Read up in the gold thread.

I concur with this.

Gold is essentially a crisis hedge. QE is needed in crisis. QE is the catalyst for sudden gold price rises. However, as the effects of QE is felt in the economy, the effects on gold is slowly felt and so we see the rise of gold from $680 in 2009 to $1900 in 2011.

Dow gold theory is just a ratio just gold/silver ratio. However, the Dow gold ratio is trying to demonstrate the purchasing power of gold with respect to the DJ index through time. Just like the parable of gold purchasing a jacket through time.

As I have said, its not instep with QE. QE is but a catalyst. And some have put it as the Rate of money printing rather than QE per se.

Of course every asset has a cycle, no matter whether its gold or equities. What you have described is the end of the gold bull. Which was the beginning of the equities bull. Nothing new there.
And the proverbial gold does not produce an income. That's the reason I call it a hedge, rather than a pure investment in the normal sense.
And I compared it against FDs if you had read my other posts on gold.

I guess the question is "So What"?

Since investors always looks at returns and I have looked at it as a hedge against such as Covid 19, since I started investing in gold in 2002, gold has returned me 11.5% CAGR over the last 18 years.
Not bad a non income producing asset, No?

This post has been edited by prophetjul: May 10 2020, 08:13 AM

Sounds like the same tactics for every asset!

But no, producers do not DUMP. There is enough demand out there. For eg the central banks of every nation has been increasing their holdings, especially Russia and China. For China, gold is just a small portion of their national assets. Still very far from the developed nations.

And YEs. QE is a reason. A very real reason. As with every asset there is a story.

QE is a catalyst to push gold. A big catalyst. Others are like war, pandemics, etc. Basically CRISIS.

I have only bought gold 3 times in the last 18 years and sold once in 2011. My biggest buy was 2002 where I changed 90% of my FDs to gold.
Then in 2008 I sold all my banking stocks and put them in gold and others.

As for speculating forward prices, I expect gold to correct to $1600 to 1650 an then catapult to $2800 to 3200.
Depending how MYR does against USD, results in the returns. But then, I have never had faith in the MYR anyway.

First graph. I cannot say anything on this. It will take a lot of time to analyze this.
Normally it is advised 10% max of allocation to gold in a portfolio. But I have not looked at gold strictly as an investment tool.
Rather a hedge against my savings. My cash part.

Which the 2nd graph may be more relevant.

As I have related in my MYR experience, although gold has yet to reach its highest price at 1900, gold has already reached its highest in MYR and a lot of other currencies too. This is due to the high USD vs other currencies presently.
In normal circumstances, gold is inversely correlated to USD.
Although I cannot correlate the effects directly, in times of fear and crisis, sometimes the world flees to the USD AND GOLD together.
This is what is happening now. This is now a double plus for gold holders, rise in both USD gold price and local currency gold price.

Hi Bro

Yeah. I did my research into gold after the 97/98 crisis. Reading lots of materials on the banking system and gold.
Then i took the major plunge in 2001/2. My only target at the time was to beat FD rates!

But the 2008/09 crisis was a testing time as gold retreated from $1000 to 680. But as you mentioned, i was already few times in the money as i bought around MYR1100. But it did not retreat that much in MYR. Only 3300 to 2700.
Since it retreated about 30% in USD terms, i bought more.

i took profit in 2011 because it had already risen from $680 to $1800. The high was 1900. Not that I needed the funds.

Then I added back in 2015/16.

That was 18 years ago. Was still young-er
Plus i had the commitment after 3 years of study on the banking system and gold.
My only objective was simple. BEAT FD rates. Gold had been hovering around$250 for many years. Not likely to get any lower.
And the writeups was higher projection.

In 2008 to 2009, theres this technical cup and handle formation.
Now in 2020, we are also seeing the formation from 2012. Big cup here. Hopefully,...…..

This post has been edited by prophetjul: May 11 2020, 04:50 PM

Only if your trades are USD priced.

Now for you is when to return to the markets.

I am not advocating going back now. But when?
I know you have stated maybe another 20% rise to confirm the bull being back.
Or will you wait till the global economy takes deep roots?
Or just green shoots will do?

Good point. How?

Yeah....but preservation should low risk. How?

That's obvious one.

not sure.
Reason I am asking.
I am thinking of dropping some into my wife's EPF account!

This is a very sound investment advice.

This post has been edited by prophetjul: Jun 21 2020, 12:11 PM

Surprisingly 2020 turn out to be a very Good year for equities.