Blade Opines on Money and Anesthesia

[BLADEMDA]

buying SPY puts can be a 'cheap' way to hedge your gains against a general market selloff... bought some a week back in anticipation of this fed meeting. they literally quadrupled in value in 2 days!

The pundits all recommend the same thing. They say the puts are needed as the market will likely drop another 5 percent.

Good move on your part. Remember to sell those puts next week and bank those gains.

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[thinkorswim]

The pundits all recommend the same thing. They say the puts are needed as the market will likely drop another 5 percent.

Good move on your part. Remember to sell those puts next week and bank those gains.

Forget next week, just sell them now while volatility is high and then roll to lower strikes. Who knows how much lower the market can go now that key support levels have been breached -- two months of gains were just wiped out today.

I've been nervous/skeptical of the rally for some time now and have been playing the market non-directionally for the past month. I mainly use weekly options on highly volatile stocks, and have about 70-80% cash in my portfolio on most days at close. The high daily volatility has made me good $$$ on both up and down days.

 

[BLADEMDA]

Forget next week, just sell them now while volatility is high and then roll to lower strikes. Who knows how much lower the market can go now that key support levels have been breached -- two months of gains were just wiped out today.

I've been nervous/skeptical of the rally for some time now and have been playing the market non-directionally for the past month. I mainly use weekly options on highly volatile stocks, and have about 70-80% cash in my portfolio on most days at close. The high daily volatility has made me good $$$ on both up and down days.

Good advice. There are MANY like me out there waiting to put money to work so I expect any correction to be brief.

 

[BLADEMDA]

My expectation is that economic data over the coming months will be poor. Additionally, corporate guidance for future revenue and earnings will be disappointing. It follows that the Fed will ultimately be forced to put its plan for tapering on hold.

 

[BLADEMDA]

According to Victor Thianpiriya, commodities analyst at ANZ, the production cost of gold, which is estimated to be around $1200-$1300 an ounce, may not be a good gauge for how low prices will fall.


"That cash cost of production is a moving target. If margins get squeezed, miners could start pulling back on exploration expenditure. To say there is a solid line in the sand that prices can't fall below, is not the right way to look at it," Thianpiriya said.


He expects gold to trade in a range of $1200-$1400 over the next six months, but is not ruling out moves below $1200, given violent moves in the precious metal recently.


"It's certainly possible gold could fall below $1200 - we also need to see how far the U.S. dollar rally can continue to go," he said.

 

[deleted126335]

I know how you feel about gold. Despite trying to make gold an investment gold is a currency. It has been a currency for thousands of years. Honestly, if I could get paid in gold at $1200 an ounce vs $1200 in US dollars i would take the gold for at least 1/4 of my income.

Sure, right now the dollar looks better vs gold. But, will this short term effect last more than 6 months? A year? Only time will tell.

Doze, as a value investor now is the time to look at GDX and other commodities. Buy these when there is blood on the streets and guys like Paulson are bleeding severely right now.

I hold 5% of my equities as commodities. Used to be PCRIX in a tax deferred account (A collateralized commodities fund (CCF)). I decided to switch to IGE in a taxable account.

CCFs are better portfolio diversifiers, but have lower expected future returns in isolation. I thought the diversification benefit was not worth the limited tax deferred space and high tax bracket that I have.

 

[pie944]

What is the interest rate of your loans? What is your anticipated federal and state tax rate? Is there a reasonable selection of low cost funds available as investment options?

457s are not quite as good as 403b as you seem to be aware of.

6% on ~200K, so 12K per year. I need to investigate the selection of funds after the start date, right now I just know it is with Fidelity. Since I'll be earning the salary for half a year, it might be worthwhile to utilize pretax investments to fall below the 250K federal tax limit this year. In terms of state taxes it is ~5.9% for >200K and 5.4% below it.

 

[deleted126335]

6% on ~200K, so 12K per year. I need to investigate the selection of funds after the start date, right now I just know it is with Fidelity. Since I'll be earning the salary for half a year, it might be worthwhile to utilize pretax investments to fall below the 250K federal tax limit this year. In terms of state taxes it is ~5.9% for >200K and 5.4% below it.

I would use the extra cash to prepay the loans. The 457 can wait till its gone.

 

[BLADEMDA]

http://www.cnbc.com/id/100851209

Gold is in a bear market. But, how long will it stay below the production cost? I am waiting for the prices to stabilize or hit bottom before adding to my positions. I like Silver and Platinum here as well.
The miners look oversold if Gold stabilizes at $1200 an ounce.

I do not expect a massive rally in gold but rather a return to the $1300-$1400 per ounce price level.
I do think it is a long term buy under its production cost (see the link).

 

[BLADEMDA]

will only get worse for gold, according to Dr. Michael Haigh, Head of Commodities Research at Societe Generale.

In early April, when bullion was trading at $1,600, Haigh forecasted a drop to $1,375 per ounce. Just two weeks later, it indeed fell that far and then some. He is now forecasting a price of $1,200 in the last quarter of this year.

In an interview with Talking Numbers (see the video above), Haigh also says gold may hit $1,000 by 2017. For those arguing mining costs prevents gold from falling more, Haigh writes in his report this past Monday:


"We don't think that the reported very high gold production costs will prevent the gold price from trading down to $1,200/oz. And while production cost concerns may slow the price decline below $1,200/oz, this factor is unlikely to provide firm support until we get closer to $1,000/oz."

Haigh elaborates in his Talking Numbers interview, "The other element is the production companies have an incentive to reveal high costs to the world in the hopes prices remain high accordingly." Translation: mining companies say costs are high so that the market thinks there's a floor in gold prices.

On the technicals, Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, has four technical reasons he believes gold will hit $1,000. Ross has already called for $1,000 before on Talking Numbers

 

[BLADEMDA]

I'm adding to my Gold positions this week on weakness. Gold under $1200 should be bought and not sold. While it is hard to get an exact fair value for Gold the $1400 per ounce figure seems reasonable. Longer term I see $1900 (after Obama leaves office).

Cramer was recommending buying under $1150 an ounce. Gold at $1150 means huge reductions in mining of the metal.

An even better buy right now is the Gold Miners themselves. On a pullback from here (just 5-10%) lower you can get quality mining companies at a huge discount.

Platinum and Silver look great here. If you don't believe in Gold then the industrial metals are starting to look cheap here as well.

While a nasty correction is never any fun it does provide opportunity to the investor to add to his/her positions for the longer term.

 

[BLADEMDA]

http://finance.yahoo.com/blogs/talking-numbers/cramer-why-could-value-gold-173655650.html

Worth watching the short video.



http://video.cnbc.com/gallery/?play=1&video=3000179295

Watch 6 min of this video: Starts at 9min 35 seconds runs to 15 min 55 seconds

 

[Silent Cool]

According to Victor Thianpiriya, commodities analyst at ANZ, the production cost of gold, which is estimated to be around $1200-$1300 an ounce, may not be a good gauge for how low prices will fall.


"That cash cost of production is a moving target. If margins get squeezed, miners could start pulling back on exploration expenditure. To say there is a solid line in the sand that prices can't fall below, is not the right way to look at it," Thianpiriya said.


He expects gold to trade in a range of $1200-$1400 over the next six months, but is not ruling out moves below $1200, given violent moves in the precious metal recently.


"It's certainly possible gold could fall below $1200 - we also need to see how far the U.S. dollar rally can continue to go," he said.

Blade, do you own any rental properties? Aren't there some red hot deals in Florida after the housing crash? What about buying a few small properties and having a rental mgmt. company look after them or purchasing some in your area and directly managing them? I remember Buffet saying a while back that, ideally, he would be buying up groups of houses all over the country because they values had dropped so significantly. My other choice spot for rental is Las Vegas--there are some key housing developments there that are nice and saw a significant drop in value (>50%).