Sunday Morning Coffee

John Hathaway, the manager of the TocquevilleGold Fund (TGLDX) had a take in Barron’s on why gold can move higher that I don’t recall hearing before. Perhaps people have been saying essentially the same thing but still I thought this was interesting. He said “the disparity between the amount of paper that has been created since 1980 and the amount of gold that has been produced since then is just enormous.” So we have had a much larger increase in the supply of money compared to the supply of gold. FWIW, Hathaway thinks gold can go quite a bit higher. I have been writing about having gold exposure one way or another since I started this site, three years ago yesterday by the way. The idea that it can zig when stocks zag has been tested a little bit of late. I own several things in the mix that I think/hope provide offset to domestic stocks. When the market is roaring I would expect gold to lag but sometimes, like the month just ending, gold does even better than stocks. Maybe a way to think of it is that gold may not a great hedge for market events but could offer a lot more protection against an external shock like a terror attack. If that line of thought makes sense to you then it may be possible that there will be long periods of time where it does very little as was the case from February of this year until August. Personally I do not think this is a bad thing but some folks will not be patient enough...

Sunday Morning Coffee

John Hathaway, the manager of the TocquevilleGold Fund (TGLDX) had a take in Barron’s on why gold can move higher that I don’t recall hearing before. Perhaps people have been saying essentially the same thing but still I thought this was interesting. He said “the disparity between the amount of paper that has been created since 1980 and the amount of gold that has been produced since then is just enormous.” So we have had a much larger increase in the supply of money compared to the supply of gold. FWIW, Hathaway thinks gold can go quite a bit higher. I have been writing about having gold exposure one way or another since I started this site, three years ago yesterday by the way. The idea that it can zig when stocks zag has been tested a little bit of late. I own several things in the mix that I think/hope provide offset to domestic stocks. When the market is roaring I would expect gold to lag but sometimes, like the month just ending, gold does even better than stocks. Maybe a way to think of it is that gold may not a great hedge for market events but could offer a lot more protection against an external shock like a terror attack. If that line of thought makes sense to you then it may be possible that there will be long periods of time where it does very little as was the case from February of this year until August. Personally I do not think this is a bad thing but some folks will not be patient enough...

Twisting By Bill Poole

Bill Poole just threw a wrench in the works and knocked the market down as he tried to dampen expectations for a rate cut. As I write this the market snapped back a hair off it low and while the reaction was swift it was not that big–unless the other shoe drops in the last few minutes. I am torn between the goal of staving off recession and my concern that the dollar decline could move a little faster than the market can handle comfortably. No answers here just a little conundrum to close out the...