Archive for July, 2010

Yet Another Magazine Cover Story

Monday, July 12th, 2010

The folks at The Economist are back at it.  Makes it look pretty hopeless, doesn’t it?

Magazine covers are contrary indicators.  They reflect the notion that, by the time the editor approves a cover story, he or she has to be convinced in his or her own mind that such a cover is going to boost readership.  That’s not likely until the popular conscience is on high alert.  And by that time the smart money is long gone.  In fact, the weak hands are just as likely to sell their shares to the smart money.

This isn’t to suggest that the problems with Europe are past, just that the performance of European investments might be set to reverse–at least for a while.  In fact, you should read the article, but the cover story should alert you to the possibility that now is not the time to bail out.  One should get a better chance to do that later.

Here’s a look at the EMU index.  The downtrend has been established since late 2009, and the index is off by 50%.

You might not have noticed it at first, but there’s a highlight on the front cover that bears a comment:  “Why gold has probably peaked.”  If that included some attention-getting picture and consumed the front cover, it would probably be a signal to go out and buy gold.  One thing that popular magazines are not good at doing is divining the end of a trend, and you could say that gold has been in a trend.  That The Economist thinks the trend is over is not likely to put an end to it.

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Weekly Recap & Outlook – 07.09.10

Friday, July 9th, 2010

Tower Private Advisors

Below

  • Summer rally underway
  • Mixed economics, but Jobless Claims poised to improve

Prior posts

(more…)

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Gold . . . too late?

Thursday, July 1st, 2010

So has the train left the station or is there time to get on?  We ponder this question for gold as an investment.  The barbarous relic pays no dividend, generates no earnings, and, thus, has no intrinsic value as Benjamin Graham and Warren Buffett would define it.  It has, however, value in its scarcity.  I’d guess it’s one asset that a majority of investors and speculators agree has some–if not significant–upside.

That agreement, along advertisements like the one below, causes us to question whether gold is too popular right now.  (Of course, there were those who said that the introduction of the first gold-bullion exchange-traded fund, the GLD, which is now the second largest ETF behind the big S & P 500 SPDR, SPY.)

I came across a blog posting (here and shown below) that compared the percentage of financial assets that gold represented in 1982 compared to now.  At 17% then and 4% now, it sure looks like gold has some upside

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