Gold Bugs Unite

[Blaupanzer]

Silver has broken American hearts for more than a century now. It's always about to take off, but it never does. Stay away.

Gold on the other hand has gone from $35 an ounce to $1000 an ounce (inflation factors in here) in the last 40 years. Any currency devaluation benefits the physical holders of gold and selected jewels. (Diamonds are not one of those jewels. The value of diamonds is determined by a collaborative market controlled by DeBeers. Diamonds are worth what they say they are, whatever the supply and demand.) Rubies and emeralds, especially, follow the pattern of gold in relation to currencies.

[Seeker]

Approaching another big selling point for goldielockses.

I don't think it will actually reach over 1000 again this year, but I'd say 980 is a good round number to get out again, and hope for another dip below 900 if the gods are very very kind.

Remember that you can have the equivalent of a 'stop loss' order with gold by just leaving instructions with whatever institution is holding your physically allocated gold.

A thousand was a good call last time, but I don't think we'll quite make it before it gets pasted again by that those silly IMF announcements (we're selling our gold; oh wait it needs Congressional approval which they haven't had in decades; it's ridiculous how they can dive the price just by announcing an intention to do something that they never actually follow through with).

Long term, Bernanke still hates the dollar, so that's good. I don't set price targets as a 'top' but fundamentally, given that investment demand has now outstripped jewelry demand I'd say that gold traditional function of being a way to say '**** off' to central bankers is still holding true at least 'til now.

My big signal to get out and stay out will be a return to 4%+ interest rates.....but it seems that won't be for a while!

[Seeker]

980 that fast!!?

Selling...major sell signal to all goldies.

I strongly suspect the next dip will be a big 'un and shake out a lot of folks. Might even go as low as 680 according to some, but I wouldn't wait for it. I would suggest re-entry at 920 or thereabouts

A gift from the gold gods!

[Felch]

Gold was around 300-400 just a few years ago. I remember pointing out to a buddy that good weed was literally worth its weight in gold (well not exactly considering troy vs. avoirdupois ounces). I'm glad you made money off of it, but it's hardly a long term store of value.

I just looked up how to spell avoirdupois, and came on the wikipedia article for it. I decided I'm going to get into selling weed by the dram. Just to **** with people.

[Blaupanzer]

Felch, what are the visiting hours at the prison you'll end up in if you screw with the customers buying an illegal product? You live in one of the most conservative cities in America, and brag about this trade? You must be crazy! We all are a little tilted, but most of us are quiet about how far gone we are.

[Asher]

http://www.theglobeandmail.com/globe-investor/investment-ideas/for-canadians-gold-isnt-glittering/article1166228/

For Canadians, gold isn't glittering

Now that gold is rising again, is it time to load up on the precious metal?

Gold bugs always seem convinced of two things: The financial world is on the brink of collapse, and the price of gold is about to shoot to $2,000 (U.S.) or $3,000 an ounce.

Now that gold is rising again, is it time to load up on the precious metal? And if you decide to buy gold, how much exposure should you have?

Before you stock your basement with gold bars and ammunition, let's provide some context by looking at how gold has performed over various periods.

GOLD IS SURGING - FOR SOME

With the U.S. dollar sinking amid fears that massive government spending will unleash inflation, gold - an inflation hedge - has been on a roll lately. It's up 11.3 per cent this year, with futures closing yesterday at $984.40.

But because gold is priced in U.S. dollars, which have been plunging relative to the loonie, Canadian investors have missed out on those gains. In Canadian dollars, gold is down 1.5 per cent this year.

If the loonie keeps rising as many analysts expect, that will blunt gold's rise for Canadians.

It's true that gold has delivered strong returns over longer periods, even after taking into account currency fluctuations. Gold has more than doubled in Canadian dollars in the past decade, and more than tripled in U.S. currency.

But over really long periods, gold hasn't exactly glittered.

In his book, Stocks for the Long Run, Wharton finance professor Jeremy Siegel calculated that a dollar (U.S.) invested in gold way back in 1802 would have grown to just $1.95 by 2006, adjusting for inflation.

A dollar invested in stocks, on the other hand, would have grown to an inflation-adjusted $755,163, including reinvested dividends. So, while gold has its moments, stocks are the clear winner over time.

"Whatever hedging property precious metals possess, holding these assets will exert a considerable drag on the return of a long-term investor's portfolio," Mr. Siegel concluded.

GOLD AS INSURANCE

Fans of gold point to trillions in stimulus and bailout spending around the world, which they say will ignite inflation and devalue paper currencies. In that case, they say, you'll want to own some gold to preserve your wealth.

"The main reason we're holding it is more or less as a hedge, or insurance, against what we perceive as being some of the massive problems that may be created from all the deficit spending globally," said Michael Sprung, president of Sprung & Co. Investment Counsel, which owns shares of gold miner Goldcorp.

But investors shouldn't go overboard with gold, he said. About 5 per cent of one's portfolio is "reasonable," he said.

Others see no reason for Canadians to invest in gold. Because Canada produces oil and other commodities that rise with inflation, "owning Canadian dollar assets is a bit of an inflation hedge longer term," said Todd Johnson, associate portfolio manager with BCV Asset Management.

What's more, for all the talk about paper currency becoming worthless, until people actually start buying and selling goods and services with gold he'll remain skeptical. "If you look at what you need in retirement, you need dollars," not gold, he said.

MANY OPTIONS

If owning some gold gives you that warm and fuzzy feeling as you brace for global calamity, there are a number of ways to get your fix, each with its own advantages and disadvantages. Next week we'll look at these options in detail.

[Riesstiu IV]

You think gold will be worth anything when America degenerates into warlordism after Obama makes being a Caucasian male illegal? Hello no!

If you want a good investment in these troubling times, you should seriously consider an armory with assault rifles, grenades, and rpgs; an underground walk-in freezer able to store hundreds of MREs, a generator, a small well, and a fortified concrete bunker.

Of course, your probably going to rack up massive credit card debt but when those creditors come knocking at your door, they won't know what hit 'em.

[DanS]

Gold's fine as a modest part of a large portfolio, depending on your investment goals and age. Physical gold has a lot of transaction costs and other attributes that make it hard to deal with for those with small portfolios.

Probably most Polytubbies should stay away.

[Lorizael]

You think gold will be worth anything when America degenerates into warlordism after Obama makes being a Caucasian male illegal? Hello no!

If you want a good investment in these troubling times, you should seriously consider an armory with assault rifles, grenades, and rpgs; an underground walk-in freezer able to store hundreds of MREs, a generator, a small well, and a fortified concrete bunker.

Of course, your probably going to rack up massive credit card debt but when those creditors come knocking at your door, they won't know what hit 'em.

The best part about underground walk-in freezers is that they store the genetic material of idiots so we know what to avoid in the future.

[Riesstiu IV]

Are you saying there is a flaw in my plan?

[Felch]

Felch, what are the visiting hours at the prison you'll end up in if you screw with the customers buying an illegal product? You live in one of the most conservative cities in America, and brag about this trade? You must be crazy! We all are a little tilted, but most of us are quiet about how far gone we are.

The guy I was talking about is spending some time in a federal facility right now. Apparently driving a car to Philly, loading it with drugs, and driving it down to Maryland is some sort of crime. Who knew?

[Ben Kenobi]

How can I motivate my unruly silver brick?

Add mercury. Then you don't have slow silver, but quicksilver.

[Seeker]

So not much in the way of surprised here for goldbugs.

We didn't get the big drop in gold that I was expecting, lol I was hoping for it to stay in the 800s for a while.

Anyhow, if you believe in that sort of crap 1005 is a strong 'resistance number' for gold, but more importantly it is psychologically overbought.

I would strongly urge fellow gold bugs NOT to buy gold now, but sell into silver or cash and get back in in October when we should have a good correction (at least that's my general impression gathered from gold investor websites).

Congratulations to all who bought over the summer and are selling now, at over $1001 USD!

But the best times are still ahead.

[Riesstiu IV]

Are you saying there is a flaw in my plan?

I must admit that my post-apocalyptic/second coming of Jesus prayer and salvation bunker with electrified fence and minefield defense grid to keep the godless ivory tower liberals and homos out was not built at the most prudent time.

[MRT144]

Whatever you do, don't go paper gold, if you insist on gold at all.