I have historically keyed my gold position off of movements in crude oil, making judgments on their relative value; mostly (but not always!) this approach has worked pretty well. As of this moment, I anticipate a continued slow-growth economy with low inflation, hence, feel that both crude and gold have limited upside unless or until the economy shows signs of accelerating growth or inflation (or both).
Now that, and $1.95, will get you a cup of coffee at Starbucks!
Since the early '80s, a core portion of my portfolio has been numismatic coins, with a concentration in Morgan dollars minted at the Carson City mint. Some Silver Eagles and bullion silver as well. Except for various short periods of time, I have avoided gold, and just recently (over the last two days, actually) sold my gold position. I have historically keyed my gold position off of movements in crude oil, making judgments on their relative value; mostly (but not always!) this approach has worked pretty well. As of this moment, I anticipate a continued slow-growth economy with low inflation, hence, feel that both crude and gold have limited upside unless or until the economy shows signs of accelerating growth or inflation (or both).
Now that, and $1.95, will get you a cup of coffee at Starbucks!
Not to tell you your business, but I'd be a little cautious about numismatic coins. If I understand correctly, their value is chiefly collector value. That's fine as long as the economy remains in good enough shape that collectors still have money to burn. If the economy goes south in a big way, collector value can evaporate faster than you can say "fiat money".
Considering that crude oil supplies in the U.S. are near a 27-year high, that's probably not a bad idea. Some day soon you might be able to buy refined products at your local Starbucks, since oil companies can't seem to sell them at Wal-Mart.
Not to tell you your business, but I'd be a little cautious about numismatic coins. If I understand correctly, their value is chiefly collector value. That's fine as long as the economy remains in good enough shape that collectors still have money to burn. If the economy goes south in a big way, collector value can evaporate faster than you can say "fiat money".
I agree that there is a glut of oil. Can't understand how the price has not collapsed. How does a commodity market not reflect supply/demand? If we knew that oil was going to fall the $40 a barrel, the direction for gold might be clearer.
Historically, gold and silver usually traded at like 1 to 20, up to maybe 1 to 50, IIRC. Now it's way beyond that.
[...]]Gold is basically more of a value-store than an actual growth-investment, really... and I think the biggest growth is probably already past, unless the worldwide economy really goes belly-up.
This is exactly why I'm so skeptical of gold right now. It only makes sense that gold and silver would move in tandem, and I think the exaggerated price of gold is due to the general climate of economic fear over the past few years.
At this point I think the general view of the economy is getting more optimistic, so we can probably expect the gold bubble to burst as optimism returns.
Well, to an extent I would expect all precious metals, including copper and platinum, to move in tandem because they all function as a bet against the economy. You're right that the industrial uses of other precious metals can impact their market price, whereas gold has no use, but if anything doesn't this make the higher price of gold even more out of whack?Not sure I would agree with two points. First not sure why gold and silver need to move in tandem. Gold seems more of a hedge for a currency devaluation while silver has some of that but is also used in industry.
On the economy improving, while that may be somewhat true it is still below trend and is still on the life support of a $1.3 trillion federal buget deficit and the expanded balance sheet of the fed.
If 30 ounces of silver buys you 1 ounce of gold historically, then one needs to consider the overvalue of gold. One could make the case that silver is undervalued if gold is fair value. But I don't see any reason for the divergence.Not sure I would agree with two points. First not sure why gold and silver need to move in tandem. Gold seems more of a hedge for a currency devaluation while silver has some of that but is also used in industry.
On the economy improving, while that may be somewhat true it is still below trend and is still on the life support of a $1.3 trillion federal buget deficit and the expanded balance sheet of the fed.
Gold is a good temporary hedge against what is coming down the pike. i have about 25% of my stuff in a commodoties mutual fund that includes gold; and it's been my money maker for the past two years. basically i'm looking to sell as soon as they start looking to raise interest rates and then re-buy a few years after that when they start looking at monetizing the debt.
but in the event of a crash all precious metals would go up, no? Making silver the better buy.
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