Precious Metals

[vand]

Well the fact that a corrupt government made it illegal to hold gold during an era where wealth confiscation was conducted in plain sight- and thus eliminating 50 years of data from the modern record - is more of a argument to hold some than not ,some would say.

Why is the government's capability to easily confiscate an asset (and precedent for having done so in the past) an argument for owning that asset?

If anything it seems like that history should be an argument against putting too much of your wealth where previous precedent for government seizure exists.

Taxes and inflation perform the same function now in an elastic monetary system.

[vand]

Gold broke new all time highs yesterday.
No one noticed.

[2Birds1Stone]

Gold broke new all time highs yesterday.
No one noticed.

Yes, let's pretend inflation isn't a thing.

[vand]

Gold broke new all time highs yesterday.
No one noticed.

Yes, let's pretend inflation isn't a thing.

It's definitely a thing.. but let's just pretend you can print more gold.

[waltworks]

Gold broke new all time highs yesterday.
No one noticed.

Yep, the kids these days just care about bitcoin.

You can't snuggle up to a bunch of ones and zeros, or bask in their warm golden glow. Or bury them by the big tree in the holler. Pfah.

-W

[ChpBstrd]

I think when the inflation of 2021 broke out, everyone piled into housing more than gold because you can leverage your housing down payment 10:1 or 20:1 but there are no US-government-subsidized mortgages on gold.

I mean, GLD is up 13% YTD but the people putting down 3% or 6% on houses that were appreciating at a double digit pace were earning a much bigger premium on inflation, even after paying PMI.

[vand]

What's the definition of a bubble?  A bull market where you don't have a position..

Gold new all time weekly high close at $2416
Silver highest close since 2013 at $31.50

[waltworks]

Gold was like $415 20 years ago when I started investing, so a 9% annual return, not shabby!

S&P was 10%, though.

-W

[vand]

Gold was like $415 20 years ago when I started investing, so a 9% annual return, not shabby!

S&P was 10%, though.

-W

according to portfoliocharts, 20yr return to end of apr 2024

US Total Stock Market 9.74%
Gold 8.31%
US Total Bond Market 2.71%

It baffles me why anyone would want to own any combination of Stock/Bonds in preference to the equivilent in Stocks/Gold - if you still think bonds are the automatic go-to as a secondary asset then you need to reexamine your beliefs.

Pensioncraft/Portfoliocharts interview worth a listen - before you listen, have a guess at what percentage gold allocation the optimum backtested global portfolio has (for drawdown)?

https://many-happy-returns.captivate.fm/episode/building-a-bulletproof-retirement-portfolio

[WayDownSouth]

Gold is too expensive to buy right now IMPO but if you're going to do it, do it right, buy physical, and bury it.

Learn how to seal PVC tubes to be 100% waterproof and use a posthole digger. Put the top end of the pipe no more than 4 feet below the surface in a area that has historically never flooded.

Even if you have to flee the country, you can always come back and retrieve that gold, 1, 3, or 10 years later. DO NOT rely on GPS or something stupid to use as a marker, and bury it ONLY in an area where you are 99.999% sure will never be developed. You should divide the whole by 5 and bury in 5 different spots. Knowing where to dig here is key. Away from homes, away from low-flying aircraft, and preferably in a forested area that provides cover but it unlikely to burn or be disrupted.

[vand]

Generally distinct from the metal, I am not a fan of the goldmining sector and have warned as such on this thread previously.  They have a history of being very poor allocators of capital and tend to destroy shareholder value, and gold mining shares do not have the same portfolio efficiency enhancing characteristics as the metal does.

That said, I'm starting to buy more of them... they're had a nice little run up, but the further upside is huge if they really catch a bid.

Barrick looks like its breaking out of a 13 yr downtrend:



Miners/Gold ratio:

[waltworks]

Gold is too expensive to buy right now IMPO but if you're going to do it, do it right, buy physical, and bury it.

Learn how to seal PVC tubes to be 100% waterproof and use a posthole digger. Put the top end of the pipe no more than 4 feet below the surface in a area that has historically never flooded.

Even if you have to flee the country, you can always come back and retrieve that gold, 1, 3, or 10 years later. DO NOT rely on GPS or something stupid to use as a marker, and bury it ONLY in an area where you are 99.999% sure will never be developed. You should divide the whole by 5 and bury in 5 different spots. Knowing where to dig here is key. Away from homes, away from low-flying aircraft, and preferably in a forested area that provides cover but it unlikely to burn or be disrupted.

This is the kind of content I come here for.

*golf clap*

-W

[sonofsven]

Gold is too expensive to buy right now IMPO but if you're going to do it, do it right, buy physical, and bury it.

Learn how to seal PVC tubes to be 100% waterproof and use a posthole digger. Put the top end of the pipe no more than 4 feet below the surface in a area that has historically never flooded.

Even if you have to flee the country, you can always come back and retrieve that gold, 1, 3, or 10 years later. DO NOT rely on GPS or something stupid to use as a marker, and bury it ONLY in an area where you are 99.999% sure will never be developed. You should divide the whole by 5 and bury in 5 different spots. Knowing where to dig here is key. Away from homes, away from low-flying aircraft, and preferably in a forested area that provides cover but it unlikely to burn or be disrupted.

In the old days we made maps. Signed, a pirate.

It reminds me of (one of!) my stoner friend who buried $30k in the woods behind his trailer--in a wooden box, so no one could metal detect it (he thought of everything!) because he heard some local tweakers were planning to raid his grow house (trailer).
It took him a good month to find it as he was drunk and stoned when he buried it in the dark

[ChpBstrd]

Generally distinct from the metal, I am not a fan of the goldmining sector and have warned as such on this thread previously.  They have a history of being very poor allocators of capital and tend to destroy shareholder value, and gold mining shares do not have the same portfolio efficiency enhancing characteristics as the metal does.

That said, I'm starting to buy more of them... they're had a nice little run up, but the further upside is huge if they really catch a bid.

Barrick looks like its breaking out of a 13 yr downtrend:



Miners/Gold ratio:

I have to carefully pick how to take this information. There are 2 opposite interpretations:

1) Gold miners have historically done a horrible job allocating capital, as you note, and are likely to continue doing so, or...
2) Gold miners are historically underpriced relative to the commodity they produce

Looking at ^HUI versus GLD, it seems that since the Global Financial Crisis the price of gold started to take off without the gold miners. Prior to that point, ^HUI and GLD were more in lockstep. It does not seem to be because the gold miners are undervalued. Barrick has a PE ratio of near 24, Kinross is 23, and Newmont is a money-loser.

[vand]

@ChpBstrd - above charts was just to show how the miners/gold ratio is still on the floor despite the record gold prices..

Looking at the HUI gives a much cleaner chart pattern, showing an upside breakout from a huge muti year wedge.. time to get bullish.. if this really is a new bull market then taking out the 2011 highs should be just the start.

[ChpBstrd]

@vand very interesting. I'm not a fan of technical analysis, but the miners would have to be very, very badly managed to not make tons of money on the continuing gold run-up. Perhaps their PE ratios being in the twenties reflects investor enthusiasm about higher prices leading to higher profits. In comparison, one can buy oil producers like COP or XOM at half the valuation.

Gold continued to rise after the deflationary GFC until 2012, debunking ideas about it being linked to inflation or serving as a substitute for currency. The same could happen today, as investors run for cover years after the big financial event (inflation). The 5-year breakeven rate suggests investors believe we are heading back to a low-inflation, low-rate world, where the disincentives for tying up capital in PMs is reduced compared to normal times.

[Must_ache]

The correlation coefficient would be 0.97+ here if we didn't have the housing recession drama temporarily throwing off an otherwise fine relationship.

[Radagast]

Generally distinct from the metal, I am not a fan of the goldmining sector and have warned as such on this thread previously.  They have a history of being very poor allocators of capital

In what way? What do you think they could be doing differently, if anything? What would a mining company do if it was a good allocator of capital?

[markbike528CBX]

Generally distinct from the metal, I am not a fan of the goldmining sector and have warned as such on this thread previously.  They have a history of being very poor allocators of capital

In what way? What do you think they could be doing differently, if anything? What would a mining company do if it was a good allocator of capital?

I don't think the companies are poorly allocating the capital, it is just that mining IS the poor allocation of capital.   
Lots of capital in the form of heavy equipment,  and not that much return on investment.

[vand]

That's a very good question- and tbh I am going to take the easy way out and hand it over to Rick Rule's who talk about it here at @19:50 (as far as the Juniors go at least)

https://www.youtube.com/watch?v=doFlxY1--Yo

Basically they're a perpetual loss-making sector where most of money raised goes on expenses that aren't exploration & discovery

[joshrosenthal5000]

Before I start, know I don't give one hoot about what the MMM perspective is on this question (I don't even know what it is, and don't care to); I am asking this question here only because this is a pretty decent place to find knowledgeable financial/investment folks:

We're looking to convert a small portion of our assets (~5%) into precious metals and to maintain that ratio going forward. We're in the lucky/hard earned position of this being a fairly decent sum. We've looked at dealers like Kitco, et al but really have no idea what the most efficient way to go about doing this is (minimize loss due to fees, shipping, etc.). Lots of marketing department driving advise floating around but hoping for neutral 3rd party advise from someone here with experience (or a pointer to such advise).

Thanks!

Congrats on making banks for this move.

[waltworks]

Before I start, know I don't give one hoot about what the MMM perspective is on this question (I don't even know what it is, and don't care to); I am asking this question here only because this is a pretty decent place to find knowledgeable financial/investment folks:

We're looking to convert a small portion of our assets (~5%) into precious metals and to maintain that ratio going forward. We're in the lucky/hard earned position of this being a fairly decent sum. We've looked at dealers like Kitco, et al but really have no idea what the most efficient way to go about doing this is (minimize loss due to fees, shipping, etc.). Lots of marketing department driving advise floating around but hoping for neutral 3rd party advise from someone here with experience (or a pointer to such advise).

Thanks!

Congrats on making banks for this move.

OP made (assuming around a $1600/oz price in June 2018) indeed a nice profit, they're up something like 65% (before shipping/storage/insurance fees which I don't know much about but are presumably somewhat significant).

It's too bad they didn't leave their money in the S&P instead, they'd be up 122% as of last month (and a bit more by now).

-W

[RWD]

Before I start, know I don't give one hoot about what the MMM perspective is on this question (I don't even know what it is, and don't care to); I am asking this question here only because this is a pretty decent place to find knowledgeable financial/investment folks:

We're looking to convert a small portion of our assets (~5%) into precious metals and to maintain that ratio going forward. We're in the lucky/hard earned position of this being a fairly decent sum. We've looked at dealers like Kitco, et al but really have no idea what the most efficient way to go about doing this is (minimize loss due to fees, shipping, etc.). Lots of marketing department driving advise floating around but hoping for neutral 3rd party advise from someone here with experience (or a pointer to such advise).

Thanks!

Congrats on making banks for this move.

OP made (assuming around a $1600/oz price in June 2018) indeed a nice profit, they're up something like 65% (before shipping/storage/insurance fees which I don't know much about but are presumably somewhat significant).

It's too bad they didn't leave their money in the S&P instead, they'd be up 122% as of last month (and a bit more by now).

-W

That's assuming they went ahead with their plan. Besides one follow-up post thanking people for their responses there was never any further discussion from the OP. They never confirmed they bought any precious metals (and considering they haven't been on the forums for 3 years after being temporarily banned I don't think we'll ever know). They also only said "precious metals," not "gold" specifically, suggesting they were planning on some mix. Platinum is only up 13% and Palladium 9% since June 2018. Though Palladium was up over 2x (even 3x at one point), so some nice profits could have been made with a well-timed sell.

[waltworks]

Fair point! I assumed glod, but you never know!

-W

[Financial.Velociraptor]

Silver could be a big play if battery tech keeps advancing and getting deployed more widely.  Lots of anodes needed in the future.  Photovoltaic energy often times uses a lot of silver as well.  I've been watching the price of SLV since about 2008 expecting the gold/silver ratio to finally revert to mean.  Still no joy.

Not precious but I think the long term need for copper is going to be huge.

[vand]

Before I start, know I don't give one hoot about what the MMM perspective is on this question (I don't even know what it is, and don't care to); I am asking this question here only because this is a pretty decent place to find knowledgeable financial/investment folks:

We're looking to convert a small portion of our assets (~5%) into precious metals and to maintain that ratio going forward. We're in the lucky/hard earned position of this being a fairly decent sum. We've looked at dealers like Kitco, et al but really have no idea what the most efficient way to go about doing this is (minimize loss due to fees, shipping, etc.). Lots of marketing department driving advise floating around but hoping for neutral 3rd party advise from someone here with experience (or a pointer to such advise).

Thanks!

Congrats on making banks for this move.

OP made (assuming around a $1600/oz price in June 2018) indeed a nice profit, they're up something like 65% (before shipping/storage/insurance fees which I don't know much about but are presumably somewhat significant).

It's too bad they didn't leave their money in the S&P instead, they'd be up 122% as of last month (and a bit more by now).

-W

TBF not much has beaten the S&P over that timeframe - but that's still a weak argument to only hold the S&P.

The question to ask is: has holding gold worked for the purposes you held it, ie to help balance your portfolio? I won't run the backtest again because they won't be substantially different to what I have already posted  and the most recent runup will only have strengthened its case - it's the best complimentary assset you can add to a stock portfolio - much better than bonds.

[vand]

Before I start, know I don't give one hoot about what the MMM perspective is on this question (I don't even know what it is, and don't care to); I am asking this question here only because this is a pretty decent place to find knowledgeable financial/investment folks:

We're looking to convert a small portion of our assets (~5%) into precious metals and to maintain that ratio going forward. We're in the lucky/hard earned position of this being a fairly decent sum. We've looked at dealers like Kitco, et al but really have no idea what the most efficient way to go about doing this is (minimize loss due to fees, shipping, etc.). Lots of marketing department driving advise floating around but hoping for neutral 3rd party advise from someone here with experience (or a pointer to such advise).

Thanks!

Congrats on making banks for this move.

OP made (assuming around a $1600/oz price in June 2018) indeed a nice profit, they're up something like 65% (before shipping/storage/insurance fees which I don't know much about but are presumably somewhat significant).

It's too bad they didn't leave their money in the S&P instead, they'd be up 122% as of last month (and a bit more by now).

-W

Also, just thought I'd fact-check this.

Gold USD price June 2018:

O 1298 H 1309 L 1246 C 1252

So from Closing price June 2018 it's actually done... 114% as of time of writing.

[waltworks]

I looked it up on that "historical gold prices" chart (first thing that came up on teh goog). Sounds like it was a tie! Good work glod!

-W

[joshrosenthal5000]

I would like to allocate 10% of my total assets to physical silver and possibly gold.  This would be 25% of my liquidity assets.  I had held physical bar before but sold to buy my first house. 

I am not completely sure my true intention of holding physical gold and silver because a combination farmlands, livestocks, and stocks in food producers and grocers would be a better bet for the hard time that physical silvers and golds would be of actual use.  Otherwise, a regular roitine recession may be best countered with just holding indexes and few businesses with more resistance to recessions.

And then the questions of buying and selling silvers and golds.  Accumulation in small denominations is very costly.  Buying from online dealers seem extremely expensive and risky; I see new production coins being pitched as collectibles at rate many times exceed the weighted value.  Then how does one goes about selling without being ripped to shreds by two-legged wolves and hyenas disguised as bandits and jewelers? 


I thought about getting 10 10-oz silver bars to start.  Anything less won’t worth the effort.  The immediate rewards is being about to have 10 bars to take with along with cash if any civil unrests were to occurr.


Any exchanges and wishdom would be appreciated.

[joemandadman189]

Generally distinct from the metal, I am not a fan of the goldmining sector and have warned as such on this thread previously.  They have a history of being very poor allocators of capital

In what way? What do you think they could be doing differently, if anything? What would a mining company do if it was a good allocator of capital?

I don't think the companies are poorly allocating the capital, it is just that mining IS the poor allocation of capital.   
Lots of capital in the form of heavy equipment,  and not that much return on investment.

Since COVID mining companies have been hit hard by inflation of good and services, driving up costs, and reducing profits. When mining companies evaluate an asset or project the metal price used to crunch the numbers is the average of the last 3 years times the proven reserves compared to all costs associated with developing the mine, so the open pit or underground tunnels, trucks and heavy equipment, plant and processing facilities, heap leach pads, tailings facilities, stormwater management, man camps, roads, ponds, etc. Mines really are small cities. So existing mines could be benefiting from the current high metals prices, but i believe they often have contracts to sell their concentrate or dore at set prices for some contract period so the middle man (someone like wheaton precious metals corp) may be making lots of cash at the moment. Lithium projects have stalled lately but gold, silver and copper projects are still going strong

[vand]

Take lines drawn on charts with any degree of skepticism you like, nonetheless the price action over the last couple of months has confirmed the end of the secular bull market in stocks when priced in gold:

[BicycleB]

The swings in this ratio seem to last 10 to 20 years at a time. Are you suggesting that gold will be more profitable to own than the S&P 500 for the next 10 years?

Since this chart just shows the ratio of SPX to gold price, along with the blue trend lines, it doesn't include the effect of dividends, correct?

What is the effect of dividends in comparing these two investments?

[2Birds1Stone]

Tea leaves, you may as well be reading a horoscope.

[vand]

The swings in this ratio seem to last 10 to 20 years at a time. Are you suggesting that gold will be more profitable to own than the S&P 500 for the next 10 years?

Since this chart just shows the ratio of SPX to gold price, along with the blue trend lines, it doesn't include the effect of dividends, correct?

What is the effect of dividends in comparing these two investments?

Yes, secular trends have powerful underlying drivers that can last for a decade or more, hence why such changes in trend are are usually of the 1-2 decade duration and so important to be aware of.

Dividends naturally provide a tailwind to stocks in terms of overall return from that asset class, but they don't change the relative valuation, so stock index-to-gold ratios are still perfectly valid way to determine which asset is in the ascendency.

Tea leaves, you may as well be reading a horoscope.

About as brainless as your last contribution here, I see.

[2Birds1Stone]

The swings in this ratio seem to last 10 to 20 years at a time. Are you suggesting that gold will be more profitable to own than the S&P 500 for the next 10 years?

Since this chart just shows the ratio of SPX to gold price, along with the blue trend lines, it doesn't include the effect of dividends, correct?

What is the effect of dividends in comparing these two investments?

Yes, secular trends have powerful underlying drivers that can last for a decade or more, hence why such changes in trend are are usually of the 1-2 decade duration and so important to be aware of.

Dividends naturally provide a tailwind to stocks in terms of overall return from that asset class, but they don't change the relative valuation, so stock index-to-gold ratios are still perfectly valid way to determine which asset is in the ascendency.

Tea leaves, you may as well be reading a horoscope.

About as brainless as your last contribution here, I see.

I'm glad we're on the same page.

[vand]

Take lines drawn on charts with any degree of skepticism you like, nonetheless the price action over the last couple of months has confirmed the end of the secular bull market in stocks when priced in gold:

Ratio moving down at speed now, down to 1.78.

You have to admit it's not looking good for the stock bull case against gold.




And before anyone shouts "what about dividends" here's the TR version

[vand]

Gold miners finally getting some love, with GDX up 41% YTD and 44% over the last year.

[ChpBstrd]

Gold miners finally getting some love, with GDX up 41% YTD and 44% over the last year.

Up 45% YTD.
Why... did I not bet on chaos? Did I not understand what was coming?

[Radagast]

Wow I had not been paying attention recently and gold is acting like Rocket Lab (in 2024). If we get a ZROZ / RING price cross I may rebalance (but probably not to ZROZ, I don't trust that one enough for a lump sum rebalance, probably to small cap value stocks).

[chasesfish]

If we hit $3,500 I may take one of my Canadian Maple Leafs somewhere to exchange it for some "walkin 'round money"

[vand]

Gold miners finally getting some love, with GDX up 41% YTD and 44% over the last year.

Up 45% YTD.
Why... did I not bet on chaos? Did I not understand what was coming?

Following the dumb money...?

[tooqk4u22]

I remain ever baffled that humans still place such value in a shiny rock with limited productive value - truly evidence of primate evolution.

I really wish my primate would let me think otherwise and here I sit questioning where I went wrong.....you mean we could have just bought GLD 20 years ago and we would have outperformed SP500 with divi reinvested by 50pts? Where did I go wrong.   

Although if you cut off the analysis at November 1, 2024 S&P 500 would have been 621% total return vs GLD's 479% total return - 142 points higher. I wonder what changed after November 1.....hmmmm?

Even still, GLD's return through 11/1 is still far more impressive than I realized.