Hi Joel,
I want to emphasize that I am not a gold bug, as I am not a Softbank, or CSCO or MSFT bug.
However, I have been selling puts on NEM and SWC for nearly 2 years now, as each stock nears the low of its then very well defined lower range ($18, $25 respectively). I now have NEM strike price 12.5 puts and SWC stk price 25 puts shorted. For every 3-4 series of puts I sell, I got put the shares once. I sell covered calls on NEM as it reaches for its higher range. My thus accumulated NEM and SWC has a low average price.
I do not believe gold will go up anytime soon, as the Europeans, against the better instincts of central banks elsewhere, insists on selling what had been accumulated by their ancestors and spend the proceeds on free drugs and free condoms. But, when Au does breakout, it will be front page news, in bold and shadow font, triple underlined; at that moment, no other assets will be valued at anywhere near their highs. Thus is the value of insurance.
I have some gold coins minted a thousand some years ago, and I leave some on desktop to remind me what to bring along when if I need to step into a time machine. I like physical platinum better for hoarding purpose, in the form of Australian Koala coins. The metal is rarer than gold, and unlike gold, has a genuine and massive industrial use, as catalysts and as purifier (glass making), as well as being more popular each year for jewelry use, especially as gold price goes down relative to platinum. Of course, its brilliant shine is almost as wonderful as gold, and its density complements the high fondle value. Should fuel cells ever replace the gasoline engine, I will then start to cash in the insurance policy, as more platinum is required for the cells than for the catalyst in the tail pipe of dino burners.
So far I have only accumulated SWC shares as it is protected by many aircraft carriers and Patriot missils. I missed out on Impala and AngloAmerican Platinum in S.Africa. The platinum price may soften, or S.Africa may explode, and so these are on my watch list of about fifty shares.
On deflation, and we have had some in the neighborhood, down the road, across the street and ofcourse in China/Japan/SEAsia, most commodity prices go down. Real estate and stocks go down, but gold stayed even in local currency terms, allowing relative value to be picked up from the neighbors at the newly deflated prices. Sometimes wealth is absolute, at other times relative; ask Gate of MSFT, Son of SFTBF, and Larry of ORCL. I believe gold, physical and shares, should mostly be counter cyclical in the coming difficulty period. Deflation, should it happen in the US broadly, is uncharted for me, and so I keep my Roman gold coins handy on my desktop. |
