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Thread: weekend commentary : more Bounce to the Ounce

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    Default weekend commentary : more Bounce to the Ounce

    I don't mean to 'push' any particular investment, but lately gold prices have pulled back a bit and stabilized while the US dollar has strengthened (slightly). Thus if you happen to believe that the US economy will get worse before it gets better, you may want to read these commentaries.

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    Default Re: weekend commentary : more Bounce to the Ounce

    Again, some basic universal facts

    * Gold has been historically the worst long term investment
    * You should buy assets that produce cash flows. Think Real Estate, Stocks and Bonds. When an asset produces cash flow, you can more accurately predict its real worth

    * Gold is speculative. Nobody has any clue what factors are already priced into gold. Even if US economy tanks 15%, What if Gold prices has already factored a 25% tank? In that case you'll probably lose 50% of your investment

    * No Gold investor has beaten S&P 500

    * It is the same line of thinking Melonie suggested investing in Currencies. Rate Cut means Dollar drop right? Wrong!!! When buying speculative investments, nobody has any clue what factors market has already priced in. If you want to sleep well and still beat Gold Investors, a basket of World 1000 stocks offers higher returns for much lower risk

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    Default Re: weekend commentary : more Bounce to the Ounce

    Often, investing in ourselves and our friends can create the best cash flows and rewards.

    Forgive me, perhaps I am getting too christmassy.

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    Default Re: weekend commentary : more Bounce to the Ounce

    well, I'll throw in a Christmassy biblical response ... 'neither a borrower nor a lender be'.

    Trust me on this one, lending money to friends and family is guaranteed to cause very 'un-Christian' future developments in the vast majority of cases.

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    Default Re: weekend commentary : more Bounce to the Ounce

    * ahem * since this thread was first posted a week ago gold has gone from $798 to $843 an ounce. S&P has gone nowhere, and the US dollar has weakened again after it's recent ECB 1/2 trillion dollar induced 'dead cat bounce'.

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    Default Re: weekend commentary : more Bounce to the Ounce

    Quote Originally Posted by Melonie View Post
    * ahem * since this thread was first posted a week ago gold has gone from $798 to $843 an ounce. S&P has gone nowhere, and the US dollar has weakened again after it's recent ECB 1/2 trillion dollar induced 'dead cat bounce'.
    Gold could be a dead cat bounce too. No?

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    Default Re: weekend commentary : more Bounce to the Ounce

    ^^^ not likely. Gold is clearly in an upward trend, with the rise in price requiring central bank sales of gold to be temporarily halted. On the other hand the S&P is clearly in a downward trend, with the decline requiring hundreds of billions of dollars worth of central bank 'cash injections' to be temporarily halted. The fundamental difference of course is that central banks can print up an infinite amount of new 'cash' to inject, but they cannot print up additional gold to sell !!!

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    Default Re: weekend commentary : more Bounce to the Ounce

    Quote Originally Posted by Melonie View Post
    ^^^ not likely. Gold is clearly in an upward trend, with the rise in price requiring central bank sales of gold to be temporarily halted. On the other hand the S&P is clearly in a downward trend, with the decline requiring hundreds of billions of dollars worth of central bank 'cash injections' to be temporarily halted. The fundamental difference of course is that central banks can print up an infinite amount of new 'cash' to inject, but they cannot print up additional gold to sell !!!
    S&P 500 generates cash. What does gold generate? In other words, how is gold different from Tulip bulbs and Internet stocks?

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    Default Re: weekend commentary : more Bounce to the Ounce

    ^^^ gold generates 'financial security' ... a commodity which may be in extremely short supply a year or two down the road ! And even if this never becomes an issue, unlike Tulip bulbs or Internet stocks (or many companies who were S&P component stocks in the past), gold will never be worth zero ! Gold is strictly a fear factor play, I will fully admit. At particular stages in the economic cycle Gold is indeed a 'loser' because it does not 'generate' additional wealth. But at other points in the economic cycle gold's ability to 'preserve' wealth can be extremely valuable.

    I would also argue that the S&P can also 'consume' cash as well as generating it ... with the financial sector of the S&P having already 'consumed' a few hundred billion dollars worth in 2007 !

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    Default Re: weekend commentary : more Bounce to the Ounce

    well, here we are a week later ...


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    Default Re: weekend commentary : more Bounce to the Ounce

    hmmm, here we are 3 weeks later ...





    Spot Gold is now at $909 per ounce from the original $798

    S&P 500 is now hovering around 1400 mark from the original 1500 ballpark

    The US dollar has returned to it's 1.49 per Euro all time low ...

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