Post edited 4:00 pm – October 9, 2009 by Will

It really depends on what is your objective and how long is your holding period. People who go for physical gold tend not to worry about the day-to-day fluctuation of the spot price. Their philosophy is the preservation of wealth, being convinced that the USD is going the way of the Zimbabwean dollar. These people, and I count myself as one of them believe that gold has the potential to reach $5,000 an ounce. If and when it gets there, I also believe life in the good old US of A will not be the same as we all know it.

Physical gold can be in bullion coins, pre-1933 coins, or gold bricks. The premium for bullion is between 3~5% depending on supply and demand. Pre-1933 coins are a different animal and the premium varies a lot depending on their numismatic value (usually determined by the MS value which ranges from 60-70, 70 being perfect and uncirculated).

Dealers have been bombarding unsuspecting customers with the need to buy pre-1933 coins because of the possibility of confiscation by the US government. In 1933, FDR signed executive order 6102 requiring all gold coins to be turned in to banks in exchange for $20 an ounce. The order has been rescinded  in 1974 by Gerald Ford and no longer in force (dealers don't tell you that). By preying on the fear of confiscation, they were able to charge huge premiums on pre-1933 coins. That all pre-1933 gold coins are non-confiscatable is a myth. They were not confiscated simply because some brave folks were able to hide them or  some of those coins may have made their way overseas and subsequently migrated back to the States to be sold as "non-confiscatable collectibles". Note that the fear of confiscation does not exist overseas so the fear factor only works in the States. For a more complete understanding, see http://www.cmi-gold-silver.com…..-1933.html

Physical gold can be cumbersome and you do need to think about storage and security. Silver presents even more problems. A 500-oz box of silver eagles weighs over 30 pounds  and takes up about 1 square foot of space so a $50,000 worth of silver can take up quite a bit of space. You can't really buy and sell them as you would shares. Dealers will take them back at maybe 1% over spot but you still have to worry about delivering the gold. Physical gold is really for the long term investors.

Miners add another dimension to the scenario. One has to consider the logistics, management, political climate, and location of mines, etc. There are others on this Forum (Darrell being one of them) more experienced than me regarding this area and I will defer to them.

Gold backed ETF's are fast gaining popularity but I don't know enough to comment on them

In conclusion, I would recommend putting aside 10~20% in physical gold/silver/platimum. For those who are tired of worrying about the vagaries of the market, I would put more. Hope this helps.

Also, if you go to a large mint and bring cash, you can walk out with $10,000 worth of metal with no paperwork.  You can do that every few days until you are done. 

Then take Darrell's advice and stash.

Yes Please, step on the gas.

Pay no attention to that man behind the curtain.

Heads up, on Oct 13th post #154 "This suggests that crude oil could break out through the $76 resistance area high zone for the past four months. The charts suggest a target of $90 for crude". Time will tell. 

The telecom and fertilizer groups keep trending lower, and this is a warning of a possible macro problem with the groups. On a pure technical basis, the charts say "stay clear."

Gold can hit the 1200 mark by years end & Oil is on a technical breakout with a possible target of $90.

Have a great weekend.

Current Trends:

DJIA: Target and Support 11,500-9400

SPX: Target and Support 1250-1020

COMP: Target and Support 2300-1950

Oil: Broke through resistance around 76 with an upside target to 90

Gold: Broke through 1000 with a technical target of 1200 then 1300

Natural Gas: Bottoming in a 3.80 – 5.00 range

DJ Transports: Needs 4100+ to confirm recent highs in the Industrials

DJ Utilities: Big improvement, needs 390+ to break out into a new uptrend

US Dollar: No clear bottom; next target 73-74

Rates: TNX trending lower to a target of 30 (3.00%)

shredmonster said:

I sold my Gold ETF on the way up.   Is there any room left in gold to get back in at this point?

I bought some general precious metal funds lately because I was thinking the gold ship has already sailed.

Natural Gas – is a contrarian view appropriate here – maybe buy as it reaches bottom ??

I got into some oil – SU and PBR when oil was still in the 30's.  Any more good opportunities in oil right now?

Shred:

The gold ship may have already sailed but there are quite a few ports of call before it arrives at its destination, i.e $5,000 an oz.

The reported earnings for the 3rd qtr. are running well above estimates causing stocks to rally & then puulback. This may be a sign that the earning surprise pattern is running out of steam. There is now enough toppy action that the market may start to pullback in the near term.

It looks as if the market is preparing for a 5 – 10% pullback within the next 3-6 weeks, much like the one witnessed in the June to July period. One of the possible reasons for a pullback is the recent strenght in Oil (Target $90), but primarily due to consolidation within the overall bull market. Caution is advised.

Thanks for faithfully updating us on the market outlook. Looks like the pullback came a little early today

The major indexes swung back and forth this week, but ended to the downside. The DJIA and the S&P 500 Index fell 0.2% and 0.7%. Crosscurrents stood out to insider trading arrests, earnings & the rally in crude oil.

Until this Friday, crude oil’s move had benefited the broader stock market because of the rally in the Energy sector. Oil rose from around $66 per barrel less than 1 month ago to more than $81 this Thursday. The Energy sector rose 10.6% during that period which helped the Dow and S&P climb to new highs for the cycle.

Rallies in crude oil can at times help the stock market, but once crude oil reaches a tipping point, it can create headwinds for the broader stock market and economy. This tipping point can occur at different levels for different economic cycles. At this point in time, crude oil is starting to close in on its tipping point.

Oil prices tend to spill over into higher gas prices, which in turn begin to crimp consumer spending. Stock market gains from the Energy sector tend to be offset by pullbacks in the consumer sectors, which can be a headwind for the broader market. Gas prices have yet to fully respond to the recent rise in crude oil, but they likely will if oil remains at current levels or hits the $90 target. Have a great weekend.

This up in the early hours, then collapse midway through the day pattern has me wondering if this market is going to just dip the 5-10% as optimisim says, or if this is the start of a new wave down as demand dries up with the continually bad economic data.

Remember ST 's post on TBT that he really like Jan 50 call?  I got into that one a while back and it was pretty lackadaisical for a while. I think it is starting to breakout like you said.

I understand that this week the Treasury is auctioning a bunch of 10-year bonds and TBT could be reacting to what is expected to be a poor auction.

Made a few bucks today, but I think the dollar rising caused the pull back in some fields. I'm still looking for good moves until 2010…Late Feb. ..early March.

Darrell said:

Made a few bucks today, but I think the dollar rising caused the pull back in some fields. I'm still looking for good moves until 2010…Late Feb. ..early March.

Darrell, you must have something in your portfolio that we don't have. Care to share?

Last time I check you'd mentioned WLL, CLR, GMO, CMIN, MNEAF, DNDN, IVN,  amongst others and as far as I know most of these are big losers over the past week