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Jeffrey Dow Jones

 
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  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    Sure but nobody is going to use a $1,200 coin for its $50 face value. :-)
    Jun 3, 2014. 08:22 AM | Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    I love the idea of writing options against a gold position. I advise with a few hedge funds, and one employs that exact strategy right now. Long gold and the miners and writing calls on them all day long.
    Jun 3, 2014. 08:21 AM | Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    "Would you please using the same logic employed in the above article justify current levels of DJIA, S&P 500 and NASDAQ."

    Yes, as the first commenter here mentioned, the logic doesn't work for equities. Stocks are productive assets that generate earnings and pay dividends. Their value is equal to a discounted stream of future cash flows. A million different variables can affect the size of those cash flows.

    Gold has no cash flows. It also doesn't get used up the way other commodities do. Over the long run its value is roughly based on the value of the Dollars in which it is denominated.
    Jun 3, 2014. 08:20 AM | Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    "Funny how Jeff picks near the low price point for gold in year 2000 after 1990's and 1980's when gold was priced mostly higher."

    I didn't pick that date. The guy that started this thread did.

    For gold, the period that matters most is 1974+. That's really the only useful data we have on the gold price, too.
    Jun 3, 2014. 08:17 AM | 1 Like Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    "Many people have had to pay double since 2012 though,so the trend is UP."

    It doesn't matter what specific people have to pay. It matters what the price is systemically. Healthcare costs haven't doubled in the last decade. But yes, the trend is indeed up.

    "Next big thing ,ELECTRIC Bills ,you may have to revise your statement after coal is banned by the Erkel in charge."

    I don't know what this means. But there's no way coal is going to get banned. It accounts for almost half of U.S. power. We don't have the infrastructure in place to pick up that slack.
    Jun 3, 2014. 08:15 AM | 1 Like Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    It sounds like this particular thread doesn't believe the CPI accurately measures the rate of systemic inflation.

    Rather than citing anecdotal evidence or specific cases, the more logically sound path here would be to cite something that does a more accurate job tracking inflation.

    Here, look at this too:
    http://nyti.ms/1pClFMX
    Jun 3, 2014. 08:12 AM | Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    Yes.

    The reason why I think it matters less is because sometimes current operations shouldn't or can't be sustained. Sometimes things change.
    Jun 3, 2014. 08:07 AM | Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    Well, it should be constant over the long run relative to the value of the Dollars in which it is denominated. The CPI is how we measure the change in the value of the Dollar.
    Jun 3, 2014. 08:05 AM | 1 Like Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    I really need to do this type of analysis on silver. I'm curious how the long-term data looks, especially since there wasn't any artificial price suppression in silver prior to 1974. (Right?)

    Silver has more industrial uses, so it's not a purely neutral asset the way that gold is, but still, this is a neat idea.
    Jun 2, 2014. 11:01 PM | Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    I'm a huge fan of GDX.

    http://bit.ly/McwC74

    In fact, being long GDX over GLD might be one of my favorite trades right now.

    This is my game:

    1) I want to stimulate discussion and honestly see if there are some robust, rational counter-arguments to this type of model. SA is a good place for this, especially relative to the rest of the internet.
    2) I'm writing a book on gold and want to vet this thesis as best as a chump like me can.
    3) I want to drive traffic to my website and get people to sign up for my newsletter, and hopefully by discussing interesting topics in interesting ways I'll be able to do that.
    4) I get paid (peanuts) per click on this article. So the more traffic the better! Hopefully this one will pay for a nice dinner for me and my wife. :-)
    Jun 2, 2014. 11:00 PM | 7 Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    No, it's a real asset denominated in dollars.

    I'm confused why being liquid or metal would matter?
    Jun 2, 2014. 10:55 PM | Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    That was the point I debunked in this piece: http://seekingalpha.co...

    If you own gold as insurance, why not trend follow instead? The returns are SO MUCH HIGHER. The premium associated with having that policy all the time is huge. And if you trend follow, there's still a very good chance you'll catch the move and benefit from the insurance.
    Jun 2, 2014. 10:54 PM | 2 Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    Yeah, I see where you're coming from here. But it's possible we didn't screw the pooch, too. Debt as % of GDP skyrocketed in the early 1940's but the U.S. slowly grew its way back down. Barring another economic disaster of similar magnitude (no guarantee, mind you), we could grow that debt back down again.

    It's tough to say.

    Thanks for the comment.
    Jun 2, 2014. 10:45 PM | 1 Like Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    Yes, this was sort of one of my points. If you want to pick a different benchmark for gold, then you have to use that same benchmark for other real assets. And in that case, it suggests that things like real estate or durable goods or corn are massively undervalued.

    "it is futile to bench mark the gold price against anything."

    This is sort of true to the extent that it's futile to benchmark ANYTHING against anything. Prices for all assets are set every day in the market. That's what buyers are willing to pay and what sellers are willing to sell at.

    You can do some fundamental digging, though. I don't believe the concept of intrinsic value is totally pointless.
    Jun 2, 2014. 10:42 PM | Likes Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    Yes, as stated in the disclosure I am long gold. I'm also long GDX in one of the virtual model portfolios I manage.
    Jun 2, 2014. 10:38 PM | Likes Like |Link to Comment
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