Can anything go wrong with gold at this point?
- Thread starter Saltynuts
- Start date
I doubt it will break out like the gold bugs and metals touts claim. Gold produces no payment for the owner, unless it is leased. Not sure what vehicle you have obtained exposure with, but there can also be the issue of a collectibles tax.
DGLD. Short 1% of your portfolio every 2 days. Continue until account maxed out. After that, let it ride. Come thank Saltynuts for making you rich.
It is much more complicated than you think.
3 major factors impact gold price:
1. Risk premium associated with trade war;
Since phase one deal has been reached, risk premium on gold is on the decline, and the impact on gold price is on the down side;
2.US economic strength, which will affect FED rate policy. It is hard to know where is the future US economy direction. But the trade war deal will have positive impact on US economy, so it is possible US economy turn up in the next a few years;
3. Most countries are cutting rate and printing money, but this is due to the fact their economies have been doing down because of trade war. If trade tension ease and their economies turn round and getting better, the other way is more likely and their rates will go up,diminishing gold demand.
So anything is possible for future gold price but the chance is gold is more likely to go down than up in long term.
over the next few quarters,
unlikely anything will go wrong with gold.
look at quarterly range data over the past few decades.
between 1993 to 2001, quarterly range was very low at around 30 points.
ie gold was virtually untradable.
since then quarterly range has increased significantly to somewhere between
80 to highest at 450 points in 2011.
3Q19 it was at decent level of 180 points.
we expect to see good quarterly range over the next few quarters
and we should continue to make hay while the sun shines.
unlikely anything will go wrong with gold.
look at quarterly range data over the past few decades.
between 1993 to 2001, quarterly range was very low at around 30 points.
ie gold was virtually untradable.
since then quarterly range has increased significantly to somewhere between
80 to highest at 450 points in 2011.
3Q19 it was at decent level of 180 points.
we expect to see good quarterly range over the next few quarters
and we should continue to make hay while the sun shines.
gold/silver ratio and platinum/gold premium - check long term trends on these... gold is over valued.
other than that gold has these problems -
- for inflation hedge equities are much better... hedging while producing profit/growth for you;
- for crisis hedge USD is much better.... check what happened during the '08 crisis; gold went DOWN, USD went UP.... the dollar is the true gold of today.
- from the speculation perspective OP has cited the conventional wisdom which has been sold to the general public aka the dumb money... check all the youtube gold salesmen channels, 100:1 like dislike ratio on almost all of them... because the dumb money has already bot them, with little sideline money to push the price higher....
'can anything go wrong', which implies nothing/little can go wrong, is exactly the problem lol.... stuff needs to climb the wall of worry, which means you need to get in at the time of uncertainty when there is still sideline money waiting for clarity. by the time everybody has consensus 'nothing can go wrong', that's when everybody has already bot, the price has nowhere to go, but DOWN... this is universal for any assets.
other than that gold has these problems -
- for inflation hedge equities are much better... hedging while producing profit/growth for you;
- for crisis hedge USD is much better.... check what happened during the '08 crisis; gold went DOWN, USD went UP.... the dollar is the true gold of today.
- from the speculation perspective OP has cited the conventional wisdom which has been sold to the general public aka the dumb money... check all the youtube gold salesmen channels, 100:1 like dislike ratio on almost all of them... because the dumb money has already bot them, with little sideline money to push the price higher....
'can anything go wrong', which implies nothing/little can go wrong, is exactly the problem lol.... stuff needs to climb the wall of worry, which means you need to get in at the time of uncertainty when there is still sideline money waiting for clarity. by the time everybody has consensus 'nothing can go wrong', that's when everybody has already bot, the price has nowhere to go, but DOWN... this is universal for any assets.
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Gold historically has been a useful portfolio component - but keep in mind that the launch of GLD in 2004 dramatically upended the market, and was a major (if not THE major) driving force behind the 2005-11 bull. Before that there was the Nixon-shock bull from 1971-80, followed by a 24 year bear market.
Obviously there was huge monetary expansion and significant inflation from 1980-2004, so there's no straightforward mechanical link between these things and the gold price.
The best signal for a renewed multi-year bull would be something like the launch of MMT, or another catalyst event which clearly shakes the foundation of the monetary system. Tough to develop much of a thesis otherwise beyond purely technical/trend measures.
Obviously there was huge monetary expansion and significant inflation from 1980-2004, so there's no straightforward mechanical link between these things and the gold price.
The best signal for a renewed multi-year bull would be something like the launch of MMT, or another catalyst event which clearly shakes the foundation of the monetary system. Tough to develop much of a thesis otherwise beyond purely technical/trend measures.
We already live in MMT but no one admits it. The real disaster would be politicians realizing it though I'm sure they're no dummies
The dollar is not gold. Look at how much purchasing power the dollar has lost relative to gold over decades. 2008-2009 was a period of deflation. Dollar does well during deflation and gold performs poorly during deflation. The monetary response immediately following 2008 was inflationary, then gold did well.
The worst thing that could happen to gold is if all the world governments got serious and started seeing debt as the next climate change. If everyone or even just the US embraced austerity and started running balanced budgets -- increased taxes, cut spending and entitlements, that would be very bad for gold. Second worst scenario would be strong economic growth with rising interest rates.
I wish there was an instrument whose value directly correlated with total government debt. If there was, I would go full long with max leverage.