Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Trend Forecast 2024 - 15th June 24
Gold Price Consolidating at High - 15th June 24
NVIDIA Stock Market: Price Prediction for the Future - 15th June 24
When Will the Boom/ Bust Rollercoaster End? - 15th June 24
Stock Market Trouble Lies Ahead. Are You Ready For It? - 15th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Start Hoarding Gold and Silver Right Now

Commodities / Gold and Silver 2010 Dec 05, 2010 - 05:52 AM GMT

By: Investment_U

Commodities

Best Financial Markets Analysis ArticleCarl Delfeld writes: Over the past decade, gold has trounced stocks across the board.

No big secret there, of course.

But the margin of the beating might surprise you…


•S&P 500: The index kicked off the 21st century at 1,469 points. But it ended the decade at 1,115 points on December 31, 2009 – a drop of 24%.

•Gold: The contrast in fortunes couldn’t be more marked, with the yellow metal sweeping to a total gain of 275% over the same 10-year period – an annualized return of 14.1%. And if you shorten the time period to gold’s performance since the collapse of Lehman Brothers in early 2008, the price has soared by 76%.
Let’s get one thing straight, though: Despite the fact that gold prices recently broke through the $1,400 per ounce barrier and the mainstream media keeps referring to “all-time highs,” this is off the mark. Adjusted for inflation, the real gold price record was set 30 years ago at $2,318 per ounce.

Nevertheless, the current scorn over paper currencies and their assorted woes is fueling the gold rally. However, two key questions remain:

1.Will gold continue to sparkle?

2.Are there better alternatives than gold as a hedge on inflation and instability?

The Case for Gold’s Mojo

Let’s deal with Question #1 first by considering the catalysts that could keep the price of gold surging…

•Inflation: Gold and other precious metals serve as a legitimate hedge on inflation.

•Insurance: Gold is a form of “disaster insurance” if/when global geopolitical events spin out of control.

•The Anti-Currency Investment: Holding gold serves as a vote of no confidence in the world’s reserve currencies.

•China: Many are banking on China to invest more in gold and take prices to the next level. The country only holds 2% of its dollar-heavy foreign reserves in gold.
So what if – like me – you think that gold prices will keep chugging higher? You have a couple of options…

Follow the Big Boys into This Easy Gold Investment

The easiest way to gain exposure to the gold market is to buy shares in an exchange-traded ETF like the SPDR Gold Trust (NYSE: GLD). This fund replicates the price movement of gold bullion, which is up 23% this year.

The pros are all over the map with this ETF, too.

According to SEC filings, the fund run by former Goldman Sachs trader Chris Shumway added 2.1 million shares of GLD during the third quarter, while Dan Loeb’s Third Point LLC bought 115,000 shares.

Highfields Capital was also bullish, buying call options worth 1.6 million shares.

By contrast, George Soros sold over 500,000 GLD shares to finish the quarter with 4.7 million shares, while Eric Mindich reduced his Eton Park Capital’s stake by two million shares to 4.6 million. Guru John Paulson maintained a 31.5-million share holding through the quarter.

But what if you want a more specific investment?

Go Gold Mining With a Pick and Shovel

In this case, many investors prefer to buy individual gold-mining shares. But there are pros and cons…

On the plus side, the gold-mining industry has large fixed costs and higher gold prices go straight to a company’s bottom line.

Balanced against that, however, are regulatory risks. Revenue-hungry governments are targeting mining companies to fill budget holes. For example, Australia recently tried to impose a 40% “super tax” on resource companies like BHP Billiton (NYSE: BHP) and it resulted in a significant haircut for mining shares.

In addition, keep in mind factors like mining accidents, labor issues, management mistakes and particularly volatility. While gold prices held up fairly well during the global financial crisis, mining shares tumbled.

I suggest you take a “shotgun and rifle” approach here:

•Shotgun: For an aggressive shotgun approach, go for a basket of mining stocks like the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ). It has more than $1 billion in assets and offers more indirect exposure to gold through ownership of equities that generate at least 50% of their revenues from mining.

•Rifle: One company I like is Canada’s Eldorado Gold (NYSE: EGO), which operates mines in Turkey, China and Brazil. During the first quarter of 2010, its gold revenue exceeded Q1 2009 sales by $129 million, or 248%, mainly due to production increases and the acquisition of two mines from Sino Gold.

That’s the gold story. But what about its partner in crime – silver? I believe it could fare even better than gold at this point. So let’s check out a couple of good silver investments…

Could Silver Fare Better Than Gold?

The headlines tell us that silver prices have climbed to a two-year high. But if you adjust for inflation, the price remains more than 60 times cheaper per ounce than gold.

Adjusted for inflation since 1980, silver prices should be trading at roughly $128 an ounce. And budget-conscious jewelry shoppers and investors alike are taking note. “People who can’t afford gold will buy silver,” says Seshan Ramakrishnan, head of retail products at HDFC Bank.

Investment-wise, in addition to the main ETF – the iShares Silver Trust (NYSE: SLV) – take a look at Coeur D’Alene Mines (NYSE: CDE). It offers more revenue growth and better value compared to its financially stronger rivals Barrick Gold (NYSE: ABX) and Newmont Mining (NYSE: NEM).

Remember this tip, though – one that goes for any investment: When everyone is talking about a sure thing, be skeptical and diversify. For example, Abu Dhabi’s Emirates Palace Hotel recently opened a vending machine that dispenses gold bars! Choose your investments carefully and be sure to distribute your capital into other hedges like cash, silver and oil.

Good investing,

Source: http://www.investmentu.com/2010/December/start-hoarding-gold-and-silver-right-now.html

Carl Delfeld

http://www.investmentu.com

Copyright © 1999 - 2008 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in