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urban_hymn

Merrill Lynch Gold And General

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I'm in a bit of a quandry. I have a rather checkered track record in investing, having a good nose for companies that subsequently go bust. However, the performance of my latest investment has been stupendous.

On the 25th April this year I invested my full ISA allowance of £7000 in Merrill Lynch Gold and General via the Fidelity Fund Supermarket.

Checking today, I see the value of this investment is now £9,558.17.

This performance has dwarfed my own stockpicking attempts but has presented me with an agonising decision as to whether to buy more. You would think that it would be a no brainer but it would mean me being in gold considerably more than this 5% figure that is touted about so much.

Are these special times that would warrant being in gold up to say 50% of one's portfolio?

Are gold stocks more stock like or gold like in their behaviour? What's the worst reverse that could befall someone who piled in too enthusiastically (provided they kept a daily close watch)?

Would appreciate some views from people in the same boat!

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Are gold stocks more stock like or gold like in their behaviour?

They are not like either. Gold stocks tend to crash up for say 3 months to less than a year and then spend two or three times as long grinding back down. Sort of a 8 steps up 6 back.

What's the worst reverse that could befall someone who piled in too enthusiastically (provided they kept a daily close watch)?

The US$ gold price is the like the leader of the pack with the stocks overreacting to it. The thing to look at is the ratio between gold stocks and gold. When it been trending down and turns up its usually the time to buy.

Get a longer term version of one of this chart of the XAU to gold:

http://stockcharts.com/def/servlet/SC.web?...U:$GOLD,uu[m,a]waclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G

When the ratio has been trending up for a while it usually not such a good time to buy in.

Edited by Lurker at the pleasuredome

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Thanks cgnao, lurker - lots of technicals to get my head around!

I wish the pro gold argument was more "battle tested" Nearly everyone posting here seems to be a gold bull. "Whenever everyone's on the same side of a trade etc....." but I suppose in the wider world, gold bugs are a very small minority?

I've never been early at any bull market before. I got into tech stocks late, ouch! That's why I'm hyper sensitive to bubbles of any kind.

I can't see that gold is anything like a "punters" bubble yet or ever would be. Loads of people feel comfortable speculating in property, some have a notion about shares but gold would be a bull market fuelled by institutional money, pro investors?

BTW would it be true to say that bull markets in stocks are not the result of the Tuesday night shareclub at the Red Lion deciding to buy Tadpole Technologies etc. Individual investors just don't have the firepower to move any stock or index?

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I've never been early at any bull market before. I got into tech stocks late, ouch! That's why I'm hyper sensitive to bubbles of any kind.

This is how bubbles start, one little bit at a time, I think gold is going to form a series of bubbles.

You are asking some good questions and I don't have all the answers. It's a moving target. You seem to asking is this 'time to be brave'. I have what I call my 'work back method' of thinking. I ask where are we now and what was the last really good entry point, how far below was it in price and time.

What might be called the first leg of this bull market was from 2001 to Dec 2003. That's three years. Since Dec 2003 we have been in a sideways consolidation pattern. That was about 18 months. It appears to have transitioned to the next upleg somewhere between May to August.

So in theory (alarm word) we could be 2 to 4 months into a major upleg. On that count it could be time to be brave. Adding to the weight of evidence that this upleg is not going to end here is the dramatic increase in volume.

A good entry point on the XAU is when there is a turn up from above a flat or gently rising 30 week moving average. (Hint read Stan Weinstein's book) So the last clear entry point was 2 months ago at 94 on the xau, this level held on a pullback 1 month ago. So provided you are prepared to ride out a potential downturn towards say 100 it should be ok to buy.

Im inclined to be cautious in answering your question but on the other hand you did want to know if this could be time to act.

And anticipating you might want to sell someday, the signal is after a major move up and the gold price goes up and the shares don't follow. That would mean the ratio between gold shares and gold has turned down. When that happens sell, stay away until there is there is a clear capitulation on the downside.

Edited by Lurker at the pleasuredome

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First of all,congratulations on the performance.

you'll probably be the first to admit being lucky,but so are many of the BTL's who think they have discovered some new business accumen....but can't face facts that they were in the right place at the right time.

...the difference is you admit that you got stung badly with tech,and hopefully have done a bit of a stocktake in the process.....similar situation to mine,except I watched bloomberg relentlessly for 3 years and got profit from tech by selling into ralles and averaging down the rest.

....I too lost the nerve for direct share trading after that and decided funds was the way to go(JPMF nat resource running since 03 has been awesome!,and the jap fund I switched into about 6 weeks ago is doing well,but I'm still awaiting the currency adjustment to really kick ass!)

WRT lurkers comment on gold,in principle I agree with what he is saying(this is probably a 15 year bull market,on the cusp of a bit of a pullback,but this is only phase 1)....so anything more like a war or higher GLOBAL growth will trigger phase 2 up-leg.watch the oil price.....I think it will be heading down briefly,but this will only be short term,so treat any corresponding decline in gold as a chance to buy in.......preferably below $460/oz.

in a way I feel a bit sorry for BTL,they are merely showing they are a one-trick pony,and unwilling to be brutal about their investments....if it don't make money,bin it....quick!

Edited by oracle

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in a way I feel a bit sorry for BTL,they are merely showing they are a one-trick pony,and unwilling to be brutal about their investments....if it don't make money,bin it....quick!

Right place, right time for once, you're correct but it's nothing more than I deserve!

:rolleyes:

At the correct time in their respective cycles, being long equities, being long gold can be very rewarding but neither can compare even remotely with timing the house price cycle correctly.

The cheerful way lenders will let you gear up massively and the benefits of living in your investment at the same time make correctly timed STR a dream. Doubling (say) your ungeared investment in gold can't compare!

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congrats urban hymn,

I 'only' made ~20% on my investment in the same fund earlier this year (invested in MArch 05), and I supopse too, I was there at the right time in the right investment (thanks to this forum !!!).

I think I i will invest more in gold if I feel the time is right (once the price has been declined for a while) but I certainly don't think it is a safe bet. sometimes you just need to be a bit lucky too...

I am in there for the long run.

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congrats urban hymn,

Thanks, actually the gains on gold are subsiding my spread betting clangers!

Gold appeals to me because it has so many detractors. You never hear of oil bugs, or utilities bugs. So many people are scornful of it that it gives me confidence!

So you're in it for the long term Uforia? whether it goes up or down?

Buy and hold is not for me. I know some people stick their chests out and advocate "buy and hold for ten years" but that just seems reckless to me, so much can happen in that time frame.

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Sell half, and try to outperform ML with your own stock-picking

Who? Me? :) I no longer trust my stockpicking abilities to be honest, unless picking gold stocks will be like shooting fish in a barrel before long!

I bought gold fund because I was persuaded from my own research that we are in a long term gold bull market. If I sell now because historically early October is a good time to sell then that makes me a trader and I know from experience that I'm not a good trader. I'm always behind the action - too late in, too late out.

I'll take a look at some HUI/XAU charts and see if it makes sense!

There's a little streak of the backwoodsman in me and I wanted some way to play my gut instinct that something big is going to happen one day on account of the the huge U.S. budget and trade deficits.

Selling my beloved gold fund in October kind of abandons that bigger picture.

I don't know whether North American stocks are "ISAble" but someone on here is bound to know.

Doc B. keep up the WMPY updates - I'm going to get my money back one day and I need all the info. I can get!

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I'm in a bit of a quandry. I have a rather checkered track record in investing, having a good nose for companies that subsequently go bust. However, the performance of my latest investment has been stupendous.

On the 25th April this year I invested my full ISA allowance of £7000 in Merrill Lynch Gold and General via the Fidelity Fund Supermarket.

Checking today, I see the value of this investment is now £9,558.17.

Well done! I am thinking of entering this fund too. What were your upfront costs to buy your position in the fund?

Thanks,

Silverity.

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Well done! I am thinking of entering this fund too. What were your upfront costs to buy your position in the fund?

Thanks,

Silverity.

Through FundsNetwork - 0.50% ISA, 1.25% non ISA

R.

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