10/02/2010
December 3, 2017
09/26/2010
December 3, 2017

09/30/2010

I am currently in Calgary, Alberta.


I followed your lead and bought GROW when the stock pulled back to the $5.60’s. I believe the market is going to correct in a dramatic fashion at years end. Resultingly taking this stock with it.
I know you are long term player. I see this being traded up and down. Your thoughts would be greatly appreciated. Have made nothing but money following you.

To start with, I am writing about what I am doing. It is all food for thought. If you buy something that I have written about, you NEED to do your own work. If you think it’s going down, act accordingly.

If I spend 10 minutes in a week thinking about what the market will do–it is 10 minutes that I have wasted. I buy good companies at decent prices and hold onto them until they appreciate to fair value. The market can do anything. These things are correlated somewhat. Sometimes it will be, sometimes it won’t be. I am being patient for now.


Kuppy,
my holdings of AAG is about 8% of my portfolio. I think the market may go lower in Oct/Nov and am wondering if AAG may be resilient to a downturn. Specifically, if the market fell 20-30% do you think AAG would fall by the same amount or would it be resilient based on it’s current performance. I realize this is asking for speculation, but just trying to manage risk as I have sold my other gold holdings (except for EGD). I would prefer not to reduce my position in AAG and EGD but would do so if conditions warrant.
Thanks for your super service, excellent advice and entertaining and informative writings.. look forward to hearing about Argentina…

I cannot give personal advice. Keep that in mind.

I buy stocks to hold them. I ignore what the market is doing. It is hard enough to perdict what businesses will do–I find it impossible to figure out how the market will impact share prices. I find that whenever I am worried about something, I sell enough until I no longer worry about it. If you are asking this question, you probably should reconsider your position sizing.

I sort of think that mining stocks will be pretty bid going forward, but I also thought that in 2008 when they got klobbered. You need to do what is right for yourself.


Harris – Your article on the real cost of gold production is excellent. Thank you for sharing. As for “how high,” I think about this question in terms of rungs on a ladder. At current prices, gold is fairly valued (give or take) based on the marginal economic cost of production, as your article shows. This, then, is our bottom rung. Ascending, the next rung is Dow-gold of 2x, which puts gold at $5,400 an ounce, provided DJIA remains unchanged. The third rung as we climb the ladder assumes the world demands that the Fed’s $2.25 trillion of liabilities is collaterlaized by the 287 million ounces of U.S. gold reserves…this gets us to $7,800 an ounce (provided we still have the gold). And my fourth rung assumes the world demands that our $13.5 trillion of debt is collateralized by Fort Knox gold; under this scenario, AU climbs to $47,000 an ounce. Some of these are big numbers and I take them with a grain of salt. Still, in an attempt to apply rigor estimating gold’s intrinsic value, this is one approach. Anyway, thanks again for the thoughtful commentary.

This is from a smart reader. It shows various ways to think about gold. The cost of producing it is just a start. Depending on your conceptual view of gold as currency, there are many different ways to think of ‘fair value’ I share this for readers as it is well thought out. That doesn’t mean that gold will get to any of these price levels any time soon. I’m be pretty happy with $1,300 and some fiscal sanity from the government. At these prices, my derivative businesses should be coining money.


I thought this interview was just excellent. Bernie Marcus, founder of Home Depot, gets it. This is worth watching twice. Then send it to your friends.

http://www.cnbc.com/id/15840232?video=1593436488&play=1