Edward, interesting comments on gold and ABX. I've also been watching the gold and silver charts the past few months. Silver is lower now than it was 25 years ago. It may now be close to production costs, as is gold. Not sure about that, however.
> much of the current levels is one of "perception"
I don't have any idea how much of the current price is perception (not much, I suspect), and how much reflects reasonable demand. But gold and silver are certainly subject to extremes of perceptions. That's one of the problems with gold and silver.
IMHO, demand is currently down for these metals because, in the absence of any really serious inflationary threat (no serious threat right now, at least), it makes little sense to hold gold and silver for noncommercial purposes - unless one thinks inflation is about to explode in the near term. And personally, I just don't see that happening without some catastrophic unknown event/s happening "out of the blue".
Also, IMHO, non-metal stocks are up now for a reason. That's because technology is the future, not gold and silver. I don't really see a lot of future in gold / silver - except for continued use in the photographic and dental industries.
Having said all that, I admit it is tempting to shift a certain percent of one's portfolio from tech stocks to metals / mining stocks right now - if for no other reason than the former stock prices are up, and the latter prices are down. What percent to allocate where, depends upon one's assessment of what the future will bring. I see nothing on the horizon that will impede technology stocks, but I can see continuing trouble ahead for gold stocks.
On a related note, there was an interesting article in the July 21 issue of "Newsweek" magazine, page 50, by John McCormick, titled "You Snooze, You Lose". It was about Montgomery Ward's bad bet in the 1940's and 50's - to hold massive amounts of cash - waiting for a post-war depression that never came. Ward's CEO, Sewell Avery, was massing cash to buy out Sears for 10 cents on the dollar when and if the depression happened. Sears Roebuck pushed ahead. The depression never came. Wards is now in Chapter 11.
I thought it was a fascinating story - in view of the fact that had the depression materialized, as Avery was projecting, he would have been a hero. I guess the key is to accurately predict the future. Avery didn't.
Ice |
