sundrenched

Why Gold ETFs Trump Gold Bullion

Pick and choose your ratio... Looking at previous bear markets, you're right to say that the gold/Dow ratio has further to rise. But if you look at the ratio of gold to oil, then gold looks seriously overpriced.

To each his own, but personally I think it'll be easier to make money in oil than in gold at current price levels, with less risk of a vicious drawdown.


On Feb 25 03:06 PM clam75 wrote:

> I don't wholly trust the gold ETFs. Can one of their shareholders
> actually go to a depository and SEE the physical gold that is owned
> by the fund? If not, I'd be very suspicious. Until the Dow/gold
> ratio gets to 2:1, I think that buying physical gold is a good play.

Why Gold ETFs Trump Gold Bullion

You put it well: "survivalists" :) I'll take my chances that we're not going back to a medieval economy. Bullion is nice to look at, but the bid-ask spread compared to GLD is way too big. Today you pay a premium because they can't melt and distribute the stuff fast enough, and once the sell-off comes it will be the opposite.

Today there was an interesting article about silver in the Financial Times also. It's up 40% for the past 4 months, mainly driven by investment demand. Industrial demand has dropped and output has increased. Looks like a good shorting opportunity once the trend breaks.

Wednesday Outlook: Commodities, Emerging Markets

Martin Wolf of the Financial Times has a very nice column today. He found exactly the right word to describe this situation: "depressing".

Just more of the same dithering, with the underlying cause money politics. Them lobbyists sure were worth every cent. As for Tim Geithner, I'm beginning to fear his ultimate goal is a multi-million dollar job after his stint in the treasury. I do hope I'm wrong, but what we're seeing so far doesn't make me optimistic. As for Obama, is this what he meant by "change you can believe in"? I'm gonna be sick.

Peter Schiff: Outlook for the Gold Market

I'm reading his "little book" (a good read), and what you say has to be refined a little. One of his specific recommendations is to buy equities in developed nations that export commodities (Norway, Netherlands, Australia, New Zealand, Canada). Emerging markets are more speculative (political risk, etc.) and he recommends only limited exposure (10% if I recall correctly). Economies in such countries will benefit from the recovery in commodity prices that he predicts, and their currencies should also do well due to their strong export performance (except perhaps in the case of the Netherlands, which uses the euro).

On Dec 29 05:09 PM Sleeves wrote:

> Quick question. If the Europeans are doing the same as the Fed why
> does P. Schiff their currencies will fare any better than the Dollar?
> Why invest in European Equity?

Peter Schiff: Outlook for the Gold Market

Noop, this is a common misconception, but this money never existed, it was only an estimate of worth, not actual worth. The market cap of a company is the number of outstanding shares multiplied by the last transacted price, but the last transacted price would not be available to all shareholders if they tried to sell all at the same time.

Likewise, all this housing wealth that disappeared never really existed to begin with. I bought a house at 250k and at some point similar houses in my street were going for 450k, and now it's back at 250k, but that doesn't mean that I lost 200k and someone else walked away with it. I suffered a theoretical loss, but no money changed hands.

On Dec 23 09:50 PM BrucePile wrote:

> To the point about all the money lost in the stock markets causing
> an equal amount of deflation: all that money did not disappear !
> The market is a zero sum game; every dollar you make in the market
> comes out of some other participant's pocket on the losing end of
> a trade.