Archive for the 'Gold' Category

Charlie Rose: All About Gold, Plus David Einhorn

Posted on December 7, 2010, 9:25 pm. Closed

Last night Charlie Rose interviewed a group of three about gold: Jim Grant, John Hathaway of Toqueville Asset Management, and Peter Munk, chairman and founder of Barrick Gold. Rose then did a one-on-one with Einhorn on gold and inflation and other topics.

I think its a good show. Jim Grant’s thoughts and opinions are always interesting. I also enjoyed having the perspective of a miner. And it’s always good to listen to Einhorn.

Rose asked Einhorn what he likes about the investing business. Einhorn likes “solving the puzzles.” If Rose asked me the same question, I would have answered differently. I would have said that I enjoy doing something that is very hard, that few people are good at and where I have the opportunity to be one of the best. However, I do agree that there is a “puzzle solving” aspect to being a good investor.

Einhorn and Gold

Posted on November 22, 2010, 10:49 pm. 1 Comment

If you haven’t seen it by now, Einhorn was recently interviewed on WealthTrack.

Einhorn is a great investor, but he is long gold, which makes no sense to me. Einhorn says matter-of-factly that gold is money. That’s an opinion, not a fact. A lot of people do consider gold to be “money”, but that does not make it so. In my opinion, Einhorn is doing a superb job of rationalizing his holding onto a greater fool asset, an asset where you are dependent upon finding someone to buy it at a higher price than which you paid.

Gold has very little intrinsic value and in fact there are many costs associated with owning this non-productive piece of metal. You have to dig it up, refine it, store it back in the ground, insure it, and guard it.

Einhorn has been lucky so far, and he might be smart enough to exit the position at a huge profit, but how can you really call yourself a value investor and own gold?

But then again, like gold, the value of all major currencies are only backed by the faith of the respective governments and their citizens, so perhaps Einhorn can still be a value investor and own gold. If it is a currency, or “currency-like”, what is the difference between owning dollars, euros, or gold?

Gold: A Crowded Bubble?

Posted on November 27, 2009, 9:46 am. Closed

A month ago, I began a second investment game with two of my pals. I won the previous game, which lasted about 8-9 months. Anyways, in the current game, I exited from 60% of the gold miner positions this past Wednesday. Gold in my eyes just has gotten extremely close to the end of its parabolic move, a type of move that just is not sustainable in the long run. I think there will soon be profit-taking and people realizing that they are participating in a precarious bubble. (click for larger image)

2009-11-27-gold

Since just the beginning of November, the mining stocks in my game portfolio have risen by25% to 50%. In a year, the price of gold has risen from $700 to nearly $1,200.

A Gold Standard

Posted on April 15, 2009, 10:54 pm. Closed

I’m reading Cra$hmaker, a two-volume +1,000 page book about a plan to take down the Federal Reserve and restore the gold standard. It’s filled with top notch discourse on constitutional law, economics, politics, history, religion, literature, and philosophy. Here’s one of the many interesting quotes about a gold standard.

A gold standard’s good for all nations because it integrates their economies in a world market, eliminates the rivalries, antagonisms, and exploitations from competitive inflations of national paper currencies. But the Establishment in the United States wants  no gold standard, at home or abroad. Return to a gold standard would undermine the Establishment’s domestic dominance. Inflationism, credit expansion by central banks, and monetization of debt could no longer buy political power by redistributing wealth. And return to a gold standard would end the role of the Federal-Reserve paper dollar as the world’s reserve currency. This would prevent the Establishment from exporting domestic inflation to other countries. Thus, restoration of a gold standard in the United States would curtail political corruption by the Federal Reserve at home and end its imperialism abroad.

This quote comes from a speech an incendiary academic gives to an economic conference which the protagonists of the book are attending. The academic is advocating that Russia’s chance at salvation and return to power lies in instituting a gold-standard in partnership with Germany.

I chose to type up the above quote because I think it’s quite interesting to me that Russia and China have recently suggested a new global reserve currency to replace the dollar. However, they only seem to be advocating a bundle of fiat currencies and not something based on hard, physical  assets.

Finding Gold in Poo

Posted on February 2, 2009, 11:54 am. Closed

I never knew you can find gold in poo – literally:

TOKYO (Reuters) – Resource-poor Japan just discovered a new source of mineral wealth — sewage.

A sewage treatment facility in central Japan has recorded a higher gold yield from sludge than can be found at some of the world’s best mines. An official in Nagano prefecture, northwest of Tokyo, said the high percentage of gold found at the Suwa facility was probably due to the large number of precision equipment manufacturers in the vicinity that use the yellow metal. The facility recently recorded finding 1,890 grammes of gold per tonne of ash from incinerated sludge.

That is a far higher gold content than Japan’s Hishikari Mine, one of the world’s top gold mines, owned by Sumitomo Metal Mining Co Ltd, which contains 20-40 grammes of the precious metal per tonne of ore.

The Commodities Correction

Posted on August 14, 2008, 6:20 pm. Closed

All commodities have experienced a large, much-needed correction. Oil, energy, metals, food; all the basic materials. The dollar has made a large move up. However, I’m not certain that we are at the beginning of a strengthening dollar just yet. I still believe America has a large inflation problem. Though there seems to be more evidence of global growth slowing down, which would bring down the price of commodities and materials down even more, I think now is a good time to take advantage of the dollar and commodities correction.

Here’s a chart of the Euro versus the US dollar:

There may or may not be further downside for the Euro. I’m guessing the dollar will weaken again over the next six months.

Here’s a chart of the gold ETF:

Gold usually increases along with inflation and oil. If we’ve got an rising inflation and oil, gold will go up.

Here’s a chart of the price of platinum:

I particularly like the prospects for platinum. I recently purchased some Jan. 2010 calls on Stillwater Mining (SWC), the only US producer of platinum and palladium. With many good reasons to expect a continuation of a commodities bull market, and this recent large correction, I felt the time was right to make such a purchase.

Some Current Contrarian Investing and Trading Tips

Posted on August 10, 2008, 11:08 pm. Closed

If you’re a trader, Gold Stock Bull lists three areas where one should probably be able to profit: financials, the dollar, and energy. With energy, Petrobras is the particular stock mentioned right now that seems to be a both a good trading and investing opportunity.

I also agree with the general outlook on energy. Oil was greatly overvalued, but now it seems that there has been an over-correction.  But perhaps not, as I have been hearing that there is some evidence of a greater worldwide economic slowdown, and thus a decrease in demand for energy.

Newmont Now World’s Largest Unhedged Gold Company

Posted on July 5, 2007, 5:08 pm. 1 Comment

Newmont Mining Corporation announced today the elimination of its entire 1.85 million ounce gold hedge position.  It’s now the world’s largest unhedged gold producer.  In addition to the falling U.S. dollar, rising cost of oil, and over-the-counter derivatives and sub-prime fiascos, the stage seems to be set for the price of gold to sky rocket.

But today, the price of gold fell from about $656 to $646.  I had foreseen that gold might fall one last time, so I had already placed trades to sell my calls at market open this morning.  I made a nice profit and will now be looking to accumulate more probably next Monday or Tuesday.

Gold on the Rise Again

Posted on June 28, 2007, 9:39 pm. Closed

Though he writes about one gold mining stock in particular, OTC Speculator puts forward excellent reasons to load up on gold stocks in general right now.  His bullish case for gold is “rather simple”: Continue reading ‘Gold on the Rise Again’