AI
Tuesday, March 27, 2012 10:34:18 AM
We Have Entered The Most Favourable Era For Gold Prices In Our Lifetime -
Simon Black
Mar. 26, 2012, 11:55 AM
Acclaimed screenwriter William Goldman (The Princess Bride,
among many others) famously began his autobiography with
three telling words: "Nobody Knows Anything."
The same logic would seem to apply to much conventional
reporting of the financial markets.
Any investor looking for informed analysis of market
developments can therefore save themselves a few minutes every
day by choosing not to read any of the 'Companies and Markets'
section of the FT, which typically constitutes a fantastic
piece of fiction.
(If there is a more thankless task in finance than trying to
explain why certain markets did what they did yesterday, we
don't know what it is... unless it's working in the PR
department at Goldman Sachs.)
But as Soc Gen's Dylan Grice has frequently pointed out, human
beings are suckers for stories.
We seek meaning from just about everything, and financial
markets are no exception.
Why else would otherwise rational people shell out ~£2.50 every
weekday just to read a selection of vapid and contradictory
speculations about recent market price action?
At the risk of going out on a limb, here is our own inherently
subjective "take" on the current market environment:
Investors seem to believe that the euro zone debt metastasis
has gone into remission.
There is an uneasy calm to both equity and bond markets --
it feels like the calm before the storm.
Both Goldman and Barclays have issued research notes
recommending equities over bonds.
It is certainly difficult to get excited about G7 government
bond markets except from the perspective of shorting them.
As Stratton Street recently observed, there are over $10
trillion in marketable US government securities, yet their
average yield amounts to less than 1%.
But it might yet be dangerous to adopt Goldman's binary response
which is to advocate blanket support for stocks.
This is not a black vs. white issue; just because most
government bond markets are uglier than sin does not
automatically justify going 'all in' on the stock market,
even as deposit rates remain painfully thin.
We nurse an ongoing fear that equity markets are being largely
supported by the inflationist antics of central banks.
This may have led to many investors becoming addicted to the
effects of cheap credit, and they may not like it when cheap
credit is ultimately withdrawn.
But whatever is driving equity sentiment, there are undoubtedly
pockets of value for those with the stamina and patience to
embrace them.
In Don Coxe's latest and typically excellent letter,
"All Clear?", he highlights the opportunity
in precious metals mining companies:
"If there were one over-arching theme at the BMO Global Metals &
Mining Conference, it was that the gold miners are upset and
even embarrassed that their shares have so dramatically
underperformed bullion...
"On the one hand, they were delighted in 2011 when it was
reported that since Nixon closed the gold window, a bar of
bullion had delivered higher investment returns than the S&P
500 for forty years-- with dividends reinvested.
But some gold mining CEOs find it an insult that what they mine
is more respected than their companies' shares...
"In our view, we have entered the most favourable era for gold
prices in our lifetime, and the share prices of the great
mining companies will eventually outperform bullion prices."
Gold remains one of the most widely misunderstood assets in
the investible world. Indeed, it may be better to refer to
it as a means of saving that does not expose the saver to
counterparty or credit risk or to the depredations of the
monetary authorities.
As Don Coxe makes clear, governments are running deficits
"beyond the forecasts of all but the hardiest goldbugs five
years ago; central banks are printing money and creating
liquidity beyond the forecasts of all but the most paranoid
goldbugs a year ago."
The choice for the saver is essentially binary: hold money in
ever-depreciating paper, or in a tangible vehicle that has
the potential to rise dramatically as expressed in paper
money terms.
Gold prices have now softened, offering investors yet another
chance to get back on board what is perhaps the most compelling
form of money- and portfolio insurance available.
Why large cap gold miners are being so undervalued by equity
investors relative to gold is an open question that takes us
back to the realms of stories.
That the discount exists is undeniable; all that is required
to crystallise that value, we believe, is patience.
http://www.businessinsider.com/we-have-entered-the-most-favourable-era-for-gold-prices-in-our-lifetime-2012-3
its great time to add more which I done to average out
the strategic gold bargain play position
enjoy....
http://www.caledoniamining.com
$GOLD Chart P&F TA Alert Bullish Price Objective $1820.-/oz
God Bless
Simon Black
Mar. 26, 2012, 11:55 AM
Acclaimed screenwriter William Goldman (The Princess Bride,
among many others) famously began his autobiography with
three telling words: "Nobody Knows Anything."
The same logic would seem to apply to much conventional
reporting of the financial markets.
Any investor looking for informed analysis of market
developments can therefore save themselves a few minutes every
day by choosing not to read any of the 'Companies and Markets'
section of the FT, which typically constitutes a fantastic
piece of fiction.
(If there is a more thankless task in finance than trying to
explain why certain markets did what they did yesterday, we
don't know what it is... unless it's working in the PR
department at Goldman Sachs.)
But as Soc Gen's Dylan Grice has frequently pointed out, human
beings are suckers for stories.
We seek meaning from just about everything, and financial
markets are no exception.
Why else would otherwise rational people shell out ~£2.50 every
weekday just to read a selection of vapid and contradictory
speculations about recent market price action?
At the risk of going out on a limb, here is our own inherently
subjective "take" on the current market environment:
Investors seem to believe that the euro zone debt metastasis
has gone into remission.
There is an uneasy calm to both equity and bond markets --
it feels like the calm before the storm.
Both Goldman and Barclays have issued research notes
recommending equities over bonds.
It is certainly difficult to get excited about G7 government
bond markets except from the perspective of shorting them.
As Stratton Street recently observed, there are over $10
trillion in marketable US government securities, yet their
average yield amounts to less than 1%.
But it might yet be dangerous to adopt Goldman's binary response
which is to advocate blanket support for stocks.
This is not a black vs. white issue; just because most
government bond markets are uglier than sin does not
automatically justify going 'all in' on the stock market,
even as deposit rates remain painfully thin.
We nurse an ongoing fear that equity markets are being largely
supported by the inflationist antics of central banks.
This may have led to many investors becoming addicted to the
effects of cheap credit, and they may not like it when cheap
credit is ultimately withdrawn.
But whatever is driving equity sentiment, there are undoubtedly
pockets of value for those with the stamina and patience to
embrace them.
In Don Coxe's latest and typically excellent letter,
"All Clear?", he highlights the opportunity
in precious metals mining companies:
"If there were one over-arching theme at the BMO Global Metals &
Mining Conference, it was that the gold miners are upset and
even embarrassed that their shares have so dramatically
underperformed bullion...
"On the one hand, they were delighted in 2011 when it was
reported that since Nixon closed the gold window, a bar of
bullion had delivered higher investment returns than the S&P
500 for forty years-- with dividends reinvested.
But some gold mining CEOs find it an insult that what they mine
is more respected than their companies' shares...
"In our view, we have entered the most favourable era for gold
prices in our lifetime, and the share prices of the great
mining companies will eventually outperform bullion prices."
Gold remains one of the most widely misunderstood assets in
the investible world. Indeed, it may be better to refer to
it as a means of saving that does not expose the saver to
counterparty or credit risk or to the depredations of the
monetary authorities.
As Don Coxe makes clear, governments are running deficits
"beyond the forecasts of all but the hardiest goldbugs five
years ago; central banks are printing money and creating
liquidity beyond the forecasts of all but the most paranoid
goldbugs a year ago."
The choice for the saver is essentially binary: hold money in
ever-depreciating paper, or in a tangible vehicle that has
the potential to rise dramatically as expressed in paper
money terms.
Gold prices have now softened, offering investors yet another
chance to get back on board what is perhaps the most compelling
form of money- and portfolio insurance available.
Why large cap gold miners are being so undervalued by equity
investors relative to gold is an open question that takes us
back to the realms of stories.
That the discount exists is undeniable; all that is required
to crystallise that value, we believe, is patience.
http://www.businessinsider.com/we-have-entered-the-most-favourable-era-for-gold-prices-in-our-lifetime-2012-3
its great time to add more which I done to average out
the strategic gold bargain play position
enjoy....
http://www.caledoniamining.com
$GOLD Chart P&F TA Alert Bullish Price Objective $1820.-/oz
God Bless
My opinions are my own and and DD I post should be confirmed as unbiased
