I try not to use too much jargon on this site but gold seems to be getting Donkey-Konged (small humor attempt).I added the purple trend line and I have no idea if it will turn out to be technically significant or not. Most of the mining stocks are doing worse than the metals.
I did a podcast yesterday (which will be available this afternoon) for WallSt.Net and one of the stocks was a silver stock and whether yesterday's closing price was a good entry point or not. My take was this is a falling knife zone and I guess today the knife is still falling.
The point of this post is to underscore something I have been trying to get across which is moderation. I know there are a lot of people with way too much in the mining stocks. Whatever the next hot thing is, there will be investors with too much there as well.
Gold stocks are such a small segment of the market (in terms of cap size) that it might as well not even exist. That is not a bad starting point to think about how much you should have. I first wrote about gold when it was below $400. My sole purpose in owning it then was that it goes up when bad things happen in the world. I felt then, as I do now, that it will be up on days when external shocks hurt the stock market. I never correctly predicted this move up I just was writing about its diversification benefits.
To me none of the above has changed. If some horrible external shock happens, I expect gold to go up. The effect is less volatility on the portfolio.
If you have too much gold you have created more volatility in your portfolio not less. If you have succumbed to the siren song of the AMEX-listed microcaps you have created a lot of volatility for yourself.
If this week you have said to yourself, I wish I had less, well, you have too much.
8 comments:
Roger-
This may be good point to start scaling in to the oil sands. If it falls a tad, then add, but this looks trendline for the good ones and very ripe for CNQ. JMHO.
Looking more like a panic than a correction in energy and metals. Anyone else think there's another Refco blowing up out there?
Oh I don't know about that. $WTIC has been pretty regular about coming back to trendline. Just check the charts. Gold was technically very overbought and a retracement of this size isn't out of the ordinary. What I found puzzling was the steepness of the decline in the gold miners.
Some of the other metals (CU) are still at ridiculous levels. If it is a hedgie unwinding that is just beautiful.
Too many brave people here, Time for the Scarty-Cats to weigh in. I've increased cash 10% from stocks, holding GLD for now, but I'm easing over toward the exit door, afraid that if S&P breaks 1240 the doorway might get crowded.
OG
Cue the solid gold dancers... I think gold has enough volatility to make it interesting to trade, but I think "investing" in it at this point seems to be a Greater Fools game. IMHO!
You can never have enough Gold and Silver.
If you are a true long term investor and not watching the daily charts like a dog, then paying off your house and filling it with Gold and Silver bars is the ONLY sound investment strategy in America today. Period. Double Period.
-Inca King
Part of the problem, which has a psychological basis, is that people like to chase heat.
I think people who figured that gold would rise ot the sky got spooked and so there is alot of panic selling going on.
However owning small volitile things sole for the purpose of diversification is psychologically very hard because people want to see performance. When gold shot up over the past year, people who had a small 5% holding suddenly had a 10% holding, which commands some attention.
My main belief behind the run-up in the price of gold is due to the prolific amount of printing the central banks around the world have been engaged in. The more money that sloshes around, the less valuable it is.
The total amount of gold mined during the world’s history would amount to a square just over 20m in length per side.
If we considered the number of one dollar bills it would take to represent the M2 money supply of the US and laid them end to end, it would span the distance between the sun and Jupiter.
Food for thought…
Dollar_Daze
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