Gold in a bubble and/or going to $3,000

[touchring]

Re: Gold in a bubble and/or going to $3,000

Here is an article for you touchring

http://www.foreignpolicy.com/article...ths_day_trader

The rare earth opportunity slipped away from me. Two years ago I was researching on how to invest in rare earth but couldn't find a way. I was even earlier than the author Jason Miklian, and like what Jason discovered, almost all companies dealing in rare earth are loss making companies with almost no revenue.

I think this round, I'll start tracking palladium which has an ETF.

[nero3]

Re: Gold in a bubble and/or going to $3,000

The rare earth opportunity slipped away from me. Two years ago I was researching on how to invest in rare earth but couldn't find a way. I was even earlier than the author Jason Miklian, and like what Jason discovered, almost all companies dealing in rare earth are loss making companies with almost no revenue.

I think this round, I'll start tracking palladium which has an ETF.

Still chasing the rainbow then. I try to ignore such opportunities, and look at something I can hold for an extended period of time.

[metalman]

Re: Gold in a bubble and/or going to $3,000

Still chasing the rainbow then. I try to ignore such opportunities, and look at something I can hold for an extended period of time.

like gold & ust 10 yrs ago... but what?

[nero3]

Re: Gold in a bubble and/or going to $3,000

like gold & ust 10 yrs ago... but what?

Gold was cheap relative to the dow in 2000. Now the dow are at around 3,8 relative to book value. It's a year before 1996 when Alan Greenspan warned people about the stock-market getting irrational based on price/book. So does that mean you should buy stocks now? Can Obama pull out a rabbit? Buy stocks in Russia instead that are trading at book value? Or is the US stock market getting irrational again now that inflation in emerging market's seems to be getting out of hand and the dollar appears to be setting in a low? What's really amazing is that this market is still more expensive than in 1965 based on price/book, yet have done nothing for the last 11 years.

[c1ue]

Re: Gold in a bubble and/or going to $3,000

like gold & ust 10 yrs ago... but what?

Don't feed the trolls.

[nero3]

Re: Gold in a bubble and/or going to $3,000

here was exactly what I was looking for

A theory justifying why stocks in 2009 was cheaper than in 1982.

http://www.ritholtz.com/blog/2008/12...ow-gold-price/

[flintlock]

Re: Gold in a bubble and/or going to $3,000

here was exactly what I was looking for

A theory justifying why stocks in 2009 was cheaper than in 1982.

http://www.ritholtz.com/blog/2008/12...ow-gold-price/

But what about this?

http://www.multpl.com/ Median PE ratio of 15.77. 1982 PE was far below today.

[jk]

Re: Gold in a bubble and/or going to $3,000

Don't feed the trolls.

+1

[nero3]

Re: Gold in a bubble and/or going to $3,000

But what about this?

http://www.multpl.com/ Median PE ratio of 15.77. 1982 PE was far below today.

I'm aware the professor behind the 10 year earnings average is predicting the stock market to be around these levels 10 years from now. The market looks expensive using that ratio, that's why I think you must be a stock picker and don't buy the general market. Many stocks have went up a lot since 2000, even the market was flat. Many stocks went down even the stock market went up after 1982. There is some bullish signs I have mentioned. The earnings yield on high quality blue-chips is around twice the 10 year treasury rate. If you look at the 2009 low, some companies, stocks like MO and PM comes to mind (tobacco stocks), since PE ratios was in the single digits, and PM have all their earnings from outside the US (it's ridiculous how high some emerging market stocks are priced relative to solid stocks such as PM), MO all inside the US, and given the stability of those earnings, it's just unlikely that waiting for a (10 year average P/E 8 situation) would had made the stocks cheaper (I think MO was at it's cheapest in the 74 recession and then again in 2009), it's also unlikely that the earnings now is some kind of bubble, or will drift lower in the future. That's why individual stocks are the key. Before it was strong dollar weak market. Now it's weak market, weak dollar. That to me suggest this is like a correction, and that it's possible to get a carry trade toward US assets , funded by cheap swiss currency, you could get a yen carry trade to, but I think the yen will strengthen if there is problems in the Chinese economy. Since 2000, bonds in general have expanded 3 times, in volume, while stocks are roughly the same. That money needs a new home. There is also a strong commitment from the government to support the market. You have the money printing, and when that expire possible a combination of a stronger dollar and lower corporate tax.

http://finance.yahoo.com/echarts?s=MO+Interactive#chart2:symbol=mo;range=my ;compare=^ixic;indicator=volume;charttype=line;cro sshair=cross;ohlcvalues=0;logscale=on;source=undef ined

MO was experiencing in 2000 that fund managers and individual investors sold the stock so they could "invest" in the nasdaq. It's not possible to see it in 2009 using that stock because of the PM split, but something similar happened then, only then it was the bond market, not the nasdaq that sucked up the money. In 2000 was so cheap that you had made lots of money by holding it 10 % dividend yield or some wild number, that old tech stock sold for during the height of the mania, that's some cash to burn, while the nominal stock price since then gained 3-4 fold. Its the same with a lot of quality stocks. So those big macro views to hold stock only when the general market is cheap on some 10 year metric, I don't buy into. It's no rule that the individual stocks you want to hold is a better buy in those special times. Another way to value it, is to compare the blue-chip share price relative to how many quarterly dividends the stock are priced at. In 1982 100 was pretty cheap for those stocks, and that's the level it was at again in 2009, blue-chips have not been this cheap since 82 when the bull-market started.

[touchring]

Re: Gold in a bubble and/or going to $3,000

But what about this?

http://www.multpl.com/ Median PE ratio of 15.77. 1982 PE was far below today.

1982 FD rates were high, hence the lower P/E ratio?

The real P/E ratio might even be higher if you consider the undeclared losses in the financial industry.


http://www.marketoracle.co.uk/images...t_18_11_07.gif


China's P/E ratio as shown in this chart is probably way below true figures, knowing that the quality of the books of Chinese companies is on par with adulterated infant milk formula.

[touchring]

Re: Gold in a bubble and/or going to $3,000

Still chasing the rainbow then. I try to ignore such opportunities, and look at something I can hold for an extended period of time.

Not chasing now, just noting this opportunity if it ever comes (if ever). If price drops below $230 it is buying time. As you can see from the chart, it bottoms at around 200. In this respect, it is much safer than gold.

[jpetr48]

Re: Gold in a bubble and/or going to $3,000

Another view of Gold support at 1250 to 1270. I missed this chart pattern on Gold but for those who need patience, a picture may be worth a thousand $. On the fundamentals, Hussman's weekly commentary verifies EJ's position and Fred's restatement on effect of interest rates. He is looking at long durations while EJ is looking for changes in short. Hussman did increase his exposure to precious metals last week but is waiting for further unfavorable economic news and reversal in trend of long rates to be more agressive.

http://seekingalpha.com/article/2480...s?source=yahoo

[renewable]

Re: Gold in a bubble and/or going to $3,000

I'd say gold may have topped out, or will spike somewhere between June-July this year at around 2500-3200

Gold might crash. Or it might double.

Great, thanks for the valuable insight.

[nero3]

Re: Gold in a bubble and/or going to $3,000

Gold might crash. Or it might double.

Great, thanks for the valuable insight.

I think the market is discounting the Chinese tightening, however when oil spiked, the paper longs had gone down by a lot a few months before the crash. What's hard to predict is a spike in actual physical demand coming out of China related to their inflation.

[nero3]

Re: Gold in a bubble and/or going to $3,000

Here is one article you can all read: http://www.stanford.edu/group/siepr/.../pdf/99-16.pdf

I don't know anything about it yet ,because I have not read it, but I think it might put some light into the inflation adjusted (very high) index.