Gold & Silver - Bull Market

I recently found this article and thought I would share.
Gold bull still has a long way to run
One-thousand Federal Reserve Notes per troy ounce! This past week gold edged over $1000 to close at its highest levels ever witnessed. This much-maligned investment has nearly quadrupled since its secular bull’s humble beginnings in April 2001, a fantastic 297% gain compared to the S&P 500’s pathetic 7% loss over this 8+ year span.

With gold being the best-performing major asset of this decade, and now surpassing the once-unthinkable $1000 mark, many investors are growing wary of its future prospects. Is gold too high today? Are $1000+ levels unsustainable? Is gold’s secular bull nearing its end after this metal’s epic run? These first tentative steps over $1000 are really fanning the flames of doubt.
Article continues here

I know in the past that Silver/Gold investment has been laughed off these forums by some as trinkets or not of use to get rich fast and they are probably right if you buying without leverage and physical metal only.

Luckily for us there are shares on the ASX which are hugely leveraged to the price of Silver and Gold and small movements upwards can send the profits and share prices for these stocks soaring.

There are a lot of pros for Gold and reasons the price should keep rising, China is increasing it's reserves and encouraging it's citizens to buy, the Fed continues to monetise US debt, Gold is less than 20% above a 30 year old high and less than half of the high in inflation adjusted terms.

Gold is not an inflation hedge, it's a crisis hedge and this crisis is far from over.

Happy to disclose some of my (ASX listed) holdings and reasons for picking them, but if the interest is not there I won't bother. I'm not looking to blindly ramp, but Gold is going places. Maybe this thread will receive limited or no replies, that's cool, I'll dig it up in a couple of years ;)
 
i agree - i still think i'll see gold at USD$2000oz within 10 years.

i buy gold with my super fund cash income. i have one (!) 10oz bar that cost me about $8500.
 
I recently found this article and thought I would share.
Gold bull still has a long way to run


I know in the past that Silver/Gold investment has been laughed off these forums by some as trinkets or not of use to get rich fast and they are probably right if you buying without leverage and physical metal only.

Luckily for us there are shares on the ASX which are hugely leveraged to the price of Silver and Gold and small movements upwards can send the profits and share prices for these stocks soaring.

There are a lot of pros for Gold and reasons the price should keep rising, China is increasing it's reserves and encouraging it's citizens to buy, the Fed continues to monetise US debt, Gold is less than 20% above a 30 year old high and less than half of the high in inflation adjusted terms.

Gold is not an inflation hedge, it's a crisis hedge and this crisis is far from over.

Happy to disclose some of my (ASX listed) holdings and reasons for picking them, but if the interest is not there I won't bother. I'm not looking to blindly ramp, but Gold is going places. Maybe this thread will receive limited or no replies, that's cool, I'll dig it up in a couple of years ;)


China Wants IMF Gold, But Only at a Discount


Monday, September 21, 2009 9:52 AM

Article Font Size

China is considering buying gold being offered for sale by the International Monetary Fund, Market News International said on Monday, citing two unnamed government sources, but the report could not immediately be confirmed.

"China will consider buying if the price is right and the return is relatively high," MNI quoted one of the government sources as saying.

Gold, which had dipped just below $1,000 an ounce, rebounded to $1,003.45 after the report.

That would put the market value of the 403.3 tonnes on offer from the IMF at close to $13 billion.

......
http://www.moneynews.com/financenews/gold/2009/09/21/262554.html


.
 
Last edited by a moderator:
I'm not investing in gold but am trading it. Last purchase was yesterday @ $1000.54. I think I said in another thread recently I think we could easily see $1050 pretty soon. If it heads south I'd buy again at $970.
 
this is a speculative trade so i dont participate.
but i can tell you that the 'smart' players have been buying gold in pound sterling, not AU$
 
why would you buy in a currency that is weakening? why not ride the AUD to at least the mid 90s and the switch if you felt you could find a btter currency? (unlikley with aussie IRs as they are)
 
why would you buy in a currency that is weakening? why not ride the AUD to at least the mid 90s and the switch if you felt you could find a btter currency? (unlikley with aussie IRs as they are)

because you get downside protection. Its not just about how much you can make but also about how you can hedge your risk.
 
Thanks for the chart willair, I would be very interested in seeing the 5 years prior to where it starts. Notice where it was in 1977-1980, do you know what we saw happen to Gold prices over this time period? Investment demand is increasing and soaking up the difference from the falling jewelery demand. Quarter 1 this year saw investment demand surpass jewelery demand for probably the first time in 30 odd years (although reverted back 2nd quarter). It is possible that we will see jewelery demand fall to as low as it was during the last few years of the 70s bull run.

I'm sure China would love the Gold at a discount, good luck to them!

China, India and Russia, eager to reduce their position in dollar-denominated securities, have expressed interest in buying IMF gold.

I believe the Gold will most likely be auctioned if the sale goes ahead, to the highest bidder much like occurred during their sales over 1976-1980.

I raise you the graph at the bottom of this post.

this is a speculative trade so i dont participate.
I am investing in & sometimes trading gold/silver mining shares some of which are profitable and undervalued at today's Gold prices.

I agree that expecting Gold to go up is speculative, but then I see investing in profitable miners (or explorers/juniors with potential to be profitable at today's prices) is no more speculative than buying other undervalued stocks on the market. If anything I would say blue chip stocks are more speculative at today's pricing as many now have a premium built into their price. Any investment in any asset class is speculative to a degree.
 

Attachments

  • gold1.jpg
    gold1.jpg
    77.3 KB · Views: 73
Gold is not an inflation hedge, it's a crisis hedge and this crisis is far from over.

Happy to disclose some of my (ASX listed) holdings and reasons for picking them, but if the interest is not there I won't bother. I'm not looking to blindly ramp, but Gold is going places. Maybe this thread will receive limited or no replies, that's cool, I'll dig it up in a couple of years ;)

Hobo Jo

I would be interested in your reasons for buying and holding gold shares as I note the Baltic Index is diverging.


Sheryn
 
I would be interested in your reasons for buying and holding gold shares as I note the Baltic Index is diverging.
Yes the BDI certainly doesn't look great.

I do not lump Gold with other commodities, it is clearly much more than a commodity to anyone who cares to take a look into Gold's history.

I am in the process of putting together a bit of a document about Gold and why I think it will do well, what the drivers will be, which I intend to share probably with friends and family. It's a little unstructured at the moment, but here is some of what I've put together so far:

On Mining:
- Reducing supply due to lower output from gold mines
- Low amount of exploration due to lack of funds invested into the industry while Gold has been at low prices
- Deterioration of mature mines, not being replaced by new reserves
- Takes years to bring new mines online, high cost of production

On Central Banks:
- Currently account for around 20% of above ground stock
- World Gold Council says central banks may be justified increasing their Gold holdings to 40-50% of their reserves – June 2009
- Central Banks worldwide have reduced Gold sales
- It’s been reported that in 2nd Quarter 2009 Central Banks have become net buyers for first time since 1987 – Aug 2009
- CBGA continuation announced with 100t reduction in maximum allowed to be sold per year (Sept 2009 rolls to new agreement) – Announced Aug 2008

On BRIC (China/Russia main influence):
- Russian President proposed new world currency at G8 meeting, revealing minted Gold coin – July 2009
- Russia wants Gold to be a part of IMF SDR – March 2009
- Russian Central Bank has been increasing Gold reserves for 2 years
- China revealed it had increased it’s Gold reserves by 450t – April 2009
- China, Russia & India all expressed interest in buying IMF Gold from proposed 400 ton sale – Sept 2009
- China has changed rules on private ownership of precious metals
- China urges citizens to buy Gold/Silver, makes it available from banks & advertised as a good investment on TV – July 2009
- India is the world’s largest consumer & importer of Gold
- New Gold depository in Hong Kong – to be Gold hub for Asia (Gold moved from London to this new facility) – Sept 2009

I'll post more as I put it together, maybe an update this weekend.
 
I agree that expecting Gold to go up is speculative, but then I see investing in profitable miners (or explorers/juniors with potential to be profitable at today's prices) is no more speculative than buying other undervalued stocks on the market. If anything I would say blue chip stocks are more speculative at today's pricing as many now have a premium built into their price. Any investment in any asset class is speculative to a degree.

please dont get me wrong. Investing in gold, commodities, and most resource companies (with maybe the exception of BHP, RIO and WPL) are speculative for me because i lack the skill set to value them.
Therefore what is speculative for me might not be speculative to someone who does possess the necessary skill set.
 
on a macro level, do you consider it good that we dig this near useless metal out of the ground and ship it overseas for real goods in exchange? or is it a destruction of national wealth?

is the environmental cost worth the utility that gold provides?
 
on a macro level, do you consider it good that we dig this near useless metal out of the ground and ship it overseas for real goods in exchange? or is it a destruction of national wealth?

is the environmental cost worth the utility that gold provides?

not for computers. why gold is still used in computers is beyond me.

there's a big hole out wodjina way that mines 70% of the worlds tantalum - an UBER conductor. gold is like a mini vs a tantalum ferrari - as far as conductivity goes - in comparison.
 
Hi Hobo-Jo,

I'm a self-confessed Gold Bull. I've got about $50K in Aus gold stocks and that much again in hard bullion.

I too believe we're still in early days, maybe wave 2, of where this gold bull is headed. In inflation adjusted terms we're still way off the 80's peak in the gold price. I think we'll see US$2000 before this bull ends and probably within the next 2 years.

The big kicker will be if the USD tanks and the world looks to a reserve currency backed by something tangible. Ever since the world went fiat and removed the peg to gold we've lost control of our financial markets. At some point I hope this will be reversed so that we grow within our limits. If that happens then gold could explode to US$6000 or more.

All a speculative play, but the upside potential is significant. And leveraged gold stocks beat the returns on the hard metal itself.

I'll ride this bull for a bit longer. Its far from being dead just yet. Here's a link to a technical analysis of the bull market in gold and silver:

http://www.gold-eagle.com/editorials_08/watson092209.html

Cheers,
Michael
 
Hi Hobo-Jo,



The big kicker will be if the USD tanks and the world looks to a reserve currency backed by something tangible.

Cheers,
Michael

If the USD tanks i will be buying US large cap companies with dominant market positions and receiving either:
a) large proportion of their earnings through exports, or
b) large proportion of their earnings from overseas subsidiaries.
 
If the USD tanks i will be buying US large cap companies with dominant market positions and receiving either:
a) large proportion of their earnings through exports, or
b) large proportion of their earnings from overseas subsidiaries.
I like this!

Remind me again when the USD tanks so I can act on that as well... ;)

Cheers,
Michael
 
Top