gold equity investors: tossed in the towel yet?

[The Outback Oracle]

Re: gold equity investors: tossed in the towel yet?

Lukester are you geared in your gold and silver holdings or just pure metal?

[Guest]

Re: gold equity investors: tossed in the towel yet?

I am wearing a namby pamby set of trycicle wheels, known over here as "kiddy-wheels", because I employ NO GEARING at all. When the markets puke, I smile contentedly. Not even holding Barrick Gold or Goldfields. Couldn't care less about them even if they go to the stratosphere. But - I am "loaded for bear" with what many here would consider a "portfolio" which defies every known (what I think are dog-eared canard) preconception about "diversification", because I've made what such people would consider in horror to be a "grossly immoderate bet". Screw their viewpoints. I'll greet them all at the finish line turned out in my best (unwrinkled) suit and starched linen shirt. I am to some viewpoints, a stupid, intemperate heretic to "modern portfolio theory", and all the rest of it's related useless baggage in a world about to be grabbed by the throat, by the wolf of Peak Cheap Oil.

In the world of Peak Cheap Oil in 2008 - 2016, "Diversification" is a crock of mule-shit to be avoided. Find the massive trend, the one that can't be turned back by mice or men, and then bet on it - seriously, not with any timid "experimental" puts.

Example: How predictable would you rate Peak Cheap Oil to be at this juncture? Quite likely already arrived, and proceeding right on schedule, no? Corrolary # 01: What is the relationship between Peak Cheap Oil and inflation? Corrolary # 02: What chance has Peak Cheap Oil to devolve into deflation in an entire world off the gold standard? :rolleyes: Corrolary # 03: What is the safest way to ride Peak Cheap Oil's stress upon ALL the legacy systems of the global economy built on affordable hydrocarbons for 125 years? Corrolary # 04: If the answer to question # 02 is "an ugly combination of market stress and unrelenting rise in input costs due to runaway rising real energy price", what asset classes derive most benefit, and are most immune (in fact thrive on) equities markets distress combined with inflation?

All I did was fill in the dots.

BTW, sorry to tread on your sore toes Outback. It takes nerve and seriousness to stand fast with a portfolio of juniors in this climate, and I have little doubt that they will surge massively at an upcoming juncture. They've come down a lot, and I feel an 80% assurance that if you wish it, you'll have an exit point a great deal more favorable than today from that portfolio, within which you evidently picked a good few winners to net 550% across the board. Grapejelly is absolutely correct, these stocks are primed for a serious rally. I just pointed out that you can arrive at that same destination, and in fact probably improve on that notably, by taking a far more "grounded" approach and holding only the "serious delivered value (the actual "stuff" rather than the mere "levered options on the stuff" in hand).

It is a fallacy that those heavily vested in the humble old "delivered goods" have not taken home the really big fat returns from very large inflations. Stock investors don't seem to understand this, at a gut level. They are fascinated by leverage and extrapolate it to their total return projections without properly evaluating the bottom line risk/return. It's like a large lightbulb going off in your mind when you look dispassionately at the resultant numbers. You realise "I don't have to put myself through this meat-grinder". I can get nearly the same gross result simply by sharply increasing my positions in the most conservative investments pacing that same trend. When I took that step substantively I immediately felt myself changing from an indecisive hand to a strong hand in this sector. I said goodbye to stocks and have not missed them in the current market for even a moment. I think I will do just as well overall, with more assurance of the result.

Peak Cheap Oil is a freight train pulling into the station right the f**k now.. We keep reflexively snapping back to "normal" frames of reference, but it will yank the rug right out from under our investing stance if we under-estimate the changes just beginning to break because of it. Massive trend - bigger than both the past world wars combined. Inflation is woven into this event. Re-read that fleeting acknowledgement of Dr. Keen's about the oil-inflation linkage, and then EJ's endorsement of Dr. Keen'as acumen and sobriety of inquiry, if you need a reassurance that inflation and peak oil are not joined at the hip. A very under-discussed topic on these pages in my view.

[The Outback Oracle]

Re: gold equity investors: tossed in the towel yet?

Yeah well i'm one of the real sensitive new age ones...and if you don't agree with me i'll come over there and rip yer bloody arms orf!

[Guest]

Re: gold equity investors: tossed in the towel yet?

Yeah well i'm one of the real sensitive new age ones...and if you don't agree with me i'll come over there and rip yer bloody arms orf!

That's more like it! Fits my image of how "infallibly formal and courteous, and even obsequiously docile, retiring and deferential" all Aussies are supposed to be. They are famous for these traits. I have my doubts about the New Age bit though. ...

[Brooks Gracie]

Re: gold equity investors: tossed in the towel yet?

Everyone is forgetting something important. Equity shares are taxed at 15%, while physical gold is taxed at 28%.

[grapejelly]

Re: gold equity investors: tossed in the towel yet?

incredible carnage in this market today...I think we are at a bottom. I know my sentiment couldn't get much lower...

[Guest]

Re: gold equity investors: tossed in the towel yet?

incredible carnage in this market today...I think we are at a bottom. I know my sentiment couldn't get much lower...

It sure is ugly out there Grapejelly. Nastiest day I've seen since "last mid-august". Hey, that's a coincidence isn't it? last Ugly August = this Ugly August? I wonder if there's something in there? Seriously, not a fun past couple of weeks for any of us here in the inflation hedges. Such markets work to weed out those with little conviction on the macro trend. And those owning the shares have an even tougher discipline to hold here.

I was talking to Bart about the charting work of David Bensimon, and Bensimon insisted even (I think) 18 months ago that we'd have the "large correction" in the petroleum and commodities sector right squarely in the summer of 2008. He had also some quite "interesting" predictions for Ag going out five years, so I was watching his accuracy in calling this major oil price correction to see if his rep held up well for his further out predictions.

So far, he's coming out of this with a predictive track record that smells like a rose. Look him up - lots of interesting snippets on his further out market calls in among his interviews, particularly with regard to the Asian Bourses. Hong Kong index, I forget exactly but he's projecting it to soar with the eagles in the next five years (suggests they all will in this region). And interestingly, one of the few commodities (he suggested) to keep up with those Asian bourses will be Ag. Au will not match that.

Of course everybody's just guessing, but Bensimon passed Bart's smell test pretty well, so he's right up there with EJ in terms of credibility. BTW, he's also calling oil's price way up there in the $300's - $400's (second half of the 2010's), but is enigmatic about what happens to it when it "tops out" up there. The notion of a commodities bear market after oil "tops out" at $400 is "wonderfully" enigmatic, as it's a world of 7.5 billion people.

[bobola]

Re: gold equity investors: tossed in the towel yet?

From June 24, 2008 interview

http://www.rickackerman.com/commenta...s_Deflate.html

Eric: Gold is an international currency. As governments print to reflate economies, the value of their currencies deflate against gold. My theory since 2001 is that this process will eventually take gold to $2500. Needless to say, that was contrarian back when gold was trading at $270. At $900 we have new entrants with very deep pockets to take us to the next stage of the market: “Gold prices may rise to $5,000 an ounce as investors seek to protect themselves against accelerating inflation, said Schroder Investment Management Ltd., which oversees $277 billion of assets globally."

.........(the big question is when).............

[FRED]

Re: gold equity investors: tossed in the towel yet?

From June 24, 2008 interview

http://www.rickackerman.com/commenta...s_Deflate.html

Eric: Gold is an international currency. As governments print to reflate economies, the value of their currencies deflate against gold. My theory since 2001 is that this process will eventually take gold to $2500. Needless to say, that was contrarian back when gold was trading at $270. At $900 we have new entrants with very deep pockets to take us to the next stage of the market: “Gold prices may rise to $5,000 an ounce as investors seek to protect themselves against accelerating inflation, said Schroder Investment Management Ltd., which oversees $277 billion of assets globally."

.........(the big question is when).............

One hypothesis we offer in an upcoming analysis in connection with The New New Deal. Stay tuned!

[LargoWinch]

Re: gold equity investors: tossed in the towel yet?

I am with Lukester on this: physical bullion should provide for plenty of return if the macro trend is right. I think physical has the best risk/reward ratio.

Personally, I don't have the nerves to invest in juniors.

one of the few commodities (he suggested) to keep up with those Asian bourses will be Ag. Au will not match that.

Lukester, you are very bullish about Ag, can you share your view on Platinum?

The metal is down significantly since its peak during the spring (and yeah I am back to square one with PT at $1,500: did trade some for gold though at $2K+).

Methinks this one is due for a rebound...

[Guest]

Re: gold equity investors: tossed in the towel yet?

For Grapejelly and Outback Oracle, and all those others here standing firm in this brutal correction. You don't need me to repeat it, but we should all remember Jesse Livermore's "be right, and sit tight".

What is the macro-premise up ahead? >>>> I . N . F . L . A . T . I . O . N

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CIBC RECOMMENDS: Bulk up on gold and silver stocks, cash as interest rates and inflation rise: CIBC World Markets

CANADIAN IMPERIAL BANK OF COMMERCE - CM | 8/8/2008 8:17:14 AM

TORONTO, Aug. 8, 2008 (Canada NewsWire via COMTEX News Network) --

CIBC (CM: TSX; NYSE) - By this time next year, the cost of borrowing in Canada may be a full percentage point higher, and the recent easing in oil prices will be a distant memory, notes a new report from CIBC World Markets.

"Investors are likely underestimating just how much (interest) rates will rise over the next 18 months," advise Peter Buchanan and Meny Grauman, senior economists, in the latest Canadian Portfolio Strategy Outlook.

With U.S. inflation already at 17-year highs, policy makers in Canada and south of the border will be forced to "shift their focus from supporting growth to preventing a material spillover from energy and food to core inflation," say the two economists, who expect rate hikes to begin after the U.S. presidential election and carry through into 2009.

Canadians though will see a smaller rate increase over the same period, says Mr. Buchanan, as signs increasingly point to a rapid slowing in the economy. Canada "will be in no rush to match" a forecast 200-point rise in U.S. interest rates, he says, but "above-target inflation will make it difficult for (Bank of Canada) Governor Carney to turn a completely blind eye to policy changes stateside."

As for the recent 20 per cent drop in the price of West Texas Intermediate (WTI) crude oil, Mr. Buchanan says it's just a detour on the road to higher prices. "Driven by emerging markets, global demand is still advancing," he says, noting that oil consumption in the U.S. fell by 500,000 barrels per day in the first half of 2008 year-on-year but non-OECD demand grew nearly three times that, by 1.3 million barrels.

"The past year's drop in crude demand is just a quarter of the reduction that will be needed over the next five years to free capacity to fill the gas tanks of millions of new motorists in places like China and India. That adjustment is unlikely to occur without even high crude prices."

CIBC World Markets has updated its model investment portfolio based on how current market complexities are affecting Canada's main stock index, the S&P/TSX Composite.

While an "overweight" position in the materials group is maintained, a percentage point has been shifted from base to precious metals to protect against rising inflation. "Gold bullion is a traditional inflation hedge, and our analysis indicates the same holds for Canadian gold and silver mining stocks," says Mr. Buchanan. "In the absence of a sizeable move up or down in the U.S. dollar, we expect changes in inflation to be the main force affecting bullion prices over the balance of 2008."

CIBC World Markets has also taken a percentage point from its "underweight" position in bonds and added that to an already "overweight" position in cash. The shift is a defensive move against investors underestimating the potential for appreciable rate hikes in the coming year. "That makes us less enthusiastic about fixed income investments," says Mr. Buchanan.

The model portfolio also maintains its previous "market-weight" position in equities, and long-standing "overweight" stance in energy.

Mr. Buchanan also recommends underweighting the financials, industrials, telecom services and consumer discretionary sectors. A continuing tough operating environment will make it difficult for financial shares to hang onto all of their recent gains, he says. The skid in U.S. auto sales to 15-year lows in June points to difficult times for auto parts makers as well.

While CIBC has maintained its previous targets for oil of US$125/bbl this year and US$150 in 2009, the firm has trimmed its target for natural gas to an average US$11/Mn Btu this year and $13 in 2009. Although rapid supply growth has dented gas recently,

Mr. Buchanan notes the potential for firmer prices down the road as climate worries force more utilities to switch to the fuel from coal. The complete CIBC World Markets report is available at:

http://research.cibcwm.com/economic_...ad/psaug08.pdf.

CIBC World Markets is the wholesale and corporate banking arm of CIBC, providing a range of integrated credit and capital markets products, investment banking, and merchant banking to clients in key financial markets in North America and around the world. We provide innovative capital solutions and advisory expertise across a wide range of industries as well as top-ranked research for our corporate, government and institutional clients.

SOURCE: CIBC World Markets
SOURCE: CIBC
SOURCE: Canadian Imperial Bank of Commerce
Peter Buchanan, Senior Economist, CIBC World Markets at (416) 594-7354, peter.buchanan@cibc.ca; or Tom Wallis, Communications and Public Affairs at (416) 980-4048, tom.wallis@cibc.ca

________________

LOOK! IT'S A BUBBLE POPPING! QUICK, LET'S RUN TO SAFETY ... OVER HERE! : :rolleyes:

BUBBLE_IS_BURSTING_CLIFF_JUMP.jpg

[jk]

Re: gold equity investors: tossed in the towel yet?

the 1970's have provided us with an analogy for thinking about our current era. from 1975 through most of 1976, over 18mos, gold dropped from roughly 200 to roughly 100. of course this was during its journey from $32 to $800, and it's easy to be sanguine in retrospect about that long and severe correction. is everyone here ready to live through something similar?

[Jim Nickerson]

Re: gold equity investors: tossed in the towel yet?

the 1970's have provided us with an analogy for thinking about our current era. from 1975 through most of 1976, over 18mos, gold dropped from roughly 200 to roughly 100. of course this was during its journey from $32 to $800, and it's easy to be sanguine in retrospect about that long and severe correction. is everyone here ready to live through something similar?

Nope, I am not. I watched 16K in profits in GLD and SLV disappear between 7/16 and 7/30 and closed out those positions barely in the plus column. I sold some physical back on 7/25 when spot was at 928 and coin dealer was paying 914 for Krugerrands. My remaining little physical, CEF and GTU positions are hedged, I hope, with what was half as much in DZZ (-200% to gold).

$GOLD has dropped through 50 and 200 DMA's in less than a month, the first time gold has been below 200 DMA since breaking it in Sept. 2006 and weaving above and below it until Jan 2007. A possible next test downward could be the 325 DMA which currently is at 813. http://stockcharts.com/h-sc/ui?s=$GO...100&a=85010109 to see a chart.

Neither the RSI nor MACD suggests any sort of a bottom as being in so far.

Who knows, gold may reverse Monday and go to whatever high number anyone wishes, but I personally doubt that the current skakeout is over--pure opinion.

[metalman]

Re: gold equity investors: tossed in the towel yet?

Nope, I am not. I watched 16K in profits in GLD and SLV disappear between 7/16 and 7/30 and closed out those positions barely in the plus column. I sold some physical back on 7/25 when spot was at 928 and coin dealer was paying 914 for Krugerrands. My remaining little physical, CEF and GTU positions are hedged, I hope, with what was half as much in DZZ (-200% to gold).

$GOLD has dropped through 50 and 200 DMA's in less than a month, the first time gold has been below 200 DMA since breaking it in Sept. 2006 and weaving above and below it until Jan 2007. A possible next test downward could be the 325 DMA which currently is at 813. http://stockcharts.com/h-sc/ui?s=$GO...100&a=85010109 to see a chart.

Neither the RSI or MACD suggests any sort of a bottom as being in so far.

Who knows, gold may reverse Monday and go to whatever high number anyone wishes, but I personally doubt that the current skakeout is over--pure opinion.

makes a horse race. my strategy is buy gold and sleep. worked for me since 2001 and will until someone convinces me that the coast is clear... china owes us money, entitlements are covered, we're racking up a surplus, usa launched wars are over, we're energy independent, etc., etc.

[santafe2]

Re: gold equity investors: tossed in the towel yet?

We seem to be approaching an absolute bottom in sentiment especially in the junior miners. They have been mauled for two years and lately they have absolutely sunk to new lows.

A major bottom here...meaning the start of the next bull leg...but have you thrown in the towel? Are you fed up yet?

As are many others on this board, my primary interest in this arena is in physical metals. But, this is an extraordinary sell off and I'm reviewing how I'll trade this opportunity. As others have said, miners are never good investments. They are however, on occasion, very good trading vehicles.