Gyroscopic Investing

Below the streets of Lower Manhattan, in the vault of the Federal Reserve Bank of New York, the world’s largest trove of gold — half a million bars — has lost about $75 billion of its value. In Fort Knox, Ky., at the United States Bullion Depository, the damage totals $50 billion.

nd in Pocatello, Idaho, the tiny golden treasure of Jon Norstog has dwindled, too. A $29,000 investment that Mr. Norstog made in 2011 is now worth about $17,000, a loss of 42 percent.

“I thought if worst came to worst and the government brought down the world economy, I would still have something that was worth something,”? Mr. Norstog, 67, says of his foray into gold.

Read the rest here...
http://www.nytimes.com/2013/04/11/busin ... ml?hp&_r=0

Part of me thinks this thread properly belongs in the VP forum but everyone seems to be discussing gold's recent case of the blues in the this forum. For the record I don't particularly care what gold does, it's always been my least favorite component. But if you are in the PP you accept that at any given time at least one of the assets you hold will be a stinker. And if gold really is entering a secular bear market that would likely be good news for the broader economy.

So he bought a fund investing in mining company stocks.Ouch!

Gold is down what, 13-14%?

Ad Orientem wrote: For the record I don't particularly care what gold does, it's always been my least favorite

I'm of the opposite bent -- it seems to me that our entire financial system is based on trust, and if that trust evaporates, the whole system could go up in smoke along with it.  I love gold for that reason, and have a hard time keeping 75% of my savings in less-tangible assets.

However, I'd be happy to see the price of gold fall, as I don't have much yet, and would be very pleased with the opportunity to buy some while it is "on sale."

Additionally, I do agree that the falling price of gold means good news for the rest of the economy.  It seems to me that the mood has been one of fear and depression for the past while.  It would be nice to see that ebb, and be replaced by a mood of optimism and hope.

annieB wrote: So he bought a fund investing in mining company stocks.Ouch!

Gold is down what, 13-14%?

Paulson had the mining stocks (the famed hedge fund manager).  And since mining stocks are often leveraged, they tend to have more volatility than gold bullion. 

Personally I doubt the bull market is over. I think that gold just got super hot after a 12 year run and with the dumb money chasing the hot money it overshot. At that stage gold @ $1900 oz. just could not be justified and a lot of traders realized this and cashed in their chips. But the fundamentals haven't changed. Most of the nations of the Western world are still up to their eyeballs in debt and they are still printing money like it's going out of style. My gut says gold is just consolidating and waiting for more evidence of inflation before its next leg up.

And that evidence may not be that far off...
http://gyroscopicinvesting.com/forum/ht ... ic.php?t=5

Yep, once real inflation hits (i.e. hot potato money and/or capacity constraints) -- not this pansy reflationary deflation offset by central banks -- later in this decade, gold and rare gold coins will shoot to the moon!!!  I absol I'm betting on it!

I'm a bit light on real estate though.  That long has passed its bottom but theres still about 45% upside to get back to the normal-price median.