Bye Bye Gold Nonsense

[J. J.]

Asian spot markets are showing a slight gold increase, around $5 per ounce.

Now just up by 2.70 on the Asians; it sure looks like the spike ended.

[J. J.]

Asian spot markets are showing a slight gold increase, around $5 per ounce.

Now just up by 2.70 on the Asians; it sure looks like the spike ended.

Now up over seven, but no surge.

[J. J.]

And now there is a surge.  Asian spot gold up $22 from NY close.  It looks like it is reacting to the Asian stock markets.

[Sam Spade]

Doesn't all of this just miss a simple point?  In particular, when something is in a bull market, you invest in it.

Gold is obviously in a bull market, and I don't see the mania phase yet (which almost always tops commodity bulls), so you invest.

The simple point as you put it is buying gold as a large part of your portfolio is pure speculation.  It is NOT investing.

What is a large part? 10%? 15%?  I would never invest more than 20% of anything I have in an investment, no matter how much I believe in it, unless I obtain cash flow from it.

Functionally, gold is a hedge.  A hedge against fear, and most importantly, a hedge right now against the surmise that paper currencies are worthless.  That does, in a certain sense, explain the huge attraction in Asia and other places with historically crappy currencies.  It also, from a fundamentals standpoint, explains the acceleration of the bull market in gold in the past 5 years or so.

Does that mean that gold is not a bubble?  No, it probably is a bubble.  What I do know is that gold is in a bull market, and when it convincingly broke the former high, you had to buy it for the ride.

Maybe the last couple of days is the beginning of the last parabolic spike I talked about.  Or maybe not.  The problem is with those last spikes - you never know where they end, except that they end badly.

[Beet]

Gold is a good investment unless you get a real deflationary depression. Right now, it is a good investment. I don't own any now, but I sold in order to go short speculative. Eventually it may crash if we start to see worldwide deflation.

[J. J.]

Asian spot is up 26.9, but off its high.  It is reacting to the Asian markets which can be reflective of Europe/America.

[J. J.]

Gold surging again, now up 41 in the Asian markets.

[J. J.]

Spot gold in Asia now at 1769.20, up 52 from close.  It is full surge, but it also the Asian markets.

[J. J.]

Now down to 1759.  Mercifully off its high.

Edit:  It seems to be market related in Asia; now down to 1753.

[J. J.]

Gold now at 1747, well off its high.

[J. J.]

Since this has come up repeatedly, I wanted to post the gold charts of 1979-80:





Basically, even if you bought gold at its pre September 1979 high, you still would have made money on it at any point in 1980, though not necessarily a lot.

Also consider that gold went from the about $220 low in 1979 to $850 high in 1980, or about 285%.  So far, we're seeing a high low gain in 2011 of just over 30%. 

The gain from 2010 low at about 65%.  Gold hit that percent mark of being 65% up from the 1978 low in May of 1979.

[I'm using the price of gold at $1730 per Tory Ounce.]

[J. J.]

I'd also call your attention to the mini crash in gold in October of 1979, about a 10% sell off.  I'd expect something of about a 5%-10% 2-4 week decline in gold before we're at the outer edge of the bubble.

[J. J.]

Gold currently at 1758.

[J. J.]

Gold currently at 1758.

Gold tumbling to 1726.

[J. J.]

Gold closed in NY at 1744.10.  I could see a 5%-10% correction.

[J. J.]

Gold is up to 1777.

[J. J.]

Gold closed at 1795.40, up 51.30.

This represents an 18.76% increase since July, and an Opebo Number increase of 26.92%.

[J. J.]

Gold down about 15 in the Asian spot.

[J. J.]

Gold opened down -14.  There could be some welcomed downward pressure today.  The gold market needs to correct.

[J. J.]

Gold down 20, showing weakness, finally.

[J. J.]

Gold down 40 to 1755.

[J. J.]

Gold down a bit to 1767.60.  Still a bit overpriced.

[opebo]

I have a gold anecdote - a colleague has about 2,000 dollars spare to invest and can borrow lots of money at a low rate from the credit union.  Her mom has made quite a profit (unrealized) on her gold - I guess she keeps around 50,000 of her retirement money in gold, a strange habit Southeast Asians have.  At least this old lady just buys 'gold stocks' as they call them here.. I'm not sure what it is, a way to play the gold market without having to lug the gold around.  I know another family here (Chinese-Thai of course) that reputedly has about one million US in real physical gold hidden in their huge fortress-like house.

So, anyway the daughter's been considering investing at least the 2K in gold and possibly borrowing another 8 or 10 to do the same! I basically said 'well far be it from me to interfere, but I wouldn't do it'.

[J. J.]

Unless you are planning to hold it for the short term, I would not advise anyone to buy gold at this point.

I think in the very short term, there will be a correction.

[J. J.]

Unless you are planning to hold it for the short term, I would not advise anyone to buy gold at this point.

I think in the very short term, there will be a correction.

Aaahhh... Here we go.  Here is the walk back.  Seeding threads with hedged statements in preparation for the coming gold calamity.  I love it.  Let the squirming begin.  Let me get a good seat.

Aaahh, what "walk back?"  I've been saying it for a while.  I think gold will have hit $2000 per ounce by April.  I never said it would stay there.

I've been saying it would above its June 30, 2011 close on June 30, 2012.

Can't you read?

In that respect, if you have bought gold already, it is good to hold now.  If you are looking for gold as a short term investment, selling it sometime within a year, it's a good investment.  If you are looking for a shorter term investment will be a better investment over the next several weeks, than today.

I said four days ago:

Prediction:  on 12/30/11, gold will close between $1770 and $1850 per Troy Ounce.

I stand by it.