Hi all,
I would appreciate if you could tell me looking at the sheer volume of paper money that is being printed and the real state of the US economy along with some others, how there is any chance that precious metals and oil could fall significantly other than pull backs over the next 2 years or more?
I have read all Peter schiff's books and Hazlitt's 'economics in one lesson'. Have heard other well known investors such as M.Faber and even Robert T. Kiyosaki mention gold silver and oil as solid investments at present, but know nothing compared to a lot of you here so very much value your opinions.
Could you please tell me what you see as negatives to having a stock portfolio of blue chip gold/silver mining companies and high yielding oil companies for the next few years held on the Australian/Canadian exchanges for example, being guided by solid economic theory rather than stock salesman who know nothing.
Many thanks
If your invested in stocks representing metals you are still at risk because.
A) You own a dollar representation of the metal. Whatever company or fund your invested in will be subject to economic recourse during a currency crash
B) There's been alot of fraud lately in the security stock funds, primarily GLD. Tungsten plated gold bars..
I hate to say it but it seems most wise to hold the metal physically yourself. Otherwise, if you already do, sit back and enjoy 20-30% returns on your investment each year. This applies to silver and gold.
On the other hand, I've heard some positive things about investing in mining company's lately though I haven't tried it personally.
http://www.panamericansilver.com/silvermarket/documents/WorldSilverSurvey2008Summary.pdf
the above link had some info stating that silver gains were in a large part driven by a sub-prime crisis...i dont know if thats true or not. i doubt it.
if it is..i suppose a sub-prime correction would lead to falling silver...after awhile.
also some discussion about inelastic demandity in industrial sectors...some decline in conventional photography but maybe small gains in circuit boards for digital cameras.
hamilton: I would appreciate if you could tell me looking at the sheer volume of paper money that is being printed and the real state of the US economy along with some others, how there is any chance that precious metals and oil could fall significantly other than pull backs over the next 2 years or more?
There are many possibilities. As solvency pressures increase, banks could increase their reserves instead of making loans, thus dramatically slowing the velocity of money and muting the effects of the large amounts being printed. "Weak hand" investors could liquidate their holdings for immediate needs as the economy continues to fall, thus sending these commodities much lower. Central banks could sell their gold holdings. The Fed could raise interest rates dramatically as massive inflation becomes a PR liability.
hamilton: Could you please tell me what you see as negatives to having a stock portfolio of blue chip gold/silver mining companies and high yielding oil companies for the next few years held on the Australian/Canadian exchanges for example, being guided by solid economic theory rather than stock salesman who know nothing.
Investing in mining and oil companies exposes one to counter party risks: management could decide to build up a hedge book, accounting irregularities could come to light, the country in which mines/oil fields are located could stop playing nice and demand higher taxation of profits or even nationalize, a drop in the general equities market could pull down these companies due to selling in index funds, etc.
More importantly, the attractiveness of "blue chip" commodity companies may already be fully priced in by the market, leaving little upside.
Having said all this, though, I think physical precious metals are one of the premier stores of wealth right now, and could have significant appreciation still to come.
filc: On the other hand, I've heard some positive things about investing in mining company's lately though I haven't tried it personally.
Jim Rogers is bullish on agriculture most of all. He told everyone on CNBC to quit their jobs and become farmers.