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malco

Guidance on where to park my money

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For several months I have been struck into immobility by doubts about what do do with my savings. Because I do nothing, my savings continue to pile up in my bank account. This cannot go on.

 

My problem is that I can't get through the problem of what to plan for:

 

a) depression due to banking failures and general failure of the financial system, basically the global economy goes bankrupt, under the onslaught of peak oil and too much debt;

 

or, b ) steady progression to new energy sources, albeit with high inflation and still problems due to debt levels.

 

If a) occurs, then gold and cash will be the things to have, plus maybe shares in utility companies (because the governments will not allow the power, gas and water to go off line, so presumably utility shares will maintain or increase in value whilst the rest of the stock market goes to pot)

 

If b ), then gold is again a good bet, as are utility shares and also energy shares, but cash is not a good idea due to inflation.

 

Note that I am primarily aiming to protect what I have from inflation, banking failures, currency collapse and stock market collapses. I am not all that interested in making great gains, although if I do happen to make great gains, I will not be sorry about it!

 

What do you think of my reasoning above?

 

As I see it the big doubts are whether or not to hold cash and whether or not to hold energy stocks (because in a depression capital investment collapses and so energy companies will get hammered right when we need them). On the other hand, gold and utility stocks look good bets whatever happens.

 

What is the view on how to buy gold: eGold or bullion? And can you recommend a utility ETF or index that is not secretly polluted by risk to make it look better than it is?

 

Suppose I create a portfolio that is 25% gold, 25% utility stocks, 25% energy stocks and 25% cash (not Sterling, probably Can$, CHFr, Euro, Yen and Yuan). What bank do you think is the safest these days? Do you think this is the best balance?

 

Unlike Doc Bubb and many others here I do not have the aptitude or time to be constantly prancing here and there in and out of the markets like a gazelle. I am pedestrian. I just want a strategy that will get me through calamity reasonably unscathed.

 

Your comments on my thinking will be appreciated!

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Suppose I create a portfolio that is 25% gold, 25% utility stocks, 25% energy stocks and 25% cash (not Sterling, probably Can$, CHFr, Euro, Yen and Yuan). What bank do you think is the safest these days? Do you think this is the best balance?

 

Unlike Doc Bubb and many others here I do not have the aptitude or time to be constantly prancing here and there in and out of the markets like a gazelle. I am pedestrian. I just want a strategy that will get me through calamity reasonably unscathed.

 

Your comments on my thinking will be appreciated!

 

Hi Malco,

 

Not sure if this helps I'm not an expert by any means as I have only been trading for a few years.

 

I have a core holding of Cotton, Sugar, Coffee and Silver which hasn't done much yet but I think could perform well over the next few years. In terms of holding it I have cash to back up the margin trades I am making in easy access savings so I can pay any margin calls I get and then I buy spread bets with selftrade/city index on the futures contracts. They let me roll the contact forward on the expiry week without paying the spread again which is ok for holding it long term I have found so far. I am not sure this is the best way though but city index didn't have very much on their platform to trade options and I don't have much experience with them anyway (I hope I can learn more about options here). The other benefit is that I am not paying an interest charge like I would on a rolling bet against the current price and as with all spread bets gains are free of CGT.

 

I too would love to find out more about what others are doing for the long term parts of their portfolios and how they execute their investments.

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three bits of advice:

 

+ get out of the dollar

+ get out of uk property (str, if you are flexible enough), and maybe sterling cash too

+ diversify carefully

 

with in the diversify carefully, i suggest:

 

+ some gold and silver, use maybe goldmoney.com, and the etfs (GLD, SLV)

+ some gold stocks (RGLD, and GFI are two examples of possible long term holds that I bought recently)

+ some gold funds (others can advise you better)

+ some energy stocks

 

invest in (your own) education, stay informed

 

personally, i would like to learn more about smart ways to invest in agriculture

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Excellent question as even a gazelle needs to walk sometimes. That is, a blended approach (trading versus investing) of strategies seems the the most prudent one to me. Are you really avoiding roll forward charges though? I would be surprised they are doing what the other spread bet companies are not. Then there is time decay, backwardisation, and contango to account for.

 

You may want to look at the etfs at etfsecurities.com as an alternative or supplement. I'm impressed by the range of products on offer which enable you to specialise in one commodity or take a sub-group of products (e.g. Agriculture) in one security. That enables you to diversify on the cheap (although the basket ones can go nowhere if the individual gains and losses compensate each other, which has happened).

 

It's a UK company which lists its products on the LSE and other European bourses. The LSE listed ones are quoted in USD which is not really an issue regarding a dollar decline as the values should compensate. The main issue is the currency conversion costs and that some brokers (e.g. TDW) therefore don't let you trade on line (E*Trade does though). Some of the European listed ones trade in EUR which is where I plan on going. There are also some products that seek to minimise contango, etc. Counterparty risk (i.e. they or one of their suppliers goes bust) remains though.

 

Just a thought in case you haven't been there yet.

 

Other thoughts:

 

o I also hold a core "cash" position of some of my STR money in NS&I index linked funds, Premium Bonds, Goldmoney, etc as I don't want to trade or risk my STR money (I want to be able to buy a house later!). I'm not wild about Goldmoney though given their charges (purchase and holding), especially for silver. There are cheaper alternatives like the ETFS (the Canadian gold/silver one is well respected and, as you point out, is in Canada). I'm also looking at options for taking physical possession because I'm a grumpy old man who believes the world is going to hell in a handbasket.

 

o I like the Canadian income trusts. Sure, there are probable tax changes coming but this should have been discounted in the price and the fundamentals are still strong. The importance of dividend income (versus just capital gains) is often overlooked. iShares has an ETF that can be bought via TD Waterhouse. There is also a US listed Emerging Market dividend ETF (and other regions), etc so you can get income along with regional focus (e.g. avoid US based dividends and maybe some capital gain and/or minimal capital loss).

 

o I only invest in ETFs (and the international not US company ones) for my core holdings in order to spread risk away from individual companies. I like the sector focus to achieve better returns (i.e. there has to be an optimum level of diversification, which is not full blown diversification). I'm in cash now as I'm expecting more weakness (hopefully I'm now better at the average in and buy low approaches). Sectors are Mining, Materials, Oil, Oil Services, Agriculture (Dr Bubb take note, there is a new ETF), and some regionals/country ones such as Emerging Market Dividend, Russia, South Africa, and Brazil. There are also some currency ETFs which offer surprisingly good yields.

 

o I'm looking at using products listed on the European bourses to get out of the GBP and also because they offer a far better range of ETFs than the UK (rip off Britain again). TD Waterhouse say you can trade them on-line, although they often say these things only for the reality to be somewhat different. One issue is that most of the sector ETFs are European (rather than globally) focussed.

 

o Spreadbetting is tough (most people (70%?) lose). Good for quick trades and where you want to make a real return on US trades (e.g. the USD price of something goes up while the USD itself is going down!). Alternatively, buy USD stocks but hedge your currency position with a covered warrant (the SG Warrants website has a booklet explaining this). I started to do this only to realise there was no need to buy the actual securities - i.e. most of the action is currently in currencies and not stocks (although covered warrants are definitely trading and not investment vehicles). I tend to trade with covered warrants (high leverage, no margin risk) than spreadbets and have done pretty well (and a lot better than spreadbetting), especially with the Agriculture, USD:EUR, USD:JPY warrants.

 

o Dr Bubb is right about education. I read and listen a lot. I subsribe to one paid newsletter and listen to Financial Sense and GoldSeek internet broadcasts, as well as Commodity Watch Radio (the Dr Bubb bit of course!). I'm also a fan of the RHAM free newsletter (pretty bearish but being proven right). The key is not to overload yourself with information (which can become no more than noise) and to focus on the price charts (they don't lie, sort of).

 

Hope this helps. Certainly helps me to remind myself of what I should be doing!

 

I'd love to hear anyone else who has ideas regarding the focus of the original question - periodic and lowish risk investing.

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has this idea been developed any further

 

there are a few listed agri. co's, but they look expensive to me.

 

Minesite's affiliate, AgriProds, will do a one day seminar in Jan, I was told by CEO Emma Milton yesterday

 

Fence makes some good points on the larger question. Do be careful with spreadbetting.

I rarely do it. Only when I see a big opportunity. And I win a little better than half the time, I suppose

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quote name='DrBubb' date='Nov 18 2007, 09:59 AM' post='25984']

three bits of advice:

 

+ get out of the dollar

+ get out of uk property (str, if you are flexible enough), and maybe sterling cash too

+ diversify carefully

 

with in the diversify carefully, i suggest:

 

+ some gold and silver, use maybe goldmoney.com, and the etfs (GLD, SLV)

+ some gold stocks (RGLD, and GFI are two examples of possible long term holds that I bought recently)

+ some gold funds (others can advise you better)

+ some energy stocks

 

invest in (your own) education, stay informed

 

personally, i would like to learn more about smart ways to invest in agriculture

I read 'get out of the dollar' to mean.................. Don't trade in USD demoninated assets and only trade in Euro's, or Canadian Dollars etc........ or Yuan....

Can you let me know if I have the right interpretation?

 

Also, on the Agri front, Rogers is bullish on Sugar and Cotton in partiular. Look at the history to understand where the long term trends are at, then look at the fundamentals and see if you agree with him. Oats [http://www.cstcharts.com/cgi-bin/chartge.pl?o.m ]may be ready for an upside breakout......but the price is on the overbought limit [70.63] right now, so a correction here may be a good buying opportunity if the analysis works out..... IMH 'and novice' O :D

post-1170-1195655148_thumb.jpg

MunsterK

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personally, i would like to learn more about smart ways to invest in agriculture

 

 

When you say "Smart ways" could this be in the form of "Agricultural Tooling" ??

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Thought I would resurrect this one. Thank you for the replies. I still have taken very little action - when it comes to making investment decisions I am absolutely hopeless.

 

If you invest in an "agriculture" ETF, what exactly is that? A load of Mansanto etc? Or fertilizer suppliers? Or commodities? I wonder at the morality of "investing" in a staple like wheat, since it creates demand not related to actual consumption and thus increases starvation somewhere.

 

There was a guy on Financial Sense last weekend called McClellan who recommended investing in a limited number of good stocks (picked with care following analysis) rather than diversifying. What do you think of this idea?

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Thought I would resurrect this one. Thank you for the replies. I still have taken very little action - when it comes to making investment decisions I am absolutely hopeless.

 

If you invest in an "agriculture" ETF, what exactly is that? A load of Mansanto etc? Or fertilizer suppliers? Or commodities? I wonder at the morality of "investing" in a staple like wheat, since it creates demand not related to actual consumption and thus increases starvation somewhere.

 

There was a guy on Financial Sense last weekend called McClellan who recommended investing in a limited number of good stocks (picked with care following analysis) rather than diversifying. What do you think of this idea?

 

In a similar position meself...had a locked savings account with a&l which matures soon...probabl going to invest through an ISA wrapper. the whole inflation and deflation argument is perplexing. Part of me is considering Gold, although it really does look to be in a bubble...does anyone see a pullback on the horizon??? Looking at bullion vault, for the amount I have the fee's seem much toohigh...

 

ahhhh, options options. Perhaps sit tight and wait for the bottom

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malco,

I just thought I'd start by depressing you with this:

 

When you started this thread gold was around $800 (£395).

Now it is $945 (£485).

 

18.1% !!!!

 

From what I read, you'd prefer something you can just buy and hold.

Physical gold/silver seem to fit the bill exactly. IMO the best thing to do is buy and hold, and ignore the short-term noise.

Bullion Vault, Gold Money & maybe get some you put in a safety deposit box locally.

 

 

bob,

I've read quite a bit about inflation/deflation. I've also read articles saying it doesn't matter which, gold is still going to do well.

For me there are a few points:

1. Gold/silver are a good safe haven.

2. Just look at the news and economic data, and look at what is actually happening to commodity prices.

 

I read a lot about gold. I only read about currency/gold/silver related things. At the moment that seems to cover the whole world economy !

 

Jim Sinclair a few days ago sounded unusually resigned to a pullback. Today he sounds very upbeat.

I've seen constant predictions of dips. "Wait for the dip and buy".

Recently I've been pretty damn well spot on with my predictions. I called the rise from Xmas. I got the recent bounce at ~$905. I'll get it wrong some time :lol:

 

Looking at the aggregate of all the news and writing, I can see gold stepping up another leg right now.

The next step will be around $1000. Maybe then we'll get a reasonably long period of consolidation.

Personally I don't see any dips below about $880, and now maybe nothing below $910.

If you weigh up risk/safety and the possibility of buying on a dip, I think it's been on the side of buying.

 

Try reading the latest Jim chart. That will give you an insight into what may happen when the shorts get squeezed. If you are not in, you will probably miss one huge rise up when the longs and physical buyers win.

 

http://www.jsmineset.com/cwsimages/Miscfil...ld1230pmCST.pdf

 

Re BV, I've found that the cheapest route. Over 2 years it's only about 2%.

If you buy coins, it'll be ~5%+.

 

Please checkout the gold comments thread. I try and post the most significant articles I find.

Steve

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To my previoius suggestions, I would add...

 

Buy some cheap Uranium stocks- they are now at a level that "makes sense", and so is Uranium.

 

Here's the Uranium etf, as traded in Canada

 

U.t/ Uranium participation ... update

aa2mz3.gif

 

How to play?

Here's what I did, I bought in-the-money ($5) calls on:

Uranium One / UUU.t

Dennison / DML.t

 

= =

 

Other ideas, some funds that trade in Canada

 

Endeavour / EDV.t

Pinetree / PNP.t

Longview / LV.t (thnx to Ace)

 

= =

 

How does this style of investing work for me?

Well there's a portfolio that I have been informal advising since it was set up.

 

Here's the record of it:

 

PERFORMANCE: Month-by-month : since May 2004 inception

 

NAV : 12 Mos. - Jan. - - Feb. - - Mar. - - Apr. - - May. - - Jun. - - Jul. - - Aug. - - Sep. - - Oct. - - Nov. - - Dec. -

2004* 78.22% : - - - : : - - - : : - - - :: 100.00 100.78 102.05 103.75 104.13 108.17 131.15 138.67 179.62

2005 : 28.22% 175.77 166.38 154.77 136.83 130.40 128.10 125.78 123.94 132.17 124.00 171.03 230.32

2005a 67.47% : : - - - : : - - - : : - - - :: : - - - : : - - - : : - - - :: : - - - : : - - - : : - - - :: : - - - : w / wts: 300.80

2006 : 121.27% 303.35 287.53 314.88 379.26 392.31 316.46 379.63 428.78 385.70 461.96 582.30 665.60

2007 : 53.79% 713.83 713.33 743.39 828.49 836.93 873.81 911.84 863.94 993.84 1132.16 1004.58 1023.60

2008 : : - - - : 1027.40

 

 

(it's not a huge amount of money- low 7-figures.

But the compounded return of over 950% over less than 4 years can compete with any funds, I think.

Sometimes I scratch my head when 25% per annum is considered "awesome")

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If you invest in an "agriculture" ETF, what exactly is that? A load of Mansanto etc? Or fertilizer suppliers? Or commodities?

 

The manager of the ETF is required to report at least the top holdings, so you can clearly see what you're investing in. This info is available on their website, or on sites like Yahoo Finance.

 

I wonder at the morality of "investing" in a staple like wheat, since it creates demand not related to actual consumption and thus increases starvation somewhere.

 

I think there may be a fallacy in this line of thought. I'm no economist, but it seems that if you are not an end user of wheat, you aren't creating real demand over the long term; you are merely shifting the demand from the future to the present. This has beneficial results:

 

* The rise in price associated with your near-term demand gives producers the economic signals they need to have the confidence to allocate enough capital to increase wheat production for the future. This is the beauty of the free market, versus a socialist system whereby the government makes a best guess at how much production is needed.

 

* The practice of futures speculation allows producers (i.e. - a wheat farmer) to hedge their future production, thereby allowing banks to more comfortably give them financing, thereby allowing more future production. Someone has to take the other end of the bet from the farmer. That's where you (the speculator) come into the picture.

 

So the short term price rise may well have the benefit of assuring future production is adequate to meet the needs of everyone. Of course, if you are successful in your futures speculation, you can always use a portion of those profits to help feed the hungry. Wheat prices are high right now, partially due to the devaluation of the $, and partly due to the fact that no one around here has any wheat to sell right now. This will likely change if there is a good crop this spring. I personally worry much more about the quantity of food that I consume than I do about the effects of investing in commodities. For example, I heard the other day that in many of the poor countries in Africa only about $0.20/day is required to feed someone who is starving. That makes one think twice about spending 100 times that for a single meal at a restaurant.

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* The practice of futures speculation allows producers (i.e. - a wheat farmer) to hedge their future production, thereby allowing banks to more comfortably give them financing, thereby allowing more future production. Someone has to take the other end of the bet from the farmer. That's where you (the speculator) come into the picture.

 

So the short term price rise may well have the benefit of assuring future production is adequate to meet the needs of everyone.

 

A good point!

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(I first posted this on an HPC thread about credit tightening, but it is relevant here too, I think):

 

I'd like t give much respect to DR. Bubb, he first bought credit tightening to our attention years ago and said it would be the catalyst, he was also I think THE first person to start talking about gold on this board back in 2003/2004, Bubb was the first guy to get me thinking about gold and his recommendations started a journey for me that has been VERY VERY profitable thus far - it has taken time but he has been way ahead on his calls.

 

Bubb has had some ridicule about his HPC and GOLD calls but he has/is being proved correct.

 

Thanks and well done Dr. Bubb

 

Thanks, I.

 

I have to laugh (all the way to the bank!)

Despite frequent criticisms here, and on some other websites like SP, my investing has succeeded beyond even my wildest dreams:

 

+ One of my two core portfolios is up 1000% (that's 10 times!) since May 2004. While the other has done nearly as well, but its month-by-month performance is harder to measure since I "raid it" frequently to cover my living expenses, pay taxes and make other investments, like Hong Kong property,

 

+ My foray into HK property that started about one year ago has done well. Borrowing 65-70% on investments, I now own 9 properties, with 5 fully closed, another closing this month, and three more in March and April. I recently calculated returns, and my equity has doubled, after an average investment time of perhaps six months. Prices are rising about 1% per week (repeat: that's 1% PER WEEK !) in HK, at the moment.

 

It's not that I am so fabulously clever. My success is based upon huge amounts of hard work. I am a fulltime investor, making my living through this activity. So I put the time in, listening carefully to many other experts, and sharing ideas with other private investors. (Some of this work is done online, on HPC, and my own site, GEI.) Partly because I am willing to share the fruits of my research labors, I get plenty of information and ideas in return. Tune into the podcasts on CW Radio, if you want a sample of this sharing.

 

My latest keen interest is urban planning, with a particular focus on New Urbanist concepts. Within 2-3 years, I hope to be in a position to invest (at bargain prices) in communities within the USA that are rebuilding themselves away from the old-fashion "tragedy of suburbia" model into communities with a real future, using the important principles of the New urbanist movement.

 

Why not join the adventure? I reckon it will be profitable to be involved, even if it is just investing alongside, in your own way.

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Congrats bub. I only wished I had fully comprehended your message back in 2005.

 

Haha.

It's easy for "clouds to get in the way", isnt it:

Joni Mitchell :

 

Here's more...

 

AS THE CIRCLE TURNS 'ROUND...

Listen to Joni Mitchell : http://www.youtube.com/watch?v=6XOV34vsjfg

 

1/

BLESS THOSE BANKS AND BTL SPECULATORS

 

...from a thread on HPC ...

 

As much as I'd love to help out a BTL landlord and rent their shiny flats, I'm afraid I can't afford them.

 

When you're single, living alone and taking home £1,000 - like many, many of us are, it's just not possible. You have to rent older properties with lower rents.

 

For me, renting a new build studio/bedsit would cost about 50% of my take-home, as opposed to 35% I am paying on a nice/clean studio that is 25 years old. Even the fact that with the increased rent it would all be newer and larger, I can't afford to be tempted.

 

They'd have to drop the rents a bit more than £100 to get people moving in in big enough numbers to make a difference.

 

As has been said 1000 times before: where ARE all these "young professionals" expected to be magicked up from that are supposed to live in these places...?

 

Two trends:

+ UK property prices are falling, and the slide will pick up pace, as all that BTL malinvestment begins to get liquidated

 

+ Younger folk will progress, getting higher paying jobs, and building their savings. Through this, the price of property they can sensibly afford will gradually rise.

 

A falling line, and a rising line, will eventually cross. But that day is still 2-3 years away IMHO.

 

Can't you see it now?? All those crazy BTL speculators were actually your friends. They created excess supply, that will drive the marlet LOWER than it would have gone without them. Within 2-3 years you may be in a position to take advantage. Then you will thank them for the mad excess that they help to create.

 

"Bless those mad BTL-ers."

 

2/

but that the whole point short term lose long term gain

short term gain long term lose.

 

Right.

And the banks were there happily aiding and abetting the wild speculation.

They will suffer too, and so they should, they should, they should.

In the end, they have helped to bring excess supply to the market.

And those that were rise enough to stand bavk and just observe, while building their savings,

will be the ultimate beneficiaries.

 

It's a slow process, but the cycle is a wonderful teacher- isn't it?

Some of us have seen it before, and are amazed at how the drama plays out again and again.

 

3/

Younger folk may be getting older, wiser, more experienced . . . this does not mean the higher paid jobs will be available. Everything including Dr. Bubb and Mr. Parry are moving East.

 

Also consider the demographics. The age group to which you refer, well, there isn't that many of them. Also, consider wage inflation versus CPI.

 

Not all will have better jobs.

But many will, as they progress in their careers.

 

Sadly, I agree with your larger point that the UK is in for a tough several years.

So the property rally, when it does come, is likely to be a weak and half-hearted rally.

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In response to impartials post..a big hat tip from me too.

 

My first Gold investment was in ML G&G in June 2006 and that is now showing an 86% gain. Have added a lot more on the way and am optimistic for the future. My reasons for investing in gold was to to pay off the mortgage as the endowment policies I had were not performing. The good news is that the next move up in ML G&G will achieve that goal!

 

So many thanks Bubb (No6, Frizzers, BP and anyone I forgot)....I owe you all a pint!

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My first Gold investment was in ML G&G in June 2006 and that is now showing an 86% gain. Have added a lot more on the way and am optimistic for the future. My reasons for investing in gold was to to pay off the mortgage as the endowment policies I had were not performing. The good news is that the next move up in ML G&G will achieve that goal!

 

that's great going!

 

May I offer a suggestion:

If Gold hits $1,000+, don't be afraid to use a stop on a part of your position.

 

I think it is likelt that the "ground" between $930 and $1,000 will get retraced (at least once) at some stage

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that's great going!

 

May I offer a suggestion:

If Gold hits $1,000+, don't be afraid to use a stop on a part of your position.

 

I think it is likelt that the "ground" between $930 and $1,000 will get retraced (at least once) at some stage

 

Cheers Bubb....makes sense to me does that and will bear that in mind.

 

I get a gut feeling that we may see 1000$ very soon......possibly by the end of this month

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I get a gut feeling that we may see 1000$ very soon......possibly by the end of this month

 

Yes, we may.

But dont forget that gold has a seasonal tendency to peak between March and May

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Yes, we may.

But dont forget that gold has a seasonal tendency to peak between March and May

 

Point taken, although I would question whether seasonality is a factor considering the current turmoil in the financial markets. Have tried to trade in and out of the market in the past and have had limited success, so I have resorted to holding my position for the long term

 

Cheers

 

Harvi

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To my previoius suggestions, I would add...

 

Buy some cheap Uranium stocks- they are now at a level that "makes sense", and so is Uranium.

 

Here's the Uranium etf, as traded in Canada

 

Thank you. I am interested in getting some uranium exposure. How would I go about investing in this Canadian ETF? Please bear in mind I am a neophyte when it comes to buying in the markets. Please keep it nice and simple: whom do I make the cheque out to and where do I send it? In return, I'll tell you all you want to know about engines and energy, but were too afraid to ask.

 

I am also interested in the agricultural sector. Would you consider shares in Potash Corp. to be sound? Do you know of a good etf covering agricultural products (fertlizer and pesticides)?

 

PS: I will DMOR, it's just that it saves time to get some general guidance to start with.

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On $1,000 gold, I anticipate with fascination the way the MSM will play that. The rise and rise of gold has attracted very little attention so far. The day gold broke the old record was also the day oil broke $100, so the story about gold got crowded out.

 

By comparison, I still clearly remember to this day the gold bull zenith of 1980. I was still at school, and had no interest in the financial markets nor any idea how they worked. The press coverage was enough to make a deep impression on me, as day by day it reported a new record and everyone got drawn into Peak Excitement at how long the incredible flight would last.

 

I wonder how high gold will have to go to get the same treatment this time?

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Some relevant points taken from Financial Sense:

 

Current situation characterised by slowing US economy but rising inflation;

 

US economy will steadily shrink as a factor in the world;

 

High debt levels and lack of will to combat inflation mean central banks are keeping interest rates low at the expense of inflation. This has not currently had as serious effect as one might expect, because wage demands have not yet reflected pressures caused by rising energy and food prices. If that changes, then high inflation becomes likely.

 

Global grain stockpiles are cause for great concern. Currently 53 days' global inventory, lowest level since records began in 1960 (ie: THIS IS A BIG DEAL). The world has enjoyed good harvests for many years. A bad year is virtually certain. Result will be spiralling agricultural prices and famine (viz comments last week by CEO of Potash). The fundamentals favour high prices for the foreseeable future, as wealth and diets improve esp in Asia.

 

Gold and crude oil are being used as a hedge against inflation. Corn and soya beans are also linked into this due to biofuels production.

 

Keep an eye open for a "Paul Volker" figure to appear to fight inflation. This would change many trends.

 

Overall they see the developing situation as troubling, serious. Rationing of oil likely within 3-5 years due to Peak Oil clashing with determined economic growth in India and China. China's plans for motorways and airports are oblivious to her lack of large oil reserves and the realities of peaking production, so growth in consumption there will only happen at expense of reduced demand elswhere... is that likely? They don't see China's plans coming to fruition. India likewise has little oil and no quality road network to speak of.

 

On the other hand, Brazil is rich in oil and many other strategic resources (including hydro-electric power), has vast agricultural lands and growing manufacturing base. Along with Russia, the foresee a lot of growth.

 

Infrastructure demand expected to be high; government spending on US's neglected infrastructure will support economy in recession/depression and more infrastructure is needed throughout the world.

 

So the general lesson is the good investments will be in gold, oil, energy, infrastructure, agricultural commodities. Inflation is expected to be a major issue, so get out of cash.

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