Posted by: momoo August 22, 2011
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DONT buy Gold (a very private opinion about current hipes and hysterics….)
Do you remember the story about the Hunt Brothers in the late 70s early 80s?
Nelson Bunker and his younger brother Herbert collected a lot of silver and made the silver price jump up. In parallel the price for gold reached 900 $. When they got bankrupt due to speculations on silver futures, the price for gold collapsed to some 400 $.
What did we learn from that? I think ... NOTHING.
What is the real value for gold?
It has very low consumption in industry. Majority is collected or converted to jewellery. So we have to assume that the 145 000 tons we digged out since human beings go for that metal, are still there. Some say only 45 000 tons are still available and gold mining companies tell us it becomes harder and more expensive to produce that shiny metal.
All that might convince you: Gold is a very stable valuable material...but isn´t it?
Truth is: Gold is only rare on the surface of the earth. The iron core of the earth contains a lot of gold. But you don’t have to go so far. There is about ten times more gold in the oceans compared to what we have collected sofar. Bio Mining and gaining metals from hydro thermal sources are technologies for the future. And it is very likely that they will be realised since they are also attractive for standard industrial metals like iron, manganese, zinc and copper. An increasing price for gold will be a nice motivation for new technologies to get there.
What happens to the market price for valuable goods when the available volumes increase can be learned from the history of pearls. When Kokichi Mikimoto invented the culture pearls the price for natural pearls just crashed.
Now imagine what will happen to your gold portfolio when the volume of manufactured gold will double or triple because of the new digging technologies... You better think twice before you buy gold.
Even though there are lots of prophets telling me and the majority of investors to bet on that metal, I will not spend a single $ or € on gold.
How about other material assets … It is very much the same. If they are really rare and no longer manufactured or no longer can be manufactured, you might be lucky and win. The owner of a Galle Vase can be pretty convident. But how many cases are like that and do keep value over time?
Don’t expect a big profit, but only buy what you love and where you have expertise. I bought a used Porsche 911 when the oil crisis in the 70s was popping up. I sold it 20 years later for 2 and half times more.
The real and solid growth comes from industries, so investments in stocks is still the one where you can expect a robust profit. At the moment there are lots of worries again. But we have to face the fact that investments in stocks are driven b`y emotions. And you may take advantage from that… There are many theories about the waves in stock market and how to make profit with alogorithms that promise to predict the future. Actually the most important impact comes from the emotions that traders have. You think that is weird? You are convident that the majority of trades are done by computer programs and they can’t be emotional? Well how about the programmers and their models?
Like many others I am investing in stocks for more then 30 years now. At some point in time I thought about my history and why and when did I succeed.. My conclusions were simple: I managed to skip 3 crashes in stock market, but I got also hurt by one (the one caused by sept 11). So I made profit mainly by reading the investor’s emotions. If I can do this with big events how to make is happen on a daily base?
Story is very much the same like the one with the gold. If you follow the mass you likely will loose… I don’t care about the standard talk about stocks. Same is true for the algorithms that are used by traders. Moving average, elliot waves, dynamic momentum and the like do not really work. Actually you cant be successful since the majority of traders are using those. But if you use these algos to verify what traders expectations are and what their next moves might be… isn’t that smarter?
Anticipating that traders and investors are acting emotionally is the base for success … for the happy few that will get it.
To make the long story short, here are my suggestions:
1. DON’T BUY GOLD nor any other nobel metal that doesn’t have a reasonable consumption in industries
2. Buy matrial assets where you have EXPERTISE and that you really LIKE, but don’t expect a big profit from those. There might be only a few winners.
3. Invest cash where there is really growth = stocks. Aniticipate the majorities of investors and traders are acting emotional. Take your conclusions from that.
If you are inrested in details just drop me a line or send a PN. I will answer your PN, promise.
This post was modified on 19 Aug 2011 at 05:03 pm.
http://www.xing.com/net/business_ksa/non-business-issues-116649/dont-buy-gold-a-very-private-opinion-about-current-hipes-and-hysterics-37847559/
Do you remember the story about the Hunt Brothers in the late 70s early 80s?
Nelson Bunker and his younger brother Herbert collected a lot of silver and made the silver price jump up. In parallel the price for gold reached 900 $. When they got bankrupt due to speculations on silver futures, the price for gold collapsed to some 400 $.
What did we learn from that? I think ... NOTHING.
What is the real value for gold?
It has very low consumption in industry. Majority is collected or converted to jewellery. So we have to assume that the 145 000 tons we digged out since human beings go for that metal, are still there. Some say only 45 000 tons are still available and gold mining companies tell us it becomes harder and more expensive to produce that shiny metal.
All that might convince you: Gold is a very stable valuable material...but isn´t it?
Truth is: Gold is only rare on the surface of the earth. The iron core of the earth contains a lot of gold. But you don’t have to go so far. There is about ten times more gold in the oceans compared to what we have collected sofar. Bio Mining and gaining metals from hydro thermal sources are technologies for the future. And it is very likely that they will be realised since they are also attractive for standard industrial metals like iron, manganese, zinc and copper. An increasing price for gold will be a nice motivation for new technologies to get there.
What happens to the market price for valuable goods when the available volumes increase can be learned from the history of pearls. When Kokichi Mikimoto invented the culture pearls the price for natural pearls just crashed.
Now imagine what will happen to your gold portfolio when the volume of manufactured gold will double or triple because of the new digging technologies... You better think twice before you buy gold.
Even though there are lots of prophets telling me and the majority of investors to bet on that metal, I will not spend a single $ or € on gold.
How about other material assets … It is very much the same. If they are really rare and no longer manufactured or no longer can be manufactured, you might be lucky and win. The owner of a Galle Vase can be pretty convident. But how many cases are like that and do keep value over time?
Don’t expect a big profit, but only buy what you love and where you have expertise. I bought a used Porsche 911 when the oil crisis in the 70s was popping up. I sold it 20 years later for 2 and half times more.
The real and solid growth comes from industries, so investments in stocks is still the one where you can expect a robust profit. At the moment there are lots of worries again. But we have to face the fact that investments in stocks are driven b`y emotions. And you may take advantage from that… There are many theories about the waves in stock market and how to make profit with alogorithms that promise to predict the future. Actually the most important impact comes from the emotions that traders have. You think that is weird? You are convident that the majority of trades are done by computer programs and they can’t be emotional? Well how about the programmers and their models?
Like many others I am investing in stocks for more then 30 years now. At some point in time I thought about my history and why and when did I succeed.. My conclusions were simple: I managed to skip 3 crashes in stock market, but I got also hurt by one (the one caused by sept 11). So I made profit mainly by reading the investor’s emotions. If I can do this with big events how to make is happen on a daily base?
Story is very much the same like the one with the gold. If you follow the mass you likely will loose… I don’t care about the standard talk about stocks. Same is true for the algorithms that are used by traders. Moving average, elliot waves, dynamic momentum and the like do not really work. Actually you cant be successful since the majority of traders are using those. But if you use these algos to verify what traders expectations are and what their next moves might be… isn’t that smarter?
Anticipating that traders and investors are acting emotionally is the base for success … for the happy few that will get it.
To make the long story short, here are my suggestions:
1. DON’T BUY GOLD nor any other nobel metal that doesn’t have a reasonable consumption in industries
2. Buy matrial assets where you have EXPERTISE and that you really LIKE, but don’t expect a big profit from those. There might be only a few winners.
3. Invest cash where there is really growth = stocks. Aniticipate the majorities of investors and traders are acting emotional. Take your conclusions from that.
If you are inrested in details just drop me a line or send a PN. I will answer your PN, promise.
This post was modified on 19 Aug 2011 at 05:03 pm.
http://www.xing.com/net/business_ksa/non-business-issues-116649/dont-buy-gold-a-very-private-opinion-about-current-hipes-and-hysterics-37847559/