This research summarizes some important facts and history of the gold market and overall current market dynamics.
Passport Capital Physical
Friday, June 11, 2010
Tuesday, June 8, 2010
History can add perspective.
Haven't We Been to This Show Before- Dan Alpert-Westwood
Draw parallels where you may, the author makes ample comparisons, but all too often studying history is less of an economic tool than what current economic theory is dictating to be done.
For a day by day account of the depression era check out news from 1930
It provides a summary of news day by day to get a granular perspective of the evolution of the Great Depression.
Draw parallels where you may, the author makes ample comparisons, but all too often studying history is less of an economic tool than what current economic theory is dictating to be done.
For a day by day account of the depression era check out news from 1930
It provides a summary of news day by day to get a granular perspective of the evolution of the Great Depression.
Friday, June 4, 2010
Hogwash is full of Bubbles.
I keep reading about how gold is supposedly in a bubble. This claim is plastered acrossed financial blogs and publications not to mention TV talking heads with stronger opinions than investment track records.
So let's explore this assumption:
First from google news
gold bubble:689 articles
treasury bubble:383 articles
Unless you think that interest rates will go negative and bonds will rally forever the latter scenario with less chatter is of higher probability of being true.
Second, gold costs money to produce so how much does it cost?
The average cost in 2009 was $457 down from $623 in 2008 due to higher oil prices. Mind you while these costs may seem low compared to the spot price of gold, the money made from other metals that are extracted with the gold are subtracted from the cost; so much so in some cases like silver miners they can have a negative cash cost when the silver ore has a high concentration of zinc or lead.
Profit margin gold miners: 27.1% from the most recent data I could find in 2008 and for 2009 some of the major producers were as follows:
Barrick 29.6%
El dorado 29.1
Newmont 24.35%
kinross 16.8%
Anglogold 14%
Now for other industries
Big Pharma: 21.7%
Software: 21.1%
Microsoft 27.6%
Intuit 35%
Johnson & Johnson 29%
Eli Lilly 22.8%
Hey where are the articles about the software and pharmaceutical bubbles!
The idea that gold is over priced as Miami condos during the boom or internet stocks in the late 90'S is hogwash. If the argument is that gold is overpriced fine, that can be evaluated upon merit.
I would like to see if any of the talking heads called the bottom in gold in 2000 since they are so quick to call a top. I doubt they bought at the top or willing to put their money where their mouth is and short the "bubble". Talk is cheap, but we sure didn't hear much when gold was.
So let's explore this assumption:
First from google news
gold bubble:689 articles
treasury bubble:383 articles
Unless you think that interest rates will go negative and bonds will rally forever the latter scenario with less chatter is of higher probability of being true.
Second, gold costs money to produce so how much does it cost?
The average cost in 2009 was $457 down from $623 in 2008 due to higher oil prices. Mind you while these costs may seem low compared to the spot price of gold, the money made from other metals that are extracted with the gold are subtracted from the cost; so much so in some cases like silver miners they can have a negative cash cost when the silver ore has a high concentration of zinc or lead.
Profit margin gold miners: 27.1% from the most recent data I could find in 2008 and for 2009 some of the major producers were as follows:
Barrick 29.6%
El dorado 29.1
Newmont 24.35%
kinross 16.8%
Anglogold 14%
Now for other industries
Big Pharma: 21.7%
Software: 21.1%
Microsoft 27.6%
Intuit 35%
Johnson & Johnson 29%
Eli Lilly 22.8%
Hey where are the articles about the software and pharmaceutical bubbles!
The idea that gold is over priced as Miami condos during the boom or internet stocks in the late 90'S is hogwash. If the argument is that gold is overpriced fine, that can be evaluated upon merit.
I would like to see if any of the talking heads called the bottom in gold in 2000 since they are so quick to call a top. I doubt they bought at the top or willing to put their money where their mouth is and short the "bubble". Talk is cheap, but we sure didn't hear much when gold was.
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