Friday, Jan 25, 2008
Gold not gold stocks
Market Oracle: Gold Stocks - The Next Stock Market Sector to Crash?
Gold stocks could struggle at the same time as gold price goes up. Worth thinking about. Apologies to those not interested in alternative investments who see this as off topic!
Posted by happyrenterz @ 08:20 AM (587 views) Add Comment
11 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. cornishman said...
Would whoever was suggesting last week how to invest in gold [sorry, can't remember who it was!] - ie sell when it peaks and buy back when it has finished correcting, care to give us the benefit of their thinking just now. Is just now a peak to sell at?
sorry, this is a bit of a tongue in cheek request. Hindsight is wonderful and looking at the gold price chart it is easy to see where one should have sold or bought. It's not so easy in real time!
My two-pennyworth is that if things in the world system collapse big time, the price will rocket in days and you won't be able to buy any gold because no-one will be selling - so sitting waiting for a sign will be too late. Holding a proportion of your wealth as a core investment in gold is the only insurance in such uncertain times.
2. techieman said...
it was h4pc. As i write new all time highs - looks like time for me to eat humble pie - pass the salt!!! Off to trade something else to cheer me up, now where's that Footsie......
3. sold 2 rent 1 said...
Read a great article about gold stocks yesterday
http://www.safehaven.com/article-9295.htm
It recommends to exit junior stocks around February/March 2009
A mine takes 7-10 years to be built. Peak oil is going to seriously play into how much gold and silver can actually be mined, but the Johnny and Jane Come-Lately are going to be blinded by the shine of gold and not even see this coming. The termination of this bull market will see stocks fall off a cliff because this will be the end game for stocks
4. happyrenterz said...
A couple more gold refs from Market Oracle
Gold forming a Bull Trap
Danger of Gold ETFs
5. drewster said...
@HappyRenterz,
Cheers for those Market Oracle links. Have to say, I disagree fundamentally with both of them.
1) "Bear traps" - there may be some short-term volatility, but a long-term investor shouldn't worry about day-to-day fluctuations.
2) "Dangers of gold ETFs" - Frankly this author is financially illiterate. He doesn't understand how ETFs work.
When a company like iShares or Lyxor creates an ETF, they don't do so out of the goodness of their hearts - they're in it to make money. They make money by taking a small amount of gold out of the kitty - 0.25% per year or so, depending on the ETF provider. So in the first year, 1 ETF = 1 ounce of gold; in the second year, 1 ETF = 0.9975 ounces, in the third year, 1 ETF = 0.995 ounces, etc. After a few years it will seem like the ETF isn't providing the same value as pure gold. However it will still track gold up and down, minus fees. Companies like BullionVault charge storage fees too. The only way to avoid paying storage fees is to keep Krugerrands under your mattress and pray you don't get burgled.
6. planning4acrash said...
I stand by what I said. If you had sold when gold got to 900$ and oil prices were falling, you would have benefited from currency appreciation as gold fell to $960, you could then have bought back when US rates went down and you would have gained 4% from that hedge. Gold would probably have corrected to $700-740 without the fed cut. Oil has gone back above 90$, which would explain why gold prices have continued to rise after the fed cut. Some of the rise is a result of the fed cut, given that gold is priced in dollars, so this extends the upwards rout caused by the fed cut. Exactly in line with what I said. The next massive rout upwards will be when oil goes about specific thresholds. A small rise when it goes above $95, a massive rise when it breaches $100 again, and a humungous rise when we breach $103-5. The next IR cut in America will also set off an upwards rout and kick off higher oil, with some longer term effects on gold. Its a simple formulae and its mine! I need to make it more sophisticated tho, I'm interested to learn about how things like copper prices impact, given their indication of economic health, i.e. does a lower copper price indicate higher gold? etc. Anyway, like I said, its not financial advice, I'm looking for feedback from you guys.
7. planning4acrash said...
So, sell when oil goes down in price and interest rates go up (buy into the currency with higher interest rates) this will be dollar in the not so distance future. Buy when interest rates go down and oil prices go up, particularly if they breach all time highs and specific psychological thresholds. To do this you need good access to your funds, and real time access to information, i.e. you will need to have found out about the fed cut within 5mins of it hapenning and will need to have got onto a computer to transfer funds within 10mins to have benefited. I may be investing in a blackberry and business news text alerts!
8. techieman said...
p4crsh - you really confuse me. Last time you said "IF" i had a bullion vault account this is what i would have done". If i were you i would (and im not being flippant) just open an IGindex account (im not familiar with the Bullionvault or you could open that too) and trade the thing if thats what you want to do. I am seriously considering reducing my Core holding by about 40% at this level. If it continues the rally to 940 then another 10%. In fact lets forget considering it - i've just done it - sold @ $916. I dont even want to trade around this thing - I might be wrong but if i am .... i am, and to be honest all this talk is making me nervous! Now we could have a spike (by that i mean an increase straight up on the dailies of $100) and if that happens then i'm out of it all. Perhaps you Bulls are all right but i would just prefer some money in the bank - well maybe not the bank!:-).
9. cornishman said...
techieman - I've only got around 15% in gold. My thinking is that if it goes ballistic, I win some. If it plummets, the cash I've got increases its buying power. Who knows what will happen?
Where to keep the cash, that's the fun question!
10. techieman said...
Cornish - balanced view!! Nice one!
11. planning4acrash said...
techieman. I'm only just getting my head around all this. Am doing research testing bets in my head, seeing how the market works before betting actual money!
Another point. I see that oil will not go much lower than $90. So, we are quite safe buying gold when it is at that level. When oil goes close to $100, I am looking for the price plateau to sell before the fall back.