Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Gold, New Record Highs?

StockBee
Posts: 4
Joined: April 12th, 2021, 9:16 pm

Gold, New Record Highs?

#403742

Postby StockBee » April 12th, 2021, 9:40 pm

With all of the stimulus in the USA and inflation continuing, do you think will drive gold to record highs again? If so, how do you feel about the companies that mine it? Are there any miners you are keeping a close eye on? I have always had greater success with investing in gold miners than actually buying gold. Does anyone else share this same sentiment?

Looking forward to reading your replies. Have a great day!

Adamski
Lemon Quarter
Posts: 1075
Joined: July 13th, 2020, 1:39 pm
Has thanked: 1465 times
Been thanked: 553 times

Re: Gold, New Record Highs?

#403790

Postby Adamski » April 13th, 2021, 8:54 am

I've had these thoughts as well. Gold has been losing value since August. Whilst Bitcoin and stocks have gained. My guess is the stimulus is going to increase asset values but this will be largely the stockmarket and house prices. Bitcoin has partly taken the shine off gold. Plus gold has an inverse relationship with stocks, so whilst stocks climbing gold may continue with the drift down. This may reverse with the next significant correction. However the recent corrections have been rotation from tech to value, and this may continue.

mark88man
2 Lemon pips
Posts: 234
Joined: January 28th, 2017, 11:58 am
Has thanked: 315 times
Been thanked: 87 times

Re: Gold, New Record Highs?

#403791

Postby mark88man » April 13th, 2021, 8:58 am

not sure about record highs it all seems to be heading in the other direction. I have Blackrock gold and general at about 5% of portfolio on a monthly addition which is well down from its peak

I have dabbled in GGP (Greatland Gold) and made a few K but missed the big rise from 2p to 12p
I also dabbled in SOLG and got out just underwater, but missed the larger more significant drop recently, not interested in buying back in
I see a lot of chatter about Centamin (CEY), but haven't even begun to think about it which means I've probably missed whatever bubble there is/was

richfool
Lemon Quarter
Posts: 3492
Joined: November 19th, 2016, 2:02 pm
Has thanked: 1195 times
Been thanked: 1280 times

Re: Gold, New Record Highs?

#403801

Postby richfool » April 13th, 2021, 9:29 am

I get some exposure through Polymetal Gold miner (POLY). I'm slightly underwater, though with a good dividend yield, currently c 6.6%)

I also have exposure through Blackrock Energy and Resources trust (BERI) and City Natural Resources (CYN).

JuanDB
2 Lemon pips
Posts: 243
Joined: August 15th, 2018, 9:31 pm
Has thanked: 114 times
Been thanked: 135 times

Re: Gold, New Record Highs?

#403961

Postby JuanDB » April 13th, 2021, 5:15 pm

Inspired by 1nvest’s posts I’ve recently been looking at the relationship between the gold price and various indices such as FTSE100 and S&P500. The concept of “how many oz of gold does it cost to buy the index?”. My reading is that whilst gold price is in a near term decline from recent highs, it is still well above its 10 year average price vs those indices.

I plan to buy gold as I close in on early retirement but am waiting for the price to drop closer to or below its long term average relative to those indices before taking the plunge.

Cheers,

Juan.

1nvest
Lemon Quarter
Posts: 4323
Joined: May 31st, 2019, 7:55 pm
Has thanked: 680 times
Been thanked: 1316 times

Re: Gold, New Record Highs?

#404249

Postby 1nvest » April 14th, 2021, 5:15 pm

JuanDB wrote:Inspired by 1nvest’s posts I’ve recently been looking at the relationship between the gold price and various indices such as FTSE100 and S&P500. The concept of “how many oz of gold does it cost to buy the index?”. My reading is that whilst gold price is in a near term decline from recent highs, it is still well above its 10 year average price vs those indices.

I plan to buy gold as I close in on early retirement but am waiting for the price to drop closer to or below its long term average relative to those indices before taking the plunge.

Cheers,

Juan.

Dow/Gold is moderately high (suggestive of gold inexpensive/stocks expensive)
https://www.macrotrends.net/1378/dow-to ... ical-chart

Given that gold can do well when real yields are negative, ponder that it was May-August 2020 where inflation dived due to Covid, down to 0.5% type levels. Come May-August 2021 and quite possibly we'll be seeing reports of inflation raging back up again as year on year inflation measures are based to those start date lows and demand (exiting lockdown) rises (perhaps a 2.5% type inflation rate). Real yields, interest rates minus inflation may seem to have moved more negative as a consequence of that inflation 'spike' - which tends to see gold rise.

US stock gains for UK fiscal 2020/2021 were pretty good/great. Calendar years and 2020 had gold the winner, +20% versus +14% for US stock total returns adjusted to £. I have no idea if it will be gold or US stock that performs better for 2021 calendar or 2021/2022 fiscal. Would be just guesswork/speculation. It will however be one or the other, and where no matter which - on average the average of the yearly best tends to counter and more the average of the worst.

Image

But where in some years they can both correlate to the downside (or upside).

A benefit of buying both in equal measure at the same time is that broadly/generally it matters much less when you actually lump in. But not always, if Dow/Gold was down at < 5 levels then I'd be hesitant about buying gold, but up at 19 current/recent levels that's not suggesting gold is particularly expensive, if anything its more suggestive of stocks being relatively expensive. That (sorry about the poor quality) image/Callan-table are all £ adjusted real (after inflation) figures. The rightmost column is indicative of the decades averages and scan vertically down those and I'm content to achieve those sorts of averages in a relatively consistent manner, and care little about how those averages actually arose.

I use silver pre 1968 as that was when the US started to end the pegging of the US$ to gold, as a means to pay down the cost of the Vietnam war i.e. break their promises, decoupled the $ from being pegged to gold ... to facilitate printing/spending however much money that was needed. Each new $ created/spent is in effect a micro-taxation on all other notes in circulation that get devalued a little by the newly created notes. Beneficial for the 'counterfeiter' to the cost of others. We've already seen much printing of Trillions by many (US, Japan, Euro), currency wars of sorts, that tends to lead to higher currency fluctuations volatility, along with it driving higher gold price volatility. Rebalancing is like trading to a 'mechanical' method, that can benefit from volatility (add-low/reduce-high). Therein lies golds 'dividends'.

1nvest
Lemon Quarter
Posts: 4323
Joined: May 31st, 2019, 7:55 pm
Has thanked: 680 times
Been thanked: 1316 times

Re: Gold, New Record Highs?

#404263

Postby 1nvest » April 14th, 2021, 5:43 pm

Shame we're not more like India, where money is untrusted, looked to be held/used quickly, something that the state can 'deflate/tax' away (which also holds true for the £). Instead of bit coin they like physical gold, and its common to have a friendly loaner nearby for quick/easy conversion of gold into currency. Like payday lenders but where the borrower deposits gold as collateral in exchange for currency, typically where 70% of the gold value is available as cash, and a 0.75% monthly cost of interest. When repaid, they get their gold back. Better than bitcoin etc. Liquid and where both parties are happy. If the lender (of money) counts that gold collateral as being on their books as gold then if the loan is defaulted they secured that gold at a 30% discount. Otherwise that gold earned a near 10%/year interest (dividend). When repaid (returned) they have to buy some actual gold to replace it, or perhaps lend again. The 'borrower' can convert gold into cash quick-and-easy, with few/little background checks or reporting. Exchange that money for whatever goods/services, and then when payday arrives get their gold back again.

Be mindful that during currency wars periods that states may instate barriers. Raise taxation or outright ban holding gold alongside putting up tariff barriers and in general being protective (such as only being allowed to take out £x on holidays etc.). We've peaked globalisation and are more inclined to see reinstatement of controls in forward time IMO. Rule 1 of holding gold - you don't own any gold. But tricky, as you also need a paper trail to show that it was acquired through legitimate methods - otherwise it could be confiscated as being the proceeds of assumed illicit activities. Physical is best, but needs to be stored safely. Paper is more liquid and has tighter spreads, however push come to shove and all of the paper gold around is vastly more than what actual physical gold exists. If all called in at the same time and physical prices would soar as paper gold defaulted. Even funds that say they're physical backed may be performing accounting trickery such as having lent/borrowed gold. Given wide physical spreads however, perhaps 3% or even 5% between buy and sell prices, its best to use 'other peoples money' to pay that i.e. use paper gold until reasonable real (after inflation) gains are apparent, and only then swap out some paper gold for physical gold.

1nvest
Lemon Quarter
Posts: 4323
Joined: May 31st, 2019, 7:55 pm
Has thanked: 680 times
Been thanked: 1316 times

Re: Gold, New Record Highs?

#404265

Postby 1nvest » April 14th, 2021, 5:51 pm

Adamski wrote:I've had these thoughts as well. Gold has been losing value since August. Whilst Bitcoin and stocks have gained. My guess is the stimulus is going to increase asset values but this will be largely the stockmarket and house prices. Bitcoin has partly taken the shine off gold. Plus gold has an inverse relationship with stocks, so whilst stocks climbing gold may continue with the drift down. This may reverse with the next significant correction. However the recent corrections have been rotation from tech to value, and this may continue.

It can span decades of stocks having done well, gold having done poorly. 1980's/1990's for instance, when gold progressively/repeatedly declined, stocks did well. Despite that, 50/50 yearly rebalanced stock/gold saw 10 times more ounces of gold being held at the end than at the start. Such that when a 'rebound' occurred that paid dividends, assuming you had had the patience and stayed-the-course. Difficult to do in practice, i.e. stocks repeatedly making good gains when gold repeatedly declined in price - to sell some shares to buy more gold. Investing is a multi-decade timeframe, it you're not prepared for such a motion as that then perhaps best not to bother even start holding any gold at all.

1nvest
Lemon Quarter
Posts: 4323
Joined: May 31st, 2019, 7:55 pm
Has thanked: 680 times
Been thanked: 1316 times

Re: Gold, New Record Highs?

#404934

Postby 1nvest » April 17th, 2021, 12:28 pm

Add some gold to a otherwise all-stock portfolio and historically that has tended to lower make the worst years losses less deep. 67/33 stock/gold for instance might see the worst year improve from being a -50% loss to a -33% loss. Similarly in the best years the gains will tend to be less tall/good. There's a element of inverse/no correlation, but where stocks might do well during periods of positive real yields, gold can do well during periods of negative real yields. Lower portfolio best and worst year cases = lower volatility, standard deviations in yearly gains/losses. The broader average yearly gains however can perhaps surprisingly be similar.

When you have a similar/same average yearly gain where one has the lower volatility than the other then that compounds to a higher CAGR.

Many just look at gold in isolation and declare it as a unproductive asset, no dividends/interest paid .. etc. Elementary. Looked at as a compound, blended with other assets and correlations/volatility all come into play. If one asset moves through price motions of halving and then doubling then it breaks-even. If another asset does the same and also individually breaks-even but where it is out of cycle with the other asset i.e. doubles when the first asset has halved, halves when the first asset has doubled, then 50/50 of both yearly rebalanced - and after a couple of years the portfolio will be up +56%. The realities are much less extremes but do see some of that type of effect.

Gains can arise out of price appreciation, income (interest/dividends) and/or volatility capture. Historically golds "dividend" is predominately provided by volatility. Diversifying gains across each of price appreciation, income, volatility is more diversified than seeking gains from one source alone.

slyoldfox
Posts: 4
Joined: August 10th, 2021, 5:13 pm
Been thanked: 1 time

Re: Gold, New Record Highs?

#433793

Postby slyoldfox » August 10th, 2021, 6:28 pm

Stockbee asked…
I have always had greater success with investing in gold miners than actually buying gold. Does anyone else share this same sentiment?

Personally I always made much better money with actual (account gold) rather than individual gold miners which tend to disappoint.. Although I made good money over the years with Centamin CEY.L..

There are too many variables in buying stocks, especially miners… normally they run out of money for example, although there are some noble exceptions..

With physical one only has to concentrate on the price, which is much more straightened in my humble.
I bought today at $1725.. as it has sold off more than $100 in the last week or so.. I don’t bother with charts.. but from my feeling we are near the bottom..


Return to “Mining & Metals”

Who is online

Users browsing this forum: No registered users and 3 guests