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Ray Merola  

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  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    OAG

    I have not followed the futures markets closely enough to opine. However, it would not surprise me if there's some manipulation. It's gone on in the forex markets, and I believe I read there's some LIBOR allegations, too.

    Gold is mercurial.

    My approach to gold is quite limited and disciplined, so I can live with whatever ruckus is being raised in the background. Evaluating companies and their stocks keeps me busy enough.
    Apr 14, 2015. 11:51 AM | Likes Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    Good points all, kimboslice

    Even the GLD is not exactly investing in hard currency gold. One cannot stop by a SPDR office and exchange a certificate for the metal. So sans the guy who buys coins or bars, we're all using asset derivatives (GLD, IAU, etc.). It's a reasonable comment.

    Likewise, I agree my approach is largely speculative. My normal investment research efforts don't work well with commodities/currencies like gold. I'm ok with that, since it's just a very small part of my overall portfolio, and for a specific purpose.

    Perhaps looking at it another way, an insurance policy is "speculative." Most of the time, it lapses worthless and has to be renewed. I envision gold (or its derivatives) as a sort of "counter-market" insurance policy, but with more likely upside than my insurance premiums / receipts.

    Finally, I was careful to note expressly that my article isn't financial advice to follow; it's for information and to share an approach only. I'd certainly avoid investing any significant money into gold until I had an aligned portfolio allocation process for my personal situation and objectives.
    Apr 14, 2015. 11:14 AM | 1 Like Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    Yes, Stephen Mayo

    It's not entirely clear to me if it means much, either. However, a little gold exposure doesn't seem to detract from the muddle.

    I appreciate your candor, "Now I have no idea if this is bullish or bearish..."

    Sometimes it's good to just admit the tea leaves don't read clearly.

    Onya!
    Apr 14, 2015. 11:02 AM | 2 Likes Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    I agree with your thinking, Doug

    I chose to write at this level of depth/detail for those readers who want grind on it. For many, it may be more trouble than it's worth. For years, I just bought a few shares of GLD for some gold exposure and was done with it.

    My view on the big picture: 1) I want liquid, limited gold exposure, 2) I would like to minimize the capital outlay, and 3) I'd like to try to generate some income.

    I see an element of gold as like a small insurance policy.
    Apr 14, 2015. 11:00 AM | 8 Likes Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    Agbug (clever handle)

    Indeed, I see investing as the long game; including my puddle of GLD.

    Thank you for reading. I trust I can meet or beat your expectations on future articles.
    Apr 14, 2015. 09:23 AM | 1 Like Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    pink floyd

    Thanks for reading and commenting. One can skinny down the complexity by just buying GLD shares. The gold exposure is there, and it's straightforward. The short calls strategy is just to generate some income on an otherwise dead asset.

    I hesitate to get involved with the miners since in additional to exposure to the commodity, there's management issues, execution risk, political risk, financial risk, etc. The only one I've toyed with is FNV. However, I never pulled the ripcord on it.
    Apr 14, 2015. 08:58 AM | Likes Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    scctty

    Long-term is relative. Gold has risen 8 of the past 10 years. Since gold doesn't correlate well to stocks, I'm ok if gold falls and the S&P is up 30%. Taking a long view, the GLD is doing what I'd like to see it do: NOT correlate with the SPX.

    Your point on leveraging is interesting, and also one of perspective. I determine I want $XX exposure to gold. By purchasing DITM long calls, I can control this pre-set dollar amount (as measured by the GLD) for half the capital. While it's true I'm "leveraged," I'm also limiting my capital outlay to half. Since gold pays no income component, that makes sense to me.

    Furthermore, to achieve my 4% income benchmark (via short calls), it only takes half the income since my investment is halved, too.

    Interesting points of view. Thanks for sharing them.
    Apr 14, 2015. 08:51 AM | 2 Likes Like |Link to Comment
  • International Paper: A Cyclical With 2 Big Catalysts [View article]
    Pedro Larroy

    What multiples are you referring to? Most would say 8x cash flow isn't expensive on an absolute basis. That multiple is on the mark as the long-term historical actual P/CF ratio for International Paper.

    I trust you are not using P/E. Given the structure of International Paper's financial profile, price-to-earnings isn't the best metric. Remember IP generates twice cash flow versus earnings.

    Even so, the current stock price suggests a 15x PE on projected 2015 operating earnings, and a 1.1 PEG. That's reasonable.
    Apr 14, 2015. 08:41 AM | 2 Likes Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    hobart16

    Great question, but the answer is no. I have never dabbled with any other commodities or forex.

    Just gold. I really am much more an equities and fixed income guy.
    Apr 14, 2015. 08:30 AM | 1 Like Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    hfireball1

    What makes your comment good is that it's got a fair amount of truth to it. As an investor, I try to perform clear, clean research and select great companies with undervalued stocks. Gold doesn't permit me to do much of that at all, so I do feel more like the weatherman than the FBI.

    I suppose I can offer is this: for over a decade, gold has generally trended up, despite the current bear. It doesn't follow equities very well. So while predicting rain, but not telling you when, at least I'm forecasting thundershowers, not drought and flood.

    Cryptic enough?

    Great S.A. username, but the way. Does your nick match your investment results?
    Apr 14, 2015. 08:28 AM | 7 Likes Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    You're correct. However, it took gold until April 2013 to fall 20% and BECOME a bear market.

    Can I finagle that point to salvage my point-of-view?

    Thanks for keeping me on my toes.
    Apr 14, 2015. 08:10 AM | 4 Likes Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    james.,

    While I don't spend too much time on predicting short-term Dow moves, I concur that there are plenty of reasons that the index may stall in May. The failure of the DJTI to lead an advance (Dow Theory) is reasonable, as well as a view corporate earnings may take a breather. One significant reason: multi-nationals taking a hit over forex. I'm not sure this is fully baked into Street estimates.

    Part of my gold investment includes the dollar has peaked. I admit this is as much intuition as analytical. We're aligned there, too.

    I steer clear of gold mining stocks. Too many variables: not only the commodity price for the metal itself, but execution risk, management capex decisions, debts, etc. all stewed into the mix. I'll just stick with gold and be done with it.

    Thank you for reading and commenting.
    Apr 14, 2015. 08:06 AM | 4 Likes Like |Link to Comment
  • The 2015 Yellow Sleeper: How And Why I Invest In Gold [View article]
    Thank you, RAMPANT!

    Nothing wrong with selling GLD puts instead of buying the calls. However, for most it requires the short puts to be cash-secured. This may tie up more capital than otherwise necessary versus long calls.

    Buying long DITM calls cuts the capital outlay, yet provides the foundation for selling short calls for income.
    Apr 14, 2015. 07:58 AM | 2 Likes Like |Link to Comment
  • International Paper: A Cyclical With 2 Big Catalysts [View article]
    You are most welcome, jpmj4847
    Apr 13, 2015. 10:24 PM | 1 Like Like |Link to Comment
  • International Paper: A Cyclical With 2 Big Catalysts [View article]
    I truly appreciate the kind words, Phr3d

    Thank you for reading and taking the time to comment.
    Apr 13, 2015. 08:56 PM | 1 Like Like |Link to Comment
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