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SimJimons


Total Posts: 198
Joined: Aug 2007
 
Posted: 2014-02-28 13:19

For various reasons I'm starting to get extremely bullish on gold (and silver and miners). Most people I listen to, or read, are also bullish. However, I think this is mainly due to biases on my part. Hence, it would be refreshing to hear your views on the matter, and perhaps especially views of people who are bearish on gold.

/Sim


Sounds great...keep me out!

gill


Total Posts: 206
Joined: Nov 2004
 
Posted: 2014-02-28 20:42
i) Raising interest rate
ii) End of QE
iii) The economy is doing okayish and liquidity will go to the other sectors of the economy
iv) Trend is your friend

To support the bullish case:
i) as i noted in the other thread gold mining companies are break even at $1,200. Therefore, the price below that level may affect supply side, unless companies hedged their production for the next 10 years when the price was at $1,800.
ii) hedge funds increased allocation to gold

Disclaimer: I am not a bear. But i would rather be short then long.



Cheng


Total Posts: 2867
Joined: Feb 2005
 
Posted: 2014-03-03 08:58
Gold tends to perform if real interest rates are negative. This can be used as a bear and bull argument. Right now the US short end is negative in real terms.

"Flammandus et Contemptus / Seyn Todt in Schwartz "

fantisst


Total Posts: 13
Joined: Jul 2011
 
Posted: 2015-11-10 18:32
Anything changed? Is it the right time to bet a reversal move? due to prospect theory?

Rashomon


Total Posts: 214
Joined: Mar 2011
 
Posted: 2015-11-11 03:51
Gold exploded in anticipation of unknown years of QE which are now ending, without having begotten hyperinflation.

"My hands are small, I know, but they're not yours, they are my own. And they're, not yours, they are my own." ~ Jewel

goldorak


Total Posts: 1090
Joined: Nov 2004
 
Posted: 2015-11-11 15:16
You will excuse my impertinence, but based on the same reasoning how come gold did not explode in anticipation of the anticipation of.... ? Wink

If you are not living on the edge you are taking up too much space.

TSWP


Total Posts: 434
Joined: May 2012
 
Posted: 2015-11-12 18:05
I always wonder why people likes to waste their time trying to make fundamental predictions. Flip a coin, it has the same predictive power.

The only thing that counts: Can you make money?

rickyvic


Total Posts: 205
Joined: Jul 2013
 
Posted: 2015-11-13 00:56
I am personally not bearish nor bullish, but I would fear a scenario of very low risk aversion levels. Also a further drop in commodity prices given by a lower global demand (see China and Asia in general) can cause gold to follow the other commodity prices or be hit by a lot of volatility, if western equity markets do not crash.

Carry vs dollar is about zero, better than negative.

Of course all the other factors mentioned earlier by others are significant.


"amicus Plato sed magis amica Veritas"

gergely


Total Posts: 29
Joined: Sep 2007
 
Posted: 2015-11-13 12:57
"I always wonder why people likes to waste their time trying to make fundamental predictions. Flip a coin, it has the same predictive power."

And even if one has an edge in these things, the profit generated from such a position is not very desirable considering:

(1) it will take a fair bit of time to realize said profit,

(2) such a position is fairly risky so not much capital should be allocated to such an idea,

(3) the opportunity cost of the research is not negligible compared to other approaches.


AndyM


Total Posts: 2335
Joined: Mar 2004
 
Posted: 2015-11-13 17:17
Capital needs to be allocated to enterprise; that's the nature of capitalism. Is it your considered opinion that everyone should switch to tick whoring instead?!

I used to be disgusted; now I try to be amused...

TSWP


Total Posts: 434
Joined: May 2012
 
Posted: 2015-11-13 17:30
>Is it your considered opinion that everyone should switch to tick whoring instead?!

What's "tick whoring"? Like e-whoring for stocks?


The only thing that counts: can you make money?

fantisst


Total Posts: 13
Joined: Jul 2011
 
Posted: 2015-11-15 15:14
A sad weekend. I am seriously considering a long position in vol or gold. But the vix related party seems crowded...PS: I am a big fan of Ray Dalio....

EspressoLover


Total Posts: 418
Joined: Jan 2015
 
Posted: 2015-11-15 23:22
> Capital needs to be allocated to enterprise; that's the nature of capitalism. Is it your considered opinion that everyone should switch to tick whoring instead?!

How does the price of gold affect the allocation of capital to any enterprise? Besides gold miners of course. Whose only purpose is to make more gold to idle in vaults.

Good questions outrank easy answers. -Paul Samuelson

MCgeneratedname


Total Posts: 143
Joined: Dec 2013
 
Posted: 2015-11-16 00:26
> How does the price of gold affect the allocation of capital to any enterprise?

Gold is a unique asset class: Commodity with little real demand.
This gives it some unique features: It's a store for cash with a protection against inflation (USD inflation). It was / is useful to store cash in case the alternatives (stocks) are too volatile.
The current lack of (non-asset) inflation would explain the long term downtrend gold is in right now.
If gold becomes completely useless beyond the real demand the price will adjust accordingly.

By definition: As long as there are people willing to pay for gold it has a use in capital allocation.

@fantisst did you buy on sunday evening? if so congrats ;)

EspressoLover


Total Posts: 418
Joined: Jan 2015
 
Posted: 2015-11-16 09:25
Sure, that makes complete sense in a world where TIPS don't exist. But we already have assets that directly track inflation in a much more straightforward way. Nobody cares about the gold market, besides people trading or mining gold. I doubt there's a single major banker or treasurer in the world that's getting an inflation forecast from the price of gold. By definition: There are people willing to wager a given price for a bet on the Patriots winning the Super Bowl. That doesn't mean those odds have anything to do with capital allocation.

The marginal buyer of gold isn't an asset manager hedging the risk of inflation. Its Peter Schiff-Glenn Beck paranoids who don't trust the gub'mint, think the Federal Reserver is run by the Elders of Zion, and have successfully predicted 157 of the past 2 cases of hyperinflation in OECD economies. Or its third world gangster oligarchs who are trying to hide and smuggle their wealth, or just plain don't trust financialized assets.

Gold may have some loading on inflation expectations, but the vast majority of the variance is a bet on whether the aforementioned lunacy increases or decreases in the near future. Which is why you get spikes in the price of gold during scary financial crises like 2008, even though they precipitate frozen credit markets and deflation. After TIPS were created almost all the adults at the table abandoned the gold markets. There's almost certainly no mutual information to be found in gold prices that isn't found in TIPS spreads.

Good questions outrank easy answers. -Paul Samuelson

MCgeneratedname


Total Posts: 143
Joined: Dec 2013
 
Posted: 2015-11-16 13:39
> The marginal buyer of gold is ... Peter Schiff-Glenn Beck paranoids who don't trust the gub'mint

> vast majority of the variance is a bet on whether the aforementioned lunacy increases or decreases in the near future

I don't want to trade with rational people all the time. Do you?

AndyM


Total Posts: 2335
Joined: Mar 2004
 
Posted: 2015-11-16 14:18
> Capital needs to be allocated to enterprise; that's the nature of capitalism. Is it your considered opinion that everyone should switch to tick whoring instead?!

>How does the price of gold affect the allocation of capital to any enterprise? Besides gold miners of course. Whose only purpose is to make more gold to idle in vaults.

No view or care on gold; I was replying to some speculations on the pointlessness of fundamental analysis. I know this forum has become a bit hung up on scalping lately, to the extent that we have even have hobbyists clamouring to play in their spare time, but still, it's important to maintain a bit of perspective.


I used to be disgusted; now I try to be amused...

Rashomon


Total Posts: 214
Joined: Mar 2011
 
Posted: 2015-11-16 18:43
Why the ancients and medievals loved gold (Bronowski): it was "incorruptible". Relating to alchemical theories of a mercury/sulphur dichotomy, as well as what happens when you melt alloyed gold or expose pure gold to acid/alkali. Includes a video of assay by cupellation.

"My hands are small, I know, but they're not yours, they are my own. And they're, not yours, they are my own." ~ Jewel

TSWP


Total Posts: 434
Joined: May 2012
 
Posted: 2015-11-17 23:23
>I was replying to some speculations on the pointlessness of fundamental analysis.

I have Graham's "The Intelligent Investor" here on a shelf aside my desk, piled together with a bunch of other "value investing" bibles.

But I still cannot take out of my mind an estimated client that used to work at a fund, and during the Lehman crisis in 2008 started to bother passers-by around Wall Street, pulling them by the arm and asking them "Are you a value buyer? Are you a value buyer?".

At one point they had to call the police because he was harassing everybody.

That's what happens with fundamental analysis, when all of a sudden you find out there was something missing in your (fundamental) analysis and guess what? At that point is too late to fix the mess.

I am not a fan of scalping either, you can't make money shaving pennies here and there. Is anyone from the 90s here?

The only thing that counts: can you make money?

svisstack


Total Posts: 340
Joined: Feb 2014
 
Posted: 2015-11-17 23:34
i love when you guys conclude things like you can't make money from something, etc
but in the meantime talking about topics so open like:

- fundamental analysis?: who make money, probably most of startup guys, seed/angel investors, vc firms (even that ones who live on mgnt fee), employees with option on shares (decision about working in company, can be treated similar as investment in firm), every company founder?

- scalping pennies?: market makers? htf funds? street beggar?;-d

www.coinapi.io && www.cryptotick.com

fantisst


Total Posts: 13
Joined: Jul 2011
 
Posted: 2015-11-18 04:36
@ MC

Not yet... still wait for the fed meeting.

EspressoLover


Total Posts: 418
Joined: Jan 2015
 
Posted: 2015-11-18 08:16
> But the vix related party seems crowded

FWIW, if you hedge out the short beta exposure, long VIX has had consistently positive returns since the curve normalized at the end of 2012.

Good questions outrank easy answers. -Paul Samuelson

TSWP


Total Posts: 434
Joined: May 2012
 
Posted: 2015-11-18 10:08
svisstack,
I am sorry but I am not sure scalping = market making/street beggars/hft.
Maybe yes, in a broad sense, if taken from the Oxford Collins dictionary that word applies to the category you have mentioned, but I am talking about "traders" that try to determine micro price movements.

And in regard to making money with fundamental analysis, the categories of people you've mentioned most times are just lucky. How many startups never went anywhere? So if you make money on one startup, that does prove your fundamental analysis is good?

Since we started talking about GOLD in this thread, and fundamental analysis related to it, there was a fundamental advisor that in the end of 2007/early 2008 started to scream to his clients that they should pile up on Gold (he was not alone, obviously), and he provided a very articulated fundamental analysis on why Gold would have soared. In the next 4 years (until August 2011) this advisor was a star, and Gold went from ~900 to ~2000 and he kept sending this analysis to his clients (published publicly also on his blog) saying that gold was headed to 4000-5000, inviting them to hoard more, all corroborated by detailed fundamental analysis, what the Fed would do and why, the state of resources of miners in the world, prediction on the use of Gold metal in various sectors, etc.

Well, guess what?
As of yesterday Gold (GCZ15) is trading at ~1070.
If you bought it 8 years ago at ~900, following the advice of this fundamental genius, you will be probably underwater now because of all the buy actions at higher prices ("buy on strength", another nonsense often pimped by some). If you were a buy&hold guy, you will be up some 20% which hey, is not bad for 8 years!

Did luck/bad luck played some role in all this? Was there ever any real "value" in the fundamental analysis made by this advisor (and many others that are still struggling trying to figure out what went wrong with their Gold fundamental predictions)?

All this said, I think Gold is oversold, and if I had a statistical model that gives mes a good idea of what can happen from here, I would not dislike buying it and probably I would buy more if it goes lower.


The only thing that counts: can you make money?

Maggette


Total Posts: 1225
Joined: Jun 2007
 
Posted: 2015-11-18 11:39
TSWP I think you mixing up "macro" ideas with fundemental analysis.

It is true that a bussiness exists in the context of an economy and hence each fundamental analysis does in parts use some "macro" perspective. Evaluating the bussiness concept of a company before buying there stocks might be a sensible idea.

Fundamental considerations are at the core of almost every real world bussiness decision. Sure, that does not imply that you are able to predict returns by it. But label everybody crazy or stupid who at least takes it into consideration?

We are al quantitative driven people here. But don't let our fancy and abstract way to look at the world mistake for what moves it :)

Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

goldorak


Total Posts: 1090
Joined: Nov 2004
 
Posted: 2015-11-18 11:50
I think fundamental analysis COULD work. All you need is to get rid of the market. You think DELL is undervalued or whatever? Then buy it, all you can, take it out of the stock market and live happy for the rest of your days. Relying on others to think like you is a sweet dream.

At whatever scale of quote analysis you may carry decently (I mean with enough data), fundamentals are just a constant, not worth any consideration.

If you are not living on the edge you are taking up too much space.
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