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Gold tumbled into bear-market territory on Friday, underscoring how money managers' search for yield has trampled one of the most resilient post-financial crisis wagers.
Friday's selloff bolstered expectations that 2013 might mark the end of gold's 12-year bull run. Gold fell $63.30, or 4%, to $1,501 a troy ounce on the Comex division of the New York Mercantile Exchange, after falling as low as $1,480.20 during the day. It was the lowest close since July 2011 and the biggest one-day decline in dollar and percentage terms since February of last year. Gold fell 4.7% for the week.
A bear market is defined roughly as a 20% drop from a recent peak. Gold hit a record of $1,888.70 an ounce in August 2011, a month when jitters about the euro-zone's debt load were ramping up and Standard & Poor's Ratings Services yanked the U.S.'s triple-A rating.
No man can predict the future. Those who hold gold do so as a "Mad Max" hedge. I have 5% of my wealth in gold. I have bought some every month or so for the last 25 years. Will I sell? No. I don't respond to short term trends.
I sold out of the stock market at Dow 10,500 after the rebound bounce. Did I lose out on the extra 4,000 points? Yes.
I am more into preservation of principle than taking huge risks.
It was never a bubble and still isn't. This is something else. Gold ran up because of a carry trade unravel. Gold was tracking oil which triggered a gold panic because of the bubble myth. So we are looking at an overreaction with respect to other commodities. All commodities are down.
The squirrels have been over saving the nuts. Mining has been red hot but only for savings and not for industry. They have been killing industry with austerity and over saving for commodity demand cannot last forever.
Russia, Canada and Australia should be very concerned.
No man can predict the future. Those who hold gold do so as a "Mad Max" hedge. I have 5% of my wealth in gold. I have bought some every month or so for the last 25 years. Will I sell? No. I don't respond to short term trends.
I sold out of the stock market at Dow 10,500 after the rebound bounce. Did I lose out on the extra 4,000 points? Yes.
I am more into preservation of principle than taking huge risks.
Hmmm. You buy gasoline but don't have any stock in the oil company. Thank you for renting the use of my refineries and pipelines and retail distribution. You use telecom services but don't own any communications companies. Thank you for renting my cell towers and fiber optic cables and wire and networks. You wear clothes and buy groceries but don't own any retailers or producers. Thank you for renting my stores and distribution centers and manufacturers and suppliers.
Most of all, thank you for preserving your principal so that you can spend it with the many fine companies I own. You enable them to pay me dividends in excess of the cash income I could make on CD's or Treasury bonds or money funds or even corporate bonds issued by the same companies.
I bet you own your home instead of renting it, which is curious to me in light of the above. But thanks for selling out of stocks--you've helped me establish some wonderful positions.
No man can predict the future. Those who hold gold do so as a "Mad Max" hedge. I have 5% of my wealth in gold. I have bought some every month or so for the last 25 years. Will I sell? No. I don't respond to short term trends.
I sold out of the stock market at Dow 10,500 after the rebound bounce. Did I lose out on the extra 4,000 points? Yes.
I am more into preservation of principle than taking huge risks.
There is no such thing as preservation of principle. What you are doing is investing in dollars. If you really wanted to cancel all bets you would use options for a neutral position. One could own 100k of and SP 500 and then buy 50k worth of Rydex inverse as an index fund investor.
I just spread myself out and avoided stupid investments based on the concept that smart ones are harder to find than it is to find stupid ones to avoid.
According to pre-market reports it will dive another $100 today.
And indeed it has - more actually. Right now it's down nearly 10% in just the last couple of hours alone (currently down $138/ounce) Looks like panic is setting in. A bit less than 2 years ago gold was up to nearly $1900/ounce. Now it's down to nearly $1350 - that's a loss of roughly 28%.
at least gold will always be worth something, not so for the dollar. no world reserve currency has lasted forever.
As if that MATTERS.
WHO cares if in 200 years the dollar doesn't exist?
WHO cares if in 200 years gold is still worth something?
I care about what's happening NOW and during my lifetime - and maybe a bit beyond for my heirs.
Anything beyond that is not really relevant.
But if YOU care - go ahead and hold on to your gold and watch it go down and down and down. It will rally again eventually. After all it only took a quarter of century for gold to rally after the last gold bubble collapsed so if you can afford to have your money sit there and do nothing for essentually a full third of your life go ahead just let it sit in gold. Who knows? If you are young enough you might even still be breathing when it rallies again.
Might it rally again sooner?
Sure - but not if history is any example.
Ken
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