Is now a good entry point, /biz/?
Gold has had a rough 5 years lowering it by 40% since late 2011 and with a bearish or even 'cataclysmic' year ahead, like it is known to do, the price may soar temporarily as people shift their money to valuable commodities so their savings don't vaporise in a bank.
Any gold speculators with a similar mindset?
Bump for interest.
I've thought about this. Its still pretty speculative, but the bears will say that gold is going to shoot through thr roof if/when the natonal debt bubble bursts.
There's seemingly less and less the fed can do to rectify the current financial situation, and if they do QE4 then people may become fearful and put their money into gold.
The real question is whether or not to buy gold mining companies. Right now the price of gold is creating diminishing returns for extracting gold, but if gold were to go to 2 - 5k per ounce (very bearish outlook) these mining stocks could go up exponentially in value.
Again, gold is extremely speculative. It's not like regular stock where you can analyze a company's earnings/cashflow etc. It relies on macroeconomic factors that may or may not come to fruition.
Tl;dr: buy some gold/gold stocks if you think we're headed for a recession.
I wonder about this all the time watching the markets have these wild swings. I gotta say I'm a gold bug too but I don't think now is the time.
All I know from my reading is commodity prices drop drastically in deflationary times. Look at mining stocks. They're getting slaughtered right now with oil stocks.
Gold also didn't take off in 08'. Buy near the bottom of said event when people are hoarding cash. If you feel like right now is the bottom then buy.
Waiting doesn't hurt. Gold would have to break and maintain the $1300/Oz mark for a month or more before I would even consider buying more. If faith in the system is questioned like it was in 08', you profit. Even if it's not - as inflation rises so will gold so you'll still profit. Just not right now. Too expensive and likely to continue falling absent some major event.
>buying an inflation hedge while the market is tanking
>natonal debt bubble bursts
You call that a bubble?
I dont get the whole gold is an inflation hedge meme.
Litterally any asset could work as a hedge against inflation, as long as is not cash or like fixed incomes.
If you had stocks, why would you worry about inflation?
Maybe it made sense back in the 70s, but in today's world, gold is a hedge against cataclysm.
Honestly, I would say to build a portfolio of low risk value companies. Maybe allocate 70% of your portfolio to that, 15% bonds, and 15% gold.
If the market crash does come, your stocks won't be hit so hard and your upside on bonds/gold will be large.
If it doesn't come, your stocks will gain moderate returns and you didn't risk much.
Either way, if we don't have a crash but rather a period of stagnation and the markets adjust to it, your stocks will do better than the broader SP500.
Your investment strategy is wrong, as are most people who are not financial specialists.
You need to throw our the concept of "buy low, sell high". Money is not made efficiently through this way of thought, because it suggests you can only make money in a bull market.
The real value is accurately predicting which direction the market is going, and modifying your strategy to accommodate it.
Right now, we see huge volatility in China, which is trickling down to other countries. This is exacerbated by Saudi Arabia's refusal to lower oil outputs, pushing oil down. With oil prices anticipated to be low for 2016 and possibly longer, we are likely to see high potential for further market decline. A slight correction should be seen within a month, as people's sentiment causes overselling. After that, the market will lay stagnant for as long as oil prices are low.
During this period of stagnation or decline, it is not the proper entry point to buy low. You can either short sell or bet against volatility.
It's not until you see glimmers of a recovering market from US, Europe that you should re-enter. US will rise first, consuming more goods. This will take some time to trickle down to China's manufacturing sector, and an even greater lag before seeing higher market values of Canada and Australia's metal and coal market.
So wait it out for now for a few months, and enter into US small cap stocks. Once the ball gets rolling, switch to China based companies. After China shows higher growth, move to Canada's metals market (I'd suggest an ETF, rather than a specific mining stock).
If you're not an American but buying American stocks or funds, beware the exchange rate. If you're from Canada, all of your gains in US stocks could implode into nothingness is the Canadian dollar rises. You'd basically be exchanging $10,000 CAD to buy $6000 of US stock today....and if the dollar goes back to par, you'd be taking that $6000 USD and exchanging it for only $6000 CAD.
Gold is not an inflation hedge. It is a hedge against taxation, or a hedge against financial risk (counterparty risk etc.) A safe haven asset.
The best investment in inflation is a productive asset, like a farm, or a silver mine, or a manufacturing plant. Equities are thus excellent in inflation.
I'd post my link to my blog on the subject, but I don't want to shill you all.
According to Kevin O'Leary, it's not a good idea to buy gold mining companies because they simply can't keep their costs down. He recommends no more than 5% net worth in precious metals.
Honest question here for gold bugs.
If we're looking at deflation first and then lets say inflation + other factors drive up precious metals....what time frame are you expecting to take value from these events?
If it takes around 1.5 years for stocks to crash to their bottom and 4 years(ish) for a property bubble...how many years do you expect commodities to go down when deflation hits and how many years should it take to get significant value from previous metals?
I can't help but feel that I'd have to transfer gains from PM into something like property but the timing of doing that seems a littlr weird and uncertain.
Gold is a means of storing wealth during the inevitable crash of fiat currency and the busting of the US credit bubble.
Gold, Guns and a getaway plan. Buy some gold, buy some ammo, take some cash out while you can. Put it away, forget about it and start growing some backyard staples.
And hold onto your dicks.
>what time frame are you expecting to take value from these events?
You should buy precious metals if you want to preserve wealth over decades, instead of buying and selling it to make a profit. The price of gold is unpredictable because it's affected by the price of oil, government monetary policy, and so on. If I were to buy now with the hope that in three years it will double in price and I can sell, that would be a gamble.
>If it takes around 1.5 years for stocks to crash to their bottom and 4 years(ish) for a property bubble...how many years do you expect commodities to go down when deflation hits and how many years should it take to get significant value from previous metals?
It's hard to say exactly what the US government will do to "fix" the economy once the bubbles burst. Look at what happened in the 2008 crash, but expect it to be amplified due to it now being the property + tech + auto + student loan bubble.
>I can't help but feel that I'd have to transfer gains from PM into something like property but the timing of doing that seems a littlr weird and uncertain.
Well, if you have stock in overvalued tech companies like amazon, facebook or twitter now would be the time to jump ship.
^My take on this PM Market. I'd point out that this is the "financial" side of the market. iShares gold trust and what not.
The physical (real) market is a little different in the sense that supply will be restricted, or the ask market price might rise pushing the price higher. I hold some PMs myself.
^Here I talk about inflationary hedges.
^Here I talk about why deflation is more likely and what asset classes do best.
If the PM fans want me to do an article on the difference between financial and real PMs as an investment, I can.