Investment Strategies

[RobInKuwait]

Hey, just wondering who out there invests and if you have any good strategies for the current economic "downturn".

The strategy I'm considering is:

Buying a lot of GLD (NYSE gold index). (40%)
Buying some NYSE Euro or Yen index. (25%)
Buying gold and mineral exploration companies. (10%)
Keeping a minimal S&P exposure (25%ish)

Keeping minimal exposure in dollars, due to an upcoming inflationary explosion. Should I put my tinfoil hat on or am I playing it safe?

 

[jakellpet]

The Gold investment looks sound to me.

In times of recession, gold has always been seen as a safe haven.

What sort of time frame is your proposed strategy?

 

[suncloud]

Keeping minimal exposure in dollars, due to an upcoming inflationary explosion. Should I put my tinfoil hat on or am I playing it safe?

most of my money is overseas right now. you can also buy a small amount of GM/Ford stock while its low - provided the bailout has been approved, then plan on selling it in march

 

[RobInKuwait]

What sort of time frame is your proposed strategy?

Long term. Maintain it as is until there's some sense of sanity in the FED's policies and the US has a long term capital outlook. Based upon what I've been reading, we could be looking at double digit inflation next year and an explosion in gold prices as the dollar deflates. Peter Schiff says gold will be $5000 by 2012. We'll see.

 

[RobInKuwait]

most of my money is overseas right now. you can also buy a small amount of GM/Ford stock while its low - provided the bailout has been approved, then plan on selling it in march

Where overseas?

I refuse to touch a bailout company. I don't want to trust Washington with my investment's well being.

 

[jakellpet]

Long term. Maintain it as is until there's some sense of sanity in the FED's policies and the US has a long term capital outlook. Based upon what I've been reading, we could be looking at double digit inflation next year and an explosion in gold prices as the dollar deflates. Peter Schiff says gold will be $5000 by 2012. We'll see.

It looks a little high-risk to me for the current economic climate.

You would be better off investing in unhedged gold producers such as Newmont than exploration companies - especially considering how undervalued they are.

 

[RobInKuwait]

It looks a little high-risk to me for the current economic climate.

You would be better off investing in unhedged gold producers such as Newmont than exploration companies - especially considering how undervalued they are.

I'm looking at buying gold through NYSE: GLD.
http://www.spdrgoldshares.com/sites/us/shares/#key_info

What does Newmont do exactly?

 

[jakellpet]

I'm looking at buying gold through NYSE: GLD.
http://www.spdrgoldshares.com/sites/us/shares/#key_info

What does Newmont do exactly?

Newmont is a Denver-based global mining house. Unlike it's competitors, it has an unhedged gold position meaning it has full exposure to the spot gold price.

Often gold producers hedge, or forward sell part or all of their production at an agreed price to minimise risk not only to future revenue, but also to hostile takeover bids.

I the current economic climate, one would want full exposure to a rising gold price, and obviously under 'normal conditions' the market would place a premium on the company value.

Currently this premium is not recognised due to economic uncertainty created by the sub-prime collapse and general panic mentality by the global investment community.

A google search will reveal more... as would advice from an investment professional (which I am not)

 

[futurepilot]

if you want to go high risk, im looking into GM, purely because of the volt.

 

[somewhatgifted]

Hey, just wondering who out there invests and if you have any good strategies for the current economic "downturn".

The strategy I'm considering is:

Buying a lot of GLD (NYSE gold index). (40%)
Buying some NYSE Euro or Yen index. (25%)
Buying gold and mineral exploration companies. (10%)
Keeping a minimal S&P exposure (25%ish)

Keeping minimal exposure in dollars, due to an upcoming inflationary explosion. Should I put my tinfoil hat on or am I playing it safe?

Id take the yen over the euro anyday. Taxes levees and fees associated with mining and drilling are bound to skyrocket due to environmental concerns, i think this industry will shrink further. Id get right out of the s&p and get into silver or platinum.

 

[RobInKuwait]

Id take the yen over the euro anyday. Taxes levees and fees associated with mining and drilling are bound to skyrocket due to environmental concerns, i think this industry will shrink further. Id get right out of the s&p and get into silver or platinum.

What's the advantage of silver and platinum vs gold?

 

[RobInKuwait]

if you want to go high risk, im looking into GM, purely because of the volt.

GMs problem is not selling cars, its purely their overhead. Unless there is a drastic change to the price of oil, I can't see the Volt even being viable in the current market. Even if the Volt is successful, one successful model does not make a company profitable.

 

[RobInKuwait]

Newmont is a Denver-based global mining house. Unlike it's competitors, it has an unhedged gold position meaning it has full exposure to the spot gold price.

Often gold producers hedge, or forward sell part or all of their production at an agreed price to minimise risk not only to future revenue, but also to hostile takeover bids.

I the current economic climate, one would want full exposure to a rising gold price, and obviously under 'normal conditions' the market would place a premium on the company value.

Currently this premium is not recognised due to economic uncertainty created by the sub-prime collapse and general panic mentality by the global investment community.

A google search will reveal more... as would advice from an investment professional (which I am not)

Thanks for clarifying that. I'm very new to commodity investing and need to learn more about it. When I googled it I got a lot of explanations from sites that deal in commodities. Any ideas where I could go for objective information/advice on these sectors?

 

[somewhatgifted]

What's the advantage of silver and platinum vs gold?

The Modern Commodity
The number and scope of platinum's industrial uses have skyrocketed during this century to include neurosurgical and dental apparatus, drugs for cancer treatment, computer and automotive equipment. Indeed, one of every five goods manufactured either contains or is produced using platinum. One of its most essential uses is in auto catalytic converters. Within autocatalysts, platinum converts harmful emissions into carbon dioxide and water. Nearly one third of newly mined platinum is used in this fashion. Due to its function in the automotive industry, it has been dubbed "the environmental metal."

While new uses for platinum are being discovered almost daily, its supply is extremely restricted. Remarkable difficulties exist in its mining and production, with between 5 and 6 million ounces of new platinum reaching the world market each year; that figure is less than 5% of gold production. It is estimated that all of the platinum ever mined would fill a room measuring less than twenty-five feet on a side. Refining the metal poses its own problems; platinum occurs naturally in combination with other metals, necessitating an intricate process of extraction that takes about six months.

Taken from Platinum - History and Investment

In the past Platinum doesnt out perform gold in tough economic times, I think you could snap up some for quite cheap. The world is cracking down on polluters and i think its a nice way to diversify.

Id invest in gold bouillion or bars and if crap hits the fan you can ensure your saftey with this global standard of monetary exchange.

 

[jakellpet]

Thanks for clarifying that. I'm very new to commodity investing and need to learn more about it. When I googled it I got a lot of explanations from sites that deal in commodities. Any ideas where I could go for objective information/advice on these sectors?

sure, google:

• the world gold council
  
• USGS
  
• CRU mineral economics
  
• London Metal Exchange

will give you a good start.

'Mineral Economics' is another good search - of course, throw 'China' or 'BRIC' , which is an acroymn for Brazil-Russia-India-China - key emerging economies that will drive future global economic growth :thumbsup:

 

[suncloud]

Where overseas?

I refuse to touch a bailout company. I don't want to trust Washington with my investment's well being.

france - the only country that didn't buy into the repacked bank loans

 

[jakellpet]

there is a tonne of info to wade through - I've studied post-grad level Mineral Economics, and work in the Resource and Mining Sector and sometimes feel I've only scraped the surface.

All the analysts are have been proved wrong with recent events - I don't think anyone has the correct answer.

It's still worth while seeking professional advice, but always, always do your own research as well.

 

[somewhatgifted]

GMs problem is not selling cars, its purely their overhead. Unless there is a drastic change to the price of oil, I can't see the Volt even being viable in the current market. Even if the Volt is successful, one successful model does not make a company profitable.

I agree 100%.

As peter schiff says the market fixes itself and its the governments involvement that has made things worse. Bailouts cant fix a company without some SERIOUS makeovers, which is extremely unlikely.

They are failing for a reason. The market is shedding some fat in tough times dont buy the fat.

 

[jakellpet]

I agree 100%.

As peter schiff says the market fixes itself and its the governments involvement that has made things worse. Bailouts cant fix a company without some SERIOUS makeovers, which is extremely unlikely.

They are failing for a reason. The market is shedding some fat in tough times dont buy the fat.

In saying that certain stocks have already been oversold due to investors having overextended positions or call margins - panic selling generates a domino effect.

Look for the bargins with significant cashflow and a pipeline of quality assets. BHP and Rio Tinto are ones to watch.

 

[DR.D]

Hey, just wondering who out there invests and if you have any good strategies for the current economic "downturn".

The strategy I'm considering is:

Buying a lot of GLD (NYSE gold index). (40%)
Buying some NYSE Euro or Yen index. (25%)
Buying gold and mineral exploration companies. (10%)
Keeping a minimal S&P exposure (25%ish)

Keeping minimal exposure in dollars, due to an upcoming inflationary explosion. Should I put my tinfoil hat on or am I playing it safe?

Hey Rob,
I'm not in the market at all and really don't know anything about investments, but recently I've been thinking I need to get better educated about money. You mentioned the yen. That reminded me of this guy Jim Rogers with a ton of vids on U-tube. He puts a big emphasis on commodities and agriculture, and he also really likes the Asian markets. What do you think about his economic theory and investment strategy? I had never heard of him before, but apparently he's some kind of investment guru. I LMAO looking at his videos too. The old man says what's on his mind with no BS!

 

[somewhatgifted]

The price of Oil will more than double by this summer. May be worthy to grab some of that cash.

 

[RobInKuwait]

Hey Rob,
I'm not in the market at all and really don't know anything about investments, but recently I've been thinking I need to get better educated about money. You mentioned the yen. That reminded me of this guy Jim Rogers with a ton of vids on U-tube. He puts a big emphasis on commodities and agriculture, and he also really likes the Asian markets. What do you think about his economic theory and investment strategy? I had never heard of him before, but apparently he's some kind of investment guru. I LMAO looking at his videos too. The old man says what's on his mind with no BS!

Dr. D,
I'll be sure to check out Jim Rogers. I've been trying to follow Peter Schiff's investment strategies as much as possible. He seems pretty brilliant, and everything he's saying makes sense to me.

IMHO, the best strategy one can make is to minimize dollar exposure to mitigate against upcoming inflationary pressures. Schiff recommends a combination of high dividend Asia stocks with minimal dollar exposure and Gold. Every non-inflationary *dollar* you make overseas equates to large amounts of actual dollars in our inflated dollars.

 

[RobInKuwait]

The price of Oil will more than double by this summer. May be worthy to grab some of that cash.

I am confused why oil is so cheap vs the dollar while gold is doing so well.

What makes you think oil will do so well?

 

[DGSky]

The price of Oil will more than double by this summer. May be worthy to grab some of that cash.

What makes you say that?

 

[somewhatgifted]

http://www.stopahmadinejad.com/how-much-will-oil-prices-go-up-if-iran-decides-to-close-the-strait-of-hormuz-in-the-persian-gulf/

Hurricane season always elevates oil prices due to platform destruction.

I have many more tinfoil hat reasons but wont share for fear of "theyre all gonna laugh at you, noo" lol.

 

[jakellpet]

I am confused why oil is so cheap vs the dollar while gold is doing so well.

What makes you think oil will do so well?

they have different economic drivers. Oil has a direct link to economic growth, gold is used as a 'safe haven' currency during times of economic uncertainty.

With gold you need to watch for a 'decoupling' trend from the US dollar - this indicated the price is no longer linked to the rise and fall of the USD, rather is recognised as a 'currency' in it's own right.

 

[jakellpet]

Now tin is a commodity I have a vested interest in:

http://metalprices.com/metalNews.asp?id=85490&svc=RN&type=1

 

[RobInKuwait]

they have different economic drivers. Oil has a direct link to economic growth, gold is used as a 'safe haven' currency during times of economic uncertainty.

With gold you need to watch for a 'decoupling' trend from the US dollar - this indicated the price is no longer linked to the rise and fall of the USD, rather is recognised as a 'currency' in it's own right.

Gold and Oil historically have the same market tendencies. Commodities in general are considered 'safe havens' to inflationary pressures.

 

[RobInKuwait]

http://www.stopahmadinejad.com/how-much-will-oil-prices-go-up-if-iran-decides-to-close-the-strait-of-hormuz-in-the-persian-gulf/

Hurricane season always elevates oil prices due to platform destruction.

I have many more tinfoil hat reasons but wont share for fear of "theyre all gonna laugh at you, noo" lol.

I think we may have missed the boat on this. Crude Oil is already around 40.

 

[jakellpet]

Gold and Oil historically have the same market tendencies. Commodities in general are considered 'safe havens' to inflationary pressures.

...but this is historical data... remember we are in a new era of growth. The Sleeping Dragon has awakened and the rules may be re-written.

To be honest no-one knows what the fk will happen. Right now cash is king :thumbsup:

 

[RobInKuwait]

Right now cash is king :thumbsup:

Until inflation hits! Foreign cash is king.

 

[jakellpet]

Until inflation hits! Foreign cash is king.

...then Gold is king :thumbsup:

 

[RobInKuwait]

...then Gold is king :thumbsup:

Most definitely. I just bought AUY and own some GLD.

 

[somewhatgifted]

Wicked than i can sell my teeth for food, although i will have to get it pre chewed..
Note to self: get gold teeth.

 

[RobInKuwait]

Alright. I've sold all my mutual funds except for 1 S&P Fund.

5% Yamana Gold Inc. (USA) AUY
A Canadian Gold company poised for 100% growth over the next 4 years. Offers a small monthly dividend. Planning on holding long term to take advantage of future gold price increases.

5% Pengrowth Energy Trust (USA) PGH
A Canadian Oil and Natural Gas Trust offering 20% dividends which I plan on reinvesting through a Dividend Reinvestment Plan (DRIP). Planning on holding long term to take advantage of future oil price increases.

12.5% SPDR Gold Trust (ETF) GLD
A trust which has 23 billion in gold stored. Its primary purpose is to mirror the gold market. Plan on holding long term to take advantage of future gold price increases.

10% ProShares Ultra Oil & Gas (ETF) DIG
A fund that owns shares of securities highly tied to the price of oil, which causes shares to respond approximately twice as much as the price of oil. Oil goes up 5%, it goes up 10%, Oil goes down 5%, it goes down 10%. Plan on holding short term. Looking to sell when Oil gets to 35-40 a barrel.

8% iShares Silver Trust (ETF) SLV
Same as the gold trust. Long term play.

12.5% USAA S&P 500 INDEX MEMBER SHARE USSPX
This is the last of my former almost all mutual fund portfolio. Keeping it just because a little US market exposure can't hurt....:nutkick:

47% Cash

Looking to buy:

More PGH and AUY, or possibly other stocks in the same sector, and Yanzhou Coal Mining Co. (ADR), YZC, a coal company in China.

Thoughts?

 

[DR.D]

That looks pretty smart Rob! Gold looks solid, but historically it looks like silver may give an even greater return than gold. Does anybody have any info on the Amero? One source says it's backed with silver, another says gold. I'd think there might be better security in the standard metal, whatever it is.

 

[RobInKuwait]

That looks pretty smart Rob! Gold looks solid, but historically it looks like silver may give an even greater return than gold.

Thanks. I hope it plays out better than my funds tied to the American Stock Market strategy.

As for the Silver, I agree. Silver looks under priced compared to gold. I feel safer having precious metals than money right now. I think they both should do pretty well long term.

Does anybody have any info on the Amero? One source says it's backed with silver, another says gold. I'd think there might be better security in the standard metal, whatever it is.

Everything I've read on the Amero is speculation. If they were to implement it and actually back the currency with an objective standard of gold and silver I would be SO all for it. However, considering most currencies are fiat now, I think the odds of that happening are pretty low....unless Ron Paul wins in 2012.

My theory is that the Fed and Treasury will devalue the dollar into worthlessness and then implement the Amero to sneak out of the inflationary nightmare of their own making.

A problem with the Amero in theory is that a common currency will hinder a poorer country such as Mexico. For example the Euro works fine for Germany and their stronger industrialization, but hurts the weaker economies in Italy and Spain. Obviously if the money was backed by precious metals I don't think this would be the case.

I have seen the idea of using gold as currency cropping up. Basically you have gold in a bank, and you use a debit card to purchase items in gold. The legality of this has been challenged by the government, but if legal it would be ideal.

 

[DR.D]

... However, considering most currencies are fiat now, I think the odds of that happening are pretty low.....

That is what concerns me. If future currencies have no metal standard, then metals may be worth nothing beyond their industrial uses. Like platinum, it's got a high value now but if the auto industry takes a dip they say that platinum will too.

Also, it looks like China is buying all kinds of metals, not just precious. I wonder what that's all about.

 

[jakellpet]

That is what concerns me. If future currencies have no metal standard, then metals may be worth nothing beyond their industrial uses. Like platinum, it's got a high value now but if the auto industry takes a dip they say that platinum will too.

Also, it looks like China is buying all kinds of metals, not just precious. I wonder what that's all about.

These are some good points - that is the risk with gold... but these are risky times.

One thing there is a huge shortage of is Rare Earth Elements (REEs).

Another note about Tin - it is now seen as a 'green' substitute for lead - lead has been banned in the EU.

China is the key ;-)

 

[DGSky]

Okay...

Where does one start to learn more about the basicis of such investing?

 

[jakellpet]

Okay...

Where does one start to learn more about the basicis of such investing?

the internet and a financial advisor that specialises in this area.

there is some really good discussion in this thread - who said lifters were all a pack of meatheads?

 

[DR.D]

... who said lifters were all a pack of meatheads?

Haha, even meatheads gotta feed their kids! :food:

Your insights are appreciated Jakellpet. Thank you to all the fellas here with good input. It helps financial dummies like me a lot.

 

[RobInKuwait]

Okay...

Where does one start to learn more about the basicis of such investing?

Investing is not like other knowledge you find on the internet. You can get completely conflicting advice from reputable sources at all times, and either one could be completely right depending on macroeconomic factors in the market.

Most places you go will spew out your standard invest in the market and over time you will see growth strategy. However, there are serious inherent flaws in this strategy, namely inflation.

I recently read "Crash Proof, How to Profit from the Coming Economic Collapse" by Peter Schiff, and his insights are golden.

There is mounds of raw data out there, and the best thing you can do is try and interpret that data into a coherent strategy and follow that strategy. My strategy is based on the premise that the dollar is dying and I'm taking what I think is the optimal strategy to maintain profits in this environment.

 

[RobInKuwait]

That is what concerns me. If future currencies have no metal standard, then metals may be worth nothing beyond their industrial uses. Like platinum, it's got a high value now but if the auto industry takes a dip they say that platinum will too.

Also, it looks like China is buying all kinds of metals, not just precious. I wonder what that's all about.

What's beautiful about precious metals is that for as long as human beings maintain ascetics has they have for the past 5000+ years, gold, silver, and platinum will still be in demand. Try and by your wife a pyrite and cubic zirconium ring and you'll see what I'm saying?

The value of precious metal is in the labor that it took to find and mine them as well as the the effort to refine them. That gives the metals objective value.

Metals like tin and commodities like oil are wanted for their utility alone. Precious metals have both utility and ascetics pushing their value.

 

[RobInKuwait]

there is some really good discussion in this thread - who said lifters were all a pack of meatheads?

Hells ya. I'd actually like to hear what other strategies people are implementing. This could grow into an interesting mega thread if we can get some contrasting ideas on investing going.

 

[jakellpet]

FYI: Gold Fever....this is just the start.

Gold rush erupts over financial crisis
By Nick Gardner
The Daily Telegraph
January 10, 2009 12:01am
All that glitters ... investors are are ploughing billions of dollars into gold to fend off the financial crisis.

• Record rush on gold in Australia
• Investors convinced gold's a safe haven
• Only time will tell if it is

THE global financial crisis has sparked a new gold rush.
Worried investors seeking a safe home for their money are ploughing billions of dollars into the precious metal in a bid to preserve their wealth, The Daily Telegraph reports.

Demand has now reached such unprecedented levels that the Perth Mint, Australia's biggest wholesaler of gold coins and bars, has been forced to ration its sales.

Perth Mint's bullion sales rose 194 per cent in the December quarter compared with the corresponding period in 2007, while silver bullion sales were up 140 per cent.

The mint has suspended sales of all gold bars and all bullion coins - except its 1oz "Kangaroo" gold bullion coin.

On Monday, after a three-month suspension, it will expand its range of bullion coins for sale but the restrictions remain in place for minted gold bullion bars so the mint can sell some gold to as many customers as possible.

"We are working three shifts a day, six days a week, and still can't keep up with demand," Perth Mint CEO Ed Harbuz said. "I've never known anything like this in the precious metals market.

"We would be working Sundays too but we are having difficulty getting enough staff."

Non-minted gold in the form of cast bars produced by Perth Mint's local refinery can still be bought, although customers who want the bigger bars often have to wait several weeks.

One customer recently bought $500,000 worth of bullion and wanted it delivered so he could hold it personally.

"For very big orders we normally keep the gold in our depository for security reasons," Mr Harbuz said.

"Orders of $10 million or more are not unusual. Often the orders are much larger if we are dealing with pension funds or institutional investors."

 

[RobInKuwait]

Gold rush erupts over financial crisis
By Nick Gardner
The Daily Telegraph
January 10, 2009 12:01am
All that glitters ... investors are are ploughing billions of dollars into gold to fend off the financial crisis.

• Record rush on gold in Australia
• Investors convinced gold's a safe haven
• Only time will tell if it is

THE global financial crisis has sparked a new gold rush.
Worried investors seeking a safe home for their money are ploughing billions of dollars into the precious metal in a bid to preserve their wealth, The Daily Telegraph reports.

Demand has now reached such unprecedented levels that the Perth Mint, Australia's biggest wholesaler of gold coins and bars, has been forced to ration its sales.

Perth Mint's bullion sales rose 194 per cent in the December quarter compared with the corresponding period in 2007, while silver bullion sales were up 140 per cent.

The mint has suspended sales of all gold bars and all bullion coins - except its 1oz "Kangaroo" gold bullion coin.

On Monday, after a three-month suspension, it will expand its range of bullion coins for sale but the restrictions remain in place for minted gold bullion bars so the mint can sell some gold to as many customers as possible.

"We are working three shifts a day, six days a week, and still can't keep up with demand," Perth Mint CEO Ed Harbuz said. "I've never known anything like this in the precious metals market.

"We would be working Sundays too but we are having difficulty getting enough staff."

Non-minted gold in the form of cast bars produced by Perth Mint's local refinery can still be bought, although customers who want the bigger bars often have to wait several weeks.

One customer recently bought $500,000 worth of bullion and wanted it delivered so he could hold it personally.

"For very big orders we normally keep the gold in our depository for security reasons," Mr Harbuz said.

"Orders of $10 million or more are not unusual. Often the orders are much larger if we are dealing with pension funds or institutional investors."

Wow, great find! That's the Perth Mint it the mint that Peter Schiff recommends. It makes me wonder why the price of gold isn't going up at the same rate.

 

[jakellpet]

Wow, great find! That's the Perth Mint it the mint that Peter Schiff recommends. It makes me wonder why the price of gold isn't going up at the same rate.

chances are it will Rob - it looks like the small investors have jumped the gun on the institutions :thumbsup:

 

[RobInKuwait]

chances are it will Rob - it looks like the small investors have jumped the gun on the institutions :thumbsup:

I was thinking about selling GLD, as 35-40% of my investments are a bit much for metals, but I'm going to hold now!

 

[jakellpet]

I was thinking about selling GLD, as 35-40% of my investments are a bit much for metals, but I'm going to hold now!

Of all the metals, gold would be the one to keep.

...but keep a close eye on Rare Earth Elements (REEs) - there's a current shortage building !