GOLD: THE ULTIMATE AAA ASSET
22 August 2009 by Cullen Roche
3 Comments
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Comments
Are there any gold bears out there? I think everyone knows that the US is an example of “fiscal and monetary debauchery.” It is not even tradable knowledge in a competitive market.
Aki:
I am a gold bear at the moment. About a year ago I thought gold the only asset worth owning; not anymore. Having said that normally September is a very good gold month if one looks at the seasonal patterns going back 30 years or so. Be careful trading gold and gold stocks. Always buy at the low Bollinger band.
Be careful about Sprott. They’ve had a pretty good run but have had some high profile managers (that shared in their success) leave in the last year. I’m always a little suspicious of people leaving “for personal reasons, to spend time with family”. If the investment thesis is not suspicious, then another hidden reason is they believe the market is going nowhere and are getting out and no longer “insiders”.
I own some gold miners, but not because I believe gold is a AAA asset and has some mysterious core value … but I believe other people believe it. The return on gold stocks is asymmetric right now and will probably remain that way for 5 years as uncertainty in financial markets. The most likely case is they go nowhere, +/-20% over the next few years. The downside is -30%. The upside is 100% if people feel they need to own it since the market cap of global gold miners is tiny relative to investable assets. You might also get a dividend of 1-2%. I wouldn’t hold a huge overweight.