The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

Moderator: Global Moderator

User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: The GOLD scream room

Post by MediumTex » Fri Jun 28, 2013 9:46 am

buddtholomew wrote: To what degree is the price of gold manipulated? Am I naive in believing in a free market? Many articles posit that the recent decline in gold has been manufactured by the fed to serve some purpose. Does the US want to return Germany's gold reserves at the lowest possible price? Interested to hear other's thoughts on the subject.

Is it possible that I am a "gold bug" in the making? I don't own a tin hat nor do I have a bunker in the back yard  :)
I would say that if the price of gold is manipulated in order to keep it down, the manipulators have failed miserably over the last 12 years.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The GOLD scream room

Post by Libertarian666 » Fri Jun 28, 2013 12:43 pm

MediumTex wrote:
buddtholomew wrote: To what degree is the price of gold manipulated? Am I naive in believing in a free market? Many articles posit that the recent decline in gold has been manufactured by the fed to serve some purpose. Does the US want to return Germany's gold reserves at the lowest possible price? Interested to hear other's thoughts on the subject.

Is it possible that I am a "gold bug" in the making? I don't own a tin hat nor do I have a bunker in the back yard  :)
I would say that if the price of gold is manipulated in order to keep it down, the manipulators have failed miserably over the last 12 years.
My guess is that the manipulation has been to make the price fluctuate violently so as to scare people off from buying and/or shake out the weak hands who have already bought.
User avatar
buddtholomew
Executive Member
Executive Member
Posts: 2464
Joined: Fri May 21, 2010 4:16 pm

Re: The GOLD scream room

Post by buddtholomew » Fri Jun 28, 2013 12:57 pm

MediumTex wrote:
buddtholomew wrote: To what degree is the price of gold manipulated? Am I naive in believing in a free market? Many articles posit that the recent decline in gold has been manufactured by the fed to serve some purpose. Does the US want to return Germany's gold reserves at the lowest possible price? Interested to hear other's thoughts on the subject.

Is it possible that I am a "gold bug" in the making? I don't own a tin hat nor do I have a bunker in the back yard  :)
I would say that if the price of gold is manipulated in order to keep it down, the manipulators have failed miserably over the last 12 years.
I'm not referring to the last 12 years, but rather recent economic events whereby fed's policy would benefit from a drop in gold prices.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: The GOLD scream room

Post by MediumTex » Fri Jun 28, 2013 12:58 pm

buddtholomew wrote:
MediumTex wrote:
buddtholomew wrote: To what degree is the price of gold manipulated? Am I naive in believing in a free market? Many articles posit that the recent decline in gold has been manufactured by the fed to serve some purpose. Does the US want to return Germany's gold reserves at the lowest possible price? Interested to hear other's thoughts on the subject.

Is it possible that I am a "gold bug" in the making? I don't own a tin hat nor do I have a bunker in the back yard  :)
I would say that if the price of gold is manipulated in order to keep it down, the manipulators have failed miserably over the last 12 years.
I'm not referring to the last 12 years, but rather recent economic events whereby fed's policy would benefit from a drop in gold prices.
But wouldn't the Fed's QE policies have also been aided by gold drops in 2009, 2010 and 2011?
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The GOLD scream room

Post by Libertarian666 » Fri Jun 28, 2013 1:56 pm

If the fed isn't manipulating the gold market, it would the only market they aren't manipulating. I guess that is possible but it doesn't seem very likely.
User avatar
dualstow
Executive Member
Executive Member
Posts: 14232
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The GOLD scream room

Post by dualstow » Tue Jul 02, 2013 3:01 pm

Sam Bankman-Fried sentenced to 25 years
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The GOLD scream room

Post by Libertarian666 » Tue Jul 02, 2013 5:16 pm

dualstow wrote: Has anyone else seen this?
http://www.bogleheads.org/forum/viewtop ... 1&t=115027
Ok, I read it. So?
User avatar
l82start
Global Moderator
Global Moderator
Posts: 1291
Joined: Sun Apr 25, 2010 9:51 pm

Re: The GOLD scream room

Post by l82start » Tue Jul 02, 2013 7:32 pm

they all seem to be promoting bail at the "bottom"/sell now,  funny i thought that was contrary to boglehead thinking and sound investment strategy
-Government 2020+ - a BANANA REPUBLIC - if you can keep it

-Belief is the death of intelligence. As soon as one believes a doctrine of any sort, or assumes certitude, one stops thinking about that aspect of existence
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: The GOLD scream room

Post by MediumTex » Tue Jul 02, 2013 7:58 pm

l82start wrote: they all seem to be promoting bail at the "bottom"/sell now,  funny i thought that was contrary to boglehead thinking and sound investment strategy
But most of those guys hated gold the whole time (or at least said they did).
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
AdamA
Executive Member
Executive Member
Posts: 2336
Joined: Sun Jan 23, 2011 8:49 pm

Re: The GOLD scream room

Post by AdamA » Tue Jul 02, 2013 8:20 pm

Did that guy put all of his money into gold?
"All men's miseries derive from not being able to sit in a quiet room alone."

Pascal
User avatar
l82start
Global Moderator
Global Moderator
Posts: 1291
Joined: Sun Apr 25, 2010 9:51 pm

Re: The GOLD scream room

Post by l82start » Tue Jul 02, 2013 8:36 pm

MediumTex wrote:
l82start wrote: they all seem to be promoting bail at the "bottom"/sell now,  funny i thought that was contrary to boglehead thinking and sound investment strategy
But most of those guys hated gold the whole time (or at least said they did).
maybe they hate gold so much they are willing to give contrary advice just to see a gold buyer fail, so they can say "I Told You So"
-Government 2020+ - a BANANA REPUBLIC - if you can keep it

-Belief is the death of intelligence. As soon as one believes a doctrine of any sort, or assumes certitude, one stops thinking about that aspect of existence
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The GOLD scream room

Post by Libertarian666 » Wed Jul 03, 2013 9:23 am

Most participants on that board are extremely illogical when it comes to gold. As we know, the evidence shows that it reduces variance in the portfolio while not hurting CAGR. But they have a visceral hate for gold nonetheless, which is another piece of evidence for the odd psychology of investing even among many of those who claim to be guided by reason.
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: The GOLD scream room

Post by MediumTex » Wed Jul 03, 2013 11:06 am

Libertarian666 wrote: Most participants on that board are extremely illogical when it comes to gold. As we know, the evidence shows that it reduces variance in the portfolio while not hurting CAGR. But they have a visceral hate for gold nonetheless, which is another piece of evidence for the odd psychology of investing even among many of those who claim to be guided by reason.
You don't have to love gold to recognize its uses as a tool within a diversified portfolio.

When I look at my toolbox I don't think in terms of being "pro-hammer" or "anti-hammer."  The hammer is just there when I need a hammer.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
dualstow
Executive Member
Executive Member
Posts: 14232
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The GOLD scream room

Post by dualstow » Wed Jul 03, 2013 4:45 pm

l82start wrote: they all seem to be promoting bail at the "bottom"/sell now,  funny i thought that was contrary to boglehead thinking and sound investment strategy
That was my reaction, too.
Sam Bankman-Fried sentenced to 25 years
happyspec
Associate Member
Associate Member
Posts: 31
Joined: Wed Jun 12, 2013 4:43 pm

Re: The GOLD scream room

Post by happyspec » Sat Jul 06, 2013 4:05 am

For all those who are losing their nerves about the continuing fall of the precious metals: The Gold industry (miners) is so bullish about the future that it's nearly hard to believe it. If you watch the data of the Commodity Futures Trading Commission (CFTC) you will see that the commercial hedgers (miners) have so little short contracts as they didn't have since 2001!!! This means they don't expect (much) lower prices ahead. If so they would secure their business by loading up on short contracts and locking in a certain price. But instead they go all in and leave the price of their production open to the movement of the market. I don't go with clueless fund managers who buy at the top and sell short at the bottoms but with the business professionals. In my opinion this situation should translate  into a big up move for gold. By the way: Silver is the same story... The commercials are nearly nt long. This hasn't ever happened in history. So be patient... :D
We often underestimate what we can reach in the long term.
frommi
Executive Member
Executive Member
Posts: 189
Joined: Mon Mar 25, 2013 1:04 pm

Re: The GOLD scream room

Post by frommi » Sat Jul 06, 2013 5:02 am

I find this is one of the best quotes from Warren Buffet on gold:

“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”?

:)
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The GOLD scream room

Post by Libertarian666 » Sat Jul 06, 2013 9:06 pm

frommi wrote: I find this is one of the best quotes from Warren Buffet on gold:

“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”?

:)
That is excellent advice for anyone considering buying a 67-foot cube of gold. In other circumstances, it's not particularly significant.
User avatar
Pointedstick
Executive Member
Executive Member
Posts: 8864
Joined: Tue Apr 17, 2012 9:21 pm
Contact:

Re: The GOLD scream room

Post by Pointedstick » Sat Jul 06, 2013 9:26 pm

frommi wrote: I find this is one of the best quotes from Warren Buffet on gold:

“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”?

:)
Of course if the farmland turns to dust and Exxon Mobil fades away, the cube of gold may look more attractive. Why not hedge your bets and hold one third of each?

Also, this is particularly ironic coming from Warren Buffet given his prior interest in other precious metals. At one point he owned 130 million ounces of physical silver, if I recall. Apparently he had more use for the 78-foot cube of silver (the volume of 130 million troy ounces) than the 67-foot cube of gold.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The GOLD scream room

Post by Libertarian666 » Sat Jul 06, 2013 9:29 pm

Pointedstick wrote:
frommi wrote: I find this is one of the best quotes from Warren Buffet on gold:

“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”?

:)
Of course if the farmland turns to dust and Exxon Mobil fades away, the cube of gold may look more attractive. Why not hedge your bets and hold one third of each?

Also, this is particularly ironic coming from Warren Buffet given his prior interest in other precious metals. At one point he owned 130 million ounces of physical silver, if I recall. Apparently he had more use for the 78-foot cube of silver (the volume of 130 million troy ounces) than the 67-foot cube of gold.
It is nothing unusual for Warren Buffett to be hypocritical. He has excellent PR but is really not very nice at all.

As for gold vs. Berkshire Hathaway, let's look at 2000-2010, to pick the most recent completed decade.

First, BRK:
"Berkshire Hathaway stock produced a total return of 76% from 2000–2010 versus a negative 11.3% return for the S&P 500.[3]" (from http://en.wikipedia.org/wiki/Berkshire_Hathaway)

Now, gold:
First London fix in 2000 was $282.05
First London fix in 2010 was $1121.50

for a gain of 297% for that decade.

I'd rather fondle the latter!
Last edited by Libertarian666 on Sat Jul 06, 2013 9:37 pm, edited 1 time in total.
User avatar
dualstow
Executive Member
Executive Member
Posts: 14232
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The GOLD scream room

Post by dualstow » Sat Jul 06, 2013 9:34 pm

Pointedstick wrote: Also, this is particularly ironic coming from Warren Buffet given his prior interest in other precious metals. At one point he owned 130 million ounces of physical silver, if I recall. Apparently he had more use for the 78-foot cube of silver (the volume of 130 million troy ounces) than the 67-foot cube of gold.
But I think he bought it at a 20-year low.
If I'm right, he certainly bided his time.
Sam Bankman-Fried sentenced to 25 years
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: The GOLD scream room

Post by MediumTex » Sat Jul 06, 2013 10:07 pm

dualstow wrote:
Pointedstick wrote: Also, this is particularly ironic coming from Warren Buffet given his prior interest in other precious metals. At one point he owned 130 million ounces of physical silver, if I recall. Apparently he had more use for the 78-foot cube of silver (the volume of 130 million troy ounces) than the 67-foot cube of gold.
But I think he bought it at a 20-year low.
If I'm right, he certainly bided his time.
It was a good trade for him.  Very profitable.

For whatever reason, though, he doesn't think anyone else should look for similar opportunities in the precious metals markets.

Warren Buffett is a clownish gambler who has had an exceptionally lucky career.  Statistically, there will always be a Warren Buffett-type figure out there, and they will usually rationalize their success as a function of their own abilities, while suggesting anyone can do it if they just study the master's methods.

If you take the home run BRK investment in GEICO out of the picture, however, Warren Buffett would look a lot less impressive.

Even if you want to be very generous with Warren Buffett, he's still a hypocrite.  He's sort of the investing equivalent of the Dave Thomas Wendy's commercials--the persona is charming, but mostly fake.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
dualstow
Executive Member
Executive Member
Posts: 14232
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The GOLD scream room

Post by dualstow » Sun Jul 07, 2013 6:29 am

I don't know. I don't doubt that luck was involved, but I think you're underestimating him. Didn't he make great plays with Coke, Disney, American Express, etc. very early on? A "clownish gambler"?
Sam Bankman-Fried sentenced to 25 years
frommi
Executive Member
Executive Member
Posts: 189
Joined: Mon Mar 25, 2013 1:04 pm

Re: The GOLD scream room

Post by frommi » Sun Jul 07, 2013 12:41 pm

If you think WB or any other value investor was only lucky, i have two links to read and think about:

http://greenbackd.com/2013/01/09/examin ... l-or-luck/

http://en.wikipedia.org/wiki/The_Superi ... Doddsville
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: The GOLD scream room

Post by MediumTex » Sun Jul 07, 2013 5:11 pm

frommi wrote: If you think WB or any other value investor was only lucky, i have two links to read and think about:

http://greenbackd.com/2013/01/09/examin ... l-or-luck/

http://en.wikipedia.org/wiki/The_Superi ... Doddsville
If Warren Buffett's experience wasn't driven by luck, then why aren't all value investors billionaires?  There is more to it than just value investing, and what I am suggesting is that we are talking about a skilled value investor who was aided by a tremendous tailwind of good luck.

I'm not saying that Buffett is an incompetent idiot.  In fact, I am sure he is brilliant.  The problem is that the investing world is full of brilliant people, and most of them will never be billionaires.

Every lottery has a winner, but that doesn't mean that the winner was a better lottery player than everyone else who bought a ticket. 

I don't disrespect Buffett any more than I disrespect a lottery winner.  I just think it's a little silly for Buffett to go on TV and talk about how easy it is to be a successful speculator just because it has worked out well for him.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
KevinW
Executive Member
Executive Member
Posts: 945
Joined: Sun May 02, 2010 11:01 pm

Re: The GOLD scream room

Post by KevinW » Sun Jul 07, 2013 6:54 pm

IMO Buffet is an exceptional executive and an unremarkable stock investor. His modus operandi is to buy companies with a crippling flaw, buy them, and repair the flaw using heavyhanded management techniques. That works great when you are buying whole companies or controlling interests in them. But the same dynamic doesn't work at all when you are a middle class retail investor buying slivers of percentages of companies and have no meaningful input into their management.
Post Reply