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Gold, they don't see it

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January 03, 2014 – Comments (16) | RELATED TICKERS: G , O , LD

I am not your typical gold bug. I won't curse your name if you say anything bad about it.  I am a firm believer in equities.  One's that yield dividends/distributions the better.  But I am also a firm believer in owning gold.  Coins, not paper.  Owming paper to me is an oxymoron.  While I missed gold rising up, I am buying on its way down.

I buy gold coins under $1200 and silver coins when gold is over $1200. Buy it.  Hold it in your hands.  You just can't beat that feeling. Some say it is nothing but a hunk of mettle sitting there.  Yeah well shares of stock or dollar bills are nothing but pieces of paper sitting there.

I think gold bottomed.  Of course I could be wrong since it is one's man opinion with time telling. But the important $1180 number held several times now.  Buy the coins.  Put it in your safe and pass it on to your family.  And should I be wrong and gold drops further, fear not, you are given a better purchase price.

16 Comments – Post Your Own

#1) On January 03, 2014 at 12:08 PM, jiltin (30.00) wrote:

This is the only investment opportunity I made year after year, typically buy physical gold from 2000. Along with my friends I started buying it 2 or 3 coins everytime possible. I still hold yellow metal from $454 onwards, sold some  of those only when I badly need money. I keep them as my reserve, for emergency purpose, and against inflation risk. The  last time I purchased when it was $1600 two coins. Overall, I am still positive.

It worked fine until last few years, but not last two or three years. Hence, stopped adding those and focusing on stocks.

For almost next one year, I am do not foresee any good prospects. 

It all depends on where the growth (or acceleration) is there.

1. Stocks are growing great time, from 20% to 100% range.

2. The biggest gold consumer (25% of world consumption) is India. That government repeatedly increased duty (from 2% initially to 10% now) on gold import. In addition, the INR value is devalued. Both of these reduced the consumption from appx 1000 tons import to 550 tons of import.

3. The next consumer is china, which becomes biggest consumer of gold.  

Both China and India together consumes 50% of yearly gold sale. 

Hence, next gold hikes are likely when stocks crash. If stocks crash based on MBS withdrawal or interest rate hike by FED, USD becomes strong compared to GOLD. I am still not clear how the reaction going to be. 

Let us discuss further more with other experts in this forum.

 

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#2) On January 03, 2014 at 12:19 PM, ffbj (60.20) wrote:

I guess I am a contrarian.  Now that so many hate gold I see it as

an opportunity. It is around 5% of my portfolio, as a hedge and just brought it recently.

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#3) On January 03, 2014 at 12:54 PM, amassafortune (29.60) wrote:

I have come to hold an awallejr-like gold opinion as well. 

Like my home, I want to own it outright. As with a home, I don't care what I bought it for or what the price is now. I just want the piece of mind that no entity has any claim to them.

We can never completely escape the possibility of financial disaster. Homes are subject to property tax, eminent domain, etc. that can create a claim on property owned free and clear. Gold can be confiscated as it was only 76 years ago in the U.S. Still, if I need to provide food, water, shelter, and health care for my family, owning a home and gold covers most circumstances that can be imagined or have happened historically.

Even holding this opinion, one need not get crazy with the concept. A 5% of net worth PM position puts one in a much better-than-average position if any dire scenarios emerge, especially as other asset values in those circumstances diminish on a relative basis.

The good old dollar, stocks, and insurance still have their place. I especially like stocks that represent going concerns that could also survive most scenarios.

After being a buy and hold investor for a few decades, I believe 2008, the SEC and GAAP rule changes, and the buy-ins we have seen in recent years, represent a meaningful shift that argues against complacency at the individual level. 

Don't go nuts, but understand that the recent public policy template does not protect the individual as it did even six years ago. Gold is a little bit of insurance that can't be reneged on like a policy written on paper, a pension once promised, or the verbal assuaging of an elected official.  

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#4) On January 03, 2014 at 8:21 PM, HarryCaraysGhost (99.59) wrote:

I'm into occasionally picking up the poor mans gold, silver. (more of finacial restraints, and a preferance for Silvers industrial use reason than a dislike of gold)

Have to say my wife had the right idea of asking for gold jewelry all these years. She was dollar costing into the metal without even knowing it.

Andy, why do you prefer coins over rounds and bars. Just curious as the coins have no smelt value(under current law)?

Like others have said I am certainly not obsessed with owning PM's, it's more just a nice thing to have, just in case. 

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#5) On January 03, 2014 at 10:35 PM, awallejr (76.71) wrote:

I prefer coins over bullion because you have the melt value plus a stronger numismatic value.  There is no law against melting European gold coins to my knowledge.  Plus I just like imagining what the world was like when that coin was circulating.

There is absolutely nothing wrong with owning the bullion. I am not a fan of owning the etf or mining stocks over the physical coins, however, because, as I said, it really is an oxymoron.

This line made me laugh heheh:

Have to say my wife had the right idea of asking for gold jewelry all these years. She was dollar costing into the metal without even knowing it.

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#6) On January 03, 2014 at 11:41 PM, awallejr (76.71) wrote:

Oh and I love silver coins too.  Morgans, Peace Dollars, Barber 50 cent, walking Liberties, Ben Franks, mercury dimes.  Love holding them and flipping them like Casino chips.

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#7) On January 04, 2014 at 12:04 AM, jiltin (30.00) wrote:

I prefer Canadian Maple only as we can trade across the world. Sometimes, we sell the coins and buy jewelry. No bars or bullions.

I do not prefer ETFs or Silver or other coins (as I do not know anything about their values and liquidity issue).

 

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#8) On January 04, 2014 at 12:48 AM, awallejr (76.71) wrote:

I always viewed silver as the "poor man's" gold. I love silver too. They are just as liquid as gold.

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#9) On January 04, 2014 at 11:47 AM, MoneyWorksforMe (< 20) wrote:

awallejr

 I'm surprised I agree with just above everything here, including the comments. Haha. We do have a tendency to have polar differences; but it's nice to finally see some commonality here. 

 "Some say it is nothing but a hunk of mettle sitting there.  Yeah well shares of stock or dollar bills are nothing but pieces of paper sitting there."

This is a very important point. The logic doesn't hold for those who disparage gold, when dollar's posess even less (arguably none) unique intrinsic properties

Also I might add, it's a "hunk of metal" that central banks continue to hold and accumulate as part of their reserves. And no this is NOT confined to just the eastern world. Germany also finds some value in their 700 tons of "hunk metal" and plan to repatriate all of it--if they're lucky enough. And Germany with respect to the global economy is a leader; it's not just some third-world banana republic. They plan on getting their 700 tons back over a 7 year period. Unfortunately Germany was able to only repatriate 37 tons of their gold this year (I wonder why?), meaning they will have to triple that rate going forward to meet the 2020 estimate. 

 I can't decide yet if U.S. equities will have a negative year this year. At this point I'd put it at a range of up 5% to down 10% for the year. I'm very confident this is NOT the best place to be this year however. Commodities, precious metals and mining, I believe do very well, and I have less confidence in some emerging economy stock markets outperforming the U.S. The U.S. stcck market and Nikkei look like the worst performers in 2014.

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#10) On January 04, 2014 at 12:49 PM, awallejr (76.71) wrote:

Well I guess there is such a thing as "common ground" heheh.  And that one typo really did bug me ("mettle").  Spell check is making me sloppy.  If I don't see a red underline I hit post.

As for prognosticating, I am losing my "divining rod" Uncle Ben Bernanke.  When he was in charge I saw things with clarity and profitted accordingly.  I hope I can read Aunt Janet just as well.

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#11) On January 04, 2014 at 1:35 PM, MoneyWorksforMe (< 20) wrote:

Yea I saw that but nearly a second too late - I almost duplicated your typo;  I caught mine in a quick proofread...

Anyway, I also forgot to mention my liking for silver vs. gold. Again I agree with much of what was stated above, but i wanted to add that the Gold silver ratio (GSR), is currently at 61.5, and by historical standards that is very high. Very good arguments can be made for a GSR closer to 20:1 or even 15:1.  For this reason alone I like silver more than gold at this point, and it is reflected in my own holdings, where I hold significantly more silver than gold. In dollar terms it is probably close to 70/30. Couple the GSR with silver's myriad industrial uses and it looks very compelling here. Honesly the list goes on and on. The one thing that always has me wanting to come back to gold is its stability relative to silver and particularly the stock market during tough times. To sort of balance this, I have come up with a strategy to gradually rebalance my holdings to more gold as the GSR declines, i.e. as silver outperforms gold I gradually rebalance my physical holdings by increasing the relative amount of gold I own; perhaps even to the point where I'd own significantly more gold than silver in dollar terms.

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#12) On January 04, 2014 at 8:21 PM, awallejr (76.71) wrote:

Oh I think silver is a great buy now.  Breaking from my desire to only buy "currency" coins (meaning coins that were actually used as currency) I did buy a bunch of 1 oz silver "Morgan" dollars.  Beautiful coins.  I fully expect to see silver over $50 an ounce and gold over $2000 ounce.  The question isn't "if."  The question is simply "when."  And that "when" is closer than people might think.

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#13) On January 04, 2014 at 9:04 PM, portefeuille (99.67) wrote:

I fully expect to see silver over $50 an ounce and gold over $2000 ounce.

Can you not come with slightly more unique forecasts? ;)

Ride This QE3 Rocket to $2,000 Gold and $50 Silver

Eric Sprott: 2014 Sends Gold North of $2,000 and Silver Over $50 – USA Watchdog

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#14) On January 04, 2014 at 9:15 PM, portefeuille (99.67) wrote:

biotech is winning :)



enlarge

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#15) On January 04, 2014 at 10:41 PM, awallejr (76.71) wrote:

Can you not come with slightly more unique forecasts? ;)

I don't care about "unique" I care about being right heheh;p

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#16) On January 04, 2014 at 10:44 PM, awallejr (76.71) wrote:

As for biotech, yup you can make a ton if you hit right.  But my put sales are kicking butt too:

 http://caps.fool.com/Blogs/put-sales-2014/904492

Sadly I don't think anyone has been following them, except a handful on yahoo ;(

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