The past few months have put gold in the spotlight, and for good reason. The metal has shot up from below $1,000 per ounce in 2009, all the way to its current levels above $1,500. As markets around the world continue to falter, gold has seen a massive amount of inflows as it has long been the popular safe haven investment. Now that the Swiss franc is pegged to the euro, many consider gold to be the last remaining safe haven, as the once strong franc will now be dictated by the movements of the drowning euro. But with gold seeing its price nearly triple in the last several years, many investors are formulating strong opinions as to whether or not the precious metal is overvalued and due for a huge correction in the near term [for more gold news and analysis subscribe to our free newsletter].
In the current market environment, equities are exhibiting extreme volatility, and bonds yields are at an all time low, forcing investors to find their returns elsewhere. With so much instability, and the strong returns that gold has posted, it makes sense that it has surged in popularity over the last three years. Yet, as the commodity continues to climb, it has become clear that it is overvalued by some metrics. Below, we outline the specific reasons why gold’s price is inflated, and what makes this asset class one that investors need to keep their eye on for bubbles in the near future:
1. Gold is Gold is Gold
Let’s look at the facts. Gold is finite mineral that is considered a rare find, giving it such a high price per ounce. It does not pay dividends and it has no underlying benchmark, it simply sits in lumps in vaults all over the world. The past few years has not seen a massive change in the amount of gold in existence; if there were to somehow be a massive loss of gold around the world, it would certainly make sense to see its price skyrocket. Instead, the metal is just as rare today as it was 20 years ago, you could even argue that with all of the mining giants around the world that gold has become more abundant [see also Warning: Ignore Bill Gross’ Hard Money Prediction At Your Own Risk].
Nothing about gold has changed in the last few years, so why the massive appreciation in price? Any other commodity, like lumber or cotton, that saw this kind of exponential jump would be under major scrutiny. And cotton, in fact, did bottom-out after seeing its highest prices in history, putting it at the top of headlines for quite some time. Investor speculation and market scares have all contributed to gold’s meteoric rise, and if equities were ever to get their act together, gold would be in for a massive sell-off. Its price is held up by flimsy markets and a cloudy future, but if skies were to ever clear for our economy, investors would pile into equities, leaving the inflated gold to plummet.
2. Gold is Overbought
One of the most popular benchmarks for gold investment comes from the SPDR Gold Trust (GLD), an ETF that offers exposure to physical bullion. Looking at the average volumes of GLD, it is clear that the metal has been overbought as of late. In August of 2011, GLD had an average daily volume of 33.4 million, which is a huge increase compared to ADVs of 7.4 million and 9.8 million in August of ’09 and ’10, respectively. In fact, last month saw an astonishing increase in volume of over 244% from the previous year’s August and 351% compared to August ’09, leaving screaming evidence of the unnatural volumes in gold. Because markets have been so abysmal, gold has seen an extremely high amount of trading, but this is not the first time gold has seen this kind of move [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].
In 1980, gold prices experienced a very similar pattern that we see today. In the late 70′s markets dealt with inflation and tumultuous equities, while investors piled into gold, causing its price to jump from around $200 per ounce in 1978, all the way past $800 in 1980. With an exponential rise in gold prices, increasing fourfold in fact, the metal crashed in the subsequent two years all the way back below $400 per ounce, creating painful losses for a number of investors. Gold prices are exhibiting an eerily similar pattern today, as prices have jumped threefold since 2006 in an exponential fashion. If investors were to ever consider the phrase “history repeats itself”, now may be a good time to keep a close eye on gold.
3. Portfolio Rebalancing
As pointed out by Simon Oates from Financial Expert, gold may be poised for a loss simply based on the portfolios of a number of individuals and institutions alike. When it comes to portfolio allocations, a well-diversified basket of holdings is key, and that means that investors will try and spread their exposure across numerous asset classes. Commodities, like gold, are typically given a small portion of a portfolio usually ranging between 5% and 10% of total assets. However, for those investors lucky enough to have held a product like GLD over the last five years, they have seen not only massive gains, but now a major increase in their commodity allocations as well [see also The Guide To The Biggest Companies In Every Major Commodity Sector].
As a result, gold, an asset that is often meant for the “buy and hold” investor, now makes up a much larger percentage of many portfolios than what was originally planned. While investors are likely very aware of this, it is difficult to sell out of an asset that has multiplied so rapidly in recent years. Soon enough, however, it will come time to scale back on the now too-large commodity allocations and prompt a healthy rebalance. This could send gold for a massive drop as a number of investors sell out to keep their portfolio reasonably diversified and avoid putting too much in the precious metal.
Final Thoughts
One of the most important things to remember is that while gold may be overvalued, that does not mean that it is a bad investment, but is rather a factor to keep an eye on. It would be absurd to call gold a bad investment given its historic gains in recent years, but that also does not mean that it is safe at its current levels. For as long as market volatility persists, gold will be able to keep its high prices afloat, but when the day comes where equities finally break ground, this shiny metal will likely suffer a massive drop. When that will happen though, could be anywhere from one year to decades depending on who you ask. Instead, investors simply need to keep a close eye on their gold holdings, and be ready to pull the trigger if and when our economy pulls itself out of its downward spiral and confidence once again returns to the markets [see also Major Countries Burn Up Crude Reserves: Big Oil In Trouble?].
Don’t forget to subscribe to our free daily commodity investing newsletter and follow us on Twitter @CommodityHQ.
Disclosure: No positions at time of writing.
[...] Gold has been an extremely popular commodity recently as its price has skyrocketed over the past few years. Now that the Swiss franc is officially pegged to the euro, many feel that this is the last safe-haven investment available. While there are a number of massive gold miners, Newmont Mining Corporation is one of the better value options. Newmont is based in Denver, Colorado, and is among the world’s largest gold producers. Active mines for the company lie all over the world in places like Indonesia, Australia, Ghana, and the US. As of the end of 2010, the company produced 5.4 million ounces of gold annually while boasting proven reserves nearing 94 million. While its dividend yield of 1.8% isn’t anything extreme, when compared to the rest of its sector, NEM makes for one of the best dividend plays [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] One of the biggest ETF losers on the day was the Market Vectors TR Gold Miners (GDX), which faced significant headwinds after gold’s dismal performance on the week. While gold has been consistently hovering around the $1,800/oz barrier, this week saw it tumble all the way below $1,700/oz, with most of the losses occurring today. Gold itself fell 5.7% while GDX managed to lose only 4.9%, an interesting result given that GDX is typically thought of as a leveraged play on gold itself. Top holdings in this ETF include bellwether mining firms like Barrick Gold and Newmont Mining [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] This past week saw markets take a wild ride, as investors had a wealth of data and news to digest from around the world. The biggest news came from Fed Chairman Ben Bernanke’s speech on Wednesday, in which he outlined the up and coming “Operation Twist” to make yet another attempt at jump-starting our economy. Apparently, investors were less than impressed as the following day saw a massive sell-off that sent major indexes tumbling. Another surprise came from gold, which fell all the way below $1,700/oz as the week drew to a close, creating an interesting buying opportunity for the wealth of gold bugs in today’s environment [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] This fund employs a unique strategy that has made it one of the best performing exchange traded products this year. SPHG tracks an index which seeks to simulate the combined returns of investing equal dollar amounts in the S&P 500 Total Return Index and long positions in near-term exchange-traded COMEX gold futures contracts to help hedge against losses in either direction. The fund charges an expense ratio of 0.85%, but the steep expenses may be worth it upon seeing its robust returns [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Gold bullion is perhaps the safest and most hassle-free way to maintain gold exposure. The biggest issue when holding physical bullion comes from purchasing the metal itself, which can run up costs exponentially depending on the amount that someone wishes to purchase. Gold bullion allows an investor to know exactly where their money went, what it is worth, and immediate access to the metal should they ever need it. For those that can afford to purchase physical bullion, your only real worry is where to store it and keep it safe [see also Three Reasons Why Gold Is Overvalued]: [...]
[...] Gold bullion is perhaps the safest and most hassle-free way to maintain gold exposure. The biggest issue when holding physical bullion comes from purchasing the metal itself, which can run up costs exponentially depending on the amount that someone wishes to purchase. Gold bullion allows an investor to know exactly where their money went, what it is worth, and immediate access to the metal should they ever need it. For those that can afford to purchase physical bullion, your only real worry is where to store it and keep it safe [see also Three Reasons Why Gold Is Overvalued]: [...]
[...] lose only 4.9%, an interesting result given that GDX is typically thought of as a leveraged play on gold itself. Top holdings in this ETF include bellwether mining firms like Barrick Gold (ABX) and [...]
[...] Investing the equity side of the equation isn’t a pure play on the metal, but it can make for a number of interesting opportunities that other investment vehicles simply don’t offer. Equities that focus on metals will most often consist of mining, exploration, or refining companies which can offer a number of advantages over other options. A fair amount of these companies offer strong dividend options and high liquidity for traders of all kinds [see also Three Reasons Why Gold Is Overvalued]: [...]
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There has never been a modern world situation where fiat currencies, escalating debt, and increasingly unbearable sovereign debts that have conspired to make fiscal irresponsibility the accepted norm across the majority the globes major industrial economies.
This is the bubble that we should all worry about since there is no politically tenable solution to it. A global economic bubble burst is inevitable given ever weaker populaces that elect politicians who reflect their accelerating degradation standards of personal responsibility.
What I find most amusing is how clever we are at kicking the can of our collective Waterloo down the road. Never underestimate human ingenuity! The fact that money is flying to the US dollar from the Euro demonstrates how short sighted money flows are. Apparently money managers are perfectly happy to fly out of the Euro pan into the dollar fire. Since, we a talking about very intelligent people, clearly these money managers feel that they will be able to jump out of the dollar fire before they actually get burned.
I cannot predict the timelines of the global economic demise that is the collective inevitable outcome that our collective foolishness of this foolishness will earn, however you can pretty much take to the bank the fact that it will take longer than expected. What will replace fiat currencies will probably be some sort of commodity based basket that has “real world” value and cannot be manipulated by governments hell bent on appeasing their increasingly degenerate populaces with a standard of living achieved though government distributed borrowed wealth.
It is a certainty that precious metals will play an important role in any currency basket, but other core commodities that provide energy and much needed staple foods seem make a great deal of sense as well.
One thing that does not make any sense is that fiat government currencies subject to hijack by irresponsible politicians should have any real world value. In the long run, a bitter fate is in store for those who squander countries’ long term prosperity in return for their short term job security.
Sooner or later, that political aristocracy they will meet the same fate that the monarchies of past received when the masses finally rebelled. Let’s just say the the details of that revolt may be hard to predict, but it is sure bet that it is going to get very ugly. Don’t you think?
We all owe it to ourselves to pay ourselves back when we borrow money from ourselves because we will go broke if we don’t pay ourselves back when we borrow our own money from ourselves.
Its all just permission to do things
“If and when our economy pulls itself out of its downward spiral” says it all
The only “problem” is see with the economy is a class of over valued assets called “owners” who do not generate productive outputs.
You need more for gold to collapse. Here are a few factors that would help push gold down a lot:
1. Greece pays its debts.
2. The PIIGS balance their budget and start paying down their huge debts.
3. The USA balances its budget and reforms its entitlements (real reform needed).
4. Central Banks around the world stop printing money and keep interest rates above inflation.
5. The big Western banks become safe again.
Until then, don’t sell your gold.
Or, humans could stop wasting money on shiny rocks used for ornamental purposes
[...] Perhaps a many renouned benchmark for bullion prices comes from a SPDR Gold Trust (GLD), that represents earthy bullion bullion. The account has over $64 billion in resources and an normal daily volume of scarcely 25 million, creation it one of a largest supports in a world. GLD started off a year delayed though steady; a account non-stop 2011 during $138.72, and was means to post gains of 5.3% by a initial half of a year. But as a third entertain rolled around, bullion took a drum coaster float that led to a series of investors branch vital increase and waste comparison [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] While investors and experts will argue over whether gold is ready to dive or jump, one glaring opportunity lurks behind the luster of the metal; mining stocks. 2011 saw a number of mining firms get off to a rough start despite gold itself performing exceptionally well. After having such a strong 2010, many investors were frustrated to watch their mining stocks dive while gold itself surged, after all, miners are typically thought of as a leveraged play on gold. So while gold has been climbing, these major mining firms have seen little appreciation in price, leaving them to be undervalued by many standards [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] As experts have argued over gold’s next move, many are citing harsh economic conditions for the main culprit of why gold has a major upside potential. It seems that most of 2011 has been gobbled up by gold headlines, as the metal was smashing record prices on a monthly basis. A number of investors quickly scrambled in to cash in on gold’s success, all the while, gold’s sister metal, silver, was flying largely under the radar. Though silver got a fair amount of attention early on in the year, it has been all gold since. However, investors may want to rethink this, and give the white metal a closer look as we approach the end of the year [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Investing in commodities has certainly picked up in recent years, but it seems that the overall industry has begun to experience some growing pains. As is common with newer investment types (not that commodities are new, but their heavy popularity is), analysts will lash out and tell investors why this asset class is bad news. Such is the case with a recent article in the Wall Street Journal entitled “The Case Against Commodities“. This piece outlines a number of the dangers and issues that come along with commodity investing. But investors shouldn’t take it at face value, as there are a number of factors that WSJ neglected to mention [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] While this may sound similar to GDX, the implications of the ‘generates vast majority of their business from gold mining’ section are profound. In total, close to 95% of component securities revenues come from gold mining, ensuring that the fund is heavily correlated to gold prices and not to more industrial metals which have a very different investment outlook. This method also helps to exclude a number of large mining firms giving the product a tilt towards mid and small cap securities instead, which could increase volatility when compared to more ‘traditional’ gold ETF products in the space [read Three Reasons Why Gold is Overvalued]. [...]
[...] Believe it or not, there are actually plenty of options for owning physical copper or copper bullion. No, not just pennies. Though it may seem like an unconventional investment, considering that copper plumbing and wiring is a popular item for theft from construction sites, buying the physical metal may not be a bad idea. There is clearly a demand for the commodity and owning bullion is a guaranteed way to maintain safe and steady exposure [see also Three Reasons Why Gold Is Overvalued]: [...]
[...] For the time being, the solar industry is dominated by the developed nations of the world, which should come as no surprise given how expensive these systems can be to install. China comes in as the 8th ranked country though it has robust growth predictions and goals that it plans to meet in the coming decade, making it a country to watch as the solar industry plays out [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Over the past few years, pretty much every investor has become familiar with gold. The shiny precious metal has surged in price and has managed to hold strong while broad indexes have slipped, highlighting its appeal as a diversification agent and safe haven investment. This has prompted many investors to ramp up their allocations to the space in order to take advantage of these favorable trends and lead their portfolios to broad gains. After all, gold-backed ETFs such as IAU have seen tremendous gains over the past few years including double digit returns in the year-to-date period and more than a 165% surge in the past five year period, figures that far outpace similar investments in the S&P 500 over the same time frame [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] lead their portfolios to broad gains. After all, gold-backed ETFs such as IAU have seen tremendous gains over the past few years including double digit returns in the year-to-date period and more than a [...]
[...] For those looking to make a play on a metal, there are a series of options that will interest to both traders and some-more normal investors. From a trade standpoint, a Dec china futures contract on a COMEX is trade with a top volume of any near-term contract. Perhaps a many glass choice out there comes from a iShares Silver Trust (SLV) that measures earthy bullion. The account creates for a ideal trade option, as it has an ADV commanding 33 million, though also given a earthy nature, it can be an constituent partial of a longer-term portfolio. Finally, for investors who wish something of a leveraged play on a metal, Silver Wheaton (SLW) is a renouned mining organisation that will customarily offer a high beta on a steel [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] One of the biggest ETF losers on the day came from the Market Vectors TR Gold Miners ETF (GDX). This ETF tracks the performance of some of the most popular gold miners in the world, including Barrick Gold and Kinross. As gold took a tumble today, GDX fell even further due to the fact that mining firms often have high betas and make them something of a leveraged play on their underlying metal. GDX tumbled 4% and saw its daily volume jump to 18.6 million, around four million higher than average [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] For those who subscribe to the power of the steady income stream that value investing offers, it can be hard to stray into a riskier asset class that pays no yield whatsoever. However, now that the commodity space has evolved from just futures contracts to a number of publicly traded firms and funds, value investors can allocate the necessary assets for commodity exposure while still maintaining their yield-based strategy. Below, we outline four commodity-based securities with yields topping 5%, making them an enticing grab for just about any investment portfolio [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] But not everyone is savvy to futures markets as they can be quite complex and difficult to understand. GLD, another option, is an ETF that measures physical bullion that has become wildly popular among the investing world. For those who like the ETF structure, the iShares Gold Trust (IAU) also offers physical gold exposure at 15 basis points less than GLD. Finally, an indirect play can be made with a number of equity-based gold mining firms like Barrick Gold (ABX) or Kinross Gold (KGC) (see also Three Reasons Why Gold Is Overvalued). [...]
[...] One of the worst ETF performers on the day came from the Market Vectors TR Gold Miners (GDX), which lost 3.4%. The result of GDX’s performance is relatively surprising given the fact that gold was up on the day. But a closer look reveals the culprit behind the losses. The majority of GDX’s underlying holdings either reside in Canada, or do most of their business there, giving the fund a 64% allocation to our neighbors to the north. “Statistics Canada reported Friday that the Canadian economy lost 18,600 jobs in November, weaker than the 20,000 gain analysts expected. The unemployment rate rose to 7.4% from 7.3% in October” writes Nicole Hong. With Canadian markets under some pressure, GDX featured heavy losses due to the high betas of its underlying holdings [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] GLD, has close to $73 billion in assets under management and charges an expense ratio of 0.40% [see Three Reasons Why Gold Is Overvalued]. IAU is the runner-up in terms of size, with almost $10 billion in assets, although this iShares [...]
[...] This ETF tracks an index which provides exposure to a global universe of publicly traded small and medium-capitalization companies that generate at least 50% of their revenues from gold and/or silver mining. The fund, which charges 0.56% in expenses, is home to over 75 securities that are based around the world. In fact, GDXJ features a U.S. allocation of just 1.5%, the majority of its holdings lie in Canada and Australia, a noteworthy exposure for investors. Though the fund focuses on small cap holdings, it should come as a sigh of relief that the majority of them are based in developed and stable economies. Top holdings in the fund include Alamos Gold, AuRico Gold, and Silvercorp Metals [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Markets faced a brutal start to the week as the world decided that the recent euro deal was only prolonging the inevitable and not taking a step in the right direction. The Dow sank 162 points while the S&P 500 lost 1.5%, the most of any major index. 10 year bond prices surrendered just over 2% while oil sank down to $98/barrel, creating an interesting buying opportunity for the fossil fuel. By far the worst performer on the day came from gold, which saw its price sink by nearly $50/oz. or 2.9%. Despite today’s crushing blow, gold is still one of the best performing assets on the year, but with euro fears keeping the precious metal on the chopping block, the latter trading sessions of the year could spell trouble for the commodity [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] from gold, which saw its price sink by nearly $50/oz. or 2.9%. Despite today’s crushing blow, gold is still one of the best performing assets on the year, but with euro fears keeping the precious [...]
[...] Markets faced a brutal start to the week as the world decided that the recent euro deal was only prolonging the inevitable and not taking a step in the right direction. The Dow sank 162 points while the S&P 500 lost 1.5%, the most of any major index. 10 year bond prices surrendered just over 2% while oil sank down to $98/barrel, creating an interesting buying opportunity for the fossil fuel. By far the worst performer on the day came from gold, which saw its price sink by nearly $50/oz. or 2.9%. Despite today’s crushing blow, gold is still one of the best performing assets on the year, but with euro fears keeping the precious metal on the chopping block, the latter trading sessions of the year could spell trouble for the commodity [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Gold seemed to be on a never-ending upward trend for the majority of the past year or so, with its price breaking through the $1,900/oz. earlier in 2011. But now that the metal has declined all the way down below $1,575/oz, many are re-thinking the future of this precious metal. Though some still maintain that gold will hit $2,000/oz before long, its crossing of its 200 day moving average yesterday has spooked many from the commodity, as it has not lost grip on this technical indicator since early 2009. In an effort to keep investors educated on today’s markets, we outline two of the most notable ETF performances on the day [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Gold seemed to be on a never-ending upward trend for the majority of the past year or so, with its price breaking through the $1,900/oz. earlier in 2011. But now that the metal has declined all the way down below $1,575/oz, many are re-thinking the future of this precious metal. Though some still maintain that gold will hit $2,000/oz before long, its crossing of its 200 day moving average yesterday has spooked many from the commodity, as it has not lost grip on this technical indicator since early 2009. In an effort to keep investors educated on today’s markets, we outline two of the most notable ETF performances on the day [see also Three Reasons Why Gold Is Overvalued]. [...]
Today is Dec.17 , Gold price is drop becoming compared its highest point . USD is gradually stronger more , Euro still no solution . Asset balance decide gold price ..
[...] Why IAU Will Be In Focus: This past week saw gold turn in a dismal performance. The precious metal started off the week at around $1,700/oz, but quickly dropped down below $1,600, including 5% losses on Wednesday. Now, analysts and investors are beginning to retrace their steps when it comes to their gold allocations. Some believe that the commodity’s bull days are over, while others think that this is simply a bump in the road, and gold will continue its stellar performance. Either way, this week will be an important one for the metal and its investors alike. IAU tracks physical gold bullion and its price represents approximately 1/100th an ounce of gold [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Keeping a watchful eye on the cost of investing certainly applies to the general investing field, but it is especially true for commodities. Investors have a number of options when it comes to exposure vehicles, including ETPs, futures, and stocks, but the fees associated with each are very different. Equity investments will almost always be cost-free but are indirect plays on commodities, leaving ETFs and futures as the primary trading structures. Trading futures contracts will incur brokerage fees, which may be fine if you only occasionally use futures contracts. But for those who are actively involved in the commodities markets, the constant rolling of futures positions can rapidly add up and eat into returns [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Investing in commodities has certainly picked up in recent years, but it seems that the overall industry has begun to experience some growing pains. As is common with newer investment types (not that commodities are new, but their heavy popularity is), analysts will lash out and tell investors why this asset class is bad news. Such is the case with a recent article in the Wall Street Journal entitled “The Case Against Commodities“. This piece outlines a number of the dangers and issues that come along with commodity investing. But investors shouldn’t take it at face value, as there are a number of factors that WSJ neglected to mention [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Investors rejoiced as Tuesday turned out to be a massive day for most asset classes. The Dow racked up an impressive 340 point gain while the S&P jumped by nearly 3%. 10 year bond prices saw a stellar jump of nearly 6.2% on euro hopes as well as better than expected housing starts, bringing markets a big winning day after a disappointing string of trading sessions. Gold is another asset that was able to snap its losing streak on the day, as it jumped a healthy 1.3% on the day. Its gains were likely propelled by a positive day for the euro, which has weighed on the precious metal for the past few weeks. Despite today’s big win, gold is still only at $1,617/oz., a potential value buy for those looking to get in while this hot commodity is still cheap [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] euro, which has weighed on the precious metal for the past few weeks. Despite today’s big win, gold is still only at $1,617/oz., a potential value buy for those looking to get in while this hot [...]
[...] Investors rejoiced as Tuesday turned out to be a massive day for most asset classes. The Dow racked up an impressive 340 point gain while the S&P jumped by nearly 3%. 10 year bond prices saw a stellar jump of nearly 6.2% on euro hopes as well as better than expected housing starts, bringing markets a big winning day after a disappointing string of trading sessions. Gold is another asset that was able to snap its losing streak on the day, as it jumped a healthy 1.3% on the day. Its gains were likely propelled by a positive day for the euro, which has weighed on the precious metal for the past few weeks. Despite today’s big win, gold is still only at $1,617/oz., a potential value buy for those looking to get in while this hot commodity is still cheap [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Investors rejoiced as Tuesday turned out to be a massive day for most asset classes. The Dow racked up an impressive 340 point gain while the SP jumped by nearly 3%. 10 year bond prices saw a stellar jump of nearly 6.2% on euro hopes as well as better than expected housing starts, bringing markets a big winning day after a disappointing string of trading sessions. Gold is another asset that was able to snap its losing streak on the day, as it jumped a healthy 1.3% on the day. Its gains were likely propelled by a positive day for the euro, which has weighed on the precious metal for the past few weeks. Despite today’s big win, gold is still only at $1,617/oz., a potential value buy for those looking to get in while this hot commodity is still cheap [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Investors rejoiced as Tuesday turned out to be a massive day for most asset classes. The Dow racked up an impressive 340 point gain while the SP jumped by nearly 3%. 10 year bond prices saw a stellar jump of nearly 6.2% on euro hopes as well as better than expected housing starts, bringing markets a big winning day after a disappointing string of trading sessions. Gold is another asset that was able to snap its losing streak on the day, as it jumped a healthy 1.3% on the day. Its gains were likely propelled by a positive day for the euro, which has weighed on the precious metal for the past few weeks. Despite today’s big win, gold is still only at $1,617/oz., a potential value buy for those looking to get in while this hot commodity is still cheap [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] GDXJ allows for investors to tap into the small cap equity segment of the commodity-producers sector. The fund’s underlying index provides exposure to a global universe of publicly traded small and mid cap size companies that generate at least 50% of their revenues from gold and/or silver mining [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] GDXJ allows for investors to tap into the small cap equity segment of the commodity-producers sector. The fund’s underlying index provides exposure to a global universe of publicly traded small and mid cap size companies that generate at least 50% of their revenues from gold and/or silver mining [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Investing the equity side of the equation isn’t a pure play on the metal, but it can make for a number of interesting opportunities that other investment vehicles simply don’t offer. Equities that focus on metals will most often consist of mining, exploration, or refining companies which can offer a number of advantages over other options. A fair amount of these companies offer strong dividend options and high liquidity for traders of all kinds [see also Three Reasons Why Gold Is Overvalued]: [...]
[...] to take risky bets that could pay off big time if the precious metal continues to sink [see Three Reasons Why Gold Is Overvalued]. Whatever the reason may be for gold’s recent slump, the main question that’s puzzling [...]
[...] to take risky bets that could pay off big time if the precious metal continues to sink [see Three Reasons Why Gold Is Overvalued]. Whatever the reason may be for gold’s recent slump, the main question that’s puzzling traders [...]
[...] the other end of the spectrum, some are convinced that the “gold bubble” has finally burst, prompting speculators to take risky bets that could pay off big time if the [...]
[...] unsure bets that could compensate off large time if a altered steel continues to penetrate [see Three Reasons Why Gold Is Overvalued]. Whatever a reason might be for gold’s new slump, a categorical doubt that’s obscure traders [...]
[...] Commodities made headlines throughout most of last year, but for all of the wrong reasons. 2011 saw a number of commodity investments turn sour with just six of the 22 major commodities posting annual gains. No commodity was more talked about than gold, however, as the precious metal took investors on a wild ride. After finishing 2010 with gains of approximately 29.5%, investors had caught gold fever and piled into the safe haven commodity. But the following year would be filled with both joy and frustration as gold was all over the board in 2011 [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Commodities made headlines throughout most of last year, but for all of the wrong reasons. 2011 saw a number of commodity investments turn sour with just six of the 22 major commodities posting annual gains. No commodity was more talked about than gold, however, as the precious metal took investors on a wild ride. After finishing 2010 with gains of approximately 29.5%, investors had caught gold fever and piled into the safe haven commodity. But the following year would be filled with both joy and frustration as gold was all over the board in 2011 [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Commodities done headlines via many of final year, though for all of a wrong reasons. 2011 saw a series of commodity investments spin green with usually 6 of a 22 vital line posting annual gains. No commodity was some-more talked about than gold, however, as a altered steel took investors on a furious ride. After finishing 2010 with gains of approximately 29.5%, investors had held bullion heat and piled into a protected breakwater commodity. But a following year would be filled with both fun and disappointment as bullion was all over a house in 2011 [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] The upside potential for silver seems to be about as bright as the metal itself; last year saw the commodity spike all the way to nearly $50/oz., the highest levels seen in years. Shortly thereafter, silver lost its steam and came crashing back down to earth, but the opportunity still remains for 2012 to see a similar jump, especially given that silver is lower now than it was at this time last year. This year is already looking up for commodities, let alone the battered silver. Alcoa’s earnings report earlier in the week came with a bullish forecast for the year, inspiring some much needed investor confidence and a welcomed rise in general commodities. For those who believe that this is the year for silver, we outline several ways to play the metal below [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] SBV is an intriguing product that may provide some investors with a host of benefits in certain circumstances; first and foremost, given the advantageous tax treatment associated with the ETN product structure, SBV may appeal to investors looking to add commodity exposure to their long-term, buy-and-hold portfolios. Also, this ETN employs a unique weighting methodology in an effort to avoid contango and backwardation. Nonetheless, SBV’s underlying portfolio is far from balanced given its significant bias towards the energy sector; this ETN could serve as a tactical tool for investors who are bullish on the energy sector, but don’t necessarily want to go “all in” so to speak [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today marks the end of a major earnings week with stocks managing to finish out the day relatively flat. The S&P 500 finished up by less than a point, while the Dow tacked on 96 points for the session. Today’s flat finish means that the S&P will close out a week above 1,300 for the first time in nearly six months, sparking some investor confidence across the board. Though this trading week was shortened by the Martin Luther King Jr. holiday, the S&P 500 was still able to gain 2% in the four open days on the week. As for commodities, Friday saw gold continue its steady rise as the precious metal is now above $1,660/oz. Oil, on the other hand, lost over 2% to finish just over $98/barrel [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today marks the end of a major earnings week with stocks managing to finish out the day relatively flat. The S&P 500 finished up by less than a point, while the Dow tacked on 96 points for the session. Today’s flat finish means that the S&P will close out a week above 1,300 for the first time in nearly six months, sparking some investor confidence across the board. Though this trading week was shortened by the Martin Luther King Jr. holiday, the S&P 500 was still able to gain 2% in the four open days on the week. As for commodities, Friday saw gold continue its steady rise as the precious metal is now above $1,660/oz. Oil, on the other hand, lost over 2% to finish just over $98/barrel [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today marks the end of a major earnings week with stocks managing to finish out the day relatively flat. The S&P 500 finished up by less than a point, while the Dow tacked on 96 points for the session. Today’s flat finish means that the S&P will close out a week above 1,300 for the first time in nearly six months, sparking some investor confidence across the board. Though this trading week was shortened by the Martin Luther King Jr. holiday, the S&P 500 was still able to gain 2% in the four open days on the week. As for commodities, Friday saw gold continue its steady rise as the precious metal is now above $1,660/oz. Oil, on the other hand, lost over 2% to finish just over $98/barrel [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today marks the end of a major earnings week with stocks managing to finish out the day relatively flat. The SP 500 finished up by less than a point, while the Dow tacked on 96 points for the session. Today’s flat finish means that the SP will close out a week above 1,300 for the first time in nearly six months, sparking some investor confidence across the board. Though this trading week was shortened by the Martin Luther King Jr. holiday, the SP 500 was still able to gain 2% in the four open days on the week. As for commodities, Friday saw gold continue its steady rise as the precious metal is now above $1,660/oz. Oil, on the other hand, lost over 2% to finish just over $98/barrel [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today marks the end of a major earnings week with stocks managing to finish out the day relatively flat. The SP 500 finished up by less than a point, while the Dow tacked on 96 points for the session. Today’s flat finish means that the SP will close out a week above 1,300 for the first time in nearly six months, sparking some investor confidence across the board. Though this trading week was shortened by the Martin Luther King Jr. holiday, the SP 500 was still able to gain 2% in the four open days on the week. As for commodities, Friday saw gold continue its steady rise as the precious metal is now above $1,660/oz. Oil, on the other hand, lost over 2% to finish just over $98/barrel [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today saw markets finish off relatively flat as traders mulled over the news of the most recent GDP results. While last quarter saw one of the biggest economic expansions in over a year, it failed to meet expectations, creating an environment of mixed emotions on the Street. Today watched both the euro and gold make steady gains, with gold nearing $1,750/oz. reigniting the debate as to whether or not this asset is truly worth what it trades for, or if is under/overvalued. Markets have also welcomed the news that Facebook may file for IPO by Wednesday of next week. With a potential valuation topping $100 billion, it would be the largest initial public offering in history [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today saw markets finish off relatively flat as traders mulled over the news of the most recent GDP results. While last quarter saw one of the biggest economic expansions in over a year, it failed to meet expectations, creating an environment of mixed emotions on the Street. Today watched both the euro and gold make steady gains, with gold nearing $1,750/oz. reigniting the debate as to whether or not this asset is truly worth what it trades for, or if is under/overvalued. Markets have also welcomed the news that Facebook may file for IPO by Wednesday of next week. With a potential valuation topping $100 billion, it would be the largest initial public offering in history [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] creating an environment of mixed emotions on the Street. Today watched both the euro and gold make steady gains, with gold nearing $1,750/oz. reigniting the debate as to whether or not this [...]
[...] Today saw markets finish off relatively flat as traders mulled over the news of the most recent GDP results. While last quarter saw one of the biggest economic expansions in over a year, it failed to meet expectations, creating an environment of mixed emotions on the Street. Today watched both the euro and gold make steady gains, with gold nearing $1,750/oz. reigniting the debate as to whether or not this asset is truly worth what it trades for, or if is under/overvalued. Markets have also welcomed the news that Facebook may file for IPO by Wednesday of next week. With a potential valuation topping $100 billion, it would be the largest initial public offering in history [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] 2012 may have started off like a bull, but it appears that the bears are lurking in the shadows, waiting to make their move. This week has already seen a disappointing halt to the surge that general markets had enjoyed to start the new year, as drama from overseas as well as lackluster earnings have put a damper on investor confidence. But commodity investors can take advantage of this lull with a number of different products that have been profiting from these turbulent markets; namely precious metals. These elusive investments have been outperforming most assets in the trailing week, leaving many investors chomping at the bit for juicy returns [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] with a number of different products that have been profiting from these turbulent markets; namely precious metals. These elusive investments have been outperforming most assets in the trailing week, leaving many [...]
[...] The testimony, which will come at 10 a.m. EST, will likely encompass varying aspects of our economy, as Bernanke is expected to be asked “to assess the state of the U.S. recovery, the central challenges facing American fiscal policy, the economic impact of Europe’s economic and political struggles, and the Fed’s recent conduct of monetary policy” writes John Shaw. As many know, when Bernanke testifies or makes a speech, markets are quick to react. Gold, in particular, is prone to big moves based on Bernanke’s comments, as traders take cues from the chairman on where the precious metal will be headed in days to come [see also Three Reasons Why Gold Is Overvalued]. [...]
When the Univ. of Texas board of Trustees took delivery of tons of gold bullion in the later ~2010 I perked up and stated to seriously accumulate a small position in gold; the ETFs made it far more convenient to take positions in the shiny metal (gold). I’ve been using it as a place to park money so it has been an erratic ingress and egress into the metal as the middle east blew up and Greece et al. blew up, too.
More trading around the position than I would like to have done.
[...] Today was one of the best trading days in recent memory. The Dow rose 1.2%, hitting its highest levels since 2008, while the Nasdaq surged 1.6% to its highest level in 11 years; the S&P 500′s return of 1.5% wasn’t too shabby either. The big day was spurned by a better than expected unemployment report for January, which showed signs of an economic turnaround, though many analysts have warned that we need several more months like this in order to classify ourselves as recovering. On the commodity side of things, gold futures were slaughtered with the price of the precious metal dropping by 1.8% as investors piled into equities. But the losses for gold were oil’s gain, as crude jumped by 1.5% to close out this week [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] price of the precious metal dropping by 1.8% as investors piled into equities. But the losses for gold were oil’s gain, as crude jumped by 1.5% to close out this [...]
[...] Today was one of the best trading days in recent memory. The Dow rose 1.2%, hitting its highest levels since 2008, while the Nasdaq surged 1.6% to its highest level in 11 years; the S&P 500′s return of 1.5% wasn’t too shabby either. The big day was spurned by a better than expected unemployment report for January, which showed signs of an economic turnaround, though many analysts have warned that we need several more months like this in order to classify ourselves as recovering. On the commodity side of things, gold futures were slaughtered with the price of the precious metal dropping by 1.8% as investors piled into equities. But the losses for gold were oil’s gain, as crude jumped by 1.5% to close out this week [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today was one of the best trading days in recent memory. The Dow rose 1.2%, hitting its highest levels since 2008, while the Nasdaq surged 1.6% to its highest level in 11 years; the SP 500′s return of 1.5% wasn’t too shabby either. The big day was spurned by a better than expected unemployment report for January, which showed signs of an economic turnaround, though many analysts have warned that we need several more months like this in order to classify ourselves as recovering. On the commodity side of things, gold futures were slaughtered with the price of the precious metal dropping by 1.8% as investors piled into equities. But the losses for gold were oil’s gain, as crude jumped by 1.5% to close out this week [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Today was one of a best trade days in new memory. The Dow rose 1.2%, attack a tip levels given 2008, while a Nasdaq surged 1.6% to a tip turn in 11 years; a SP 500-s lapse of 1.5% wasn’t too unfair either. The large day was spurned by a improved than approaching unemployment news for January, that showed signs of an mercantile turnaround, yet many analysts have warned that we need several some-more months like this in sequence to systematise ourselves as recovering. On a commodity side of things, gold futures were slaughtered with a cost of a changed steel dropping by 1.8% as investors piled into equities. But a waste for bullion were oil’s gain, as wanton jumped by 1.5% to tighten out this week [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Revenue weighting also tends to introduce a shift toward companies with higher debt-to-equity ratios, since the impact of interest expense is non-existent–only top line revenue matters. Because the equity value (i.e., market cap) can be calculated by deducting debt from overall enterprise value, cap weighted benchmarks would generally give higher weightings towards a company with low debt, all else being equal. Revenue weighting shifts exposure towards companies with higher leverage, which can result in strong performances in bull markets but cause problems when markets fall [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Why IAU Will Be In Focus: This ETF tracks physical gold bullion and is quickly becoming one of the most popular funds on the market. With nearly $10 billion in assets and a daily volume topping 6.1 million, it is safe to say that IAU is an investor favorite. Gold it typically active on its own, but with FOMC minutes on Wednesday and Bernanke addressing the nation on Thursday, the precious metal is sure to have an active week. Fed statements typically have a massive effect on gold, especially if there is any sort of mention of asset-purchasing or any other event that would spark inflation. Along with the important Fed statement, U.S. CPI and retail figures are set for the week, all of which will dictate the performance of this ETF [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Those looking for a reason to add commodity exposure to their portfolio will find gold’s massive historical return to be heavily persuasive. This precious metal has quickly become one of the few safe haven investments left on the market as investors will typically flock to gold when equities falter. Some swear by futures contracts, while others are more partial to obtaining their gold positions by investing in the mining sector, which can offer offer lucrative opportunities as these securities often have high betas. Still, others have embraced exchange traded products as their primary means of establishing a position in this commodity [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Those looking for a reason to add commodity exposure to their portfolio will find gold’s massive historical return to be heavily persuasive. This precious metal has quickly become one of the few safe haven investments left on the market as investors will typically flock to gold when equities falter. Some swear by futures contracts, while others are more partial to obtaining their gold positions by investing in the mining sector, which can offer offer lucrative opportunities as these securities often have high betas. Still, others have embraced exchange traded products as their primary means of establishing a position in this commodity [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Tuesday saw a welcomed bull run on Wall Street as it was announced that a number of major banks had passed their respective stress tests, meaning that they would have enough capital to endure even the most severe scenarios. Investors cheered on the news with a buying trend that show the Dow up to its post-crisis high, as our economy has been showing signs of life as of late. But while the U.S. has been enjoying relatively strong data, the same cannot be said elsewhere, as a number of economies around the world are struggling to find their footing [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Tuesday saw a welcomed bull run on Wall Street as it was announced that a number of major banks had passed their respective stress tests, meaning that they would have enough capital to endure even the most severe scenarios. Investors cheered on the news with a buying trend that show the Dow up to its post-crisis high, as our economy has been showing signs of life as of late. But while the U.S. has been enjoying relatively strong data, the same cannot be said elsewhere, as a number of economies around the world are struggling to find their footing [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Thanks to the tremendous growth of the ETF industry, the average investor can now easily tap into an asset class that had previously been virtually unreachable. There are currently over a 100 commodity ETPs for investors to choose from, some of which have posted spectacular gains since their inception. In particular, single commodity ETPs have proven to be a bright spot in the commodities space, outshining some of the more popular broad-based products. Below we highlight 5 of the best performing commodity ETPs over the last three years [see also Three Reasons Why Gold Is Overvalued]: [...]
[...] Weighing in at $68 billion in total assets, GLD is not only one of the largest ETFs in the world, but it is one of the largest funds in the investing universe. This fund tracks physical gold bullion, allowing it to avoid the setbacks that are often featured in a futures-based product. The fund is highly active from a trading perspective and has a healthy options market for those who understand the complexities behind those contracts. But GLD’s biggest setback comes from its expense ratio of 40 basis points; while this isn’t high relative to the overall industry, it has been significantly undercut by a smaller product [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Gold has been one of the most talked about commodities in recent years and has also been subjected to violent daily swings as of late. COMEX Gold futures are currently contangoed through December 2017, the last contract available. With gold prices rapidly rising in recent years, the contango here is partly due to the expectation of higher prices as time goes on, but also note that part of it is simply due to the costs of physically storing bullion in a vault. For those looking to make a play against gold, the DB Gold Short ETN (DGZ), which utilizes futures contracts to offer a -100% exposure to gold [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] One of the biggest ETF winners on the day was the Market Vectors TR Gold Miners (GDX), which saw a healthy increase of approximately 2.1% on the day. GDX tracks the performance of gold mining equities, which are known to exhibit high beta scores, making them something of a leveraged play on the underlying metal, allowing GDX to gain more than gold for the day. The ETF is now up to $6.5 billion in total assets and is trading around 14 million shares each day [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Gold has gotten off to a shaky and volatile start this year, as investors continue to digest the latest inflows of economic data. In an announcement in early March, Ben Bernanke had made no mention of an upcoming round of quantitative easing, which forced the shiny “safe haven” metal to plummet over 4% in one day as investors’ inflation fears were somewhat abated. Some believe that the commodity has been overvalued and that the drop in prices this year has simply been an example of a market correction [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Those looking for a reason to add commodity exposure to their portfolio will find gold’s massive historical return to be heavily persuasive. this precious metal has quickly become one of the few safe haven investments left on the market as investors will typically flock to gold when equities falter. some swear by futures contracts, while others are more partial to obtaining their gold positions by investing in the mining sector, which can offer offer lucrative opportunities as these securities often have high betas. still, others have embraced exchange traded products as their primary means of establishing a position in this commodity [see also Three Reasons why Gold is Overvalued]. [...]
[...] On the commodities side of things, softs dominated markets, as soybeans, cocoa, and coffee were among the best performing futures on the day. Gold was able to jump in early trading, but fell as markets came to a close, leading to a relatively flat day. Crude oil was up big in early trading, fell down a ways, but was then able to finish out the day up 1%, a nice gain for an asset that has also had trouble finding its path. Below, we outline two of the most significant ETF movers from Friday’s session to help keep investors informed on all of the recent happenings in the financial world [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] dominated markets, as soybeans, cocoa and coffee were among the best performing futures on the day. Gold was able to jump in early trading, but fell as markets came [...]
[...] On the commodities side of things, softs dominated markets, as soybeans, cocoa, and coffee were among the best performing futures on the day. Gold was able to jump in early trading, but fell as markets came to a close, leading to a relatively flat day. Crude oil was up big in early trading, fell down a ways, but was then able to finish out the day up 1%, a nice gain for an asset that has also had trouble finding its path. Below, we outline two of the most significant ETF movers from Friday’s session to help keep investors informed on all of the recent happenings in the financial world [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] dominated markets, as soybeans, cocoa and coffee were among the best performing futures on the day. Gold was able to jump in early trading, but fell as markets came [...]
[...] Moving to the commodity side of things, gold was able to make big strides today as the precious metal tacked on nearly 15 points while crude also saw a meager rise. In fact, precious metals were among today’s best performing futures, as platinum, silver, and palladium all jumped by more than 1%. After another busy day for the economy, we detail two of the most significant ETF movers from Thursday to help investors get a better grip on what is transpiring in the world around them [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] to the commodity side of things, gold was able to make big strides today as the precious metal tacked on nearly 15 points while crude also saw a meager rise. In fact, precious metals were among [...]
[...] Markets are nearing a critical moment in the year as earnings season draws to a close. After a strong first quarter, a number of blue chip firms are reporting strong earnings, keeping optimism levels high for the time being. But with euro debt problems arising in countries like Ireland, Spain, and Portugal, it seems like 2012 may repeat last year’s performance. After a strong beginning of the year, stocks were battered as the Greek debt crisis and a downgrade of U.S. debts wreaked havoc on trading. Those who were unfortunate enough to have equity-heavy portfolios were invariably slaughtered to close out the year, leaving frustration where there had been strong gains [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Translation: The physical bars may not be up to standards of the London vault that they are actually held in and if it is discovered that the gold is in any way counterfeit or not pure, the fund and its respective shareholders, the Trust, can take a loss. This has led to a number of bloggers and investors accusing the fund of holding lead bars painted gold, or any number of other scenarios that involve fake gold in the vault. Note, this is standard legal language to simply warn of the possible risks and does not necessarily suggest that GLD holds fake gold [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] No surprise here. Gold has been around forever and its appeal as a precious metal has truly withstood the test of time. Since the U.S. abandoned the gold standard in 1971, this precious metal has seen a meteoric rise in value; gold prices have appreciated over 500% since the year 2000 alone. Serving as a worthy hedge against rising prices, it’s no wonder that investors have embraced physical bullion as a means of preserving their capital while also maintaining lucrative upside potential. Buying gold bars, coins, and jewelry ensures that the value of the assets you can hold in your hand will move in unison with spot gold pricing; this is appealing become it allows for investors to avoid the nuances of futures contracts as well as settling for indirect equity exposure through mining companies. Because the yellow metal has a high value-to-weight ratio, it is relatively cheap to store a material amount of gold bullion (just remember to arrange for security) [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Now that investors are prepping for a new year and hopeful for some market stability, we outline five of the best commodity ETPs of 2011. Note that this list does have some limitations; only one fund from any given commodity was chosen, otherwise the list would have been comprised of mostly gold-based products [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] In recent years, gold has become arguably the most popular commodity from an investing perspective, and with good reason. Gold and the funds that track it have provided some massive returns for traders and investors all around the globe. But that popularity got especially heated in 2010 and the first half of 2011, as gold featured a meteoric rise to eclipse the $1,900 /oz. level with the financial world buzzing about what appeared to be the best investment at the time [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] In recent years, gold has become arguably the most popular commodity from an investing perspective, and with good reason. Gold and the funds that track it have provided some massive returns for traders and investors all around the globe. But that popularity got especially heated in 2010 and the first half of 2011, as gold featured a meteoric rise to eclipse the $1,900 /oz. level with the financial world buzzing about what appeared to be the best investment at the time [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] On the commodity side of things crude oil continued to take a beating as it lost 1.5% in trading. This marks a near two-week wallop for the fossil fuel as it has failed to establish any positive momentum in recent sessions. Gold also saw big losses on the day, creating a very enticing buy for those who believe that QE3 is just around the corner. For now, we outline two of the day’s biggest ETF movers to keep our readers up to date with all of the happenings in the financial world [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] wallop for the fossil fuel as it has failed to establish any positive momentum in recent sessions. Gold also saw big losses on the day, creating a very enticing buy for those who believe that QE3 is [...]
[...] their footing, a number of commodities have been stuck in a similar rut, namely, gold [see also Three Reasons Why Gold Is Overvalued].After a monster performance in 2009 and 2010, gold quickly became an investor favorite as the [...]
[...] their footing, a number of commodities have been stuck in a similar rut, namely, gold [see also Three Reasons Why Gold Is Overvalued].After a monster performance in 2009 and 2010, gold quickly became an investor favorite as the [...]
[...] Stocks started off the week on the wrong foot yesterday, as more euro worries forced major benchmarks to stumble out of the gate. The first quarter of the year was generally positive, but that momentum has shifted for the worse in recent weeks as investors and analysts have begun to worry about our economic future not only in the U.S. but for many nations around the world. But while equities have been having some trouble finding their footing, a number of commodities have been stuck in a similar rut, namely, gold. [...]
[...] On the commodity side of the equation, gold finally saw an up day, as its price finally broke out of its rut. Crude oil, on the other hand, remains in the doldrums as it approaches $90/barrel. Crude has dipped by about 12% in just two weeks, begging the question of when it will turn things around and when investors will be safe to make a buy. With such a hectic day in trading, investors may be left scratching their heads, trying to make sense of why certain securities behaved the way they did. In an effort to keep our readers educated on financial markets, we outline two of the biggest ETF movers on the day [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] In recent years, gold has become arguably the most popular commodity from an investing perspective, and with good reason. Gold and the funds that track it have provided some massive returns for traders and investors all around the globe. But that popularity got especially heated in 2010 and the first half of 2011, as gold featured a meteoric rise to eclipse the $1,900 /oz. level with the financial world buzzing about what appeared to be the best investment at the time [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] As mentioned previously, many investors have embraced ETFs that focus on stocks of commodity-intensive businesses as a way to gain indirect exposure to natural resource prices. While there are a number of advantages to this approach–such as avoiding the nuances of a futures-based strategy–there are a couple common features that may diminish the correlation between, for example, gold miners and gold prices. [...]
[...] Of course, given that APMEX categorizes different countries’ coins somewhat inconsistently from the point of view that we’re trying to get a feel for each countries’ coin’s popularity across all years, this ranking must be taken with a huge grain of salt (e.g., sometimes APMEX lists a specific year’s coin as a unique product, but other times lumps different years together into a “random year” product). Still, the ranking above gives some clues about which gold bullion coins are most popular among the APMEX client base, which is a decent proxy for the American retail investor market [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] There are many popular, time-tested portfolio strategies a long term investor can implement with their own savings. Some portfolio strategies will achieve positive real returns in the next decade, and some will not. A prudent investor should take this month’s relatively minor correction in equities, as an opportunity to “gut check”: what are the real world possibilities for equities, fixed income, commodities and indeed currencies in the next decade? Inflation, deflation… sovereign defaults? Massive credit writedowns? Could we see a Dow at 6500 again? Or even 2,000? What about 20,000? [see also Three Reasons Why Gold Is Overvalued] [...]
You missed a big point as to gold’s overvaluation. Over the last few centuries, an ounce of gold has been worth about the same as a hand-tailored good-quality suit (usually wool). There are a few other general comparisons as well. Right now that puts gold around $1150 dollars/ounce at fair value, so it’s definitely overvalued.
Of course, you are absolutely right that gold being overvalued does not always make it a bad investment. There are other factors right now holding up the price.
Shit, the suits are way over valued too.
The simply understanding of supply and demand is a mandate here. The general population of the most populus country of the world has seen a steady and dramatic increase in expendable income. These people have demonstrated a continued desire to purchase necklaces, rings and all things gold. Now multiple that times 1 billion+ people. This is the initial CAUSE of the rise in gold price and it will not wane for decades. Gold will continue to rise in value as this demand will eventually reach a frenzy when the supplies become insufficient.
And their average IQ and educational levels remain low
if one is buying EFT, one is NOT buying gold. an eft is an eft is an eft. paper or more correctly, electrons in “the cloud”.
buy gold. go down to your neighborhood coin/jewelry store, give the person behind the counter cash (they operate on a pretty thin margin and visa transactions hurt these little guys). take your lumps of actual shiny metal that you can hold in your grubby little fist home and lock it up in your safe and protect it with that other lump of metal known as lead.
Exaxtly the same as if we used Gold as the world currency…It would get issued as a paper note thereby making its dynamics the same as any other paper note- you have to believe and trust that your Gold note is in fact backed with a certain unit of Gold.
There is not enough Gold for a world currency with a population of +8 billion people without issuing paper notes denominated in very small Gold units
So what if it’s small units. It’s just a number.
bull ! gold is up because of those tv ads buy gold..the dollar is worth nothing..but send me your dollars for my gold..remember my gold worth everything your dollars i worth nothing..something for nothing???????????
[...] It’s an argument that seems to have no end: is gold really overvalued? There are two distinct sides to this story, and the controversy has been heating up since the precious metal made its historical run in 2011. As a number of factors combined midway through last year, gold was able to soar to its highest price in history, briefly touching the $1,900/oz. mark. The hard asset had risen so quickly, that breaking through the $2,000 barrier seemed like a certainty for many. But what goes up must come down, and gold was no exception. With prices now stuck in a rut around $1,600/oz., investors are continuing the age old argument as to whether or not this commodity is worth its salt [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Most investors are aware that there are distinctions between exchange-traded funds and exchange-traded notes; ETFs hold a basket of underlying securities and may experience tracking error, while ETNs are debt securities that will expose investors to the credit risk of the issuing institution [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] With gold hitting an all-time high of over $1,900 during 2011, radical analysts were sure to follow with predictions of the precious metal soaring to unthinkable heights. President and CEO of Bullion Management Group Inc., Nick Barisheff, believes that gold has the potential to reach the $10,000 mark within five years. Barisheff contends that “When you take the true debt position of the U.S. — when you add in the things like Social Security and Medicare — then you get the real national debt not being $15 trillion but $120 trillion. And when you try to put meaning against that, you find $120 trillion represents $1 million per taxpayer.” Under Barisheff’s thesis, debt will eventually force the U.S. to print more money, which will further de-value the U.S. dollar while gold continues to increase in purchasing power. [...]
[...] It seems that a third round of quantitative easing and historical momentum have figured in a massive appreciation for gold in the coming years, now the only question that is left is whether you buy in to that theory or [...]
[...] Though you may have your preferences between the two precious metals, each will do a good job of protecting the value of your capital in the case of a market dip. Note that gold may be the better option of the two as it has less industrial use than silver, which will drag the white metal down a fair amount more. You can either own physical bullion (your safest bet) or utilize the physically-backed SPDR Gold Trust (GLD) and iShares Silver Trust (SLV) [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Gold investing is one of the most popular aspects of the commodity world. In recent years it has established a cult following that swear by the hard asset as one of their favorite capital allocations. But for every gold bug that exists, there is someone else who writes the precious metal off completely. One of the biggest gold-haters our there is Warren Buffett, as the Oracle of Omaha has been adamant about his lack of interest in the asset as well as its complete lack of use to him as an investor [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Gold investing is one of the most popular aspects of the commodity world. In recent years it has established a cult following that swears by the hard asset as one of their favorite capital allocations. But for every gold bug that exists, there is someone else who writes the precious metal off completely. One of the biggest gold-haters our there is Warren Buffett, as the Oracle of Omaha has been adamant about his lack of interest in the asset as well as its complete lack of use to him as an investor [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] The recent slowdown in India may just be a cyclical phenomenon, however, as the nation has previously endured (and overcome) a similar economic slump. As such, India’s beat down economy at the moment may present investors with an attractive opportunity over the coming months as economic growth expectations gradually improve. With nearly a dozen India ETFs to choose from, there’s no shortage of tools available to access this robust Asian economy [see also 3 Reasons Why Gold Is Overvalued]. [...]
[...] European Central Bank president Mario Draghi caused quite a commotion last week when he stated that the ECB would do anything in its power to save the euro. Stocks soared and investors saw a bit of confidence return to the market. That was quickly followed by healthy GDP figures from the U.S., allowing a number of assets to climb even higher. Among the best performers was gold, as investors felt the commodity was poised for gains given the commentary from Draghi as well as the wide assumption that Bernanke and the Fed are ready to print more money [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] The 2012 Summer Olympic Games have been a spectacle of fierce competition and a seemingly never-ending journey in pushing the limits of the human body. This year’s games, which began on July 27 and officially end on August 12, have effortlessly captured our attention as athletes from 204 nations have gathered to compete in 26 sports. With everyone eager to see athletes going for the gold medal, we’ve decided to tap into our Olympic spirit by highlighting five A+ rated ETFs that deliver exposure to foreign equity markets [see also 3 Reasons Why Gold Is Overvalued]. [...]
[...] Gold investing has surged in popularity in recent years as a number of individuals and institutions alike have seen the benefits of making allocations to this hard asset. After watching gold surge to an historic high in 2011, many investors hopped in on the trend only to watch the metal struggle shortly thereafter. But now that all eyes are on gold, investors are looking for a way to get a leg up on this precious metal. Below, we outline seven blogs to help you stay ahead of the gold curve and make sound, savvy investments [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Investing in physical gold has been a mainstay for a number of years, as many people have found the value in holding on to this precious metal and watching it appreciate in price. But for those who are looking to start a gold collection of their own, there are a number of factors that come in to play. Below, we have assembled an all-encompassing guide of articles and resources from around the web to educate you on every facet of the physical gold industry [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] The 2012 Summer Olympic Games have been a spectacle of fierce competition and a seemingly never-ending journey in pushing the limits of the human body. This year’s games, which began on July 27 and officially end on August 12, have effortlessly captured our attention as athletes from 204 nations have gathered to compete in 26 sports. With everyone eager to see athletes going for the gold medal, we’ve decided to tap into our Olympic spirit by highlighting five A+ rated ETFs that deliver exposure to foreign equity markets [see also 3 Reasons Why Gold Is Overvalued]. [...]
[...] Gold investing is arguably the most popular facet of the commodity world as this precious metal has become an investor favorite in recent years. The hard asset has appeal both as a safe haven and as a trading instrument given its high volume in futures markets. One of the best ways to keep updates on gold markets and trends is to utilize Twitter. It may be difficult for some to view Twitter as a viable source for trading info, but there are a number of professionals who aim their tweets at keeping their followers in-the-know. Below, we outline 10 must-follow gold Tweeple to give you the best information for your commodity trades [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Gold investing is arguably the most popular facet of the commodity world. From the people who buy physical bullion and bury it in a secure location to the day traders who utilize futures and products like GLD to make speculative bets on the metal’s movement. But there are a number of price drivers behind this yellow metal that investors may be unaware of. Below, we outline four little known factors playing into the price of gold in an effort to give investors a leg up on this commodity [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] as the days wear on, it seems that more and more experts and analysts are hopping on the gold standard train, as it seems like our troubles are only mounting with the fiat dollar and our absurdly [...]
I see “edwierd” understands that lead as in bullets must be used to protect your gold and your life. Something even more important that bullets or gold will be realized in the near future with overpopulation soon to destroy the world as we know it and that is WATER!
I’m sure Mumps, Measles, and Chicken Pox (just to name a few notable instances) won’t trumped by “bullets”
Yep, your better off as a moron with guns and Gold.
I see the paper money going to zero, before gold will ever drop. Remember, Gold never goes to zero, and paper, well, that has gone to zero in many countries….I would rather own metals than the worthless paper…Just keep saying this paper we call money is worthless, it buys so much less than just a year ago… Good luck folks in whatever you do…
You assume valuable people want Gold…I don’t think that is a very safe assumption. Donald Trump’s Gold has much more buying power now than SHTF…..In the case of SHTF, Donald Trump’s Gold will garner him little say.
[...] Gold’s movements are heavily dictated by headlines from around the world and tomorrow will be no exception. A bond-buying program could be a toss-up for this commodity, the devil will be in the details. If the program is to be funded by printing more money or by debt, gold will likely jump higher, as it will increase its safe haven appeal. But a program could also show that the ECB is determined to keep its surrounding nations alive and make stocks more attractive than the metal. The best fund to watch will be the SPDR Gold Trust (GLD) as it has an extremely active options market not to mention that it is the largest commodity ETF in the world [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Mobile Gold Investor: This app provides daily gold trading prices, latest headline news and trading tips. It’s formatted for both the iPhone and iPod Touch. The latest version includes an updated series of news sources and additional historical data [see also 3 Reasons Why Gold Is Overvalued]. [...]
[...] both developed and emerging markets has grown tremendously over the years as investors seek to add value and stability to their [...]
[...] both developed and emerging markets has grown tremendously over the years as investors seek to add value and stability to their [...]
[...] both developed and emerging markets has grown tremendously over the years as investors seek to add value and stability to their [...]
[...] Newmont is one of the biggest names in gold mining as it holds reserves of more than 98 million ounces with over 31,000 square miles of land. The company had been struggling for most of the past year, but turned it on in September as bullishness for gold was renewed. It should be noted that the firm has a current P/E ratio of 121, which may scare off some investors who feel it to be overvalued [see also Three Reasons Why Gold Is Overvalued]. [...]
Gold is not an investment: it is money. In fact it is the only sound money with all major central banks committed indefinitely to bailouts and keeping the massive world bad debt overhang at bay. Since it is money, is the standard by which all else is valued, and since it is capable of serving as a convenient currency (with electronic claims to tiny portions of the physical method) the value of all the gold in the world (which is actually quite a small mass, physically) is equivalent to a substantial fraction of all the assets in the world, and even if the world economy totally collapses, which is quite likely at this point, that will still be true.
Although the price of gold has increased more than five fold over the last ten years, it has been rising only gradually for the most part, because, in fact, only a very small minority of funds or individuals with savings have allocated any substantial portion of their financial assets to gold. The estimates are that the average allocation across all investment capital is substantially less than 1%. At the height of the previous gold upsurge in the late 1970s, early 1980s (which BTW was no bubble, but simply rational behavior in the face of the looming threat of world hyperinflation) the average allocation was more than double what it is today, and the only reason the percentages didn’t climb into the 5, 10, 20% and more range was that inflation was nipped in the bud by one courgeous policy maker: Fed Head Paul Volcker. If there is any one like Volcker in a comparable position of influence today, I wish that someone would point him out.
Hyper-inflation seems far away today to most people, but this is mostly because inflationary expectations have been fraudulently disguised by the U.S. Government’s manipulation of the statitistics underlying the CPI and other inflation measures. Inflation has been running at less than 2% they have been telling us, and most people continue to believe that, even though their own costs have been going up much faster than that for years. A better measure of actual inflation is the chart of the pre-1991 CPI published on economist John Williams’ ShadowStats website. This shows that inflation has been running at 6% a year or better for the last ten years, and was far higher than the jimmied CPI for years before that. The much higher price of gold is merely a belated recognition of that fact.
Before we are through with this financial blow off phase, the fiat US$ is going to 0, and the price of gold is going to some multiple of tens of thousands of current dollars an ounce. The only question is when. IMO everyone who is managing assets should have at least a 5-10% position in gold, because once the metal really starts to take off it’s going to become harder and harder psychologically to buy it so much higher.
“rational”
LOL
[...] Warren Buffett, the Oracle of Omaha is one of the most famous investors of all time. This billionaire has made so much money that he hardly knows what to do with it, although he has decided that after his passing he would like a sizable portion of his earnings to be dedicated to charity. Still, for all of the successes and endeavors that Buffett has taken on in his lifetime, there is one asset that he never quite warmed up to; gold [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Warren Buffett, the Oracle of Omaha is one of the most famous investors of all time. This billionaire has made so much money that he hardly knows what to do with it, although he has decided that after his passing he would like a sizable portion of his earnings to be dedicated to charity. Still, for all of the successes and endeavors that Buffett has taken on in his lifetime, there is one asset that he never quite warmed up to; gold [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] You will always have analysts calling for $5,000 gold and $100 silver but the short term is nearly impossible to predict. To better assess the situation, there are a couple of factors that investors should take into consideration. Silver is a much more volatile metal than gold, so when things are good they’re great, but when things go bad, it can get ugly. Silver, however, is much further off of its historical highs than gold is, suggesting it may be undervalued. Another factor to keep in mind is when Bernanke plans to end QE3. Though this is very unlikely to end anytime soon, the expiration of that program will no doubt have some negative ramifications for these two assets [see also Three Reasons Why Gold Is Overvalued]. [...]
Gold hasn’t gone up; it’s the fiat that’s going down.
You mean your anti-government sentiment is causing Golds price to go up
No, I mean the dollar is being devalued.
[...] advice comes at a time when gold has been faced with a number of hardships, as the precious metal had been rapidly losing value for the majority of the past month. Sitting at [...]
Gold will always have excellent value. We urge investors to closely track the gold price by visiting http://www.goldprice.net
[...] Physical Bullion: Working off of the notion that GLD is a phony, physical gold is most certainly your next best bet. Though it will not have nearly the same liquidity, physical bullion can be safely stored by its owners, ensuring that they know exactly how much of the precious metal they own. Take a look at American Gold Eagle coins if you are just getting started with physical investing, as these will probably be the best for you price range [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] does however have a P/E ratio of 938.67 and an EPS of only $0.03, suggesting that investors are grossly overpaying for this mining [...]
[...] Prized for its extreme resistance to corrosion and its ability to catalyze reactions such as those vital in the refining of crude oil into gasoline, platinum is essential in a variety of laboratory and industrial applications. The catalytic converter – a vehicle emissions control device – is the most widely-used application of platinum group metals. Jewelry is the second largest sector of PGM demand. Platinum is also used for biomedical applications, crucibles, dental alloys, electronic devices, glass, hard disks, silicones, turbine blades, and watches. And, like gold and silver, platinum is a popular investment metal [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] Another driver is gold. Silver has a tendency to follow the price of gold in terms of direction; when gold rises, silver is likely to as well. The price of gold is driven by monetary policy, the value of the US dollar, worldwide jewelry and industrial demand, and wealth protection. During periods of economic uncertainty, many investors flock to gold because of its enduring value, viewing it as a safe haven for their money. Compared to gold, however, silver has lower market liquidity and, as such, tends to be far more volatile. Because the price of silver often follows gold, many investors analyze the gold-silver ratio which represents the number of silver ounces it takes to purchase one ounce of gold. The higher the ratio, the less expensive silver is compared to gold, and vice versa [see also Three Reasons Why Gold Is Overvalued]. [...]
Just because there was a pattern similar to today many years ago, does not mean what happened then will happen now. Things happen for a reason, and that reason is not “because it has happened before”.
In the simplest possible terms, gold is low when people have savings and no fear of them disappearing if they hold them in dollars. When this is not the case, gold is high. Argue about the details all you like, but this is what it all comes down to. We simply will not be seeing such a thing for at least a decade, and so gold is simply not going to go back down in the mid to long term.
Yep, the price of Gold isn’t mostly determined by subjective matters…because most of it is employed in objectively valuable tasks like as an oxidative shield for computers or as thermal radiation shields on a satellites.
If, all of a sudden, only productive buyers were left to the market purchases with current market supply being unchanged, the price would plummet to far below the cost of mining. The Gold market is 90% uselessness
There is a lot of stockpile in central banks and the like, but gold still has the same physical properties today that made it be money for thousands of years.
Governments cannot easily debase gold in the way that the Romans once did, but they can debase their paper currencies. If the world were not running headlong into a mathematically inescapable problem of government debt and mismanagement, I would be very very bearing on gold indeed, but it seems a distinct possibility that we will see a return to a gold standard in my lifetime, which would send the price through the stratosphere.
The only alternatives I see are politicians all of a sudden becoming trustworthy and concerned with sustainability, or the people suddenly becoming smart enough to use Bitcoin as their main currency, and neither seems particularly likely to me.
[...] One the simplest but most important rules to remember, different commodities means different returns. Very different. Because most commodities are produced in completely different areas of the world through various methods, very few of them have the same price drivers. This has lead to some major discrepancies among major commodities over certain time periods. Perhaps the best example comes from comparing gold and natural gas over the last few years [see also Three Reasons Why Gold Is Overvalued]. [...]
[...] United States Metals Index Fund (USMI): A recently launched exchanged-traded security, the United States Metals Index Fund ETF provides exposure to a basket of metals futures contracts, including lead. It tracks the SummerHaven Dynamic Metals Index Total Return (the “Metals Index”), designed to reflect the performance of a group of ten metals futures contracts selected on a monthly basis. With a fund inception date of June 19, 2012, USMI has an expense ratio of 0.70%, total net assets of $3.59 million [see also 3 Reasons Why Gold Is Overvalued]. [...]
Very knowledgeable discussion here,
you listing three reason for why gold is overvalued. very creative thought .
Very Nice
Appreciable Post !!!
Gold has always an excellent value.three reason for overvalued of gold in this blog are really very nice.
Gold is only of little value because it is mostly sitting in the possession of “rich” people not doing work.
If Gold were mostly in average people’s every day goods like computers and cell phones where it would actually do productive things, it would be immensely valuable.