Gold (for diversification and balance)

AlanP_2

sixpence. said:

Sailtheworld said:

sixpence. said:

dunstonh said:

Do you think now is a good time to be buying gold?    Gold peaks during a financial crisis.   It then falls away during recovery.

NO WAY. This would be for the future. Now is an objectively bad time to be buying gold, but I am preparing to maybe make a purchase in the impending recession...

To be honest if you're able to correctly judge whether the market price of gold is wrong and know the timing of the next recession you probably don't need to overly worry about diversification.

So I feel like you're being sarcastic? Hard to tell on a forum! Obviously no one cane "time" the next recession, but I live in London and business are literally closing everywhere, very few people have been on holiday this year or come here on holiday, the theatres and cinemas have been shut... I think it's pretty obvious one is coming!

I agree, but that doesn't mean it will be a better time to buy gold though, the price could increase if equities fall and it is inversely correlated. 

Sailtheworld

sixpence. said:

Sailtheworld said:

sixpence. said:

dunstonh said:

Do you think now is a good time to be buying gold?    Gold peaks during a financial crisis.   It then falls away during recovery.

NO WAY. This would be for the future. Now is an objectively bad time to be buying gold, but I am preparing to maybe make a purchase in the impending recession...

To be honest if you're able to correctly judge whether the market price of gold is wrong and know the timing of the next recession you probably don't need to overly worry about diversification.

So I feel like you're being sarcastic? Hard to tell on a forum! Obviously no one cane "time" the next recession, but I live in London and business are literally closing everywhere, very few people have been on holiday this year or come here on holiday, the theatres and cinemas have been shut... I think it's pretty obvious one is coming!

If you've got a knack for telling the future better than the market and think the market will come around to your way of thinking then you should be looking for concentration of risk rather than diversification.

It might look like sarcasm but it's more skepticism. It would be a rare skill and most are unlikely to be better informed or have better interpretation skills than the market. You're words on a page to me so perhaps you're one of a rare breed.

You say it's obvious nobody can time the next recession and then follow this with a 'but' suggesting it's just around the corner. Maybe you're not sure yourself.

Is a diversifier something people try to time? Seems like an oxymoron - if you can time it why do you need it as a diversifier?

dont_look_now

sixpence. said:

Sailtheworld said:

sixpence. said:

dunstonh said:

Do you think now is a good time to be buying gold?    Gold peaks during a financial crisis.   It then falls away during recovery.

NO WAY. This would be for the future. Now is an objectively bad time to be buying gold, but I am preparing to maybe make a purchase in the impending recession...

To be honest if you're able to correctly judge whether the market price of gold is wrong and know the timing of the next recession you probably don't need to overly worry about diversification.

So I feel like you're being sarcastic? Hard to tell on a forum! Obviously no one cane "time" the next recession, but I live in London and business are literally closing everywhere, very few people have been on holiday this year or come here on holiday, the theatres and cinemas have been shut... I think it's pretty obvious one is coming!

I'm confused. When you say the next recession, do you mean the one which will officially be declared when the 2020 Q2 GDP figures are published, and will inevitably show a large drop from 2020 Q1? (A recession is defined as a drop in GDP for 2 consecutive quarters, and 2020 Q1 showed a smaller drop, after coronavirus started to affect the economy in a big way only in the last few weeks of the quarter.)

Or do you mean the next recession, after the impending one?

It's rather late to buy gold because of the impending recession, becuase everybody knows about that. And it's too early to buy because of the recession after that.

Or do you think that most people are underestimating how deep the impending recession will be? That is of course possible. But everybody is aware that it is of unprecedented depth. And it's also possible that they are over-estimating its depth.

Or do you think most people are over-optimistic about how fast the recovery will be? Again, this is possible. But far from obvious.

The only bit that is obvious is the bit that everybody else already knows.

bowlhead99

sixpence. said:

Sailtheworld said:

sixpence. said:

dunstonh said:

Do you think now is a good time to be buying gold?    Gold peaks during a financial crisis.   It then falls away during recovery.

NO WAY. This would be for the future. Now is an objectively bad time to be buying gold, but I am preparing to maybe make a purchase in the impending recession...

To be honest if you're able to correctly judge whether the market price of gold is wrong and know the timing of the next recession you probably don't need to overly worry about diversification.

So I feel like you're being sarcastic? Hard to tell on a forum! Obviously no one cane "time" the next recession, but I live in London and business are literally closing everywhere, very few people have been on holiday this year or come here on holiday, the theatres and cinemas have been shut... I think it's pretty obvious one is coming!

Well if it's pretty obvious one is coming, the prices of assets will have already started to reflect that, which is one reason why gold has moved to a high price.

When we get deeper into recession (whether we actually get a technical recession or just something that feels like one) and businesses are making lower profits and laying people off and declining to take on new employees as they are not looking to expand but contract in the face of declining revenues, you would not expect equities to go up in value, you would expect them to fall, yes? And if you are correct that gold price is inversely correlated with equities prices, you would not expect gold to be super cheap while equity prices are on the floor, right?

So, when you are saying that "NO WAY" do you think now is a good time to be buying gold, and that you plan to buy some when we have more of a recession which you think we're on the cusp of, it sounds like you are preparing to make a purchase when consumers have even less money and when  businesses start reporting worse profits and when the prices of equities have started to fall to the floor and gold goes up further, moving in the opposite direction to equities prices? 

To me it doesn't seem particularly logical to be buying gold in the depths of a recession when equities are relatively cheaper than gold. Rothschild said it's time to buy risk assets when there's blood on the streets. Buffet said to be greedy when others are fearful and vice versa. Moving to safe haven assets once we're already in a recession is not something that necessarily works out well. 2009 Q1, a period where the UK had a negative quarter-on-quarter GDP growth of -2.5% was literally the best equities-buying opportunity for the following 11 years, and while gold 

So, "preparing to make a purchase" of safe haven assets once the 'impending' recession has already hit, sounds like you will have missed the boat. And the fact that you think it's "pretty obvious one is coming" sounds like you should have already taken your position for what you know is coming, but if it is really all that obvious presumably the global institutional investors with their trillions to deploy will have already figured it out by now and positioned accordingly, and they will be the ones who will be making profits by selling to you at unattractive prices later.

If you want to use gold 'for diversification and balance' you should presumably already have some in your portfolio, if a portfolio needs it to be 'balanced', no?  What is this plan of yours to instead buy it later when the economy worsens and equities become cheap?

goldieandblackie

The Gold boat has long since sailed away from port and only a fool would invest now the price is over $2000 per ounce
The biggest risk event this week for the gold price is the upcoming U.S. NFP data release. So far, we have clear evidence from the U.S. jobless claims that the Americans have started to file more Initial jobless claims—indicating that the labor market is off the recovery track. 

If the U.S. unemployment data also confirm the same and the unemployment rate ticks higher, it could bring enormous buying pressure for the gold price.

However, if the U.S. NFP data confirms another reading, it is likely that the dollar may strengthen, and the gold price may well ease off.

RyanHello

goldieandblackie said:

The Gold boat has long since sailed away from port and only a fool would invest now the price is over $2000 per ounce
The biggest risk event this week for the gold price is the upcoming U.S. NFP data release. So far, we have clear evidence from the U.S. jobless claims that the Americans have started to file more Initial jobless claims—indicating that the labor market is off the recovery track. 

If the U.S. unemployment data also confirm the same and the unemployment rate ticks higher, it could bring enormous buying pressure for the gold price.

However, if the U.S. NFP data confirms another reading, it is likely that the dollar may strengthen, and the gold price may well ease off.

All the so called "experts" said this about gold last month. It wouldn't surprise me if it goes to $3000 per ounce by the end of the year. 

DiggerUK

Accusing posters of trying to "time the markets" is a criticism  in the realms of a straw-man argument. 

Some do indeed manage to pull that trick off, it's what attracts many to go day trading.

What is being falsely argued  here is that nobody can read the markets or see great dangers, a totally different kettle of fish. That is a falsehood. Digger Mansions did that correctly from the start of the century, eventually putting all our retirement savings in to gold.

sixpence is struggling to revise their game plan going forward to meet an obvious threat to wealth values, which seems to be getting rebuffed on the grounds that everything is hunkey dorey, not possibly on a one way ticket to Palookaville..._

Filo25

I'm far from a precious metal obsessive but I have started holding some mining funds in my pension portfolio, I am just looking for asset classes which are less strongly correlated with the broader equity market, just as sixpence is,

I don't think that is a ridiculous thing to do in the current market when I view bonds as a risky investment with limited remaining upside.

I would also love recommendations of other asset classes which might fit the bill to enable me to diversify better.

EdGasketTheSecond

goldieandblackie said:

The Gold boat has long since sailed away from port and only a fool would invest now the price is over $2000 per ounce

That is simply not true. It is not too late to get into gold and silver now to preserve value against debased fiat currencies and future inflation. Gold is still cheap by many measures; just not in ever devaluing fiat currency.

coachman12

EdGasketTheSecond said:

goldieandblackie said:

The Gold boat has long since sailed away from port and only a fool would invest now the price is over $2000 per ounce

That is simply not true. It is not too late to get into gold and silver now to preserve value against debased fiat currencies and future inflation. Gold is still cheap by many measures; just not in ever devaluing fiat currency.

I agree with Ed. I will not start another thread about my 100 Krugerrands but I WILL always recommend any form of gold as an investment at any price, and I have continued to hold stocks of the stuff for many years.