Gyroscopic Investing

The price of gold plunged 5% Friday to its lowest level in three years as economists grew increasingly worried about the economy's forward momentum heading into spring.

The price of gold futures for June delivery finished the week at $1,487, down $78 an ounce. It's the lowest close of the precious metal since it peaked at $1,889 in August 2011.

Read the rest here...
http://www.usatoday.com/story/money/mar ... e/2077545/

Eh. Maybe it's the end of the gold bull market and maybe it isn't. The future is unpredictable. Normally though at least one asset is underperforming. For the moment that's gold. On the upside if this really is the end of the gold bull market that is probably good news. It would indicate that a true recovery is underway. I am skeptical. But I hope that I'm wrong in that skepticism.

But, the media here (UK) says it's because of the additional Cyprus debt.
http://www.guardian.co.uk/business/2013 ... one-crisis

Over the last week or so we've had Krugman, Goldman Sachs and Soros (iirc) telling us not to touch the stuff.

A few days ago I thought I'd take the opportunity to move a little over from ETF holdings to physical but found that the dealers cupboard was bare.

FOFOA's playing "in the air tonight'.

Then gold has a 5% slap down.

I'm hoping the PP's hedging holds up and buying popcorn.

   

gizmo_rat wrote: I'm hoping the PP's hedging holds up and buying popcorn.

Even if the other assets do not hedge fully, this still could be a very good thing. If gold or any other asset is going to go on sale via an extreme nose dive, I'd rather it does this quickly. Then one is more likely to hit a rebalancing band only once or twice rather than continuously buy into a declining asset. High volatility, while unnerving, will produce the most returns in the long run. Agree?

A gold bear market will shake out the weak PP hands, IMO.  Especially if the stock market stays in bull territory.

Good.  I've only managed to get half my retirement into the PP (Roth and Rollover IRAs).  I still need to do my 401k and maybe I'll get a deal on an asset instead of everything feeling somewhat high like it did in January.

In the recent past we have had stocks, bonds and gold all going up in value. It is inevitable that one of them is going to pull ahead, and one or more may get dropped off the rear of the pack. I don't like seeing all the assets going up at once because it gets me worried that they could all go down at once. I prefer to see them moving separately. If it's gold's turn to go, that's just how things work. At least investors will have a cheaper asset to park stock profits which have been going gangbusters the last couple years.

Then again, the Euro could blow up next week and gold goes to the moon and stocks nosedive.

That's what makes investing interesting.

See
http://online.barrons.com/article/SB500 ... rticle%3D0

for a slightly contrary and optimistic view

gap wrote: See
http://online.barrons.com/article/SB500 ... rticle%3D0

for a slightly contrary and optimistic view

Couldn't read it (you have to be a subscriber).  Can you summarize?

I'm with CraigR on this.  Q:  How do you know if the PP is working correctly?  A: One of the assets is going down, and the commentators are advising everyone to get out of at least two assets.  I've seen those assets change identity a couple of times just over the past year, and it's getting easier and easier to sit back, enjoy the popcorn, and not worry about it.

I've also noticed that all assets were moving up at the same time. It's really strange because these things should be moving up or down for different reasons. I'm leaning to the opinion that the reason is because of massive support from the Fed. The gold sell off makes me worried that we are headed for deflation. But I do HOPE it's because of prosperity!

Just in case one wants to know how this side of the world sees big gold price drop on Friday. My wife practically dragged me to the jewlery shop today in Shanghai. Wanted an early start on Mothers day 


Low bullion prices lure shoppers
Author: Hu Xiaocen
PublishTime: 2013-04-15 01:07:51
SHOPPERS swarmed into gold jewelry shops in Shanghai over the weekend lured by the two-year low of bullion price after global gold prices plummeted.

China National Gold Group, the country's biggest gold producer, slashed the bullion price from 313 yuan (US$50.55) per gram to 298.50 yuan per gram in its flagship store in Shanghai on Saturday, the lowest level in two years.

Global gold prices tumbled to the lowest since July 2011 on Friday after the Cypriot authorities made a commitment to sell excess reserves of gold. Spot contract for 99.99 percent purity gold on the Shanghai Gold Exchange shed 7.17 yuan per gram last week, tracking losses in overseas markets.

"Many customers came to shop due to bargain prices," said an assistant at the China Gold store. "The 10-gram and 20-gram bars are sold out, and we don't have many stocks left for the 50-gram and 100-gram."

Another salesperson at Shanghai-based jewelry retailer Lao Feng Xiang said "the number of customers doubled" and gold bars were selling like hot cakes at its shops over the weekend.

China Bull
That is fascinating. Thanks for sharing.

I've been sitting on the sidelines for the past couple of years, waiting to make my move into gold.  All that time I've felt gold was overvalued.  If it slumps a bit more this week I'll jump in to fill out my PP.  I was planning to do that anyway within the next few weeks regardless of the price; I only wish I had taken some of the stock profits in my VP off the table so I could use them to bolster my PP!  Ah well, whaddya gonna do?

If Oil is priced in Gold and not priced in Dollars and you have WTI oil @ 87.30
A 15 to 1 Ratio,That some believe is a Historic ratio, then we are very close to fair value for gold.
BUT IMHO Markets are not efficient.
http://www.incrediblecharts.com/economy ... _ratio.php

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akacoat wrote: If Oil is priced in Gold and not priced in Dollars and you have WTI oil @ 87.30
A 15 to 1 Ratio,That some believe is a Historic ratio, then we are very close to fair value for gold.
BUT IMHO Markets are not efficient.
http://www.incrediblecharts.com/economy ... _ratio.php

Markets are efficient in the long-term, but there are certainly daily inefficiencies based on human emotions and psychology.  Like Benjamin Graham once said:

"In the short term the stock market is a voting machine, but in the long term it's a weighing machine."