Comments on: Gold Reaches One Month Low

By: Andy

Andy — Mon, 02 Feb 2009 18:37:33 +0000

Great analysis and some "golden" points presented. I like gold as an inflation hedge and a portfolio diversifcation play.

By: Greg Atkinson

Greg Atkinson — Mon, 19 Jan 2009 04:03:17 +0000

Pete...No need for any apology. There is a lot of misunderstanding about gold just as there was (is) about what moves oil prices. I have been looking into gold prices now for a few weeks and every thing seems quite complicated. The latest demand data I have been able to find indicates that demand for jewelry is falling, I actually saw a comment that the demand in the U.S has collapsed. In addition gold prices are at historical highs against mining costs, i.e. the margins for gold miners are high. So to keep prices high we need the demand to come from somewhere else? I doubt it will be from industry so we need an awful lot of coins and bars to pick up the slack. Finally remember they are digging up plenty of the stuff every year and around 15% is recycled so I just do not get the whole gold is in short supply story?

By: Pete

Pete — Mon, 19 Jan 2009 02:19:05 +0000

I did post a reply with an apology Greg, but it is awaiting moderation. I expect it to come through sometime late April

By: Andrew

Andrew — Sun, 18 Jan 2009 07:41:49 +0000

While gold continues to slide in US dollars, we holders here are thankful we possess at least some of the yellow stuff. In New Zealand dollar terms, gold is more expensive to buy now than at it's high in March. I will always see gold as a protector of value first rather than an investment. I think this is holding true.

By: Pete

Pete — Sat, 17 Jan 2009 04:41:04 +0000

Sorry Greg, I must have got it wrong about current supply. What I was thinking was more along the lines of total gold in existence - being that it can still be traded aswell.

Something like this:
http://www.fgmr.com/gold.htm

But I do stand corrected on above and will be interested to see what happens if jewelry demand shrinks.

I also found this article and the comments interesting:
http://seekingalpha.com/article/87383-the-case-for-gold-today

Cheers

By: Bron Suchecki

Bron Suchecki — Fri, 16 Jan 2009 08:15:55 +0000

Nic, I would also suggest Perth Mint Gold (ASX:ZAUWBA) which has a lower management fee than GOLD (0.15% compared to 0.39%) and allows you to take delivery of physical if need be.

Unfortunately for Australian investors, the fall in the USD gold price has been matched somewhat by a fall in the AUD/USD, so the AUD gold price is holding above $1200. Now if it would only go below $1000.

By: Greg Atkinson

Greg Atkinson — Fri, 16 Jan 2009 06:31:17 +0000

Pete...jewelry is actually the biggest consumer of gold, much bigger than investment. In 2008 around 2400 Tonnes for jewelery and around 650 Tonnes for investments..although some of the jewelry could be classed as an investment I guess. All the data is on the world gold council website.

By: Pete

Pete — Fri, 16 Jan 2009 05:45:08 +0000

Gold and oil are so much different Greg. Also I believe the proportion of gold use as materials/jewelry is quite low - i am pretty sure it is under 20%.

Thing is, gold is a fear resource - when people get scared of inflation or financial uncertainty, they go to gold. Fear is such a strong emotional force that it is doubtless that gold demand will increase if inflation or uncertainty are upon us.

By: Greg Atkinson

Greg Atkinson — Fri, 16 Jan 2009 02:03:08 +0000

Dan, since the ASX 200/All Ords are basically driven my miners and banks you can safely say the Australian stock market will be slave to world economic events. I suspect commodities have a little more pain to go through as the Chinese and others. make BHP and RIO pay for charging outrageous prices for iron ore etc. over the last few years. We will then go though the usual cycle where mining project are canceled (as they are now) and supply is cut back until demand picks up and mining companies scramble to build capacity again. As for gold, it is still subject to the forces of demand and investors only make up part of this demand. People tend to overlook that gold is also used in industry and of course jewellery. India is a major market for gold jewellery and with the economy there in trouble I doubt the demand for wedding season gold is going to boom. The demand side for industrial gold is also heading south so that leaves mainly investors to prop up the gold price. Haven't we gone through this all before with oil prices last year?

By: Nic

Nic — Wed, 14 Jan 2009 22:46:45 +0000

Dan, thanks for another good post on the golden topic.

As a small scale retail investor, how do we increase our exposure to Gold? As far as I'm aware of, the cheaper option would be to buy (1) Gold Companies (eg. ASX:LGL, etc. ), (2) Buy the Gold ETF (ASX:GOLD) or (3) CFD Contracts on Gold Futures (eg. CMC Markets)

What other methods would you recommend retail investors to use to acquire a position in Gold?

Many thanks and keep up the good work!