Gold – the final bubble, page-7

Thanks for the comments @23skidoo @Dentie and all others who have liked my comment. It is always nice to have your work appreciated. Many would already be familiar with many of those points but it does take time to format it into legible readable points and hence all likes are very much appreciated.

I think the fundamentals for gold stocks in particular are really great - probably one of the best in history.
I could have come up with even more positives but my original post was long enough as it is. I'll list 3 below -

Eg 1 - Potential demand from Apple for its gold watch and other tech companies if that concept catches on. I touched on this some months back. Note that Apple and the tech companies have huge cash reserves and they too might look to diversify
http://hotcopper.com.au/threads/ann...o-conference.2461136/page-60?post_id=14825101

Eg 2 - I spoke of the currency wars but did not mention the fact that the US cannot really have its currency so strong or it would start affecting profits of the big companies, which are dependent on exports. Now this does not mean that the USD cannot go past 100 again, but it must be kept in mind that the US would not really want its currency so strong. Take our own example why we have been trying hard to keep the AUD down.

Eg 3 - I also did not speak about how gold was suddenly officially revalued overnight, during the depression of the 1930s. There is a chance of such an event again.

I love the fundamentals of gold right now. This does not necessarily mean that gold is going to go to the moon tomorrow. I understand that some would prefer to trade while some would prefer to invest. IMHO, gold is one of the safest long term investments for the simple reason that everything else has already gone to the moon while gold is yet to get off the ground. So, it is a simple issue of cyclical nature of investments, really.

I spend a lot of time commenting on HC hot favourite TON and I see a similar trader vs investor debate there. I passed this comment around 2 months back there and the same concept applies here
http://hotcopper.com.au/threads/major-gap-up-monday-morning.2480805/page-182?post_id=14964569

Gold too is a fabulous long term investment on pure fundamentals, and since I'm more an investor than trader, short term fluctuations don't bother me much. The great thing about long term investments is that you don't have to be on the computer all the time. When the market wakes up, it is often sudden and if you are on vacation for eg., you've probably already lost your opportunity to purchase. Take SBM for eg. which soared from 18.5 c on March 18 to around 60 c some days back (it has fallen a bit since though).

If and when China officially declares its gold holdings, the rise in gold might be sudden and overnight. You might wake up the next morning and find your gold stock has doubled and tripled the next day, if such a scenario occurs. The same could also happen if there is a sudden overnight revaluation like the 1930s.

Gold is not just a commodity but a currency, safe haven, hedge against extremes of inflation, depression (1930s), stagflation (1970s), etc. I've mentioned many potential black swans. Only 1 or 2 of them need to materialise to have a chaotic event - this is very important to realise

I won't deny though, that gold stocks due to the volatility has great opportunities for day traders, short termers and long termers, and maybe an ideal approach could be having a core long term portfolio and also a separate portfolio for trading, for gold bugs to keep their sanity intact. At the end of the day, each person must recognise their strengths whether they are DT, STT or long termers.

I've also heard from time to time that the market is always right, but really, that is only applicable to traders. If you are a pure FA long termer and contrarian (as many goldbugs are), then for you, the market is always wrong and you would be busy buying when there is blood on the streets. So, really we must play to our own strengths.

Thanks again to those who took the time to read my original post. Much appreciated. Hope all are enjoying their weekend. Cheers