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Aluminum, carbon, silver and gold.

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December 30, 2013 – Comments (15) | RELATED TICKERS: F , TRYIY

Ford (F) is going to introduce an F-150 truck that will feature a body made of aluminum.  This is not striking as the first vehicle ever made of aluminum (or aluminium if you are British) but may mark a large shift towards better materials in vehicles.  

 A shiny and exotic thing, aluminum was briefly prized above silver and gold in the 1800's.  Times changed, and aluminum became a useful engineering material for the military due to its lightness.  It also became less exotic and now is a common foil and material for beer cans.  Nevertheless, the F-150 made of aluminum is notable in that we may now be entering a new transition for automative materials.  Light, yet strong, metals may lead to greater fuel efficiencies and new car designs.  As well engineered planes face great stresses from heat/cold, winds, and landing - aluminum will be able to stand the stresses placed on large trucks.  One concern I would have with aluminum will be salty-roads.  Aluminum can be damaged by salts and corrosion.  

Carbon based materials will be the next generation in building car chassis, etc.  These will offer better strength-weight than aluminum or steel.  They will also be more resistant to corrosion than metals. Companies such as Zoltec, that have carbon fiber technologies are now worth investigating (Zoltec - ZOLT merged in Oct 2013, with Toray - TRYIY).

As for those other shiny metals, they are less and less attractive.  2011 was the top of the precious metal bubble and the year that the sentiment shifted from fears to greater optimism.  See the blog I posted in that May of 2011 ( Look at the Silver bubble pop! ) and the CAPS player GoldTop11.  Investing in anything based solely on predictions of higher stock/commodity prices is a mistake (Looking at you TMFsinchinuria!).  Same to Bitcoins, house prices, oil, etc.    

So, at the end of 2013, my motto is "be adaptable - try different things (or materials)!"  

 -Rof 

 

(Side note, been seeing lots of Red Manitowoc Cranes everywhere.  Seems like there is again plenty of building and investment in the midwest). 

15 Comments – Post Your Own

#1) On December 30, 2013 at 12:29 PM, MoneyWorksforMe (< 20) wrote:

TMFSinchurina is his moniker. And he is far more intelligent than you will ever be Rof. Every dog has its day.

This has been a very severe correction, no doubt, and you were correct in your positioning, on one side. Although to set the record straight you were very wrong for a LONG time and you missed the entire run up. But I will tell you this: you are making a terrible mistake at this juncture, expecting extremely oversold/pessimistic conditions to not mean revert to the upside, and conversely not expecting overbought/euphoric conditions (US equities) to correct to the downside. If you were smart, you'd be looking to slowly close out of your bearish positions in the metals and mining sectors. The HUI in terms of gold price i.e. the HUI/gold price ratio is the lowest its been since 2001. The HUI on an absolute basis, (when not considering the gold price) is at levels last seen during the depths of the financial crisis. From a contrarion perspective you are clearly now on the wrong side.

From a fundamental perspective I can tell you nothing has changed for the long term bulls. I myself have continued to accumulate and average down. When the fundamentals change, my investment behavior will change. The economy is not even close to healthy -- in fact, it is probably more sick now than it has been at any point over the past 5 years, they have just managed to temporarily stabilize it. Don't take my word for it, all one need to do it look at the fed's, JCB's, and ECB's monetary policy to see that not even they believe in this "recovery". 

Additionaly it should be of some concern to you that the largest buyer of gold during this entire correction has been China. Meaning, China has purchased thousands of tons of gold and continues to do so at or above these levels. So who is the biggest "loser" at the moment: China. Do you really think the soon-to-be largest economy in the world is going to permit their enormous gold holdings to just go down indefinitely in value? Haha. You are failing to see the forest for the trees. Physical buying has only been increasing. The outflows from GLD have been the only real means to pushing prices down but that too is slowing. And what should happen if/when GLD sees more interest? Well they will have to buy more gold -- the only problem is it all now sits in VERY strong hands...And that headwind of GLD gold being dumped onto the market will shift quickly to a tailwind of additional physical demand.

For the record, I'm calling 1180 (a double bottom) the low in gold and 2014 will be a very postive year for all precious metals. Both gold and silver will obtain new nominal record highs within the next few years. U.S. equities will have a significant down year, after perhaps starting the year off relatively strong. 

Don't count your chips while you're still at the table. Hopefully this time you can actually catch the next leg up. Good luck. 

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#2) On December 30, 2013 at 5:01 PM, awallejr (82.72) wrote:

I am not quite sure that is a good thing for Ford trucks.  Kind of takes away from their ruggedness I would think.  Cars today are getting better mileage for that exact reason, being made from cheaper, lighter material.  Industry that is probably gaining is the most includes autobody work shops. 

As for the other shiny metals I have been buying coins gleefully.  I caused Apmex to run out of certain European coins.  I think that $1180 will be an interesting number to watch.

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#3) On December 30, 2013 at 8:53 PM, rofgile (99.33) wrote:

Dear MoneyWorksForMe:

  I am skeptical of gold having a ¨next leg up¨.  A real gold price correction to the average would need to go below 2006 prices to take the price below $800/ounce in current dollars.  After the last precious metals bubble (which had an exponential climb similar to the current) - prices fell for 2 decads straight.  So, if faith is again lost in precious metals - it could be a long trip down.  Much of the rise in gold prices has correlated with near 0 or negative real interest rates.  When interest rates begin rising (officially the bond buying program is slated to end in 2014, so soon) gold prices will likely fall further.

 Source- Krugman (Source: Krugman

 I am not sad about this.  I would like to buy silver to make jewelry out of on occasion.  I cast mine and my wife's rings myself.  Silver and gold are great materials for practical purposes, but they are not meant to be hoarded in a vault like Scrooge McDuck.  Capital should be put to use to encourage productive efforts like building homes that people can live in (as opposed to buying bitcoin rigs).

 -Rof 

 

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#4) On December 31, 2013 at 10:17 AM, EnigmaDude (98.06) wrote:

Rof - good post and nice job in your sensible rebuttal to MoneyFleesFromMe. It will be interesting to see what happens to gold prices next year.  I am starting to buy shares in some gold miners because I think they will make a comeback in 2014 (and beyond) as long as Gold does not fall too far below $1,000.

I'm sort of with awallejr though when it comes to Ford trucks.  Not sure aluminum will have the "toughness" that a real truck requires, although many people don't use them for real work any more!

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#5) On December 31, 2013 at 10:45 AM, MoneyWorksforMe (< 20) wrote:

What if I told you it was 1976, not 1980? How does one chart justify a bearish position at this juncture? You think Janet Yellen is the next Paul Volcker!? Hahaha. And even if you did, you're much better off being bearish U.S. equities than gold at this point.

QE (lower rates) haven't helped precious metal prices, so why should rising rates have a negative affect as well? Again you'd have a better argument being bearish equities for this reason.

The precious metals bull run from 2001 to 2008 was in full swing despite a "strengthening enonomy" and rose from $350/oz. in 2003 to $1000/oz. in 2008. More importantly the fed fund's rate was ratcheted up from 1% in 2003 to as high as 5.25% in 2006, yet gold rallied throughout that time frame. The 10 yr. rose from 3.1% yield to 5.1%, and guess what: gold still rallied...

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#6) On December 31, 2013 at 11:19 AM, MoneyWorksforMe (< 20) wrote:

Gold and silver can be healthily treated as savings and/or insurance. They do not provide a replacement for all investments. They are simply part of a portfolio. Additionally, savings, is a necessary and integral part of a growing economy. If one should choose to save in gold and silver etc. versus just dollars, what is the harm in that if it will eventually be deployed in the same areas: equities, real estate a home etc.?

 

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#7) On December 31, 2013 at 8:48 PM, awallejr (82.72) wrote:

Well one of the few times me and Money can agree heheh.  Physical gold/silver should be a part one's portfolio. As the kids say, EOM.

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#8) On December 31, 2013 at 10:53 PM, Lordrobot (87.42) wrote:

Aluminum is a very poor choice for a vehicle, composites are much better. Aluminum welding is very problamatic. Rivits are better but aluminum dings and unless annodized, becomes powdery and introduces micro perforations.

And what is the purpose? To find an expensive way to meet silly MPG standards. A truck is a truck. It is used for work generally not just toting groceries. 

As for gold and silver... if we have another recession in 2014 then the fearful will buy this junk. Oh... did I call gold junk? Yes I did. It possesses only intrinsic value which is a kind way of saying what one sucker will pay another sucker for the right to own a chunk of metal. 

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#9) On January 01, 2014 at 3:09 AM, portefeuille (99.56) wrote:

Your goldtop player is still doing great :)

http://caps.fool.com/player/goldtop11.aspx

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#10) On January 01, 2014 at 3:16 AM, portefeuille (99.56) wrote:

Do you still have your Vestas shares? One of those great comebacks.

http://finance.yahoo.com/q/bc?s=VWS.CO&t=my&l=on&z=l&q=c&c=

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#11) On January 01, 2014 at 4:42 PM, rofgile (99.33) wrote:

I sold these Vestas shares around $9/share.  I probably am selling too early, as I tend to do.

Goldtop is doing well.  My only mistake was to green thumb two ultrashorts.  I should never do that long term.  Otherwise, his accuracy would be 100%.

-Rof 

 

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#12) On January 01, 2014 at 9:13 PM, valunvesthere (21.57) wrote:

@ comment #8 and rofgile

Automotive vehicles manufactured other than steel sheet metal is nothing new examples are

- some vehicles manufactured pre world war 2 are wood panels

- Acura NSX body is all aluminum sheet metal

- Audi some sedans body is all aluninum sheet metal

- Chevrolet Corvette body is fiberglass (possibly shifting to all aluminum)

- Chrysler some crossover/suv body is combination of plastic and steel sheet metal 

- Dodge some crossover/suv body is combination of plastic and steel sheet metal 

- Honda Element body is combination of plastic and steel sheet metal 

- Jeep some crossover/suv body is combination of plastic and steel sheet metal  

- Pontiac Fiero body is all plasatic

- Trabant body is all duraplast (recycled cotton fibres)

- and etc...

In the near future all manufacturers will vary in metals used or use combination of metals/plastics materials to hedge materials costs and improve fuel efficiency. 

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#13) On January 01, 2014 at 11:54 PM, awallejr (82.72) wrote:

Well #12 seems to be a spammer, nevertheless he seems to be spot on here.  Car makers are using lighter materials to improve gas mileage.

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#14) On January 02, 2014 at 7:21 PM, awallejr (82.72) wrote:

Interesting move by gold today.  The $1180 bottom wasn't touched, gold making higher lows now perhaps.

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#15) On January 02, 2014 at 8:46 PM, awallejr (82.72) wrote:

Oh and bought 10 Netherland 10 gulden coins today at a really good price.

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