Cam Hui

Gold: Critical Test for Inflation Trade

If the US went to a gold standard the target price would be somewhere between 5K and 10K/oz.

But be careful about what you wish for. My full comments here: humblestudentofthemark...

If Gold Bugs' Fantasies Came True

Just because you are bullish on gold (as I am) doesn't mean everything is fine. Just be careful about what you wish for!

BTW, this was an excerpt from my free commodity newsletter. I have posted it here at the urging of some readers. If you are interested in getting on the email list drop me a line at cam at hbhinvestments dot com. promise that I will keep your email address to myself and won’t give, sell or rent your email away to anyone.

Gold Bulls Should Stay Away from Gold Stocks

I would like to thank everyone for their comments.

For the holdings of gold stocks: I never said that they wouldn't go up. In fact, given the technical position of the group it appears that they have good upside. However, if you look at the first chart here (humblestudentofthemark...) the more important question is "why aren't gold stocks near all-time highs?" This is like going to a casino and knowing that the house has an edge on you. It doesn't mean that you can't win, but how long are you going to put up with this poor relative performance before you give up and use another levered vehicle?

For the hard asset crowd: Again, I am not saying that gold stocks won't go up but if you believe in hyperinflation or economic collapse you should hold the physical metal or proxies that hold the phyiscal (like CEF).

For those who believe in stock selection: No doubt stock selection can add value. This analysis was based on the index averages (HUI and XAU). On average, we only get average returns. You can go down from the senior producers into the intermediate producers and junior explorers. The more junior you go, the more the play looks like some form of lottery ticket. Good analysis can give you an edge but the market is pretty efficient overall.

In conclusion, I believe that given the political, operational and developmental risk in the gold stocks, the risk-reward ratio is favorable enough when there are other alternative leveraged vehicles on gold.

Time to Buy Market Vectors Gold Miners ETF?

See my comment here on why the Gold/XAU ratio might not be relevant: humblestudentofthemark...

SA article here: seekingalpha.com/artic...

The article is a little dated but the principles are still relevant.