# Gold is doing its job



## james4beach (Nov 15, 2012)

As I've mentioned here before, gold priced in CAD was remarkably stable during the 2008 crisis and held quite steady while other assets declined.

The same seems to be happening now. Here's the chart of gold in CAD over the last month using the Royal Canadian Mint's MNT etf.

Up nearly 1% today and steady over the last month. Nearly an inverse correlation to the stock market.


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## doctrine (Sep 30, 2011)

Very good point. MNT only has a 0.35% fee as well, I find that very reasonable (SPDR GLD is 0.4%). I'm not sure, but I think actually both of those fees have dropped over the last year.


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## supperfly17 (Apr 18, 2012)

james4beach said:


> As I've mentioned here before, gold priced in CAD was remarkably stable during the 2008 crisis and held quite steady while other assets declined.
> 
> The same seems to be happening now. Here's the chart of gold in CAD over the last month using the Royal Canadian Mint's MNT etf.
> 
> Up nearly 1% today and steady over the last month. Nearly an inverse correlation to the stock market.


You are saying its less volatile than the stock market?


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## doctrine (Sep 30, 2011)

Gold isn't necessarily less volatile, but it's definitely uncorrelated. Meaning it could hold value in a market crash, but it also might lag a bull market.


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## james4beach (Nov 15, 2012)

I think doctrine describes it well. An uncorrelated asset is a very nice thing to have. It certainly lagged during the stock bull cycle.

I'm interested in MNT but don't own any. Does anyone know more about this 'exchange traded receipt'? Apparently it is backed by gold held at the RCM.


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## fatcat (Nov 11, 2009)

doctrine said:


> Gold isn't necessarily less volatile, but it's definitely uncorrelated. Meaning it could hold value in a market crash, but it also might lag a bull market.


might lag a bull market ?

MNT opened at 20 and now, almost 4 years later is at 16 and has paid zero dividends in the meantime ... 

if you own a significant amount of gold, the lost opportunity cost might more than make up for a market correction in which gold might hold up and even advance ... it tanked in 2008 and only recovered when it was clear that we would see massive monetary easing

gold will always, at some point, have it's day, but i think gold bugs do a terrible job of calculating the cost of actually owning gold


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## doctrine (Sep 30, 2011)

Given it is down, I think it's worthwhile owning some now. Better buying some now at $1150 US/oz than when it was $1900 US/oz. I would probably really start accumulating under $1k USD but I don't know how long it could stay there given extraction costs are close to that.


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## zylon (Oct 27, 2010)

GLD priced in CAD tracks very closely to MNT.
A very convenient way to own gold without opening a USD account.










_MorningStar quantitative fair value_ for MNT is $19.04
I have no idea how they come up with that number.

In case anyone is interested in the Mint's silver ETR, the symbol is MNS.TO
http://reserves.mint.ca/Silver/


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## james4beach (Nov 15, 2012)

zylon, that's a very nice chart from stockcharts.com. How did you overlay those two onto the same part of the graph area? If possible could you use the 'Linkable version' feature to post a link to the chart here?


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## zylon (Oct 27, 2010)

james4beach said:


> If possible could you use the 'Linkable version' feature to post a link to the chart here?


In the lower "Indicators" select "Price"
> for "Parameters" enter MNT.TO
> for "Position" select "Behind Price"

http://stockcharts.com/h-sc/ui?s=GLD:$CAD&p=W&yr=2&mn=1&dy=0&id=p06594161524


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## dime (Jun 20, 2013)

Thanks James for pointing that out. It's nice to have some reassurance right now in these difficult markets and times of stress.
Good discussions here everyone, its what makes CMF such a great place!


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## GoldStone (Mar 6, 2011)

james4beach said:


> Up nearly 1% today and steady over the last month.


It's funny how the gold bug narrative has changed.

Back in 2010-2012, gold bugs were screaming that US was about to experience hyperinflation, that US dollar would be obliterated, that gold would be going to $5000 USD.

None of that happened.

A simple admission that you were wrong would be nice.

But no, let's move the goal posts. 

"Steady over the last month" priced to CAD! Woohoo!!

You know what else is steady over the last month? Cash! And unlike gold, it can earn interest in a saving account. 3% at Tangerine as we speak.


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## Eder (Feb 16, 2011)

Since 2012 it is down 20%...is MNT a buy today? Maybe, but Smith and Wesson SWHC is up over 80% in the same period.


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## tenoclock (Jan 23, 2015)

even my cash is down since 2012 by more than 20%


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## Spudd (Oct 11, 2011)

tenoclock said:


> even my cash is down since 2012 by more than 20%


Are you saying we've had 20% inflation since 2012? If not, how is your cash down 20%?


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## dogcom (May 23, 2009)

I am not so sure which event as in inflation or deflation will occur to end the debt game but I do know that real things will win out in the end like gold and silver. This of course is the end game of the government and fiat money controls which is a very rare event but one that is coming.

However goldstone you are correct and I also look at the price of gold and silver in US dollars and then all the other major currencies second. So being bullish on gold since the start of 2013 I believe for me personally was simply wrong.


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## tenoclock (Jan 23, 2015)

Spudd said:


> Are you saying we've had 20% inflation since 2012? If not, how is your cash down 20%?


Just because the official inflation rate is 2% does not mean people haven't experienced a 20% decline (or even greater decline) in purchasing power by simply being in a full cash position. I certainly have, by not owning a house/apartment, I am now (more than 30% or more) in the red on that account. By consuming more imports than exports all the while while Canadian dollar has tanked, I am more than 20% in red seeing my expenses go up. Even with all the foreign investment from Asia and US coming in the country, the Canadian dollar is still going down. I have no faith left in the central banking system and their interference in the free market economy, they have completely warped the incentives to benefit some people and hurt others. I have no faith left in these numbers issued by the government, not even going to argue over the fact that much of it is aggregate and average. But certainly if anyone who had 100% cash in 2012 cannot come and say that in 2015, his purchasing power has only gone down by 2% a year.


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## andrewf (Mar 1, 2010)

Rent, on the other hand, is not inflating very quickly. I haven't seen a rent increase in 7 years.


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## none (Jan 15, 2013)

I had a rent increase of 2% this year.... after my landlord cut it by 4% last year.

Also, she's replacing all the windows in my suite. It's a pretty sweet deal that's for sure.


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## james4beach (Nov 15, 2012)

I don't ever recall screaming about hyperinflation (then again I'm not a typical gold bug).

I *do* recall pointing out that gold has had a better 10 year return than the TSX itself. And I used this to illustrate that it has been a fine asset class to hold in the long term.

*TSX 60's 10 year total return to date is approx 120%, and gold in CAD's is 174%.* Those are both in the same currency, and gold has done better.

The reason I point that out is to show that it's not a crazy asset to hold ... not only does it have a low correlation to stocks in general, it has actually performed quite well. Better than the TSX anyway.


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## none (Jan 15, 2013)

I don't think combining gold with the fall of the Canadian dollar is the right way to look at it.


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## GoldStone (Mar 6, 2011)

james4beach said:


> *TSX 60's 10 year total return to date is approx 120%, and gold in CAD's is 174%.* Those are both in the same currency, and gold has done better.


Nice cherry picking.

Here's gold in CAD going back to 1973.










What do we see?

Nice run from 1975 to 1980 (5 years)
Dead from 1980 to 2005 (25 years)
Nice run from 2006 to 2011 (5 years)
Dead from 2012 to present (4 years and counting)

Hope and pray that the next 20 years are not a repeat of 1980-2005.

Hope and pray is all you have when you buy an unproductive asset.


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## Eder (Feb 16, 2011)

I don't think holding a gold ETF is the same as holding real gold. If the sh*t ever hit the fan as doomers hope it will be an eye opener to see who is wearing clothes when the tide goes out. Better to buy coins & bury them (as well as your Smith & Wessons)


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## james4beach (Nov 15, 2012)

GoldStone said:


> Nice cherry picking.


10 year return is hardly cherry picking.



> Hope and pray that the next 20 years are not a repeat of 1980-2005.


1980-2000 ish was the greatest stock bull (and bond bull) run in world history. It is unparalleled. I'm not holding my breath for it to happen again and I really don't think it's happening right now.

I think you may be missing the irony in the argument you're making. You're saying that I'm cherry picking by looking at gold's 10 year return, and then as a counter example you're pointing to the period in the US with unparalleled, historically-aberrant stock and bond market growth.

You're cherry picking too... this is the same mistake in reasoning that all pension managers make. You think stocks have high historical returns but this is based on a highly unusual period in world history. Do you realize that there have also been many periods in the US with multi-decade _zero real growth_ in the stock market?


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## GoldStone (Mar 6, 2011)

james4beach said:


> 10 year return is hardly cherry picking.


Sure it is. You ignored two and half decades of negative real returns that preceded the last 10 years.



james4beach said:


> 1980-2000 ish was the greatest stock bull (and bond bull) run in world history. It is unparalleled. I'm not holding my breath for it to happen again and I really don't think it's happening right now.


I thought we were talking about gold here. Not stocks or bonds. Not sure why you decided to bring them up.



james4beach said:


> I think you may be missing the irony in the argument you're making. You're saying that I'm cherry picking by looking at gold's 10 year return, and then as a counter example you're pointing to the period in the US with unparalleled, historically-aberrant stock and bond market growth.


I didn't say *anything* about stocks or bonds. *You* brought them up. My message was strictly about gold.



james4beach said:


> You're cherry picking too... this is the same mistake in reasoning that all pension managers make. You think stocks have high historical returns but this is based on a highly unusual period in world history. Do you realize that there have also been many periods in the US with multi-decade _zero real growth_ in the stock market?


How you know what I think about stocks or bonds? How you know what expectations I have going forward? Again, I didn't mention them once. The topic here is GOLD.

Can you make a case for gold without talking about stocks or bonds? Does it have any value on its own? What is it exactly? Can you quantify it?


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## james4beach (Nov 15, 2012)

I said gold outperformed _stocks_. When I talked about the 10 year performance I said gold outperformed stocks... this is a comparison of one thing vs another.

(Actually I could have also said gold outperforms the TSX over the last 15 years... that's true as well... but I guess you won't be happy with 15 years either!)

Since you disagreed with my assertion, I presumed you are implying the opposite: that stocks outperform gold. Right?

And I pointed out that in the process of trying to prove that stocks outperform gold, *you* are cherry picking the period of the greatest stock bull market in history. I mean yeah ... if we include the period of the greatest stock bull run in history, of course we'll show that "stocks outperform gold". As long as it's during the stock bull market!

But ever since then, so the last 15 years, gold has outperformed the TSX.

Now go buy some high quality dividend paying stocks  And repeat the mantra ... stocks will make me rich. Gold is just a useless shiny metal that doesn't produce income.


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## supperfly17 (Apr 18, 2012)

james4beach said:


> I said gold outperformed _stocks_. When I talked about the 10 year performance I said gold outperformed stocks... this is a comparison of one thing vs another.
> 
> (Actually I could have also said gold outperforms the TSX over the last 15 years... that's true as well... but I guess you won't be happy with 15 years either!)
> 
> Since you disagreed with my assertion, I presumed you are implying the opposite: that stocks outperform h. Gold is just a useless shiny metal that doesn't produce income.


I would suggest you read the book "Stocks for the long run" by Jeremy Siegel. It talks about 200 years of stock market history and clearly describes how inferior gold is.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> I said gold outperformed _stocks_ ...
> But ever since then, so the last 15 years, gold has outperformed the TSX.


Fair enough ...




james4beach said:


> ... Now go buy some high quality dividend paying stocks  And repeat the mantra ... stocks will make me rich. Gold is just a useless shiny metal that doesn't produce income.


This I'm not so sure about.

The last gold/stocks comparison thread had a bunch of people listing run of the mill, quality dividend paying stocks they owned that equaled or exceeded gold's performance over the comparison time frame. Of course that brings up the debate of what the average investor does versus what those who bought the said out performers as well as the cherry picking debate.



Cheers


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## james4beach (Nov 15, 2012)

I guess these really are very difficult comparisons to make, when taking into account time horizons

On one hand, nobody here is investing for 100+ year durations...
Then again, just a handful of years (5 years, 10 years) doesn't mean much and you can't draw conclusions from just one decade.


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## cainvest (May 1, 2013)

james4beach said:


> Up nearly 1% today and steady over the last month. Nearly an inverse correlation to the stock market.


For whatever reason, gold took a heavy fall today.


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## sags (May 15, 2010)

A huge fall for the mining companies.

One company on the Toronto Venture exchange dropped 33% today.


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## fatcat (Nov 11, 2009)

sags said:


> A huge fall for the mining companies.
> 
> One company on the Toronto Venture exchange dropped 33% today.


apparently gold has given notice and is looking for a _new_ job ...


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## mf4361 (Apr 11, 2015)

cainvest said:


> For whatever reason, gold took a heavy fall today.


Apparently, some government or financial institute sold 5 tons of gold into the Shanghai commodity market. Hmmm I wonder who would that be?

http://www.cnbc.com/2015/07/20/gold-bulls-in-retreat-after-spectacular-plunge.html


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## doctrine (Sep 30, 2011)

Gold still up YTD and over 1 year. In Canadian dollars, that is. (MNT.TO)


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