Tag: Gold - 24/7 Investor

Somebody knows what do about the U.S. dollar rally we’ve seen lately.

A recent regulatory filing with the SEC on February 16 shows that George Soros’ Soros Fund Management has doubled its holdings in the SPDR Gold Trust (NYSE:GLD). Soros is now the 4^th biggest investor in GLD. John Paulson’s hedge fund, Paulson & Co. owns the most GLD, with 31.5 million shares.

I discussed Soros gold investment in a recent Daily Profit. Soros believes gold is likely to become a "bubble asset." Low interest rates and concerns about the global economic recovery would be the driving catalysts. But as we know, bubbles occur when buying begets buying.

Gold is currently trading around $1,095 an ounce. Price estimates from Goldman Sachs and HSBC call for gold prices to rise to the $1,235 to $1,300 range. But I think Soros’ position suggests he thinks it could rise even higher than that.

And that’s the thing about bubbles. Once they start, it’s hard to say how high prices can run.

Now, as you know, I’m usually a fundamental investor. I like to buy reasonably valued companies that are taking advantage of important economic or consumer related trends. At the same time, I believe gold should be part of any portfolio, especially now.

The Cheapest Gold Stock? �

You’ve heard me call out big-name investors who are "talking their book" in the past. An investors is "talking his or her book" when he/she states an opinion as fact for the sole purpose of helping a particular trade.

We’ve seen Warren Buffett do this. Last year, it was widely known that he was massively short the U.S. dollar. And he continued to say he thought the dollar was collapsing, even as it hit important support. Then we learned later that Buffett was covering his dollar short, all the while extolling its weakness.

Obviousl, Buffett, in true P.T. Barnum fashion, was attempting to use his influence to talk the dollar down while he covered. He only needed to fool people for a short time as he exited the trade.

******Last month at the Davos conference in Switzerland, George Soros did his version of talking his book. He made headlines when he said "The ultimate asset bubble is gold."

I always view statements like these with skepticism. And sure, recent SEC filings reveal that at the same time Soros was saying gold was a bubble, his Soros Fund Management was buying 6.2 million shares of the SPDR Gold Trust ETF (NYSE: GLD) for $663 million.

Gold Versus Silver on a Weakened Dollar

The headline retail sales number for October came in better than expected, up 1.4%. Of course, sales were down more than expected in September, so a bounce isn’t a complete surprise.

Interestingly, it was mostly auto sales that drove the decline in September and the increase in October. Remove auto sales from the numbers and retail sales were up 0.4% in September and 0.2% in October.

Those aren’t big numbers and it’s easy to imagine that they could reverse if there are any new shocks to the U.S. economy. But retail sales numbers are a better measure of consumer confidence than polls like the Michigan Sentiment Survey, especially when people are making long-term commitments like car purchases.

I suspect we can attribute much of the bullish bias in the stock market to rising expectations for holiday spending.

*****President Obama is in China this week. I’m sure you’ll read plenty in the media about how Obama is there simply to reassure the Chinese about the U.S. dollar and our deficit. But it’s critical to remember just how inter-dependent the U.S. and China are.

China is an export economy. Without the U.S. consumer, their economy collapses. China will continue to buy U.S. Treasuries because it’s in their interest to do so.

Also remember that China has been pegging its currency to the U.S. dollar since last year. China knows full well that the U.S. dollar is weak against the euro and the yen. China is deliberately piggy-backing on the U.S. dollar to keep their exports competitive.

So why all the lip service about the relative strength of the U.S. dollar? It seems to me it’s just good old fashioned politickin’. We complain about their human rights and slap tariffs on Chinese tires and steel, they gripe about our currency and deficits. It’s pretty standard stuff…

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The Irrational Market

Fed governors were out in force yesterday, expressing dovish comments on rates. Dallas Fed President Richard Fisher said economic growth and inflation may both be weak into 2011. San Francisco Fed President Janet Yellen started talking about a “jobless recovery” like the one we had back in 2002-2003, and Atlanta Fed President Dennis Lockhart sees a “relatively subdued pace of growth” this quarter and beyond.

All this means one thing – interest rates aren’t going anywhere soon.

And right on cue, gold hit another new high at $1,118 an ounce. I know not many investors think of the move in gold as a bubble, but that’s really what’s going on. There’s no inflation in sight. But low rates are so deeply associated with inflation it’s practically a given in investors collective consciousness that hyper-inflation is right around the corner...

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Gold and the New World Currency for Oil

Stocks on the Move Ahead of Earnings

Were Yesterday’s Losses in Financials the Start of the Correction?

Cash for Clunker Stock Rally Pauses for Earnings Season

What You Have in Common with King Nebuchadnezzar

"There’s no reason to invest in gold," said the finance editor of a major newspaper interviewing me. "If gold goes up because of inflation, then so does everything else, so why buy it? It’s not really a good investment."

She was serious. Yes, she is a finance writer. And yes, it’s a newspaper you’ve heard of.

Are We Being Conned About Gold Confiscation?

There’s a lot of Internet chatter these days about the possibility of the U.S. government seizing its citizens’ private gold holdings.

What are the chances?

Well, it’s always good to bear in mind that there is no telling what the government might do. It’s already doing things that were unthinkable just a few years ago. If President Obama believes there is political hay to be made from seizing your gold - or even if he sincerely thinks such a move would be "good for the country" - we’re sure he won’t hesitate to make the grab. After all, his favorite predecessor, Franklin Roosevelt, set the precedent.

Secret Ratio Values Gold at $1641.60 an Ounce

For 60 years, gold and oil have maintained a secret relative valuation ratio. Today, that ratio is off by over 50%. Read on to discover this secret ratio and why gold is still at least 50% undervalued?

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Naturally Occurring Investments

In just the past 52 weeks alone, the commodities index is up 33.7%, compared with the S&P's 15.6% gain.

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Red Hot Commodities

Commodities continue to reach record highs. In this issue we take a look at some commodity related ETFs and in our "Ask the Editor" feature we field a reader question about commodities. Also, Starbucks (Nasdaq: SBUX) is applying their success in selling CDs to movie promotion. And, McDonald's (NYSE: MCD) will complete their spin-off of Chipotle (NYSE: CMG) sooner than expected.

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Is There Still Gold in Oil?

Is loading up on oil and gold a good idea?

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Gold-to-Oil Disparity Creates Big Opportunity

In this issue we present Big Idea readers with special holiday discounts to Business Financial Publishing's newsletters. Also, find out why the oil-gold price ratio indicates an opportunity for investors. And a look at the rise of in-game advertising.

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Philadel-FI

This week's Big Idea features guest columnist Andy Kessler. Andy writes about the situation between Verizon and the city of Philadelphia and wonders if this situation is the start of a nationwide trend. Also in this issue we look at the rumors of a Microsoft-AOL alliance, and Growth Report market columnist, Peter Henig ponders the long-term viability of investing in gold.

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