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.
Wednesday, April 29, 2009
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!
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