Gold funds

[mathjak107]

there may have been a capital gains distribution on gld not reflected. i saw another site which ill try to find that said it was up almost 5% in 2008

[mathjak107]

your missing the point,,... we arent trying to show which has bigger gains. the point is gold stocks are stocks and as such act like stocks first and a gold play second.

2008 was chosen as an example of the fact that when gold rises gold stocks can fall and fall by alot. they dont mirror each other many times when called upon to do so.

[mortimer]

Originally Posted by mathjak107

sorry my dear friend mortimar, but your wrong ,gold was up in 2008 it closed at 869.00 and opened the year at 847.00.. gld did even better being up about 5% for 2008.

gold mining funds fell on average over 20%. fidelity select gold was down 21%, xau the post popular index of gold mining stocks plunged 28% in 2008.

You are cherry-picking your data by cherry-picking your time frame.
( For the plots, GDX is a composite index of the larger gold miners that is an ETF. )
_____ ( GLD is plotted in a gold color and GDX is plotted in a green color ) ______

( XAU, BTW contains Freeport- McMoRan Copper & Gold (FCX) - the XAU's largest component. That's why I use GDX now. It's even better than HUI. )

Here is [plot] your data. [/plot][/u] ......... Yup. GLD ( 5% ) beat the GDX ( down 12% ) - better by 16.9%.

If you are going to cherry-pick, why didn't you make it look worse by picking [plot] the top around May 15th? [/plot]
From there, GLD was only down around 12% while miners really looked bad - down just about 40% - GLD better by almost 30%.

Of course, I could also cherry-pick the data by using the [plot] lowest point [/plot] in 2008 on Oct 27.
According to my data, GLD was "only" up 20% and GDX more than doubled. ( Note that GLD didn't bottom till 11/12. )

You see, timing is everything. ( The above two charts show normalized data. )

Finally, the [plot] correlation between daily moves [/plot] shows that when GLD moves one way, GDX does the same move - only more.
( Some outliers not shown on this chart. )

Again, as I said earlier, the GLD and GDX have disconnected and GLD has been a better hold while GDX has been a better trade.
They almost always move together and only for a short time do they diverge.

Your statement should say: "GLD outperformed GDX over the 01/01/08 to 12/31/08 timeframe."
You can't say that all of 2008, GLD outperformed. For a trader, there were many times where
selling GLD and buying GDX was better in 2008 and other times where the opposite held true.
For someone who is just holding, since the crash of 2008, it has been far better to just hold the metal. For them, 2008 was irrelevant.

GLD and GDX can trade all they want in quadrants 2 and 4, but in quadrant 3 ( lower right hand ), GLD goes up when GDX goes down.
If it does this here-and-there, pretty soon, you have GLD and GDX bouncing around as mirror images, but at different levels.

Holding the miners since the ( gold ) crash of 2006, you doubled your money in the miners and you tripled your money in the metal ( Aug, 2011 ).
As of last May, you are looking at a 25% gain for miners and still, almost a triple in metal.

Holding the miners since the ( gold ) peak of 2008, you gained 20% in the miners and you almost doubled your money in the metal ( Aug, 2011 ).
As of last May, you are looking at a 25% loss for miners and 50% in metal.

Even if you are just holding, timing is still everything. I think the miners are not reflecting their value here.
If the price goes up from today's $1,600 to $2,600 many of them might double their reserves as rock with some
gold in it here-and-there becomes ore that can profitably be mined.

( If anyone spots any errors, please DM me. There are lots of chances to screw up data or links above. )
Arguing with mathjak107: It reminds me of the good old days.

[mathjak107]

The answer is they move together until they dont.

Having been a buyer of both ASA the origonal gold stock index for decades as well as fidelity select gold off and on im well aware of when they move in opposite directions.

One of the wildest was when a strike in south africa shut down most major mines.

I was holding ASA at the time and it plunged. Gold itself took off like a rocket as the thought of a gold shortage caused 2 different reactions.

So heres my opinion for what its worth.

If you want the biggest bang for the buck in a rising gold market then stocks are the place to be.

But if you want gold for the safety and security that gold provides then buy the metal.

You dont want to risk the fact that when called upon to do its part that will be one of those times gold stocks and gold will stop being joined at the hip.

[Troof]

Originally Posted by mathjak107

The answer is they move together until they dont....
So heres my opinion for what its worth.

If you want the biggest bang for the buck in a rising gold market then stocks are the place to be.

But if you want gold for the safety and security that gold provides then buy the metal...

On this much we agree

[mathjak107]

I never was debating which performed better. If you read my posts my argument was only that they move together all the time until they dont.

I would only buy gold for my permanent portfolio.gold stocks are never recommended.

I do buy fidelity select gold though when i want to speculate on golds movement.

2 distinct different purposes and 2 different ways of betting on gold.

One is for insurance and an asset of last resort, the other ,mining stocks are a sector play for me.

[mortimer]

Originally Posted by Troof

On this much we agree

Me three.

Own, but trade the miners since they go up and down more aggressively.

[mathjak107]