Instead of the ETF I've used Kinross Gold (KGC) in the past and it has done well for us, so I am going back to the well. Since this is a "sentiment" trade (to me) if the market strengthens this trade should fail, and vice versa. After spiking north of $25 at the height of the bailout talks (that was just this past weekend and Monday folks - even though it feels eons ago), it has now retraced below $23 and we're adding it here in the the $22.80s. If it breaks down below $21.50 (or the Gold ETF breaks down) we'll most likely be out. 
In this case I won't mind if this trade does not work because it should mean other things in our portfolio are. So while this is a "long" position technically, mentally I consider it a "short"/hedge. Note - I am not a gold bug, nor a gold expert and buying a gold miner instead of the metal straight up can always be an error. But directionally this will either provide a hedge during further downside or not work if the market rebounds. So we might be out of this in a few days, a week or it might be a few months.I debated getting into Kinross at the end of June but didn't pull the trigger (down at $21) [Jun 26: Gold. Back from the Dead?] We threw what was left of the cash we raised today, that had not been applied to index shorts into this position, and created a 2% stake in Kinross Gold (KGC).
[May 5: Closing Precious Metals]
[Jan 30: Starting New Position in Kinross Gold]
Long Kinross Gold in fund; no personal position
8 comments:
Story in the Washington Post today, Dems pushing for a $50B stimulus this fall, Reps opposing. Story isn't worth reading, but the issue out there now. Doubt it passes myself, if blue dog dems don't kill it in the House Bush will likely veto.
Pathetic
I actually wrote at the time when the first one came out we'd have another
And I am serious if the economy continues like this deep into 2009, we'll have a third
I could at least live with 1 if it was something that should not be a stimulus but a public works i.e. put people to work who don't have houses to build, rebuilding our infrastructure but we are broke so can't do that. So we'll borrow from China to give our money to buy even more flat screen tvs. Oh, and good. And oil.
good = food ;)
One of the best gold plays! I did an overlay of the large miners, gold ETFs, etc., and KGC has held up very well.
Our US Dollar is getting cheaper by the day!
BD
good = food ;)
Funny how common sense and good economics often synch up isn't it.
When the last "stimulus" came out I recall reading an article that demonstrated food stamps provided superior economic benefits to any other form of handout, though I agree infrastructure building would be prefferable.
Cash handouts are just dumb tho as a form of stimulus because the govt cannot control their use. For example, I accounted for mine during my vacation in China. Heck, it was going to end up there anyway, why not bypass the middleman.
lol on China
Good point - why not just directly deposit the money.
I'm more against sensible and preventative policies that mean there never has to be any stimulus plans in the first place but of course that is just a dream. In lieu of that get people working - then they can spend the money they earn and you have a nice cycle.
I envy you - where did you go in China? I love to travel and have yet to reach the Far East. One of these days I have to see with my eyes what everyone talks about.
Each and ever manager who has been there says "until you go, you don't really understand what is going on" So I am hoping they are correct.
GLD appears sticky to me. Several weeks ago I suggested a price target of $992; gold hit $989 before selling off a bit - close but no cigar. I think there is more to come for gold as real interest rates remain negative.
GDX and GLD remain good hedges because they are poorly correlated with equities, and on the big down days for stocks, these positions have done very well to cap my downside. GLD has been better than GDX.
Hi Guy
Depends on your time frame
http://is.gd/XSB
GLD is obviously without the individual company risk or miners. I like the volatility myself of the non GLD stuff but thats because I trade it rather than bury it in my backyard :)
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