Thursday, November 19, 2009

Jim Rogers: Avoid Mining Stocks

A large number of investors have looked to Jim Rogers for advice on how to play the ongoing rise in silver and gold, as it looks like there's no end in sight as to how high the prices of the two precious metals will go in the years ahead.

Rogers has cautioned that he wouldn't by gold through mining stocks unless you're a great stock researcher and picker, as investing directly in gold and silver over the years has proven to be the best way to make money.

He applies that to all commodities as well, where studies confirm investing in commodities in and of themselves outperform commodity companies.

Even though gold is far below its high when adjusted for inflation, it is hovering near its all-time highs as far as price goes.

Rogers says while he's not buying, neither is he selling, as price will go up without a doubt, even if there are the usual corrections.

Concerning gold, Rogers recently stated that there is no doubt in his mind that gold will surge past the adjusted for inflation high of about $2,000. Peter Schiff has said he could see it going as high as $5,000 in the current commodity bull market.

Wednesday, November 18, 2009

John Paulson Launching Gold Hedge Fund

With many investors starting to become true believers that gold still has a long way to go up, John Paulson, founder of Paulson & Co., has announced he's going to launch a new gold hedge fund January first, putting the seed money into the company himself of $250 million.

Paulson says he's going to buy assets primarily related to physical gold, including shares of gold miner stocks.

This isn't anything new for Paulson, who at this time is the largest investor in SPDR Gold Shares ETF (NYSE: GLD), a major way to invest in gold. Paulson also already owns shares in mining stocks as well. Paulson & Co. owns 31.5 million shares in SPDR Gold Shares, worth a hefty $3.24 billion.

Gold will continue to go up in price based on nothing other than the flawed monetary policy of the United States through the Federal Reserve. Politicians don't have the will at this time to make meaningful and lasting changes in the monetary policy, and other than Ron Paul, really have no understanding of the cause and effect of it.

Investor Jim Rogers has said recently that the price of gold should be standing at it inflation adjusted price of $2,000. Even so, he is in a holding pattern with gold at this time, saying he's not buying more gold, but he isn't selling either.

Saturday, November 14, 2009

Where are Copper Prices Heading?

Copper Prices

The interference by the government in the economy has made it more difficult to know which direction copper prices will go, as the articial propping up of certain industries can also give a temporary bump up in prices.

Copper is of course one of the best indicators of the economy, as it signals whether people are buying or hoarding their cash.

Copper prices exploded upwards in 2009, but have flattened out since around August at about $2.80 to $3.00 a pound. During the summer months copper price per pound fell to around $2.20.

There is no doubt there will be a big move in copper prices sometime soon, but the question is whether that move will be up or down.

I think we could use the $2.20 a pound lows in the summer of 2009 as a sign that demand has slackened and people aren't spending. On the other hand, if prices start to rise well above $3.00 a pound, say like $3.20 or more, it would probably be a good indication that inflation is rearing its ugly head and prices will continue to shoot up.

Because we don't know how badly the government will continue to print money, copper prices are a good indicator of how much they're really doing it and how people are responding.

Copper Prices

Gold Has Much More Upside

Gold Prices

There is a basic principle seasoned investors use to check to see if any type of investment could be experiencing a bubble, and this is when the majority of the public understands it and claims to have a piece of the action. That's the same with gold, and while many people are talking like this has happened with the precious metal, it's highly doubtful that's the case.

What has really happened with gold to me is the financial press and news outlets have been covering it more, but that doesn't translate to the regular person on the street who really doesn't follow those programs. In other words, those that always follow business and investing news are aware of the reason gold is going up and why it will continue, but those that are average investors haven't picked up on it yet, so the upward price movement of gold isn't happening simply because of a hoard of investors joining in a gold feeding frenzy.

So when you hear that we are in a gold bubble, that isn't true at this time, and could even be part of a strategy of speculators who have shorted the yellow metal and could be getting clobbered as it keeps on moving up. Rumors like that are part of playing the speculation game, and very well could be the reason it's becoming part of the conversation.

The bottom line is everyday people haven't really understood or started to invest in gold yet, and until that happens, a bubble is still on the far horizon. This doesn't mean it won't happen, just that gold prices are being moved by market forces and economic circumstances, not by talk around the water cooler.

Gold Prices