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Jeffrey Dow Jones  

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  • A Brief History Of Gold And Why It's Overvalued By A Factor Of 2 [View article]
    I appreciate this!

    When it comes to this sort of thing, I have an extremely open mind and am very easily swayed by convincing, logical arguments. If that means I have to change my mind, I do so gradually. But I also couldn't possibly care less about what others think. So it's easy to have a nice dialog, and it helps me with my analysis.
    Apr 21, 2014. 09:16 PM | Likes Like |Link to Comment
  • A Brief History Of Gold And Why It's Overvalued By A Factor Of 2 [View article]
    Well, the model that supports a $2700 price is completely insane. It requires buying into some really, really wild assumptions. Some investors may be cool with those, others less so.

    Stay tuned, though...
    Apr 21, 2014. 09:13 PM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    In a sense, that's what this article is designed to do. It's designed to illustrate when gold is expensive or cheap. It has worked extremely well over the past 114 years (in a long-term sense i.e. decade-long forward returns)

    Sounds like a lot of people disagree about what it says today though. So maybe it's not as easy to buy and sell correctly as we all think...
    Apr 21, 2014. 07:51 AM | 1 Like Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Careful with your dates... I can cherry pick data here too. If I bought $300 of AAPL in 2000 I'd be at $19,650 today.

    The point I'm trying to make is that when you look at longer windows of time, it's pretty clear that Cash + Interest is a better investment than gold i.e. it makes more money.

    There's no disputing this point. It is fact.
    Apr 21, 2014. 07:47 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    I don't know any of that as fact. It's simply my guess. Just like it's your guess that gold would be accepted as a medium of exchange.

    I just know (for a fact) that if you came to me during some kind of post-apocalyptic scenario and wanted some of my water and dehydrated food, I wouldn't give it to you for your gold. Your horse? Sure. Your ammo? Sure.

    I see the argument you're making though. Gold & silver were a fine medium of exchange at various points in history, but not in any society where there was already another medium of exchange, some kind of currency. I've never been presented sufficient information or data or logic to be convinced that gold would act as a medium of exchange in this type of scenario.
    Apr 21, 2014. 07:43 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    "According to a study of 775 fiat currencies by DollarDaze.org, there is no historical precedence for a fiat currency that has succeeded in holding its value."

    Of course not. Not even all of today's global currencies succeed at holding their valuation. The reason is because a little bit of inflation is much, much, MUCH better than deflation (in an economic sense). Inflation translates to a less valuable currency

    The U.S. Dollar has lost 96.7% of its value since 1900. But the Dollar + Interest has done quite well. It has preserved its value and then some.
    Nobody holds currency in a vacuum (or under their mattress) the way they do gold. If you want to look at the erosion of purchasing power in a paper currency, you have to include interest.

    As for similarities between Weimar-era Germany and the US today... well, let's just say you go ahead and bet on that outcome while I'll bet my actual money on a different outcome. It's the future, so neither one of us can say for sure what'll happen.
    Apr 21, 2014. 07:36 AM | 2 Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    http://seekingalpha.co...
    Apr 20, 2014. 09:58 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    With a real rate of return over the last 114 years of pretty close to zero, there are much, much better places to make money in the markets than gold.

    MUCH BETTER PLACES. :-)
    Apr 20, 2014. 09:57 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Production. Cost. Can. Go. Down.

    It has happened before and could happen again. It will happen if market. prices dictate it must.
    Apr 20, 2014. 09:55 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Interesting point... nobody ever talks about this. In fact, I never thought about this really. It's a new dimension upon which we can criticize the CPI!

    Thanks for this.
    Apr 20, 2014. 09:55 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Yeah, baby!

    http://seekingalpha.co...
    Apr 20, 2014. 09:53 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Yeah, I'm kind of disappointed by this. I guess you're right. Nobody cares about better ways to make money; they own this thing, and the price of this thing is about as far as they can think.

    As for the historical prices, these are fairly well documented. The prices were what the prices were. That's pretty much it. The fair market determines a price (or prior to the 1970's, the Treasury did) and that's the price of gold. This is true by definition. An asset is worth on any given day whatever the market on that day says it's worth.
    Apr 20, 2014. 09:49 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Why do you believe $5000 is a good target? That's a lot higher from here.
    Apr 20, 2014. 09:45 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    The 10yr projected returns have two inputs: the rate of inflation (actual in the past, and as projected by the TIPS market for the future) and the degree by which gold is over- or under-valued relative to trend. There are the fundamental trend drivers and whether the asset is historically expensive or cheap.

    Most basic price projection models work in an identical fashion. Grantham, Hussman, @JesseLivermore, Major Investment Banks & Research Houses, etc.

    The "actual" return line is simply that decade's actual forward rate of return. So basically, at every date on that chart there are two data points: what the model is projecting and what the actual return wound up being. Those points are what generate the lines.

    Hope that makes a little more sense.
    Apr 20, 2014. 09:45 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Totally agree -- simple MA approaches can indeed produce a lot of whipsawing. Not just with gold, but anywhere you use them.

    You could definitely use a basic MA cross approach instead. They'd generate slightly different results over the long run, but my guess is that they'd correlate almost perfectly. Eg. be long gold when the 50 day is above the 200 day, etc.

    In spirit, it's the same basic thing. You're long gold when the trend is good and out when the trend is hostile.
    Apr 20, 2014. 09:41 AM | Likes Like |Link to Comment
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