Time to invest in gold... if so what vehicle?

Apart from all the conspiracy theories (That Gold is being suppressed and manipulated, which I do believe it is btw), I would recommend either physical (Coins or Bars) or the Gold miners ETF (GDX). I don't recommend any of the leveraged gold miners ETFs or the Juniors, etc...

I also don't recommend GLD, which is supposed to be an equivalent to physical gold.

Gold futures are no different than the fiat world. Gold futures trading on CME (NYMEX) has an open interest of roughly 456,000 contracts (For Feb and April only), that's about 45.6 million troy ounces of gold, that's approximately 1,418 tonnes worth of gold. There is also around 81,000 contracts in farther months which I ignored (Though significant).

It's all imaginary. The world annual production is around 3,300 tonnes. This means that there are contracts (For February and April only) representing about 42% of the world annual production of gold.

This of course does not count the rest of the gold futures exchanges around the world.

So as you can see, if all the buyers of those 456,000 contracts requested delivery, it will be a disaster because the sellers simply can't deliver & they will simply either default or the price of spot gold bullion will skyrocket.

But of course this will never happen, just as it is extremely difficult to get a run on a bank. It's just a fractional reserve system, just like the fiat monetary system.
 
SunTrader said:
It will never happen for the simple reason ..... most don't want to take delivery.
More...

True, I agree, most don't want to take delivery, however, if you have seen what happened in Cotton in late 2010 and early 2011, the slim possibility is there where a big buyer who is interested in physical delivery will cause panic & a massive spike in prices.

But again, that's why the exchanges have position limits anyway. The market must stay well tamed.
 
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Plenty of value in TSX miners right now. Should play out in February earnings as long as nothing dramatic happens to metal prices or broader markets. Some subtle strength today in stocks that have corrected hard recently. I look at CXB under $2 it's an irrational level given they made 10 cents a share last quarter and are forecasting that level all year. Last earnings report they shot up to $2.80 a share. The larger Gold miners like Kinross seem to have baked in some pessimism on Gold prices or unknown issues. I suspect they'll just report a good number again.

The sector would test anyone's patience since August but sometimes the best trades are like that. Gold at $1872 isn't far off the old ATH and that seems to be a forgotten reality.
 
maxinger said:
look at the day chart.
See how messy, how untidy, how ugly, how choppy it is.
We Professional traders don't know where gold is heading.
But Professional talkers, professional writers & fortune tellers
know where gold is heading.

Now, look at other index futures chart eg Nikkei.
Just see how trendy, now decisive, how tidy, how beautiful it is.


Learn to distinguish these 2 types of charts.
I'd Avoid trading those charts which are very ugly.
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So I know this is mostly a trading forum, but I was really talking about longer term investing.
 
narafa said:
Apart from all the conspiracy theories (That Gold is being suppressed and manipulated, which I do believe it is btw), I would recommend either physical (Coins or Bars) or the Gold miners ETF (GDX). I don't recommend any of the leveraged gold miners ETFs or the Juniors, etc...

I also don't recommend GLD, which is supposed to be an equivalent to physical gold.

Gold futures are no different than the fiat world. Gold futures trading on CME (NYMEX) has an open interest of roughly 456,000 contracts (For Feb and April only), that's about 45.6 million troy ounces of gold, that's approximately 1,418 tonnes worth of gold. There is also around 81,000 contracts in farther months which I ignored (Though significant).

It's all imaginary. The world annual production is around 3,300 tonnes. This means that there are contracts (For February and April only) representing about 42% of the world annual production of gold.

This of course does not count the rest of the gold futures exchanges around the world.

So as you can see, if all the buyers of those 456,000 contracts requested delivery, it will be a disaster because the sellers simply can't deliver & they will simply either default or the price of spot gold bullion will skyrocket.

But of course this will never happen, just as it is extremely difficult to get a run on a bank. It's just a fractional reserve system, just like the fiat monetary system.
More...


Thanks a bunch narafa! Just so I know, why do you recommend GDX, but not the leveraged gold miners or I guess the "junior" gold minors, and not GLD?

If I buy into any form of gold and there IS this run on gold, however unlikely, would be a GOOD thing for me, right?
 
Nine_Ender said:
Plenty of value in TSX miners right now. Should play out in February earnings as long as nothing dramatic happens to metal prices or broader markets. Some subtle strength today in stocks that have corrected hard recently. I look at CXB under $2 it's an irrational level given they made 10 cents a share last quarter and are forecasting that level all year. Last earnings report they shot up to $2.80 a share. The larger Gold miners like Kinross seem to have baked in some pessimism on Gold prices or unknown issues. I suspect they'll just report a good number again.

The sector would test anyone's patience since August but sometimes the best trades are like that. Gold at $1872 isn't far off the old ATH and that seems to be a forgotten reality.
More...


Thanks Nine_Ender - so Toronto exchange - do you think the miners are more valuable there than the ones on the U.S. market? Or you just pay attention to those ones as you are Canadian maybe? Thanks!
 
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