Posts Tagged ‘gold prices’

How Investors Get Suckered Time After Time

Dr. Paul viewed David Rosenberg’s chart picked up by Clusterstock as the "chart of the day" yesterday (posted here, with comments by Edward Harrison) and Paul concluded that this is not a good time to start buying gold.  Obviously, with the rise in gold prices over the last decade, there was a great decade-long trade opportunity. But prices go up and down, and past performance does not dictate future results.  - Ilene 

How Investors Get Suckered Time After Time

Courtesy of Dr. Paul Price at Beating Buffett

The following chart was published on Clusterstock yesterday with commentary explaining how this proved that stocks were no longer a good place to invest…

asset-class-returns-aug-2000-through-july-2010

As the S&P 500 was the only major asset class to have shown negative results over the past 10-years, they felt it was obvious that Gold, Long-term Bonds and Commodities would continue to be the best place for the next decade. In other wordsthe conclusion was that new money should be allocated to whatever had just finished going up the most!

I hear ads for gold every day shouting that, “I invested in gold 10 years ago and it’s the best decision I ever made.” “Gold has tripled since 2000. Get in now for the move to $3000 /oz.”

How many times have you made great profits buying something that just finished tripling? How did your real estate purchase in 2006 work out using that reasoning?

gold-price-charts-1975-1980-and-1980-1985 

The same ‘Gold Bug’ ads were running in 1979 – 1980 sucking people in right at the top as Gold briefly broke through $800 /oz. for the first time. The second chart shows the disastrous results for those who took the bait.

See the longer-term chart below to learn that it took about 30 years for Gold to regain its 1980 highs (without adjusting for inflation). Even at this week’s new all-time nominal high Gold is still well below the old peak. So much for Gold as an inflation hedge.

gold-price-charts-1975-2010-and-2000-20101 

gold-inflation-adjustedI look at the first chart presented and draw the opposite conclusion from the Clusterstock article. If stocks suffered through 10 years of negative returns they might be quite cheap considering all the revenue, earnings and book value growth that took place.

I’d be avoiding bonds and…
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THERE IS A HIGH PROBABILITY OF AN IRRATIONAL BUBBLE IN GOLD

THERE IS A HIGH PROBABILITY OF AN IRRATIONAL BUBBLE IN GOLD

Courtesy of The Pragmatic Capitalist 

Wrapped gift

Ben Bernanke is confused.  And no, it’s not just the monetary system that continues to confound him.  This time it’s gold prices.  During yesterday’s Congressional testimony Bernanke was asked about the surging price of gold and if that is a sign of no confidence in fiat currencies.  He responded:

“Well the signal that gold is sending is in some ways very different from what other asset prices are sending.  For example, the spread between nominal and inflation index bonds remains quite low – suggesting just 2% inflation over the next 10 years.  Other commodity prices have fallen recently quite severely including oil prices and food prices.  So gold is out there doing something different from the rest of the commodity group.  I don’t fully understand the movements in the gold price, but I do think there’s a great deal of uncertainty and anxiety in financial markets right now and some people believe that holding gold will be a hedge against the fact that they view many other investments as being risky and hard to predict at this point.”

Mr. Bernanke is no dummy.  I know I am a bit hard on him at times, but that is only because he is supposedly the Michael Jordan of the financial system so expectations are high.  Unfortunately, he has performed more like Luc Longley (no offense to the superb Aussie readers here).  Nonetheless, Mr. Bernanke understands that inflation pressures remain very low (even though he has failed to apply or promote the proper solution to our current balance sheet recession).  Aside from gold prices there are no signs of inflation in the economy.  But I believe gold prices are moving higher due to the public’s opposition to fiat currency, fiscal stimulus and what is generally viewed as continued “money printing”. This is highly irrational in the long-term in my opinion and creates the potential for gold to turn into a bubble is looking increasingly high.

Gold prices have surged this year as the Euro crisis has created increasing concerns over the viability of fiat money. I have previously discussed the great irony here.   Gold is viewed as a hedge against the potential collapse of paper currencies .  It is seen as the ultimate safe haven currency.  The Euro…
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Santelli talks about gold price suppression

Santelli talks about gold price suppression

Courtesy of Tim Iacono at The Mess That Greenspan Made

Skip to about the 7:45 mark to hear Rick Santelli say, "Central banks have to be petrified about gold going to $2,000! Didn’t Larry Summers write a paper saying that central banks have to keep a lid on the price of gold for obvious reasons?"

It keeps getting more and more interesting with nary a hint of the gold price faltering.

 


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No One is Buying Real Gold, They’re Just Betting On Higher Gold Prices

Sound familiar?  (Hint:  Goldman’s Global Oil Scam Passes the 50 Madoff Mark!, and Oil Manipulation Info.) – Ilene

No One is Buying Real Gold, They’re Just Betting On Higher Gold Prices

Courtesy of Joshua M Brown, The Reformed Broker 

buying gold - reformed broker 

Mainstreet USA

This is a remarkable story.  I am not calling for either higher or lower gold prices as this is a forecast-free blog.  I will say that depending on how you interpret the facts, your outlook, bullish or bearish, may change.

The LA Times offers us an interesting look at the divergence between the activity of gold speculators and that of the buyers of real gold, be it coins or jewelry.  The data is based on the third quarter 2009 versus Q3 ‘08…

From the LA Times:

Data from the World Gold Council show that the surge in the metal’s price to record highs ($1,146.40 an ounce as of Friday) hasn’t been accompanied by record purchases of the real thing.

The council’s report put total global purchases of gold in the quarter that ended Sept. 30 at 800.3 metric tons, down 34% from the 1,205.6 tons bought in the third quarter of 2008.

Buying was down in the third quarter versus a year earlier in every major category of gold consumption, including jewelry (the biggest single source of demand), industrial use, coins and purchases by exchange-traded funds.

Now this can be a price-demand issue, higher prices for the raw material keeping buyers away at the retail level…

Gold bought as jewelry, for example, reached 673.3 tons in the third quarter of 2008, when gold’s price was mostly below $900 an ounce. In the third quarter of this year, with the price mostly above $900 and on its way to $1,009 by the quarter’s end, the amount of the metal bought as jewelry totaled 473.5 tons, down 30%.

Surprisingly, while the US Mint is continuing to produce, some major mints around the world are holding back:

Interestingly, the Austrian government mint is betting otherwise, at least in the near term: The mint, the world’s biggest producer of gold coins, recently said it planned to cut output by 32% in 2010, figuring that an improving global financial system will slash gold demand from investors.

An analyst from Kitco Metals is calling the rally in gold entirely speculative…
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Phil's Favorites

Icahn Called BlackRock "An Extremely Dangerous Company"; the Fed Has Chosen It to Manage Its Corporate Bond Bailout Programs

Courtesy of Pam Martens

Carl Icahn Created a Cartoon About BlackRock and Its Junk Bond ETFs Going Over a Cliff

In 2015, the legendary Wall Street investor, Carl Icahn, called BlackRock “an extremely dangerous company.” (See video clip below.) Icahn was specifically talking about BlackRock’s packaging of junk bonds into Exchange Traded Funds (ETFs) and calling them “High Yield,” which the average American doesn’t understand is a junk-rated bond. The ETFs trade during market hours on the New York St...



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Kimble Charting Solutions

Tech Testing 9-Year Support, With Fear Levels At 2009 Highs!

Courtesy of Chris Kimble

Is an important Tech Index sending a bullish message to investors? It is making an attempt!

Does that mean a low in this important sector is in play? Humbly it is too soon to say at this time!

This chart looks at the Nasdaq Composite Index over the past 25-years on a monthly basis.

The index has spent the majority of the past 9-years inside of rising channel (1), as it has created a series of higher lows and higher highs. It created bearish reversal patterns in January & February as it was kissing the underside of the top of the channel and...



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Zero Hedge

Gold Is Now "Unobtanium"

Courtesy of ZeroHedge View original post here.

By now it becoming clear to many that demand for precious metals, as the world 'turns', is far outpacing supply as major gold suppliers and sellers exclaim "there is no gold."

One glance at APMEX pages and two things are immediately clear:

1) There is no gold or silver....

2) And if there is, the premium for physic...

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Insider Scoop

Amazon Warehouse Workers Plan Monday Walkout To Protest Lack Of Coronavirus Protection

Courtesy of Benzinga

Amazon.com Inc.'s (NASDAQ: AMZN) workers at the company's Staten Island warehouse are planning a mass walkout on Monday to protest against what they call a lack of protection provided during the novel coronavirus (COVID-19) pandemic.

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Biotech/COVID-19

The world before this coronavirus and after cannot be the same

 

The world before this coronavirus and after cannot be the same

Gettyimages

Courtesy of Ian Goldin, University of Oxford and Robert Muggah, Pontifical Catholic University of Rio de Janeiro (PUC-Rio)

With COVID-19 infections now evident in 176 countries, the pandemic is the most significant threat to humanity since the second world war. Then, as now, confidence in international cooperation and institutions plumbed new lows.

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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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The Technical Traders

These Index Charts Will Calm You Down

Courtesy of Technical Traders

I put together this video that will calm you down, because knowing where are within the stock market cycles, and the economy makes all the difference.

This is the worst time to be starting a business that’s for sure. I have talked about this is past videos and events I attended that bear markets are fantastic opportunities if you can retain your capital until late in the bear market cycle. If you can do this, you will find countless opportunities to invest money. From buying businesses, franchises, real estate, equipment, and stocks at a considerable discount that would make today’s prices look ridiculous (which they are).

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Chart School

Cycle Trading - Funny when it comes due

Courtesy of Read the Ticker

Non believers of cycles become fast believers when the heat of the moment is upon them.

Just has we have birthdays, so does the market, regular cycles of time and price. The market news of the cycle turn may change each time, but the time is regular. Markets are not a random walk.


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ValueWalk

Entrepreneurial activity and business ownership on the rise

By Jacob Wolinsky. Originally published at ValueWalk.

Indicating strong health of entrepreneurship, both entrepreneurial activity and established business ownership in the United States have trended upwards over the past 19 years, according to the 2019/2020 Global Entrepreneurship Monitor Global Report, released March 3rd in Miami at the GEM Annual Meeting.

Q4 2019 hedge fund letters, conferences and more

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Promotions

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TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

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Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Funny but probably true:

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.