12/24/2011
December 3, 2017
12/08/2011
December 3, 2017

12/16/2011

If the world was hit by serious prolonged deflation, why wouldnt that cause a drop in gold prices?

It could happen like that–or gold could go up a lot because that would mean that all the banks fail and the governments of the world are about to embark on a massive printing spree.


Harris, it seems to me that as the Euro weakens the dollar should now appreciate as a “safety” bet. I believe this will go on for a while in the near term. If the dollar strengthens would you expect gold to weaken further???   We all know, however, that in the long term the dollar is history.  Accordingly I agree this could be a good time to accumulate gold—on weakness.

Just curious as to what vehicle you use to “buy” gold and/or precious metals.

No one knows how to time these things. If the Dollar goes up, that could mean that gold goes lower. In that case, I’ll buy more. As you say, over time gold is going higher. I generally use gold futures to play in gold for trades and physical for my core positions.


Kuppy–I’m interested in your take on the effect of a collapse in the European Union on MERC. It would seem to me that it would likely initially entail deflation, which would be negative for sales, but also a strengthening in the German currency, whatever it is, which could change MERC’s competitive position. Any thoughts?

You’re thinking this out way too many steps into the future. There’s almost no new NBSK production in the world and demand is expanding as people discover toilet paper in the 3rd world…. A weaker EUR will certainly help them at least in the short term.


If Energold is your favorite “drilling for gold” company, do you have a second favorite?

Foraco or Major Drilling but neither is ideal. Foraco has too much water and Major has no growth.


Do you know Peter Kellogg?  Having examined his SEC filings his positions appear to have begun with a convert.

Where is the best place to start to gain an understanding of the pulp market.

I have never spoken with Peter Kellog.

There’s tissue world and a bunch of industry publications. They’re rather dull reading, but that’s how you learn. I guess you could read Wall St. research if you want entertainment value….


I find today’s economic climate chaotic and frightening, I see Europe, US, and Japan drowning in debt and pay attention to your thoughts “It’s about to Blow and Jeremy Grantham’s recent newsletter where he opines that this is a terrifying time.
How do you think about an investment in a macro context such as now? Do you expect the EGD and MERC not to fall with the tide?

It’s scary out there. There’s a reason that I own a bunch of physical gold and a bunch of assets in countries that are non-correlated to the rest of the world.

If the world is in trouble, EGD and MERC will not be ideal investments, but I personally think that things just muddle along with a lot of political meddling in which case those 2 are as good as any others…


Kyle Bass among others paint a gloomy and somewhat credible picture of gloom and doom re Japan and the PIIGS.
How will those issues if they materialize affect Mongolia….in your opinion of course?

Clearly, if the world implodes, it’s not ideal for Mongolia. However, I think Mongolia will do just fine. Remember, they’re building 2 mines that are essentially fully funded to completion. (OT is funded and TT has dozens of multi-national bidders). No matter what happens in the world (within reason), the GDP of Mongolia will triple based on these mines being completed. The real question is if the other mines get built and you see the economy increase 10-20x this decade, or if it’s only a triple. I know of no other place in the world where you can paint a scenario that is even slightly as bullish. Remember, governments will print money to fix their ‘problems’ and that is VERY bullish for commodities and Mongolia.


Kuppy,
Here’s a link I thought you might find interesting. Reminds me of your thinking. http://wallstreetsectorselector.com/2011/12/what-gold-supply-crunch-gld-gdx-iau-vxx-eza-ewm-iev-fxi-pin/
Looks promising on all fronts, especially for energold.
I’m a small investor with limited resources trying to grow them. Based on the history of gold mania in the 80’s and the current world economy situation, I feel gold could go to $5000 an ounce or higher from what I researched.
I have $5000 to invest in gold, but I feel if I invest in GLD, my investment will only turn into 15k if mania occurs. I know it’s a great return but I feel as if that’s such acsmall profit from such a huge event.
It seems gold has a strong base and the retail investor have yet to begin to fuel the demand. UGLD mimics gold futures moves daily 3X. When gold continues to rise, it will compound with gains 3X the daily % move of gold. ( like I need to explain lol, however there is a 1.3% yearly fee)
UGLD is at $39 right now with gold at roughly 1600. If the mania sets in, this ETN could shoot to $600 a share, giving me a return of $80k . Is my thinking too risky for a small retail investor like myself? Would you consider this a foolish play?

Don’t try to be cute. Just buy gold. These 3x ETFs have massive tracking error. They’re designed as shorts for hedge funds that can find borrow….