What The Hell, A New Gold Thread.........

bubblesmoney

it was funny seeing the RBS advertisement for 'managing your money' on the same article you have linked above.

the main concern for me too is the crowd going for gold now which usually preceeds a bubble burst in any market, but the only thing going for it is the fundamentals. the oil-gold ratio looks more promising as the article says. am wondering myself whether to go the oil investment way instead of overpaying my mortgage when interest rates are low. i feel more chance of oil doubling than gold. any pointers on those who invest in oil and how they do it and where they buy it from. i dont mean filling the car tank weekly, i mean filling an investment portfolio

rl290

FWIW, I just sold a substantial minority of my gold investment (I have taken back half of my original investment). It seems to me that talk about gold, here and elsewhere, has ballooned lately. There is certainly growth to come, but I have noticed larger sellers beginning to sell chunks of their holdings. I still see a long term bull market for gold, but in the short term I think there may be a bubble about to burst. Meanwhile I am holding my gold mining shares.

R

bubblesmoney

rl290 wrote: »

FWIW, I just sold a substantial minority of my gold investment (I have taken back half of my original investment). It seems to me that talk about gold, here and elsewhere, has ballooned lately. There is certainly growth to come, but I have noticed larger sellers beginning to sell chunks of their holdings. I still see a long term bull market for gold, but in the short term I think there may be a bubble about to burst. Meanwhile I am holding my gold mining shares.

R

i think gold mining shares work similar to leveraging. when gold booms the smaller mining stocks become multibaggers. but the reverse works too when prices fall.

see this graph below on the link and see the gold appreciation. more important see the flatline before that appreciation, see how many decades that lasted, if the gold bubble bursts then whoever gets caught gets stuffed for good.
http://stockcharts.com/charts/historical/Print/djiagold1980print.html

it would be much more prudent holding on to gold rather than mining stocks, because if gold goes down then that industry suffers credit problems plus smaller players disappear. but holding physical gold depends on what price you acquired it at. in my case i and my family are holding on because almost all holdings were acquired between $287 - $500 range purely out of luck and not financial genius let me add. so i/we dont have much downside (hopefully ). did book a bit of profit around the 450$ range earlier and again bought a bit more between 2000 - 2003 when the prices dipped. regret not buying more then before 2003 otherwise could have offloaded now rather than thinking of sour grapes .

cloud_dog

rl290 wrote: »

FWIW, I just sold a substantial minority of my gold investment

Is it possible to have a substantial minority

:rotfl:

JoeCrystal

That would be 25%.

rl290

bubblesmoney wrote: »

i think gold mining shares work similar to leveraging. when gold booms the smaller mining stocks become multibaggers. but the reverse works too when prices fall.

see this graph below on the link and see the gold appreciation. more important see the flatline before that appreciation, see how many decades that lasted, if the gold bubble bursts then whoever gets caught gets stuffed for good.
http://stockcharts.com/charts/historical/Print/djiagold1980print.html
.

Thanks for the feedback, though I don't entirely agree. While buying gold miners does provide some leverage on gold, it also plays on oil prices, good stock picking (there are some ludicrous valuations.. see by quote below) and the potential for consolidation as the money market frees up. I won't write a comprehensive essay on this, but, as an example, see the quote below from Ruffer:

"We believe the tide has now finally turned and 2009 will be a far better
environment for gold shares. On costs, the lower oil price will have a significant
impact on margins, with oil price down some US$100/bbl from its high likely to
reduce mining costs by U$40-80/oz. For example, Oceana Gold tells us that the
annualised fuel saving from the first half year will amount to close to US$16m,
significant when one considers that its market capitalisation is only US$28m!
Other costs are also falling including steel, reagents and even labour: the margin
expansion could surprise a market that has yet to factor these changes..."

"...Many gold shares remain ridiculously cheap on replacement cost and price
to cashflow metrics (we can only assume continued equity market risk aversion).
For example Northgate, which has a market cap. of US$210m, expects to produce
390,000oz at US$400/oz in 2009. This implies EBITDA of over US$180m (or a
price to EBITDA multiple of 1.2x) and yet the shares are barely off their year
lows: we continue to buy."

Even with significant gold pullbacks from $750 to $850 there are still upsides to many stocks.

****************************

As for significant minority... 20-30%


R

bubblesmoney

rl290 wrote: »

Thanks for the feedback, though I don't entirely agree. While buying gold miners does provide some leverage on gold, it also plays on oil prices, good stock picking (there are some ludicrous valuations.. see by quote below) and the potential for consolidation as the money market frees up. I won't write a comprehensive essay on this, but, as an example, see the quote below from Ruffer:

"We believe the tide has now finally turned and 2009 will be a far better
environment for gold shares. On costs, the lower oil price will have a significant
impact on margins, with oil price down some US$100/bbl from its high likely to
reduce mining costs by U$40-80/oz. For example, Oceana Gold tells us that the
annualised fuel saving from the first half year will amount to close to US$16m,
significant when one considers that its market capitalisation is only US$28m!
Other costs are also falling including steel, reagents and even labour: the margin
expansion could surprise a market that has yet to factor these changes..."

"...Many gold shares remain ridiculously cheap on replacement cost and price
to cashflow metrics (we can only assume continued equity market risk aversion).
For example Northgate, which has a market cap. of US$210m, expects to produce
390,000oz at US$400/oz in 2009. This implies EBITDA of over US$180m (or a
price to EBITDA multiple of 1.2x) and yet the shares are barely off their year
lows: we continue to buy."

Even with significant gold pullbacks from $750 to $850 there are still upsides to many stocks.

****************************

As for significant minority... 20-30%


R

i guess the mines profitabilty depends on the quality of the ore and costs involved in extracting gold. read somewhere that in some places the cost can come up to 600-750$ per ounce!!! that makes them seriously unprofitable if costs rise. obviously the ones with lesser costs will survive. but low oil prices isnt going to last long. my feeling is it has to go up with dwindling world reserves. when the oil price shoots again then loads of speculators will exit gold to jump on the oil band wagon. also credit crunch is apparently affecting funding for mine exploration and develoment affecting smaller players. speculators must be keeping an eye on the oil:gold price ratio which looks extremely wide now from historical perspectives. i am just guessing. good luck to you, but i think gold mining stocks are very risky. i'd much rather speculate on the asset rather instead for now but will keep my eyes open learning new things.

mini_lidi

So invest in oil??

cloud_dog

A fairly good article, as it also contains a couple of 'beware...'.....

$2500 gold - is Nichols nuts or a prescient observer?

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=78718&sn=Detail

cloud_dog

Found this article for an interesting read....... (I do believe, I do believe).............

http://www.resourceinvestor.com/pebble.asp?relid=49112