Guys....forget about charts...."gap filling", "double cup formations", and any o
gecko109
Posts: 8,231 ✭
Dont watch daily, weekly, or even monthly precious metals charts. "Back filling", and "tea cup" terms are for pansies.
When deciding when to buy gold or silver bullion, the only chart that matters is this one:
When deciding when to buy gold or silver bullion, the only chart that matters is this one:
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Comments
Knowledge is the enemy of fear
–John Adams, 1826
<< <i>AMEN to that, brother. Just tell me when it's time to hold, buy more or sell it all and I'm happy.
Time to buy gold, from me.
In all seriousness, stackers should be learning to make these decisions for themselves based on their own study and understanding of the markets.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
One problem, the chart shows a 65-70% incline/upward slope during the 1980- 1995 period and yet Gold tanked during that time frame.
So does that teach us to buy the big long term dips in Gold and Sell the What?
<< <i>AMEN to that, brother. Just tell me when it's time to hold, buy more or sell it all, *be correct 80% of the time*, and I'm happy.
**Semi-official correction
Forum AdministratorPSA & PSA/DNA ForumModerator@collectors.com | p 800.325.1121 | PSAcard.com
Then, what next? Think ahead.
I knew it would happen.
Fourth point and perhaps most important is that fundamentals will never get a person out at the top. Fundamental indicators such as the debt, the deficit, will look very good for gold at the major market top. Virtually no one investing on fundamentals is going to want to sell at the top.
<< <i>Gecko,
One problem, the chart shows a 65-70% incline/upward slope during the 1980- 1995 period and yet Gold tanked during that time frame.
So does that teach us to buy the big long term dips in Gold and Sell the What?
You can use a tiny slice in time thats conveinent for your argument and make it look real good. I can too.....look at 1995-2010 on the chart. How did gold do then? The secret is thinking LONG TERM, and thats something that watching monthly PM graphs and charts dont help alot with.
That's a very true and thought-provoking observation. Let's think about it for a minute...
Fundamentals may have gotten us into a solid precious metals position. We can all see what's happening, and the differences of opinion in how to proceed are what constitutes the debate over debt. It's painfully obvious that the fundamental issue with unsustainable debt levels will inevitably lead to some sort of default.
So, is the default going to be manifested by hyperinflation or by a "re-set" of all debt obligations and all of the "3rd rail" entitlement programs?
In your opinion, what would be the ultimate "sell signal" for precious metals? Will it be an actual technical indicator, a political one, or will it be something else?
I knew it would happen.
When deciding when to buy gold or silver bullion, the only chart that matters is this one:
According to that chart one should have been loading up on gold from 1980-2000. And fundamentally that was probably true. But per the technicals it was a disaster.
How did that work out for those who were say 50-60 yrs old in 1980? I took the simplest route and jumped in during 2002 when Sinclair said it was safe again to re-enter.
It didn't hurt that gold was $310, stocks were in the toilet, and even then otc derivatives had already grown to around $200 TRILL, enough to destroy the financial system.
roadrunner
<< <i>Dont watch daily, weekly, or even monthly precious metals charts. "Back filling", and "tea cup" terms are for pansies.
When deciding when to buy gold or silver bullion, the only chart that matters is this one:
According to that chart one should have been loading up on gold from 1980-2000. How did that work out for ya?
roadrunner >>
Other factors had to do with that, mainly I think everyone never thought that eventually politicians would become so dam reckless. I think everyone thought that we would eventually get our deficit under control and the economy would grow out of the problem - simply ain't gonna happen the way it's going and of course the rising gold price is a reflection of that.
From May 2, 1933 until yesterday's close, the DOW is up by a factor of 144.1x, from 77.29 to 11,139.30. This does not include dividends.
<< <i>A couple of points, as has been discussed many times, short term traders have a different mentality from long term stackers. Second point is that most of the retail demand is now from Asia, which makes that particular chart a side-show. The U.S. debt and deficit may be important for U.S. centric folks, but Americans are now probably less than half the retail demand. Third point that I've made many times, is the best time to buy gold in recent memory was the last time the U.S. federal government reported a surplus in 1999, and that debt chart was flat.
Fourth point and perhaps most important is that fundamentals will never get a person out at the top. Fundamental indicators such as the debt, the deficit, will look very good for gold at the major market top. Virtually no one investing on fundamentals is going to want to sell at the top. >>
With current accounting practices I don't know who can invest on fundamentals. It's been like this since before the dot-com era. I guess trending and momentum are your "friends."
I wholly agree, but I sure wish we had a fool proof "GET ME OUT AT THE TOP" tool. Don't We All.
Now hold on a bit there, 1980-1995, I don't consider that a small time period, I gained a many wrinkle
during that time, "every time I looked in the mirror all those lines on my face gettin clearer- the past is gone"
<< <i>In your opinion, what would be the ultimate "sell signal" for precious metals? Will it be an actual technical indicator, a political one, or will it be something else? >>
Historically, it has been when the DJIA to gold is about 1:1. As that nears I will be looking for a top with which to exit gold.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>From May 2, 1933 until yesterday's close, gold is up by a factor of 53.5x, from 35 to 1873.60.
From May 2, 1933 until yesterday's close, the DOW is up by a factor of 144.1x, from 77.29 to 11,139.30. This does not include dividends. >>
It also doesn't include that the price of gold was generally fixed until August 1971. The G7 realized in the early 1960's that gold was headed
up regardless if it had a publically "fixed" price. So they formed the London Gold Pool from 1961-1968 and sold thousands of tonnes of gold into the market
to suppress its price to keep the alarms bells from sounding. Note that they didn't do this with silver which then saw more than doubling in price by 1967.
I'd like to see the original Dow vs Gold comparison performed from 1971 to 2011. The debt-money system of the past 40 yrs really needs to be analyzed
on its own terms. One can even say the last 10-15 years are also unique unto themselves.
roadrunner
<< <i>From May 2, 1933 until yesterday's close, gold is up by a factor of 53.5x, from 35 to 1873.60.
From May 2, 1933 until yesterday's close, the DOW is up by a factor of 144.1x, from 77.29 to 11,139.30. This does not include dividends. >>
Is that the same DOW that periodically replaces underperforming companies with more profitable ones?
<< <i>
<< <i>From May 2, 1933 until yesterday's close, gold is up by a factor of 53.5x, from 35 to 1873.60.
From May 2, 1933 until yesterday's close, the DOW is up by a factor of 144.1x, from 77.29 to 11,139.30. This does not include dividends. >>
Is that the same DOW that periodically replaces underperforming companies with more profitable ones?
Let's not forget bailouts too
Get that U.S. debt chart in front of you on your screen. Grab a sheet of paper. Cover the chart from 1981-present with that sheet of paper. Look at the remaining portion of the chart. Look like there might be any cause for concern there? Not really......so the gold explosion in 1980 was truly a bubble/mania phenomenon. Nothing really supported that boom.
Now remove the paper from the screen. Look like there might be any cause for concern there? You betcha!
Thats why the graph I posted is the number one reason I personally buy precious metals. We have hopped onto the vertical portion of an exponential function. There is no repairing the damage......get into hard assets right now while your "money" will still be able to purchase them. Forget weekly or monthly dips.....those are just speed bumps at the foothills of a massive mountain range!
Yep, that's the one. The same one that nearly tripled the return in gold over the same time period.
Ask, and you shall receive.....
Gold goes from an average of 42.73 in Aug 1971 to 1873.60 yesterday: 43.85x
DOW goes from a rough average of 881 in Aug 1971 to 11,139.30 yesterday: 12.92x
Figures don't lie, liars figure.
Hence the potential issue with any data. In many cases, it can be skewed to support (or trash) pretty much any view.
<< <i>Note: the post immediately above this one does not take into account changes in the DOW members or dividends. >>
Which might be considered a wash, I dont know? Dividends are very important in adding to your argument.......but changes in which companies the DOW reflects are equally important in hurting your argument. For example, in just 2008, Kraft replaced AIG and in 2009 Travelers replaced GM. And because the components of the DOW are modified so frequently, it becomes basically useless to track the price over time.
Its almost like saying: "look at how well gold has done from 2001-now" while completely ignoring gold's performance from 1980-1995. Not a very intelligent discussion.
<< <i>From May 2, 1933 until yesterday's close, gold is up by a factor of 53.5x, from 35 to 1873.60.
From May 2, 1933 until yesterday's close, the DOW is up by a factor of 144.1x, from 77.29 to 11,139.30. This does not include dividends. >>
Hummm . . . Sounds like gold is still WAAAAY undervalued ! ! !
HH
1947-P & D; 1948-D; 1949-P & S; 1950-D & S; and 1952-S.
Any help locating any of these OBW rolls would be gratefully appreciated!
Liberty: Parent of Science & Industry
Much depends on your time horizon. Gold over the last two days has sucked. Gold over the last two months has been great.
<< <i>Gosh, it all sounds so easy! Buy the commodity asset that has appreciated 11 years straight! Avoid and ignore the other asset classes that have historically outperformed gold over the long term, but have underperformed for the past decade! After all, gold has far outpaced inflation, it stands to reason that it will continue to do so forever! >>
Baley, haven't you been presenting this same case since $1200 gold. Sooner or later you will be correct. Hands on a broken clock are correct twice a day.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>In your opinion, what would be the ultimate "sell signal" for precious metals? Will it be an actual technical indicator, a political one, or will it be something else?
Historically, it has been when the DJIA to gold is about 1:1. As that nears I will be looking for a top with which to exit gold. >>
Note the reversal of which asset to hold as gold and DJIA approach 1:1 during the fiat capital era. Chart makes a good case for when to get out of one and into the other.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
as well as the metals mania that ran in the late 1970's and the recent one from about 2002 to present.... wait, are you making my case or am i making yours?
anyway, it sure looks like the 1979 blip was an anomoly, and I'd read the chart as favoring a dow:gold ratio of about 21:1, not 1:1. The giant swings are market-dysfunctional noise?
Liberty: Parent of Science & Industry
<< <i>Yes, many companies in the Dow and S&P and Nasdaq have been replaced. Some went out of business or filed for BK. Some were bought by other companies. But if I have $10,000 invested in an S&P or Dow mutual fund, and companies get replaced for whatever reason, I still have $10,000 in that fund the day after the rebalancing. S&P goes up 10% in the next period of time, I now have $11,000 plus a little extra for dividends.
Much depends on your time horizon. Gold over the last two days has sucked. Gold over the last two months has been great. >>
Sorry, but not true. Say you bought into a DOW "fund" that held shares of all 30 companies that make up the DOW index. First, the DOW is a weighted entity....not all 30 companies are given same equality.....but for your example, lets say they were. You buy $10,000 worth, and the next day one of the companies goes bankrupt. You just lost 3% of your money in that scenario. When the DOW fund replaces that BK company with a new one, where do you think they will get that $333 you lost yesterday to invest in this new company? Thin air? Sorry Wings, but thats a loss in the real world of investing.
However, as far as indices are concerned, the DOW can simply toss out bad companies, and replace them with profitable ones. Its not real money, its simply an index of a collection of stocks at a given point in time.
Those huge swings are the direct result of the FED's actions via depreciating dollars. They would not be there otherwise.
Ironically, those dysfunctional and volatile markets are brought to us from the very entity whose mission is to ensure price stability....lol.
Get used to 'em, they'll only get bigger before the entire Ponzi scheme gets canned or collapses upon itself. The chart itself has to be updated
to show the recent drop of the ratio to 5.6. It's a month or two out of date.
If the only criteria for judging the quality of an investment is whether it's gone down for the past 10 yrs....then loading up on US dollars would certainly fit the bill.
I need to call my broker and get out of all my PM related stocks and load up on UUP.
roadrunner
If you reread my posts, nowhere did I state that was not the case. Indexes go up and down and an investment in a mutual fund or ETF that mimics that performance would move accordingly.
Your OP displayed a chart that you felt indicated when to buy gold or silver. My OP simply indicated that there were substantially better investments to make over that same time period.
However, as far as indices are concerned, the DOW can simply toss out bad companies, and replace them with profitable ones. Its not real money, its simply an index of a collection of stocks at a given point in time.
Exactly my point again. And the returns of that (manipulated) index would have yielded substanttially better returns over the time period you chose.
<< <i>Sorry Wings, but thats a loss in the real world of investing.
If you reread my posts, nowhere did I state that was not the case. Indexes go up and down and an investment in a mutual fund or ETF that mimics that performance would move accordingly.
Your OP displayed a chart that you felt indicated when to buy gold or silver. My OP simply indicated that there were substantially better investments to make over that same time period.
However, as far as indices are concerned, the DOW can simply toss out bad companies, and replace them with profitable ones. Its not real money, its simply an index of a collection of stocks at a given point in time.
Exactly my point again. And the returns of that (manipulated) index would have yielded substanttially better returns over the time period you chose. >>
No, actually you specifically said that if you invested $10,000 real money into the DOW collection of companies via a mutual fund......that if one of the companies went bankrupt and was replaced.....that you would still have $10,000 the next day. Thats absolutely incorrect.
Whereas a real money investment would be punished with a real money loss in YOUR example.....the DOW index suffers NO LOSS when it replaces bad companies with better ones. Its a mirage. How do you not see that much?
Now take that same $30,000 and buy gold in 1976 (about $125/oz). Today its worth over $430,000.
How much are those 30 stocks from 1976 now worth?
http://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average
<< <i>Yes, you are really reading into what was written. But if a Dow company did go bankrupt overnight and no one saw it coming, there would be a loss. I was referrring to the way it has happened historically - companies get replaced before they file for bankruptcy. >>
AIG replaced with Kraft on Sept 22, 2008.....look at that stock price tumble when the DOW finally chucked em!
After looking at the linked graph of AIG's stock price freefall, and exactly WHEN the DOW decided to replace them with Kraft....how can you tell me with a straight face that tracking the value of the DOW longterm is anywhere even close to reality? What if the DOW had not dumped AIG or any of the other several dozen failing companies over the past 40 years? How would your "DOW fund" investment look then? Think about it. The DOW pick winners, and then replaces them with new winners once they fail. And thats an accurate way to track performance? Sounds kinda 20/20 hindsight to me.
<< <i>I'll have the results posted by tomorrow, even though you just slapped someone several posts ago for picking a specific time period. >>
On that remark, you are absolutely right! Guilty as charged. So I will let you pick any group of DOW stocks from that link that are at least 20 years out or longer. Less than 20 years wouldnt be fair to your stock market in terms of gold outperforming it!
I very much look forward to your results! I have a feeling that you will begin to see that the DOW......as tracked long term.....is not an accurate indication of the true performance of the stock market. But thats primarily because the DOW only keeps the winners, and dumps the losers.
When I say 'exist today', I mean those companies that remained as the survivor in any mergers, etc. For instance, Chrysler was in the Dow in 1976. If you owned C back then and never sold it, you would have received DaimlerChrysler stock when that merger happened, and today you would hold Daimler stock. I did not include any value for that, so the 'value' in the $116K number is suspect.
Another example is International Harvester. If you owned IH stock then you would own a different stock today since they are a subsidiary of a larger company. But for this example, IH = 0.
The top four returns in order are UTX, XOM, PG and GE.
If you think it's been easy to accumulate precious metals without selling any substantial amount over a 13 year period, you are mistaken.
I knew it would happen.
I choose May 7, 1991.
Using Yahoo Finance historical prices, I entered the date above for each of the Dow stocks that still exist today*. This gave me an adjusted share price which takes into acount dividends and splits.
If I spent $1,000 to purchase shares of each company at the adjusted price and held them through today, I would end up with $169,201 or 5.64x my initial investment of $30,000. During that same period, the Dow 30 average moved from 2,917 to 11,414 or 3.9x. Companies that no longer exist were valued at zero.
If I purchased $30,000 worth of gold at the May 7, 1991 price of $354.20 / oz, I would have 84.70 oz. The value of that today would be $153,925 or 5.13x the initial investment.
So, as I stated earlier, you have to take into account what the person presenting the data is trying to prove (or disprove) because it certainly CAN influence how data is presented.
While I do not always disagree with a particluar post, I do sometimes like to take the opposite point-of-view and try to examine it from a new perspective. The results are oftentimes interesting.
Regards,
Mark
*with the exception of Sears and GM. I also did not include the spin-off value of KFT or PM when they were spun off from MO, so the figures below would be a bit higher.
So...I've never sold any silver or gold in my entire life as I think it's a hedge against a collapse of the $ and the USA.
<< <i>OK.
I choose May 7, 1991.
Using Yahoo Finance historical prices, I entered the date above for each of the Dow stocks that still exist today*. This gave me an adjusted share price which takes into acount dividends and splits.
If I spent $1,000 to purchase shares of each company at the adjusted price and held them through today, I would end up with $169,201 or 5.64x my initial investment of $30,000. During that same period, the Dow 30 average moved from 2,917 to 11,414 or 3.9x. Companies that no longer exist were valued at zero.
If I purchased $30,000 worth of gold at the May 7, 1991 price of $354.20 / oz, I would have 84.70 oz. The value of that today would be $153,925 or 5.13x the initial investment.
So, as I stated earlier, you have to take into account what the person presenting the data is trying to prove (or disprove) because it certainly CAN influence how data is presented.
While I do not always disagree with a particluar post, I do sometimes like to take the opposite point-of-view and try to examine it from a new perspective. The results are oftentimes interesting.
Regards,
Mark
*with the exception of Sears and GM. I also did not include the spin-off value of KFT or PM when they were spun off from MO, so the figures below would be a bit higher. >>
A big thanks for running the numbers. In your own calculations, the rate of return on DOW stocks in 1991.....if held until today, would very marginally outpace the same amount of money invested in gold during the same span of time.
But what interests me the most from your data is the fact that those 30 stocks from 1991.....left without substitution.....have actually outpaced todays DOW index. In other words, had the DOW retained all 30 companies from 1991 to today, then the DOW would be at around 16,451 (5.64 x 2,917). That runs utterly against what I had believed to be a "stacked deck" in relation to the DOW's price over time with all the periodic substitution.
Now im just baffled.
<< <i>Like in all charts, graphs, technical analysis...you see what you want to see. >>
Sometimes it helps to turn them upside down.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
A summary of the more recent changes to the index include the following:
On September 22, 2008, Kraft Foods replaced the American International Group (AIG) in the index.[5] On June 8, 2009, General Motors and Citigroup were replaced by The Travelers Companies and Cisco Systems, which became the third company traded on the NASDAQ to be part of the Dow.[6]
If the true losses of all 3 of these bankrupt companies had been factored into the Dow average, what do you suppose it would have done to the results in your 1991 to 2011 span?
I knew it would happen.