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Gold Trading Closes: Returning 29.7% For the Year, Doubles S&P 2010 Performance
Some time in mid/late 2009, after becoming convinced that the stock market is a broken topological nightmare, with feedback loops that are so unpredictable to be virtually "skyNet" self-aware, and is in essence broken, we urged readers to pull all their capital from the stock market. This happened even as we grew increasingly concerned by the Fed's ongoing ruinous actions which anyone but the staunchest propaganda foot soldier realized were going to mean ongoing pain for all dilutable assets, including stocks and fiat currencies. As a result it became abundantly clear that hard assets such as gold, silver, non-nailed down park benches, bananas, hard liquor, stripper poles, and of course strippers, would outperform paper assets. Sure enough, with regard to the first, in May 2010, our skepticism about stocks was confirmed, and anyone who had limit sell orders likely ended up losing up to 40% of their capital with no recourse. Since nothing has changed in stocks, we repeat our warning that the market is at all times a few stray millisecond algos away from total meltdown. And as for gold: the 29.7% 2010 return is double that of the S&P. Which means those who did not play stocks and bought gold did ok. And even those who shorted stocks and bought gold, are still up about 15%. As above, little has changed to weaken our long-term conviction that gold (and silver, for those who can handle the added vol) is the natural antithesis to central banker lunacy. And that we will have a lot more of in 2011. Guaranteed.
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And don't forget Gold's cousin Silver. They are connected at the hip though the binding rope has some flexibility.
Get monie!
Jimi: You and CD can appreciate this, I think. Today was a BIG DAY!
http://tfmetalsreport.blogspot.com/2010/12/once-in-lifetime.html
Sounds like Redback Networks 12/31/1999.
Why don't you buy more?
Turd,
I've been reading your blog three or four times a day and I love it. Keep up the good work and don't spare the Blythe Masters sarcasm even for the weak stomachs among us. :>)
BTW what's wrong with the "New Kids On The Block" that would make me vomit in my mouth? It's all just teen porn for the teens, right?
82%.
The trolls can all suck it.
Yes and gold has an annualized average return of about 25% since this bull market began. Let's see: $1400 + 25% = $1750
At some point in 2011, gold will trade at $1750. Guaranteed.
In Ecuadorian dollars
JUUUuunnnk!!!
I understand the basis for this argument, but im worried. I feel historical returns are never a good indicator of the future. Is there anything that would make you change your mind on the expected returns of PMs for 2011? Not critical here, just curious.
As soon as you start to see governments act ethically and responsibly start to worry about the prices of precious metals going down.
So . . you're saying this rise is never gonna stop.
Bingo. Not until regime change, which is unlikely to be peaceful.
As long as I can watch stupid shitfucks tell people what's good to eat and whats good for them and bad for them on "The Doctors" and as long as these asswipe consumers who keep gobbling up igadgets. Gold is going up and dollar is going down. Because the servants of the dollars are too fucking greedy, too fucking stupid and too fucking crazy to stop.
Listened to a Max Keiser interview last night that someone had linked here. He siad bluntly that America's rich don't know how to be rich, they're too "in your face" about it. They are doing our recruiting for us.
Re: silver. Love the vol. Gold is going to move my savings into the future and provide capital for myself and my offspring, while silver and silver miners are going to make me rich.
"Dilutable assets;" that's a keeper.
On the precious metals front, it's useful to recognize how important falling Treasury bond yields and negative short-term interest rates have been in the recent commodities run. Historically, the Philadelphia gold stock index (XAU) has advanced at a 23.0% annual rate when the 10-year Treasury bond yield has been below its level of 6 months earlier, but has declined at a -5.9% annual rate when Treasury yields have been rising. With respect to short-term real interest rates, the XAU has advanced at a 16.1% annual rate when 3-month Treasury bill yields have been below the year-over-year CPI inflation rate, and just 4.1% otherwise. Put falling Treasury yields together with negative short-term real rates, as we've seen during much of the recent commodity price run, and you'll find that the XAU has historically advanced at a 33.9% annual rate. Notably, Treasury yields have recently reversed course, and are now above their levels of 6 months ago. While real short rates are still negative, this has historically not been enough to overcome rising bond yields and produce positive returns in the XAU, on average, except when the Gold/XAU ratio has been well above 7.
In short, my impression is that investors chasing commodities have not paused to recognize that one of the major supports for this run - falling Treasury bond yields - has been knocked away from them. There may be some pure momentum remaining for commodities, but this is now purely speculative. A much better environment for gold stock holdings would include falling Treasury yields, negative real rates at the short-end of the maturity curve, reasonable valuations of gold stocks to the bullion (which is presently still the case), and some amount of downward economic pressure, such as a Purchasing Managers Index below 50. The present Market Climate for precious metals shares isn't terrible by any means - it's just not positive anymore.
Please explain gold and silver's strong price rise during 2004-2006 in the face of steadily rising interest rates.
It's even more useful to recognize that the principal driver for precious metal prices, an underlying conviction in the collapse of "dilutable assets" such as paper money, paper promises, paper precious metals etc. hasn't subsided at all, it has accelerated. The underlying destruction of the productive economy has been papered over, nothing has been solved.
Trade bond yields if you want to, but IMO you might also ask what happens to the U.S. dollar in the event of a sustained trend of rising interest rates. How does the U.S. government pay its debt under those circumstances? What happens to the Fed's balance sheet under those circumstances? Will those circumstances be allowed to occur?
And COMP will double, that'll show 'em!
Even that bucket of turds, JohnnyBravo, had the miminal level of decency to flee from ZH once his ridiculously pro-fiat, anti-gold predictions were proven flatly wrong one too many times. Or maybe his mommy just changed his curfew hours and computer access. But in any event, it is interesting to see how the lifespan of any given troll here seems to be shortening as time passes.
No, Johnny thought gold was in some sort of rising wedge and thought he could trade it based upon technicals. He didn't understand the money aspect of it. I did find some of his strings to be utterly repetitive and boring -like when he railed about paying a premium for coins. But he wasn't a troll like Harry or toothingus or gloomboom. He just repeated himself too much but had the decency to admit he was wrong.
They don't have what it takes to hang with this tough crowd. Say anything dumb here and you will be taken apart with surgical precision. Paid trolls don't have nuanced thoughts, or passion. Their pay grade guarantees it.
Where in the hell is that chumpstain Bravo?
Well, the flash crash happened on a 3% down day for the DOW, so IMO it didn't exactly come out of nowhere, but that certainly doesn't mean it couldn't happen again. I think the market will continue to melt up 20 points a day until we have some sort of crisis again. BUT, this should be a good year for gold !
thanks all ZH staff and all posters for a very informative and highly entertaining year. and a prosperous new year to all.
Is that with the S&P priced in USDs? Bernanke is a douche. Gold bitchez!
But it's a bubble. And you can't eat it. And it's better to own shotguns and canned food. And it's about to crash to worthlessness.
(circa every year since 2005)
Yes, gold "returned" 29.7% for the year. How does that fare on an inflation-indexed basis? Oh, right. What's one divided by one? Except that your 29.7% "return" roughly keeping up with inflation is taxable, probably at 28% if you were smart and held physical.
My point is not that gold is a bad investment - it's certainly beating most other options right now - but that all of us non-banksters are still being looted, even if we take defensive measures. The defensive measures just moderately reduce our current loss.
And I'm wishing I'd put my fiatscos in silver a year or two ago. But I digress.
Move to Canada and start a tax-free savings account. Stuff it full of CEF and PSLV stocks on a yearly basis and give the government and the Fed the middle finger!
Or, buy all of those things and more in you IRA...and be ready to cash it out when the dot gov tries to save you from yourself and turn it into a Treasury Annuity.
Taxes? Who's fucking paying those this year. That was last decade.
http://af.reuters.com/article/metalsNews/idAFLDE6BU09J20101231
Spot gold rose 0.6 percent to $1,411.86 an ounce by 1305GMT, on course for a 29 percent annual gain and a fifth straight
month of gains, the longest stretch of monthly increases since
late 2001.
GOLD WILL GET CRUSHED WITHIN WEEKS
"The world economy is resting on policymakers in China. If the interest rate rises don't reduce inflation there, eventually the population could become very difficult to govern," said Peter Cohan, a financial markets commentator in Malborough, Massachusetts.
"If the resulting instability leads to a decline in Chinese demand, those betting on a weak dollar and ever-rising commodities prices could be in for a world of hurt"
http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=117700&sn=Detail&pid=66
And who the hell is Peter Cohan? Never heard of him.
Nice try, move along...
It is always possible that gold and silver decline in price if there is a widespread market decline as margin clerks sell what they can. But is also possible - and more likely IMHO - that PM's hold steady or rise as people realize the fiat endgame is near. Eventually all PM's will decouple from paper assets as individuals look for some tangible form of wealth. The size of the gold and silver markets will be overwhelmed with the flight to safety.
I can only hope. I need to accumulate more
This is somewhat misleading.
You've plucked out your favorite commodity and measured it against a basket of 500 stocks. That's cherry picking.
Comparing apples to apples, if you measure a basket of commodities (DBC) against the basket of the S&P, the returns are nearly identical for 2010.
To get a true comparison, one needs to select a single stock or maybe a few of their favorites that they would have actually bought (like Apple - everyone owned Apple) and then compare it to gold. With those parameters, the comparison would yield dramatically different results. I don't think most readers at ZH just buy the S&P - most likely, they manage their money better, follow fingle stocks and simply pay attention. Only truly comatose Americans and massive funds buy the S&P.
You're probably right, though. Any bet against the Fed will probably be profitable - their task is simply too big.
Your mistake, one that is almost ubiquitous among the paperbugs and pro-fiat crowd, is in assuming that gold is "just another commodity". Several thousand years of history, and even current central bank policy, refute that simplistic and erroneous thesis. Or have world central banks started holding wheat, cotton and molybdenum on their balance sheets?
Sure. That's fine. But just don't compare it to a basket of 500 stocks.
And I'm not pro-fiat. That's stupid.
I agree that being pro-fiat is stupid, but I merely mentioned that the error in your analysis was one that is ALSO made by most paperbugs and the pro-fiat crowd --- it did not necessarily imply that you are one or both of the above. Your many posts in this forum, however, do seem to indicate a prediliction toward those tendencies, and away from the anti-establishment zeitgeist of ZeroHedge.
If you're not pro-fiat and pro-gold - you must be pro-squirrel meat?
You seem to forget.
Gold is not a commodity.
Nor is Silver.
They are real money and always have been.
Or maybe you think the world's criminal central banks store hundreds or thousands of tonnes of Au in their vaults by mistake and they should really be storing corn or wheat or barrels of crude?
Baskets of Gold?? How about baskets of red necks?
Considering that the SPY and the ES are the two most liquid and traded instruments in the cash and futures market respectively, by the retail, hedge and the mutual fund communities which represent about 80% of the stock market by capitalization, and that 99% of mutual and hedge funds are evaluated by their performance relative to the broader market, your observation is just a little off.
RNR, when Tyler himself enters the fray to rebut a particularly disingenuous argument, that poster should consider themself SPANKED.
That's fine by him. Any time Tyler responds to one of his comments, RNR immedietly drops to his knees and verbally fellates him.
when Tyler himself enters the fray to rebut a particularly disingenuous argument...
And when tmosely himself enters the fray one should expect to hear the sound of flesh thumping against wood in the background.
http://sewingfromtheheart.files.wordpress.com/2008/11/woody-woodpecker-0...
I was in second grade once too.
I noticed that he doesn't even bother to try to debate anymore. It's exactly like a second grader saying "nuh-uh!"
Tyler - you filthy little tramp. If you were a girl, I'd bend you over my knee and spank you with your hairbrush.
Everyone on planet Earth knows that the SPY and ES are used nearly exclusively as short-term hedges by quants and Ritalin popping 25 year olds in Greenwich.
Furthermore, the SPY is probably the single, most popular hot potato that the algos play with to jam the market in whatever direction they want to protect the rest of their inventory. Hence, the liquidity.
The SPY is a toy, not an investment - and you know that.
And with regard to them being benchmarks.... yes, isn't that funny in today's age of HFT?
Translation: *slurp* *slurp* *slurp*
Hopefully Tyler will add a kill file or an ignore button so we do not have to read your crap.
You're right in pointing out the basket case, or rather the case of baskets, but I completely disagree with your remark that only 'comatose Americans' would buy SP. Trading ES is far better than trading stocks. More liquidity, larger capital efficiency and you don't have single stock risk (which is not getting much attention lately.)
are lap dances pegged to silver now??
PM stripper poles ... ya baby !!
Imagine that. How does one fit mercury dimes in a thong?
2010 marked the Year of the Gold Vindication. 2011 will be the Year Silver Trades at All-Time Highs (and takes one of the JPM off-balance-sheet entities down). Morgan will dodge the bullet and reap billions off the copper corner.
ZeroHedge readers will be heard screaming in New Zealand...
The only reason JPM cornered the Copper market is to keep the price high. With the downturn in the world economies the copper price will plummet and that would be bad for the suppression of Silver.
Where does most of the Silver come from anyway ?
As a bi-product of mining Copper.
Slow down Copper production and you slow Silver production.
Got-it ?
Silver is a by-product of Lead-Zinc mining.... it is Gold and Copper that tend to co-mingle....
if you sell gold at a profit do you have to pay tax?
Yes, you are supposed to ....
I should think that depends on what you sell it for.... If it's not sold for currency, then no :)
Never sell gold. When the time comes, spend it.
Ask yourself, "Self, did you 'sell' gold, or did you 'exchange' money for a fungible, paper money-equivalent?"
Not if it's in your IRA...
Violetta; auction it honey child. Set your reserve at least above melt value (all depends on whether you are selling bullion, numismatic, or other). You will fetch around fair market that way.
If your hammer price is above a certain threshold the house will take less as seller's commission. You will still get hit for that commission but most auction houses do not send in 1099s yet. Ask the A/H first.
http://www.youtube.com/watch?v=3i0DMbCKnAg&feature=fvw
Eric Burdon & War - Spill The WineGold up even though the propagana machine was in full force in Dec. with anti-gold/pro-paper articles, videos, and "analysis."
They tried to force gold under $1400 for 2010 and were unsuccessful.
You Champions of Gold - fight on!
Half of the sp500 gains came in December on thin volume.
@"
GOLD WILL GET CRUSHED WITHIN WEEKS
"
... bring it on !!!
"If the resulting instability leads to a decline in Chinese demand, those betting on a weak dollar and ever-rising commodities prices could be in for a world of hurt."
.
"ever rising". dick fantasy viagra wet delusion.
comment: hurt me and then fuck off, hopefully for good.
tone loc, next episode.
http://www.youtube.com/watch?v=3i0DMbCKnAg&feature=fvw
,
Tone Loc - Wild Thing
http://www.youtube.com/watch?v=387ZDGSKVSg
.
whoop etty doo dah ....
Cheeba Cheeba - Tone Loc
http://www.youtube.com/watch?v=waL3DAl55zQ
What? No inane comments from robotarder?
Oh yah, federally funded pro shills probably have the day off for the holidays.
LOL!
Hence Leo's absence as well.
Or maybe it's just some idiosyncratic holiday up in Canadia today ---- something to do with royalty, no doubt, like "Queen Victoria's Graduation to Full Butt-Ugliness Day", or some such.
Why not buy SP500 and go long GLD (or physical) on margin (@ 0.3% LIBOR) at the same time? Basically eliminating the USD from the equation and getting exposure to the economy denominated in gold ounces if that makes one sleep better.
Maybe that's the most foolproof way of playing the ZIRP age.
Actually, since both securities are in USD, you didn't quite hedge out of the dollar. Yes if you argue that being long gold is by definition a short dollar play, but thats not the GLD etf.
OK I'm out of gold come Monday. Mr. T was just on Bloomberg with Pimm Fox. If that isn't a screaming indicator that the bubble is here nothing is...
Barb, Mr T has been a gold bug since his A-team days. Why would you pay attention to him now and not then?
Mr. T represents a company that wants to buy your gold. He's not selling it to you. The top in gold <might> be when a central banker or finmin actually tells the truth and tries to address the reality - but I don't think that's happening any time soon.
I pity da fool who doesn't buy on da dipz
Wait a minute - what are the chances that Mr. T's demographic is the type holding lots of gold? Next up it's Bo and Luke Duke tryin' to buy all your silver...
UUhmm.... Isn't Mr. T the original "Bling" creator? I would say that it's highly likely Mr. T's demo has some shit for sale. Especially if Mr. T isn't asking a lot of questions about where it came from.
Just a test from this guy, but I think the whole Gold and Silver Stuff is Fucked, they only want you to throw in all the money you have
Well, I think I can safely say that SOMEBODY'S stuff is fucked!
...or it could be as simple as they are bluffing and gold/silver is the Royal Flush poker hand and they are getting ready to head for the hills before the pitchforks come out.
Gold Is Just A Lot Off Bullshit, Don't Go For It. Be Sure You Have A Home, Some Garden, Some Money, Some Friends, Some Family And Be Sure You Can Rely On Some Good Friends That Can Help You To Feed Your Children
Yeah, just ignore several thousand years of human financial and monetary history --- it's all just bullshit.
How did that epiphany never dawn on me before reading your remarkably informed and insightful post?
Perhaps he just finished reading Denninger's latest predictions for 2011 and gold.
Yep, that deflation is going to hit any day now ---- right on the heels of the next unicorn migration.
I keep noticing that "deflation" at the gas pump and grocery store.
Wow, did you just stop by from stockhouse, or yahoo? Just a tip - when you're posting inane junk to scare the timid and/or uninformed out of their positions, you're supposed to USE ALL CAPS. I'm surprised you forgot that.
AND HE FORGOT TO CLAIM THAT THE BUBBLE IN GOLD IS ABOUT TO BURST!!!!!
OH, DID I MENTION THAT GOLD IS IN A BUBBLE TOO?
IT ALSO HELPS TO USE AD HOMINEM ATTACKS AGAINST "CONSPIRACY THEORISTS" AND "ARMAGEDDONIST DOOMSAYERS" AND "GOLDBUG NUTS"!
You got the all caps, but your spelling, punctuation and grammar are too good to be genuine troll. The multiple exclamation points were good though.
You are correct, of course --- it is almost impossible to convincingly pretend to be retarded.
I'm going with Yahoo. Good catch, Al.
http://watch.bnn.ca/squeezeplay/december-2010/squeezeplay-december-31-20...
Thank You for doing what you do and how you do it.
Gold is advancing in most currencies these days, not just the US$. US interest rates are a function of the Federal Reserve's manipulations, period. The relationship between gold pricing and interest rates is broken now do to that manipulation. The question one must ask is "What are Central Banks doing now which may effect the price of gold"?
?? Prop-ing up a failed global credit/finanical system with massive infusions of freshly created digital money.
?? Pretending to be in complete control while doing insanely foolish idiocies.
?? Blatantly manipulating/controling any substantive market they can to prevent "crashes" and to promote "higher prices".
?? Extend and pretend, and cover ups, with regard to fraud, abuse and the utter worthlessness MBS's of every stripe: the largest market (ABS's) being a complete sham and mine field.
So, please tell me again why any sane investor would not want to own 10-30% of their portfolio is physical gold and silver?
No not really.
It only returns 29.7% if you sell it. I know this sounds simple enough, and largely assumed in closed financial circles, but you will only profit 29.7% with immediate conversion to USDs. Assuming you can find a buyer (not too difficult with gold). Minus any commisions on the conversion.
Profits are good but only in exchange for something of relative constant worth at the time of conversion. Which is not the USD. Real USD worth (holding USDs) also assumes that we fully understand the lagging effects of debasement, and the dynamic behavior of commodity inventories and commodity demand driven price (oil) which will ultimately effect the USD while we hold them.
Mark Beck
Yeah I sold my gold and silver early at 1350 and 27, but I am still calling a top dammit!
"damn it all anyhow". (that was mary) but the women held her shizzle, gold, and
gave it to her love. they will no/ t sell it, ever, but will give it
away to their love, the next generation. so it goes...... on and on .....
all i see is "we buy gold". all i think is fuck off .
................................................................................................
"damn it all anyhow". (that was mary) but the women held her shizzle, gold, and
gave it to her love. they will no/ t sell it, ever, but will give it
away to their love, the next generation. so it goes...... on and on .....
all i see is "we buy gold". all i think is fuck off .
................................................................................................
wow twice works.
So VIX priced at ~15% vol/year is actually PERFECT, and not a creature from hades, which means that any time it got to 16, vol was overpriced.
Wow! Excellent. Does that mean all of the gold bugs and silver bugs did better than Leo and Robo?
Does a Bearnanke shit dollar bills in the woods?