The Case For $3,000 Gold 1 1

[GoldFinger1969]

CME the analyst was talking about contracts traded, I guess Open Interest.  This would signify retail and institutional buying.

Normally, public cover stories are reverse indicators (i.e., Time or Newsweek in their heyday), but BARRON'S is different.  If they had a cover story that gold was going higher, they'd have lots of sound reasons within the story for that to be the case.

[VKurtB]

My investment advisor has a huge number rolling over for me, half in 9 month maturity sovereign debt, and half in 12 month maturity sovereign debt. If rates fall, I get cap gains. Zero gold, zero equities. My small account is in growth equities, the headline making companies.  

Edited November 1, 2023 by VKurtB

[GoldFinger1969]

On 10/31/2023 at 10:09 PM, VKurtB said:

My investment advisor has a huge number rolling over for me, half in 9 month maturity sovereign debt, and half in 12 month maturity sovereign debt. If rates fall, I get cap gains. Zero gold, zero equities. My small account is in growth equities, the headline making companies.  

Gold is a personal choice, not really an asset to be included in a financial plan.  But equities should be -- at least 20% -- as an all fixed-income/bond portfolio is riskier than a portfolio with a small allocation to equities.

[VKurtB]

On 10/31/2023 at 10:05 PM, GoldFinger1969 said:

Gold is a personal choice, not really an asset to be included in a financial plan.  But equities should be -- at least 20% -- as an all fixed-income/bond portfolio is riskier than a portfolio with a small allocation to equities.

My account in equities is about 20%, maybe a percent or two below. My guy doesn’t see ANYTHING positive happening in the economy until Biden is gone. And he’s in Southern California. 

Edited November 1, 2023 by VKurtB

[GoldFinger1969]

On 10/31/2023 at 11:07 PM, VKurtB said:

My account in equities is about 20%, maybe a percent or two below. My guy doesn’t see ANYTHING positive happening in the economy until Biden is gone. And he’s in Southern California. 

That's fine. 

MPT basically says that having an equity exposure below 20% doesn't reduce portfolio risk at that point because as your bond or fixed income portfolio goes over 80% you increase the overall portfolio risk there.  Of course, if someone is market-timing and dropping their stock exposure under 20% just for a short period of time, that's a separate manner. 

Of course, lots of people do that saying it's short-term and then they never get it back to that level. 

[Henri Charriere]

This just in FWIW... 

ACCORDING TO THE LATEST LONG-TERM FORECAST...

Gold price will hit $2200 by the middle of 2025 and then $2700 by the end of 2026.

Gold will rise to $3,000 within the year of 2028, $3500 in 2031 and $4000 in 2033.

(Reference:  coinpriceforecast.com>gold) 

Edited November 1, 2023 by Henri Charriere
Delete extraneous letter

[zadok]

On 10/31/2023 at 8:30 PM, World Colonial said:

"Traded" differs from "open interest" but it has to be both.  

...true, has to be a buyer n a seller...but arent there indicators of trends?....

[VKurtB]

On 11/1/2023 at 5:26 AM, Henri Charriere said:

This just in FWIW... 

ACCORDING TO THE LATEST LONG-TERM FORECAST...

Gold price will hit $2200 by the middle of 2025 and then $2700 by the end of 2026.

Gold will rise to $3,000 within the year of 2028, $3500 in 2031 and $4000 in 2033.

(Reference:  coinpriceforecast.com>gold) 

I just fundamentally believe that is 100% BS.

[World Colonial]

On 11/1/2023 at 10:09 AM, zadok said:

...true, has to be a buyer n a seller...but arent there indicators of trends?....

I believe trading volume and open interest are an indicator, but I have never seen actual evidence.  Also seen sentiment indicators in terms of WHO is doing the buying and selling.  Data I have seen breaks it out by commercials (producers hedging), large speculators (such as hedge funds), and small traders (retail public).  

I don't have direct access to the data and if someone is going to own physical anyway, I don't believe it matters much.  It's a lot more relevant to "paper" trading.

[World Colonial]

On 10/31/2023 at 9:50 PM, GoldFinger1969 said:

Normally, public cover stories are reverse indicators (i.e., Time or Newsweek in their heyday), but BARRON'S is different.  If they had a cover story that gold was going higher, they'd have lots of sound reasons within the story for that to be the case.

Great.

Is there actual evidence that they are correct more often than not?

I'd say "no" until proven otherwise.

[World Colonial]

On 10/31/2023 at 11:05 PM, GoldFinger1969 said:

Gold is a personal choice, not really an asset to be included in a financial plan.  But equities should be -- at least 20% -- as an all fixed-income/bond portfolio is riskier than a portfolio with a small allocation to equities.

Gold is a valid asset to be included in a financial plan, just not according to the financial services industry because there are no management fees to get from anyone.  The conventional thinking you are describing is the result of the trend from 1981 in bonds and 1982 in (US) stocks. 

[World Colonial]

On 11/1/2023 at 12:48 AM, GoldFinger1969 said:

That's fine. 

MPT basically says that having an equity exposure below 20% doesn't reduce portfolio risk at that point because as your bond or fixed income portfolio goes over 80% you increase the overall portfolio risk there.  Of course, if someone is market-timing and dropping their stock exposure under 20% just for a short period of time, that's a separate manner. 

Of course, lots of people do that saying it's short-term and then they never get it back to that level. 

The composition of someone's portfolio should be based upon their personal financial circumstances, risk tolerance, and knowledge.  It should not be based upon what anyone else thinks, as no one else is going to pay their bills when life doesn't "work out".

The goal of every individual should be to maintain or improve their personal financial circumstances, not maximize their return or beat some arbitrary benchmark.  Using myself as an example, I'm hardly rich but I don't need to follow conventional thinking to accomplish what I want to achieve.  That along with knowing this is the most overpriced market in history is why I don't follow conventional advice.

[VKurtB]

On 11/1/2023 at 5:08 PM, World Colonial said:

I'm hardly rich but I don't need to follow conventional thinking to accomplish what I want to achieve.

Good on ye.

[VKurtB]

On 11/1/2023 at 5:08 PM, World Colonial said:

That along with knowing this is the most overpriced market in history is why I don't follow conventional advice.

This is what you believe because this is what you WANT to believe. I don't know what metric informs you thusly. My equities (20%ish) are in high flying tech firms. My main assets are in sovereign debt intended to be held to maturity. And I have about 5% in an account I manage personally and write covered call options.

[GoldFinger1969]

On 11/1/2023 at 5:39 PM, World Colonial said:

Great. Is there actual evidence that they are correct more often than not? I'd say "no" until proven otherwise.

Yeah, I've been reading them since the mid-1980's and they've made some great Cover Calls.  Probably the best over that time was the March 2000 cover story on how the Dot.com's were bleeding too much cash.  NASDAQ went down 75% next 2 years, lots of the bubble stocks lost 90-100%. 

[GoldFinger1969]

On 11/1/2023 at 6:08 PM, World Colonial said:

The composition of someone's portfolio should be based upon their personal financial circumstances, risk tolerance, and knowledge.  It should not be based upon what anyone else thinks, as no one else is going to pay their bills when life doesn't "work out". 

Of course, but general investment guidelines provide a good starting point -- and sometimes a good ENDING point -- for a good portfolio.  In many cases, the standard "60-40" portfolio might be best for most people at most points in time.

In most cases, this isn't rocket science.  But I do see too many people make decisions involving life savings, 5- or 6- or even 7-figure sums of money and spend LESS time researching what they are doing than the time they spend to buy new furniture, a Hi-Def TV, or new kitchen counter tops.   

 

"The goal of every individual should be to maintain or improve their personal financial circumstances, not maximize their return or beat some arbitrary benchmark.  Using myself as an example, I'm hardly rich but I don't need to follow conventional thinking to accomplish what I want to achieve."

Sure, no objections.  And thanks to the rise in interest rates, it's alot easier.  An 8% portfolio return can now be achieved with moderate risk.

 

"That along with knowing this is the most overpriced market in history is why I don't follow conventional advice."

Definitely not true, even with the rise in interest rates.  Much more overvalued only 2 years ago let alone in 2000.  On a straight P/E basis, we're elevated but not at bubble levels.  See charts, below.

Edited November 6, 2023 by GoldFinger1969

[World Colonial]

On 11/5/2023 at 8:18 PM, GoldFinger1969 said:

Yeah, I've been reading them since the mid-1980's and they've made some great Cover Calls.  Probably the best over that time was the March 2000 cover story on how the Dot.com's were bleeding too much cash.  NASDAQ went down 75% next 2 years, lots of the bubble stocks lost 90-100%. 

Great calls out of how many?

Something tells me their batting average isn't that good.

No one's has been, except those who say "buy and hold" forever due to the asset mania.

[World Colonial]

On 11/5/2023 at 8:22 PM, GoldFinger1969 said:

 Definitely not true, even with the rise in interest rates.  Much more overvalued only 2 years ago let alone in 2000.  On a straight P/E basis, we're elevated but not at bubble levels.  See charts, below.

No practical difference with the late 2021 or early 2002 peak.

Once again using one of the worst value metrics (earnings) even when I keep telling you this, over and over.  It's even worse using forward earnings.

Statistically, Hussman has proved this, but you ignore it because the asset mania has made it possible to profit from the most overpriced market ever anyway.

It's not just stocks either.  Look at real estate and until the 2020 bottom in rates, bonds.

Foreign markets have improved somewhat recently (some), but US valuations have been on an island in deep outer space since 2008, 2000, or the late 90's depending upon the comparison.

This relative US performance hasn't been based upon the "fundamentals".  The fundamentals ("growth") during the mania have been mediocre most of this time, even with deranged monetary and fiscal policy the entire time since 2008.  Deranged, not just in the US, but Europe, Japan, and China too.

US interest rates are somewhat "normalized" now, but the FRB balance sheet absolutely is not.  Fiscal policy is worse than ever.  Remove that and the supposedly great "fundamentals" evaporate, with little if any "growth" since 2008.

Lastly as I told you, earnings aren't real money.  It's an abstract accounting number.  No one can spend earnings.  It's buried in the balance sheet where the retail "investor" can never monetize it.    They can only sell their shares.  That's what makes it SPECULATION.

"Investors" mostly don't care about the overwhelmingly pathetic dividends, and they almost never care about the balance sheet, so why do earnings matter either?  (No, it's not a real question.)

Edited November 6, 2023 by World Colonial

[GoldFinger1969]

On 11/5/2023 at 9:13 PM, World Colonial said:

Great calls out of how many? Something tells me their batting average isn't that good.  No one's has been, except those who say "buy and hold" forever due to the asset mania.

I don't know the exact numbers but I'd say maybe a 60% success rate, maybe 70%.  Their timing is good....directions are easy for the most part since most stocks do go up over time.  Their shorts stand out (aside from AMZN, which they totally blew). 

Edited November 6, 2023 by GoldFinger1969

[World Colonial]

On 11/5/2023 at 7:11 PM, VKurtB said:

This is what you believe because this is what you WANT to believe. I don't know what metric informs you thusly. My equities (20%ish) are in high flying tech firms. My main assets are in sovereign debt intended to be held to maturity. And I have about 5% in an account I manage personally and write covered call options.

You're using the P/E ratio too?

Read my reply above.

Edited November 6, 2023 by World Colonial

[Henri Charriere]

On 11/5/2023 at 9:13 PM, World Colonial said:

Great calls out of how many?

Something tells me their batting average isn't that good.

No one's has been, except those who say "buy and hold" forever due to the asset mania.

I'll make the call and my Roosters are all I have. Besides, they personally guarantee it. Excelsior! Ever Upward!  🤣

[GoldFinger1969]

First, let me say I am happy to continue the discussion of stocks/bonds/investing in another thread if this gets too far off the "$3,000 Gold" topic though it is still somewhat tangentially tied to that since we are discussing the valuation of a competing asset class. 

Second, earnings are what you have to use.  There are discrepancies at times with GAAP or Operating EPS, but by and large they have gone up 7% a year since 1960 and provided real growth that outstrips inflation and any other asset class.  Free cash flow also backs this up.  Earnings are real and when they go up, stocks go up.

Third, while I respect Jon Hussman as very knowledgeable and he brings interesting thought-provoking ideas to the table, he has a TERRIBLE track record as a perma-bear.  His main fund has returned about 3% over the last 10 years which is a lousy performance...without checking, it's probably had a more bullish bias than Hussman himself talks about because it does have to compete for $$$.

Fourth, I agree that foreign markets offer some interesting valuation metrics but some of their companies just don't get it.  As an example, BP and SHEL seem to think they work for the European Green Party and both cut their dividends in 2000 right at the worst possible moment.  XOM and CVX continue to make them both look like fools.  ROEs and ROICs for U.S. companies are among the best in the world.  Europe is cheap -- but then again, so is a fixer-upper home.   Labor markets, regulations, and energy policies are looking like a major headwind in Europe.   A tariff war may also be coming as they try to "equalize" costs by hitting American and Chinese firms.

Fifth, U.S. growth is not 100% dependent on the FRB's balance sheet.  Yes, it helped with stock returns but companies here have real earnings growth.  AI is a real thing and while I think NVDA is ahead of itself, the U.S. is a leader there, too. 

Quick...name 1 great European tech company ?  Now....name 5 great U.S. tech companies ?  I bet most people reading this can name the 5 over the 1 !!!  

Sixth, earnings are real.  Over time they are not manipulable (is that a word ? ) .  Dividends ARE real cash and the S&P 500 and many companies do pay out hard, real cash.  NVDA is actually CHEAPER today than it was 6 months ago.  The earnings are real....the P/E has DEFLATED not INFLATED because of easy money (whcih has been tight, anyway).  

Earnings determine the valuation level, free cash flow, CAPX levels, and dividend payouts.  They DO matter and the U.S. has among the best accounting in the world.

I've read Hussman and other perma-bears and they bring up some interesting stuff.  But if you listened to them...you'd scare yourself out of the market for 3, 5, 10, 20 years or more.  You can't do that.  You'll lose out.  You can't be like Charles Allmon in the 1980's and miss the 1987 Crash and stay in cash for 15 years.  It doesn't work. Better to be in the market and the Crash and stay fully-invested.

You know, the S&P 500 sold at 6x EPS in December 1974.  Those days are gone.  But there was a small-cap stock that sold for TWICE the market multiple, 12x EPS, at that time.  At that time, selling for 2x the market multiple was considered super-rich (unlike the Go-Go late 1960's).  Not many people wanted to pay 2x the S&P 500 P/E when they didn't even want to buy stocks at 6x EPS.  In fact.....they should have been willing to pay 30x EPS...or 50x EPS...or even 100x EPS.  They'd have done OK even if they paid 600x the company's earnings and done no worse than the S&P 500 for decades to come.

The company's name ?  Wal-Mart.   

 

Edited November 6, 2023 by GoldFinger1969

[Henri Charriere]

On 11/5/2023 at 10:25 PM, GoldFinger1969 said:

....Over time they are not manipulable (is that a word ? ) . 

Close enough:  manipulatable  

[VKurtB]

@World Colonial's view STARTS WITH an answer which he has decided is true, and he backfills everything else to comport with that view. That's not analysis. It's a broken clock being right twice a day. Someday a major correction will happen. Of course it will. It's a better than 50/50 bet I'll be dead by then. I can't bother with that much fear. My finances fear only one thing - the same guy in the White House 2 years from now. I NEED a government committed to economic GROWTH, not the economics of make believe scarcity.

"90% of Electric Vehicles are still on the road. The other 10% made it back home."

Edited November 6, 2023 by VKurtB

[GoldFinger1969]

On 11/1/2023 at 2:11 PM, VKurtB said:

I just fundamentally believe that is 100% BS.

The predictions may or may not come true....I find the price projections REASONABLE for the time frames indicated.

That said....gold could also be $1,800 in 5-10 years, I freely admit. 

But I don't think so.

[VKurtB]

On 11/5/2023 at 10:38 PM, GoldFinger1969 said:

The predictions may or may not come true....I find the price projections REASONABLE for the time frames indicated.

That said....gold could also be $1,800 in 5-10 years, I freely admit. 

But I don't think so.

But I do.

[GoldFinger1969]

On 11/6/2023 at 4:52 PM, VKurtB said:

But I do.

You don't think gold will do anything by the end of this decade ? 

That's a ballsy prediction, because you have MILLIONS of new middle-class consumers being created EACH MONTH from 3rd World continents (Asia, South America, Europe, Africa) who put small amounts into gold and it adds up.  

I can see future threads here complaining that the price of a Saint-Gaudens gold coin or a Morgan Silver Dollar is not set by American supply/demand but by GLOBAL demand. 

Edited November 12, 2023 by GoldFinger1969

[zadok]

On 11/12/2023 at 2:27 AM, GoldFinger1969 said:

You don't think gold will do anything by the end of this decade ? 

That's a ballsy prediction, because you have MILLIONS of new middle-class consumers being created EACH MONTH from 3rd World continents (Asia, South America, Europe, Africa) who put small amounts into gold and it adds up.  

I can see future threads hear complaining that the price of a Saint-Gaudens gold coin or a Morgan Silver Dollar is not set by American supply/demand but by GLOBAL demand. 

...im thinking that along those same lines that lead mite see a price jump as well....

[GoldFinger1969]

On 11/12/2023 at 9:54 AM, zadok said:

...im thinking that along those same lines that lead mite see a price jump as well....

Unless supply increases from somewhere.  But even just 1 country like India, look at how much more they buy now than decades ago.  Now take into account what their per capita GDP will look like in 10-15 years (like China 2020 vs. 2020) and do this to an extent for a few dozen other countries (albeit without the gold history, population size, or GDP growth that we have in India).

The chart is dated but today India consumes about 700 tons annually...double the 1990's, 5x the rate of decades earlier.

Edited November 12, 2023 by GoldFinger1969

[Henri Charriere]

FWIW... Gold spot is down today, Nov. 21, 2023, as of 20:52 hours, EST.

oz.   $2,008.30

gm.  $64.57

K.      $64,568.34