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Numero Uno? Vicino...On Gold

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October 21, 2008 – Comments (14) | RELATED TICKERS: GLD , AAPL , GS

Pride goeth before destruction, and an haughty spirit before a fall. Better it is to be of an humble spirit with the lowly, than to divide the spoil with the proud. 

Proverbs 16:18-19

In this game of CAPS, the Space Invaders of Stock picking, I achieved the high score, again today. I passed SPECBEAR, momentarily. Usually by the time I write something boastful or provide some recommendation, I get crushed. 

My Best example was Proud to Be Long SKF, posted on 18 SEP. Just before King Henry, banned short selling. But the tyranny, may not go unanswered as James Kunstler points out here:

 

"I think it has already begun with the inquisitors summoning the shifty Dick Fuld of Lehman Brothers -- but there are hundreds of other characters like him out there, who scored untold millions of dollars in activities that were simply grand swindles. I wouldn't be surprised if, eventually, Treasury Secretary Hank Paulson found himself in the dock to answer how come, when he ran Goldman Sachs, there was a special unit in the company dedicated to short-selling the very mortgage-backed securities that another unit in the company was so busy pawning off to every pension fund on God's green earth."

James Kunstler

http://jameshowardkunstler.typepad.com/

My updown.com portfolio under: abitarecatania, is up 100% in 8 months? 

Like comedy, timing counts in CAPS and the market. I have been ahead and my timing has worked out. I abandoned my long commodity positions mostly in May 08 to hold at 4-5K in points.

My fellow fools, who held on commodities enjoyed a "blow off top" and a crushing sell off from commodities. My timing was lucky, but early here: REF: 

My post on 27 May 08: The Upcoming Top Fool Will Be a Commodity BEAR

May 27, 2008 – Comments (27) | RELATED TICKERS: GLD , OIH , SLV

"When the commodity bubble pops, like the DeathStar explosion, you had better be clear."

So where is it going? Not sure really, time span is really unknown. I really have no idea. Who does? Legislative risk is a new calculation, who has added it in their portfolio?

I expect deflation unto possible latter hyper inflation, based on the CURRENT "Wallstreet Bailout", ineptitude, corruption and lack of confidence. 

But I can see a large potential NOMINAL rally in the market, maybe we already have had it? The FED Cartel and the government appear to be printing amazing amounts of money to keeps the system in place and the game going.  

However, in the long run earnings are coming down, bankruptcies are going up,  unemployment will climb and interest rates are going to climb.

Do not think interest rates are going up?

Ask Warren Buffet Financial Raped Victims GE or GS, what interest rates "the Oracle" charged these two mysterious Black Box hedge funds. Remember when these two companies were considered the "Gold Standard" of American Companies? Way back to May of 2007? Or was it Sep 2008? 

This is bad for the stock market. But there are companies that I would consider buying. I am checking on company now. Apple. My computer at home keeps crashing, so I am in the Apple store mooching a MAC. I heard MAC get fewer virus then Microsoft, plus the IPHONE connectivity makes it an ideal computer. 

Would I consider a long position in Apple? Sure

BREAK - -------------------

ON GOLD 

I am no expert on Gold. I like it, I am slowly acquiring Gold coins. Where? Where I find them, from reputable sources and I pay cash. Why? Watch the Pianist or Black Book. Gold has been money for 3000+ years. Gold is insurance.

But for most Fools, gold should not be your focus. Your job and saving money, should be your focus.  

 Gary North, who I subscribe to, has an outstanding write up today on Gold. If you are long Gold or considering a Gold position, I 100% guarantee it is worth your time to read. GN will give you a free one month trial, sign up and read it for free ... www.garynorth.com

Gold in 2009: Up, Down, Or Sideways? 

I do not want to steal his work, but I will steal a quote or two, that I think are relevant.

GOLD IN 2009: UP, DOWN, OR SIDEWAYS? 

For the overwhelming majority of people in the world, this question is irrelevant. Except for India, in which gold jewelry is given by parents to daughters at the time of their marriage, almost no one owns gold.

Cutting your budget by 10% is more important than buying gold coins at the present time. Getting in control of your expenditures is crucial. Buying gold coins is a good idea, but it is not as crucial as getting control of your family budget. Assume that your income will drop over the next year. If you're in sales, you had better expect a drop of 25% or greater. Deal with this first. Then worry about gold.

14 Comments – Post Your Own

#1) On October 21, 2008 at 6:57 PM, dinodelaurentis (73.07) wrote:

yes! damned good advice!!

conservation pays off today! the consumer lifestyle can consume you...

you have to have the dry gunpowder to get off the killing shot!

i also reccomend silver (when you've eliminated debt and waste) because it's easier to find, easier to trade, and not such a target to the hoarders.

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#2) On October 21, 2008 at 7:21 PM, abitare (35.13) wrote:

I forgot my Humor:

Here a replay of (Referee) Hank Paulson on My SKF Postion.

 

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#3) On October 21, 2008 at 7:48 PM, dinodelaurentis (73.07) wrote:

NOT MY GAMECOCKS!!!!!!!!!!!!

ohwhywhywhywhywhywhywhywhywhywhywhywhy...sob...heave(wheeze)sob... sniffile... whhhhhyyyyy?????

why is fate so cruel? to take something so beautiful as this post and then sully it with this horrible, evil, dispicable moment from my beloved gamecocks loss??!!

i'm sorry Ares, it's not your fault... it just slipped out... excuse me, i have to wipe my tears...

it's not easy pulling for the Univesity of South Carolina... i'm afraid i just can't discuss this now... forgive my outburst...

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#4) On October 21, 2008 at 7:57 PM, abitare (35.13) wrote:

dinodelaurentis,

I know, it seems pretty ridiculous, that a referee would sack? the Gamecocks, Quarterback. At first, I thought it was some scumbag, payed off referee. But when I found out he played for UK back in 1970s, I realized, he was just acting on instinct and I was...proud of him.  

GO UK! Go Wildcats! Report this comment
#5) On October 21, 2008 at 10:19 PM, Harold71 (22.06) wrote:

I agree with most of this, especially long term interest rates.  4.2% on the 30-year is a bubble.  Marc Faber stated it could go to 8% or higher and I think that's reasonable.

AAPL is up huge after hours.  I still have a long-term sell on it.  It basically moves in lockstep with RIMM, and of course the overall market to a major extent...high beta. I consider AAPL, RIMM to be the posterchilds of the consumption bubble.  I may love AAPL philosophy (Think Different!) but the stock is another story.  I hated it at $200 last year, $190 earlier this year, and still don't like it near $100 now.  Though like the market it could bounce, it is due.  Perhaps if they had a dividend it would be more worth considering.  Otherwise you have your money in the system, expecting someone to come along that will pay more for the shares.  That's the only way to win.  And to me that just doesn't make sense.  I'd rather own physical gold/silver than a non-dividend payer any day, and especially these days.

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#6) On October 21, 2008 at 10:20 PM, lquadland10 (< 20) wrote:

Hey Ares. This reminds me of when Rogers said that he was just waiting for the dollar to rise some in strength and then he was going to dump the rest of his dollars.

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#7) On October 21, 2008 at 10:32 PM, abitare (35.13) wrote:

Harold71,

I am mostly aligned. My concern is one more of diversity of assets. I understand Mish Shedlock goes 1/3 long, 1/3 short and 1/3 cash or money markets. I do not think that is a terrible idea.

Apple makes one of the few products Americans can export to Asia and Europe. Would you rather have a fist full of Apple stocks or fiat currency? Right now the choice is dollars. But if we go into hyper inflation, I prefer to own a producer. Those in all cash or short will be wiped out.

My WAG is deflation into possible hyper inflation. Holding Apple, which can produce to our Asian overlords, would be a hedge, IMO. 

I agree with your other premises.  American stosks, have had it good for to long. No dividends, over paid CEOs, constantly abusing common stock shareholders. I think going forward, overpaid CEOs and abusive to Common Stock share holders will be reduced. Money and capitial are in short supply.

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#8) On October 21, 2008 at 10:36 PM, abitare (35.13) wrote:

lquadland10,

Yep, Rogers and Schiff have had it right.

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#9) On October 21, 2008 at 11:24 PM, Harold71 (22.06) wrote:

For death of the USD, I'd feel better having OIL than an AAPL.  The US also exports grain...DBA. 

But yes we can and should have some diversity in our holdings  :)

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#10) On October 22, 2008 at 9:37 AM, XMFSinchiruna (26.96) wrote:

Great post Ares... and congratulations!!

I, alas, am far too pig-headed and macro-minded to have ever entertained the idea of locking in gains in the Springtime when I too was in the top 100. Nope... I kept my seatbelt fastened and came along for the ride straight down to the bottom 2 percentile of CAPS. Though I remain confident in my longer-term focus, becoming overly prideful is certainly not among the challenges I face today. :)

By the way... did you see I gave you a shout-out for your excellent posts of Jim Rogers intervirews in my latest article?

http://www.fool.com/investing/etf/2008/10/21/commodity-investing-the-jim-rogers-way.aspx

Congrats again for reaching the pinnacle.

TMFSinch

 

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#11) On October 22, 2008 at 11:18 AM, lquadland10 (< 20) wrote:

can you use this for your next post? http://www.popgive.com/2008/10/starving-billionaires.html

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#12) On October 22, 2008 at 11:26 AM, anchak (99.87) wrote:

OUTSTANDING POST!!!!! PERIOD

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#13) On October 22, 2008 at 7:21 PM, abitare (35.13) wrote:

TMFSinchiruna,

Good article and good find there. Thank you for the props. 

lquadland10,

Good find. You should post it.

anchak,

Thanks you.

 

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#14) On October 22, 2008 at 9:21 PM, lquadland10 (< 20) wrote:

can you use this for your next post? http://www.popgive.com/2008/10/starving-billionaires.html

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