Gold's Bull Run Is Only Beginning

• Report this Comment On November 20, 2009, at 11:19 AM, pondee619 wrote:

  Alex:

  "some exposure to gold looks like a reasonable choice" Why?

  The only way to make money on gold is to sell it, and "it's difficult to put an intrinsic value on an asset that generates no cash flows"

  You can't put a value on it for a good buy in price, it generates nothing while you own it (you may have to pay to safeguard it), and you can't put a value on it when it may be time to sell. You guess on an entry point, get nothing while holding, and guess again on an exit stragety. This is your idea of a good investment on any level in any amount?

  At least if I bought art work, coins, stamps or other collectables, I would have something pretty to look at while I'm holding. What do I get with gold? Naked speculation, hope and a stab at being lucky?

• Report this Comment On November 20, 2009, at 11:26 AM, JeanDavid wrote:

  If you buy gold bullion in the form of (usually one Troy ounce) coins that trade near bullion prices, at least you get some nice pictures. The U.S.Arts Medallions, for example, have pictures of notable American artists on them.

• Report this Comment On November 20, 2009, at 12:13 PM, FoolsSpecialK22 wrote:

  Goldmember: I love gooooooold. :)

• Report this Comment On November 20, 2009, at 1:34 PM, kabierwatz wrote:

  This is of course assuming that the Fed will continue to keep rates at 0 for years....which it won't if it wants China to keep buying our debt. Gold may be an okay investment in the short run, but will underperform compared to equities after a year or two. In short - much ado about nothing.

• Report this Comment On November 20, 2009, at 2:10 PM, radicalaccountin wrote:

  What do you get if you buy gold? Don't you get tax-free returns? Who is going to tell the government how much you paid for the gold and how much you sold it for?

  Also, isn't it a hedge against the stock market crashing? That's why I don't quite understand the point of buying gold stocks? My thought is that if the stock market drops 25%, and your gold is up 25%, you'll be positioned to buy into the rally.

• Report this Comment On November 20, 2009, at 2:16 PM, kurtdabear wrote:

  Gold may seem irrational -- sort of like insurance: You pay someone money for something that will pay off for you (or your heirs) only if something really bad happens to you.

  Gold works because it is the historic, universally recognized world medium of exchange. Its broad historic and geographic acceptance is what gives it value.

  A long parade of holders of paper money -- from John Law's original notes through U.S. Continentals, Confederate dollars, 1920's Marks, to today's Zimbabwe dollars -- would be happy to trade you bales of their paper money for an ounce or two of gold.

  Why is gold going up now? Because the US$ is the world reserve currency, which makes it the support for all other paper currencies. The US$ is also what is known as as a "faith-based" currency, and the faithful are beginning to lose faith in the US$ and most other paper currencies currently being printed by the bale in a futile attempt to stave off the financial disaster that's been triggered by decades of deficit spending.

  There will be ups and downs aplenty along the way, but some day a few years from now, Warren Buffett and rest of you who don't understand gold will understand the role of gold in monetary policy and wish you'd traded a few of your rapidly depreciating Federal Reserve Notes for a bit of it.

• Report this Comment On November 20, 2009, at 6:37 PM, pondee619 wrote:

  "What do you get if you buy gold? Don't you get tax-free returns?" NO "Who is going to tell the government how much you paid for the gold and how much you sold it for?'" Your broker or the dealer who bought it off you so he/she can keep track of his/her cost basis and be a law biding tax paying member of society. Are all of your investment ideas based on breaking the law?

• Report this Comment On November 20, 2009, at 6:38 PM, pondee619 wrote:

  "What do you get if you buy gold? Don't you get tax-free returns?" NO "Who is going to tell the government how much you paid for the gold and how much you sold it for?'" Your broker or the dealer who bought it off you so he/she can keep track of his/her cost basis and be a law biding tax paying member of society. Are all of your investment ideas based on breaking the law?

• Report this Comment On November 20, 2009, at 6:38 PM, pondee619 wrote:

  Again, I don't know why I can't post a comment only once sometimes. Sorry for the duplication

• Report this Comment On November 21, 2009, at 1:08 AM, thisislabor wrote:

  if you purchase stocks you get a tax discount on your capital gains if you hold the stocks for longer then a year.

  if you get a gain on gold you get taxed up to like 28% i believe.

  and yes I have a feeling if you make a purchase large enough to effect the market someone somewhere will report it to the IRS.

• Report this Comment On November 21, 2009, at 10:34 AM, Quantemonics1 wrote:

  I don't remember reading articles like this at the low in gold 7-8 years ago around $250 an ounce! Back then the cost of production/mining an ounce of gold was $300US and nobody on Wall Street would touch this relic of the past.

  Today the price of gold is $1150 and the total cost of production is around $500-$550US, everyone wants to own it or recommends owning it, while we are at the end of a prolonged major recession and financial panic period. Sure, trust me, now is a great time to buy gold assets because one or two screwball hedgies love it.

  If I am not mistaken in 2001-2002, commercials in the futures market were neutral to net long at the bottom, while speculators and investors were net short. Today's situation is the exact opposite, with record net short positions by commercial firms including miners and gold wholesalers, while small investors and speculators own a record net long position!

  Plus, after the central banks of the world dumped gold at the bottom to push prices below the cost of production, today they are spiking the price higher with mindless, fear based purchases by India, China and a few others.

  Conclusion: the ONLY way gold prices can stay above $1000US an ounce in 2010 is if we get massive inflation to push the cost of production closer to $1000 per troy ounce. Otherwise, a strong Dollar period, a more serious effort by the western central banks to end the gold rally, and basic supply/demand pulls from the end of a boom will end the latest mania, and put gold prices back to $600-$700US an ounce, still well above its cost of production and quite a bit above the 200-year average, inflation-adjusted "value" of gold which is around $500-$600US today.

  At least that's what a reasonable long-term gold investor would write and do with his money.

• Report this Comment On November 21, 2009, at 4:47 PM, gfes wrote:

  if u don t like gold... just don't buy it ... or even better sell it ... At the end of the day, that makes more volume to those who want to buy it ... Eventually, you mite even get rich being short if you happen to be right. Meanwhile, considering the amount of gold US gov has got in its safe, isn't it better to have a high price ?

  I feel sometimes those unhappy with price of gold do not realize a high gold price does not bother anyone ! Unless your expensive girl friend is only satisfied with gold ...

  Good luck

• Report this Comment On November 23, 2009, at 8:09 AM, ttboydxb wrote:

  The only thing I worry about with having too much gold is that I think Central Banks can manipulate it's price a lot easier then an asset like oil....

  And we saw last year how if they think it's for the greater good, central banks worldwide will act in unison.

• Report this Comment On November 27, 2009, at 2:11 PM, Fool wrote:

  Buy silver, you get more weight for your buck or poor mans gold ,copper.

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