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EnigmaDude (98.06)

Dollar Up - Gold Down (for now)

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June 04, 2008 – Comments (7) | RELATED TICKERS: MUX , AZK , MRB

With Bernanke's latest comments about inflation fears the good ole US$ has been gaining ground. Apparently, some analysts think that this means that the latest gold rally is dead. Others feel that this is temporary and that gold may yet benefit from inflation worries and the potential for future stock-market weakness.

Compared to oil, gold has not kept up the pace so far this year. If you are betting on oil vs. gold, oil would be the winner, for now.

But I am a long-term investor, looking for opportunities now to buy low so I can sell high later on down the road. For me this means a great opportunity to pick up some cheap shares of junior gold and silver mining stocks, because they will be the ones that benefit the most when (not if) the dollar declines and gold prices rise again.

What does the rest of Fooldom think?

EDude

7 Comments – Post Your Own

#1) On June 04, 2008 at 1:27 PM, FourthAxis (< 20) wrote:

So let's see...interest rates are going to hold...so what does that do about the govt overspending problem.  NOTHING!

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#2) On June 04, 2008 at 2:03 PM, madcowmonkey (< 20) wrote:

Fourth- should have been more of a soft "nothing". Kind of drawn out with a whisper to it, but I get what you mean.

Edude- gold has never been proved wrong to be a long hold in my lifetime or my fathers or my fathers fathers or even before his father. I think you are making a good call. 

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#3) On June 04, 2008 at 3:50 PM, cubanstockpicker (20.20) wrote:

I have to respectfully disagree with all of you. Your theory is worth as much as an oil painting of a whale on and a dolphin getting it on. :)

actually, when adjusted for inflation, gold has given the worst return of all compared to even t-bills.

If you have any doubts do research on long term gold priced for inflation. David Dreman, the best contrarian investor will disagree with all of you, just read his book. Gold may be a hedge for worst case world ending scenraios, and the 50's were a great time for that. Fifteen years removed from the great depression, a few years from a World War and a in the middle of a nuclear threat.

Follow those returns.

According to analysts, if tracked for inflation, GOLD "SHOULD" be at $2000 per oz. Should and would are to different words.

And to go historically, no other investment has done as well as stocks over a twenty year period. NONE 

 

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#4) On June 04, 2008 at 4:04 PM, EnigmaDude (98.06) wrote:

macdow - thanks for the feedback. I have no idea what my father (or his father) invested in when they were alive...

cuban - I respect your opinion as well. But "to", "too", and "two" are too different words!

(btw - i never said i wanted to buy gold - just gold mining stock)

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#5) On June 04, 2008 at 4:19 PM, cubanstockpicker (20.20) wrote:

"they will be the ones that benefit the most when (not if) the dollar declines and gold prices rise again."

A mining company profits from the sale of its gold, duh! But eiuther pick companies who have recently locked in contracts for the gold when it was higher (a few days ago) unless you believe gold would spike up to above $1000 again, then go with an open market selling miner like NXG. If I was to pick a metal though, gold would not be on the top of the list. I would go for usefullness and value as well.

Molybdenum(extyracted from copper, silver (very useful), platinum, vanadium also.

And excuse my quick typing and typos, they're and their and there not intentional. 

 

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#6) On June 04, 2008 at 5:02 PM, XMFSinchiruna (27.97) wrote:

EnigmaDude... you can't go wrong with that plan!  :)

Cuban, if gold "should" be at $2,000 but is not, ask yourself why.  Could it have something to do with the faulty inflation numbers upon which so many assumptions are based?  Could it be the black box trading action by the major investment banks doing their part to avert financial catastrophe?  Could it be that that no one knows how much money is in circulation since the M3 was discontinued?  Could it be all this hype about a second-half recovery for the markets and the worst being over for the banks?  Could it be the lack of understanding about the true extent of the derivatives crisis?

You alluded to past moments in history when it was the right time to own gold.  Which of the fundamental elements that drove the price of gold during those historic cycles are absent at the present time???????

I agree with you completely about moly, copper, silver, etc. being excellent bets as well, but we have the perfect storm for gold here.  If my prior discussions haven't convinced you, I predict the one I have in the works now will.  :)   Stand by.  But stand by gold as well.

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#7) On June 05, 2008 at 1:21 PM, madcowmonkey (< 20) wrote:

Dreman is talking overweight in the energy sector. What classifies as a contrarian investor anymore. His news letter spoke of the equity market hurting his ports. You telling me he didn't know the banks were hurting, yet he said gold was up 10% and silver is up 17%, I would rather have that then the negative 5% he spoke of:)

Cubanstockpicker- nothing against you, but I don't listen to any of these "smart" investors and rarely get brainwashed by their writings, but everybody has the right to read, listen, and believe what they want.

The main point that I would like to make is that Gold went over $1000 and miners did very well on this the last couple of months. Gold has come down a bit, but isn't that the time that you want to buy? Shortsightedness, if you want to use a WB term.

Edude- good luck in whatever you decide.  

BTW- what is a "whale on" Whale-dolphin hybrid has baby wholphin - Science- msnbc.com 

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