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bowman711
100 Comments
Is Gold A Sucker's Bet?
The huge drop in gold on Friday was due to a 'perfect storm' affecting gold. The first was the liquidation of gold by the mutual and hedge funds trying to raise cash to meet the redemption requests of thousands of investors. The second leg was those same funds selling their foreign investments and then trying to convert the foreign currency into dollars. This, of course, made the dollar spike up from demand for dollar being greater than the demand for the currencies they were trying to convert. Since gold is priced in dollars, this was reflected in the price of gold.
Finally, free market gold is a safe store of value whether there is inflation or deflation. If the currency is inflated gold will eventually find the same level when priced in that currency. Or, if the currency is deflated X%, then free market gold will eventually find the same $X level in the deflated currency. The main wild card is how much governments meddle in or intervene in the gold market.
[The same could be said for oil, and that is why oil and gold have such a close proportional relationship. It doesn't matter if oil is priced in inflated dollars or deflated dollars. One barrel of oil will produce the same number of miles traveled, or pieces of plastic, no matter how it is priced. So, owning stocks in companies where the vast majority of their value consists of oil reserves in the ground will eventually find its same free market price relative to the rest of the economy no matter whether it is priced in inflated or deflated dollars. This is assuming that the demand in terms of petroleum for those miles traveled or pieces of plastic remains constant. ]
Since the jury is still out as to whether governments will be able to inflate our way out of the current economic crisis, or if deflation will win over, or, for that matter, the total breakdown of the current monetary system which is then replaced by a new system, gold will eventually settle at relatively the same value in the new system as it was in the old one. There may some minor variations in the relative value of gold, but sooner or later it will once again settle back to its historic value.
The only question now is just exactly where is gold priced today in comparison to its historic value in relation to the rest of the economy. If it is lower, then sooner or later it will shoot up to find its historic value. If gold is priced higher than its historic value, then it will go down. It is up to each investor to determine where he or she thinks gold is price when compared to its historic value, and act accordingly.
What are McDonald's and Wal-Mart Telling Us?
At least, mutual and hedge fund redemptions is the only way I can logically explain why the dollar, with its recent fundamentals is rising, at least short term, and not plunging like the drop in the stock market. . . . And it applies just as well to explain the drop in WMT and MCD.
Examining the "Unprecedented Demand" for Gold Eagle Coins
I would like to know any possible logical explaination for such a drop in this uncertain of a market.
A Chart From Our Anxiety Closet
Since oil is the 'lifeblood' of the world's economies, it truly is a bellwether of economic contraction and EXPANSIONn. Don't forget that no matter where the current situation takes us, at some point the economies will have to start producing new goods to replace those that have worn out during the downturn. It will take oil to get industry running again. Even getting raw materials to the factories will take oil. So, I think a better store of value than dollars, Treauries, etc. would be to own the stock of oil companies whose assets are oil in the ground.
No matter what oil is priced at, or in what currency, it still will produce the same number of miles traveled, pieces of plastic, etc.
Examining the "Unprecedented Demand" for Gold Eagle Coins
I learned today that the major countries are talking about suspending all equity trading for however long it takes for them to develop new 'trading rules.' It would take just such an international meeting for the current monetary system to be replaced with something else. Something absolutely stunning will cause people to try to get out of their dollars, euros, pounds, yens, etc., leaving them worthless.
It looks like 'the Select' are driving as many people out of gold (and silver) as possible, which they are buying at fire sale prices. No matter what form the new currencies take, they will sooner or later have a price in gold. Then, they can convert to the new money and buy up the stock market at salvage, fire sale prices.
Right now, I'd say that it is absolutely essential for one to have their house (& cottage) completely paid off so they own it outright. In fact, later today, I am going to call my county to see if I can even pre-pay my property taxes for the next couple of years. [During the Great Depression, most people lost their homes to tax delinquencies.] Then, I'd get everything else you can into gold or silver. Best would be the actual gold coins or bullion, but that is virtually impossible to find now, so the next best is to get the gold and silver ETF.
Any group evil enough to crash the monetary system, and steal the wealth of virtually everyone in society, is evil enough to outlaw gold for anyone except 'the Select,' but I can see no other option but to try to survive with the only store of monetary value that could be counted on for the last six thousand years.
I see a situation that is unprecedented in its seriousness - and in its evil. I can't think of any other scenario to explain why gold would go down during a financial panic, can you?
Stocks, Gold, and the U.S. Dollar
I learned today that the major countries are talking about suspending all equity trading for however long it takes for them to develop new 'trading rules.' It would take just such an international meeting for the current monetary system to be replaced with something else. Something absolutely stunning will cause people to try to get out of their dollars, euros, pounds, yens, etc., leaving them worthless.
It looks like 'the Select' are driving as many people out of gold (and silver) as possible, which they are buying at fire sale prices. No matter what form the new currencies take, they will sooner or later have a price in gold. Then, they can convert to the new money and buy up the stock market at salvage, fire sale prices.
Right now, I'd say that it is absolutely essential for one to have their house (& cottage) completely paid off so they own it outright. In fact, later today, I am going to call my county to see if I can even pre-pay my property taxes for the next couple of years. [During the Great Depression, most people lost their homes to tax delinquencies.] Then, I'd get everything else you can into gold or silver. Best would be the actual gold coins or bullion, but that is virtually impossible to find now, so the next best is to get the gold and silver ETF.
Any group evil enough to crash the monetary system, and steal the wealth of virtually everyone in society, is evil enough to outlaw gold for anyone except 'the Select,' but I can see no other option but to try to survive with the only store of monetary value that could be counted on for the last six thousand years.
I see a situation that is unprecedented in its seriousness - and in its evil. I can't think of any other scenario to explain why gold would go down during a financial panic, can you?
Too Soon to Move From Equities to Gold
'Actions by the Federal Reserve include: (1) an increase in the size of the 84-day maturity Term Auction Facility (TAF) auctions to $75 billion per auction from $25 billion beginning with the October 6 auction, (2) two forward TAF auctions totaling $150 billion that will be conducted in November to provide term funding over year-end, and (3) an increase in swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, Danmark’s Nationalbank (National Bank of Denmark), European Central Bank (ECB), Norges Bank (Bank of Norway), Reserve Bank of Australia, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank to a total of $620 billion, from $290 billion previously.'
All this means that they are scheduled to add $330-B to the already scheduled $290-B over the rest of the year. Added together, Uncle Sam, in the last two weeks, issued or is scheduled to issue $1,890-trillion newly 'printed' dollars to the system. This can only result in inflation, which will translate into increased prices for commodities - like gold.
On top of that, our (U.S.) Government is now pleading with other central banks around the world to participate in a co-ordinated issue of huge amounts of new monies. If this comes about, it will be even more inflationary. The question is, how long will it take for all this inflation to work its way into commodities? Answering that question (and each person will have to judge for him or herself) will tell you if it is too soon to buy gold.
The 20-Month Gold Puzzle
Gold Bulls: Beware
Even Asset Managers Run For Cover to Gold ETFs
Gold Bulls: Beware
Even Asset Managers Run For Cover to Gold ETFs
Dollar Soars
By the ECU, China, and other countries printing their money faster than Uncle Sam does his.
5 Reasons Why the $700B Bailout Could Translate to $250 Oil
he oil income trusts specialize in buying oil fields, and replacing the ones that start to run dry with new fields. On top of any capital gain, they pay great dividends. One I have, PGH, is paying $255/1,000 shares for October. That is a rate of 20.55%/year at the current share price of $14.89.
Canadian oil sands stocks would be a good choice since most of them are valued according to oil they have in place, ready to be produced when the spot price of oil is right. My favorite is Oilsands Quest (BQI).
Market Safe Havens Rapidly Dwindling
The only reason for the CFTC to announce such an investigation is because it is a total sham, and both they and the bullion banks know it. The announcement has nothing to do with starting an investigation - it is to quiet those who are lobbying for one.