in the past) thinks they're a poor idea for the average investor. Plus there's the bubble issue (when the shoeshine boy is talking up the virtues of holding commodities, maybe its time to wonder if things aren't getting a bit toppy, etc., etc.).
hello great commentaries keep in mind that during 2008-2009, gold hit a major decline almost 30s-40s% downward [at least this is what i've remebered] nothing is safe during armagedon. your best bet is a diversed portfolio
The gold/silver price went up much much more than the dollar went down. There is a component of gold/silver prices that is effected by dollar decline but the majority is speculative rise.
Good points all and from an investors perspectie, all quite true. That said, many buyers see gold as the penultimate store of value.
And besides, Warren bought a pot full of silver back in the early 2000's after the run had begun, and then sold. He might have made 100% on his investment. feh. Silver is up 1000% since this bull market started.
That said, folks really do have to differentiate between gold and silver as an investment, speculation, and a 'bed buddy' not unlike my grandkids stuffed animals that help them to sleep at night.
I go back and forth on the whole metals/commodities issue in an attempt to try and get my head around it.
GMO's latest investor letter might be of interest to you -- makes an extremely bullish case for commodities of all sorts (...but doesn't answer the ultimate question as to what the end state is if the world population keeps increasing and every essential input to human life becomes increasingly incredibly expensive...).
Gold @ 2300 & silver @ 130. Who knows if fiat currencies will depreciate that much more against pm's. Think of what the global economy would look like if they did...
I actually started trimming my speculative paper pm's today per exit strategy. I still like them long term and for huge fundamental reasons, but you must have and stick to your exit strategy. I reduced my spec paper position by ~25%.
Please note that I'm starting to eye a physical purchase at these sale prices.
I've lightened up on commodities, including an unintentional (oops) sale of Rydex Long/Short Commodities (RYLFX) that worked out rather well a couple of days ago. However, I still like commodities (especially agriculture and metals) for the long haul and will not be selling further.
Saw a trailer this morning that Carlos Slim was shorting bigtime. If so, it would explain things. However, I personally see it as a lightening up on the paper side and buying on the physical. The long term fundamentals haven't changed.
Oh absolutely. I think the issue with silver especially (not as much gold) is that the volatility is tremendous and moves either way can be tremendous. The fundamentals are still certainly there, but now that I believe silver has likely (?) broken the 50day MA one has to sit back and wait a bit. Buying physical - especially likely in overseas markets - likely continues.
Personally, as I noted in another thread, if this is a repeat of 2008 and we are bumping up against another "ceiling" in commodity prices ($4 gas again) and get a repeat of that, I think that's really concerning for the longer term. I continue to like the metals, but I also like the long-term fundamentals of food/ag. As I've also noted, I like flavor companies, as I think the "science of packaged food" (primarily taste and how that will work with rising health concerns - things like making bitter healthy foods taste less bitter by blocking some bitter taste receptors) will be another interesting theme in the years to come.
Comments
when we least expected... look at the numbers today
gold may break out
http://finance.yahoo.com/blogs/breakout/gold-record-going-even-higher-john-roque-110641135.html?sec=topStories&pos=7&asset=&ccode=
Do you all have a call on oil? Seems it could go bit higher, but then demand destruction would creep in...
OK, so gold's at 1500 and silver is at 48 - so what. As Bob said, DCA or scale into a position and you can do that at ANY price. Ignore the price as it's completely relative. Just focus on what you pay and what it does thereafter.
Let's say you wanted to have a $10K position in gold from here. Sokay, buy the first 2500 and watch it for a week or so. If and ONLY if it goes up, add another 2500. If it's flat sit and keep watching. If it drops more than your stop loss (say 10%) sell.
Now let's say it goes up again. Buy the last 5000 and continue to watch it. Set mental stop losses however because you must have an exit strategy. If it pulls back 10%, sell 25%. If it continues to slide, sell some more.
You Scale in and you Scale out. Similar to a DCA approach but a DCA approach is always buying regardless of Captain Price and while that's good for a 401K, I prefer to scale in to speculations. And by this I mean that I'm only buying on the uptick - only adding to winning plays. You never, ever, ever average down on a speculation. Too risky that it's actually a trend reversal. You want to go with the trend.
And to put things in perspective, a real all time inflation adjusted high for gold would be around $2300 and for silver around $130.
peace,
rono
If you take long term averages, the prices should be much lower than now. Gold and silver price is up so much because of speculative demand. The price movement in these cannot be explained with weak dollar or any other sane metric.
This sort of argument is like why tech stocks should reach to sky in 2000 and why real estate should go up in 2007.
I was stating that to put things in perspective, new inflation adjusted all time highs for gold and silver would be in the 2300 and 130 range. I didn't say that this was an equilibrium price or a justified price, just that when we're all watching CNBC and they talk about 1530 being a new all time high, it's NOMINAL high and that for either gold or silver to really hit new highs, they will both have to go higher.
Now. That said, I sincerely believe we'll see both gold and silver surpass these numbers and sooner than later.
Oh, and I believe that I've been touting gold and silver since around 2002 on FA and for the record, I never owned any gold before around that time. I've collected coins for over 15 years and I've owned silver in small quantities, but never much in a bullion sense either before this trend began.
I'm just your everyday momentum investor who found a nice steady trend.
peace,
rono
Look, I am trying to take advantage of the madness of people by small daily in-outs of silver. One day, this madness is going to end and those holding huge amounts will be sorry that they did not sell earlier. It did happen to a number of times. It is going to happen again. This time is not different!
Silver fever is about to break, and break badly
Well, Investor, you are correct and silver mania will come to an end. So will gold mania and so did dot.com and real estate . . . and tulips.
I'm not sure I'd call this current market manic, however. AND, between now and the day silver mania comes to an end could be a long way off.
I'm just an old momentum player and not a market timer. I have to wait for a trend to change before I make changes to my investments. When gold and silver pull back, if the correction exceeds my stop losses, I'll start reducing my speculative position.
WHEN they pull back. Not before.
peace,
rono
That's the nut. Gold and silver (and oil, cotton, wheat, corn, etc.) have not changed in price. The unit of measure that the price is measured in - the dollar - has.
90% circulated U.S. silver coinage (up until 1964) is selling for meltvalue at around 30 times face value. Let's see - back in the late 50's and early 60's, I could go to the store and buy a loaf of bread with a quarter. That same silver quarter today will net me $7.50 in U.S. dollars.
The attractiveness of gold in these days of fiat currency devaluation is as a store of value. When all else fails, it holds its value. Politicians and central bankers can tell us all day long that we're no longer on the gold standard. feh. Of course we are - gov'ts may not be but the people are TYVM. What you're seeing with gold at 1550 or so, is just that simple fact - the gold standard.
peace,
rono
1. (From Buffett): Total world value of gold would be a cube 67x67 (meters?); for the same price to purchase that cube, you could buy all the arable farm land in the US and 10 Exxon Mobiles and still have a trillion left over.
2. (From Munger): Seems silly to buy something that only has value if the world goes to hell. . . seems silly to buy something whose only return comes if some bigger fool is willing to pay a higher price for it (I suppose, in contrast to something which generates real value and cash flow).
3. (From Buffett): Best best for the average investor is ownership stakes in solid companies that make essentials and generate cash flow (but note: Buffett says he would not want to hold utility companies in an inflationary environment).
Just offering the above as food for thought, rono (I've always appreciated your posts and input): I hold a commidities fund (5% of portfolio) and am thinking of buying more. With that said, I'm always looking for the bear case for commodities, however, and Uncle Warren (yes, he's held silver in the past) thinks they're a poor idea for the average investor. Plus there's the bubble issue (when the shoeshine boy is talking up the virtues of holding commodities, maybe its time to wonder if things aren't getting a bit toppy, etc., etc.).
great commentaries
keep in mind that during 2008-2009, gold hit a major decline almost 30s-40s% downward [at least this is what i've remebered]
nothing is safe during armagedon. your best bet is a diversed portfolio
Good points all and from an investors perspectie, all quite true. That said, many buyers see gold as the penultimate store of value.
And besides, Warren bought a pot full of silver back in the early 2000's after the run had begun, and then sold. He might have made 100% on his investment. feh. Silver is up 1000% since this bull market started.
That said, folks really do have to differentiate between gold and silver as an investment, speculation, and a 'bed buddy' not unlike my grandkids stuffed animals that help them to sleep at night.
peace,
rono
I go back and forth on the whole metals/commodities issue in an attempt to try and get my head around it.
GMO's latest investor letter might be of interest to you -- makes an extremely bullish case for commodities of all sorts (...but doesn't answer the ultimate question as to what the end state is if the world population keeps increasing and every essential input to human life becomes increasingly incredibly expensive...).
http://blogs.barrons.com/stockstowatchtoday/2011/05/01/uh-oh-silver-metal-plunges-12-in-asia-morning-trade
http://www.kitco.com/ind/nadler/may022011.html
I actually started trimming my speculative paper pm's today per exit strategy. I still like them long term and for huge fundamental reasons, but you must have and stick to your exit strategy. I reduced my spec paper position by ~25%.
Please note that I'm starting to eye a physical purchase at these sale prices.
peace,
rono
http://moneywatch.bnet.com/investing/blog/wise-investing/gold-and-silver-what-goes-up/2343/?tag=col1;blog-river
Saw a trailer this morning that Carlos Slim was shorting bigtime. If so, it would explain things. However, I personally see it as a lightening up on the paper side and buying on the physical. The long term fundamentals haven't changed.
peace,
rono
Personally, as I noted in another thread, if this is a repeat of 2008 and we are bumping up against another "ceiling" in commodity prices ($4 gas again) and get a repeat of that, I think that's really concerning for the longer term. I continue to like the metals, but I also like the long-term fundamentals of food/ag. As I've also noted, I like flavor companies, as I think the "science of packaged food" (primarily taste and how that will work with rising health concerns - things like making bitter healthy foods taste less bitter by blocking some bitter taste receptors) will be another interesting theme in the years to come.