(GDX) Archives

The Terrible News the Bond Market is Telling to Gold

The news from Australia?s Perth Mint was horrific last week. The refiner for the world?s second largest producer reported that sales hit a new three year low.

And the worst is yet to come.

Shipments of gold coins and bars plunged to 21,671 ounces in May, compared to 26,545 ounces in April. Silver sales have seen similar declines.

I have been warning readers for the last four years that investors want paper assets paying dividends and interest, not the hard stuff, now that the world is in a giant reach for yield.

Ten-year US Treasury yields jumping from 1.83% to 2.43% this year is pouring the fat on the fire.

This all substantially raises the opportunity cost of owning the barbarous relic. With bond yields now forecast to reach as high as 3.0% by the end of the year, the allure of the yellow metal is fading by the day.

The gold perma bulls have a lot of splainin? to do.

Long considered nut cases, crackpots, and the wearers of tin hats, lovers of the barbarous relic have just suffered miserable trading conditions since 2011. Gold has fallen some 39% since then during one of the great bull markets for risk assets of all time.

Let me recite all the reasons that perma bulls used your money to buy the yellow metal all the way down.

1) Obama is a socialist and is going to nationalize everything in sight, prompting a massive flight of capital that will send the US dollar crashing.

2) Hyperinflation is imminent, and the return of ruinous double-digit price hikes will send investors fleeing into the precious metals and other hard assets, the last true store of value.

3) The Federal Reserve?s aggressive monetary expansion through quantitative easing will destroy the economy and the dollar, triggering an endless bid for gold, the only true currency.

4) To protect a collapsing greenback, the Fed will ratchet up interest rates, causing foreigners to dump the half of our national debt they own, causing the bond market to crash.

5) Taxes will skyrocket to pay for the new entitlement state, the government?s budget deficit will explode, and burying a sack of gold coins in your backyard is the only safe way to protect your assets.

6) A wholesale flight out of paper assets of all kind will cause the stock market to crash. Remember those Dow 3,000 forecasts?

7) Misguided government policies and oppressive regulation will bring financial Armageddon, and you will need gold coins to bribe the border guards to get out of the country. You can also sew them into the lining of your jacket to start a new life abroad, presumably under an assumed name.

Needless to say, things didn?t exactly pan out that way.

The end-of-the-world scenarios that one regularly heard at Money Shows, Hard Asset Conferences, and other dubious sources of investment advice all proved to be so much bunk.

I know, because I was once a regular speaker on this circuit. I, alone, a voice in the darkness, begged people to buy stocks instead.

Eventually, I ruffled too many feathers with my politically incorrect views, and they stopped inviting me back. I think it was my call that rare earths (REMX) were a bubble that was going to collapse was the weighty stick that finally broke the camel?s back.

By the way, Molycorp (MCP), then at $70 a share, recently announced it was considering bankruptcy. Rare earths didn?t turn out to be so rare after all.

So, here we are, five years later. The Dow Average has gone from 7,000 to 18,000. The dollar has blasted through to a 14 year high against the Euro (FXE).

The deficit has fallen by 75%. Gold has plummeted from $1,920 to $1,150. And no one has apologized to me, telling me that I was right all along, despite the fact that I am from California.

Welcome to the investment business. Being wrong never seems to prevent my competitors from prospering.

Gold has more to worry about than just falling western demand. The great Chinese stock bubble, which has seen prices double in only nine months, has citizens there dumping gold in order to buy more stocks on margin.

This is a huge headache for producers, as the Middle Kingdom has historically been the world?s largest gold buyer. As long as share prices keep appreciating, demand there will continue to ebb.

So now what?

From here, the picture gets a little murky.

Certainly, none of the traditional arguments in favor of gold ownership are anywhere to be seen. There is no inflation. In fact, deflation is accelerating.

The dollar seems destined to get stronger, not weaker. There is no capital flight from the US taking place. Rather, foreigners are throwing money at the US with both hands, escaping their own collapsing economies and currencies.

And with global bond markets having topped out, the opportunity cost of gold ownership returns with a vengeance.

All of which adds up to the likelihood that today?s gold rally probably only has another $50 to go at best, and then it will return to the dustbin of history, and possibly new lows.

I am not a perma bear on gold. There is no need to dig up your remaining coins and dump them on the market, especially now that the IRS has a mandatory withholding tax on all gold sales. I do believe that when inflation returns in the 2020?s, the bull market for gold will return for real.

You can expect newly enriched emerging market central banks to raise their gold ownership to western levels, a goal that will require them to buy thousands of tons on the open market.

Gold still earns a permanent bid in countries with untradeable currencies, weak banks, and acquisitive governments, India, another major buyer.

Remember, too, also that they are not making gold anymore, and that all of the world?s easily accessible deposits have already been mined. The breakeven cost of opening new mines is thought to be around $1,400 an ounce, so don?t expect any new sources of supply anytime soon.

These are the factors which I think will take gold to the $3,000 handle by the end of the 2020?s, which means there is quite an attractive annualized return to be had jumping in at these levels. Clearly, that?s what many of today?s institutional buyers are thinking.

Sure, you could hold back and try to buy the next bottom. Oh, really? How good were you at calling the last low, and the one before that?

Certainly, incrementally scaling in around this neighborhood makes imminent sense for those with a long-term horizon, deep pockets, and a big backyard.

Oops!

Maybe It Doesn?t Look So Good After All

Is the Bull Market in Gold Back?

Diary, Newsletter, Research

After a prolonged, four year hibernation, it appears that the gold bulls are at long last back.

Long considered nut cases, crackpots and the wearers of tin hats, lovers of the barbarous relic have just enjoyed the first decent trading month in a very long time.

The question for the rest of us is whether there is something real and sustainable going on here, or whether the current rally will end with yet another whimper, to be sold into.

To find the answer, you?ll have to read until the end of this story.

Let me recite all the reasons that perma bulls used to buy the yellow metal.

1) Obama is a socialist and is going to nationalize everything in sight, prompting a massive flight of capital that will send the US dollar crashing.

2) Hyperinflation is imminent and the return of ruinous double digit price hikes will send investors fleeing into the precious metals and other hard assets, the last true store of value.

3) The Federal Reserve?s aggressive monetary expansion through quantitative easing will destroy the economy and the dollar, triggering an endless bid for gold, the only true currency.

4) To protect a collapsing greenback, the Fed will ratchet up interest rates, causing foreigners to dump the half of our national debt they own, causing the bond market to crash.

5) Taxes will skyrocket to pay for the new entitlement state, the government?s budget deficit will explode, and burying a sack of gold coins in your backyard is the only safe way to protect your assets.

6) A wholesale flight out of paper assets of all kind will cause the stock market to crash. Remember those Dow 3,000 forecasts?

7) Misguided government policies and oppressive regulation will bring the Armageddon, and you will need gold coins to bribe the border guards to get out of the country. You can also sew them into the lining of your jacket to start a new life abroad, presumably under an assumed name.

Needless to say, it didn?t exactly pan out that way. The end-of-the-world scenarios that one regularly heard at Money Shows, Hard Asset Conferences, and other dubious sources of investment advice all proved to be so much bunk.

I know, because I was a regular speaker on this circuit. I alone, a voice in the darkness, begged people to buy stocks at the beginning of the greatest bull markets of all time, which was then, only just getting started.

Eventually, I ruffled too many feathers with my politically incorrect views, and they stopped inviting me back. I think it was my call that rare earths (REMX) were a bubble that was going to collapse was the weighty stick that finally broke the camel?s back.

So, here we are, five years later. The Dow Average has gone from 7,000 to 18,000. The dollar has blasted through to a 12 year high against the Euro (FXE). The deficit has fallen by 75%. Gold has plummeted from $1,920 to $1,100. And no one has apologized to me, telling me that I was right all along, despite the fact that I am from California.

Welcome to the investment business.

Except that now, gold is worth another look. It has rallied a robust $200 off the bottom in a mere two months. Some of the most frenetic action was seen in the gold miners (GDX), where shares soared by as much as 50%. Even mainstay Barrick Gold (ABX) managed a 30% revival.

The gold bulls are now looking for their last clean shirt, sending suits out to the dry cleaners, and polishing their shoes for the first time in ages, about to hit the road to deliver almost forgotten sales pitches once again.

The news flow has certainly been gold friendly in recent weeks. Technical analysts were the first to raise the clarion call, noting that a string of bad news failed to push gold to new lows. Charts started putting in the rounding, triple bottoms that these folks love to see.

The New Year stampede into bonds gave it another healthy push. One of the long time arguments against the barbarous relic is that it pays no yield or dividend, and therefore has an opportunity cost.

Well guess what? With ten year paper now paying a scant 0.40% in Germany, 0.19% in Japan, and an eye popping -0.04% in Switzerland, nothing else pays a yield anymore either. That means the opportunity cost of owning precious metals has disappeared.

Then a genuine black swan appeared out of nowhere, improving gold?s prospects. The Swiss National Bank?s doffing of its cap against the Euro (FXE) ignited an instant 20% revaluation of the Swiss franc (FXF).

In addition to wiping out a number of hedge funds and foreign exchange brokers around the world, they shattered confidence in the central bank. And if you can?t hide in the Swiss franc, where can you?

This all accounts for the $200 move we have just witnessed.

So now what?

From here, the picture gets a little murky.

Certainly, none of the traditional arguments in favor of gold ownership are anywhere to be seen. There is no inflation. In fact, deflation is accelerating.

The dollar seems destined to get stronger, not weaker. There is no capital flight from the US taking place. Rather, foreigners are throwing money at the US with both hands, escaping their own collapsing economies and currencies.

And once global bond markets top out, which has to be soon, the opportunity cost of gold ownership returns with a vengeance. You would think that with bond yields near zero we are close to the bottom, but I have been wrong on this so far.

All of which adds up to the likelihood that the present gold rally is getting long in the tooth, and probably only has another $50-$100 to go, from which it will return to the dustbin of history, and possibly new lows.

I am not a perma bear on gold. There is no need to dig up your remaining coins and dump them on the market, especially now that the IRS has a mandatory withholding tax on all gold sales. I do believe that when inflation returns in the 2020?s, the bull market for gold will return for real.

You can expect newly enriched emerging market central banks to raise their gold ownership to western levels, a goal that will require them to buy thousands of tons on the open market.

Gold still earns a permanent bid in countries with untradeable currencies, weak banks, and acquisitive governments, like China and India, still the world?s largest buyers.

Remember, too, that they are not making gold anymore, and that all of the world?s easily accessible deposits have already been mined. The breakeven cost of opening new mines is thought to be around $1,400 an ounce, so don?t expect any new sources of supply anytime soon.

These are the factors which I think will take gold to the $3,000 handle by the end of the 2020?s, which means there is quite an attractive annualized return to be had jumping in at these levels. Clearly, that?s what many of today?s institutional buyers are thinking.

Sure, you could hold back and try to buy the next bottom. Oh, really? How good were you at calling the last low, and the one before that?

Certainly, incrementally scaling in around this neighborhood makes imminent sense for those with a long-term horizon, deep pockets and a big backyard.

Oops!

Mad Day Trader Jim Parker?s Q1, 2015 Views

Diary, Newsletter, Research

Mad Day Trader Jim Parker is expecting the first quarter of 2015 to offer plenty of volatility and loads of great trading opportunities. He thinks the scariest moves may already be behind us.

After a ferocious week of decidedly ?RISK OFF? markets, the sweet spots going forward will be of the ?RISK ON? variety. Sector leadership could change daily, with a brutal rotation, depending on whether the price of oil is up, down, or sideways.

The market is paying the price of having pulled forward too much performance from 2015 back into the final month of 2014, when we all watched the December melt up slack jawed.

Jim is a 40-year veteran of the financial markets and has long made a living as an independent trader in the pits at the Chicago Mercantile Exchange. He worked his way up from a junior floor runner to advisor to some of the world?s largest hedge funds. We are lucky to have him on our team and gain access to his experience, knowledge and expertise.

Jim uses a dozen proprietary short-term technical and momentum indicators to generate buy and sell signals. Below are his specific views for the new quarter according to each asset class.

Stocks

The S&P 500 (SPY) and NASDAQ have met all of Jim?s short-term downside targets, and a sustainable move up from here is in the cards. But if NASDAQ breaks 4,100 to the downside, all bets are off.

His favorite sector is health care (XLV), which seems immune to all troubles, and may have already seen its low for the year. Jim is also enamored with technology stocks (XLK).

The coming year will be a great one for single stock pickers. Priceline (PCLN) is a great short, dragged down by the weak Euro, where they get much of their business. Ford Motors (F) probably bottomed yesterday, and is a good offsetting long.

Bonds

Jim is not inclined to stand in front of a moving train, so he likes the Treasury bond market (TLT), (TBT). He thinks the 30-year yield could reach an eye popping 2.25%. A break there is worth another 10 basis points. Bonds are getting a strong push from a flight to safety, huge US capital inflows, and an endlessly strong dollar.

Foreign Currencies

A short position in the Euro (FXE), (EUO) is the no brainer here. The problem is one of good new entry points. Real traders always have trouble selling into a free fall. But you might see profit taking as we approach $1.16 in the cash market.

The Aussie (FXA) is being dragged down by the commodity collapse and an indifferent government. The British pound (FXB) is has yet to recover from the erosion of confidence ignited by the Scotland independence vote and has further mud splattered upon it by the weak Euro.

Precious Metals

GOLD (GLD) could be in a good range pivoting off of the recent $1,140 bottom. The gold miners (GDX) present the best opportunity at catching some volatility. The barbarous relic is pulling up the price of silver (SLV) as well. Buy the hard breaks, and then take quick profits. In a deflationary world, there is no long-term trade here. It is a real field of broken dreams.

Energy

Jim is not willing to catch a falling knife in the oil space (USO). He has too few fingers as it is. It has become too difficult to trade, as the algorithms are now in charge, and a lot of gap moves take place in the overnight markets. Don?t bother with fundamentals as they are irrelevant. No one really knows where the bottom in oil is.

Agriculturals

Jim is friendly to the ags (CORN), (SOYB), (DBA), but only on sudden pullbacks. However, there are no new immediate signals here. So he is just going to wait. The next directional guidance will come with the big USDA report at the end of January. The ags are further clouded by a murky international picture, with the collapse of the Russian ruble allowing the rogue nation to undercut prices on the international market.

Volatility

Volatility (VIX), (VXX) is probably going to peak out her soon in the $23-$25 range. The next week or so will tell for sure. A lot hangs on Friday?s December nonfarm payroll report. Every trader out there remembers that the last three visits to this level were all great shorts. However, the next bottom will be higher, probably around the $16 handle.

If you are not already getting Jim?s dynamite Mad Day Trader service, please get yourself the unfair advantage you deserve. Just email Nancy in customer support at support@madhedgefundtrader.com and ask for the $1,500 a year upgrade to your existing Global Trading Dispatch service.

Volatility Weekly

Volatility Monthly

Euro to the Dollar

Why Warren Buffet Hates Gold

Diary, Newsletter

The ?Oracle of Omaha? expounded at length today on why he despises the barbarous relic. The sage doesn?t really care if the yellow metal hit an all-time high today of $1,440. He sees it primarily as a bet on fear. If investors are more afraid in a year than they are today, then you make money. If they aren?t, then you lose money. If you took all the gold in the world, it would form a cube 67 feet on a side, worth $7 trillion. For that same amount of money, you could own other assets with far greater productive power, including:

*All the farmland in the US, about 1 billion acres, which is worth $2.5 trillion.

*Seven Exxon Mobil?s (XOM), the largest capitalized company in the US.

*You would still have $1 trillion in walking around money left over.

Instead of producing any income or dividends, gold just sits there and shines, letting you feel like you are King Midas.

I don?t know. With the stock market peaking around here, and oil trading at $115/barrel in Europe, a bet on fear looks pretty good to me right now. I?m still sticking with my long term forecast of the old inflation adjusted high of $2,300.

Maybe Feeling Like King Midas is Not So Bad

Gold: Next Stop $1,250!

Newsletter

Sometimes, the best trades are the ones you don?t do. I actually wrote up a Trade Alert to buy gold on Thursday, figuring that it would bounce the first time it hit my downside target of $1,500.

But then I scanned the entire hard asset landscape, and saw that everything was selling off huge; silver (SLV), platinum (PPLT), palladium (PALL), oil (USO), copper (CU), and iron ore. I took a long nap. When I woke up, I decided that there was something much bigger going on here, and the urge to buy the barbarous relic suddenly vaporized. I sent the Trade Alert to my recycle bin.

The selloff that ensued on Friday was of Biblical proportions, with the yellow metal taking an unbelievable $86, 5.5% swan dive. They say this is the commodity that takes the stairs up and the elevator down, and that was no more true than today.

I have been pounding the table trying to get readers out of gold since early December. It is clear what is going on here. The world is dumping hard assets of every description and pouring the money into paper ones. Commodities you can drop on your foot are getting dumped, and generous premiums are being paid for anything that can be created with a printing press. It?s as simple as that.

This is why you are having both bonds and stocks going up at the same time, a rare event in capital markets. In effect, everything is now a bond, both the wide array of fixed income securities that are getting chased, along with dividend yielding stocks. This is why a wide swath of technology stocks, like Apple (AAPL), are not participating in the game.

I called around to some of the leading technical analysts to see how much pain gold was in for. The tidings were grim. The 200-week moving average at $1,433 looks like a chip shot. If that doesn?t hold, then $1,300 is in the cards. My favorite target is the old October, 2009 breakout level where the Reserve Bank of India came in out of the blue and bought 200 tonnes of the sparkly stuff, punching it through to a new all time high. The previous resistance should now become support. This is the number my jeweler favors.

To make matters particularly fiendish for traders, we may see a breakdown well into the $1,400?s that sucks in tons of capitulation sellers, then a big bounce before a downtrend resumes. It is a scenario that will be enough to test even the most devoted of gold bugs.

At risk is nothing less than the end of a bull market that is entering its 12th year. The shares of gold miners suggest that the demise of gold is already a foregone conclusion. The index for this group (GDM) has breached major support once again and is looking for a new four year low. Since this index usually correlates very highly with the barbarous relic, the writing is on the wall.

There are a host of reasons why the yellow metal has suddenly become so unloved. The largest holder of the gold ETF (GLD), John Paulson, is getting big redemptions in his hedge fund, forcing him to sell. This is why the selling is so apparent in the paper gold markets, like the ETF?s, but not in the physical bars and coins.

India has suddenly seen its currency, the rupee, drop against the greenback. That reduces the buying power of the world?s largest gold importer. With years of pernicious deflation ahead of us, who needs a traditional inflation hedge like the yellow metal anyway?

The hyper quantitative easing announced by the BOJ last week has created an entire new class of gold liquidators. Gold has actually risen dramatically in yen (FXY) terms over the past five months, so retail jewelers across Japan have had to expand business hours to accommodate long lines of eager sellers. The overflow is hitting the international markets big time.

Here is the final nail in the coffin for gold. Gold has had a dozen reasons to rally over the past six months. Those include the European monetary crisis, the Italian elections, the Spanish elections, the Cyprus bank account seizures, sequestration, the fiscal cliff, Ben Bernanke?s QE3, the Japanese ultra QE, rising capital gains taxes, and even the reelection of president Obama. It has utterly failed to do so.

Any trader long in the tooth, such as myself, will tell you that if a market can?t rally on repeated fabulous news, then you sell the daylights out of it. That is what we got with gold, in spades, on Friday.

Why Warren Buffet Hates Gold

Diary, Newsletter

The 'Oracle of Omaha' expounded at length today on why he despises the barbarous relic. The sage doesn't really care about the yellow metal, whatever the price. He sees it primarily as a bet on fear.

If investors are more afraid in a year than they are today, then you make money. If they aren't, then you lose money. If you took all the gold in the world, it would form a cube 67 feet on a side, worth $7 trillion. For that same amount of money, you could own other assets with far greater productive earning power, including:

*All the farmland in the US, about 1 billion acres, which is worth $2.5 trillion.

*Seven Apple?s (AAPL), the second largest capitalized company in the world.

*You would still have $2 trillion left over in walking around money.

Instead of producing any income or dividends, gold just sits there and shines, making you feel like King Midas.

I don't know. With the stock market at an all time high, and oil trading at $96/barrel, a bet on fear looks pretty good to me right now. I'm still sticking with my long term forecast of the old inflation adjusted high of $2,300/ounce. But we may have to visit $1,500 on the way there first.

Maybe Feeling Like King Midas is Not So Bad

Buy the Big Dip in Gold.

Newsletter

Look at the charts for the barbarous relic below and you can only come to one possible conclusion. If the Federal Reserve disappoints on Thursday, just a little bit, even by a smidgeon, and does not deliver QE3 and gold sells off big, you should jump in and by the stuff like crazy.

All of the charts for gold and the derivative plays are showing major breakouts to the upside. This is true for spot gold and the ETF (GLD), which broke a major downtrend line last week. It is the case for the gold miners ETF (GDX). It is also the reality for silver, the silver ETF (SLV), and the silver miners (SIL).

The entire precious metals space has been floated since the prospect of further quantitative easing from the world?s central banks started in earnest on May 15. Since then, it has been prudent and profitable to buy every dip.

European Central Bank president Mario Draghi did the heavy lifting in mid-July by promising to ?Do whatever it takes to rescue the Euro? (read: huge quantitative easing). He then put his money where his mouth was last week by announcing an unlimited bond-buying program.

Assorted dovish Federal Reserve governors have done their bit by talking up the prospect of further monetary easing. China threw in its ten cents by announcing a $150 billion reflationary budget on Friday. Even the Bank of Japan has been heard murmuring about additional money printing. It all has the smell of an international coordinated effort to reflate the global economy.

Where exactly do you get back in? The sweet spot in the (GLD) will be the 200 day moving average at $159.66, which fell at the end of August. That is down $7.94 in (GLD), or $79.40 in the spot market from here.

Would you Consider a Long-Term Relationship?

Gold is Making a Comeback

Newsletter

One of my best calls of the year was to plead with readers to avoid gold like the plague, periodically dipping in on the short side only. The barbarous relic has been in a bear market since it peaked at $1,922 an ounce at the end of August last year. Gold shares have fared much worse, with lead stock Barrack Gold (ABX) dropping 36% since then and the gold miners ETF (GDX) suffering a heart rending 43% haircut.

However, the recent price action suggests that hard times may be over for this hardest of all assets. Despite repeated attempts, the yellow metal has failed to break down below the $1,500 support level that I have been broadcasting as the line in the sand.

It has rallied $100 since the last try a few weeks ago. (GDX) has performed even better, popping 23%. For the last month, the entire precious metals space has traded like it was a call option on global quantitative easing (see yesterday?s piece). Dramatically worsening economic data is increasing the likelihood of further monetary easing generating a nice bid for gold.

Now the calendar is about to ride to the rescue as a close ally. It turns out that in recent years, there has been a major seasonal element to the gold trade, almost as good as the November/May cycle that drives the stock market. Gold typically sees a summer low. Then traders start anticipating the September Indian gold season when the purchase of gifts and dowries become a big price driver. That explains why India, with a population of 1.2 billion, is the world?s largest gold buyer.

Next comes the Christmas jewelry buying season in western countries. That is followed by the gift giving and debt repayments during the Chinese Lunar New Year, during which we see multi month peaks in the yellow metal. That is exactly what we saw this year. The only weakness in this argument is that a slowing Chinese economy could generate less demand this time.

These are heady inflows into such a small space. All of the gold mined in human history, from King Solomon's mines, to the bars still in Swiss bank vaults bearing Nazi eagles (I've seen them) would only fill 2.5 Olympic sized swimming pools. That amounts to 5.3 billion ounces, about $8.6 trillion at today's prices. For you trivia freaks out there, that is a cube with 66 feet on an edge. China is the largest producer (13.1%), followed by Australia (10%) and the US (8.8%).

Peak gold may well be upon us. Production has been falling for a decade, although it reached 94 million ounces last year worth $153 billion at today?s prices. That would rank gold 5th as a Fortune 500 company, just ahead of General Electric (GE). It is also only .38% of global public debt markets worth $40 trillion.

That is not much when you have the entire world bidding for it, governments and individuals alike. Talk about getting a camel through the eye of a needle! We may well see the bull market end only when those two asset classes, government bonds and gold, see outstanding values reach parity, implying a major increase in gold prices from here. That is well above my own personal target of the old inflation adjusted high of $2,300. No wonder buying is spilling out into the other precious metals, silver (SLV), platinum (PPLT), and palladium (PALL).

The thumbnail technical view here is that we have broken the 50 day moving average at $1,610, so we may have a clear shot at the 200 day average at $1,680. There may be an easy $50 here for the nimble, and more if we break that. The current ?RISK ON? mood certainly helps this trade.

When playing in the gold space, I always prefer to buy the futures or the (GLD), the world?s second largest ETF by market cap, either outright or through a longer dated call spread. The dealing costs are far too high for trading physical bars and coins, and can run as high as 30% for a round trip. Having spent 40 years following mining companies, I can tell you that there are just way too many things that can go wrong with them for me to risk capital. They can get nationalized, suffer from incompetent management, hedge out their gold risk, get hit with strikes or floods, or get tarred by poor equity market sentiment. They also must endure the highest inflation rate of any industry, around 15%-20% a year, which hurts the bottom line.

Better just to stick with the sparkly stuff.