I trusted my own company with my 401K and lost $55K of it via the company stock plan. Trusting anyone today is a stretch. Between the derivatives mess (bank and financial stocks) and improper accounting of pension funds and other assets, one would have to be nuts to trust today's accounting standards. And all this on the heels of Enron and Sarbox (or is that Starbucks?).
I have to agree with roadrunner in that the mania surrounding gold is just not there even with $600 gold.....Everone is calling for the correcton and even I cut my position expecting a pullback that hasn't come....
These charts are helpful is coming to realize that if we are truly in a bull market for gold, then $200-$500 moves are not out of the question.....That would only get us back to the nominal values of 1980.....In order to get to inflation adjusted numbers, we would need to be at $2000 or more just to be at those same levels.....It is mind blowing but true.....
I will keep on referring to these charts to remind me of what happened then and what is likely to happen today.....Funny that it was the Iranian hostage crisis and Afghanistan's invasion by the Soviets that caused gold to spike back then.....We are focusing on that part of the world again and don't forget that!
JPK, I did not cut my bullion or $20 generic gold position on this move. I didn't add to it either. I did cut back on some of my $10 Indians and a few other denominations as they had made some strong moves. Yet, it appears I was wrong as the $3, $5, and $10 Indians continue to move. In fact the entire small gold market is still humming. I wonder if even a $50 correction in gold could turn that around? I'm still bullish on $1's and $5 Libs however. They have some more to grow to catch the $2-1/2's and $10's imo. The Type 1 $1 gold has really made some nice advances in MS64.
This is great thread. If its one thing that we know from history is that the past price pattern of investments doesnt tell us much about the future price pattern. So i dont believe in charts. But i do believe in price catch up. Look at oil. About 7 years ago it was $10 a barrel and all the investment advisors suggested avoiding energy stocks as oil would go to $5 a barrel.. I bought a Winnebago rv, so as a hedge i bought the Vanguard Energy fund to offset any gasoline price increases. That plan has worked for me. The fund has achieved 20% + annual appreciation. Of course now, most analysts suggest buying Energy stocks, and the new price target is over $100. I have sold some of my Energy fund as oil has risen, but i still hold a significant position. Oil is catching up to what it should be inflation adjusted. Gold WILL do the same. You can argue about it dropping in price for a while. But i wouldnt bet against both gold and silver breaking easily through their old highs and then some. There is no question that our government is debasing the currency. Printing more paper. I heard one advisor on tv saying that printing paper to cover deficits doesnt cause inflation. I dont know what school he went to, but he is either a political lackey or just plain ignorant. Hold on to the metals you have, buy a bit more, and get ready for a good ten year ride. Don't worry about short term gains. Just follow the oil!
We are in the acceleration phase of this market......There is evidently a short squeeze going on with major players scrambling to buy and pent-up demand on any pullbacks.....Pullbacks will eventually come but they may surprise all of us at the point from which they occur.....
Looking for a sustained move to $640-$660 BEFORE any pullback in gold and $15-$16 in silver....
We are going to wake up one morning and see gold up $50-$75 and silver up $2......
These are interesting times to say the least......Study the past and focus on your greed and fear instincts....
Thanks John, though I am afraid to show my "face" on this thread. . BTW, great hanging out with you again...
I do have to say my retired clients and pension funds I manage are having INCREDIBLE returns in the stock markets. 18% last year, 13% average year to date. This gloom and doom of the US, is of course, a bunch of hoopla. Keep in mind, THERE IS ALWAYS SOMETHING TO COMPLAIN ABOUT WITH THE GOVERNMENT, ECONOMY, ETC. EVERY YEAR IF YOU WANT TO. Corporations making more money again - this will increase the tax base and help the deficit. The deficit will take care of itself - always has.
What does this have to do with gold? I dont know. I think gold is in a catagory by itself right now- the demand (China and India consumer) and the lack of supply pushing the price up. But remember, Yahoo was predicted to go to $600 a share one time....
As we accelerate past the $700 and we have magnets pulling from $875 and $680 which will prevail? I don't know the answer to that one but will guess that we will have an 8 handle before a 6 handle.....This rally has legs, everyone is calling for a pullback or major correction and even I took profits on my futures position hoping to buyback lower....
Study the charts and it is 1979 all over again including Iran....Just remember to look at 1980 and realize you missed the boat if you bailed to early.....For those that haven't participated I say you will be missing an opportunity of a lifetime to profit from a dollar decline that will affect our lives in this country....
The Iranian oil bourse which should begin operations in the summer is the equivalent of a nuke being dropped on the NYMEX....
I would be a bit cautious of the stock market right about now. I love those gold/dow ratio charts. We are at about 16 ounces of gold to one dow currently....
I like the idea of owning MS64 and MS65 Saints versus straight bullion.....
We'll see how strong the Long Beach show is in the rare coin market.
Edited to reflect the price of gold of about $710 at this time.
I wanted to refresh this thread as I wanted to also state I believe we are on the verge of a breakout in gold that takes us to the years high of $730 and beyond.
In 1979, the price of gold doubled to around $400 and looked like it was done. We know that the fireworks occurred AFTER that and gold doubled again. I suspect that we see something similar again. Gold rallied to $730 and took quite a spill since May. However, I believe we are ready for the next leg. Look at those charts from 1979 and 1980 and don't say I didn't bring it up timely....
BTW, December gold is $630 as I type, or roughly 10% less than my last post in May..
Interesting to revisit some of the statements made in this thread in 2005 and early 2006. I too see some fireworks coming in gold either in Dec or January. I think it will be a good boost for the FUN show, which always helps the sellers and the auctions.
We may wave good bye to $590 gold for good from this point. There is much strength at the $575-$600 level now.
I'll also note that currently the MS65 saints are quite undervalued vs the lower grades. MS64 saints normally were valued at .58 to .62 the price of the 65's. Right now that premium is around 70%, the highest it's been in years. That gives the MS65 saints a "free" 10% leverage over the price of the 64's that normally doesn't exist. When gold moves up again, the 65 saints should propel quickly to the $1400 range to recover this premium. $1225 MS65 Saints are at the same levels as when gold hit $400 and then $500/oz.
I would also add that it seems unlikely that the FED will blow up housing so what is the trade off? Higher inflation and we all know what that means for gold. Gold also makes more sense for foreign governments (at least vs. the dollar). My guess is gold continues higher.
For the 1980s time period, I do believe you cannot compare that experience to today's economic outlook. The 1980s and Paul Volker started the greatest bull run in the bond market that this country has ever seen. That seems like a very unlikely scenario today.
I was blown away by this and have been studying these charts to teach myself the power of "buy and hold"......
I don't get this part of the original post. Virtually, everyone knows what happened to gold after the bubble at $800--a long bear market. Buy and hold doesn't seem like the appropiate lesson here. Maybe the trend is your friend, or no one gets out at the top.
Gold does look better in here, but there is a lot of resistance at the recent highs and the old time highs. It will take a lot to get through there. More likely in my mind is some kind of basing formation that frustrates both bulls and bears. That base will be the launch pad to new all time highs.
If this long base scenario unfolds, the best time to buy for percentage return will be the breakout from the flat base (not the scraggly base we have now). That may occur in several months, or it may be a longer time out. I believe many on this board, especially the beginners and amateurs will be selling into the breakout, thinking they are selling high, and thus miss the rocketship ride.
<< <i>I believe many on this board, especially the beginners and amateurs will be selling into the breakout, thinking they are selling high, and thus miss the rocketship ride. >>
This is why I don't trade commodities. See Amaranth.
<< <i>I believe many on this board, especially the beginners and amateurs will be selling into the breakout, thinking they are selling high, and thus miss the rocketship ride. >>
This is why I don't trade commodities. See Amaranth. >>
I agree with the sentiment. I written it many times, the average collector has no business trying to time the markets. For the average person, gold, silver and other hard assets are a small part of a diversified portfolio. To build the position, the average collector usually is far better off buying small amounts over time.
Those looking on a coin board for investment advice are usually in over their heads, and are often on their way to losing money. Especially if they attempt to time the markets, especially if they look to put a ton of money on the hot idea of the day/month/year.
I learned from Bill Gross, you can't time markets. His opinion is good enough for me.
Red Tiger, I completely agree with your statement. I find it interesting how many people actually show up on these boards looking for investment advice. Of course they get flamed into oblivion. All things considered that is probably the best thing for them.
Buy and hold doesn't seem like the appropriate lesson here. Maybe the trend is your friend, or no one gets out at the top.
I don't think the majority of gold gurus are recommending buy and hold PM's for 20 years. If anything they preach sell 30% on each upward move. But the stock gurus certainly recommend buy and hold long term in stocks.
How many bought gold in 1980 and held on to that for the duration? From opinions here, you'd think that everyone who ever bought gold in 1980 surely held on for 20 years. That not once did they waiver in their belief that the game was stacked against gold from 1982 on. I for one bought silver in 1982 thinking it had bottomed, only to see it drop again, I bailed on it by late 1983. Maybe 5% or less of those that bought gold bullion in 1980 kept it until 2000. Could be far less than that.
Buy and hold in PM's works no differently than buy and hold in other areas. Let's see how well the buy and hold method works on stock market indices from 2006-2011. In 5 years we can see who the geniuses really are. Funny that it's preached by the vast majority of the brokerages (and CNN money babes) to B&H in stocks, but not in anything else. Wonder why that is? And because buy and hold worked so wondrously well from 1982 to 2001, that it will automatically work well from 2006-2025. Too bad they forgot to tell you about 1966-1982 in their analysis. Curiously, a lot of the money babes are now recommending a minimum 5% diversification in PM's. I know it pains them to have to say that. Reality bites.
The fact that the vast majority of the US thinks that stocks have a good 20 year run ahead, and PM's have nearly run their course, bodes very well for the contrarian side. Ironically, the one guy (out of few) who actually bailed out at the gold top in 1980 and left the market for nearly 20 years, forecasts a far different view for the next 5-10 years than Wallstreet.
<< <i>Buy and hold doesn't seem like the appropriate lesson here. Maybe the trend is your friend, or no one gets out at the top.
I don't think the majority is recommending buy and hold PM's for 20 years. But they certainly recommend the same in stocks. How many bought gold in 1980 and held on to that for the duration? I for one bought silver in 1982 thinking it had bottomed, only to see it drop again, I bailed on it by late 1983. Maybe 5% or less of those that bought gold bullion in 1980 kept it until 2000. Could be far less than that.
Buy and hold in PM's works no differently than buy and hold in other areas. Let's see how well the buy and hold method on stock market indices from 2006-2011 works. In 5 years we can see who the geniuses really are. Funny that it's preached by the vast majority of the brokerages (and CNN money babes) to B&H in stocks, but not in anything else. Wonder why that is? And because buy and hold worked so wondrously well from 1982 to 2001, that it will automatically work well from 2006-2025. Too bad they forgot to tell you about 1966-1982 in their analysis.
The fact that the vast majority of the US things that stocks have a good 20 year run ahead, and PM's have nearly run their course, bodes very well for the contrarian side. Ironically, the one guy (out of few) who actually bailed out at the gold top in 1980 and left the market for nearly 20 years, forecasts a far different view for the next 5-10 years than Wallstreet.
Roadrunner has some excellent points. The stock, bond, real estate, coin and precious metal markets are all near recent highs. Investors of almost all stripes have gotten a bit spoiled by the steady almost predictable up movements. Yes, some segments have done better than others.
Bear markets, vicious bear markets, do take place and will take place in the future in all the markets mentioned. However that said, buy and hold plus dollar cost averaging (buying small amounts at set intervals) still tend to be far better than market timing for the average person.
Diversification plus asset allocation as a person advances in years are the safe middle road. A small percentage of people can time the markets and make money. The vast majority (I would guess 80%+) of the amateurs that try it lose, many of them lose in spectacular fashion. Those that are successful, tend not to need advice (or give it for that matter). Again, for the average person, gold and hard assets are a small part of a diversified portfolio. Long term, I am very bullish on gold, as I wrote about in my previous posts. That doesn't mean I am betting the farm on any explosive move to the upside. Like almost everyone, I've been wrong before, and I'll be wrong again.
I don't believe any one of us are trying to state we can predict the market, but there are certainly ominous signs of something coming. I read the financial press daily, watch CNBC, trade commodities and watch the news like everyone else to form my own opinions.
It seems as if complacency has picked up and that is supported by the VIX (volatility index) at all time lows. That usually precedes a major move in one direction or another in the stock market.
Gold has been shunned for years in a successful attempt by the powers to be to relegate it to the "barbaric relic" status. I started buying generic gold in 2003 and shifted to rare dated gold in 2004. Coins and other tangibles have done well since then which to me is a sign that cash (the dollar) is weakening.
I believe that there are only two ways for our government to pay its debt. One is by default and the other is by devaluing (or allowing the devaluation) of our currency to pay our debts. The government cannot raise revenue to cover the debt.
Its really that simple. The U.S. is not going to default so they must print more money to pay back the debt. More dollars means inflation and inflation means it is better to own tangible things whether it be coins, gold, wheat or oriental rugs!
I bought my first bag of $1000 silver last week. 50lbs of liquidity! If things get really bad I can always use a 5o cent piece to buy a Big Mac!
Typically any market will move in waves, up down, up down, etc. A cycle will usually contain several of these over an extended period. The run we had in gold earlier this year was only one of those waves as was the decline which I believe has now ended. Only time will tell but all of the factors which COULD cause an extended rise in gold are still in place and in fact have become even more pronounced.
I am certainly not an economist nor an expert prognosticator but I simply ask how can our country continue to cover its debt without default. Either increase revenues, cut expenses, print money to pay our debt or simply default. There are NO other possibilities. So I pick the one that makes the most sense to me which is print more money and pay the debt with "cheaper" dollars.
2006 is NOT like 1980 as the Fed cannot just raise rates to stop inflation. Our economy and the consumer are too extended to pay ever higher rates of interest. The Fed speaks of containing inflation yet keeps printing money to fund expenditures whether it is military spending, entitlements or interest on the debt. That is inflationary. They have to talk about fighting inflation to keep the dollar supported as best that they can as a strong currency is in the best interest of the Fed. Unfortunately, I am losing faith in our currency as will the foreigners when the value of the dollar shrinks. It is a spiral we cannot contain unfortunately and when it eventually unravels, tangible assets will be better to own than a dollar bill.
Scary times and I fear for my kids to be honest. What I found most interesting is that I asked many of my friends if they own gold and 99.9% said no. No gold at all....I find that terribly bullish.....
The whole thing comes down to common sense in the end. The dollar will be as strong as the government's lien on the productivity of American industry. It is backed by revenues, current and future. Printing dollars and issuing new debt does not do anything but devalue the US dollar and is nothing more than passing along the politics of government spending to someone else. Inflation will never be curtailed without a significant productivity surplus. The US is not going to start leasing the National Parks and selling off territories like Puerto Rico to kill some debt, at least hopefully not in my lifetime. I cannot think of a single major industry where we are actually gaining international marketshare, quite the opposite actually. Inflation is not going away no matter how many Fed bandages are applied.
The question then is of the significance of gold. It is either that antiquated relic or a valuable comodity or something in between. Personally, I would consider silver. It may be less rare in a bulk sense but is a very important and useful metal. People also probably do not realize the attrition rate of the supply through impractically irrecoverable consumption. A lot more of the gold ever mined is still with us in one form or another. A lot smaller fraction of the silver is.
The 2006 gold market was probably much more like 1974. That is when gold peaked at around $200 after starting at around $35. It fell back 50% to $100. The next few years so a fairly steady move to $500, then a drop off, and then a final blast to $850. The whole affair ended with interest rates well into the double digits, a mania with people lined up a coins shops to sell their silver and gold. We've seen nothing even close to this yet. The equities markets have yet to fully correct from 2001, and the commodities markets have yet to reach a frenzy stage.
The thing I noticed was how short the spike up to $850.00 lasted. Was it a day only? Secondly, were there any bullion buyers actually buying gold at $850 or so? It seems that the number $850 gets bantered about as gold's high in 79' but I don't think anybody was buying it that high (bullion dealers) and the spike didn't last but a day or two. It seems more accurate to say that gold hit a high of $700-$750 which is probably the highest price the average "joe" could have unloaded gold for cash.
Anybody have experience with this?
I do remember going to the local coin shop in 79' when silver was approaching $35.00 and buying proof silver quarters at about $8.00 a piece. My family was on welfare at the time and $8.00 was a small fortune for me. At least it made me love the coin so much that I polished it every day. LOL
Precious metals increase... then numismatic coins catch up. Thus, in a rising precious metals market, you should be putting your money in numismatic coins (St Gaudens versus Gold Eagles). When the numismatic coins catch up, you should sell them and exchange them for bullion. Keep repeating the process over and over again and you'll continually add to your gold hoard with no out of pocket cost.
<< <i>Let's look at it in dollar terms.....We all know what gold has done in dollar terms. We have gone from just over $400 to the current $525. But are we all aware how much MORE movement gold has had in terms of the major foreign currencies like the Yen and Euro. I am attaching charts for you to see and realize if the dollar was falling instead of rising the gold move would be even bigger than it is in percentages. That is why the foreigners are buying as they see a parabolic move. Now even if gold pulls back in Yen or Euros and the dollar starts to reverse its last year surge, then gold will rise in dollar terms which is what you and I will feel. Fascinating stuff.....
<< <i>We are in the acceleration phase of this market......There is evidently a short squeeze going on with major players scrambling to buy and pent-up demand on any pullbacks.....Pullbacks will eventually come but they may surprise all of us at the point from which they occur.....
Looking for a sustained move to $640-$660 BEFORE any pullback in gold and $15-$16 in silver....
We are going to wake up one morning and see gold up $50-$75 and silver up $2......
These are interesting times to say the least......Study the past and focus on your greed and fear instincts.... >>
Comments
roadrunner
These charts are helpful is coming to realize that if we are truly in a bull market for gold, then $200-$500 moves are not out of the question.....That would only get us back to the nominal values of 1980.....In order to get to inflation adjusted numbers, we would need to be at $2000 or more just to be at those same levels.....It is mind blowing but true.....
I will keep on referring to these charts to remind me of what happened then and what is likely to happen today.....Funny that it was the Iranian hostage crisis and Afghanistan's invasion by the Soviets that caused gold to spike back then.....We are focusing on that part of the world again and don't forget that!
$20 Saint Gaudens Registry Set
Interesting to see the changes in just four months. Hope to see the thread come back in another four.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
roadrunner
Gold WILL do the same. You can argue about it dropping in price for a while. But i wouldnt bet against both gold and silver breaking easily through their old highs and then some. There is no question that our government is debasing the currency. Printing more paper. I heard one advisor on tv saying that printing paper to cover deficits doesnt cause inflation. I dont know what school he went to, but he is either a political lackey or just plain ignorant.
Hold on to the metals you have, buy a bit more, and get ready for a good ten year ride. Don't worry about short term gains. Just follow the oil!
Looking for a sustained move to $640-$660 BEFORE any pullback in gold and $15-$16 in silver....
We are going to wake up one morning and see gold up $50-$75 and silver up $2......
These are interesting times to say the least......Study the past and focus on your greed and fear instincts....
$20 Saint Gaudens Registry Set
$20 Saint Gaudens Registry Set
I do have to say my retired clients and pension funds I manage are having INCREDIBLE returns in the stock markets. 18% last year, 13% average year to date. This gloom and doom of the US, is of course, a bunch of hoopla. Keep in mind, THERE IS ALWAYS SOMETHING TO COMPLAIN ABOUT WITH THE GOVERNMENT, ECONOMY, ETC. EVERY YEAR IF YOU WANT TO. Corporations making more money again - this will increase the tax base and help the deficit. The deficit will take care of itself - always has.
What does this have to do with gold? I dont know. I think gold is in a catagory by itself right now- the demand (China and India consumer) and the lack of supply pushing the price up. But remember, Yahoo was predicted to go to $600 a share one time....
Study the charts and it is 1979 all over again including Iran....Just remember to look at 1980 and realize you missed the boat if you bailed to early.....For those that haven't participated I say you will be missing an opportunity of a lifetime to profit from a dollar decline that will affect our lives in this country....
The Iranian oil bourse which should begin operations in the summer is the equivalent of a nuke being dropped on the NYMEX....
$20 Saint Gaudens Registry Set
$710.50
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Roger
My Indian Name is: Runs With Beer
I would be a bit cautious of the stock market right about now. I love those gold/dow ratio charts. We are at about 16 ounces of gold to one dow currently....
I like the idea of owning MS64 and MS65 Saints versus straight bullion.....
We'll see how strong the Long Beach show is in the rare coin market.
Edited to reflect the price of gold of about $710 at this time.
$20 Saint Gaudens Registry Set
In 1979, the price of gold doubled to around $400 and looked like it was done. We know that the fireworks occurred AFTER that and gold doubled again. I suspect that we see something similar again. Gold rallied to $730 and took quite a spill since May. However, I believe we are ready for the next leg. Look at those charts from 1979 and 1980 and don't say I didn't bring it up timely....
BTW, December gold is $630 as I type, or roughly 10% less than my last post in May..
$20 Saint Gaudens Registry Set
We may wave good bye to $590 gold for good from this point. There is much strength at the $575-$600 level now.
I'll also note that currently the MS65 saints are quite undervalued vs the lower grades. MS64 saints normally were valued at .58 to .62 the price of the 65's. Right now that premium is around 70%, the highest it's been in years. That gives the MS65 saints a "free" 10% leverage over the price of the 64's that normally doesn't exist. When gold moves up again, the 65 saints should propel quickly to the $1400 range to recover this premium. $1225 MS65 Saints are at the same levels as when gold hit $400 and then $500/oz.
roadrunner
I would also add that it seems unlikely that the FED will blow up housing so what is the trade off? Higher inflation and we all know what that means for gold. Gold also makes more sense for foreign governments (at least vs. the dollar). My guess is gold continues higher.
For the 1980s time period, I do believe you cannot compare that experience to today's economic outlook. The 1980s and Paul Volker started the greatest bull run in the bond market that this country has ever seen. That seems like a very unlikely scenario today.
I don't get this part of the original post. Virtually, everyone knows what happened to gold after the bubble at $800--a long bear market. Buy and hold doesn't seem like the appropiate lesson here. Maybe the trend is your friend, or no one gets out at the top.
Gold does look better in here, but there is a lot of resistance at the recent highs and the old time highs. It will take a lot to get through there. More likely in my mind is some kind of basing formation that frustrates both bulls and bears. That base will be the launch pad to new all time highs.
If this long base scenario unfolds, the best time to buy for percentage return will be the breakout from the flat base (not the scraggly base we have now). That may occur in several months, or it may be a longer time out. I believe many on this board, especially the beginners and amateurs will be selling into the breakout, thinking they are selling high, and thus miss the rocketship ride.
<< <i>I believe many on this board, especially the beginners and amateurs will be selling into the breakout, thinking they are selling high, and thus miss the rocketship ride. >>
This is why I don't trade commodities. See Amaranth.
<< <i>
<< <i>I believe many on this board, especially the beginners and amateurs will be selling into the breakout, thinking they are selling high, and thus miss the rocketship ride. >>
This is why I don't trade commodities. See Amaranth. >>
I agree with the sentiment. I written it many times, the average collector has no business trying to time the markets. For the average person, gold, silver and other hard assets are a small part of a diversified portfolio. To build the position, the average collector usually is far better off buying small amounts over time.
Those looking on a coin board for investment advice are usually in over their heads, and are often on their way to losing money. Especially if they attempt to time the markets, especially if they look to put a ton of money on the hot idea of the day/month/year.
Red Tiger, I completely agree with your statement. I find it interesting how many people actually show up on these boards looking for investment advice. Of course they get flamed into oblivion. All things considered that is probably the best thing for them.
I don't think the majority of gold gurus are recommending buy and hold PM's for 20 years. If anything they preach sell 30% on each upward move. But the stock gurus certainly recommend buy and hold long term in stocks.
How many bought gold in 1980 and held on to that for the duration?
From opinions here, you'd think that everyone who ever bought gold in 1980 surely held on for 20 years. That not once did they waiver in their belief that the game was stacked against gold from 1982 on.
I for one bought silver in 1982 thinking it had bottomed, only to see it drop again, I bailed on it by late 1983. Maybe 5% or less of those that bought gold bullion in 1980 kept it until 2000. Could be far less than that.
Buy and hold in PM's works no differently than buy and hold in other areas. Let's see how well the buy and hold method works on stock market indices from 2006-2011. In 5 years we can see who the geniuses really are. Funny that it's preached by the vast majority of the brokerages (and CNN money babes) to B&H in stocks, but not in anything else. Wonder why that is? And because buy and hold worked so wondrously well from 1982 to 2001, that it will automatically work well from 2006-2025. Too bad they forgot to tell you about 1966-1982 in their analysis. Curiously, a lot of the money babes are now recommending a minimum 5% diversification in PM's. I know it pains them to have to say that. Reality bites.
The fact that the vast majority of the US thinks that stocks have a good 20 year run ahead, and PM's have nearly run their course, bodes very well for the contrarian side. Ironically, the one guy (out of few) who actually bailed out at the gold top in 1980 and left the market for nearly 20 years, forecasts a far different view for the next 5-10 years than Wallstreet.
roadrunner
<< <i>Buy and hold doesn't seem like the appropriate lesson here. Maybe the trend is your friend, or no one gets out at the top.
I don't think the majority is recommending buy and hold PM's for 20 years. But they certainly recommend the same in stocks.
How many bought gold in 1980 and held on to that for the duration?
I for one bought silver in 1982 thinking it had bottomed, only to see it drop again, I bailed on it by late 1983. Maybe 5% or less of those that bought gold bullion in 1980 kept it until 2000. Could be far less than that.
Buy and hold in PM's works no differently than buy and hold in other areas. Let's see how well the buy and hold method on stock market indices from 2006-2011 works. In 5 years we can see who the geniuses really are. Funny that it's preached by the vast majority of the brokerages (and CNN money babes) to B&H in stocks, but not in anything else. Wonder why that is? And because buy and hold worked so wondrously well from 1982 to 2001, that it will automatically work well from 2006-2025. Too bad they forgot to tell you about 1966-1982 in their analysis.
The fact that the vast majority of the US things that stocks have a good 20 year run ahead, and PM's have nearly run their course, bodes very well for the contrarian side. Ironically, the one guy (out of few) who actually bailed out at the gold top in 1980 and left the market for nearly 20 years, forecasts a far different view for the next 5-10 years than Wallstreet.
roadrunner >>
Bear markets, vicious bear markets, do take place and will take place in the future in all the markets mentioned. However that said, buy and hold plus dollar cost averaging (buying small amounts at set intervals) still tend to be far better than market timing for the average person.
Diversification plus asset allocation as a person advances in years are the safe middle road. A small percentage of people can time the markets and make money. The vast majority (I would guess 80%+) of the amateurs that try it lose, many of them lose in spectacular fashion. Those that are successful, tend not to need advice (or give it for that matter). Again, for the average person, gold and hard assets are a small part of a diversified portfolio. Long term, I am very bullish on gold, as I wrote about in my previous posts. That doesn't mean I am betting the farm on any explosive move to the upside. Like almost everyone, I've been wrong before, and I'll be wrong again.
I don't believe any one of us are trying to state we can predict the market, but there are certainly ominous signs of something coming. I read the financial press daily, watch CNBC, trade commodities and watch the news like everyone else to form my own opinions.
It seems as if complacency has picked up and that is supported by the VIX (volatility index) at all time lows. That usually precedes a major move in one direction or another in the stock market.
Gold has been shunned for years in a successful attempt by the powers to be to relegate it to the "barbaric relic" status. I started buying generic gold in 2003 and shifted to rare dated gold in 2004. Coins and other tangibles have done well since then which to me is a sign that cash (the dollar) is weakening.
I believe that there are only two ways for our government to pay its debt. One is by default and the other is by devaluing (or allowing the devaluation) of our currency to pay our debts. The government cannot raise revenue to cover the debt.
Its really that simple. The U.S. is not going to default so they must print more money to pay back the debt. More dollars means inflation and inflation means it is better to own tangible things whether it be coins, gold, wheat or oriental rugs!
I bought my first bag of $1000 silver last week. 50lbs of liquidity! If things get really bad I can always use a 5o cent piece to buy a Big Mac!
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Jonathan
Typically any market will move in waves, up down, up down, etc. A cycle will usually contain several of these over an extended period. The run we had in gold earlier this year was only one of those waves as was the decline which I believe has now ended. Only time will tell but all of the factors which COULD cause an extended rise in gold are still in place and in fact have become even more pronounced.
I am certainly not an economist nor an expert prognosticator but I simply ask how can our country continue to cover its debt without default. Either increase revenues, cut expenses, print money to pay our debt or simply default. There are NO other possibilities. So I pick the one that makes the most sense to me which is print more money and pay the debt with "cheaper" dollars.
2006 is NOT like 1980 as the Fed cannot just raise rates to stop inflation. Our economy and the consumer are too extended to pay ever higher rates of interest. The Fed speaks of containing inflation yet keeps printing money to fund expenditures whether it is military spending, entitlements or interest on the debt. That is inflationary. They have to talk about fighting inflation to keep the dollar supported as best that they can as a strong currency is in the best interest of the Fed. Unfortunately, I am losing faith in our currency as will the foreigners when the value of the dollar shrinks. It is a spiral we cannot contain unfortunately and when it eventually unravels, tangible assets will be better to own than a dollar bill.
Scary times and I fear for my kids to be honest. What I found most interesting is that I asked many of my friends if they own gold and 99.9% said no. No gold at all....I find that terribly bullish.....
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The question then is of the significance of gold. It is either that antiquated relic or a valuable comodity or something in between. Personally, I would consider silver. It may be less rare in a bulk sense but is a very important and useful metal. People also probably do not realize the attrition rate of the supply through impractically irrecoverable consumption. A lot more of the gold ever mined is still with us in one form or another. A lot smaller fraction of the silver is.
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It fell back 50% to $100. The next few years so a fairly steady move to $500, then a drop off, and then a final blast to $850.
The whole affair ended with interest rates well into the double digits, a mania with people lined up a coins shops to sell their silver and gold. We've seen nothing even close to this yet. The equities markets have yet to fully correct from 2001, and the commodities markets have yet to reach a frenzy stage.
roadrunner
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Anybody have experience with this?
I do remember going to the local coin shop in 79' when silver was approaching $35.00 and buying proof silver quarters at about $8.00 a piece. My family was on welfare at the time and $8.00 was a small fortune for me. At least it made me love the coin so much that I polished it every day. LOL
Tyler
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<< <i>Let's look at it in dollar terms.....We all know what gold has done in dollar terms. We have gone from just over $400 to the current $525. But are we all aware how much MORE movement gold has had in terms of the major foreign currencies like the Yen and Euro. I am attaching charts for you to see and realize if the dollar was falling instead of rising the gold move would be even bigger than it is in percentages. That is why the foreigners are buying as they see a parabolic move. Now even if gold pulls back in Yen or Euros and the dollar starts to reverse its last year surge, then gold will rise in dollar terms which is what you and I will feel. Fascinating stuff.....
Gold in Yen and Euros.....WOW! >>
All time great post. I only wish I had been on the boards back then. I need a hot tub.
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<< <i>I agree with you Lloydmincy. I have recently liquidated my bullion holdings and have transfered most of it into stock index funds...Mike >>
This thread is way cool !
and not to pick on Mike in Florida , but to sell all your gold @425$ and sink that money into stocks ;
two years before the bottom fell out ......and with gold approaching 2000$ per oz today ??
<< <i>We are in the acceleration phase of this market......There is evidently a short squeeze going on with major players scrambling to buy and pent-up demand on any pullbacks.....Pullbacks will eventually come but they may surprise all of us at the point from which they occur.....
Looking for a sustained move to $640-$660 BEFORE any pullback in gold and $15-$16 in silver....
We are going to wake up one morning and see gold up $50-$75 and silver up $2......
These are interesting times to say the least......Study the past and focus on your greed and fear instincts.... >>
this guy pegged it !