Since my last post I've invested the $20.5K cash on hand at that time plus another $21.5K of new margin. Reacquired my Coeur D'Alene and Franco Nevada Wts. holdings at a 20+% discount and added to my Aurizon Gold position.
I also made a dumb, mistaken sale of my New Gold Wts. at $.35 (I wanted to sell my US Gold Wts.) I reacquired 15,000 (50% of my position) New Gold Wts. @ $.37 and will probably have to pay more for the other half. Meanwhile I'm still trying to sell my 30,000 US Gold Wts.
I'm looking to buy Pacific Rubialis Energy Wts. (PRE.WT-T) but fear I have missed the boat.
Thursday, June 25, 2009
Wednesday, June 3, 2009
RESULTS COMPARED TO YARDSTICKS
I know it's been about a month since I last posted to this blog and I suppose that's because I didn't have too much to talk about. Gold was in the doldrums while the rest of the stock market was moving up like gangbusters. Can you believe that on the day that GM's bankruptcy was formally proclaimed in the press, stock markets moved up sharply?
My general thesis (that this bull run is past due for a substantial setback) remains unchanged. I must confess that I'm starting to loose faith in these predictions. After all, every day brings forth a 100, 200 or 300 point rally (even on bad news).
Since I started measuring my Precious Metals Portfolio performance on Feb. 5th, 2009....Here is how things stack up as of June 2nd close:
My Portfolio: + 26% (includes current holding of %15 cash approx. $20.5K)
Dynamic Precious Metals Fund: + 19.7%
Toronto Global Gold Index (TTGD): + 6%
SPDR Gold Trust NAV: + 6.7%
Gold Futures (near month out): + 7.1%
As you can see, there hasn't been any advantage derived from the modest 6% increase in the price of gold compared with the more remarkable 7.8% and 16.3% valuation gains registered for the DOW and TSX indexes respectively during this same time frame. Basically we are all still patiently awaiting the day when the price of spot gold really heats up. Unfortunately I don't know when that will be. In the meantime, if my holdings move up substantially, I often sell. In this market environment, I'm frequently handed the opportunity to repurchase later on at a reduced price.
The biggest contributors to my success have been:
Couer D'Alene Mines (CDE-N) A US based silver producer
Rubicon minerals (RMX-T) Vancouver based exploration company
New Gold (NGD.WT.A-T) Intermediate consolidator of other producers
I've sold out my Yamana warrants since they will expire next February and I don't want to risk any timing issues. Yamana stock remains a solid holding in my opinion but I like the leverage provided by warrants so I am replacing this position with Franco Nevada Warrants (FNV.WT.-T) which expire March 13, 2012.
Perhaps the most interesting and meaningful news is that SPDR Gold Trust inventory of gold bars, after holding steady since April, has increased by 30 tonnes in the past 7 days. So keep your powder dry!
My general thesis (that this bull run is past due for a substantial setback) remains unchanged. I must confess that I'm starting to loose faith in these predictions. After all, every day brings forth a 100, 200 or 300 point rally (even on bad news).
Since I started measuring my Precious Metals Portfolio performance on Feb. 5th, 2009....Here is how things stack up as of June 2nd close:
My Portfolio: + 26% (includes current holding of %15 cash approx. $20.5K)
Dynamic Precious Metals Fund: + 19.7%
Toronto Global Gold Index (TTGD): + 6%
SPDR Gold Trust NAV: + 6.7%
Gold Futures (near month out): + 7.1%
As you can see, there hasn't been any advantage derived from the modest 6% increase in the price of gold compared with the more remarkable 7.8% and 16.3% valuation gains registered for the DOW and TSX indexes respectively during this same time frame. Basically we are all still patiently awaiting the day when the price of spot gold really heats up. Unfortunately I don't know when that will be. In the meantime, if my holdings move up substantially, I often sell. In this market environment, I'm frequently handed the opportunity to repurchase later on at a reduced price.
The biggest contributors to my success have been:
Couer D'Alene Mines (CDE-N) A US based silver producer
Rubicon minerals (RMX-T) Vancouver based exploration company
New Gold (NGD.WT.A-T) Intermediate consolidator of other producers
I've sold out my Yamana warrants since they will expire next February and I don't want to risk any timing issues. Yamana stock remains a solid holding in my opinion but I like the leverage provided by warrants so I am replacing this position with Franco Nevada Warrants (FNV.WT.-T) which expire March 13, 2012.
Perhaps the most interesting and meaningful news is that SPDR Gold Trust inventory of gold bars, after holding steady since April, has increased by 30 tonnes in the past 7 days. So keep your powder dry!
Friday, May 8, 2009
MACKENZIE UNIVERSITY
MacKenzie Investments, a well established Canadian mutual fund company, sponsored a one day seminar at the Toronto Convention Center this week and I took Tuesday off and attended with about 1,800 other sales reps. They had an excellent menu of guest speakers/presenters including lawyers, accountants, tax experts, economists, fund managers, self motivation experts, etc. I mention this because after the convention is finished one gets a sense about the conventional wisdom and general outlook within the financial community for future stock market performance. It should be noted that the TSX was up about 33% from its March 9th low while this conference was being conducted. This fact alone would lend a positive backdrop to the event.
The mood was fairly upbeat and the consensus outlook was cautiously bullish. It was clear to me that the case for recovery was clearly the most popular opinion.
As I have come to learn, conventional wisdom and group consensus is not at all useful for making money in investment markets while unconventional wisdom has much greater potential. I'm reminded of last years MacKenzie University at which we were treated to a 90 minute presentation by Martin Feldstein phd. (well known Harvard educator who served as Chief Economic Adviser to President Ronald Reagan). Feldstein logically and clearly explained the problems being encountered in the US housing/mortgage markets and how, because of securitization, they would have dire macro economic impact beyond the borders of the U.S. Thus the MacKenzie University attendees were getting a perfect explanation in early May of the financial disaster that subsequently unfolded in September. We had a four month window of opportunity to reposition our client portfolios and avoid the calamity that befell global stock markets.
Did any of us react to this knowledge? Our reaction at the meeting was initial profound depression eventually followed by disbelief. After all, conventional wisdom was that the U.S. housing and mortgage crisis had been documented and debated for about a year and markets had already performed poorly. The conclusion, based on conventional wisdom, was that this information had already been fully discounted in the markets.
What is Martin Feldstein saying today? Google "Martin Feldstein 2009" and his recent public pronouncements will be made available to you. Check out: http://paul.kedrosky.com/archives/2009/03/martin_feldstei_1.html.
Since May 2008 he has joined Obama's economic advisory team and is a bit more politically careful in what he says but his message is wonderfully clear. The Obama stimulus plan is not efficient in terms of direct benefits to GNP growth (perhaps 40-55 cents for each dollar spent will find its way into the economy). Secondly the stimulus plan is not sufficient to fill the gap caused by the housing, manufacturing and foreign trade meltdowns. The Obama plan calls for $400 billion for 2 years of which $200B/year might find its mark. The calculated macroeconomic stimulus need, according to Feldstein, is $800B/year, suggesting the Obama plan is 75% short.
Today's conventional wisdom says that it is time to get on board the stock market rally. Unconventional wisdom says otherwise.
The mood was fairly upbeat and the consensus outlook was cautiously bullish. It was clear to me that the case for recovery was clearly the most popular opinion.
As I have come to learn, conventional wisdom and group consensus is not at all useful for making money in investment markets while unconventional wisdom has much greater potential. I'm reminded of last years MacKenzie University at which we were treated to a 90 minute presentation by Martin Feldstein phd. (well known Harvard educator who served as Chief Economic Adviser to President Ronald Reagan). Feldstein logically and clearly explained the problems being encountered in the US housing/mortgage markets and how, because of securitization, they would have dire macro economic impact beyond the borders of the U.S. Thus the MacKenzie University attendees were getting a perfect explanation in early May of the financial disaster that subsequently unfolded in September. We had a four month window of opportunity to reposition our client portfolios and avoid the calamity that befell global stock markets.
Did any of us react to this knowledge? Our reaction at the meeting was initial profound depression eventually followed by disbelief. After all, conventional wisdom was that the U.S. housing and mortgage crisis had been documented and debated for about a year and markets had already performed poorly. The conclusion, based on conventional wisdom, was that this information had already been fully discounted in the markets.
What is Martin Feldstein saying today? Google "Martin Feldstein 2009" and his recent public pronouncements will be made available to you. Check out: http://paul.kedrosky.com/archives/2009/03/martin_feldstei_1.html.
Since May 2008 he has joined Obama's economic advisory team and is a bit more politically careful in what he says but his message is wonderfully clear. The Obama stimulus plan is not efficient in terms of direct benefits to GNP growth (perhaps 40-55 cents for each dollar spent will find its way into the economy). Secondly the stimulus plan is not sufficient to fill the gap caused by the housing, manufacturing and foreign trade meltdowns. The Obama plan calls for $400 billion for 2 years of which $200B/year might find its mark. The calculated macroeconomic stimulus need, according to Feldstein, is $800B/year, suggesting the Obama plan is 75% short.
Today's conventional wisdom says that it is time to get on board the stock market rally. Unconventional wisdom says otherwise.
Wednesday, April 29, 2009
GREAT EXPECTATIONS GO FLAT
In the past month (since my last posting) we have seen spot gold decline from $915 to a low in the $860s and rally back to $890-$900. Gold investors must be getting bored and impatient as evidenced by the SPDR Gold Trust unit holders who have sold off inventories by over 23 tonnes thus far in April.
I think that gold has lost its momentum because the general (non-gold) market has been doing quite well. Since April 1st, the DOW has gained a handsome 5.6% while my gold related portfolio is just breaking even. It is my conclusion that the investing public has gained some badly needed confidence by the competent and reassuring roll-out of the Obama Administration's stimulus plan. Thus gold is stuck in a trading pattern where it is too early for inflation concerns to move the gold market up while the need for "safe haven" buying is not as compelling as it was earlier in the year.
For now I'm just a simple profit taker. If I can pick up a 20%-30% increase in a holding I sell. If I can repurchase my position at a 10%-20% discount from my selling point, I'm back into the holding. This requires discipline and is not that easy for me to do since I'm in a constant emotional battle with my old friends, fear & greed.
In closing I should again mention that Coeur d'Alene mines has been a good little profit maker over the past month.
I think that gold has lost its momentum because the general (non-gold) market has been doing quite well. Since April 1st, the DOW has gained a handsome 5.6% while my gold related portfolio is just breaking even. It is my conclusion that the investing public has gained some badly needed confidence by the competent and reassuring roll-out of the Obama Administration's stimulus plan. Thus gold is stuck in a trading pattern where it is too early for inflation concerns to move the gold market up while the need for "safe haven" buying is not as compelling as it was earlier in the year.
For now I'm just a simple profit taker. If I can pick up a 20%-30% increase in a holding I sell. If I can repurchase my position at a 10%-20% discount from my selling point, I'm back into the holding. This requires discipline and is not that easy for me to do since I'm in a constant emotional battle with my old friends, fear & greed.
In closing I should again mention that Coeur d'Alene mines has been a good little profit maker over the past month.
Wednesday, April 1, 2009
14.9% Increase Is No April Fools Joke!
Since I started this blog on Feb. 5th, my gold & silver portfolio has been up around 15% only once before. That was on February 17 & 18 when 1 month forward gold futures closed at $978/oz. Today, June gold futures closed over $50 lower at $927.70. I don't have a fully rationalized explanation for this but I think it boils down to a couple of factors.
The first factor relates to portfolio management. I have shifted $24,000 of holdings out of senior producers into silver miners and junior producers and these shifts, by in large, have been made into profitable choices. Coeur D'Alene Mines is up 60% and Rubicon Minerals is up 31%. On Feb. 17th & 18th my senior gold holdings (Kinross, Yamana, Iamgold, Goldcorp.) were up 16% while on Aptil 1st the seniors were only up 5.3% so its just as well that I had proportionately less of them.
The second factor is not quantifiable but I believe relates to a changing political and investment climate. Investors saw how quickly spot gold moved up on March 18th after Bernanke's more detailed bailout announcement and have come to realize that the Obama led government is going to throw some very serious cash at this recession ... so gold related investments are now worth holding onto as an inflation hedge as well as a safe haven. One should not panic if spot gold falls or rises 5% on any given day. Furthermore these precious metals companies can raise all the cash they need and can make good profits at current gold prices. No need to sweat over 5% fluctuations for now but .... this theory will be thoroughly tested if spot gold retreats back into the $880 range.
It should also not go unrecorded that the SPDR Gold Trust investors added 98.15 tonnes (that is and incredible 3.16 million troy ounces)to their holdings in March. That is about 50% of global production output going into that single investment trust! If even half that rate continues, I would think that the spot gold price will start its long awaited POP!
The first factor relates to portfolio management. I have shifted $24,000 of holdings out of senior producers into silver miners and junior producers and these shifts, by in large, have been made into profitable choices. Coeur D'Alene Mines is up 60% and Rubicon Minerals is up 31%. On Feb. 17th & 18th my senior gold holdings (Kinross, Yamana, Iamgold, Goldcorp.) were up 16% while on Aptil 1st the seniors were only up 5.3% so its just as well that I had proportionately less of them.
The second factor is not quantifiable but I believe relates to a changing political and investment climate. Investors saw how quickly spot gold moved up on March 18th after Bernanke's more detailed bailout announcement and have come to realize that the Obama led government is going to throw some very serious cash at this recession ... so gold related investments are now worth holding onto as an inflation hedge as well as a safe haven. One should not panic if spot gold falls or rises 5% on any given day. Furthermore these precious metals companies can raise all the cash they need and can make good profits at current gold prices. No need to sweat over 5% fluctuations for now but .... this theory will be thoroughly tested if spot gold retreats back into the $880 range.
It should also not go unrecorded that the SPDR Gold Trust investors added 98.15 tonnes (that is and incredible 3.16 million troy ounces)to their holdings in March. That is about 50% of global production output going into that single investment trust! If even half that rate continues, I would think that the spot gold price will start its long awaited POP!
Wednesday, March 25, 2009
Obama Budget Puts a Shine On Gold
From my analysis, I'm now confident that the Obama Budget and related behavior of Ben Bernanke quite simply boils down to printing lots of money. Low interest rates are not enough to slay this recession and hopefully, flooding the monetary system with cash will move us towards recovery.
The only question in my mind is, "When will the stock markets start to seriously worry about inflation?" Right now the Federal Open Market Committee (FOMC) has assumed that for the time being, cost of living increases remain "subdued". I suspect that we are several months away from when inflation concerns become strong enough to push spot gold into record new high territory.
My portfolio has done well in the past several days but not as well as the general market which I hear has gained 20% from its lows earlier this month.
Based on the Feb. 5th benchmarks: my portfolio is today up 13.1% while spot gold and the iShares COMEX Gold E.T.F. are up 2.3% and 1.6% respectively. The Dow and TSX are at -4% and -.7% for this time frame.
I've decided to reposition some funds from senior gold holdings into silver, gold royalty trusts and junior gold holdings and will be executing changes over the next few days.
The only question in my mind is, "When will the stock markets start to seriously worry about inflation?" Right now the Federal Open Market Committee (FOMC) has assumed that for the time being, cost of living increases remain "subdued". I suspect that we are several months away from when inflation concerns become strong enough to push spot gold into record new high territory.
My portfolio has done well in the past several days but not as well as the general market which I hear has gained 20% from its lows earlier this month.
Based on the Feb. 5th benchmarks: my portfolio is today up 13.1% while spot gold and the iShares COMEX Gold E.T.F. are up 2.3% and 1.6% respectively. The Dow and TSX are at -4% and -.7% for this time frame.
I've decided to reposition some funds from senior gold holdings into silver, gold royalty trusts and junior gold holdings and will be executing changes over the next few days.
Thursday, March 19, 2009
Bernanke's Announcement Drives Markets, Including Gold, Crazy!
Around ten yesterday morning I was watching spot gold plunge below $885/oz. I considered this to be a serious breach of a technical floor and I had been thinking that spot gold should have been going up for the past few days but seemed determined to fall. So I decided to sell $26,000 worth of my holdings on a modest gain basis thereby substantially eliminating my margin position. Was this a mistake or what?
Jackie and I went downtown with our good friends Tom & Carol Ridout to watch the play "Spring Awakening" at the Canon Theatre. When we returned at 5:00 p.m. and I checked the market, HOLY JUMPIN XBSZHYTCXZ! spot gold was up over $55.
I'm really not mad at myself for having the discipline to sell when an important threshold is breached but I can't help but LOL...Isn't life interesting.
My other $110,000 of gold holdings did quite nicely and as of today my gold/silver portfolio is up 8.4% from the Feb. 5th benchmark. I can't help but notice that my senior gold producers (Kinross,Yamana, Goldcorp & Iamgold), which make up over 50% of my total cost base, have increased only modestly (up 1,5% since Feb. 5th)while my junior holdings (New Gold, U.S. Gold, Rubicon & Victoria) are up over 25%. My major silver holding, Coeur D'Alene, gained 33% today but my two silver holdings are up only 8% from Feb. 5th.
It's also worth noting that SPDR Gold Trust added over 20 tonnes of gold to its inventory in the past few days.
Jackie and I went downtown with our good friends Tom & Carol Ridout to watch the play "Spring Awakening" at the Canon Theatre. When we returned at 5:00 p.m. and I checked the market, HOLY JUMPIN XBSZHYTCXZ! spot gold was up over $55.
I'm really not mad at myself for having the discipline to sell when an important threshold is breached but I can't help but LOL...Isn't life interesting.
My other $110,000 of gold holdings did quite nicely and as of today my gold/silver portfolio is up 8.4% from the Feb. 5th benchmark. I can't help but notice that my senior gold producers (Kinross,Yamana, Goldcorp & Iamgold), which make up over 50% of my total cost base, have increased only modestly (up 1,5% since Feb. 5th)while my junior holdings (New Gold, U.S. Gold, Rubicon & Victoria) are up over 25%. My major silver holding, Coeur D'Alene, gained 33% today but my two silver holdings are up only 8% from Feb. 5th.
It's also worth noting that SPDR Gold Trust added over 20 tonnes of gold to its inventory in the past few days.
Thursday, March 12, 2009
SPDR Tonnes Moving Up.....GREAT NEWS
In the last 2 days SPDR Gold Trust investors have increased their inventory by 12.5 tonnes. Inventory growth had been stagnant since Feb. 19th (14 trading days) I feel that this renewed investor interest is highly important because it has occurred while the general stock market was rising sharply and while spot bullion was falling in price. Also today, the spot bullion trading volume returned to levels not seen for 8 trading sessions.
I know that I shouldn't put too much importance on this one set of indicators but I believe this signals that the recent spot gold downturn (and related gold stock sell off) are over.
I know that sell offs will reoccur but I think the gold complex will now move up and strike into a recent new high trading range based on bullion priced above $1,000/oz. I'm not willing to forecast that spot gold will move above $1,030 in this next leg up, but I wouldn't be surprised.
My portfolio is now down 5% from the Feb. 5th benchmark. My large position in Kinross has unfortunately lagged the general gold mining share recovery while Iamgold has been recovering unexpectedly well, along with Yamana. Remember that Iamgold must work thru its new share issue noted in an earlier blog.
I know that I shouldn't put too much importance on this one set of indicators but I believe this signals that the recent spot gold downturn (and related gold stock sell off) are over.
I know that sell offs will reoccur but I think the gold complex will now move up and strike into a recent new high trading range based on bullion priced above $1,000/oz. I'm not willing to forecast that spot gold will move above $1,030 in this next leg up, but I wouldn't be surprised.
My portfolio is now down 5% from the Feb. 5th benchmark. My large position in Kinross has unfortunately lagged the general gold mining share recovery while Iamgold has been recovering unexpectedly well, along with Yamana. Remember that Iamgold must work thru its new share issue noted in an earlier blog.
Wednesday, March 11, 2009
GOLD BUGS HAMMERED RECENTLY
Spot Bullion fell within $2 of a $890 technical support floor yesterday. It sure would be nice to see this turn around. My portfolio is now down 17.4% from its Feb 5 benchmark while gold futures are only off 2%.
Iamgold announced a prospectus issue of 34.3M shares @ $8.75. This was poor micro-timing I think since the general gold related market was very soft. My two silver holdings resisted the gold share sell off.
For the ascendancy theory of gold to be valid, we have to reach a turning point in the market valuation before too long (I would think well before spot gold goes back to $750/oz). We should be able to see spot gold and related mining stocks rising, even when (or especially when) the general market advances since the advancement in the general market valuation foretells the advancement of inflation. We need to see evidence of a shift in gold buyer psychology from "safe haven" to "inflation protection". I'm not sure what will trigger this.
Meanwhile it is difficult and costly to be patient.
Iamgold announced a prospectus issue of 34.3M shares @ $8.75. This was poor micro-timing I think since the general gold related market was very soft. My two silver holdings resisted the gold share sell off.
For the ascendancy theory of gold to be valid, we have to reach a turning point in the market valuation before too long (I would think well before spot gold goes back to $750/oz). We should be able to see spot gold and related mining stocks rising, even when (or especially when) the general market advances since the advancement in the general market valuation foretells the advancement of inflation. We need to see evidence of a shift in gold buyer psychology from "safe haven" to "inflation protection". I'm not sure what will trigger this.
Meanwhile it is difficult and costly to be patient.
Thursday, March 5, 2009
Fasten Your Golden Seat Belts Please
Spot Gold closed up over $20/oz, at approx. $930+/oz today amid another 4% sell off in the DOW which set a new low of 6594.
Yamana reported excellent YE results today:
Financial and Operating Highlights for the three-and twelve-month periods ended December 31, 2008 include:
- Revenues of $1.1 billion for the year.
- Net earnings of $179.4 million, or $0.25 per share, and $434.8 million or $0.63
per share, respectively.
- Total production from all mines of 254,774 gold equivalent ounces (GEO) and
982,897 GEO, respectively, in line with previously announced guidance.
- Average co-product cash cost of $383 per GEO and $384 per GEO, respectively, in
line with previously announced guidance. By-product cash costs for the year were
$136 per GEO.
Yesterday Yamana announced increased reserves: Proven and probable gold reserves increased to 19.4 million ounces as of December 31, 2008. Total new discovered proven and probable gold reserves totaled 2.5 million ounces in 2008. With approximately 1.0 million ounces having been mined in 2008, net gold reserves increased by approximately 1.5 million ounces, representing a net increase of eight percent. Total measured and indicated gold resources increased significantly to 15.7 million ounces, up 22 percent from 12.9 million ounces a year earlier. Approximately 7.9 million new ounces of gold were added across all categories before production, which exceeds the Company's previous expectation of 7.0 million new ounces. Discovery costs for proven and probable plus measured and indicated gold ounces were approximately US$12.00 per gold ounce which compares well to the industry average.
I currently own 8,000 Yamana Gold Warrants and would own more but I don't like the relatively short Feb., 2010 expiry date. I think Yamana and Iamgold are roughly equivalent in terms of their growth potential.
Yamana reported excellent YE results today:
Financial and Operating Highlights for the three-and twelve-month periods ended December 31, 2008 include:
- Revenues of $1.1 billion for the year.
- Net earnings of $179.4 million, or $0.25 per share, and $434.8 million or $0.63
per share, respectively.
- Total production from all mines of 254,774 gold equivalent ounces (GEO) and
982,897 GEO, respectively, in line with previously announced guidance.
- Average co-product cash cost of $383 per GEO and $384 per GEO, respectively, in
line with previously announced guidance. By-product cash costs for the year were
$136 per GEO.
Yesterday Yamana announced increased reserves: Proven and probable gold reserves increased to 19.4 million ounces as of December 31, 2008. Total new discovered proven and probable gold reserves totaled 2.5 million ounces in 2008. With approximately 1.0 million ounces having been mined in 2008, net gold reserves increased by approximately 1.5 million ounces, representing a net increase of eight percent. Total measured and indicated gold resources increased significantly to 15.7 million ounces, up 22 percent from 12.9 million ounces a year earlier. Approximately 7.9 million new ounces of gold were added across all categories before production, which exceeds the Company's previous expectation of 7.0 million new ounces. Discovery costs for proven and probable plus measured and indicated gold ounces were approximately US$12.00 per gold ounce which compares well to the industry average.
I currently own 8,000 Yamana Gold Warrants and would own more but I don't like the relatively short Feb., 2010 expiry date. I think Yamana and Iamgold are roughly equivalent in terms of their growth potential.
Wednesday, March 4, 2009
April Futures at $906.70 Down 10% From High
Spot Gold has continued a fairly orderly decline for the past 8 trading days (since Feb. 20th) and it's not clear when this sell off will end. It's noteworthy that unlike earlier in the quarter, gold and related stocks have declined regardless of the broader market performance. This behavior is putting my "Ascendancy of Gold Thesis" to the test.
My portfolio is now down 4.7% from the Feb. 5th benchmark. This is better that a 9% decline for the TTGD Toronto Global Gold Index but worse than Dynamic Precious Metals Fund which is only down 1.7%.
In the last few days I've added to my Rubicon Minerals position and replaced a 1,000 share holding of Iamgold Corp. I also think that Coeur D'alene, a U.S. based silver producer has good prospects. I like very much the just announced amalgamation of New Gold (NGD-T) with Western Goldfields (WGI-T) the combined production of 30,000 oz/month is a 67% increase and catapults NGD into an intermediate producer status.
Wednesday's Globe and Mail notes: "With its $280-million merger deal with Western Goldfields Inc., New Gold Inc. hopes its plans to be the dominant consolidator of the junior gold sector are back on track. The friendly agreement to combine Western's Mesquite gold mine in California with New Gold's operations in Mexico, Australia and Canada is the next step in a bid to become a one-million-ounce-a-year producer by 2012, says New Gold chief executive officer Robert Gallagher. "We're going to continue this consolidation of gold-producing assets. Others talk of it, but we've got the vehicle in place now with this combination that really is the full package - the go-to consolidator," Mr. Gallagher said in an interview. The deal announced yesterday could be dubbed "New Gold: Take 2." Ten months ago, the Vancouver business unveiled a three-way merger deal intended to create a $1.5-billion gold company backed by a group of mining all-stars."
I rate the NGD.WT.A-T an outstanding speculation. This warrant expires in 2017, trades at 40 cents, and is calculated to have a fair MV of over $2 by canadianwarrants.com/values/current.htm ..... I hold 30,000 of these warrants with an average cost of $0.275/each. I'm now out $27,000 on margin. Nothing quite matches the feeling of fear one gets when they borrow money only to lose more money!
I attended a fund seminar yesterday and listened to Alan Radlo explain why he doesn't like gold related companies because gold shares don't seem to ever steadily increase/hold their value and because gold is not consumed. Two good points. Alan manages the newly started (1 year old) $700M Cambridge Funds but formerly grew several Fidelity funds including the very successful Canadian Asset Allocation and Fidelity Canadian Growth Co. funds. With respect to gold not being consumed, I would note that as the global population expands, the scarcity of gold ensures that the amount of gold per capita is a steadily decreasing value. This is not the same as outright consumption but assuming a universal desire to hold gold, it is an argument supporting an increasing valuation, even in the absence of consumption.
Radlo was very keen on the long term outlook for oil and gas noting that supply is being curtailed and that crude shortages are sure to reoccur once consumption turns around.
Hopefully I'll be able to soon write about a turnaround in golds prospects. In the meantime I can only live in hope.
My portfolio is now down 4.7% from the Feb. 5th benchmark. This is better that a 9% decline for the TTGD Toronto Global Gold Index but worse than Dynamic Precious Metals Fund which is only down 1.7%.
In the last few days I've added to my Rubicon Minerals position and replaced a 1,000 share holding of Iamgold Corp. I also think that Coeur D'alene, a U.S. based silver producer has good prospects. I like very much the just announced amalgamation of New Gold (NGD-T) with Western Goldfields (WGI-T) the combined production of 30,000 oz/month is a 67% increase and catapults NGD into an intermediate producer status.
Wednesday's Globe and Mail notes: "With its $280-million merger deal with Western Goldfields Inc., New Gold Inc. hopes its plans to be the dominant consolidator of the junior gold sector are back on track. The friendly agreement to combine Western's Mesquite gold mine in California with New Gold's operations in Mexico, Australia and Canada is the next step in a bid to become a one-million-ounce-a-year producer by 2012, says New Gold chief executive officer Robert Gallagher. "We're going to continue this consolidation of gold-producing assets. Others talk of it, but we've got the vehicle in place now with this combination that really is the full package - the go-to consolidator," Mr. Gallagher said in an interview. The deal announced yesterday could be dubbed "New Gold: Take 2." Ten months ago, the Vancouver business unveiled a three-way merger deal intended to create a $1.5-billion gold company backed by a group of mining all-stars."
I rate the NGD.WT.A-T an outstanding speculation. This warrant expires in 2017, trades at 40 cents, and is calculated to have a fair MV of over $2 by canadianwarrants.com/values/current.htm ..... I hold 30,000 of these warrants with an average cost of $0.275/each. I'm now out $27,000 on margin. Nothing quite matches the feeling of fear one gets when they borrow money only to lose more money!
I attended a fund seminar yesterday and listened to Alan Radlo explain why he doesn't like gold related companies because gold shares don't seem to ever steadily increase/hold their value and because gold is not consumed. Two good points. Alan manages the newly started (1 year old) $700M Cambridge Funds but formerly grew several Fidelity funds including the very successful Canadian Asset Allocation and Fidelity Canadian Growth Co. funds. With respect to gold not being consumed, I would note that as the global population expands, the scarcity of gold ensures that the amount of gold per capita is a steadily decreasing value. This is not the same as outright consumption but assuming a universal desire to hold gold, it is an argument supporting an increasing valuation, even in the absence of consumption.
Radlo was very keen on the long term outlook for oil and gas noting that supply is being curtailed and that crude shortages are sure to reoccur once consumption turns around.
Hopefully I'll be able to soon write about a turnaround in golds prospects. In the meantime I can only live in hope.
Tuesday, February 24, 2009
Ouch! Gold Lust Abandoned Today
The DOW and TSX were up 200 points today for the first time since the Obama rescue package was approved. But my gold portfolio declined about 10% today and is now 1% below the Feb. 5th benchmark while bullion is up 5.7% over that same period. Gold futures fell over $35 today.
Bloomberg's published wisdom explaining the cause for this correction is "gold falls as demand ebbs after rally to $1,000". Unfortunately we can't verify or confirm that demand "ebbed" because SPDR inventories have remained unchanged for the past 4 days at 1,028.98 tonnes. For now I would tend to explain this correction as an adjustment that is quite typical of markets. I'm inclined to wait and see how gold moves over the next few trading sessions. If gold can't recover fairly quickly then the notion that we have been participating in a sucker gold rally gains more substance.
There appear to be a couple of incompatible notions about gold's future that I've heard. The first notion, which is most logical in my mind, is to expect gold to do best when we see the rescue package being put successfully into action because this stokes inflationary fires in the long run. That thinking seems straightforward enough. The other, more miserable notion, argues that gold will do best if the rescue package doesn't work because deflation and the related failure of government programs to kick start the economy will enhance golds desirability as a store of value. This 2nd notion seems to fit more closely with recent gold market behavior.
Bloomberg's published wisdom explaining the cause for this correction is "gold falls as demand ebbs after rally to $1,000". Unfortunately we can't verify or confirm that demand "ebbed" because SPDR inventories have remained unchanged for the past 4 days at 1,028.98 tonnes. For now I would tend to explain this correction as an adjustment that is quite typical of markets. I'm inclined to wait and see how gold moves over the next few trading sessions. If gold can't recover fairly quickly then the notion that we have been participating in a sucker gold rally gains more substance.
There appear to be a couple of incompatible notions about gold's future that I've heard. The first notion, which is most logical in my mind, is to expect gold to do best when we see the rescue package being put successfully into action because this stokes inflationary fires in the long run. That thinking seems straightforward enough. The other, more miserable notion, argues that gold will do best if the rescue package doesn't work because deflation and the related failure of government programs to kick start the economy will enhance golds desirability as a store of value. This 2nd notion seems to fit more closely with recent gold market behavior.
Wednesday, February 18, 2009
Performance Update ... Gold Consolidates Gains
Bullion moved up again today while mining stocks held onto their gains from yesterday.
Performance Information from Feb. 5th benchmark date:
SPDR tonnes: up 15.4%
Bullion (SPDR NAV): up 4.6%
Dynamic Precious Metals Fund: up 8.8%
Toronto Global Gold Index: up 7.9%
Jeff's Gold Stock Portfolio: up 16.7%
Kinross anounced Q4 results at the close today. As expected, production and cost results were outstanding but a previously announced goodwill write off might mute market response tomorrow. Hope not! Jeff holding 10,000 Kinross warrants.
Performance Information from Feb. 5th benchmark date:
SPDR tonnes: up 15.4%
Bullion (SPDR NAV): up 4.6%
Dynamic Precious Metals Fund: up 8.8%
Toronto Global Gold Index: up 7.9%
Jeff's Gold Stock Portfolio: up 16.7%
Kinross anounced Q4 results at the close today. As expected, production and cost results were outstanding but a previously announced goodwill write off might mute market response tomorrow. Hope not! Jeff holding 10,000 Kinross warrants.
Sunday, February 15, 2009
What Is Holding Gold Back?
Post Script to Feb. 11: GoldCorp Warrants didn't get sold as planned. The bid dropped down by over $1 the following day so I decided to hold for now. I was able to sell the balance of my Iamgold shares at a record high so my cash position increased. Meanwhile the value of my remaining precious metals related holdings has declined by 5%.
WHY DON'T GOLD RELATED STOCKS SURGE UP?
Most gold bugs, I expect (including myself), believe that the rationale for the ascendancy of gold to the preeminent position for global money seems obvious and compelling. Well if that's the case, why are gold mining stocks generally well below their 52 week highs and why isn't bullion breaking new highs?
Bill Carrigan, a longstanding and reputable independent technical analyst, wrote this Saturday (Valentines Day), Feb. 14, p. , Toronto Star, B7 as follows: "... Gold stocks continue to frustrate by refusing to keep pace with the recovery in bullion prices. As of mid-week there were only three new 52-week highs in the entire gold stock complex The broader AMEX Goldbugs Index (HUI) trading at 317 is still 39% below the its 52-week high of 519.6." He goes on to state that, "In order to confirm that the current run up in Gold is real, and not a sucker rally, we need the gold stocks to confirm the move by breaking to new 52-week highs. This means we need the TSX Gold Index to pop by at least 25% over the 400 level over the next few weeks."
I would like to offer my hypothesis for the slowness of gold to fulfill its potential. I think that given the unprecedented financial turmoil experienced since last Sept., we should all be surprised that gold has held up as well as it has. In the current incomprehensible, mixed up mess of a financial world, where investors are hoarding the $US as a 'safe haven currency', spot gold bullion @ US$940/oz is within 7.6% of its 17th of March, 2008 closing high of US$1,011. I would argue that it has not yet moved higher because the world still needs $US currency to wind down over-leveraged situations, the depth of these unstable positions is unfortunately beyond my capability to measure and I'm not sure if data is available in any case. The Saudi prince who must pay a casino debt; the investment fund manager who must collapse a long position to satisfy redemptions, and the Russian oligarch who must sell gold holdings to help offset falling revenues from other business sources all share in their needs to raise cash but their intentions escape measure until they act. So lets just recognize as fact that there are undoubtedly quite a few active & potentially large non-producer vendors of gold and that they will be tempted to sell into gold's current strength in order to satisfy deleveraging and cash flow liquidity requirements.
Thus my vision for the ascendancy of gold is that we must first work thru seller's inventories before gold really takes off. Or better stated, gold bullion sales will churn until vendors no longer feel it is in their interest to sell. Unfortunately this hypothesis complicates our ability to predict a date at which gold will really take off. I suspect that date is several months away from today and that the price of gold bouillon will continue to cause concern and frustration for us goldbug investors until one day, the urgent $US currency needs for deleveraging will have been largely satisfied and vendors will believe that it is no longer in their financial interest to sell.
What indicators are available that might reassure us golgdbugs that we are not simply being lured into another sucker gold rally? At this point we know that the recent 5 month gold stock upwards "trend is our friend" and the related upward move in bullion pricing is being watched around the globe.... but whether this trend will continue and accelerate is the question. Given that we have the above noted vendors we need to ask who is buying their holdings? I believe that one powerful measurable source of data for this question is the quantity of gold bullion being purchased by investment funds, gold trusts, etc. I was truly amazed to discover that just one of these funds, SPDR Gold Trust, has been purchasing, on behalf of its investors:
109.02 tonnes in 2006
174.64 tonnes in 2007
152.00 tonnes in 2008
205.63 tonnes ytd Feb 13, 2009.
Assuming that this story is repeated in other gold funds/trusts, net bullion demand by these funds is incredibly strong and implies that average investors, who are quite often wrong, are really getting involved in the global gold play.
Global Gold Production: To put this into perspective, the world's largest producer (est.8%-10% of total global mining of est. 2,500-2,700 tonnes/year), Barrick Gold, produces 20.2 tonnes/month (650,000 troy oz/month ... there are 32,150.746 troy ounces/ton).
Gold Demand Analysis is Complex: It is estimated that jewelry producers have used some 2,400- 2,700 tonnes/year of gold (ref. to National Geographic, Jan. 2009, p.43 and http://www.galmarley.com/FAQs_pages/production_consumption_faqs.htm). That's right, more gold has been used for jewelry production alone than is mined in a year. From a rational perspective, I would think that the demand for jewelry would decline but I'm the first to admit that I could be way off base. Human beings are emotional and in view of our harsh economic times and related financial crisis realities, buyers may well demand more gold jewelry now than ever before in response to a decline in purchasing power of currency. Unfortunately I think that this largest segment of gold demand is probably quite difficult to measure on a regular (monthly/weekly) basis and I would welcome any inputs on this topic from other readers. Other uses such as electronics & other industrial & dentistry (combined demand est. for 2007 = 460 tonnes) could also be in decline, but retail investment demand which includes bar hoarding, official coins, medals, special coins and exchange traded funds/trusts (combined est. for 2007 = 700 tonnes) is very likely increasing sharply.
Demand Measurement Conclusion: So as far as I can determine, we only have one element of gold's complex demand equation that we can measure semi-accurately on a regular weekly or monthly basis and that is the inventory of gold held in gold trusts and exchange traded funds. So lets keep our eyes on this and remember that individual investors in these trusts can dispose of gold interests just as fast (or faster) than the accumulated them.
Price Surge Conclusion: From the above discussion we can see that it is unrealistic to expect the complex gold market to respond instantly to news regarding one or two factors in the demand-supply equation. Furthermore we should anticipate large fluctuations and volatility in this market. That is why I plan to sell significant portions of many of my holdings after they have appreciated substantially. I don't think that this gold rally is much different from other booming investment sectors that I've come across in the past. Bullion is unlikely headed for $2,000+/oz on a straight line basis. I'm convinced investors will have several outstanding opportunities to participate in a long term gold rally yet there will also be many instances where we will wish that we stayed invested.
However I think that we should expect both bullion and gold mining stocks to trend upwards, if they don't, we need to rethink our entire hypothesis. I'm not sure we should establish deadlines but if gold fund/trust demand continues at present levels, I would expect to see a solid move upwards, 25% to 50% for most of our holdings, as they return to or exceed previous 52wk highs. My guess is that this will happen in the next month or two but with all the noise of the global financial crisis in the background, it is really difficult to call. I also think that as bullion surpasses $1,011/oz, non-producing sellers of gold will become increasingly reluctant to off load their inventories as hoarding & greed will more likely improve ROI prospects.
Things will go wrong...for example there will very likely be news that implies surprising strength in currency and various elements of the gold supply & demand equation will come into question. One can imagine headlines as follows: Dentists no longer using gold; "Peak Gold" theory in doubt; Russia Nationalizes Gold Production; Tax Bill proposed to disallow interest costs on money borrowed for gold related investments; etc. Secondly investors like myself, and the technical analyst Bill Carrigan quoted above, who invest in gold producing companies should not expect mining stocks to necessairly match increases in the price of bullion. We have seen this decoupling phenomenon before when we were oil and gas investors ... oil, the underlying commodity price, went from $80/bl to $140/bl (up 75%) but our O & G income trust or integrated oil company typically only increased by 35% to 40%. Why? because investors didn't think that $140/bl oil was sustainable. Turns out they were right. So let's anticipate a substantial lag in the appreciation of gold mining shares compared to bullion prices. In fact, we need to determine if we wouldn't be wiser to simply switch investment strategy into a bullion play.
This lag will happen unless we are presented with a series of events that unquestionably convinces all of us that astronomical gold prices are here to stay for a long, long time. In light of the current global financial crisis I think that this outcome is possible. Furthermore we should build this possibility into our investment strategy but I'm not sure we want it to happen. If it does, we might make a few bucks but, we will not be able to look forward to a very satisfying, enjoyable old age for ourselves or a promising future for our children.
WHY DON'T GOLD RELATED STOCKS SURGE UP?
Most gold bugs, I expect (including myself), believe that the rationale for the ascendancy of gold to the preeminent position for global money seems obvious and compelling. Well if that's the case, why are gold mining stocks generally well below their 52 week highs and why isn't bullion breaking new highs?
Bill Carrigan, a longstanding and reputable independent technical analyst, wrote this Saturday (Valentines Day), Feb. 14, p. , Toronto Star, B7 as follows: "... Gold stocks continue to frustrate by refusing to keep pace with the recovery in bullion prices. As of mid-week there were only three new 52-week highs in the entire gold stock complex The broader AMEX Goldbugs Index (HUI) trading at 317 is still 39% below the its 52-week high of 519.6." He goes on to state that, "In order to confirm that the current run up in Gold is real, and not a sucker rally, we need the gold stocks to confirm the move by breaking to new 52-week highs. This means we need the TSX Gold Index to pop by at least 25% over the 400 level over the next few weeks."
I would like to offer my hypothesis for the slowness of gold to fulfill its potential. I think that given the unprecedented financial turmoil experienced since last Sept., we should all be surprised that gold has held up as well as it has. In the current incomprehensible, mixed up mess of a financial world, where investors are hoarding the $US as a 'safe haven currency', spot gold bullion @ US$940/oz is within 7.6% of its 17th of March, 2008 closing high of US$1,011. I would argue that it has not yet moved higher because the world still needs $US currency to wind down over-leveraged situations, the depth of these unstable positions is unfortunately beyond my capability to measure and I'm not sure if data is available in any case. The Saudi prince who must pay a casino debt; the investment fund manager who must collapse a long position to satisfy redemptions, and the Russian oligarch who must sell gold holdings to help offset falling revenues from other business sources all share in their needs to raise cash but their intentions escape measure until they act. So lets just recognize as fact that there are undoubtedly quite a few active & potentially large non-producer vendors of gold and that they will be tempted to sell into gold's current strength in order to satisfy deleveraging and cash flow liquidity requirements.
Thus my vision for the ascendancy of gold is that we must first work thru seller's inventories before gold really takes off. Or better stated, gold bullion sales will churn until vendors no longer feel it is in their interest to sell. Unfortunately this hypothesis complicates our ability to predict a date at which gold will really take off. I suspect that date is several months away from today and that the price of gold bouillon will continue to cause concern and frustration for us goldbug investors until one day, the urgent $US currency needs for deleveraging will have been largely satisfied and vendors will believe that it is no longer in their financial interest to sell.
What indicators are available that might reassure us golgdbugs that we are not simply being lured into another sucker gold rally? At this point we know that the recent 5 month gold stock upwards "trend is our friend" and the related upward move in bullion pricing is being watched around the globe.... but whether this trend will continue and accelerate is the question. Given that we have the above noted vendors we need to ask who is buying their holdings? I believe that one powerful measurable source of data for this question is the quantity of gold bullion being purchased by investment funds, gold trusts, etc. I was truly amazed to discover that just one of these funds, SPDR Gold Trust, has been purchasing, on behalf of its investors:
109.02 tonnes in 2006
174.64 tonnes in 2007
152.00 tonnes in 2008
205.63 tonnes ytd Feb 13, 2009.
Assuming that this story is repeated in other gold funds/trusts, net bullion demand by these funds is incredibly strong and implies that average investors, who are quite often wrong, are really getting involved in the global gold play.
Global Gold Production: To put this into perspective, the world's largest producer (est.8%-10% of total global mining of est. 2,500-2,700 tonnes/year), Barrick Gold, produces 20.2 tonnes/month (650,000 troy oz/month ... there are 32,150.746 troy ounces/ton).
Gold Demand Analysis is Complex: It is estimated that jewelry producers have used some 2,400- 2,700 tonnes/year of gold (ref. to National Geographic, Jan. 2009, p.43 and http://www.galmarley.com/FAQs_pages/production_consumption_faqs.htm). That's right, more gold has been used for jewelry production alone than is mined in a year. From a rational perspective, I would think that the demand for jewelry would decline but I'm the first to admit that I could be way off base. Human beings are emotional and in view of our harsh economic times and related financial crisis realities, buyers may well demand more gold jewelry now than ever before in response to a decline in purchasing power of currency. Unfortunately I think that this largest segment of gold demand is probably quite difficult to measure on a regular (monthly/weekly) basis and I would welcome any inputs on this topic from other readers. Other uses such as electronics & other industrial & dentistry (combined demand est. for 2007 = 460 tonnes) could also be in decline, but retail investment demand which includes bar hoarding, official coins, medals, special coins and exchange traded funds/trusts (combined est. for 2007 = 700 tonnes) is very likely increasing sharply.
Demand Measurement Conclusion: So as far as I can determine, we only have one element of gold's complex demand equation that we can measure semi-accurately on a regular weekly or monthly basis and that is the inventory of gold held in gold trusts and exchange traded funds. So lets keep our eyes on this and remember that individual investors in these trusts can dispose of gold interests just as fast (or faster) than the accumulated them.
Price Surge Conclusion: From the above discussion we can see that it is unrealistic to expect the complex gold market to respond instantly to news regarding one or two factors in the demand-supply equation. Furthermore we should anticipate large fluctuations and volatility in this market. That is why I plan to sell significant portions of many of my holdings after they have appreciated substantially. I don't think that this gold rally is much different from other booming investment sectors that I've come across in the past. Bullion is unlikely headed for $2,000+/oz on a straight line basis. I'm convinced investors will have several outstanding opportunities to participate in a long term gold rally yet there will also be many instances where we will wish that we stayed invested.
However I think that we should expect both bullion and gold mining stocks to trend upwards, if they don't, we need to rethink our entire hypothesis. I'm not sure we should establish deadlines but if gold fund/trust demand continues at present levels, I would expect to see a solid move upwards, 25% to 50% for most of our holdings, as they return to or exceed previous 52wk highs. My guess is that this will happen in the next month or two but with all the noise of the global financial crisis in the background, it is really difficult to call. I also think that as bullion surpasses $1,011/oz, non-producing sellers of gold will become increasingly reluctant to off load their inventories as hoarding & greed will more likely improve ROI prospects.
Things will go wrong...for example there will very likely be news that implies surprising strength in currency and various elements of the gold supply & demand equation will come into question. One can imagine headlines as follows: Dentists no longer using gold; "Peak Gold" theory in doubt; Russia Nationalizes Gold Production; Tax Bill proposed to disallow interest costs on money borrowed for gold related investments; etc. Secondly investors like myself, and the technical analyst Bill Carrigan quoted above, who invest in gold producing companies should not expect mining stocks to necessairly match increases in the price of bullion. We have seen this decoupling phenomenon before when we were oil and gas investors ... oil, the underlying commodity price, went from $80/bl to $140/bl (up 75%) but our O & G income trust or integrated oil company typically only increased by 35% to 40%. Why? because investors didn't think that $140/bl oil was sustainable. Turns out they were right. So let's anticipate a substantial lag in the appreciation of gold mining shares compared to bullion prices. In fact, we need to determine if we wouldn't be wiser to simply switch investment strategy into a bullion play.
This lag will happen unless we are presented with a series of events that unquestionably convinces all of us that astronomical gold prices are here to stay for a long, long time. In light of the current global financial crisis I think that this outcome is possible. Furthermore we should build this possibility into our investment strategy but I'm not sure we want it to happen. If it does, we might make a few bucks but, we will not be able to look forward to a very satisfying, enjoyable old age for ourselves or a promising future for our children.
Wednesday, February 11, 2009
Feb. 11th Was a Good Day for My Gold Portfolio
Yep, my little mix of warrants & stocks gained almost $15,000 today while Jackie & I were watching "The Color Purple" at the Canon Theatre in downtown Toronto. The biggest bump up was in GoldCorp Wts. up a neat 24.3% today while Kinross Wts. gained a not too shabby 15.6%. My portfolio is now up 10.7% from my starting Feb. 5th benchmark measure and that beats the TTGD Index, up 5.1% and SPDR Gold Trust, up 1.9% and Gold Futures (April), up 3.2%. This makes me feel good about my selection and approach.
Goldcorp Wts. are very close to a reasonable short term (ST) selling target and I might let them go tomorrow. What a trade that would be since I purchased them on Jan 14th for $6.25 and would sell them between $11-$12. My other holdings are well below fair market value as caculated on the Canadian Stock Warrants website.
It blows my mind to think that in the past 5 days (since my benchmark Feb. 5th, 2009) 67.9 Tonnes of gold have been purchased into the SPDR Gold Trust, that's 1,571,952 ozs !
Goldcorp Wts. are very close to a reasonable short term (ST) selling target and I might let them go tomorrow. What a trade that would be since I purchased them on Jan 14th for $6.25 and would sell them between $11-$12. My other holdings are well below fair market value as caculated on the Canadian Stock Warrants website.
It blows my mind to think that in the past 5 days (since my benchmark Feb. 5th, 2009) 67.9 Tonnes of gold have been purchased into the SPDR Gold Trust, that's 1,571,952 ozs !
Tuesday, February 10, 2009
Gold Treading Water While TSX & DOW Plunge
Bouillon rallied back to it's Feb. 5th level while most other holdings traded lower on concerns about the lack of details in U.S. Treasury Secretary Timothy Geithner's bank recovery plan.
My Precious Metals Stock Portfolio is down 1.1% from its Feb. 5th startup position while Bouillon is flat; the TTGD Index is down 1.4% and SPDR shares are down 1.1% as well. I was hoping to buy back some Iamgold shares today at a 8-10% discount from Feb. 5 close but yesterday's selloff did not continue.
I was surprised to learn today that the SPDR Gold Inventory has been increasing at a rate of 790,000 ozs/month since Sept. 30th of last year. This is a good reference website with lots of historical information. This data supports my hypothisis that gold fund buyers are likely replacing jewelry and other industrial use buyers on the demand side of golds price equation. I still think that there are still plenty of sellers out there such as Saudis, Russians & Chinese but Joe Average is definately offsetting selling pressure. I still want to see Gold break thru the $1,025/oz level before going out big on margin.
My Precious Metals Stock Portfolio is down 1.1% from its Feb. 5th startup position while Bouillon is flat; the TTGD Index is down 1.4% and SPDR shares are down 1.1% as well. I was hoping to buy back some Iamgold shares today at a 8-10% discount from Feb. 5 close but yesterday's selloff did not continue.
I was surprised to learn today that the SPDR Gold Inventory has been increasing at a rate of 790,000 ozs/month since Sept. 30th of last year. This is a good reference website with lots of historical information. This data supports my hypothisis that gold fund buyers are likely replacing jewelry and other industrial use buyers on the demand side of golds price equation. I still think that there are still plenty of sellers out there such as Saudis, Russians & Chinese but Joe Average is definately offsetting selling pressure. I still want to see Gold break thru the $1,025/oz level before going out big on margin.
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