QUOTE(Cubalagi @ Jul 19 2019, 04:58 PM)
Yes, gold is now at historical highs in MYR terms.Thanks for sharing the chart. A 20 year time frame will show you an even more interesting picture.
But for sake of discussion, let me try to answer ur questions:
Q: How long will it keep its current valuation?
Ans: No idea. There is no comparative industry PE or EPS or a as such. Gold is..just gold. If we can tell exactly, than we can make millions by trading gold futures instead.
Q: How long will big Brother China going to continue its buying spree?
Ans: I think as long as the China-US rivalry persists.. which is going to be a long time. China problem is that they have too much of their money held in US Treasuries. Imagine if all ur money is with ur enemy.. Who is now starting to get aggressive with u. Problem right? They are trying to diversify away gradually, but since we are talking trillions of dollars, they can't pull out quickly without losing money themselves.
https://www.cnbc.com/2019/05/16/china-has-c...two-years.html:Q: How long will the US keep their interest rate low?
Ans: They have been increasing interest rates for the past 2 years. Early this year, they said enuff increase! Now everyone is expecting the first cut to come end of this month. The expectation is that this is the first cut of many to follow. To answer your question, I would say about 1-2 years.
Thank you for sharing your insights, and yes the past 20 years chart did tell a very interesting picture, but I am not going to go that far as we know gold price will never rally up in that way again (it was a huge 400% surge over the period). From where we are, a steady 5% increment in price annually is good enough, but then again we wouldn't know what is going to happen over the next 5 years or so.
US re-election is coming next year, so things might get interesting with the China-US rivalry. If he losses office, well it wouldn't take a long time for the new Government to reverse the damage Trump did with China. So on to your claim that this is going to be a long drawn affair, I'd say we'll let the US voters to decide if they would like to see this rivalry persist.
While I agree that US would have its first rate cut in years, but would this short-term rate cut spur a long-term rally of the gold price? It is highly unlikely as Fed will need to step in once again with a rate hike if inflation rises too rapidly due to cheap credit. So when that happens, gold would become more of a speculative tool rather than a hedging tool.
One downside of this GOLDETF is its very low liquidity. One is "forced" to liquidate it at a cheap price or stick with the stock through its ups and downs. And the fact that is pays no dividends, the only way to earn a decent profit from this ETF is if the price could achieve a compounded growth rate of 5% (which is again, unlikely unless the US is hit with another big recession). As compared to my stocks portfolio, I would be able to sleep better at night as I know that my stocks would still continue giving me dividends for years to come even if the price compressed temporarily.
QUOTE(Ancient-XinG- @ Jul 19 2019, 09:37 PM)
the surge of gold are mainly due to the anticipating of recession I suppose. But the volatility is high.
Investing in gold can be act as a hedge because the correlation to main market is low.
But given the uncertainty of current market movement, even gold is not safe anymore.
Its already very high at the mean time, can it breach further?
Nevertheless, we can give it a try for not exceeding 10% of our portfolio, perhaps?
Wow, 10% of total portfolio? That is a bit too much, isn't it?
Then I would have many sleepless nights afterwards. Haha.