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American Capital Agency Corp. Message Board

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  • yourbestfriendintheworld yourbestfriendintheworld Nov 7, 2012 11:38 AM Flag

    calling the bottom, any TA guys have a notion?

    Gold hasn't been a hedge for decades. A quick look at the charts shows that. The number of times it bucks the S&P is a lot smaller than the number of times it tracks or leads it.

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    • Are you kidding me? Gold may be slow now, but decades? I bought 16 ounces (1 lb.) in 2000, 12 years ago, for a cost basis right on $275/oz., 4400 for the total and threw it into the safety deposit box. At 1700/oz. that 4400 dollar value is now over 27,000. An average of about 50% per year.

      From Wikipedia: "Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest)."

      That is exactly why I bought it. Things we seem to not be able to stop for very long --- inflation, war, and financial disruptions.

      • 2 Replies to eagledragon1
      • yourbestfriendintheworld yourbestfriendintheworld Nov 7, 2012 11:16 PM Flag

        First, look at the charts. They don't show gold bucking the S&P. Both go up when people are in an investing mood, and both go down when people get spooked.

        Second, gold's value is primarily based on ersatz criteria. There's an industrial demand, but it consumes a small fraction of production. Other than that, nobody has a reason to own it. And claims that it's money when the worst happens are specious. Not one of those people combing through their crumbled houses on Long Island last week would have given you anything for a bar of gold. Our socio-politico-economic systems are far too robust to collapse just because of natural or martial disasters. It takes man-made economic crashes to really cripple an economy, and then the gold is still useless, because there's nothing to buy with it.

        You want a classical hedge that matters? Buy land. They aren't smelting more of that.

      • I decided to sell all my Jan $17 NLY puts today. Made a huge profit there and pretty much offset most of my decline from my NLY stake. I will be buying either INTC or AGNC today... tough choice or maybe not if AGNC keeps climbing. I want to wait it out till end of day.

        Thats only one decade lol... Go back farther and you will see that gold sucks. It doesn't even keep up with inflation. Gold has historically moved in huge spurts. Once the spurt is gone its toast for decades usually. Now add that particle accelerators are getting cheaper and cheaper (cheaper to make magnets) and wonder if gold will even be listed in 50 years. In 100 it will definitely be worthless unless a nuclear holocaust.

        Sentiment: Buy

    • I'm glad I stayed away from it.

 
AGNC
22.17-0.08(-0.36%)Sep 23 4:15 PMEDT

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