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I would love to hear who people hold in high regard for thoughts on Gold and Gold stocks. I am trying to understand the big difference in returns on Gold stocks vs Gold, the commodity, and would like to know who has a good explanation for what's going on. Thanks in advance. All thoughts welcome.
I follow gold-bullion (GLD, IAU, SGOL, etc) & gold-mining (GDX, GDXJ, etc) ETFs. The latter are 2x-3x more volatile than the former, & are more correlated with the stock market - but sometimes, they just go down-down (-:).
Some gold-miners are trying variable-dividends (basic + bonus based on earnings, cashflows) but that hasn't helped much. At least, they are not in mad rush to expand gold production or unprofitable revenues.
For a while, I also followed gold + oil/natural resources CEFs (GGN, GNT, etc), but then switched to tracking separate gold & oil ETFs. Gold & oil are affected by several common factors (inflation, interest rates,, currency, etc), but there are many non-common factors too (fundamental, geopolitical).
If you want to try and understand gold / gold miners I might suggest subscribing to Bill Fleckenstein’s “Market Rap.” That’s something he knows a lot about and frequently addresses in commentary or in answer to questions submitted by readers (see “Ask Fleck” link). Just take care not to drink his bearish Kool-Aid re the stock market.
I’m “agnostic” as far as metal / miners go. Beyond my understanding. Recently exited a long time exposure to the miners (1 mutual fund and 1 stock). Risk mitigation move tied to an age-related portfolio revamp - not a market call. Continue to hold a “smidgen” in GLTR, an ETF with derivative exposure to gold, silver, platinum and palladium. It’s a tiny allocation viewed as a possible hedge against equity volatility. Also own one CEF focused on gold and natural resources.
Back to Bill - My sense, having followed him a number of years now, is that while he very much likes the physical precious metals, he has felt for a long time that the miners are grossly undervalued / under-priced in relation to the metals. Not all miners are equal however. Depends on the quality of the mines / gold fields they own. That’s not always easy to discern (in the same way that seemingly profitable oil discoveries can end up being unprofitable). Like I said, best to get it directly from him.
My wife had a mining fund that I somehow bought at the right time. I sold it recently for a small gain. One such fund in the family IRA's is plenty.
For my IRA, I bought a small position in USAGX in August 2011 during another budget showdown. It was at 41.63 per share. I bought on the "dip" in December 2012 at 26.04 per share. Who is the dip? I bought again in June of 2017 at 13.61 per share.
I broke one of my rules on the last buy. It was one of two investments I have ever made based on the political situation at the time. The other, bought in tandem, and at the same times as USAGX, was MERKX, a "hard money" fund that recently evaporated without notice from The Shadow.
After global pestilence, European war, and rocketing inflation, USAGX closed yesterday at 16.43.
Here’ s the best assessment of gold I’ve ever come across. It’s the ending to Mark Twain’s short story, “I Find Fool’s Gold” (From Roughing It):
“Moralizing, I observed, then, that ‘all that glitters is not gold.’ Mr. Ballou said I could go further than that, and lay it up among my treasures of knowledge, that nothing that glitters is gold. So I learned then, once for all, that gold in its native state is but dull, unornamental stuff, and that only lowborn metals excite the admiration of the ignorant with an ostentatious glitter. However, like the rest of the world, I still go on underrating men of gold and glorifying men of mica. Commonplace human nature cannot rise above that.”
Yes. It has been quite a ride. M* is barely keeping track of where the realized gain horizon might be. That's my usual goal line for selling in retirement accounts.
Devo's original post reminded me of a comment from Buffet I quoted recently on not knowing the direction of interest rates.
I personally believe Gold will do over the next 45 years what the SPY did the last 45 years. Too much debt fueled by "only so much gold on the Earth" hype behind it (think bitcoin 21M max). My opinion is in the minority but I believe steadfast regardless. I own zero but will acquire at some point going forward.
Comments
Some gold-miners are trying variable-dividends (basic + bonus based on earnings, cashflows) but that hasn't helped much. At least, they are not in mad rush to expand gold production or unprofitable revenues.
For a while, I also followed gold + oil/natural resources CEFs (GGN, GNT, etc), but then switched to tracking separate gold & oil ETFs. Gold & oil are affected by several common factors (inflation, interest rates,, currency, etc), but there are many non-common factors too (fundamental, geopolitical).
BTW, GGN and GNT are active CEFs but haven't shined in golds or oil.
So, if I lose money, I want to lose it my way.
I’m “agnostic” as far as metal / miners go. Beyond my understanding. Recently exited a long time exposure to the miners (1 mutual fund and 1 stock). Risk mitigation move tied to an age-related portfolio revamp - not a market call. Continue to hold a “smidgen” in GLTR, an ETF with derivative exposure to gold, silver, platinum and palladium. It’s a tiny allocation viewed as a possible hedge against equity volatility. Also own one CEF focused on gold and natural resources.
Back to Bill - My sense, having followed him a number of years now, is that while he very much likes the physical precious metals, he has felt for a long time that the miners are grossly undervalued / under-priced in relation to the metals. Not all miners are equal however. Depends on the quality of the mines / gold fields they own. That’s not always easy to discern (in the same way that seemingly profitable oil discoveries can end up being unprofitable). Like I said, best to get it directly from him.
For my IRA, I bought a small position in USAGX in August 2011 during another budget showdown. It was at 41.63 per share. I bought on the "dip" in December 2012 at 26.04 per share. Who is the dip? I bought again in June of 2017 at 13.61 per share.
I broke one of my rules on the last buy. It was one of two investments I have ever made based on the political situation at the time. The other, bought in tandem, and at the same times as USAGX, was MERKX, a "hard money" fund that recently evaporated without notice from The Shadow.
After global pestilence, European war, and rocketing inflation, USAGX closed yesterday at 16.43.
I am awaiting first contact.
“Moralizing, I observed, then, that ‘all that glitters is not gold.’ Mr. Ballou said I could go further than that, and lay it up among my treasures of knowledge, that nothing that glitters is gold. So I learned then, once for all, that gold in its native state is but dull, unornamental stuff, and that only lowborn metals excite the admiration of the ignorant with an ostentatious glitter. However, like the rest of the world, I still go on underrating men of gold and glorifying men of mica. Commonplace human nature cannot rise above that.”
https://finance.yahoo.com/quote/USAGX?p=USAGX&.tsrc=fin-srch
Devo's original post reminded me of a comment from Buffet I quoted recently on not knowing the direction of interest rates.
Good luck with gold.