Author Topic: Precious Metals  (Read 56916 times)

Telecaster

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Re: Precious Metals
« Reply #600 on: May 30, 2020, 06:35:07 PM »
If you can predict inflation in advance, you can certainly make the ideal choice!

Too bad you can't.

-W

Iíll take this as agreement that if inflation runs hot, gold might be the better choice than bonds?  This is the point: since inflation canít be predicted, it would make sense to have a little bit of gold in the portfolio in the name of diversification. That is all.

Hmm, I wouldn't say inflation can't be predicted.  Obviously the exact rate of future inflation is an unknown.  Right now though, there are no indications inflation is likely for the foreseeable future. 

celerystalks

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Re: Precious Metals
« Reply #601 on: June 01, 2020, 03:14:36 PM »
Well. I just bought some more gold. It is nice to trade paper currency for solid metal with the never-ending series of bailouts, helicopter money, stimulus packages, quantitative easing, etc happening. Sure all of these are temporary emergency measures.... But there is nothing more permanent than a temporary government program.  Gold provides a safe hedge against the inevitable devaluation of paper currency.

Currently my allocation to gold is about 0.5% of my portfolio. Over time I hope to bring it between 3-5%.

 
« Last Edit: June 01, 2020, 03:24:04 PM by celerystalks »

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Re: Precious Metals
« Reply #602 on: June 01, 2020, 03:31:58 PM »
@celerystalks, what form of gold did you buy?

celerystalks

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Re: Precious Metals
« Reply #603 on: June 01, 2020, 03:35:12 PM »
@celerystalks, what form of gold did you buy?

A cleaned liberty head double eagle. It contains 0.9675 oz of gold. Ebay currently has a 5% ebay bucks promotion and Apmex had it listed for a special price of $1800. On top of that, my CC card gives me 2% cash back.

Paul990

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Re: Precious Metals
« Reply #604 on: June 10, 2020, 04:33:04 AM »
Gold is not just an asset, it is money, and it should be evaluated as a a competiting form of money.

This is partially true. Money is a divisible and fungible (1) unit of account, (2) medium of exchange, and (3) store of wealth. Since Nixon left the gold standard the dollar has no longer really been a long term store of wealth.  So it is not truly money, but is instead only a currency. It must be spent now, or put in an account temporarily with the intention of spending it soon, or must be loaned or traded as an investment to someone else who needs to spend currency today. Gold also is no longer money since it is not really a medium of exchange or unit of account the way it used to be.  So in order to have true money in a portfolio an investor must recreate the three properties of money by having both currency which can be efficiently exchanged today and gold which can be slightly less efficiently exchanged in the future, but which provides for a better long term preservation of wealth.  This is a premise that one must accept before gold allocation begins makes sense.
You are right. I would say, gold is only potential money. Nonetheless, even if only potentially, it's still money.
That's why we call central banks' gold a part of their monetary reserves.
That's why we call central banks' gold buying and selling a part of their monetary policy.
And by the way, that's why - unlike any other commodity - we trade gold on the Forex.

But in order to be actual money, gold should be used as medium of exchange in our everyday's life.
In its physical form, that's impossible, at least within a modern society.
Through paper or digital certificates, it didn't work.
Maybe blockchain and DLT will help, thanks to the advantages these new technologies offer compared to traditional digital transactions, particularly in terms of transparency, security and traceability.
It's sad to see how these new technologies are despised within goldbugs circles, while they could be gold's best allies in building some kind of new gold standard.
It my view, this "conservative" attitude towards these new technologies is one of the main obstacles on the way to make gold money again

celerystalks

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Re: Precious Metals
« Reply #605 on: June 10, 2020, 06:06:15 AM »
You are right. I would say, gold is only potential money. Nonetheless, even if only potentially, it's still money.
That's why we call central banks' gold a part of their monetary reserves.
That's why we call central banks' gold buying and selling a part of their monetary policy.
And by the way, that's why - unlike any other commodity - we trade gold on the Forex.

But in order to be actual money, gold should be used as medium of exchange in our everyday's life.
In its physical form, that's impossible, at least within a modern society.
Through paper or digital certificates, it didn't work.
Maybe blockchain and DLT will help, thanks to the advantages these new technologies offer compared to traditional digital transactions, particularly in terms of transparency, security and traceability.
It's sad to see how these new technologies are despised within goldbugs circles, while they could be gold's best allies in building some kind of new gold standard.
It my view, this "conservative" attitude towards these new technologies is one of the main obstacles on the way to make gold money again

Cryptos suffer critical flaws that make them unworkable as money:
(1) promises to transfer cryptos in the future cannot be made legally enforceable since the technology does not admit of transfer or seizure subject to court order.. In all cases, the private keys are necessary to perform any transfers.
(2) hard forks cause too much confusion surrounding which subsequent block chain or ledger is the real one.
(3) There is a custodial problem surrounding safe keeping of the Crypto-linked gold. Under a gold-blockchain linked system I presume that all of the gold is held in a central location and the cryptos representing ownership are transferred? In that case there is a high likelihood of the gold disappearing and being unrecoverable. Crypto entities are not centrally regulated, they are distributed by nature. So it would be up to any given exchange to ensure the gold backing.. Exchanges, by and large, do not have a proven track record of ensuring the safe keeping of anything.
(4) As far as I can tell, adding block chain technology provides no better gold ownership experience than a gold ETF. Currently an ounce of gold equivalent can be purchased via etf, and held as long as desired. Then, when cash is needed the ETF can be converted to it and the cash used in commerce.  Since we will never achieve wide spread acceptance of cryptos as actual currency, one would still have to convert the crypto to cash and then use the cash in commerce.  Add in all of the risk surrounding being a legal quagmire, custodial problems, and forking issues, I donít see the cryptos providing benefits.

So, as I see it cryptos provide only drawbacks.

Gold is a great asset to add to a portfolio. It has provided a stable place to store wealth throughout the ages. Buy a few coins and put them in a safe.  Or put a small portfolio percentage in a gold ETF as a financial asset backed by gold. Its as simply as that really.

Donít speculate in cryptos. And if you do, assume that the money is already gone when you buy.

Cryptos will bring only sadness.





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Re: Precious Metals
« Reply #606 on: June 10, 2020, 07:39:58 AM »
Maybe blockchain and DLT will help, thanks to the advantages these new technologies offer compared to traditional digital transactions, particularly in terms of transparency, security and traceability.
It's sad to see how these new technologies are despised within goldbugs circles, while they could be gold's best allies in building some kind of new gold standard.
It my view, this "conservative" attitude towards these new technologies is one of the main obstacles on the way to make gold money again

I agree with you that it is strange so many people who are extremely pro-gold have an irrational level of dislike for crypto. The arguments for either gold or cryptocurrency as a store of wealth was very similar in kind (though obviously not in degree).

I don't get excited about either as a store of wealth, although I still think crypto has a lot of interesting properties as a medium of exchange over the long term.

I have started to run across a few more people who are both pro-gold and pro-cryptocurrency than in the past. One of the hosts of the real vision podcast seems quite convinced that significant inflation is coming and always seems to bring up cryptocurrency and gold in the same sentence when he talks about mitigation strategies. So I think the two camps (gold investors and crypto investors*) may be slowly starting to merge or at least make peace with each other.

*As distinct from people trying to use cryptocurrency as a means of payment/medium of exchange, and who really don't care what the price of a unit of the currency is.

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Re: Precious Metals
« Reply #607 on: June 10, 2020, 08:12:23 AM »
The crypto-gold space is littered with scams, now to think of it, so is regular crypto and so is regular gold.  I know a few people that have been sucked into pyramid schemes revolving around crypto/gold. 

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Re: Precious Metals
« Reply #608 on: June 10, 2020, 10:47:10 AM »
...
Maybe blockchain and DLT will help, thanks to the advantages these new technologies offer compared to traditional digital transactions, particularly in terms of transparency, security and traceability.
It's sad to see how these new technologies are despised within goldbugs circles, while they could be gold's best allies in building some kind of new gold standard.
It my view, this "conservative" attitude towards these new technologies is one of the main obstacles on the way to make gold money again
Where's the flaw in buying a product off Amazon with a credit card?

You trust the listings, which can be reported if misleading.  The purchase goes on a credit card, and with fraudulent activity you can call your credit card company.  The product has delivery tracking, showing where it started and when it arrived.  If there's a problem, there's a couple companies and a legal framework to decide what happens.

Bitcoin (BTC) needs to be better than that system to be adopted.  With BTC, it's hard to find places that accept it.  Once you spend BTC, it's gone - even if you sent it to the wrong address.  So typically, you can't use it but you can lose it.

vand

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Re: Precious Metals
« Reply #609 on: June 10, 2020, 01:15:30 PM »
Gold's performance in the last few years has been especially impressive given the USD's relative strength. However the dollar's medium term uptrend looks like its over. The DXY index is moving lower and looks like the moving averages are all turning down.  This should provide a strong tailwind to the next phase of this PM bull market. The whole commodities complex should also benefit, and, initially, equities too.

A weakening USD is an important and necessary part of Dalio's "next paradigm".

DalioGold10

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Re: Precious Metals
« Reply #610 on: June 10, 2020, 02:02:04 PM »
A weakening USD is an important and necessary part of Dalio's "next paradigm".

Rates are expected to be near zero, and definitely some YTM might test the negative territory like in Europe and Japan. The perfect environment for the dollar to weaken has started.
Nevertheless, US needs a weaker dollar to stimulate the economy/exports and handle deficits.

All is a perfect environment for gold :)

celerystalks

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Re: Precious Metals
« Reply #611 on: June 11, 2020, 06:33:29 AM »
So I think the two camps (gold investors and crypto investors*) may be slowly starting to merge or at least make peace with each other.

Doubt it. Gold and crypto advocates are not organized groups of people, or camps, who might ďmergeĒ to support a common purpose the way political parties might. Gold owners buy it because it is a real asset providing long term real value stability, and which in the short term is uncorrelated with other assets.  I have yet to hear a coherent, convincing thesis on why cryptos are a good thing to buy.

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Re: Precious Metals
« Reply #612 on: June 12, 2020, 10:22:27 AM »
Gold's performance in the last few years has been especially impressive given the USD's relative strength. However the dollar's medium term uptrend looks like its over. The DXY index is moving lower and looks like the moving averages are all turning down.  This should provide a strong tailwind to the next phase of this PM bull market. The whole commodities complex should also benefit, and, initially, equities too.

A weakening USD is an important and necessary part of Dalio's "next paradigm".

I dunno. I took a look at the DXY and it looks to be bouncing around where itís been for about the last year. The exception being the late unpleasantness in March. This week it seems to be up a bit. Iím cheering for a huge increase in the dollar through the end of this year so I can DCA* overseas equities on the cheap.

*(DCAing in accordance with my investment plan. Which is a lot like the Pirates Code.)

Paul990

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Re: Precious Metals
« Reply #613 on: June 14, 2020, 02:28:39 PM »
You are right. I would say, gold is only potential money. Nonetheless, even if only potentially, it's still money.
That's why we call central banks' gold a part of their monetary reserves.
That's why we call central banks' gold buying and selling a part of their monetary policy.
And by the way, that's why - unlike any other commodity - we trade gold on the Forex.

But in order to be actual money, gold should be used as medium of exchange in our everyday's life.
In its physical form, that's impossible, at least within a modern society.
Through paper or digital certificates, it didn't work.
Maybe blockchain and DLT will help, thanks to the advantages these new technologies offer compared to traditional digital transactions, particularly in terms of transparency, security and traceability.
It's sad to see how these new technologies are despised within goldbugs circles, while they could be gold's best allies in building some kind of new gold standard.
It my view, this "conservative" attitude towards these new technologies is one of the main obstacles on the way to make gold money again

Cryptos suffer critical flaws that make them unworkable as money:
(1) promises to transfer cryptos in the future cannot be made legally enforceable since the technology does not admit of transfer or seizure subject to court order.. In all cases, the private keys are necessary to perform any transfers.
(2) hard forks cause too much confusion surrounding which subsequent block chain or ledger is the real one.
(3) There is a custodial problem surrounding safe keeping of the Crypto-linked gold. Under a gold-blockchain linked system I presume that all of the gold is held in a central location and the cryptos representing ownership are transferred? In that case there is a high likelihood of the gold disappearing and being unrecoverable. Crypto entities are not centrally regulated, they are distributed by nature. So it would be up to any given exchange to ensure the gold backing.. Exchanges, by and large, do not have a proven track record of ensuring the safe keeping of anything.
(4) As far as I can tell, adding block chain technology provides no better gold ownership experience than a gold ETF. Currently an ounce of gold equivalent can be purchased via etf, and held as long as desired. Then, when cash is needed the ETF can be converted to it and the cash used in commerce.  Since we will never achieve wide spread acceptance of cryptos as actual currency, one would still have to convert the crypto to cash and then use the cash in commerce.  Add in all of the risk surrounding being a legal quagmire, custodial problems, and forking issues, I donít see the cryptos providing benefits.

So, as I see it cryptos provide only drawbacks.

Gold is a great asset to add to a portfolio. It has provided a stable place to store wealth throughout the ages. Buy a few coins and put them in a safe.  Or put a small portfolio percentage in a gold ETF as a financial asset backed by gold. Its as simply as that really.

Donít speculate in cryptos. And if you do, assume that the money is already gone when you buy.

Cryptos will bring only sadness.

@celerystalks, I see that I highjacked my post by myself, mentioning gold-backed cryptos.
My point was that gold is not only an investment asset but also money, so that comparing goldís with stocksí performance should consider this aspect too. I mentioned gold-backed cryptos only in order to explain why gold could be considered money.
As I never touched a crypto, I don't have much to say on your 4 points. Iím interested in gold-backed cryptos from the angle of how much metal these projects could take out from the gold market and thus have a bearing on the gold price. I follow in particular the one with the biggest market cap, kinesis.
As you mention gold ETFs, I'd like to expand on that.

Under a gold-blockchain linked system I presume that all of the gold is held in a central location and the cryptos representing ownership are transferred?ď
Yes, and this would be an advantage of gold-backed cryptocurrencies vs. ETF shares. Unlike with gold-backed cryptos, the gold represented by ETF shares canít get transferred between people as ETF shares can't get transferred between people. ETFs shares are not designed for that.


As far as I can tell, adding block chain technology provides no better gold ownership experience than a gold ETF.
I used too to think that gold ETFs provide ownership of gold, but actually, unlike some gold-backed cryptos, they don't.
This is George Milling-Stanley, "a key member of the small team that pioneered and launched SPDR Gold (GLD)":
Quote
ĄWhen you buy GLD shares, youíre buying an ownership interest in a trust, and the sole asset of that trust is physical allocated gold bullion bars.
The individual investor does not own the gold that backs the trust, any more than an investor in GM owns a car or an investor in Apple owns an iPhone.ď
https://www.etf.com/sections/features/21952-structure-matters-how-gold-fund-gld-works.html
Quote
ĄThe gold is NOT protected from the custodianís insolvency - In the case of a custodianís or a sub-custodianís insolvency, your investment is not protected or insured in any way. You bear the risk entirely. It is not segregated from the custodianís balance sheet and thus it is exposed to the bankís creditor obligations.
To put it plainly: Contrary to investing in a stock, for instance, where you own an actual share of a company, with GLD you own nothing more than a claim to the gold -- a promise -- which completely and entirely hinges on the financial health of the custodian.ď 
https://www.globalgold.ch/single-post/2018/05/07/Special-Feature-Ten-Reasons-Why-You-Should-Stay-Away-from-Gold-ETFs-Part-II


Or put a small portfolio percentage in a gold ETF as a financial asset backed by gold. Its as simply as that really.
I don't think so. Regularly independently audited gold-backed cryptos give more guarantees that the bars are there than e.g. GLD:
Quote
ĄThe GLD gold holdings are NOT audited - There are no audits on GLD! As reflected in the excerpts from the fundís 10-K form below, even Ďmonitoringí is limited. In fact, the sub-custodians donít have to provide any documentation for proof of the existence of the underlying gold. The obvious question then becomes how an investor is supposed to know there is actually any gold in the vaults at all?ď
https://www.globalgold.ch/single-post/Ten-Reasons-Why-You-Should-Stay-Away-from-Gold-ETFs-Part-I
Quote
ĄCustodians like HSBC can use sub-custodians, such as another bank, to source and store gold. So in addition to the risk you assume with the fundís primary custodian, youíre now exposed to even more risk because it has added another counterparty.
There are no written contractual agreements between sub-custodians and the trustees or the custodians, which means if a sub-custodian drops the ball, the ability of the trustee or the custodian to take legal action is limited.ď
https://www.forbes.com/sites/oliviergarret/2017/03/22/gld-vs-physical-gold-which-is-the-better-investment-now/
Quote
ďThere are expected to be no written contractual arrangements between sub-custodians that hold the Trustís gold bars and the Trustee or the Custodian, because traditionally such arrangements are based on the LBMAís rules and on the customs and practices of the London bullion market.Ē
https://www.bullionstar.com/gold-university/etf-gold-mechanics

If one is looking for guarantees that the metals you invested in are there, one should buy gold-backed cryptos which offer audits rather than GLD
https://kinesisgoldstablecoins.com/kinesis-publishes-its-first-independent-metals-audit/


That said, this whole comparison between gold ETFs and gold-backed cryptos is somehow moot as these instruments have different functions: gold ETFs are there to invest in gold (gold as asset) while gold-backed cryptos are there in order to get deployed as currency (gold as money).


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Re: Precious Metals
« Reply #614 on: June 22, 2020, 04:45:22 PM »
Question for the folks here: what are your thoughts on miners as a substitute for gold or as a supplement?  I canít say Iím all that wild about holding the metal given that it just sits there. Usually at the bottom of a lake given the epidemic of boating accidents.

At least with miners I might get an occasional dividend.

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Re: Precious Metals
« Reply #615 on: June 22, 2020, 04:52:46 PM »
Question for the folks here: what are your thoughts on miners as a substitute for gold or as a supplement?  I canít say Iím all that wild about holding the metal given that it just sits there. Usually at the bottom of a lake given the epidemic of boating accidents.

At least with miners I might get an occasional dividend.

Investing in miners is a lot harder than the underlying commodities.  They are capital intensive businesses with highly leveraged exposure to commodity pricing.  If you know what you are doing, you can make a TON of money.  A good geologist can determine which exploration companies will eventually be producers.  Share price tends to take a wild ride up sometimes 10x as they go from raw land to drilled prospect.  Share price usually falls 90% during the time the infrastructure is being built out and then may or may not grow by large multiples once production starts.  Or the metals are not economically recoverable and the miner is suddenly worth approximately zero. 

If you just want one click leveraged exposure to miners, GDX (beta 0.92) for majors and GDXJ (beta 1.32) for juniors.  I keep 1 numismatic gold coin, 20 numismatic silver coins, and 50 dollars face of "junk".   None of them have good investments.

celerystalks

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Re: Precious Metals
« Reply #616 on: June 22, 2020, 08:59:09 PM »
Question for the folks here: what are your thoughts on miners as a substitute for gold or as a supplement?  I canít say Iím all that wild about holding the metal given that it just sits there. Usually at the bottom of a lake given the epidemic of boating accidents.

At least with miners I might get an occasional dividend.

Its not a bug, its a feature. The benefit to gold is it just sits there and doesnít corrode, burn, or loose much value to inflation.  Mere possession of it isnít taxed the way real estate is. And, if possessed physically, it doesnít show up as an asset on a brokerage account or pay any income. It doesnít require a plethora of computers to process and validate transactions of it.  It doesnít require a government say-so for it to have value.  For all intents and purposes no one needs to know that an owner has it. It can be put in a pocket and moved anywhere in the world and converted to local currency, or transacted directly, without much trouble. Or it can be laid some place safe and simply not be spoken of. Think about it..

Mining stocks are, well, stocks. They are ledger entry, bankruptcy prone, (sometime) income paying, income reporting documents generating little suckers.

Look stocks are great. 98% of my portfolio is in stocks. The other few percentage..




vand

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Re: Precious Metals
« Reply #617 on: June 23, 2020, 01:17:17 AM »
Yes. Celerystalk gets it. Gold does not need cashflow. Interest and cashflow are only a necessary feature of paper currency and assets denoted in them because of the elastic nature of paper money and their resultant loss of purchasing power over time. Who would want to hold something where the supply can be increased at will without the promise of getting some of those additional units in the future?!

Gold otoh is a good money. Good Money benefits from being a store of wealth without the need for additional units. The interest is built-in in its continual increase in purchasing power. Like a rare Van Gogh painting, it is its scarcity, uniqueness and inability to just be duplicated and diluted by future promises of the additional units of same thing that gives gold its value.

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Re: Precious Metals
« Reply #618 on: June 23, 2020, 02:12:43 AM »
Gold otoh is a good money. Good Money benefits from being a store of wealth without the need for additional units. The interest is built-in in its continual increase in purchasing power. Like a rare Van Gogh painting, it is its scarcity, uniqueness and inability to just be duplicated and diluted by future promises of the additional units of same thing that gives gold its value.

16 Psyche wants to know your location.

vand

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Re: Precious Metals
« Reply #619 on: June 23, 2020, 03:27:37 AM »
Regarding gold mining stocks: I do not consider them a replacement for the metal. Radagast and I exchanged some posts about this a few pages back. Over long time time periods they have not substantially outperformed the metal itself, but they are also far more volatile; hence more risk for no additional return.

However, I believe there is merit in holding some if your investment thesis is that that gold is in a bull market and prices are heading higher; stocks will provide leverage to that upside. But if your invest thesis is that you have no idea which way gold is heading and you just want to have a fixed allocation to this sector to create a more efficient portfolio, then miners don't improve your sharpe ratio.

I hold both, but I consider the miners the speculative portion of my exposure to the PM sector and would not hold them without first holding having a core holding in the metal itself.
« Last Edit: June 23, 2020, 03:29:19 AM by vand »

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Re: Precious Metals
« Reply #620 on: June 23, 2020, 12:36:40 PM »
Question for the folks here: what are your thoughts on miners as a substitute for gold or as a supplement?  I canít say Iím all that wild about holding the metal given that it just sits there. Usually at the bottom of a lake given the epidemic of boating accidents.

At least with miners I might get an occasional dividend.

Its not a bug, its a feature. The benefit to gold is it just sits there and doesnít corrode, burn, or loose much value to inflation.  Mere possession of it isnít taxed the way real estate is. And, if possessed physically, it doesnít show up as an asset on a brokerage account or pay any income. It doesnít require a plethora of computers to process and validate transactions of it.  It doesnít require a government say-so for it to have value.  For all intents and purposes no one needs to know that an owner has it. It can be put in a pocket and moved anywhere in the world and converted to local currency, or transacted directly, without much trouble. Or it can be laid some place safe and simply not be spoken of. Think about it..

Mining stocks are, well, stocks. They are ledger entry, bankruptcy prone, (sometime) income paying, income reporting documents generating little suckers.

Look stocks are great. 98% of my portfolio is in stocks. The other few percentage..

I had assumed from your screen name that the rest was in (ahem) celery stocks.

The_Big_H

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Re: Precious Metals
« Reply #621 on: June 27, 2020, 12:08:57 AM »
The crypto-gold space is littered with scams, now to think of it, so is regular crypto and so is regular gold.  I know a few people that have been sucked into pyramid schemes revolving around crypto/gold.

Gee... wonder why that is.
I think I'm going to start a new cypto and call it "Dunning Krugerrands"

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Re: Precious Metals
« Reply #622 on: June 27, 2020, 02:46:35 PM »
The crypto-gold space is littered with scams, now to think of it, so is regular crypto and so is regular gold.  I know a few people that have been sucked into pyramid schemes revolving around crypto/gold.

Gee... wonder why that is.
I think I'm going to start a new cypto and call it "Dunning Krugerrands"

Well, Iíd say you wouldnít make money with that, but Dogecoin took off and actually has a following, so maybe youíre on to something. 

MustacheAndaHalf

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Re: Precious Metals
« Reply #623 on: June 29, 2020, 10:28:48 PM »
@celerystalks, what form of gold did you buy?

A cleaned liberty head double eagle. It contains 0.9675 oz of gold. Ebay currently has a 5% ebay bucks promotion and Apmex had it listed for a special price of $1800. On top of that, my CC card gives me 2% cash back.
https://www.paypal.com/us/webapps/mpp/ua/upcoming-policies-full
"We are adding payments made in respect of gold (in physical form or in exchange-traded form) to the list of ineligible items and transactions under our Seller Protection Policy."

I interpret this to mean gold sellers might depart eBay or raise prices owing to the higher risk.

celerystalks

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Re: Precious Metals
« Reply #624 on: June 30, 2020, 04:45:02 AM »
@celerystalks, what form of gold did you buy?

A cleaned liberty head double eagle. It contains 0.9675 oz of gold. Ebay currently has a 5% ebay bucks promotion and Apmex had it listed for a special price of $1800. On top of that, my CC card gives me 2% cash back.
https://www.paypal.com/us/webapps/mpp/ua/upcoming-policies-full
"We are adding payments made in respect of gold (in physical form or in exchange-traded form) to the list of ineligible items and transactions under our Seller Protection Policy."

I interpret this to mean gold sellers might depart eBay or raise prices owing to the higher risk.

This is possible. We will see.

vand

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Re: Precious Metals
« Reply #625 on: July 21, 2020, 09:16:59 AM »
It's ALIVE!!


The precious metal bull market has seen some very good gains in the last few weeks... my feeling is that it is now nudging from its early-adoption phase to its main institutional investing phase.

While the dumb money continues to chase the tech stocks which are now exhibiting all the classic signs of a runaway bubble, gold stocks have notched very strong gains out of its bear market bottom, and in fact have outperformed even the tech stocks over 1, 2 & 3 years.. and yet unlike techs they are still multiples away from their all time highs, so nowhere near the dangerous bubble phase seen in the techs.




Imanuels

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Re: Precious Metals
« Reply #626 on: July 21, 2020, 10:59:09 AM »
I'm having gold ETC (iShares Physical Gold ETC) as a part of my portfolio for a couple of years now (I'm based in Europe and my portfolio is in EUR currency). I apologize if it is a foolish question, but today I realized that I'm not sure I fully understand the costs, maybe someone can help with advice. The expense ratio is 0.19% p.a., but the Gold spot price is the price of gold in US Dollar. Does that mean there are additional costs in converting the currency from USD to EUR? Additionally, in this case the EUR/USD exchange rate should influence the returns, right?
Thank you in advance.

DalioGold10

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Re: Precious Metals
« Reply #627 on: July 21, 2020, 11:18:40 AM »
I'm having gold ETC (iShares Physical Gold ETC) as a part of my portfolio for a couple of years now (I'm based in Europe and my portfolio is in EUR currency). I apologize if it is a foolish question, but today I realized that I'm not sure I fully understand the costs, maybe someone can help with advice. The expense ratio is 0.19% p.a., but the Gold spot price is the price of gold in US Dollar. Does that mean there are additional costs in converting the currency from USD to EUR? Additionally, in this case the EUR/USD exchange rate should influence the returns, right?
Thank you in advance.

Hi

The 0.19% includes all costs.

As you, I am also based in Europe hence I bought the same ETF in EUR.
Normally, when your base currency, in our case EUR, is different from the underlying asset's currency, which is USD, think about as having returns generated by two assets: (1) the gold and (2) the exchange rate between EUR and USD.
As of today, gold is going up, thus is contributing positively to the return, however USD is depreciating against EUR hence we have a negative impact on our ishares gold ETF in EUR.

Hope it helps.

Imanuels

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Re: Precious Metals
« Reply #628 on: July 21, 2020, 01:37:26 PM »
I see, thanks a lot for the explanation DalioGold10. The point (2) is why I got concerned about this. Depreciating USD is a potential risk. Of course, I can't predict the currency markets but shift to a currency-hedged version (for example, WisdomTree Physical Gold - EUR Daily Hedged, with 0.25% it is slightly more expensive) is on my research list at the moment. Any thoughts about that?

I'm having gold ETC (iShares Physical Gold ETC) as a part of my portfolio for a couple of years now (I'm based in Europe and my portfolio is in EUR currency). I apologize if it is a foolish question, but today I realized that I'm not sure I fully understand the costs, maybe someone can help with advice. The expense ratio is 0.19% p.a., but the Gold spot price is the price of gold in US Dollar. Does that mean there are additional costs in converting the currency from USD to EUR? Additionally, in this case the EUR/USD exchange rate should influence the returns, right?
Thank you in advance.

Hi

The 0.19% includes all costs.

As you, I am also based in Europe hence I bought the same ETF in EUR.
Normally, when your base currency, in our case EUR, is different from the underlying asset's currency, which is USD, think about as having returns generated by two assets: (1) the gold and (2) the exchange rate between EUR and USD.
As of today, gold is going up, thus is contributing positively to the return, however USD is depreciating against EUR hence we have a negative impact on our ishares gold ETF in EUR.

Hope it helps.

DalioGold10

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Re: Precious Metals
« Reply #629 on: July 21, 2020, 05:03:29 PM »
I see, thanks a lot for the explanation DalioGold10. The point (2) is why I got concerned about this. Depreciating USD is a potential risk. Of course, I can't predict the currency markets but shift to a currency-hedged version (for example, WisdomTree Physical Gold - EUR Daily Hedged, with 0.25% it is slightly more expensive) is on my research list at the moment. Any thoughts about that?


I understand your concern. I feel the same, but if you hold a reasonably diversified portfolio  across asset classes, geographies and currencies, than you should be ready for any scenario, including USD devaluation. Do no worry as all world currencies undergo nowadays through an accelerated devaluation due to QE and massive government stimulus.

I usually do not hedge against currencies. I believe there are studies conducted that confirm the cost of hedging against currency depreciation is "money not well spent".

USD is a reserve currency, hence still stronger than other currencies, including EUR. At the moment, US needs a weaker dollar to stimulate the economy. In case of another crash, you would prefer to be in USD than EUR/other currencies.

Please note that gold is doing what is supposed to do, i.e. hedge against fiat currencies devaluation. 

vand

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Re: Precious Metals
« Reply #630 on: July 22, 2020, 12:53:00 AM »
The PM complex has had a fuse lit under it. Look at silver in the last 48hrs.

Worrying about a 0.25% ongoing fee in an asset that is likely to go up by multiples in the next few years is penny wise and pound foolish. You cannot afford to NOT have significant pm exposure as we head into the new paradigm.

See my sig.

celerystalks

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Re: Precious Metals
« Reply #631 on: July 22, 2020, 10:49:18 AM »
This just goes to show the benefit to having a small allocation to PMs.

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Re: Precious Metals
« Reply #632 on: July 22, 2020, 01:26:13 PM »
I incorporated Gold into my asset allocation by purchasing GLDM earlier this year.  Came to this conclusion after months of look into historic performance and recessionary periods and see how Gold has typically provided a decent hedge during these times.  The asset allocation I am trying out now is below and so far I have been very happy with it.

45% - Nasdaq-100 - QQQ
15% - Consumer Staples - VDC
10% - Mid-Cap - VO
10% - Small-Cap - VB
10% - Utilities - VPU
10% - Gold ETF - GLDM

I may lighten the utilities allocation a little bit. Around 60% of our portfolio is using this allocation while the other 40% is still in total market indexes.


Imanuels

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Re: Precious Metals
« Reply #633 on: July 22, 2020, 02:04:28 PM »
Long-term damage to the reserve status of the dollar is exactly my concern. You are of course right, also ECB runs the same guns so why should I expect EUR to do better. Thanks, I will just stick to the course with the original gold ETC and forget about currency hedging.

@vand Would you mind explaining a bit what do you mean by 'the new paradigm'? 


I understand your concern. I feel the same, but if you hold a reasonably diversified portfolio  across asset classes, geographies and currencies, than you should be ready for any scenario, including USD devaluation. Do no worry as all world currencies undergo nowadays through an accelerated devaluation due to QE and massive government stimulus.

I usually do not hedge against currencies. I believe there are studies conducted that confirm the cost of hedging against currency depreciation is "money not well spent".

USD is a reserve currency, hence still stronger than other currencies, including EUR. At the moment, US needs a weaker dollar to stimulate the economy. In case of another crash, you would prefer to be in USD than EUR/other currencies.

Please note that gold is doing what is supposed to do, i.e. hedge against fiat currencies devaluation.

vand

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Re: Precious Metals
« Reply #634 on: July 22, 2020, 03:01:45 PM »
Long-term damage to the reserve status of the dollar is exactly my concern. You are of course right, also ECB runs the same guns so why should I expect EUR to do better. Thanks, I will just stick to the course with the original gold ETC and forget about currency hedging.

@vand Would you mind explaining a bit what do you mean by 'the new paradigm'? 


I understand your concern. I feel the same, but if you hold a reasonably diversified portfolio  across asset classes, geographies and currencies, than you should be ready for any scenario, including USD devaluation. Do no worry as all world currencies undergo nowadays through an accelerated devaluation due to QE and massive government stimulus.

I usually do not hedge against currencies. I believe there are studies conducted that confirm the cost of hedging against currency depreciation is "money not well spent".

USD is a reserve currency, hence still stronger than other currencies, including EUR. At the moment, US needs a weaker dollar to stimulate the economy. In case of another crash, you would prefer to be in USD than EUR/other currencies.

Please note that gold is doing what is supposed to do, i.e. hedge against fiat currencies devaluation.

By new paradigm, I simply mean what the main secular forces will be that will be shaping the world over the longer term.  Dalio (the real one) has written in great length about it. Of course none of us has a crystal ball, but some of the key features are likely to be:

Acceleration of the weakening of USD hegemony
The return of inflation, curtailing the ability of central banks to increase the money supply without any negative consequences
The end of the long term bond bull market
baby boomer population tailwinds turning into headwinds
Increasing military posturing to protect economic interests

I don't say that we can't have economic growth in this new paradigm - we can - it will just look different to what we've become accustomed to.

The danger from an investing perspective is that portfolios that were popularized because they lent themselves to the economic environment of a different era will perform poorly in the new era. This makes intuitive sense to me - if there was one asset class that did well in everything scenario then there would be little reason to ever own anything else! I think, similar to the 1970s, in this new paradigm a well rounded portfolio will need more than just stocks and bonds.

vand

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Re: Precious Metals
« Reply #635 on: July 25, 2020, 09:31:06 AM »
Gold has closed at a record weekly high as the Dollar clings on by the fingernails to its near decade-long bull market.



If the dollar does head lower over the next few years then I struggle to see any scenario where gold doesn't go much higher.


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Re: Precious Metals
« Reply #636 on: July 27, 2020, 11:02:49 AM »
^Iíll assist.

Within 5 years China floats the Yuan and opens up its internal markets with sorta-acceptable levels of regulation. A secondary market opens for oil priced in Yuan and Chinaís Belt and Road Initiative creates more markets for trade throughout Asia, the midEast, Europe, and Africa. As US productivity declines and the US debt burden mushrooms, the Yuan begins a ten year process of taking over as the worldís reserve currency. All this could happen in an environment of USD deflation as the US enters a depression or Japanese style lost decade(s).

The price of gold in dollars plummets as traders can more easily hedge dollar risk using contracts between the USD and Yuan, and as gold demand declines due to reduced consumer purchases in the US and India. This scenario is consistent with Ray Dalioís thinking on supercycles, but with the added plot twist of a disinflationary period coinciding with the rise of a new world order, rather than an inflationary one. I think this could happen as economic activity and banking infrastructure shifts to Asia while the velocity of money slows in the US.

Just saying- there are always scenarios.

vand

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Re: Precious Metals
« Reply #637 on: July 27, 2020, 11:50:43 AM »
^Iíll assist.

Within 5 years China floats the Yuan and opens up its internal markets with sorta-acceptable levels of regulation. A secondary market opens for oil priced in Yuan and Chinaís Belt and Road Initiative creates more markets for trade throughout Asia, the midEast, Europe, and Africa.

This doesn't happen without the first Major War between the world's two preeminent superpowers. So most likely gold wins in this scenario too.

ChpBstrd

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Re: Precious Metals
« Reply #638 on: July 27, 2020, 12:36:33 PM »
^Iíll assist.

Within 5 years China floats the Yuan and opens up its internal markets with sorta-acceptable levels of regulation. A secondary market opens for oil priced in Yuan and Chinaís Belt and Road Initiative creates more markets for trade throughout Asia, the midEast, Europe, and Africa.

This doesn't happen without the first Major War between the world's two preeminent superpowers. So most likely gold wins in this scenario too.

The USD peacefully overtook the British pound in the mid-20th century. Britain had been hamstrung by WW2 debt, and the bulk of industrial production shifted to the US. One might say that something similar occurred with the USís 20-year Iraq and Afghanistan wars, which contributed trillions to the national debt and diverted resources from Dalioís other competitiveness factors.

Iím sure a lot of Brits of that vintage couldnít believe the trend that was unfolding in front of them over the course of years, but it quietly happened anyway.

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Re: Precious Metals
« Reply #639 on: July 27, 2020, 09:13:12 PM »
The PM complex has had a fuse lit under it. Look at silver in the last 48hrs.


I bought some silver miners back in April just as a bit of a hedge. 
Wish I had bought more, they are two+, approaching three bagger status. 

Silver ATH was $48 in 2011.  It hit $26 today.  It could have a lot of room to run.  Or not.

vand

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Re: Precious Metals
« Reply #640 on: July 28, 2020, 01:05:06 AM »
The PM complex has had a fuse lit under it. Look at silver in the last 48hrs.


I bought some silver miners back in April just as a bit of a hedge. 
Wish I had bought more, they are two+, approaching three bagger status. 

Silver ATH was $48 in 2011.  It hit $26 today.  It could have a lot of room to run.  Or not.

Yep, silver has been the metal on the move lately. I actually hold more silver than gold, so happy with the current action. Silver is like a non-expiring call option on gold; in flat and falling markets it disappoints, but when the PM complex starts going up then silver starts to catch up and eventually explode higher. I think silver will probably challenge its ATH roughly if and when gold manages to challenge its 2011 high in inflation-adjusted terms, which today would be around $2400.

Right now though Platinum is the best buy in the sector, and by some considerable way. I'm personally only accumulating Pt and GDX miners at the moment.

celerystalks

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Re: Precious Metals
« Reply #641 on: July 28, 2020, 05:19:00 AM »
The PM complex has had a fuse lit under it. Look at silver in the last 48hrs.


I bought some silver miners back in April just as a bit of a hedge. 
Wish I had bought more, they are two+, approaching three bagger status. 

Silver ATH was $48 in 2011.  It hit $26 today.  It could have a lot of room to run.  Or not.

Yep, silver has been the metal on the move lately. I actually hold more silver than gold, so happy with the current action. Silver is like a non-expiring call option on gold; in flat and falling markets it disappoints, but when the PM complex starts going up then silver starts to catch up and eventually explode higher. I think silver will probably challenge its ATH roughly if and when gold manages to challenge its 2011 high in inflation-adjusted terms, which today would be around $2400.

Right now though Platinum is the best buy in the sector, and by some considerable way. I'm personally only accumulating Pt and GDX miners at the moment.

How do you know Pt is the best in the sector? Pt is unlike gold. Gold is a metal of luxury and has only trivial industrial usage vis a vis the available supply.  Pt OTOH is primarily an industrial metal, as is silver.  But, unlike silver, PT has many reasonable industrial substitutes among the other platinum group metals.

vand

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Re: Precious Metals
« Reply #642 on: July 28, 2020, 08:04:11 AM »
The PM complex has had a fuse lit under it. Look at silver in the last 48hrs.


I bought some silver miners back in April just as a bit of a hedge. 
Wish I had bought more, they are two+, approaching three bagger status. 

Silver ATH was $48 in 2011.  It hit $26 today.  It could have a lot of room to run.  Or not.

Yep, silver has been the metal on the move lately. I actually hold more silver than gold, so happy with the current action. Silver is like a non-expiring call option on gold; in flat and falling markets it disappoints, but when the PM complex starts going up then silver starts to catch up and eventually explode higher. I think silver will probably challenge its ATH roughly if and when gold manages to challenge its 2011 high in inflation-adjusted terms, which today would be around $2400.

Right now though Platinum is the best buy in the sector, and by some considerable way. I'm personally only accumulating Pt and GDX miners at the moment.

How do you know Pt is the best in the sector? Pt is unlike gold. Gold is a metal of luxury and has only trivial industrial usage vis a vis the available supply.  Pt OTOH is primarily an industrial metal, as is silver.  But, unlike silver, PT has many reasonable industrial substitutes among the other platinum group metals.

It's just analysis from a quant perspective, not from a fundamental perspective.

My guess is that people will eventually want to buy it for its properties as a precious metal, not an industrial one. Or another way of looking at it is that there is huge potential demand there if and when people decide they do want to own it as a precious metal. That is what usually happens with all assets classes as they go in and out of favour - people find a reason not to own it when it is going down, and then find a reason to own it when it is going up. The asset itself doesn't really change.
« Last Edit: July 28, 2020, 08:09:04 AM by vand »

ChpBstrd

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Re: Precious Metals
« Reply #643 on: July 28, 2020, 09:58:18 AM »
The PM complex has had a fuse lit under it. Look at silver in the last 48hrs.


I bought some silver miners back in April just as a bit of a hedge. 
Wish I had bought more, they are two+, approaching three bagger status. 

Silver ATH was $48 in 2011.  It hit $26 today.  It could have a lot of room to run.  Or not.

Yep, silver has been the metal on the move lately. I actually hold more silver than gold, so happy with the current action. Silver is like a non-expiring call option on gold; in flat and falling markets it disappoints, but when the PM complex starts going up then silver starts to catch up and eventually explode higher. I think silver will probably challenge its ATH roughly if and when gold manages to challenge its 2011 high in inflation-adjusted terms, which today would be around $2400.

Right now though Platinum is the best buy in the sector, and by some considerable way. I'm personally only accumulating Pt and GDX miners at the moment.

How do you know Pt is the best in the sector? Pt is unlike gold. Gold is a metal of luxury and has only trivial industrial usage vis a vis the available supply.  Pt OTOH is primarily an industrial metal, as is silver.  But, unlike silver, PT has many reasonable industrial substitutes among the other platinum group metals.

It's just analysis from a quant perspective, not from a fundamental perspective.

My guess is that people will eventually want to buy it for its properties as a precious metal, not an industrial one. Or another way of looking at it is that there is huge potential demand there if and when people decide they do want to own it as a precious metal. That is what usually happens with all assets classes as they go in and out of favour - people find a reason not to own it when it is going down, and then find a reason to own it when it is going up. The asset itself doesn't really change.

The phase-out of internal-combustion cars is a theme here. Fewer catalytic converters. More lithium ion batteries made with lithium, nickel, and cobalt.

Of course, there is an obvious problem buying metals with industrial demand to hedge against a decline in industrial production. There is a similar problem with buying gold to hedge against situations that would impoverish lots of jewelry consumers and decrease demand for electronics. 

TomTX

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Re: Precious Metals
« Reply #644 on: July 28, 2020, 11:14:50 AM »

The phase-out of internal-combustion cars is a theme here. Fewer catalytic converters. More lithium ion batteries made with lithium, nickel, and cobalt.

Of course, there is an obvious problem buying metals with industrial demand to hedge against a decline in industrial production. There is a similar problem with buying gold to hedge against situations that would impoverish lots of jewelry consumers and decrease demand for electronics.

Yep, the conversion to BEVs will see a large drop in demand for platinum.

On the BEV metals side, be aware that all major battery manufacturers are working hard to reduce and/or eliminate cobalt.  Tesla short-range Model 3 and Y in China will be moving to a cobalt-free battery from CATL.  Energy and power density is lower, but good enough.

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Re: Precious Metals
« Reply #645 on: July 28, 2020, 12:28:25 PM »
This doesn't happen without the first Major War between the world's two preeminent superpowers. So most likely gold wins in this scenario too.

The USD peacefully overtook the British pound in the mid-20th century. Britain had been hamstrung by WW2 debt, and the bulk of industrial production shifted to the US. One might say that something similar occurred with the USís 20-year Iraq and Afghanistan wars, which contributed trillions to the national debt and diverted resources from Dalioís other competitiveness factors.

Iím sure a lot of Brits of that vintage couldnít believe the trend that was unfolding in front of them over the course of years, but it quietly happened anyway.
In addition to the war debt burden, the British had been severely bombarded during WWII eroding their industrial base. Of course much of US industry has been outsourced overseas to China and others over the past several decades, so there may be some similarities even though the US has not suffered significant war on the mainland for quite a while.

I do think that being able to freely exchange dollars for gold at a fixed exchange rate (universally before the 1930s, foreign holders of dollars until the 1960s) had a huge impact on the US dollar becoming the world reserve currency. I don't see China duplicating that aspect in the near future.

vand

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Re: Precious Metals
« Reply #646 on: July 28, 2020, 01:54:35 PM »
The PM complex has had a fuse lit under it. Look at silver in the last 48hrs.


I bought some silver miners back in April just as a bit of a hedge. 
Wish I had bought more, they are two+, approaching three bagger status. 

Silver ATH was $48 in 2011.  It hit $26 today.  It could have a lot of room to run.  Or not.

Yep, silver has been the metal on the move lately. I actually hold more silver than gold, so happy with the current action. Silver is like a non-expiring call option on gold; in flat and falling markets it disappoints, but when the PM complex starts going up then silver starts to catch up and eventually explode higher. I think silver will probably challenge its ATH roughly if and when gold manages to challenge its 2011 high in inflation-adjusted terms, which today would be around $2400.

Right now though Platinum is the best buy in the sector, and by some considerable way. I'm personally only accumulating Pt and GDX miners at the moment.

How do you know Pt is the best in the sector? Pt is unlike gold. Gold is a metal of luxury and has only trivial industrial usage vis a vis the available supply.  Pt OTOH is primarily an industrial metal, as is silver.  But, unlike silver, PT has many reasonable industrial substitutes among the other platinum group metals.

It's just analysis from a quant perspective, not from a fundamental perspective.

My guess is that people will eventually want to buy it for its properties as a precious metal, not an industrial one. Or another way of looking at it is that there is huge potential demand there if and when people decide they do want to own it as a precious metal. That is what usually happens with all assets classes as they go in and out of favour - people find a reason not to own it when it is going down, and then find a reason to own it when it is going up. The asset itself doesn't really change.

The phase-out of internal-combustion cars is a theme here. Fewer catalytic converters. More lithium ion batteries made with lithium, nickel, and cobalt.

Of course, there is an obvious problem buying metals with industrial demand to hedge against a decline in industrial production. There is a similar problem with buying gold to hedge against situations that would impoverish lots of jewelry consumers and decrease demand for electronics.

If it's already known about then it's already largely in the price. Platinum preceeded the catalytic convertor and found a natural market price, and it'll continue to do so after their discontinuation.  I don't fear the death of the catalytic convertor at all as a platinum investor; a look at the history of Platinum:Palladium ratio and the swing it has seen toward Palladium over the last decade tells that the market has largely fully priced in the move away from diesels engines and then some.

I hear the argument all the time that silver is just an industrial metal, but then when it suddenly starts going up and outperforming everyone changes their tune pretty quickly.  The same will happen with Platinum.. people can be fickle like that.


effigy98

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Re: Precious Metals
« Reply #647 on: August 01, 2020, 12:07:35 AM »
So I thought about 99% of everyone on this forum hated gold and silver. So strange to see the sudden change of opinions. How many years did people act like you are a moron for even mentioning PMs and doing anything but 100% stocks.

UnleashHell

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Re: Precious Metals
« Reply #648 on: August 01, 2020, 02:51:36 AM »
tech stocks are doing well so those in tech stocks talk about it
PM are doing well so people with PM talk about it.

its just a form of survivorship posting.


I'm long term index broad market with a smattering of individual holdings.
I'm ok for the long run and don't understand the intricacies of metal trading and pricing so i don't do it. Same with individual stocks. I have a few that I understand and am comfortable with. I don't have the time to properly understand other companies so I don't invest in them.

Fair play to those that do. As long as people understand the risks of their positions and allocations then they'll be fine.


BicycleB

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Re: Precious Metals
« Reply #649 on: August 01, 2020, 12:45:44 PM »
So I thought about 99% of everyone on this forum hated gold and silver. So strange to see the sudden change of opinions. How many years did people act like you are a moron for even mentioning PMs and doing anything but 100% stocks.

MMM is not a metals fan afaik, so maybe it's unsurprising that people on his website's forum trend similarly?

Certainly there's always someone who's talking 100% stock. But usually there's also someone urging some bonds in the mix. No doubt there are some shifts as people experience different market phases, but then too there are people with less circumstantial allocation approaches.

For example, personally my favorite investing thread to date was "Idiots vs Gurus", which included gold in the very successful idiot portfolios as well as some of the guru ones. Because it focused on the worst 30 year return for each portfolio, it was pretty much not based on which investment is hot at the moment.

https://forum.mrmoneymustache.com/investor-alley/portfolio-design-idiots-v-gurus/

ETA: Started re-reading that thread. @effigy98, I guess you already know - you posted there! Well, I'll leave this up for other readers.



« Last Edit: August 01, 2020, 01:25:43 PM by BicycleB »