Wednesday, December 19, 2007

When Metal Floats – and Paper Sinks

Only Gold Can Beat the Credit Crunch

The 'knife' that carved this gash into the financial system's was the jagged blade of monetary reality: the realization that debt cannot be piled on debt forever. To no one's surprise, the band aid wasn't big enough. The bleeding of red ink continues, and the life-draining fluid is carried onward by deep sea currents in the ocean of profligate credit

Posted by sold 2 rent 1 @ 03:35 PM (1426 views)
Please complete the required fields.



13 thoughts on “When Metal Floats – and Paper Sinks

  • Yes the downside breakout of the triangle / pennant argues for a breakout to the upside from the green up “false breakout” arrow. The move up in Tech analysis should be the width of the triangle (at its largest point) projected from that green low. Normally i’d be happy with this but the downside b/out was a bit feeble, no stops were run that i could determine. Also the HUI – as he shows look like a head and shoulders top. So all in all personally I’d be looking for more of a (false) b/out to the downside before getting in. If i miss it (which looks possible) – well so be it!

    I posted a while back about the SG warrants – see http://uk.warrants.com/services/quotes/details.php?code=SG43 . That gives a tradable 4 year participation in gold with a 170% loading of the price and some downside protection. Caveat Emptor.

    Reply
    Please complete the required fields.



  • rocket robbie says:

    s2r1

    Since you recommended i invest in gold i have noticed the share prices have gone done steadily for the past few weeks. What do you think will change the trend?

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    rocket,

    Read this
    2008 Fundamental and Technical Review for Gold and Gold Stocks
    http://www.safehaven.com/article-9059.htm

    Gold/gold stocks may have further to fall.
    I think the EUR is seen as the safe haven and once the EUR/USD rate peaks at 1.50 – 160 (in the next 3 months) then gold should go through the roof.

    Reply
    Please complete the required fields.



  • Can anyone point to a independent review of technical analysis, such as this, that provides above market returns? Without that, it’s just pretty shapes on graphs.

    Here’s another one for you:

    http://ftalphaville.ft.com/blog/2007/12/17/9690/subprime-warning-signs-were-made-of-cheese/

    Reply
    Please complete the required fields.



  • planning4acrash says:

    Sure, but I only see Gold as a short term hedge. Buy it when it soars, and bail out as soon as it looks like peaking out. Play the fluctuations. It is not a long term investment because you don’t get returns on it and it is very volatile.

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    planning4acrash,

    I have to disagree. Trading gold is very difficult because of its volatility.

    Gold will be a bubble just like the Nasdaq 2000 because it is the number one safe haven.
    We are not there yet. It is still another 3-5 years away

    The time to sell gold is when your mum’s hairdresser is buying it.

    Reply
    Please complete the required fields.



  • @s2r1 – Gold has been treading water in the $780-850 range for the last few months. I’d expect it to break out of that range in the first quarter of next year, as the financial storm worsens. I’m buying now rather than waiting to miss the boat! There was an excellent article in MoneyWeek this morning:
    MoneyWeek: Why gold could hit $1,100 an ounce this year [2008]

    @robbie – Gold shares and gold itself aren’t always neatly correlated. A gold mine can see rising costs due to rising oil prices, rising machinery prices, and rising wages (food prices are climbing and miners need to eat). Also a number of gold mines are located in less stable countries, places where the government might decide to impose a windfall tax on mine output. If that sounds far-fetched remember that in 2005 Gordon Brown doubled the tax on the black gold of north sea oil. BBC News: Brown doubles North Sea oil tax

    @p4ac: I’m not keen on playing the fluctuations – I like to buy and hold for the medium term. Each to their own though. I think gold is likely to go much higher and stay high for a couple of years, before (possibly) returning to lower levels again. That’s what happened circa 1980 when inflation was high.

    @techieman – Those SG warrants look interesting, thanks. Do you have to hold them for a full four years?

    Reply
    Please complete the required fields.



  • japanese uncle says:

    Men on the street with no interest in speculation nor investment will have to face a prohibitive bill when he receives dental treatment simply because of the fluctuating gold price. What a sin!

    Reply
    Please complete the required fields.



  • @JU – you can make dental fillings from many materials, not just gold. Composite fillings are generally made out of silicon dioxide and oil-based plastic-type materials. Other options inclue mercury/silver alloys (“amalgam”), glass ionomer cement (again mainly silica), zirconium-oxide, etc – the list is fairly lengthy. Gold fillings have been falling out of favour for a long time now.

    Reply
    Please complete the required fields.



  • @drew -yes they are tradeable in effect they are shares – so you pay a broker but no stamp duty . Take a look at the pdfs.

    Reply
    Please complete the required fields.



  • Thanks techie, just had a look at those PDFs. It reminds me of the guaranteed FTSE-tracker bonds which offer 120% of the FTSE 100’s growth and a capital guarantee too – the catch with those is that you don’t get any dividend. Gold doesn’t pay a dividend anyway so these warrants seem to offer better value. The only catch I can see is that they “shield” you from currency fluctuations, so basically you’re relying on further dollar weakness. I’m expecting the pound to fall again relative to the dollar (it has never held $2:£1 for long in the past). This certainly looks like a sound investment! Thanks again for finding it.

    Reply
    Please complete the required fields.



  • Verymeanreversion says:

    >The time to sell gold is when your mum’s hairdresser is buying it.

    My hairdresser buys gold jewellery (£1K+ items) for investment rather than for personal use. Has been doing so for years.

    VMR.

    Reply
    Please complete the required fields.



  • Yep – Drewster you’re right as the spot price is denominated in dollars. I struck me as a little too good to be true – those clever frenchies :-). I take it this is a “good” derivative?? ;-).

    Reply
    Please complete the required fields.



Add a comment

  • 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

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>