Gold

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Wallace
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Re: Gold

Post by Wallace »

The Globe and Mail (Ian McGugan) reports today that the Islamic State is buying up -and looting -gold and other metals to mint dinars for the currency of their Caliphate. Perhaps a bit premature as they can't yet drive from one city to another without risking death in a rain of bombs. Ian McGugan is quite scathing about this and an economic prof that he interviewed suggests that it will be a disaster with the Caliphate winding up with "metallic coins" but no electricity. But perhaps for their purposes it makes sense. No-one in the Caliphate will be educated. Everyone will live in ignorance as they did a thousand years ago, the poor will scrape around for scraps as they always have and the thugs who run the joint will amass great wealth - which they will then have to protect from other thugs.

Wonder what happens to gold when it's blasted by a bomb?
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Re: Gold

Post by SkaSka »

Wallace wrote:Wonder what happens to gold when it's blasted by a bomb?
Melts and goes back into the ground, waiting for the day man discovers it again so he can dig it up, melt and shape it back into some geometric shape, then bury it back into the ground? :rofl:
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Re: Gold

Post by patriot1 »

Wallace wrote:Everyone will live in ignorance as they did a thousand years ago
In fact the Caliphate which ruled this area a thousand years ago was the intellectual hub of the world.

Yet another illustration of of how ISIS's "vision" of Islam is out of touch with their supposed forebears. But they didn't start this trend, the Saudis did.
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Re: Gold

Post by ig17 »

Image


Surprise, Surprise: Gold Beat All World Currencies in 2014

Maybe gold bugs are on to something after all when they harp about "race to the bottom"??
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Re: Gold

Post by patriot1 »

If you can call gold a "currency", I can call the Dow a "currency".

What would it look like on that chart?
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Re: Gold

Post by adrian2 »

patriot1 wrote:If you can call gold a "currency", I can call the Dow a "currency".
Gold was a currency for most of the recorded history.
Dow was never, ever, a currency.
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Re: Gold

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Yes, was. Today it's just another volatile commodity.

My point really is that gold bugs will go through any conceivable contortion go make it look good, when historically it has proven to be a bad investment. Or bad just in 2014.
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Re: Gold

Post by Shakespeare »

Gold should be considered a store of value, not an investment. It's long-term returns can not be significantly above zero.
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Wallace
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Re: Gold

Post by Wallace »

LIke Lazarus, gold has been brought back from the dead. It has risen quickly in the New year and is now over US$1200. With the exchange rate, over CAN$1700. Not a long way from its Canadian peak.

I'm really tempted by gold stocks again. Particularly those that operate mainly in Canada and other relatively stable areas outside the USA. Fuel costs for the big equipment that run the mines is low due to the oil crisis. The Canadian dollar is also low, and the combination of the two should make it easier for the gold companies to increase extraction in Canadian dollars and sell at the US$price. Hopefully they have learned from the profligacy of 2008 - 1010 when gold prices were the highest ever, yet the companies piddled it all away. I'm also interested in whether companies have hedging strategies in place in case the CAN$ rises again.

Any thoughts on gold miners as an investment right now?
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Re: Gold

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I have always considered miners as a bunch of losers. Piss it away in good times and go on life support in bad times. There is not really much in the way of good ore bodies in Canada any more. Better odds in airline stocks, which also destroy shareholder value on a regular basis. Go to Vegas instead.
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Re: Gold

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I personally think that gold mines are a gamble, that may pay off handsomely but may lost a lot of money as well. I remember being in Val d'Or in the spring of 1998, and over half of the mines had closed completely. A local in a bar claimed that this was all a conspiracy by the "big boys" to buy the mines cheap. But a better explanation was that we were just at the bottom of one of the recurring busts.

Prices of gold are going up now as part of a flight to safety. The old argument, that U.S. Treasuries were safe and yield a positive return, has lost some of its persuasiveness these days. How long will this flight to safety last? If it's very short term, as I expect, you are better off buying gold itself, rather than gold miners. But that's for people more pessimistic than I.

Invest in a gold miner? Only with play money that I don't really need to live on. You don't have the travel expenses of going to Las Vegas -- but then you don't get to see the showgirls either.

So yeah, I'm holding on to my great-uncle's solid gold signet ring (three ounces), and the gold medal I got from the Montreal Minerals Club (for some very tangential contributions to mineralogy). But that's it for me. Gold is just too volatile.

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Re: Gold

Post by scomac »

Wallace wrote:
Any thoughts on gold miners as an investment right now?
Good luck?

I've tried it a couple of times and got burnt. In fact, I usually get burnt when the fundamentals don't line up with the price and even then there are no guarantees. I never could make sense of gold companies using regular valuation metrics. The proponents will say you can't value a gold miner that way, but that maybe just code for the obvious truth that if you can't consistently make a profit the business isn't going to be a good investment. More like a black hole or sucking chest wound unless you happen to be on the payroll.

Obviously people have made money on these things over the years, but it's speculative. You have to be nimble and work off of price action and momentum rather than any business case I would think.
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Wallace
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Re: Gold

Post by Wallace »

scomac wrote:I've tried it a couple of times and got burnt. ... <snip> ...
Obviously people have made money on these things over the years, but it's speculative. You have to be nimble and work off of price action and momentum rather than any business case I would think.
I've been burnt too, but around 2008 gold was my lifeline. My RBI precious metals fund kept me afloat while everything else was sinking like a stone. Unfortunately I wasn't as nimble as I should have been when it started to tank, but by then everything else was recovering, so all in all I can't complain. And I still have some of the physical stuff that I got in the first few years of the new century at less than 1/3 of today's cost.

If the gold companies can't make a profit with gold at CAN$1700 the CEOs deserve Altared's derision! But I agree with him that their past performance has been dismal.

Will see how things look after the weekend.......
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Re: Gold

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ghariton wrote: So yeah, I'm holding on to my great-uncle's solid gold signet ring (three ounces), and the gold medal I got from the Montreal Minerals Club (for some very tangential contributions to mineralogy). But that's it for me. Gold is just too volatile.
I'm still holding about 30K worth, having sold off a bunch last year, thinking it was probably dead money for a long time to come. The big question I have now is do I further reduce my holdings? I do like the hedging properties of it, but was gives me pause -- perhaps more than anything -- is that "things" (collectibles) aren't what they used to be. Even coin collecting is in a questionable state. Scandinavian countries are quickly going cashless, and it seems Canada is not far behind. The end of paper/coin will not bode well for future collectors (in my opinion anyway); stamps are interesting point of comparison, though coin collectors dismiss the comparison. Bullion is still held by central banks, I get that, and I get the thousands of years of history, and I get that saying "this time it's different" usually doesn't work out, not to mention that cash is still relatively popular in the US and Asia. Still, I wonder if we're not approaching the end of caring about trinkets -- and if that won't start to include bullion -- and that it will start to look less like an alternative currency and store of value and more like a collectible rock. One things for sure: its not money, no matter what the goldbugs say about it.

It's dangerous to make comparisons, but platinum is very rare, and has traded well below gold for a couple of years now (and Rhodium is much rarer but is even less expensive now). Rarity really is a bit of a red herring. There are many reasons for the demise of platinum (such as a lack of industrial demand), and I suppose it could reverse anytime. Whatever the reasons, I wonder it's not a sign of things to come. Maybe a better post over on the Kitco forum, but I suspect I'd be under attack over there. :lol:
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Re: Gold

Post by SoninlawofGus »

In recent weeks Canada has been selling off its gold reserves, in fact, almost half of the relatively small amount of what it held.

The International Monetary Fund’s International Financial Statistics tracks gold sales and it indicates Canada held 3 tonnes of gold late last year, but that Canada has sold 1.3 tonnes in recent weeks, or just a little over 43 percent of its holdings.


Updated: CBC reports even more selling.
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Wallace
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Re: Gold

Post by Wallace »

SoninlawofGus wrote:In recent weeks Canada has been selling off its gold reserves, in fact, almost half of the relatively small amount of what it held.

The International Monetary Fund’s International Financial Statistics tracks gold sales and it indicates Canada held 3 tonnes of gold late last year, but that Canada has sold 1.3 tonnes in recent weeks, or just a little over 43 percent of its holdings.


Updated: CBC reports even more selling.
So Canada now holds 1.7 tonnes of gold, compared to 8,000 tonnes owned by the USA?

Maybe we should be a bit worried about that. :shock:
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Re: Gold

Post by SoninlawofGus »

The CBC articles says less than a ton. Our currency is tied to commodity performance anyway, so some feel that holding gold is of no value. I don't really have opinion on that one way or the other. I do find it interesting that the long-term plan has been to sell it off.
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Re: Gold

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Goldman suggests shorting gold as fear factor overdone
Concerns over the Chinese economy and fears of a U.S. recession also helped gold post one of its biggest rallies in years. Prices hit a one-year high of $1,260.60 an ounce last week.

But Goldman Sachs said prices will roll back.

"Fears around China, oil and negative interest rates have likely been overstated in the gold price and other financial markets," Goldman Sachs said in a note dated Monday.

"We are recommending shorting gold through a GSCI-style rolling index," it said, referring to the S&P GSCI commodity index.

Goldman expects prices to fall to $1,100 in three months and $1,000 in 12 months.
I think it's impossible to forecast gold prices. But it's fun watching other people try.

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Re: Gold

Post by Ken »

ghariton wrote:I think it's impossible to forecast gold prices. But it's fun watching other people try.
Agreed. :D Are you sure it's not going to jump to $5,000 an ounce within the next year? LOL.
It's been a nice cushion for the dropping C$. Just sold some of mine as well, but I'll always hold a certain amount.
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Re: Gold

Post by Sensei »

Hi,

I noticed there was a long pause in the gold discussion from January 2015 to about early February 2016 (See Wallace upthread)

I have to say that the markets have me spooked and I can only take solace in my dividends, which, other than some nasty cuts from oil companies (LNCO, COP CPG for example) have held up fairly well.

I have been a gold perma-bear for many years, basing my case on the fact that actual gold just sits. It doesn't pay a dividend, can't raise capital etc. to react to market conditions. In effect, it is like any other 'currency'.

That said, I've been reading 'Crash Proof 2.0' by Peter Schiff again. His predictions as of 2009 (date of publication) haven't been particularly accurate, but the argument he makes that the US (aka the Fed, Greenspan, Bernanke, Yellen, or your choice) is on the wrong track is very compelling. Also, the oil glut doesn't seem likely to end any time soon and could actually inflict some serious damage (and already has) on other parts of the economy.

After some reading about gold, both in Schiff and elsewhere, I'm contemplating gradually building a proxy cash sector of about 5% in my portfolio. I'm looking at GLD SPDR Gold Shares. Not interested in gold miners.

Any thoughts? Other options other than not doing it all?
Cheers

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Re: Gold

Post by AltaRed »

A 5% holding of almost anything barely moves the needle on a portfolio, other than perhaps a feel good factor. Just noise in my opinion.

P.S. The only gold I own might be whatever is in VTI, VTV or VGK, and what I have in two dental crowns. I don't touch the stuff.
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Re: Gold

Post by DenisD »

The iShares Gold Trust, IAU, has a lower expense ratio than GLD: 0.25% versus 0.4%. If you want an all-Canadian security, you could look at the Canadian Gold Reserves exchange traded receipt (ETR), MNT/MNT.U, issued by the Royal Canadian Mint for a 0.35% service fee.
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Re: Gold

Post by Sensei »

Hi,

Thanks Denis. Good input.

Alta, thanks. I assume that your advice would be 'not doing it at all' although I did say other than that. :wink:
Cheers

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Re: Gold

Post by Flaccidsteele »

Sensei wrote:Peter Schiff...His predictions as of 2009 (date of publication) haven't been particularly accurate
Sensei wrote:...but the argument he makes that the US (aka the Fed, Greenspan, Bernanke, Yellen, or your choice) is on the wrong track is very compelling
These two statements appear incongruent.
Sensei wrote:...the oil glut doesn't seem likely to end any time soon
How is this different from recency bias?
Sensei wrote:...and could actually inflict some serious damage (and already has) on other parts of the economy.
How does that affect you? From my perspective all I'm getting is cheaper fuel for the car.
Sensei wrote:Any thoughts? Other options other than not doing it all?
I've always admired Peter Schiff as being the best marketer and salesman in the investing space. Schiff will always be successful as a salesman.

Buffett's opinion of Bernanke and his rationale on gold makes more sense to me.

You will do what your confirmation bias directs you to do. Nothing can change that. Good luck with whatever you decide to do.
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Re: Gold

Post by AltaRed »

Sensei wrote:Alta, thanks. I assume that your advice would be 'not doing it at all' although I did say other than that. :wink:
Fair enough, but recommendation still stands. 5% in a portfolio won't move the needle. If you consider Gold as a separate asset class, I can't see where an allocation less than about 10-15% making a difference.
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