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Jeffrey Dow Jones  

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  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    I have a token amount of GLD and its a position in the model portfolios I run at Alpine Advisor.

    What I'm actually long is the physical metal. (It's a small percentage of my investment net worth, however.)
    Apr 18, 2014. 09:07 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    We've been darkly fantasizing about a financial apocalypse since the, what, 1970s?

    Not even a generational event like 2008 brought it about. The scenario is so low probability it's hard to justify spending resources trying to hedge it.
    Apr 18, 2014. 09:05 AM | 1 Like Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    If I lived in Ukraine, you'd better believe I'd keep a bunch of my wealth in gold (or US Dollars)!
    Apr 18, 2014. 09:04 AM | 1 Like Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Over the short run, he might be right. There's good support in the $1250-1300 range and $1300 is an important psychological level.

    The real low to watch, however, is $1200. No reason why gold couldn't go there in and re-test that in the next 12 months. I might even be kinda surprised if it didn't.
    Apr 18, 2014. 09:03 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    "Precious metals is not an investment... Physical precious metals is insurance."

    I like this.

    Here's a funny story: I was at a small investment conference a while back discussing this topic. One of the people in attendance was an ultra high net worth investor who'd spent his entire career in the gold industry. (He had similar thoughts to this piece about the price of gold, FWIW).

    One of the comments he made that the room really seemed to enjoy was that he said "an ounce of gold should always be able to buy a nice suit." Everybody chuckled, reflected for a moment, and nodded their head in agreement.

    Not only is this generally true, it's also the right way to think about gold. Over long windows of time, there's no real return. It's simply the inverse of the Dollars in which it's denominated. An ounce of gold bought you a nice suit in 1900. At $812/oz, its fair value, an ounce will buy you a nice suit.

    (Or one suit and get three free at Joseph A. Bank!! Hey-ooo!!!)
    Apr 18, 2014. 09:01 AM | 1 Like Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    "Gold is not my forte but if this article and the comments dont get your gears turning then you might need to check for a pulse."

    Depends on what you mean by "gears turning." I view all this stuff completely dispassionately. I don't feel any emotion about it and my pulse never changes it.

    It makes me think, though. I appreciate all the pushback I get on here and I like being challenged. I'm writing a book on this subject right now, and it's a more logically-sound thesis because I'm now able to neutralize all the objections in advance. I've also presented similar studies to groups of institutions, super high net worth investors, and professional money managers and have received a lot of good feedback on it.
    Apr 18, 2014. 08:57 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    I think the cost of production accelerated so quickly over the last decade (it basically tripled) because the price of gold accelerated so quickly.

    Think about it, you're a miner mining gold at $400/oz. Gold is trading at $1,000/oz. Now all of a sudden, it makes sense to go after that gold in the really difficult-to-reach places where it might cost $800/oz to mine. Gold touches $2,000/oz. Now you're starting up projects, opening new offices, hiring new staff, building new equipment, pushing your cost up to $1,400/oz for those projects. This drives up your (and the industry's) aggregate cost to mine gold.

    What a lot of folks on this thread are missing and seem to have forgotten about in actual history, is that that pattern can reverse. The AISC is in large part a function of gold price, not the other way around. I wouldn't be surprised in the slightest to see gold miners report lower AISC in the next few years.
    Apr 18, 2014. 08:53 AM | 2 Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    What does the price of gold have to do with U.S. debt?
    Apr 18, 2014. 08:49 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    "Buy and Hold Anything is a joke that we just spent 5 really nasty years learning. "

    This is why I like trend following and showed the results of what really simple trend following in the gold market looked like over the last 40 years.
    Apr 18, 2014. 08:48 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    "The inflation is obvious."

    I wouldn't think about disagreeing with you that some goods & services have become very expensive. They have. There's plenty of data to support this.

    But there's also plenty of data to support that not everything has. Some things have gotten much cheaper in recent years or over the last decade or so.

    When looking at systemic inflation, you can't just point to a subset of goods & services and use that as the basis for calculating your rate.
    Apr 18, 2014. 08:46 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    "If miners can't sell their gold at cost( at least)they will close shop,which will bring the supply down"

    This is tricky, because with gold, there's already a very large supply out there. Shuttering mines changes the RATE at which new supply enters the market. But we don't consume gold the way we do crude oil or orange juice.

    If miners can't sell their gold at cost, they'll do whatever they can to bring that cost down. This has happened to them many times before during bear markets in gold. Just a short decade ago they were happily (and profitably) mining gold at $400/oz.

    AISC has absolutely nothing to do with the intrinsic value of gold. That's 100% linked to the value of paper currencies in which gold is denominated (inflation).
    Apr 18, 2014. 08:41 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    Given the secular headwinds and the changes in demographics in this country and the decreased dependency on debt, I think this "new normal" GDP of 2-3% is perfectly acceptable and it represents a huge improvement over what we saw during the crisis and post-crisis years.
    Apr 18, 2014. 08:38 AM | Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    I'd put the probably that gold touches $812 at maybe 20% within the next 24 months. It's low. Maybe even 10%, or like the guy in another comment said, it might never touch $800.

    I give gold a 50/50 chance at touching $1000 over the next 24 months.

    And, to think about that fair value of $812 another way, this model is suggesting a coming 10yr rate of return of around -1.7%/year for gold.

    I'd say there's a 95% probability that the actual rate of return for gold over the next 10 years winds up as -1.7% +/- 3%.

    Does that help?
    Apr 18, 2014. 08:35 AM | 8 Likes Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    wut?

    You mean the first graph? That's 114 years of data, log scale.
    Apr 17, 2014. 06:01 PM | 1 Like Like |Link to Comment
  • How Far The Gold Sell-Off Could Go, And Strategies That'll Save You [View article]
    I think the weirder thing is that most of the article has to do with trading strategies that are (might be?) superior to buying and holding gold and there hasn't been a single comment about any of that.
    Apr 17, 2014. 06:00 PM | 1 Like Like |Link to Comment
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