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Sozurmama (25.86)

Musings on gold

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September 17, 2009 – Comments (11) | RELATED TICKERS: CEF

I own a good chunk of CEF (around 20% of my portfolio), and have recently considered cutting this down substantially. Why you ask?

I must say I am a huge fan of a couple gold pushers on this site (Sinch, Binve), and I always get a warm and fuzzy feeling about my holdings when i read one of their blogs....but something has been seriously bothering me over the past few days.

Its not the "major dollar bottom" that will shoot our currency through roof like an ignorant trampoline (<----note sarcasm); its not because gold is a useless metal, whose worth is based solely on rarity and durability (as long as someone will buy it when i need the cash, its cool with me); it's not even because of the recent rally (i have already skimmed off the top to throw at my favorite equities).

What's bothering me is the incresing number of commercials on TV, where these experts, be they busty chicks or old men, are trying to get me to buy their gold from them....to "preserve my wealth in these uncertain times". Why are all the "experts" trying to unload their gold on Joe Soz?

Basically, I don't like it when the boob tube tells me to do what im doing.

 

11 Comments – Post Your Own

#1) On September 17, 2009 at 8:12 PM, ChrisGraley (99.72) wrote:

You must have missed all those commercials asking you to mail in your gold and they'll send you a check.

Stores are now opening up in strip malls with huge "We buy gold!" signs.

 

I think you're safe, but you should diversify!

Buy Silver too! ;)

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#2) On September 17, 2009 at 8:27 PM, Sozurmama (25.86) wrote:

The only one i can remember is cash for gold, which i havent seen in several months...i think that was a scam anyways.

As far as silver goes, i assumed CEF was a fair balance between the two?

Otherwise i have some DBA, AOI, EGLE, VLO, LXP, and some SDS as a hedge until 3rd quarter news comes out....i havent been investing long so im hesitant to add too add other positions, im still learning how to keep up with these....

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#3) On September 17, 2009 at 8:41 PM, binve (26.90) wrote:

LOL! Thanks man, I wouldn't call myself a gold pusher. I just happen to invest in gold, and I am just sharing my opinion about it :) Yeah, the popularity of cash4gold might be concerning (TastyLunch and Madcow both think so), but I have a slightly different take. Here is a conversation Tasty and I had in this post, comment #14:

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Tasty:

"I have to agree with TigerPack tho Re: gold's attractiveness

Last week I counted four Cash4Gold trucks on one street in my city.When regular Joes start talking about Gold which many around me are, that makes me nervous.I wouldn't say it's RE 2006, but it does feel like RE 2004-2005."

binve:

"I also hear you about the gold being in the common vernacular and that is giving you a 'bubble-itis' warning feeling. I have a different interpretation (as I always do :). We were talking about the manipulation of gold and the enormous (and arguably illegal) short positions that GS has. And the only reason why these short positions have worked for so long at allowing golds manipulated price to not reflect inflation is because it has been relatively obsure/scoffed at. 

But now the public has been exposed to the size of the problem. We have had two market crashes and an honest stock panic in the last 10 years. David Walkers piece (which was very well done) that describes the seriousness of the problem with the budget and the economy, gained serious traction on CNN. On top of that, Obama says that we are broke (or its equivalent) in a speech. AND bonds are starting to make front page news in the last 6 months.

I think the public is now waking up to the size of the problem, and the enormously inflationary policies that have been at play and will continue to be at play."

So what you see as a bubble forming, I see as the beginning of the consciousness change. Gold is honest money. At the end of the day, that is exactly what it is. So when the public sees higher prices at the pump, higher bills at the grocery store, AND are invested in (or at least aware of) gold, I think a lot of people will be putting 2+2 together.

Then I think the Fed will get audited (I think Ron Paul's economics movement is picking up steam, far from national, but it is a growing presence).

So this gets me back to the Dollar Index. I think the very gears that are causing massive monetary inflation and the desctruction of the dollar (and the lowering of the Dollar Index) are turing smaller gears that are changing peoples perceptions (in a good way). If I had to guess, based on fundamentals, changing perceptions, transition from consumptive to productive GDP, etc. I bet the USDX gets down to 30-50. I do not think it goes to zero.

.

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Just something to think about :). But yeah, I do hear you regarding the original message in your post. I like being contrarian too, it is safer to buy/sell when everybody is bearish/bullish.

 

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#4) On September 17, 2009 at 9:00 PM, Sozurmama (25.86) wrote:

Seems like a pretty reasonable theory, there goes that fuzzy feeling again :)

Thanks alot for your advice binve, and chris.....i also just remembered a quote, from someone on this site, that made a lot of sense to me at the time....something along the lines of "i dont know where the price of gold is going and i dont care, i buy gold to preserve my wealth, not to get rich"

but then again that sounds like the old man....ugh

 

 

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#5) On September 17, 2009 at 9:23 PM, binve (26.90) wrote:

LOL! Good, warm fuzzies are a good thing :)

Yeah, many of us have spouted similar sentiments. Here is mine from this post:

"Gold does not pay dividends, gold does not multiply, gold does not make the world go round. Gold holds value. That’s it. So gold is not a way to get rich. Let’s be very clear about this point. Gold is a way to be NOT POOR. Like I said, it holds value."

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#6) On September 17, 2009 at 9:53 PM, NOTvuffett (96.25) wrote:

Gold is a constant, with intrinsic value, and it can not be taken away from you by the theif of inflation.  binve is right that it doesn't grow.  it is also surrounded by charatans that claim it will triple in price.  it has also been subject to wild price gyrations. 

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#7) On September 17, 2009 at 11:29 PM, msftgev (96.99) wrote:

It all depends on your situation. A year ago I was looking at gold at $750. The ETF GLD was trading for $75.

Could not afford either. All in stocks.

So we've had a %25 runup on gold. Stocks have outperformed.

Basically if your a millionare you should own gold.

If your trying to become a millionare gold is just something shiney to look at.  

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#8) On September 18, 2009 at 1:07 AM, DarkToast (98.67) wrote:

The gamco gold fund (GOLDX) that I am invested in with my 401k has gone from around $19 to around $31 in about a year.

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#9) On September 18, 2009 at 6:33 AM, cthomas1017 (30.47) wrote:

"We buy gold" usually means  10-20 cents on the dollar to the unsuspecting seller.  They turn it to a REPUTABLE refiner and 'voila'!.  ('Waa-laa' for those of you in Trenton.)  10 day turn around & 4x your money.  I can't even do that on CAPS with any of the bear ETF's that I've been holding since May. :o

Now that there are so many places hanging their shingles, the markets getting a little more competitive.  The smarter people (err, suckers) are shopping a round and the margins aren't so high.  It will get more and more competitive and soon, the "buyers" will be paying much closer to market value.  This is one of those things where I could absolutely kick myself (if I were double jointed, I would) for not jumping into it 2-3 years ago and getting out by selling the business today. 

(And I'd like to think my conscience would have required me to buy at 40-50% of kitco pricing, but I can't say that I'd be above the temptation to take advantage of people (err, suckers).  Probably a very good thing I didn't do it.  I can look myself in the mirror this morning. :)

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#10) On September 18, 2009 at 11:02 AM, StillMike (< 20) wrote:

The statement that gold is a useless metal is ignorant. Gold is used in industry, in electronics, and has been at the root of several civilizations throughout history. Its beauty alone makes it useful. Is art not useful?

I buy and sell gold. When I sell gold jewellry and scrap metals I use www.aaagoldexchange.com with great success. I buy from several local sources.

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#11) On September 18, 2009 at 11:48 AM, chk999 (99.99) wrote:

The boob tube seems to be a pretty good contrarian indicator. By the time something hits the infomercial level, the trend has to be pretty much played out. I think this is because there is no demographic below people who buy things from infomercials that has any money.

I don't know if this story is an urban legend or not, but Joe Kennedy is alleged to have sold all his market holdings a few months before the '29 market crash after a shoeshine boy gave him stock tips.

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