Isn't gold supposed to go up at times like these?

[original mungerville]

Yes the price could go down materially further.

[given2invest]

haha you guys are funny.  gold is up huge over the last year, two years, five years, and ten years.  i'm not a gold bug and only own it as a currency hedge on margin but to say that gold is over because of a few awful days is hilarious.  yes, it's near impossible to value gold but that doesn't make it worthless.

 

 

 

[Cardboard]

Raising margin requirements? Again?

 

This sounds like possibly good news coming from our governments. You can't have gold skyrocketing with further announcements of QE or some kind of European bailout.  It negates their effect. Gold and silver have now been so badly beaten up that they will have a hard time moving up at all or attracting buyers even in the face of potentially highly inflationary moves. Initially anyway.

 

Cardboard

[original mungerville]

Cardboard's view could be correct. My silver position is a very long-term play.

[oec2000]

haha you guys are funny.  gold is up huge over the last year, two years, five years, and ten years.  i'm not a gold bug and only own it as a currency hedge on margin but to say that gold is over because of a few awful days is hilarious.  yes, it's near impossible to value gold but that doesn't make it worthless.

 

The best part is when people who say you can't value gold claim that it is overvalued. ???

 

I have felt for a while now that the unusual economic conditions we are going through justify a more prudent approach including finding things that will protect you if the shit hits the fan while still looking for value - a two pronged approach.

 

So, I have held small positions in cheap gold miners from when gold was about 800. Positions were too small to move the meter on my overall portfolio return but I see them more as cheap puts on Armaggedon.

 

More recently, when silver started to look interesting, I wanted to get some exposure but felt uncomfortable getting into a crowded trade so bought some SLV 25 puts as protection to allow me to scale into SLV or cheap silver miners if there should be a pullback in silver. For a while it looked like I had missed the boat but things are looking up right now! Paid 3 for the 2013 puts.

 

Hopefully this will compensate for the pasting I've taken on YLO this year!

 

The purpose of my post is not to point out how smart my trade was - luck had much to do with it - but to advance the view that we can retain our core value investing discipline without putting blinkers on to what other smart people are saying and doing. And, if circumstances arise which are exceptional, we should pay attention and try to protect ourselves or better still take advantage of them rather than adopt an evangelical view that we will do value investing and nothing else.

 

People like Watsa, Klarman, Burry use this approach quite successfully and no one would accuse them of not being value investors. Even Buffett has done things that do not fall purely into the value mould. We do ourselves a disservice when we close or limit our minds to ideas that do not fit within a fixed model. It may not be a good analogy but this is how religious zealotry works.

 

I am not advocating that we willy-nilly adopt macro based approaches to investing. However, I believe there is something to be gained by allowing our value decisions to be informed by exceptional circumstances.

 

It is instructive to look at cases when a dogged approach has hurt value investors - Bill Miller and Canadian mutual fund company, AIC, are examples. Berkowitz is a smart guy but he could become victim to his concentration on financials because of his reliance on non- permanent capital.

 

It's a quiet Saturday morning so I thought I would start a firestorm.  ;D