Current Holdings:
Cash $104K
New Gold Warrants 37,500 units ($112K)
Victoria Gold 25,000 shares ($34K)
ECU Silver Warrants 43,000 units ($28K)
Franco Nevada Warrants 3,000 units ($17K)
Petroamerica Oil Corp. Warrants 75,000 units ($14K)
Kinross Gold Warrants D 2,000 units (under $10K)
Rio Novo Gold Warrants 8,000 units
Takara Resources 7,000 shares
TOTAL PORTFOLIO MARKET VALUE (incl. cash)...$330.7K
Percentage Increase Since Inception (Feb 5, 2009): 197%
With spot gold off over 5% from its recent $1,420/oz high, and with $100K cash on hand, What is my strategy now?
I think that the market has only partially factored the QE2, currency, and debt situations so I don't see that the gold game is anywhere near its end. Since we've just come off a 35% rally (since Feb. 1st, 2010) in spot gold and related markets it should surprise no one if we see some consolidation at current prices before we see another big run up. So I plan to simply take advantage of any rotational weakness in the prices of any of my above holdings (also Agnico-Eagle Warrants in my US$ account) to increase my positions. I hope that I have enough patience to do a proper job with this strategy however I expect to be fully invested again by year-end. I plan to move into a broker margin situation should we experience a major correction (over 25%).
Friday, November 19, 2010
Wednesday, October 13, 2010
QUANTITATIVE EASING 2 (QE2)
I was treated today to a presentation and Q&A with the highly respected CIO of Signature Global Advisors, Eric Bushell, who oversees about $28B assets. Often, when I attend this type of meeting, I depart with my head full of improved articulation and definition of both preexisting thoughts and new ideas. This is a great aid for my ability to communicate with friends and clients.
For instance I have sensed for the best part of a year that Gold's value ascendancy is highly related to a declining level of confidence in the currency of developed economies to store and hold value. Today I learned that there is in fact a new world order where the G20 is replacing the G7 in terms of economic might. Today, it is estimated that 37% of global capital market value is attributable to emerging economies and that by 2030 this will climb to 60%. Yes, a new world order is here. An arrangement where the developed West is loosing control.
When Lehman Bros. filed for bankruptcy in Sept., 2008, Chinese confidence in the then existing financial framework was destroyed and they are now aggressively advocating, and will eventually negotiate, a new framework along with a new reserve currency paradigm. We are likely to see countries like Brazil and India support this new framework since they want desperately to avoid the devastating boom and bust characteristics of our free flow of capital past.
Capital is migrating quickly to developing countries. Individuals, corporations and capital pool managers see little risk in borrowing at 1-3% interest rates and investing in developing countries where 10-20% returns are normal. This of course further exacerbates stagnating economies of the developed world and QE2 will further accelerate this flow.
QE2 (a press acronym for "quantitative easing round 2") is the label that has been placed on the expected new round of U.S. monetary stimulus designed to boost the U.S. economy. Since the Democrats are likely to loose their numerical theoretical control of the US congress, after the Nov. mid-term elections, physical (policy driven) stimulus will not likely be possible. Thus monetary policy (printing money) will be used to further help the cause. When the markets got wind of this possibility back in late July, they started to rise with commodities leading the way. Spot gold bullion has climbed to $1,375/oz from $1,162/oz, an increase thus far of over 18%!
I personally asked Eric Bushell what circumstances would gold investors need to see before they ran to cash? Without hesitation he said that if QE2 is put on hold or somehow fails to materialize, gold markets will fall back and in the longer term gold markets will decline when real interest rates turn positive. Simplicity is beautiful.
What this tells me is that this gold ride I've been on has potentially many more months to run.
Another side piece of information that puzzles me is that since August, this gold rally has not been driven by gold hoarders. SPDR bullion inventory tonnes have actually declined slightly...I can't figure that out. I've heard that Indian jewelry producers are traditionally big seasonal buyers of gold at this time of year but I would have expected gold trust investors to increase (not decrease) their holdings as the spot bullion price rose.
For instance I have sensed for the best part of a year that Gold's value ascendancy is highly related to a declining level of confidence in the currency of developed economies to store and hold value. Today I learned that there is in fact a new world order where the G20 is replacing the G7 in terms of economic might. Today, it is estimated that 37% of global capital market value is attributable to emerging economies and that by 2030 this will climb to 60%. Yes, a new world order is here. An arrangement where the developed West is loosing control.
When Lehman Bros. filed for bankruptcy in Sept., 2008, Chinese confidence in the then existing financial framework was destroyed and they are now aggressively advocating, and will eventually negotiate, a new framework along with a new reserve currency paradigm. We are likely to see countries like Brazil and India support this new framework since they want desperately to avoid the devastating boom and bust characteristics of our free flow of capital past.
Capital is migrating quickly to developing countries. Individuals, corporations and capital pool managers see little risk in borrowing at 1-3% interest rates and investing in developing countries where 10-20% returns are normal. This of course further exacerbates stagnating economies of the developed world and QE2 will further accelerate this flow.
QE2 (a press acronym for "quantitative easing round 2") is the label that has been placed on the expected new round of U.S. monetary stimulus designed to boost the U.S. economy. Since the Democrats are likely to loose their numerical theoretical control of the US congress, after the Nov. mid-term elections, physical (policy driven) stimulus will not likely be possible. Thus monetary policy (printing money) will be used to further help the cause. When the markets got wind of this possibility back in late July, they started to rise with commodities leading the way. Spot gold bullion has climbed to $1,375/oz from $1,162/oz, an increase thus far of over 18%!
I personally asked Eric Bushell what circumstances would gold investors need to see before they ran to cash? Without hesitation he said that if QE2 is put on hold or somehow fails to materialize, gold markets will fall back and in the longer term gold markets will decline when real interest rates turn positive. Simplicity is beautiful.
What this tells me is that this gold ride I've been on has potentially many more months to run.
Another side piece of information that puzzles me is that since August, this gold rally has not been driven by gold hoarders. SPDR bullion inventory tonnes have actually declined slightly...I can't figure that out. I've heard that Indian jewelry producers are traditionally big seasonal buyers of gold at this time of year but I would have expected gold trust investors to increase (not decrease) their holdings as the spot bullion price rose.
Saturday, September 18, 2010
WHERE WAS JEFF FOR THE PAST YEAR?
On Sept 1, 2009 I fell off a ladder fracturing most of my ribs, puncturing my right lung and breaking my back...I was hospitalized for 6 weeks. Interestingly I didn't loose interest in Gold during my recovery and with the help of my wife, Jackie, managed to execute a number of trades during late Sept. and Oct. 2009. I ended 2009 with my portfolio worth about $160K.
Unfortunately I forgot how to post to this blog and wasn't able to figure it out until today, Sept. 18, 2010.
Unfortunately I forgot how to post to this blog and wasn't able to figure it out until today, Sept. 18, 2010.
Gold is Good
Since August 26th I have eliminated a $35K margin position by selling $100K worth of precious metals related stock investments into a gold bouillon rally that started late July, 2010, with gold @ $1,160/oz & my portfolio @ $180K. Today, September 17, 2010, Bullion is at $1,278 (up 10.2%) while my portfolio is worth $247K.
My portfolio, by the grace of God, is up 122% since Feb. 5th, 2009 for which I am grateful, but I cannot claim any great prowess since the Dynamic Precious Metals Fund is up 130% over the same interval. In other words I would have been 8% richer had I simply entrusted my capital to this professional management team .... but then, I would not have had nearly as much fun!
My major holdings are Cash: $63K, New Gold Warrants ($67.6K MV), Victoria Gold ($36K), Franco Nevada Warrants 20.1K, Agnico-Eagle Warrants $23K and ECU Silver Wts. $14.6K. New Gold and Victoria look especially promising as longer term holds.
This summer I've taken new exploratory positions in Petroamerica Oil corp. Warrants and Takara Resources inc.
If this rally continues, I plan to sell Franco Nevada and smaller portions of my other holdings, increasing cash to perhaps $100K.
My portfolio, by the grace of God, is up 122% since Feb. 5th, 2009 for which I am grateful, but I cannot claim any great prowess since the Dynamic Precious Metals Fund is up 130% over the same interval. In other words I would have been 8% richer had I simply entrusted my capital to this professional management team .... but then, I would not have had nearly as much fun!
My major holdings are Cash: $63K, New Gold Warrants ($67.6K MV), Victoria Gold ($36K), Franco Nevada Warrants 20.1K, Agnico-Eagle Warrants $23K and ECU Silver Wts. $14.6K. New Gold and Victoria look especially promising as longer term holds.
This summer I've taken new exploratory positions in Petroamerica Oil corp. Warrants and Takara Resources inc.
If this rally continues, I plan to sell Franco Nevada and smaller portions of my other holdings, increasing cash to perhaps $100K.
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