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.
I'm not. I don't have anything against it at all, but personally I have ideas I'd rather explore in terms of stocks and continue to get that dividend income. If I were to buy metals, I do think CEF is a tremendous deal trading at a 10% discount to NAV.
I've been thinking about it but I haven't taken any action yet. I do have a small position in GDX and I've been debating whether to add to the miners or buy gold itself. I've also thought about buying gold against Euro and/or Yen (GEUR and/or GYEN) but the volume is pretty thin. With the USD strong I'm not sure I'd want to buy gold in dollar terms even though it seems cheap. I think it was @Rono who pointed out in another post that gold is actually expensive relative to miners and also relative to silver.
I'm not a gold-type myself, but I do remember a recent post (might have been rono) that pointed out that buying gold and buying the miners is really two different things, because the mining stocks can tend to get swept along with general market swings which are not really factors in the gold valuation, whereas the metal itself tends to be insulated from that sort of thing. I thought that was a pretty good point.
Off over $20 today to around $1147. That puts it only $300 above its 1970-80s peak of $850 reached in January, 1980. A white-knuckles ride for sure.
Well, since we are going back in time, how about the absolute worst investment since your time frame. That would be silver which hit $50 an ounce in April 1980 (if I recall correctly) It takes a different mindset than mine (like the world is coming to an end) to invest in commodities/gold/silver/ etc. All I've heard about since the 70s has been shortages of this and that or hyperinflation is just around the corner. But it's been the stock market (and bonds) where the wealth has been accumulated since that time.
I have in the past held CEF. The metals are now starting to catch my attention. Currently, I am at a neutral position in cash within my portfolio at about 15%. During the months of November and December I’ll be collecting most all my mutual fund income and capital gain distributions in cash. With this, I expect my cash area will grow by a couple of percent over the next couple of months. I think I’ll start a very small position in CEF and average into it to where CEF becomes a sizeable holding in my specialty sleeve. Currently, the USDollar is very strong and I look for it to weaken in the coming months and, with this, I think the metals will do ok as the Dollar weakens.
I am thinking it could take up to three to possibly five years for this to play out. I am looking at it as more of a gain from a store of value and gain from inflation rather than a return from corporate earnings. I guess I am looking for inflation to start showing up over the next couple of years and now is a good time to start positioning for inflation. I might be a little early in doing this ... but, in time, I believe it will be a prudent move.
And remember how a few years back on this forum and Fund Alarm all we heard about (and on an almost daily basis) was PRPFX. A few here said it was the best buy and hold fund in the universe. Fast forward to the present and take a gander at its three year annualized returns since it was so pontified.
Here's the discussion where @rono talked about the ratio of bullion to both miners and also silver. There was a recent post about the difference between buying gold and buying miners. @bee made a number of interesting points there. I'll try to find it again.
@Old_Skeet, why do you think the dollar will weaken in the coming months? I would expect continued strength as the Japanese weaken the yen to stimulate their economy and change the mindset related to inflation, as the ECB is going to have to get more aggressive with their actions in order to stimulate the European economies, hence weakening the Euro and strengthening the dollar, as the Swiss try to defend the Euro and weaken their own currency in the process even though they'll ultimately fail, and as the US economy continues to strengthen and the likelihood of rate increases making the demand for dollars even greater than it is today. I'm sure we'll bounce around and there will be days, even weeks, of dollar weakness, but I have any number of bets based on dollar strength (or actually yen and Euro weakness) and I'd be very interested to consider your thoughts as they seem contrary to my own. Thanks in advance.
I must be missing something here. Maybe my negativity is a sign to buy. But I was always taught not to try and catch falling knives if you want to accumulate a seven figure account and beyond.
Edit: I probably have a bias against gold and silver so don't mind me. I left this forum for a couple years because one poster kept preaching (like almost daily) something like $5000 gold and $1000 silver. Sad thing is, the groupies followed him to the gallows.
@Junkster, I think of it like throwing pennies in a wishing well. We all know that you're not likely to have any wishes come true "because" you threw a penny or two in the pond, but we do it anyway because its fun.
In the nearterm I think you are correct about the strength of the US Dollar. I am looking out three to five years as I said above .... The biggest thing I see here domestically is inflation. I am talking about taking baby steps in moving into this position. And, as the golbal economies began to heat up this should creat a demand from industry for both gold and silver. My thinking comes form more than just a currency play. In addition, I am thinking central banks, over time, will want to increase their gold reserves as they expand their currency base.
Granted, Old_Skeet has been wrong before. But, as a long term investor what is the best time to begin to position into an asset class? From my thinking, it is when it is out of favor. I am not talking about going all in as a trader might ... I am simply adding this as one of my joker cards within my deck of 52. Currently, my invstment positions total fifty with no direct play on the metals.
I ran down that quote- it wasn't rono, but our old friend FundAlarm:
"If you want to track the price of gold, invest in gold (physical, etn, futures, etc). equities introduce other risks as they correlate with other equities more than with the underlying commodity. "
I could count on you to dig this out @Old_Joe. @Junkster: PRPFX discussions during fundalarm days are fresh in my mind.
There might be inflation in the future, or not. The flattening yield curve and breakevens show the opposite. Theoretically, inflation is likely, but who knows when it's going to bite. In the meantime, gold pays nothing to wait.
I ran down that quote- it wasn't rono, but our old friend FundAlarm:
"If you want to track the price of gold, invest in gold (physical, etn, futures, etc). equities introduce other risks as they correlate with other equities more than with the underlying commodity. "
"Mr. Greenspan said gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments." "Greenspan has been talking up gold in a number of settings lately"
William Bernstein recently had an interview with Morningstar where he recommended gold equities:
http://news.morningstar.com/articlenet/article.aspx?id=670785 Benz: .......one deeply unloved asset class right now is precious metals, which was very much in vogue a few years ago. You think it's also a pretty interesting time to be looking at that asset class, too. Bernstein: I do........So, why do we even want to own this asset class? Well, it occasionally zigs. When the overall market sags, it does particularly well. ----it turns out that even with its high volatility and its crummy returns, adding several percent of it to your portfolio does improve its behavior. It improves its return and it improves its volatility as well; it lowers its volatility. Three years ago, if you had had the temerity to suggest that it might not be a good thing to put in your portfolio because it was being talked up so much, you had your intelligence and your honesty and perhaps even your parentage questioned. Now, I think it's probably not a bad time to be adding it to your portfolio, if you don't have it there already. And if you do have it there, now might not be a bad time to increase your allocation."
I'd be very careful folks. $1100 is the next stop for gold and $15 for silver. Is this a buying opportunity? Sure - depending upon your individual situation and goal. I've always looked at the precious metals in two ways - as an investment/security blanket and as a speculation. I still feel that everyone should have 5-10 of their wealth in the metals in some manner - preferably hands on physical bullion.
I think speculation in bullion right now is card-carrying nuts. However, if someone wants to establish a base holding in the metals - their security blanket, if you will, this might be a good buying opportunity.
Right now the gold/XAU ratio is WAY high at 18.46 and the gold/silver is 1/75. This points to weighting the miners over bullion and silver over gold. Note I said weighting.
Right now the street price for physical bullion is diverting from the paper price (i.e. margins are increasing) AND, there was a flash on Bloomberg earlier this evening that the mint had sold out of silver eagles for 2014 and was having to stamp out some more. This will be curious to watch. Apmex is still selling silver eagles for $20 and so far I have not seen any supply problems.
For myself, I'm in the process of reinvesting my deferred comp in a rollover IRA at Price. I've added a wee bit of PRPFX and a couple of junior silver miners. Still figuring out the Price trading platform but it's good for me to learn.
I still feel that everyone should have 5-10 of their wealth in the metals in some manner - preferably hands on physical bullion.
and so it goes,
peace,
rono
Regarding hands on physical bullion......where are people going to keep it? And insure it, etc. Seems unsafe. If I was going to invest in bullion, I would prefer an exchange traded fund, IAU or GLD
Storing gold is a huge question and most don't have a good way of storing it. You would have to invest in a good safe or other means of keeping it.
I thought the ETFs were paper gold only. The one exception was Sprotts (?) gold which was backed up by physical. ( I think that's correct). In a real SHTF emergency, the paper gold might be worthless. For normal investing it is okay.
Indeed, bullion ETFs are purely PAPER bullion. CEF is an exception - or Sprotts stuff. Also, bullion ETFs are taxed at 28%.
As for storing physical bullion, sure it's an issue. However, a roll of gold eagles is about 2" tall and the size of a quarter. Worth right now is about $25K and you could hide it in the oatmeal box. There are other variation on a theme about holding physical bullion - jewelry or watches, come readily to mind.
Some years back, I was in a conversation where asian women were buying gold as in gold necklaces. 18k and up are good and easily breakable if you needed a small amount for barter.
Only way I buy gold is on a chain for my wife, even then it is for "Decoration" not for investing, buy Capital appreciation, gains, and dividends with your money
Both China and particularly India have long used gold jewelry as sort of their social security system for women. Dowry, all holidays, etc. China has gotten involved because of their nouveau riche wanting bling. Both of these serve as a floor to the price. And in addition, you've got the survivalists. That said, this time the slide has been longer and steeper than we've had since about the inception of the bull market back in 02/03.
@MFO Member; If you going to play the precious metals game, I suggest you double your pleasure, double your fun, by killing two birds with one stone. You can own both gold & silver bullion without the 28% tax by holding Central Fund Of Canada (CEF). Regards, Ted
Indeed, bullion ETFs are purely PAPER bullion. CEF is an exception - or Sprotts stuff. rono
Rono or any MFOers,
What are your concerns with what you are calling "PAPER bullion", such as GLD? You're not doubting that shares in GLD are backed by gold bullion, or that your investment will move up or down with the price of gold, just the fact that you cannot put in an order to redeem them with physical gold like you can with Sprott??
With GLD, you don't own the gold that backs the GLD trust, you own the trust. You have purchased an ownership interest in the trust. The trust's only asset is gold bullion.
Are you referring to a situation of "complete social unrest" where brokerages and banks are not functioning and you fear your GLD investment can't be sold?
Indeed, bullion ETFs are purely PAPER bullion. CEF is an exception - or Sprotts stuff. rono
Rono or any MFOers,
What are your concerns with what you are calling "PAPER bullion", such as GLD? You're not doubting that shares in GLD are backed by gold bullion, or that your investment will move up or down with the price of gold, just the fact that you cannot put in an order to redeem them with physical gold like you can with Sprott??
With GLD, you don't own the gold that backs the GLD trust, you own the trust. You have purchased an ownership interest in the trust. The trust's only asset is gold bullion.
Are you referring to a situation of "complete social unrest" where brokerages and banks are not functioning and you fear your GLD investment can't be sold?
Basically, the view by many is that, in terms of gold, "if you don't hold it, you don't own it." There are some reasonably good options in terms of traded fund investments, like the Sprott/Merk funds, as well as CEF.
"You're not doubting that shares in GLD are backed by gold bullion."
Some have questioned it, sure. "Skeptics have raised doubts over the trust’s management of its physical gold, with questions over how much is actually held. HSBC, the custodian, is very secretive regarding its vault. Earlier this year, CNBC’s Bob Pisani was allowed to see the vault only after surrendering his cell phone and taken in a van with blacked out windows to an undisclosed location. Once in the vault, Pisani held up a gold bar and explained they were all numbered and registered. Astutely, ZeroHedge noted the bar Pisani held up was missing from the current bar list, fueling further speculation and skepticism." (http://www.forbes.com/sites/afontevecchia/2011/11/15/is-gld-really-as-good-as-gold/)
I went to Publix for Groceries, they wouldn't take Gold as payment, but they took my Stock dividends (cash).....just saying
Just saying what, that Publix does not have scales and an effective hedging strategy with the CME to transact in gold? This "Wal-Mart doesn't take gold" argument is ridiculous. Would Publix take a barrel of oil, perhaps?
You can take your paper dollars and buy things (in smaller and smaller packages) at Publix, or you can buy assets with said paper, like stocks, real estate or gold or oil or whatever. Gold and silver is something that you can easily take to Asia, Europe or the farthest reaches of wherever and you can sell it in the local currency if you wanted.
Some states have made gold/silver legal tender and have done away with capital gains taxes for sales - see Utah as an example.
Comments
I am thinking it could take up to three to possibly five years for this to play out. I am looking at it as more of a gain from a store of value and gain from inflation rather than a return from corporate earnings. I guess I am looking for inflation to start showing up over the next couple of years and now is a good time to start positioning for inflation. I might be a little early in doing this ... but, in time, I believe it will be a prudent move.
Old_Sheet
Here's the discussion where @rono talked about the ratio of bullion to both miners and also silver. There was a recent post about the difference between buying gold and buying miners. @bee made a number of interesting points there. I'll try to find it again.
Here's the discussion about the difference between buying the metal and buying the miners.
GDX (Price) -18.55 -29.98 -34.03 -17.5
I must be missing something here. Maybe my negativity is a sign to buy. But I was always taught not to try and catch falling knives if you want to accumulate a seven figure account and beyond.
Edit: I probably have a bias against gold and silver so don't mind me. I left this forum for a couple years because one poster kept preaching (like almost daily) something like $5000 gold and $1000 silver. Sad thing is, the groupies followed him to the gallows.
In the nearterm I think you are correct about the strength of the US Dollar. I am looking out three to five years as I said above .... The biggest thing I see here domestically is inflation. I am talking about taking baby steps in moving into this position. And, as the golbal economies began to heat up this should creat a demand from industry for both gold and silver. My thinking comes form more than just a currency play. In addition, I am thinking central banks, over time, will want to increase their gold reserves as they expand their currency base.
Granted, Old_Skeet has been wrong before. But, as a long term investor what is the best time to begin to position into an asset class? From my thinking, it is when it is out of favor. I am not talking about going all in as a trader might ... I am simply adding this as one of my joker cards within my deck of 52. Currently, my invstment positions total fifty with no direct play on the metals.
Old_Skeet
"If you want to track the price of gold, invest in gold (physical, etn, futures, etc). equities introduce other risks as they correlate with other equities more than with the underlying commodity. "
@Junkster: PRPFX discussions during fundalarm days are fresh in my mind.
There might be inflation in the future, or not. The flattening yield curve and breakevens show the opposite. Theoretically, inflation is likely, but who knows when it's going to bite. In the meantime, gold pays nothing to wait.
Unexpectedly, Alan Greenspan has very recently commented on gold as an investment:
http://www.cnbc.com/id/102141855?trknav=homestack:topnews:3
"That the price of gold is headed "measurably higher."
http://www.cnbc.com/id/102136750?trknav=homestack:topnews:9
"Mr. Greenspan said gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments."
"Greenspan has been talking up gold in a number of settings lately"
William Bernstein recently had an interview with Morningstar where he recommended gold equities:
http://news.morningstar.com/articlenet/article.aspx?id=670785
Benz: .......one deeply unloved asset class right now is precious metals, which was very much in vogue a few years ago. You think it's also a pretty interesting time to be looking at that asset class, too.
Bernstein: I do........So, why do we even want to own this asset class? Well, it occasionally zigs. When the overall market sags, it does particularly well. ----it turns out that even with its high volatility and its crummy returns, adding several percent of it to your portfolio does improve its behavior. It improves its return and it improves its volatility as well; it lowers its volatility.
Three years ago, if you had had the temerity to suggest that it might not be a good thing to put in your portfolio because it was being talked up so much, you had your intelligence and your honesty and perhaps even your parentage questioned. Now, I think it's probably not a bad time to be adding it to your portfolio, if you don't have it there already. And if you do have it there, now might not be a bad time to increase your allocation."
I'd be very careful folks. $1100 is the next stop for gold and $15 for silver. Is this a buying opportunity? Sure - depending upon your individual situation and goal. I've always looked at the precious metals in two ways - as an investment/security blanket and as a speculation. I still feel that everyone should have 5-10 of their wealth in the metals in some manner - preferably hands on physical bullion.
I think speculation in bullion right now is card-carrying nuts. However, if someone wants to establish a base holding in the metals - their security blanket, if you will, this might be a good buying opportunity.
Right now the gold/XAU ratio is WAY high at 18.46 and the gold/silver is 1/75. This points to weighting the miners over bullion and silver over gold. Note I said weighting.
Right now the street price for physical bullion is diverting from the paper price (i.e. margins are increasing) AND, there was a flash on Bloomberg earlier this evening that the mint had sold out of silver eagles for 2014 and was having to stamp out some more. This will be curious to watch. Apmex is still selling silver eagles for $20 and so far I have not seen any supply problems.
For myself, I'm in the process of reinvesting my deferred comp in a rollover IRA at Price. I've added a wee bit of PRPFX and a couple of junior silver miners. Still figuring out the Price trading platform but it's good for me to learn.
and so it goes,
peace,
rono
I thought the ETFs were paper gold only. The one exception was Sprotts (?) gold which was backed up by physical. ( I think that's correct). In a real SHTF emergency, the paper gold might be worthless. For normal investing it is okay.
Indeed, bullion ETFs are purely PAPER bullion. CEF is an exception - or Sprotts stuff. Also, bullion ETFs are taxed at 28%.
As for storing physical bullion, sure it's an issue. However, a roll of gold eagles is about 2" tall and the size of a quarter. Worth right now is about $25K and you could hide it in the oatmeal box. There are other variation on a theme about holding physical bullion - jewelry or watches, come readily to mind.
peace,
rono
Old_Skeet
Both China and particularly India have long used gold jewelry as sort of their social security system for women. Dowry, all holidays, etc. China has gotten involved because of their nouveau riche wanting bling. Both of these serve as a floor to the price. And in addition, you've got the survivalists. That said, this time the slide has been longer and steeper than we've had since about the inception of the bull market back in 02/03.
peace,
rono
Regards,
Ted
Central Fund Of Canada Website: http://www.centralfund.com/
M* Snapshot Of CEF: http://cef.morningstar.com/quote?t=CEF
Regards,
Ted
What are your concerns with what you are calling "PAPER bullion", such as GLD?
You're not doubting that shares in GLD are backed by gold bullion, or that your investment will move up or down with the price of gold, just the fact that you cannot put in an order to redeem them with physical gold like you can with Sprott??
With GLD, you don't own the gold that backs the GLD trust, you own the trust. You have purchased an ownership interest in the trust. The trust's only asset is gold bullion.
Are you referring to a situation of "complete social unrest" where brokerages and banks are not functioning and you fear your GLD investment can't be sold?
"You're not doubting that shares in GLD are backed by gold bullion."
Some have questioned it, sure. "Skeptics have raised doubts over the trust’s management of its physical gold, with questions over how much is actually held. HSBC, the custodian, is very secretive regarding its vault. Earlier this year, CNBC’s Bob Pisani was allowed to see the vault only after surrendering his cell phone and taken in a van with blacked out windows to an undisclosed location. Once in the vault, Pisani held up a gold bar and explained they were all numbered and registered. Astutely, ZeroHedge noted the bar Pisani held up was missing from the current bar list, fueling further speculation and skepticism." (http://www.forbes.com/sites/afontevecchia/2011/11/15/is-gld-really-as-good-as-gold/)
You can take your paper dollars and buy things (in smaller and smaller packages) at Publix, or you can buy assets with said paper, like stocks, real estate or gold or oil or whatever. Gold and silver is something that you can easily take to Asia, Europe or the farthest reaches of wherever and you can sell it in the local currency if you wanted.
Some states have made gold/silver legal tender and have done away with capital gains taxes for sales - see Utah as an example.