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!
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Hmmm, ALMOST got into the AUY $9.00 puts for April expiration this morning with my offer to sell 20 contracts @ 0.85 BUT although I was equal to the low asking price for several minutes the darn thing moved away from me. Yamana is now trading at $8.85 up from a low of $8.55 half an hour ago. That'll teach me not to resubmit every five cents from 0.65 to 0.85 trying to catch AUY at the bottom!
ReplyDeleteI did get into the AUY $9 puts for April expiration on April 3. Only got 75 cents apiece for them, and at this point it looks like I will indeed be buying the stock at $9 a week from Monday. $9 - 0.75 = $8.25, my price, so I hope market price is at least above that a week from Monday so I get some little advantage on the buy for all this effort!
ReplyDeleteLooks like I won't be making anything in gold related for awhile. I'm glad Jeff sold what he did, when he did. Anyone know what's next?
ReplyDeleteWell, finally! A nice move in gold this morning. Still down plenty from what I paid but it is looking better.
ReplyDeleteI see KWTC is still trading at $3.65. I remember when that was well over $5. Unfortunately, it is very difficult for me to take advantage of this as a US customer of Schwab. I might as well get it off my watch list....