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XMFSinchiruna (27.57)

Gold Overload

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October 12, 2009 – Comments (5)

Gold Overload:

Opinions are like dollar bills: If you print too many of them, their value goes down.

Every time gold makes a major move in either direction, suddenly every casual observer becomes a soothsayer, and the whole mishmash of conflicting guidance leaves investors more confused than ever.

After wallowing in an 18-month range-bound correction before a convincing breakout, every day that gold spends here in unprecedented territory increases the chances that four-digit gold prices represent the "new normal."

Above all, please keep in mind my admonition voiced during a prior surge in gold some 18 months ago: "Be brave, Fools. There will be corrections along the way -- some of them substantial. Investing in this sector requires strength and conviction, and short-term movements are nothing but noise within the broader trend."

 

Please read the full article at the above link, and return here to share your thoughts.

5 Comments – Post Your Own

#1) On October 12, 2009 at 7:22 PM, XMFSinchiruna (27.57) wrote:

See also:

5 Mid-Tier Miners With the Midas Touch

"Gammon Gold (NYSE: GRS) is another longtime favorite that is gaining momentum, now that an expansion of the flagship Ocampo mine has achieved commercial production. The company raised $100 million this week in bought-deal financing, and reiterated improved, low-cost production targets. Creating value with the drill, Gammon also encountered a bonanza-grade strike of 318 grams-per-tonne gold within the Ocampo area."

"Taseko Mines (AMEX: TGB) is a primary copper producer with a relatively puny market capitalization, so perhaps it doesn't technically belong on this list. Although Taseko just revealed a hiccup in ore concentrations during the third quarter, the company mines enough low-cost copper at Gibraltar to ensure a stable and reliable revenue stream. I consider Taseko one of the greater values in the mining space, and I believe that the market continues to price shares as though the Prosperity property -- with its 4.7 million ounces of gold reserves and 2 billion pounds of copper -- does not exist."

"With gold yet again reaching new heights above $1,050 per ounce, and venerable voices such as Jim Rogers urging caution (despite forecasting much higher long-term prices), I am not advocating an abrupt move into new positions at these levels. On the other hand, I consider it more important to have some exposure to the sector than to get the timing perfectly right. Whatever Fools decide, I hope the above discussion helps to inform due diligence."

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#2) On October 12, 2009 at 9:36 PM, limanova (< 20) wrote:

At your behest I'll look again at Gammon, or better still at Taseko, which seems to be more lightly weighted for its reserves. 

I got very tired of CDE and HL so I admire your patience at the "pummeling", though I'm not unhappy for going to SVM and NXG in their stead.

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#3) On October 12, 2009 at 10:20 PM, nuf2bdangrus (< 20) wrote:

At this point, having sold GLD at 900 for a small gain, I like platinum better, as it is 16 times scarcer than gold, and only priced 50% higher.  PTM or PGM are both good paper platinum plays.  I do believe gold is in a long bull, but the $ is oversold.   I would only buy precious metals on a correction.  HOpe I haven't missed the party.  LOng PTM

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#4) On October 12, 2009 at 10:52 PM, ChrisGraley (29.97) wrote:

As soon as helicopter Ben got appointed, gold was a no-brainer, but I don't recommend gold anymore. I still believe that gold will double from the price that it is now, within the next 12 months. The reason that I don't recommend gold is that the people that I recommend gold to believe that if they just buy it and hold it forever, they can be rich for the rest of their life. They don't listen to the reasons that you give them for buying it, they just think it's as simple as step 1) buy gold and step 2) get rich. I've made it a point to promote silver more than gold since helicopter Ben was put in charge, but I don't even recommend silver to more than a few of my friends anymore. The fact is when someone does recommend things like gold and silver, you still have to do the work yourself. You have to pick a price where it's undervalued and a price where it's overvalued. You are gonna get a wild price from me because I've done a ton of reasearch and I believe it's the best way to make money right now, but I have different investment objectives than you do. I have spent a lot more time looking at metals, so I'm going to be a lot more speculative in that sector than you are. I'm also looking for warning signs from inferior companies to jump out. I just buy the physical metal and that is what I recommend to my friends, but I'm always looking for something to change my opinion.

I still believe in $2500 gold and $125 silver. Does that make me crazy? Maybe... But I've studied metals more than I've studied anything else and I've risked a lot of my money on it. If I'm wrong, I will get out of gold and silver a lot quicker than you do, I will also tolerate a correction a lot longer than you do if I'm right. Your only chance is to study up and I don't have time to teach you. For those of you that think that you missed the chance, I'm buying gold in CAPS tomorrow. Not, silver, but gold! DROOY.

I recommended gold and silver a lot when it was a no-brainer and not a lot of people listened to me, but now, when I'm proven, it's not a no brainer anymore and people want me to give them the sure thing as an investment. I'm not willing to suggest it as easily because the easy money was already made and you didn't listen to me then. You are now expecting the same results when you are chasing the market.

I do wish everyone well, but I'm not here to make you rich, just to make you think. 

I think inflation has a while to go and so do your metal plays. There will be a correction, but Stagflation seems to be the best bet long term.

As always, I hope that this helps.

Chris

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#5) On October 23, 2009 at 7:37 PM, LiveOakGrey (< 20) wrote:

Hi Sinch,

I'm one of the people you were telling speedybure were out there avidly reading and appreciating gold and silver mining blogs and articles, but hadn't had occasion to come forward with any commentary.  He should also begin posting, again.  I was taking notes from his one through ten points articles, and he only began the first three.  He has too many good thoughts that he should continue to post!

I'm thoroughly convinced of the value of gold and silver miner stocks, and wondered if you or any other commenters could answer some questions that I've had trouble tracking down.  

I'm avoiding any U.S. miners, with an eye towards avoiding a potential confiscation in the future.  Probably won't happen for miner stocks, but the actual mines may be seized, or personal holdings of bullion confiscated.  That may or may not cause social  unrest worries to the U.S. government now, but their perspective may change.  I think it's easiest to sleep at night with exposure to miners in a few other countries with less chance of having a suddenly desperate government, trying to hold onto power in the near term at any cost to it's actual constituency.  Especially those governments who rely more on their reputation for being 'friendly' to the mining industry, and would be reluctant to create incidents where foreign investors ceased supporting their economy's miners, if their assets were nationalized. 

My portfolio of potential stocks sticks to those with mines in countries with relatively stable governments.  If they don't produce precious metals from only within their own borders, then their overseas mines are in preferably several relatively stable nations, as well.  Royalty and Silver Stream models look good, too.  I've wanted to find some Australian miners for silver or gold, that were worthwhile.  I've thought maybe Newcrest, but it seems to have exposure to Indonesia, and that may become unstable.

Do you have any strong Australian, New Zealander, European gold or silver miners and/or Silver stream/royalty companies you'd recommend?  Mid Caps I'm guessing would be ideal, but I'm looking to diversify into a double handful of companies for a portfolio centering mainly on miners.

You seem to like CEF in Canada a lot, and it appealed to me for a while.  I think I watched a video of James Turk, and he wasn't a fan of Australia's Perth Mint, which I think is pretty similar. Maybe it's too tempting a target for any government looking for cash to fund its foreign acquisitions during a currency crisis can afford to overlook?  On that note, what about goldmoney.com, or others with audited reserves, and electronic accounts?  They have the option of which of two nations to place your account with, and I thought that sounded like a good play, for a bit more foreign diversity, if other assets are siezed.

Any thoughts on pointers for good Australian miners/royalty companies, goldmoney.com, CEF and the like would be very appreciated. 

Thanks,

-Grey 

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