Thread: Gold and the Market

Originally Posted by Mike

I like going off topic...
Here's an explanation on what impacts the gold price: http://www.cupel.com/gold_price.html

Here are charts on the price of gold:
http://www.usagold.com/gold-price.html

Looks like a 5 yr bull market to me... given the inflation data combined with the fact that inflation keeps creeping up after the Fed finishes with rate-hikes, I think there's still several months to go at the minimum, and probably a year to a year and a half at the long end. It all hinges on how aggressive the Fed is going to be and how quickly they can clamp down on inflationary pressures. They've been ineffective thus far, and there's no reason to believe that will change anytime soon.

Tom, I share your concern with a gold bull and a stock bull coexisting... however, it has happened in the past. Gold went up about 10% in 2003 while the stock market took off. Interestingly, after the ugly inflation data when the PPI was released, gold sold off and bonds rallied. More proof that once you think this stuff is easy to figure out... it isn't.

Mike,

It just goes to show you how much speculation is in the price of gold right now. Oil as well, for that matter.

Tom

Speculation is the cornerstone of every market. Even long-term investors are speculating to some degree. It all boils down to what you *think* will happen during the time you are in the market. If you think a company is going to tank, you short its stock. If you think its profits / earnings will outperform the estimates, you go long. The same thing applies to the overall market and the economy. Economy going in the toilet? Short the indices or go to bonds. Economic boom coming? Go long with everything you have.

Whether your horizon is one year, one month, a decade... it's all guesswork.

As for today - gold, oil, and the market all rose strongly. Interesting.

Gold up big today. Good call Mike.

And since nobody ever listens to me, I'm sure nobody here profited from it either.

Case in point: I didn't listen to myself for awhile and waited 'til the middle of trading on Friday to take a position in GLD - the stupid ETF was almost perfectly flat after that.

Gold's up another $27 so far today. Now you're just showing off Mike

...Ouch for inflation concerns.

Originally Posted by tsptalk

Gold's up another $27 so far today. Now you're just showing off Mike

I think it'll run up close to its old high again. The fundamentals are there. We have a pervasive fear of conflict with Iran over their nuclear program, and just for kicks, the North Koreans threatened nuclear retaliation if we attack them pre-emptively. Then there's the Israeli-Palestinian situation spiraling out of control. If these weren't enough, I believe that inflation data going forward will continue to be at least as bad as what we've seen thus far (note: I don't think that it's really "bad", but the Fed does, and that's all that matters in this discussion, since investors care about the Fed policy).

Why will inflation continue to be a problem? Simple. The government's own calculations all but guarantee it. Excluding home prices while including rent? That should tell you what you need to know - we saw none of the inflationary run-up that should've run parallel to the overheating real estate market of the past five years. We are going to see it now - with mortgage interest rates climbing back toward historical norms, fewer people will buy houses and more will opt to rent instead. That will drive rental prices up which will show up in the inflation data. There's also continued high commodity and energy prices. Yes, commodities sold off awhile ago, but they're climbing back up. These things will work their way into the overall price level.

Since the market looks ahead about 6 months, I figure gold's run will end right around the last Fed rate hike, since inflation seems to lag the Fed by a few months (so when they're done hiking, inflation will also be "done" a few months later - and gold's usefulness as a hedge will be at an end - unless we go to war with Iran, but that's another issue).

This could all be just a bunch of hooey and mindless speculation, but I don't think that it is. FWIW, a high jobs number Friday sends gold into the stratosphere.

GLD opened at $58 on 6/29/06.
GLD closed at $63.81 yesterday.

+10% in less than two weeks.

Bet on Gold Not Funny Money article by Rich Dad author

Actually, I agree with him and think this actually points us toward I-fund more and more.

Eh, gold.

A look at the ETF fund in commodities -- i shares -- show the weighting of gold to be fairly low. Oil, one the other hand, has a very large weighting, about 75%.

Recently another analyst on msn.com --Junak is his name, I believe -- has changed his investment strategy by with a very bullish stand on gold. It is a big shift for him. Along with his recommendations is a record of his past performance, and supposedly he has greatly outperformed the indices.

There is another analyst on msn.com who is also bearish, but his name escapes me.


The analyst I respect most is Bob Brinker, and as of now he is not bearish.

For those worried about investment returns, even now one of the better choices is simply to make extra payments on the mortgage. The interest paid on the loan is front-loaded to the extreme. And figuring the interest due compared to the principle is a real eye opener -- you won't get that kind of return anywhere ... anywhere within the law that is.

Gold Hits Record $900 an Ounce
NEW YORK - Gold futures briefly rose above $900 an ounce Friday for the first time as high oil prices, a weak dollar and fears of a U.S. recession led uneasy investors to keep buying the precious metal. An ounce of gold for February delivery on the New York Mercantile Exchange jumped $6.50 to $900.10 in morning trading, an all-time high and a psychologically important milestone. Gold later slipped to $898.70 an ounce on profit-taking but remained in record territory.
http://www.newsday.com/business/nati...,1270731.story

According to PermaGoldBull Dennis Gartman,

"It appears that the dollar is strengthening, and it appears that gold has a good deal to fall."

http://www.bloomberg.com/apps/news?p...d=a4LXGWKHVYHQ