Posts filed under “Gold & Precious Metals”

Which is a Better Inflation Hedge, Gold or Houses?

0503chart
Source: Bloomberg’s Chart of the Day, Federal Housing Finance Agency

 

 

Here is something I never would have guessed at, via Dave Wilson of Bloomberg: If you want to be hedged against the risk of a pickup in inflation, you would be better off buying houses than gold.

That’s according to Michael Hartnett, chief investment strategist at Merrill Lynch. His chart (above) shows the U.S. house-price index and the price of Gold since 1995.

According to Bloomberg, “Home prices rose 6% through the end of last year from their low in the second quarter of 2011. Q1 reading is due May 23. Prices in 20 of the largest U.S. cities increased 0.4 percent through the first two months of this year, according to the Standard & Poor’s/Case-Shiller index.”

As houses became more expensive, gold got cheaper. Its off as much as 31% from its September 2011 peak of $1,923.70 an ounce.

 

 

Source:
Houses Surpass Gold for Hedging U.S. Inflation
David Wilson
Bloomberg May 3 2013

Category: Gold & Precious Metals, Inflation, Real Estate

Albert Edwards: 10 Year Bond Yield Heading Below 1%

Click to enlarge

 

Kudos to Albert Edwards for ignoring Career Risk and making a fairly outrageous call.

I question whether this sort of analysis is brave or stubborn or brave (or both) — but more importantly what clients are supposed to do with it.

The rest of Albert’s call: The  S&P500 is going to fall 75% to 450, the Sub-1% US 10 year, and Gold > $10,000.

Godspeed.

 

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Category: Fixed Income/Interest Rates, Gold & Precious Metals

Contextualizing Retracements By Time Frame

The meme of this morning was “Gold has already regained half of its losses.” That was the chatter I keep hearing. (The comment was blindly repeated by the usual suspects). As discussed earlier, I am now on all sorts of email lists informing me what a fantastic buying opportunity this drop was — but you…Read More

Category: Gold & Precious Metals, Investing, Technical Analysis

Are You an Investor or a Story Teller?

I am fascinated by the pushback to the Goldbuggery post. It has provided an enjoyable and intriguing glimpse into the minds of a certain type of investor. The thought process of undisciplined traders, the people who invest based on a narrative is amazing (and a little sad). Our story thus far: On April 9th, I…Read More

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

The Golden Rage

The price of gold plummets, even as deranged millionaire John Hodgman champions the timeless allure of a drab gray, crash-proof carcinogen.

Wednesday April 24, 2013, 05:54

Category: Gold & Precious Metals, Video

Sell Out: “The Other Side”

  Reader:  “Is it just me or has Barry Ritzholtz gone over to the other side. I see him guest hosting Bloomberg more so maybe it just goes with the territory….I’m dismayed and don’t like it when these guys sell out. Roger Lowenstein and his article on Bernanke….in Atlantic Monthly. Just venting………” Fleckenstein: Lowenstein, who…Read More

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

Sell Out: "The Other Side"

  Reader:  “Is it just me or has Barry Ritzholtz gone over to the other side. I see him guest hosting Bloomberg more so maybe it just goes with the territory….I’m dismayed and don’t like it when these guys sell out. Roger Lowenstein and his article on Bernanke….in Atlantic Monthly. Just venting………” Fleckenstein: Lowenstein, who…Read More

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

12 (Misguided) Commandments of Gold Bugs

Click for video

Source: Yahoo Finance

Category: Gold & Precious Metals, Media, Video

Kotok on Gold

Gold
David R. Kotok
April 19, 2013

 

 

 

Gold made the headlines with a rapid plunge, some possible basing, and then another plunge. Let’s talk about gold for a minute.

Central bankers prefer to have the public, the investor class, and the holders of institutional wealth believe in the credibility of their central banking skills and their ability to manage their respective currencies. But central bankers miss a critical point.

When it comes to gold, the gold bugs argue that gold is money. Simply put, that is not exactly correct. Gold was money 150-200 years, and even centuries, ago. In the US, if you wanted to buy something, you could pay for it with a gold coin.

Those days are long gone. I repeat, those days are long gone. But gold still maintains one important characteristic out of the three that we attribute to a functional currency.

So let us get to this question of whether or not gold is money. To be money, you have to have the ability to exchange easily in transactions. When you go to the store and pay for something in dollars, those dollars function as money. You can pay in paper currency, write a check, transfer it electronically, or pre-purchase the electronic entry on a piece of plastic that is carried and use it for payment. Money is a way in which payments are conducted. You cannot easily buy something with a bag or bar of gold, not even with a gold coin. There are not many people in the world who will take gold for payment. The payment mechanism of money is conducted in the currencies managed by the central banks, regardless of whether the currency is the dollar, pound, yen, euro, franc, krona, dinar, yuan, peso, or something else.

The second characteristic of money is to act as a unit of account, a method of measurement. Open up the income statement of your favorite company. It shows how much revenue, expenses, profits, assets, and liabilities they have in dollars as a unit of account or way of measurement. The same is true all over the world. We use these measurement tools constantly, so money has to provide easy, secure ways of measurement.

The problem with money substitutes that fail these two initial tests is that they become subject to volatilities that disrupt their use. Gold is such an item. Bitcoin is another one. Pay for something with bitcoin and how do you know how much you are paying in comparison to the rest of your daily transactions?

The third characteristic of money is that it is a “store of value.” It supplies an answer to the question, “Where can I safely place my accumulation of wealth, the result of my work effort, the gathering of my savings, –and have it hold its value?” Store of value is very important to gold.

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Category: Gold & Precious Metals, Think Tank

Gold, Silver vs DJIA, S&P 1885-2013

Click to enlarge     Fascinating look at the very long term via Global Financial Data, starting from the same point. The best performers are the Dow, SPX Gold and then Silver. I have no idea what this means, but its interesting and pretty and hopefully thought provoking.   Source: Ralph Dillon Global Financial Data,…Read More

Category: Gold & Precious Metals, Investing, Markets