Gold Prepares For The Big One

**GrimJack** · 07-03-2009, 07:27 PM

"casting dispersions"?? Ya think he could get an editor?

**conancare** · 07-03-2009, 11:53 PM

Hi Gavin,
I found it to be very informative and even i was looking for Gold ETF. Can you help me regarding it.

Regards,
Conan

**gavinmccallister** · 07-04-2009, 08:36 AM

Gold ETF's

**Broken Arrow** · 07-04-2009, 10:03 PM

Gavin! I remember you from back in the day. How've you been?

In the past, I've argued that perhaps precious metal was not the best bet to make, but nowadays, I agree the climate may be more appropriate to take a closer look at it....

Now, the thing I hope people will consider is that, gold right now is at a technical high (bobbing near the $1000 mark). That's why there was a V to begin with, because people set a sell limit at or near the $1000 mark. Could it break through the $1000 mark now? Maybe. Obviously, the authors in the link believe that it's a technical sign of a break out. But then, I think it's also possible that we may see a sign of a double peak resistance....

So, what's missing then, is some kind of forward fundamental suggesting that break out is not only possible, but also probable. I used to argue there were no fundamentals, but now, it's a different story, with the possibility of inflation, as well as the potential of another spike in oil commodities.

However, because it's back at an all-time high, in my personal opinion, the trading train has already left the station. If you hold precious metal ETFs, I'm thinking "Sell" at this point, not "Buy". A bird in the hand is better than two in the bush. If you don't own any, well, I don't think it's a good idea to buy in now....

Another thing to consider is that, while precious metal itself may be a commodity, a precious metal ETF is still technically an ETF. As in, the allocation in the quantity of actual precious metal that people are trading on is controlled by the ETF company. However, it is typically designed to mirror the price of physical precious metal itself as much as possible.

As I've said elsewhere, we should definitely look over their portfolio to make sure we have some kind of inflation hedge. If you wish, buying and holding some precious metal is as good as any, but these articles are predicting a MASSIVE technical breakout (seriously? $2250?)... and I don't know about that. The article anyway, did not mention any fundamental proof that breakout is likely to happen. Speculate at your own risk.

But that's my $0.02 anyway.

**swanson719** · 07-06-2009, 11:48 PM

Gold has the worst long term track record of any investment vehicle since 1801. It's entire gain has been made in the last 10 years, which is to say it's a bubble in itself so far. It might keep going up, more than likely given the decline in value of the dollar. I'd rather be owning real estate than gold at this point as a hedge against inflation. Nothing is paying a good return right now - even oil is dropping back down. So to say that gold is going to double in value from its current level is odd - there is nothing to support the increase in price. I think it will rise proportionally to the fall of the dollar, and if the dollar loses half it's value we're all hurting in a bad way anyway.

**conancare** · 07-07-2009, 01:25 AM

Hi swanson,
So investing in gold is never a bad deal but about gold ETF's, what is your view regarding gold ETF.

Regards,
Conan

**swanson719** · 07-07-2009, 02:17 AM

Conan, on the contrary, gold is always a bad investment. There is no real need for gold, it has no societal purpose other than vanity. It is not a consumable commodity by strict definition. Oil has a use, a real definable purpose that sets its price. Gold hedges against inflation because it is a psychologically driven price. To say that gold in any form, ETF or other, will exceed a rise that matches the percentage of decline in the dollar is crazy talk. We may see gold hit $1,400 or even $2,000 - but when the dollar comes back and the recession is over and we're not at war, gold will go back down to the level it was at in the mid '90s - between $400 and $600 an ounce. That's a step though - we've been at war for the past 8 years, and in a recession for the last 18 months or so. Look at the charts on gold from 1801 to 1991 and then from 1992 to current. Compare those to the stock market charts for the same period. You'll see that the gold spikes when the stock market hits it's valleys. They have a converse relationship. Hence why I wouldn't want to be holding onto gold when this market turns back to being a bull. It would seem infinitely wiser to spend your money on discounted stocks and mutual funds than on gold.

**Broken Arrow** · 07-07-2009, 06:30 AM

Did someone say tulips?

Ah, well, to be fair, precious metals isn't a bad addition to one's portfolio, as an inflation hedge. Should inflation suddenly skyrocket, you'll be able to maintain some of your current purchasing power.

But not knowing when and how much the inflation monster will rear its ugly head, I think it's best to just buy-and-hold.

As for speculations, one really do have to take commodity (gold bug) sites with a grain of salt, because they will always be bullish and claim massive rallies. Again, in fairness, sometimes there is some validity to the claims, and sometimes, there is not.

In this case though, it did not provide any proof other than a V on the chart. And to say, "This V means gold is going to double its asking price" seems, well, far-fetched....

**Broken Arrow** · 07-07-2009, 08:12 AM

The Iraqi Dinar has been brought up in the past, and back then, when the Desert Storm was still in effect, I didn't think it was a good idea either....

But since the IMF has been involved to help re-establish the currency (and de-dollarization)... well, I have to say, it doesn't seem like a bad idea now!

While it does appear that the slide has finally stopped, of course there is no guarantee that a reversal is in the works.

But that's Forex for ya. If you have the stomach for it, and the interest, now is the time to buy!

**shultice24** · 07-07-2009, 10:37 AM

No matter what your opinion is towards precious metals as an investment, I don't think you can deny the security of having some precious metals actually in your possession (rather than indirectly, like an ETF).

Do I think we're going to see an economic Armageddon? No, but that doesn't mean I don't feel a little bit more at ease knowing that I have some metals in my possession, safely locked away.

Like someone said, gold is pretty pointless if you think about it, but since it's universally accepted as a store of value that's protected against fiat currency, I'm going to hold some. I know the returns will probably be lousy over time compared to equities, especially since it doesn't produce any income, but I consider it more of an ultra-emergency fund than an investment.

**Alex_Adviser** · 07-13-2009, 02:42 AM

Thats a nice article in deed.

There are lots of good reasons to take a stake in gold, and right now the price is one of them.

Individual investors have been flocking to gold in a way they haven't for at least a generation. And the longer we worry about stocks, recession, inflation and government bailouts and spending, the higher gold can go.

**conancare** · 07-13-2009, 05:18 AM

Hi swanson ,
I agree with you but other than gold which investing instrument can we rely on. What you would do if you are having plenty of gold invested ?

Regards,
Conan

Gold Prepares For The Big One