Gold continues to soar!

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
anoop
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Re: Gold continues to soar!

Post by anoop »

000 wrote: Mon May 17, 2021 2:06 pm
anoop wrote: Mon May 17, 2021 2:06 pm My brokerage now has added a new extra warning when trading gold ETFs. Wonder what changed.
What's the warning?
"This security is subject to the Designated Investments Agreement, which you have previously signed for this account.
Alternative or "alt" exchange traded funds are publicly offered, SEC-registered funds that use investment strategies that differ from the buy-and-hold strategy typical in the ETF industry. Compared to a traditional ETFs, alt funds typically hold more non-traditional investments and employ more complex trading strategies which may carry greater risks. Investors considering alternative ETFs should be aware of their unique characteristics and risks.
"
Goldwater85
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Re: Gold continues to soar!

Post by Goldwater85 »

anoop wrote: Mon May 17, 2021 2:08 pm
000 wrote: Mon May 17, 2021 2:06 pm
anoop wrote: Mon May 17, 2021 2:06 pm My brokerage now has added a new extra warning when trading gold ETFs. Wonder what changed.
What's the warning?
"This security is subject to the Designated Investments Agreement, which you have previously signed for this account.
Alternative or "alt" exchange traded funds are publicly offered, SEC-registered funds that use investment strategies that differ from the buy-and-hold strategy typical in the ETF industry. Compared to a traditional ETFs, alt funds typically hold more non-traditional investments and employ more complex trading strategies which may carry greater risks. Investors considering alternative ETFs should be aware of their unique characteristics and risks.
"
This sounds like a tag that your broker's lawyers have advised them to place on all ETFs with holdings that aren't equities or bonds. If you are trading gold trusts like GLD or IAU, which just stockpile bullion, I wouldn't worry about it. Gold may do well or poorly, but bullion ETFs should track the underlier well. ETFs that hold commodity futures (e.g., USO, DBC), are another a matter--their construction can produce surprising results at times.
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watchnerd
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Re: Gold continues to soar!

Post by watchnerd »

anoop wrote: Mon May 17, 2021 2:08 pm
000 wrote: Mon May 17, 2021 2:06 pm
anoop wrote: Mon May 17, 2021 2:06 pm My brokerage now has added a new extra warning when trading gold ETFs. Wonder what changed.
What's the warning?
"This security is subject to the Designated Investments Agreement, which you have previously signed for this account.
Alternative or "alt" exchange traded funds are publicly offered, SEC-registered funds that use investment strategies that differ from the buy-and-hold strategy typical in the ETF industry. Compared to a traditional ETFs, alt funds typically hold more non-traditional investments and employ more complex trading strategies which may carry greater risks. Investors considering alternative ETFs should be aware of their unique characteristics and risks.
"
Interesting!

Which brokerage and which gold ETF?
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anoop
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Re: Gold continues to soar!

Post by anoop »

watchnerd wrote: Mon May 17, 2021 2:26 pm Which brokerage and which gold ETF?
Fido/SGOL
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Re: Gold continues to soar!

Post by Robot Monster »

Last month the headline was, "Gold Hits Three-Month High as Speculators Increase Bullish Bets" link

This month the headline is, "Gold Heads for Its Biggest Weekly Loss in More Than a Year" link

Last month, gold prices "rebounded from lows set in March as the dollar retreated and the Federal Reserve signaled it will keep interest rates low..."

This month gold is "weighed down by concerns over tighter monetary policy" as the "dollar surges to two-month high on Fed rate-hike projection". link
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market timer
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Re: Gold continues to soar!

Post by market timer »

With 30-year real rates at -0.21% and gold at $1764/oz, I consider gold relatively cheap and have just allocated 10% away from long term bonds to gold. My valuation model suggests gold should trade above $1900 based on current rates.
Lock
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Re: Gold continues to soar!

Post by Lock »

Market timer - I’ve been playing with your formula also and so far it seems to be tracking incredibly well (like within a few dollars). The gap between predicted and spot are considerably higher than normal right now. I too picked up a few micro gold contracts.

Some say there is a link between short term rates and the dxy. Do you have any other pricing formulas you use?

Cheers!
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market timer
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Re: Gold continues to soar!

Post by market timer »

Lock wrote: Sat Jun 19, 2021 6:07 am Market timer - I’ve been playing with your formula also and so far it seems to be tracking incredibly well (like within a few dollars). The gap between predicted and spot are considerably higher than normal right now. I too picked up a few micro gold contracts.

Some say there is a link between short term rates and the dxy. Do you have any other pricing formulas you use?

Cheers!
No, I don't have any other pricing formulas for gold or currencies, but would be curious to learn of others. When I worked with people in this space, they tended to focus on the impact of events (e.g., FOMC), rather than valuation models derived from first principles. The post-FOMC move is consistent with a hawkish surprise, as the dollar appreciated and interest-rate sensitive sectors like utilities and real estate sold off.

The yield curve flattened sharply post-FOMC, with 5yr yields up 11bps and 30yr yields down 15bps. It is certainly possible gold is sensitive to the shape of the yield curve, not simply long term rates; however, I'd like to have some theoretical justification for why this is the case. My model has an intuitive interpretation: Gold is like an inflation-adjusted bond with no coupon and a duration of 33 years. I'm open to revising this belief, but would like to avoid simply curve fitting without a theoretical justification, as this tends to lead to overfitting and performing poorly out-of-sample. One possible explanation for the discrepancy between bonds and gold in the past couple days is that the term premium declined, so I may need to include an estimate for the term premium in the gold valuation model.
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Re: Gold continues to soar!

Post by Forester »

The deflationists will look pretty stupid if the 10 year goes back over 1.5% and DXY is under 91. According to them, this it, game over.
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Re: Gold continues to soar!

Post by Always passive »

Lock wrote: Sat Jun 19, 2021 6:07 am Market timer - I’ve been playing with your formula also and so far it seems to be tracking incredibly well (like within a few dollars). The gap between predicted and spot are considerably higher than normal right now. I too picked up a few micro gold contracts.

Some say there is a link between short term rates and the dxy. Do you have any other pricing formulas you use?

Cheers!
Which formula?
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Re: Gold continues to soar!

Post by seajay »

willthrill81 wrote: Sat Mar 06, 2021 4:32 pm To be fair, many with that anti-gold sentiment don't want gold because they view the long-term real return as likely to be zero and they don't want to take on gold's volatility. While I definitely see that argument, I would have a hard time passing up gold entirely to instead take on hefty exposure to nominal bonds that are completely exposed to inflation risk.
Buying a treasury bond is lending to someone who can print more money, change interest rates, revise taxation, modify the rules.

For high net worth individuals, those that can get by on perhaps 1% SWR type withdrawals, wealth preservation might take priority over rewards. Perhaps a ancient Talmud type asset allocation, a third each land/commerce/reserves held via geopolitical diversification of a London home, US stocks, physical gold stored around the world. Apply a 3% SWR to the stock holdings to provide regular income and should that fail you have the gold to fall back upon to perhaps liquidate it and buy stocks to 'have another go'.

If you opted to live in that London home, spending in inflation adjusted Pounds, and perhaps opted to hold silver instead of gold then historically since 1900 that asset allocation supported a 1.5% PWR (worst case). In the average case a further 3.5% real gain was evident, oh and as historic rental yields averaged 4.4% then at a third of wealth in properties that was another 1.4% imputed rent benefit in effect thrown in on top.

As gold wasn't "outlawed" in the UK (as it was in the US 1930's to mid 1970's), with gold instead of silver the figures were near the same, a slightly better PWR of 1.6%, a slightly worse additional average real gain of 3.4%.

Contrasted to a all US stock alone holdings where a 1.5% PWR on averaged saw a further 5.5% additional real gain. Simple sum of those 7%, compared to 1.5% PWR, 3.5% real, 1.4% imputed rent that sums to 6.4%. Factor in taxation issues on top of that and subjectively it could swing either way, might broadly be considered as comparable, but with one having the greater geopolitical diversification and potentially the better tax risk reduction.

There are other quirks involved, such as pre 1932 UK and gold/money were exchangeable in banks by law at a fixed rate. So you might have opted to convert gold to money and then lend that money to the state (buy Treasury bonds) and be paid interest. Which was very much like the state offering to pay you for it to securely store your gold. Which could be considered as gold having paid a dividend.

Old Money (generational wealth) mantra advocates "a third, a third, a third", land, art, gold. A Cambridge University study of John Maynard Keynes (English economist) art collection observed that the longer term financial returns from that compared near equally to that of stock total returns. Some don't like art and might prefer to hold stocks instead, some don't like gold and might also prefer to hold stocks instead. Each to their own.
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Re: Gold continues to soar!

Post by market timer »

Always passive wrote: Sun Jun 20, 2021 6:45 am
Lock wrote: Sat Jun 19, 2021 6:07 am Market timer - I’ve been playing with your formula also and so far it seems to be tracking incredibly well (like within a few dollars). The gap between predicted and spot are considerably higher than normal right now. I too picked up a few micro gold contracts.

Some say there is a link between short term rates and the dxy. Do you have any other pricing formulas you use?

Cheers!
Which formula?
viewtopic.php?p=5395727#p5395727
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Re: Gold continues to soar!

Post by Unwinder »

Fortune Seeker wrote: Wed Sep 16, 2020 5:36 am Interesting thing: if you adjust gold price by US M1 money stock it's at nearly same level last 5 years, but I'm not sure if you can use M1 numbers like that, it's not direct inflation number after all.

https://imgur.com/a/CKqQ3iW
I don't really have a good idea of what the M1 money stock actually is. I've heard it explained before, but it never makes much sense to me. And at this point I just can't believe any official inflation numbers, I can only believe what I pay at the grocery store and gas pump etc. While I am not a gold bug, I'm not a gold hater either. I think every asset has it's time. I've heard a few interviews recently with Rick Rule and what he says and what I see in the world makes sense and I think that gold could easier go on a big run the next 3-5 years. That's where I'm allocating some of my capital. I could be wrong though.
Lock
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Re: Gold continues to soar!

Post by Lock »

Anyone else rather surprised by the move in nom bonds and the fact that the real yield/gold price divergence still persists?

Market timer - I thought of you the other day because a bloomberg columnist was actually showing the correlation between gold and the 10 year real yield. The movement patterns were identical. Could this be the divergence from your formula?!
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Re: Gold continues to soar!

Post by RoadagentMN »

Gold is a dud - You could ask Howard Ruff about it.
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Re: Gold continues to soar!

Post by nisiprius »

I haven't been paying a lot of attention, but we've have gotten a number of postings using the phrase "precious metals" rather than "gold." This is unusual, and made me suspect that gold has not been doing well lately, which turns out to be true.

Source

Image

Obviously, if gold is Just Another Commodity then there are always going to be lots to choose from and you're off to the races for prediction ahd market timing. But there is a storyline that gold is not just another commodity, it is special, recognized as the one true eternal measure of value by all civilizations throughout all history (not so, but never mind). And that gold has some special status as a safe, reliable holding even over shortish periods of time (say, intermediate-term).

I'm not sure how gold's recent underperformance of silver and copper fits that storyline.

I would say the big question with all "inflation hedges" is "what is a suitable holding period?" For series I savings bonds, zero after the first year. For TIPS, issue to maturity for an individual bond, or duration of the bond fund for a bond fund. For stocks, perhaps twenty years. For gold, based on past history, it looks to me to be about fifty years. Over anything much shorter, whether you make money or lose money depends exactly on where the start and endpoint fall relative to spikes falling many decades apart.
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Re: Gold continues to soar!

Post by seajay »

nisiprius wrote: Fri Jul 16, 2021 8:26 am I haven't been paying a lot of attention, but we've have gotten a number of postings using the phrase "precious metals" rather than "gold."
Many moons ago Great Uncle Sam was quite generous, he used to pay you for him to securely store your gold. Gold and money were exchangeable at a fixed rate, made more sense to hold money deposited in T-Bills earning interest, convertible at any (reasonable) time into gold.

From 1933 investment gold was outlawed. Accordingly a PM investor might have opted to hold silver instead. From the mid 1970's it was lawful to trade investment gold again so a PM investor might have rotated their silver into gold.

Based on those historical circumstances, peculiar/specif to the US, its easier to point to present day 'gold' as being 'PM'. Which is no more unreasonable than looking at the S&P500 index methodology as being a representation of historic 'average' rewards. Dow and Jones for instance devised three indexes that later transposed into one (more rewarding) choice and later still the S&P500 stepped up to take over as the 'better' choice.
gold has not been doing well lately, which turns out to be true.
If you adjust the start/end dates to being prior to the time period you selected you'll see that gold relatively outperformed silver. The broad nature of the two is similar overall rewards but where their synchronicity varies over time.

Image
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Re: Gold continues to soar!

Post by 000 »

nisiprius wrote: Fri Jul 16, 2021 8:26 am Image

Obviously, if gold is Just Another Commodity then there are always going to be lots to choose from and you're off to the races for prediction ahd market timing. But there is a storyline that gold is not just another commodity, it is special, recognized as the one true eternal measure of value by all civilizations throughout all history (not so, but never mind). And that gold has some special status as a safe, reliable holding even over shortish periods of time (say, intermediate-term).

I'm not sure how gold's recent underperformance of silver and copper fits that storyline.
The chart you posted shows gold holding, not losing, dollar value over the time period in question.

So either gold did hold value over that time period or serious inflation happened (despite all the posts here asserting not) and gold has not yet responded.

Copper is not a precious metal and I'm not aware of anyone proposing buy-and-hold investment in copper. Silver is semi-precious in that much of its demand is industrial not monetary/hoarding; likewise there are few who propose buy-and-hold investment in silver. Both copper and silver have typically been more volatile than gold.
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Re: Gold continues to soar!

Post by JBTX »

nisiprius wrote: Fri Jul 16, 2021 8:26 am I haven't been paying a lot of attention, but we've have gotten a number of postings using the phrase "precious metals" rather than "gold." This is unusual, and made me suspect that gold has not been doing well lately, which turns out to be true.

Source

Image

Obviously, if gold is Just Another Commodity then there are always going to be lots to choose from and you're off to the races for prediction ahd market timing. But there is a storyline that gold is not just another commodity, it is special, recognized as the one true eternal measure of value by all civilizations throughout all history (not so, but never mind). And that gold has some special status as a safe, reliable holding even over shortish periods of time (say, intermediate-term).

I'm not sure how gold's recent underperformance of silver and copper fits that storyline.

I would say the big question with all "inflation hedges" is "what is a suitable holding period?" For series I savings bonds, zero after the first year. For TIPS, issue to maturity for an individual bond, or duration of the bond fund for a bond fund. For stocks, perhaps twenty years. For gold, based on past history, it looks to me to be about fifty years. Over anything much shorter, whether you make money or lose money depends exactly on where the start and endpoint fall relative to spikes falling many decades apart.
I'm not a big proponent of gold or precious metals, but your assessment is really off the mark. Gold is perceived as a diversifier and store of safe value in times of turmoil. With stocks soaring and economy growing it really isn't one of those times. I don't think anybody looks at one year of gold performance vs other raw commodities and makes an assessment of its merit,or lack of it. Gold to be effective has to be held long term...and that's the problem, sometimes longer than ones lifetime.

Gold is kind of a monetary asset, whereas Silver is a combination of monetary and economic. Copper is almost entirely world economic cycle driven. To some degree silver serves as a poor man's gold, and is more speculative, and more volatile. I have small stakes in gold and silver- 5% of portfolio in total. My timing on precious metals is terrible, especially Silver. Finally I may actually be in the black with it.
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Re: Gold continues to soar!

Post by Whakamole »

What do people think of GLDM versus other gold ETFs like IAU and GLD?
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Re: Gold continues to soar!

Post by BHawks87 »

Whakamole wrote: Wed Sep 15, 2021 10:29 am What do people think of GLDM versus other gold ETFs like IAU and GLD?
In doing my research I've seen many people state that GLD and IAU are better for traders because of its higher volume which allows you to get in and out of positions quicker. For buy and hold investors GLDM would be the better choice since its expense ratio is lower.

That is what I have read at least.
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Re: Gold continues to soar!

Post by Whakamole »

BHawks87 wrote: Wed Sep 15, 2021 10:36 am
Whakamole wrote: Wed Sep 15, 2021 10:29 am What do people think of GLDM versus other gold ETFs like IAU and GLD?
In doing my research I've seen many people state that GLD and IAU are better for traders because of its higher volume which allows you to get in and out of positions quicker. For buy and hold investors GLDM would be the better choice since its expense ratio is lower.

That is what I have read at least.
Thanks, that's exactly the information I was looking for.
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Re: Gold continues to soar!

Post by Phyneas »

If you're planning on holding for a long time, and expense ratios matter to you, you can also look at SGOL (0.17 MER vs GLDM's 0.18), although GLDM has twice the liquidity as SGOL and no options trading on it (if either are important to you).
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Re: Gold continues to soar!

Post by SeasOfCheese »

Time to fire this thread up! :sharebeer
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000
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Re: Gold continues to soar!

Post by 000 »

Think it will hold?
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Re: Gold continues to soar!

Post by SeasOfCheese »

000 wrote: Wed Jan 19, 2022 3:08 pm Think it will hold?
In the short term, who knows. It probably depends on the strength of the US dollar. Which is a large part of why I hold my moderate position in miners and paper/physical gold.

What I do know:
-the miners are profitable at anything near the current price.
-sentiment toward gold is abismal.

On days like today I am glad to hold it as a hedge.
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000
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Re: Gold continues to soar!

Post by 000 »

I agree with that.

We really are living in interesting market times here.
SeasOfCheese
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Re: Gold continues to soar!

Post by SeasOfCheese »

SGOL/IAU are rockin' it today!

My only green ETFs in a sea of red.
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Re: Gold continues to soar!

Post by Elysium »

SeasOfCheese wrote: Mon Jan 24, 2022 10:31 am SGOL/IAU are rockin' it today!

My only green ETFs in a sea of red.
Huh? LTT are up, so is BND, and other short duration bonds and TIPs.
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Re: Gold continues to soar!

Post by SeasOfCheese »

Elysium wrote: Mon Jan 24, 2022 10:52 am
SeasOfCheese wrote: Mon Jan 24, 2022 10:31 am SGOL/IAU are rockin' it today!

My only green ETFs in a sea of red.
Huh? LTT are up, so is BND, and other short duration bonds and TIPs.
I don't own any bond ETFs. :beer
SeasOfCheese
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Re: Gold continues to soar!

Post by SeasOfCheese »

Gold up. Miners/streamers down.

Seems like there is more panic than rationality in the market at this moment.
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Re: Gold continues to soar!

Post by willthrill81 »

SeasOfCheese wrote: Tue Jan 25, 2022 10:54 am Gold up.
And bonds are down.
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Re: Gold continues to soar!

Post by Whakamole »

willthrill81 wrote: Tue Jan 25, 2022 11:06 am
SeasOfCheese wrote: Tue Jan 25, 2022 10:54 am Gold up.
And bonds are down.
TIPS are up.
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Re: Gold continues to soar!

Post by SeasOfCheese »

On days like today, my porfolio gives thanks for the barbarous relic. w00t!

(And black gold, too!)
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Re: Gold continues to soar!

Post by Whakamole »

SeasOfCheese wrote: Mon Jan 24, 2022 10:31 am SGOL/IAU are rockin' it today!

My only green ETFs in a sea of red.
Silver went up as well. :sharebeer
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Re: Gold continues to soar!

Post by zaboomafoozarg »

LOL, I kid you not, at lunch I was planning to sell a couple percent of my stock/bond allocation to buy IAU. But then I got busy.

I finally got time to do it at 3:30, and lo and behold my timing was awful. So I'll just keep things as they currently are.
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Re: Gold continues to soar!

Post by 000 »

When was the last day similar to today when GDXJ was up more than 3 times what SPY was down?
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Re: Gold continues to soar!

Post by Thesaints »

Price of gold on July 23, 2020 (date of first post in the thread): $1887
Price of gold today February 11, 2022: $1832
CPI-U between the two dates: +8.5%

Indeed it continues to sour !
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Re: Gold continues to soar!

Post by UpperNwGuy »

This entire thread has a faulty premise.
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Re: Gold continues to soar!

Post by 000 »

Good to see the negative sentiment is still out there towards this asset class. :greedy
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Re: Gold continues to soar!

Post by willthrill81 »

000 wrote: Fri Feb 11, 2022 4:01 pm Good to see the negative sentiment is still out there towards this asset class. :greedy
Indeed it is! :mrgreen:
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Re: Gold continues to soar!

Post by SeasOfCheese »

willthrill81 wrote: Fri Feb 11, 2022 4:17 pm
000 wrote: Fri Feb 11, 2022 4:01 pm Good to see the negative sentiment is still out there towards this asset class. :greedy
Indeed it is! :mrgreen:
I haven't seen a commodity this hated since oil in mid-2020. :beer

First they ignore you, then they laugh at you, then they fight you, then you win.
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Re: Gold continues to soar!

Post by zaboomafoozarg »

SeasOfCheese wrote: Fri Feb 11, 2022 4:20 pmFirst they ignore you, then they laugh at you, then they fight you, then you win.
I feel the same way about cheese.
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Re: Gold continues to soar!

Post by SeasOfCheese »

While gold had a good day, pushing back near to 6 month highs, GOLD soared!

And, of course, by GOLD I refer to Barrick. And RGLD posted strong numbers too.

The miners remain cheap, if gold stays anywhere near its current levels.
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Re: Gold continues to soar!

Post by 000 »

SeasOfCheese wrote: Wed Feb 16, 2022 8:10 pm While gold had a good day, pushing back near to 6 month highs, GOLD soared!

And, of course, by GOLD I refer to Barrick. And RGLD posted strong numbers too.

The miners remain cheap, if gold stays anywhere near its current levels.
I have noticed on these big up days GDX has been leading GDXJ and I guess the larger cap names are leading GDX too? That is actually extremely bullish (knocking on wood) as it suggests we are starting to see a trickle of those willing to buy the big names but still haven't explored the deeper depths of value. I'm thinking of selling the bullion and using miners as my sole PM play.
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Re: Gold continues to soar!

Post by SeasOfCheese »

$1900
:sharebeer

Al least, for a millisecond.
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Re: Gold continues to soar!

Post by firebirdparts »

This thread prompted me to just google gold miner mutual funds and I came upon a new one GDMN which has a portfolio of gold futures and gold miner stocks.

Okay so they give this instructive example:
For every $100, the Fund seeks to invest
approximately $90 in the gold miners equity basket and $10 in short-term collateral. To help magnify the potential
benefits of the asset allocation, $90 in gold futures are layered on top for $180 of total gold-oriented exposure
I don't know what the futures cost to carry, but I guess not much.

Holdings say the contract they have right now is April 2022 (GOLD 100 OZ FUTR APR22 XCEC 20220427 ADI1Z5159)
This fund has two whopping million dollars AUM.
This time is the same
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Re: Gold continues to soar!

Post by 000 »

firebirdparts wrote: Thu Feb 17, 2022 11:22 am This thread prompted me to just google gold miner mutual funds and I came upon a new one GDMN which has a portfolio of gold futures and gold miner stocks.

Okay so they give this instructive example:
For every $100, the Fund seeks to invest
approximately $90 in the gold miners equity basket and $10 in short-term collateral. To help magnify the potential
benefits of the asset allocation, $90 in gold futures are layered on top for $180 of total gold-oriented exposure
I don't know what the futures cost to carry, but I guess not much.

Holdings say the contract they have right now is April 2022 (GOLD 100 OZ FUTR APR22 XCEC 20220427 ADI1Z5159)
This fund has two whopping million dollars AUM.
Are you thinking of getting in on the action? :greedy
Topic Author
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Gold continues to soar!

Post by 000 »

000 wrote: Wed Feb 16, 2022 8:20 pm I have noticed on these big up days GDX has been leading GDXJ and I guess the larger cap names are leading GDX too?
Another day of this....

NEM +5.40%
GOLD +4.50%
GDX +3.73%
GDXJ +1.90%
SGOL +1.39%
Willmunny
Posts: 210
Joined: Mon Jun 16, 2014 6:35 pm

Re: Gold continues to soar!

Post by Willmunny »

Year to date, SGOL has been the top performer in my portfolio. Second place goes to the stable value fund in my 401(k).
Locked