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Well, Rono and other Gold (and Gold Fund) Buyers Here - what do you think?

edited August 2011 in Fund Discussions
Do you think it's just some nice profit-taking that will slow down in the next few days - or a combination of that plus newer investors who wanted to catch the band wagon but got on too late and are now scared? What is your estimation of the end value after this sell-off, i.e., at what point do you think it will level off?


  • edited August 2011
    Howdy Cathy,

    Well, from an almost close sorta fella. I expected gold at $1062, I believe in Mar, 2010 and it got down to around $1140 and then UP. So, my record is not steller. However, I suppose I will offer my best guess.
    Gold perhaps a near term 1-2 months out low of $1500-1600. This could arrive faster, but with all the surrounding problems here and abroad; I still find this area of investments to be an "insurance policy, add-on". Not that one would want the investment to go to ZERO, but each year that this house buys auto and house insurance, these "protections" always go to zero and then we pay again in the next year.
    Just another viewpoint of what the metals and/or the equity side of metals looks like from this house. I would consider, as of today; the $1500-1600 range (if reached) to be a potential buy zone again. Obviously, what is happening at the time would factor into this "buy".

    Take care,
  • edited August 2011
    I still think the fundamental thesis remains unchanged, but the level of volatility (in both directions) that was commonly seen in the metals a year or so ago may return for the time being. In the short-term, the metals were significantly overbought and a correction was logical, healthy and probably should have been likely before this. Additionally, there was another margin raise both here and overseas, as well as poorly performing hedge funds possibly having to liquidate.

    I'm not going to make any price predictions, but I will say I think the fundamental thesis remains unchanged (and silver is now back over $40 again.) As I've noted before, however, I think one can't just look at the metals and has to look at other sectors, especially agriculture (which I particularly like long-term although I don't think short-term is bad, either) and, to some degree, energy. I continue to like various MLPs. While volatile, I'm getting paid a nice yield in the meantime unless things get way worse. Anyone looking to invest in the metals can look at something like CEF (gold/silver) or Sprott's PHYS (for gold). Wisdomtree's new RRF ETF looks interesting for a broad inflation (both US and foreign TIPS, as well as direct commodities) play. DBA for agriculture, among a ton of other options. As I've noted on a number of other occasions, I continue to like Brookfield Infrastructure (BIP) as a global real assets play.

    Water is another one, although there aren't much in the way of good specific investment options regarding it. I own a tiny, tiny amount of AWTDX; not great, but there aren't many other options.
  • Reply to @catch22: Thanks for your input, Catch. Looks like my timing for this question about right. Gold up to 1785 and still looks like buying in Pre-Market data - and with recent announcement re Bank of America's modeling study that "Chance of Recession is as High as 80%", there should be more piling in to gold if only because there seems to be nowhere else to go . Still, as you said, that doesn't mean there won't be another round of profit-taking sell-offs in the next couple of months.
  • Thanks, Scott. I have PRPFX and IAU in the metals. I do like the Agriculture idea, but hadn't wanted to get into too narrow an investment category before. But I do make notes and add lots of suggested good funds to my "test" portfolio in M*, so it has been very interesting watching their performance.

    This last month certainly has been a bit overwhelming for me. I have hundreds of investment and article printouts scattered all over my desk - I should use that picture as my icon here. If we do go into a double-dip, it will be my first experience at really paying attention to what's happening on a daily basis. In my good old days of "blessed ignorance" where "managing" my 401(k) meant taking a stab at what looked good without having any idea what I was doing, I barely looked at my quarterly statements during the 2000 crash and even the results surprisingly didn't seem to affect me much - probably because I was still working and bringing in a good income.... and actual retirement seemed so far off then. Still, I would much rather take the pain of understanding what's going on in the world - and how it affects my portfolios.
  • edited August 2011
    Reply to @CathyG: While not without volatility, ag is also somewhat less volatile than the rest of the commodities - people have to eat. Strangely, there are little in the way of agricultural mutual funds, but plenty of ETFs, including MOO, PAGG, BARN, SOIL, DBA (direct investment in ag commodities for DBA) and others.
  • edited August 2011
    Hi Cathy,

    I failed to also note that the CME (Chicago Merchantile Exchange) has again raised the margin amount for holdings a gold futures contract; and I recall a blip from perhaps Tuesday, that China has also changed some type of requirement regarding either gold bullion purchases and/or gold contracts, too.
    With these in mind, gold still seems to be holding its own; in spite of the costs increases for the futures kids.
    Over the years our house has been in and out of the metals; not unlike any other sector. Back in the day, (pre internet, late 70's, 80's and 90's) all of our metals fund investments were with Fidelity; as they had two metals funds. One was North Amercian miners and the other is still in place which now uses North American, as well as global miners companies combined.
    We were also involved as the "middle" vendors, buying from the public and reselling to the larger dealers. Not unlike the current tv ads now for sending in your coins and/or jewelry OR all of the local pawn shops and jewelry stores now buying these items. It was a most fascinating time and adventure to see all of the various items that were placed before us, being sold by individuals. The majority of the buy/sell operations were with setups at the area malls. The scary part was moving everything from the van into the mall to setup the selling of coins in particular, but also being prepared to purchase whatever was placed before us that contained silver or gold. Packing $20,000 in cash for buying in and around one's body could be a little nerve racking; although the malls were well protected during these coin shows. We would have offers to buy from the public items that ranged from a hugh sterling silver bowl and punch set of glasses to a baggie of circulated U.S. silver coins. Those who bought from all of the dealers had the most dangerous position, as they had to bring lots of cash to buy; and one of these folks we dealt with then transported via a full size van; and of the items that were to be smelted, to Cincinnati, OH from mid-Michigan.
    A great adventure and learning experience overall.
    Yes, this house has and will undoubtly miss some of the up/down moves in the metals funds. Heck, we all look back to find fund moves we have missed, eh?
    OK, need more coffee and get a chair in place to find what Mr. Bananke may or may not say; and what the market kids think and how they react. Could be a big non-event.

  • edited August 2011
    hi Cathy
    gold could be bouncing back and forth around these levels. If we do head for a slow, sustainable, recovery, gold cold be just side ways or could be going up very slowly. Once all the fear/panic subsides, you'll see bunch of traders running away from gold and betting again on equities/stocks. I firmly believe that gold could be related to fear factors as well as a vehicle to place monetary worth without accounting for inflation. I would not use more than 5% of my portfolio into gold, there are better commodities out there to spread the risks around [gold/silver, oil/energy]. I think gold may have upswings of 5 - 10 s% from these levels until end of year, UNLESS WE HAVE MORE PANICS/crash then all bets are off LOL...

    a diversed portfolio maybe perform better than a all around gold portfolio.
  • Reply to @catch22: Wow, Catch, sounds like a nervewracking experience. You would have to have a good knowledge of physical metals to be able to determine pricing - which I certainly don't. But I'm happy with my IAU and PRPFX investments - so far both have provided solid growth.
  • Reply to @scott: Thanks for your follow-up, Scott. I have DBA on my Watch list.
  • Reply to @johnN: Thanks, John. I am keeping my gold exposure to low % of Portfolio totals. But even that percentage has certainly helped my total Portfolio gains so, at least for now, I am happy with having what I have in this. I just haven't experienced the ups and downs of gold (or any investments for that matter) except for the last year so I didn't know if the recent strong fluctuations were normal during stress periods, or something I should worry about.
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