Posts filed under “Gold & Precious Metals”

NDR: 1980s Gold Pattern Suggests $660/oz

Gold is one of those topics that always generates fierce pushback whenever I write about it. Yesterday’s column How Low Can Gold Go? was no different. A deluge of emails and over 150 comments soon followed.

I may post some of the more informative, vociferous and misguided comments / emails from readers later today as a public service to everyone else. But note that I find this pushback highly encouraging, as it suggests a topic that not only resonates, but is a hot button emotional issue. The lack of rationality is obviously so dangerous for investors. These last two make the subject especially intriguing to me.

One more thing: As it turns out, I am not the only one who has been skeptical on Gold since its uptrend cracked late in 2010. This weekend’s Barron’s, citing Ned Davis Research, excerpted part of a recent research report from John LaForge and Warren Pies of NDR on historical gold cycles:

“[F]rom its peak in January 1980 through its trough in February of 1985, gold suffered 65.8% losses. So far in this cycle, it’s lost 35.7% from its August 2011 peak, so if it were to follow its 1980s path, it could easily slip below $700 an ounce.

There were a number of factors working against gold in the 1980s, but notable among them was the strength of the U.S. dollar: It rose 54% from January 1980 to February 1985, versus as basket of major currencies.  LaForge and Pies write that it’s not difficult to see how the same pattern could play out again, weighing on gold. These waters aren’t friendly to contrarian investors, who usually lose out when betting against a rising dollar. Nor does it seem like a time for bargain hunters in gold, if the price is in danger of falling significantly more and pessimism hasn’t yet reached its peak.

NDR concludes: ”Gold is not worth additional capital at this point. It is oversold, but is trending poorly. Like gold, the overall commodity super-cycle looks to be dying.”

-Ned Davis: If Gold Follows 1980s Pattern, Expect $660 An Ounce

 

Feel free to take the other side of the trade from what is widely regarded as the most astute technical analysis firm in the world . . .

 

Category: Cycles, Gold & Precious Metals, Technical Analysis, Trading

Trick Question: How Low Can Gold Go?

One of the things I like to do in all of my musings is to find some thing or person who is wrong about an investing-related subject, then trying to figure out where they went awry. On occasion, small pearls of wisdom can be derived from this analytical process, as in this discussion on narrative….Read More

Category: Gold & Precious Metals, Investing, Psychology, Really, really bad calls

Is This the End of the Secular Gold Bull?

In the beginning of this year, we looked at some of the trading errors commonly made by gold investors during this cycle. At the time, gold had fallen 38 percent from its 2011 peak. Yesterday, spot gold traded at less than $1,242 before closing slightly higher. Gold is hitting new multiyear lows relative to the…Read More

Category: Cycles, Gold & Precious Metals, Markets, Technical Analysis

Rolling Returns of Stocks & Gold

click for ginormous chart   The chart above shows the rolling returns for stocks and gold. Catherine Mulbrandon of Visualizing Economics writes: For the period 1928-2013, the average annual compound real return of stocks = 6.3% and gold = 2.0%. However, the price of gold was controlled by the government until the mid-70s when the…Read More

Category: Gold & Precious Metals, Investing

The Rich Buy Real Estate; The Poor Want Gold

If you want to know what someone’s views of society are, ask what they believe is the best long-term investment. I am fascinated each year when Gallup Poll asks Americans to choose the best option among real estate, stocks and mutual funds, gold, savings accounts and CDs, or bonds. The results are a pop psychologist’s…Read More

Category: Gold & Precious Metals, Investing, Psychology, Real Estate

Real Price of Gold Since 1791

click for ginormous graphic Source: Visualizing Economics   Earlier this year, we discussed the Lessons Learned from the Fall of Gold. That surprisingly generated some controversy despite the near 40% collapse from its 2011 peak.   Rather than spill a lot of ink onto the page, I wanted to direct your attention to the following…Read More

Category: Digital Media, Gold & Precious Metals, Inflation

History of Money

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Category: Currency, Digital Media, Gold & Precious Metals

Pushback: Lessons from Gold’s Rise & Fall

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…Read More

Category: Apprenticed Investor, Gold & Precious Metals

Bitten by the Gold Bug? Some Lessons

>   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

Category: Apprenticed Investor, Gold & Precious Metals

Video: The Lessons of Gold’s Collapse


Source: Yahoo Finance

Category: Gold & Precious Metals, Media, Video