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camistocks (< 20)

I.O.U. something: GOLDSTOCKS vs GOLD comparison performance charts!

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July 08, 2009 – Comments (54)

So, a few blogs earlier I compared gold, the metal, vs the S&P 500. We saw that gold simply vastly crushed the S&P 500, as gold rose about 200% and the S&P 500 (SPX) rose... I mean fell 40% since the bull market top in stocks in March 2000. But what about goldstocks?

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=222162&t=01004553487438585767

 

So let's have comparison charts between gold the metal, XAU the gold/silver index, GDM the goldminers index, GDX the gold miners ETF and finally HUI the so called gold bugs index, as it contains the best unhedged or low hedged gold stocks. Gold stocks are supposed to outperform gold.

So as the SPX has made minus 40% since the bull market top, gold the metal has made plus 225%. XAU, the gold and silver mining index has made 120%, only! It also contains hedged goldstocks. GDM, the goldminers index however has made 255%, GDX, the goldstock ETF, has made 260%. And finally, HUI the goldbugs index has made 380% since the top of the bull market in March 2000. And in Q1 2008 it was even 600% ahead, before correcting with the market.

So since the HUI "goldbugs" index has so widely outperformed the other indices, my advice would be to buy all stocks contained in the HUI according to their market cap, if you want to mirror the performance of the HUI goldbugs index, and simply let it ride. Because their individual relative outperformance may change, no, WILL change over time. Which means that some of the highly riding goldstocks may correct quite a lot, over time but should recover again, while others may take the lead. But overall the index should continue to crush any asset class, anything...! You only care about the total performance of the basket you bought, not individual stocks, and that the trend will continue.

Alternatively simply buy the GDX Marketvectors ETF, which contains a broad choice of gold stocks (see performance above). Or of course gold itself. As Americans you can do this easily by buying the gold ETF GLD which is backed by stored and "allocated" gold stored deep below London/UK by HSBC and affiliated banks. It is a very safe ETF.

http://www.spdrgoldshares.com/ 

And again, looking at the inflationary government and central bank policies worldwide (please ignore when they talk tough about controlling inflation, it's just talk) I am pretty confident, that the gold bull market will continue for 5-10 years more. In fact I think that the best times are yet to come!

There won't be any deflation, the central banks won't allow it. They will simply print more money. Look at your bills, do they go down? There will be inflation a couple of years ahead. How much? I have no idea!

Here are the stocks contained in each index according zo relative strentgh, if you want to put your own index/buylist together.

GLD:

http://www.spdrgoldshares.com/  

HUI: 

GSS, IAG, GOLD, KGC, GG, EGO, ABX, GFI, AEM, HL, BVN, CDE, AUY, HMY, NEM

GDX:

http://www.vaneck.com/index.cfm?cat=3192&tkr=GDX  

GDM: 

NGD, NXG, GSS, IAG, GOLD, SA, KGC, GG, EGO, GBG, AU, ABX, GFI, AEM, LIHR, RGLD, HL, BVN, CDE, AUY, GRS, SSRI, NSU, PAAS, HMY, NEM, SLW, MFN, TRE, AZK, VGZ

XAU: 

GOLD, KGC, GG, FCX, AU, ABX, GFI, AEM, RGLD, CDE, AUY, SSRI, PAAS, HMY, NEM, SLW

 

Golden Luck! ;-) But don't forget, it will be a volatile ride!

54 Comments – Post Your Own

#1) On July 08, 2009 at 4:42 PM, camistocks (< 20) wrote:

PS

Also, I have no idea, if the gold sector will correct soon or not. I simply look at the long term performance...

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#2) On July 08, 2009 at 5:08 PM, binve (< 20) wrote:

cami, Awesome post man! I totally agree :) Thanks!

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#3) On July 08, 2009 at 5:33 PM, camistocks (< 20) wrote:

Thanks, binve!

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#4) On July 08, 2009 at 6:22 PM, DaretothREdux (49.28) wrote:

Great blog! I just rated a bunch of those stocks thanks to this blog.

Dare

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#5) On July 08, 2009 at 6:40 PM, camistocks (< 20) wrote:

Thanks Dare! I'm glad this blog was useful for you. I hope though, that you green thumbed them...?!?! ;-)

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#6) On July 08, 2009 at 8:16 PM, camistocks (< 20) wrote:

Here a quotation (in German, translation below):

"Nach Golde drängt, // Am Golde hängt // Doch alles. Ach wir Armen!" - Johann Wolfgang von Goethe, Faust I

Or in English more or less:

Everybody wants gold, everybody loves gold. Oh, how poor we are! ;-)

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#7) On July 08, 2009 at 9:54 PM, UKIAHED (45.40) wrote:

Great workup - thanks for the effort.  I'm still trying to figure out a good time to add to my gold/silver holding - sure seems like it is soon - if not now...

Rec

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#8) On July 09, 2009 at 3:26 AM, portefeuille (99.56) wrote:

I agree to some extent (the longer the time frame the more I agree, I guess).

The thing that lets me wait (I might add to my gold/silver positions when the price of gold drops to around 700 USD/oz) is what Redeker and Hendry and quite a few others have recently said. Everybody loves it, just like Goethe said, but right now they don't just love it, they go crazy ...

Maybe it really is not the best time to buy when your cab driver and the media tell you to do so.

I have the same feeling about this "head and shoulders formation" in the chart of the major U.S. stock indices. I should ask my next cab driver about it!

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#9) On July 09, 2009 at 1:41 PM, anchak (99.86) wrote:

Cami...there's a certain degree of dichotomy going on - echoing what Hans said......

The issue I have is that this is out there - and the gold market is very easily manipulable - if there's true hyperinflation/or serious inflationary pressure - it would most possibly be preceded by a gold scare - to shake off people

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#10) On July 09, 2009 at 3:16 PM, camistocks (< 20) wrote:

Thanks all for your comments!

 

UKIAHED - Timing is always difficult. Personally I think gold and goldstocks may have bottomed yesterday, but who knows... On the other hand now that I said it, I'm sure they're going to drop further... ;-)

 

Portefeuille - maybe that cab driver was a former banker or trader or hedge fund manager, who lost his job...? :-)

Why does everybody want to see gold come down... ;-) If you look at the gold chart,  gold already corrected to $700 last year amid the panic selling. Seems to me some people want to talk it down...

All through the bull market in gold so far the majority of people have been bearish, except during the runup late 2007/08. You could read in investment magazines about gold, everywhere in my financial newspaper there where advertisements about gold certificates or the ETF from the Kantonalbank of Zurich. I just checked again and went through every page of my latest finance mag/paper and there was NOT ONE advertisement for gold. As for the media, I did not see any articles promoting gold or talking about people buying gold.

Another sentiment indicator is CAPS. Back in early 2008 there were a lot of people bullish on gold. You could read many blogs about gold. Today, almost nobody writes about gold.

This quote from Goethe is only about things to come. When people leave their dayjobs and go for gold exploration, or when everybody wants to be a mining engineer.

The stock and gold market could have bottomed yesterday.

PS, when you ask a cab driver about investing, ask him first about his former profession... :-)

 

anchak - as I mentioned in my comment to portefeuille gold already dropped to $700 last year, probably shaking out a lot of weak hands. I think stocks and gold could have bottomed yesterday...

Also, the Chinese central bank is buying gold, and so is the Russian. Whenever gold drops there is a buyer. For example people like John Paulson and Marc Faber, one of the best. In 2001 after 911 he said to buy gold, so I bought goldstocks and made 34% in Swiss Francs in 2002 while everybody had another terrible year.

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#11) On July 09, 2009 at 4:29 PM, portefeuille (99.56) wrote:

na gut. I will add at $750.

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#12) On July 09, 2009 at 4:49 PM, camistocks (< 20) wrote:

portefeuille nur eine Frage noch: waren Leute wie Redecker oder Hendry jemals bullish für Gold? Danke...

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#13) On July 09, 2009 at 5:04 PM, portefeuille (99.56) wrote:

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#14) On July 09, 2009 at 5:12 PM, portefeuille (99.56) wrote:

Well, it seems like henfry made some money with gold. Not sure about Redeker. He is global head of currency strategy at BNP Paribas, no gold is may not be his main focus ...

Gutes video, oder?

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#15) On July 09, 2009 at 5:13 PM, portefeuille (99.56) wrote:

henfry

hendry

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#16) On July 09, 2009 at 5:17 PM, portefeuille (99.56) wrote:

The stock and gold market could have bottomed yesterday.

That may be the case indeed.

Eigentlich ein ganz normales video. Ich finde ihn einfach meistens relativ amüsant.

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#17) On July 09, 2009 at 6:07 PM, camistocks (< 20) wrote:

Hmmja, he is certainly not the typical boring financial guy. Just like Marc Faber... ;-) But he's too greedy, as he said. Gold at $500? Never, niemals... ;-)

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#18) On July 09, 2009 at 6:12 PM, camistocks (< 20) wrote:

From Richard Russell, Dowtheoryletters.com, today:

July 9, 2009 -- "I will not keep you in suspense. I believe that the greater risk for the global economy in general, and the US economy in particular, is inflation, not deflation. I arrived at that conclusion both on secular and cyclical grounds. " Paul Kasriel, chief economist for Northern Trust. In my opinion, the best of the economists. end of quote

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#19) On July 09, 2009 at 10:00 PM, camistocks (< 20) wrote:

This is now me quoting Paul Kasriel, chief economist for Northern Trust: 

Speaking of fiscal profligacy, I would be remiss in not mentioning the U.S., the largest net debtor economy in the world. Chart 9 shows that total federal government debt, including debt owed to other government entities such as the Social Security Trust Fund by the Treasury, will rise from 70% of GDP in 2008 to 101% of GDP in 2011 and remains near 100% of GDP through 2019. Bear in mind, these projections of public debt-to-GDP ratios were made by the Obama administration’s Office of Management and Budget rather than the nonpartisan Congressional Budget Office. So, a cynical person might think that these projections are on the low side. Again, given that the U.S. is a net debtor economy and given that all U.S. government debt is denominated in U.S. dollars, there will be a temptation to relieve real debt-service burdens on U.S. residents by “encouraging” the Federal Reserve to err on the side of creating some inflation rather than deflation. (emphasis mine)

from the June 1 issue of the econtrarian which you can find here:

http://www.northerntrust.com/pws/jsp/display2.jsp?XML=pages/nt/0601/1138283681241_6.xml&TYPE=interior 

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#20) On July 09, 2009 at 10:13 PM, portefeuille (99.56) wrote:

Chart 9 shows that total federal government debt, including debt owed to other government entities such as the Social Security Trust Fund by the Treasury, will rise from 70% of GDP in 2008 to 101% of GDP in 2011 and remains near 100% of GDP through 2019.

Greater Risk over Next Five Years – Inflation or Deflation? (pdf)

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#21) On July 10, 2009 at 8:49 AM, camistocks (< 20) wrote:

portefeuille - thanks for adding the graph. Hmmm, looks like we are in a "world war" against deflation...? ;-)

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#22) On July 13, 2009 at 7:01 PM, camistocks (< 20) wrote:

I received this today:

ubsresearchgold137

You and us, 

vonderubsag"> 

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#23) On July 14, 2009 at 8:31 AM, portefeuille (99.56) wrote:

Catching The Gold Bug

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#24) On July 14, 2009 at 8:35 AM, portefeuille (99.56) wrote:

Groundbreaking WSJ Story on Gold

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#25) On July 14, 2009 at 5:12 PM, camistocks (< 20) wrote:

n'Abend, I've read the articles and just a few notes:

-yes more and more retail investors are buying gold. But there is no mania, there are still the sceptics around, like the financial advisor mentioned.

-retail investors have reduced gold buying this year, while there was record buying last year. So there is no mania anymore. Good.

-Qoute from the article:  As an inflation hedge, gold’s record isn’t perfect either. After reaching a record high of $850 per ounce in January 1980, gold’s price fell almost 44% in two months. It didn’t reach $850 again until January 2008, meaning it was flat while inflation rose 175%, Mr. Condon calculates. Indeed, today’s gold price is far below its 1980 apex when inflation is factored in: That $850 is worth $2,206 in today’s dollars.

This is now very tricky, because under Greenspan, the way the inflation rate is calculated has been changed. To a way that reduces the inflation rate. So it means, if we take the same way they calculated inflation in the 1970s, $850 should worth much more than$2,200 today 

Here's nice chart. the red line is how it's calculated today, the blue how back then. Quite a difference! Ah, government statistics!

Chart of U.S. Consumer Inflation (CPI) 

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#26) On July 14, 2009 at 5:58 PM, portefeuille (99.56) wrote:

Hallo,

then gold still has quite some catching up to do!

Wenigstens scheint das Thema Kopf und Schultern mittlerweile etwas zu ruhen. Ich konnte es schon nicht mehr hören/lesen ...

Also langfristig Gold (und etwas Silber) und kurzfristig Porsche Aktien, hihi ... 

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#27) On July 14, 2009 at 6:36 PM, camistocks (< 20) wrote:

Kopf Schulter Formation: ja, scheint sie wurde neutralisiert. Sie sah einfach zu offensichtlich aus und jeder sprach darüber. Da hat doch sicher jemand bei Goldman Sachs eine fake SKS formation in die Supercomputer eingegeben um möglichst viele aus dem Aktienmarkt zu treiben oder sogar short zu gehen... ;-) (kleiner Scherz am Abend...)

Ich sage: Sommerrally!

Porsche? Wie lange ist kurzfristig?

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#28) On July 14, 2009 at 6:44 PM, camistocks (< 20) wrote:

For our english speaking friends:

I told portefeuille that the head and shoulders formation in the S&P 500 may have been neutralized. It simply was too obvious and everybody was talking about it. Did somebody from Goldman Sachs program a fake SHS formation into their supercomputers to drive as many people as possible out of the stock market or even into short positions, the current favourite passtime of investors (divestors?)... (just joking...)  ;-)

The verdict is still out, but I say summer rally!

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#29) On July 14, 2009 at 7:17 PM, portefeuille (99.56) wrote:

Bis die Scheichs die VW Optionen kaufen. Aber alles recht unübersichtlich ...

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#30) On July 14, 2009 at 7:19 PM, portefeuille (99.56) wrote:

summer rally - why not!

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#31) On July 14, 2009 at 7:29 PM, portefeuille (99.56) wrote:

I don't believe markets crash when it's sunny! (7:00/7:32)

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#32) On July 15, 2009 at 12:07 AM, portefeuille (99.56) wrote:

The summertime blues

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#33) On July 15, 2009 at 12:49 AM, portefeuille (99.56) wrote:

Bis die Scheichs die VW Optionen kaufen.

... oder geschenkt bekommen.

Porsche May Give Volkswagen Options to Qatar for Free

Wie gesagt, recht unübersichtlich.

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#34) On July 15, 2009 at 1:10 PM, madcowmonkey (< 20) wrote:

It's a camistock and portefuille show:) I got lost in the German, but take it that you two are agreeing on the same thesis that long term gold will go up.

2 things I always hold at bay. Statistics and Government Statistics. The source is fortelling of the BS numbers you receive.

I would start out really small at the 900 mark and pray to the Hawaiin dancer doll on my dashboard of the old VW vanagon that it comes down to 750 for a chance to make a chunk of change down the line.

750 seems really too low to me. If it comes down, I don't see it going past the 825 mark, but I am no expert. 

comment #20 puts up a really meaningful graph. Much appreciated.

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#35) On July 15, 2009 at 1:25 PM, portefeuille (99.56) wrote:


Hey, you even found the missing link that joins the gold and Porsche/VW lines of thought. It is the Hawaiin dancer doll on your dashboard of the old VW vanagon!

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#36) On July 15, 2009 at 1:45 PM, madcowmonkey (< 20) wrote:

The doll helped keep the vibration down on windy days. Not sure about the missing link:)

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#37) On July 15, 2009 at 3:36 PM, anchak (99.86) wrote:

MAdcow! Madcow! Where have you been?

Certainly not to London to see the queen!

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#38) On July 15, 2009 at 4:37 PM, madcowmonkey (< 20) wrote:

This is a work day for me. I am bored though and spending most of my time on caps and answering dumb questions in the office. I think I got so bored I just started writing stuff all over on caps again, but I am always glad to skim through camistocks (Peter's) blog.

.....Social Security Trust Fund by the Treasury, will rise from 70% of GDP in 2008 to 101% of GDP in 2011 and remains near 100% of GDP through 2019.

.....that is some scary stuff right there. We still are not talking about bringing manufacturing back with the stimulus money that is being thrown around. I think the government is subsidizing their subsidizing at this point.

I like gold, but would look for another retreat from the mid 950's. Nothing against Peter's numbers and arguments, just my opinion. If port is correct and it comes tumbling to 750 USD, then it is a brilliant call. We are talking USD not Euros or some other currency, right?

 

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#39) On July 15, 2009 at 5:47 PM, camistocks (< 20) wrote:

Hi all,

 

nice to see that good people are reading my blogs and are even coming back...

 

portefeuille - yeah I saw that video with henfry before... He makes great points, and so I guess I am the contrarian's contrarian. I think that hyperinflation is the wildcard here. He says he doesn't like that gold is still at the same level like a year ago. Well, maybe he should look at my chart and he would see that it went ahead of itself last year.  ;-) But he is a smart man, and I always enjoy to watch him!

summertime blues - what can I say, it's a statistic that only follows the S&P 500 and not individual sectors. But they are right in a point, after brutal bear markets, there will be huge recovery rallies. 2003 never corrected in the summer and humiliated many bears/short sellers.

Porsche, so Germany is for sale too...? Tja... :-) 

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#40) On July 15, 2009 at 5:53 PM, camistocks (< 20) wrote:

madcow - sorry for the confusion, I am trying to post everything that is important in English. Good luck for gold at 825, ... hmm actually no... ;-) Let's break through 1000 and go to 1500 in a year...!

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#41) On July 15, 2009 at 5:58 PM, camistocks (< 20) wrote:

Porsche for sale... VW is for sale. Well it's Feierabend and I already had a couple of glasses of whine... :-)

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#42) On July 15, 2009 at 6:02 PM, portefeuille (99.56) wrote:

no, you are right, they are all for sale and it is getting confusing ...

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#43) On July 15, 2009 at 6:04 PM, portefeuille (99.56) wrote:

(okay, the wine may have affected your spelling somewhat, hihi)

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#44) On July 15, 2009 at 6:17 PM, camistocks (< 20) wrote:

LOL, yeah, I definetily didn't have no whining today. It was wine. :-) It was a great day. My portefeuille was up 7.9%...!

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#45) On July 15, 2009 at 7:36 PM, camistocks (< 20) wrote:

One more chart:

this is again the old CPI versus today's "modified" Greenspan CPI, but from 1970 to 2008. So we already had inflation like back in the 1970s! And as the chart above shows, we still have 6% inflation!

 

from shadowstats.com They also believe in the hyperinflation scenario, starting even as early as this year! Personally I only hope for inflation in the range we had before, because otherwise things/life could evolve in a very ugly way. You would have to pay the bill in the restaurant, before you eat, because prices might have already risen until you finish...

Let's not forget, that to curb inflation the Fed must raise rates and induce a new recession. Can they really do this anytime soon, now that we had such a severe worldwide recession, that only seems to be bottoming out. Depending on which statistic of the unemployment rate one looks, the USA are now at almost 10% or up to 20%! Again shadowstats.com

The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated "discouraged workers" defined away during the Clinton Administration added to the existing BLS estimates of level U-6 unemployment. 

Chart of U.S. Unemployment 

The Fed is TRAPPED.... ;-)

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#46) On July 16, 2009 at 10:13 AM, madcowmonkey (< 20) wrote:

camistocks- I kept up enough on the comments. Thanks for the translations.

So on the last chart, is there going to be a top to that bad boy or what? I know stimulus packages take time to show the change in unemployment, but I wasn't too impressed with it in general. I still believe a stimulus should be for both the citizens and the companies . Bringing back the manufacturing jobs would be a great start and with the way things are going with China right now, I think it is more relevant for the US to get back to producing and trading goods from its own soil. When the immigrants came over during darker years for other countries, one of the sectors that they really excelled in was clothing. At this point it is almost impossible to find clothing made in the US. Automobiles are pretty much the same. The parts are shipped in from other countries and then the automobile is assembled here. That sector is killing it right now:) 

The one sector that I think the US needs to really consider is Tech Security training for US citizens. There are plenty of companies in demand for skilled labors in that arena....especially the US government. The reason I brought this up is because the facility that I use for the company servers was hit by a team of 5,000 computers in Viet Nam. Not a fun day to figure out why everythiing went so horrible and it was a drag on business and our clients. 

I enjoyed yesterday as well. It was an unexpected event for me and it was nice to see. As for gold breaking $1000 and moving to $1500. I hope I get to catch that train.

http://www.youtube.com/watch?v=QsLgEdowIg0

Best I could do.....Gold is the color of honey eh?

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#47) On July 16, 2009 at 11:08 AM, portefeuille (99.56) wrote:

Porsche chart.

 

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#48) On July 16, 2009 at 11:11 AM, portefeuille (99.56) wrote:

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#49) On July 16, 2009 at 11:21 AM, portefeuille (99.56) wrote:

VW common.

 

 

VW preferred vs. common (blue).

 

 

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#50) On July 16, 2009 at 11:46 AM, lemoneater (79.38) wrote:

I learned something new portefeuille=portifolio, cool! It is a slow work day for me also and I am interested knowing more about the dynamics of gold investment although anyone browsing the blogs knows that I'm more interested in jewelry than bullion :).

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#51) On July 16, 2009 at 12:55 PM, madcowmonkey (< 20) wrote:

port- I remember the day VW jumped...... so many people underperfomed it on CAPS right before the jump..... it was hillarious.

I heard from a review that the new mini van that VW came out with wsa just a Chrysler Town & Country with a new maker name on it. If it is true, Why in the world would anybody dealer do that? Unbelievable. 

cami- Let's not forget, that to curb inflation the Fed must raise rates and induce a new recession.

I am now depressed and will eventually start shoveling bratwursts and beers down my throat to clear my mind:) New recession!? Ouch.

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#52) On September 08, 2009 at 4:43 AM, portefeuille (99.56) wrote:

Spot gold is at over $1000/oz today.

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#53) On September 08, 2009 at 8:39 PM, camistocks (< 20) wrote:

Yes, I was even shouting out loud my joy! But aah, they managed to knock it below $1000 again. But it was a great feeling... maybe we break through at the next attempt or so?

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#54) On September 29, 2009 at 12:38 PM, portefeuille (99.56) wrote:

still at around $1000.

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