Posts filed under “Gold & Precious Metals”
Last week, we published a 2,500-word opus on what lessons could be learned from the rise and fall of gold.
There was lots of feedback on the general concept and many of the specifics. By and large, the response was positive, with most of the pushback coming from those who were long gold or other metals. I thought it might be worthwhile to respond to some of the comments that came my way, both positive and negative.
1. Denial. I guess this should not have surprised me, but: People called the 38 percent drop from the peak a “pullback.” Really? That’s like saying leprosy is a dermatological condition.
It is not completely inaccurate to say that we don’t know for sure if the secular bull market in metals is over. I have no objection to anyone saying we don’t know how this ends.
But ask yourself this: If stocks fell 38 percent, what trader would not declare the secular bull market over? How much does something have to drop before anyone admits the trend is broken? I chalked that up to trader’s denial.
2. Not about gold. Quite a few people understood that the entire idea of the piece was not about gold, but rather used gold as a jumping off point to discuss investing errors in general. That the 10 “lessons” offered in this piece weren’t specific to gold was by design.
Some of the pushback said this critically – “These lessons don’t even apply to gold!” – which really confused me. It was supposed to be investing advice that could be applied to equities, bonds, real estate or commodities. I have done similar such “lessons” after elections, and about investing in general (see this and this).
Point 3 -10 continues here
> I did something different with my Sunday Washington Post Business Section this week. Starting with the 2,500 word long form discussion I wrote for Bloomberg, I simplified this and edited it down to half that length. The print version had the headline Bitten by the gold bug? You’ll do well to heed the…Read More
This morning, I have a massive 2500 word piece at Bloomberg looking at the rise and fall of Gold.
The key to the discussion are the 10 lessons that we all can takeaway from that cycle and the experiences of Gold investors. Hopefully, these will make us each better investors in the future.
Here is the intro:
“It has been quite the ride for gold: from under $500 an ounce a decade ago, to above $1,900 in 2011, gold gained more than 400 percent. Since its peak of ~$1,921.15 on Sept. 6, 2011, however, the shine is off the yellow metal. Gold plummeted 38 percent, recently breaking below $1,200. Yesterday’s close is within 5 percent of the lows, at $1,241.
If a 20 percent drop is described as a bear market, and a 30 percent fall is called a crash — what do we call gold’s almost 40 percent plummet?
This column is not an “I told-you-so” or an exercise in “Goldenfreude” (describing a “delight in gold bugs’ collective pain”). Rather, it is an attempt to learn some investing lessons from the epic rise and horrific fall of gold.
As an investor, I am a gold agnostic: When used properly, the metal is a potentially valuable tool in an investment arsenal. There are times when it makes for a profitable part of a portfolio, as in the 2000s. There are periods when it is a speculative and dangerous trade — such as the 2010s. There have also been decades when it does nothing, earning no return, generating no income, essentially dead weight to a portfolio, as in the 1980s and 1990s…”
Full column after the jump:
Gold and Silver Are Manipulated The Guardian and Telegraph report that gold and silver prices are “fixed” in the same way as interest rates and derivatives – in daily conference calls by the powers-that-be. Long-time trader Andrew Maguire told told King World News this week that 2 JP Morgan whistleblowers have handed over evidence of…Read More
Financial Psalm No. 16 16:1 Preserve me, Gold, for in you do I take refuge. 16:2 My portfolio, you have saveth, and it sayeth: “You are my Saviour. Apart from you, I have no good thing…not even Bitcoins” 16:3 As for the Silver and Oil which is in the earth, they are also excellent ones in…Read More