Hedge funds have no desire to but gold now. Here you have gold in a bear market with much more selling coming in the future it is far too early to pick up gold shares. These shares are not cheap yet.
I was following many PM stocks Friday. Many stocks rose sharply into the close while physical spot gold & silver prices were down big all day...and accelerated into the close. This is very suspicious. I feel that there may be a concerted effort to drive spot down so that hedge funds can pick up these mining shares "on the cheap". Fits right in with hedge fund mentality of the "leveraged gain" opportunity that the mining shares now offer. Based on the trading Friday, physical spot prices will be up on Monday, and likely very big percentage gains.
the majors themselves are hanging by the ropes....every gold company on this planet is under siege.
Keeping interest rates at very low levels would prove to be inflationary against a
backdrop of rising economic activity.All data seems to point that things are moving in the right direction economically /globally.in other words rates have nowhere to go but up. In many ways, it’s a reversal of the rapid interest rates cuts between September 2008 and March 2009 and the effects to insurance co.s. remember Insurance companies hold substantial amounts of cash or near cash securities to back their insurance operations.Buffet is not a fool to own Geico. As interest rates increase, the returns of insurance company investments on cash or near cash securities will rise. in 2008 insurance companies could earn a 4.1% return on its cash or near cash securities. that dropped substantially when rates dropped.According to Citi Investment Research’s estimates that a 100 basis point change in interest rates has the potential to add 19% to major insurance company profits while a 200 basis point change would yield a 37% improvement in profits. its a no brainer.
As for Europe, we have seen a lot of deleveraging going on as per bailout conditions dictated by the ECB. They have until 2019 to sell some assets. European banks are improving and even becoming profitable eg, Lloyds and Barclay. People were fearful of Citi and AIG in 2009 when they were both selling for less than a dollar but now everyone and their moma wants in. I think Europe will not collapse and for Europe to thrive their banks have to thrive. I am betting heavily on Euro banks and US global insurance cos.
Interesting ideas. I appreciate the input.......the insurance play is particularly interesting......is the angle that higher rates lead to higher returns on their investable float?
Also, are you worried about the leverage levels in the European banks? They still haven't been recapitalized and many are still using 40-60x leverage from what I've read. Curious to hear your thesis on this play.
you forgive the debt, the debt , the debt, you have to repay it before or later and you have no money, japan has got no money ,europe has got no money, it's the bankrupt baby.They are printing more and more debt like no tomorrow.Corrupt banksters and politicians won a battle but gold will win the war!
insurance companies and European banks are still lagging due to low interest rates. This will change and the stocks have started moving. here are 3 stocks that are undervalued VOYA (ING US) selling at 24 but book value is 60 dollars. Genworth Financial selling 10.70 book value 32 bucks and Manulife great dividend. Barclays and LLOYDS bank both still cheap. Europe has bottomed like the US in 2009. there is also stable money in pipelines EEP pays 7 percent dividend and stock will appreciate with anticipated oil and gas boom in the US.
thank me later.
"do you want your money to be tied up in a losing trade for months or possibly years or do you admit that you are wrong and switch to a winning trade."
-Fair enough.......where do you see opportunity in this environment? To me it looks like Debt markets are at all time highs, Equities markets are at all time highs......all despite fundamental data looking tepid at best. What am i missing here? is the market running higher because they are looking forward and anticipating improving fundamental data in the near future.
its a catch 22. gold is being slapped on both cheeks. As you noticed today, for some reason despite all the QE`s, Cyprus, Japanese printing, UK holding rates till kingdom come, inflation actually dropped around the world.the opposite should have occurred. what does that translate to, central banks can print and at the same time continue to hold rates without any major consequences for now. Another slap is coming from the US dollar strength. US dollar`s relationship to other currencies pretty much dictates the value and need to hold gold. so Japan`s printing only strenghtens the US dollar which in turn weakens gold. US dollar has to fall for Gold to rise and that wont happen as long as other currencies (canadian, south Africa, Australia, india)..
hating gold is all about opportunity cost. do you want your money to be tied up in a losing trade for months or possibly years or do you admit that you are wrong and switch to a winning trade.
This is an interesting statement. In one breath you point out that gold performs well in an inflationary environment and in the next you point out that rising rates will be negative for PM's. Are you implying that the fed would raise rates (and effewctively increase debt service costs for the treasury) without the existence of inflation? in other words....the only reason that the Fed has ever raised rates is to combat inflation.
As an aside its true that historically golds performs poorly in a negative real rate environment and a rate hike would definitely hit gold short term....but with a more moderate time frame a rate hike is the first indication that velocity of money is picking up......the match to light that mountain of kindling (TARP, QE1,QE2, QE3) the fed has created for the past 5 years. I find it hard to believe that the fed will be able to unwind their massive monetary policy without making mistakes. This is an experiment on a sclae that nobody has ever seen before...human error will definitely play a role.
Its funny that everyone starts hating gold AFTER it has fallen........for me that makes for an interesting sentiment indicator.
gold only thrives in an inflationary, recessionary or weak dollar environment........so far the economy is improving in the US, bottomed in Europe and the Japanese pumping has only strengthened the US dollar.soon QE will end, rates will rise and the global economies will continue to strengthen. Unless all the things I mentioned reverse dont buy or hold gold or silver . common sense shyte really.
I think you mean 1000. There is nothing to send gold to 2000.