Tuesday, October 27, 2009

Gold as permanent investment?

Jeffrey Saut contemplates the merit of gold as a permanent investment. He quoted from "Bernard Baruch, Park Bench Statesman" by Carter Field, 1944:
“Baruch liked gold mines. There is always a market, he pointed out, for their product, and at a satisfactory price. Gold, he insisted, is one of the very few things in the world that approaches the status of a permanent investment. Baruch told the story of a Rothschild who set up a ‘permanent trust’ consisting of five different currencies. By the time Baruch heard about the trust, it had shrunk to one-fifth its original value. ‘But gold doesn’t yield any interest,’ a friend protested after listening to the story. ‘True’, replied Baruch, ‘but consider the fabulous wealth of some of the Indian princes and rajahs. I had dinner with the Maharajah of Kapurthala on one occasion in Vittel, France. Several of us talked afterward about his wealth, and someone said that among the treasures of these Indian moguls were gold coins brought to the East by Alexander the Great, hundreds of years before Christ.”

“Their gold and jewels had earned no interest during these more than 2,000 years, but they still had their capital. Suppose they had attempted to provide income from it. They might have been no more far-seeing than the Rothschild I mentioned. If they had tried speculation there have been many times in each century that they might have gone broke. No, save for gold, jewels, works of art, perhaps good agricultural land, and a very few other things, there ain’t no such animal as a permanent investment. Even in agricultural land, Baruch pointed out, there is some risk. Lands that made men rich in rice cultivation years ago in Baruch’s own state of South Carolina, are not nearly so valuable now that rice is produced more economically in other sections. City real estate is subject to all sorts of hazards, as he learned when he no longer needed his big Fifth Avenue mansion.”

Via, Minyanville.

Looking at the chart below, we can see that gold is now continuing with its prior uptrend after breaking above its triangle pattern (denoted as 'B') recently.

Chart: Gold price from Jan 4, 1982 to Oct 21, 2009 (Source: Bloomberg)


teh said...

Hi Alex,

Do you think TITAN is good to buy it now?
Pls Comment about it...

GenesisDream said...

ya, i was looking at TITAN as well. Plz comment.

Alex Lu said...

Hi Teh,

Titan broke above its long-term downtrend line at RM1.15 as well as its strong horizontal line at RM1.20. Now, we know the reason for the rally in the stock in the past 3 days- the improved financial performance. It has just announced its results for 3Q2009 ended 30/9/2009. Its turnover increased by 11% q-o-q but was dropped by 26% y-o-y. Pre-tax profit increased by 22% q-o-q & a whopping 10-fold y-o-y. The improvement came from lower operating & finance cost.

With the improved financial results & technical breakout, I think Titan will continue to rise. Next few resistance levels are RM1.30, 1.40 & 1.50.

teh said...

Thought the TITAN wil go up but end will lower 1.18. how? Is that this stock can be keep..Is that this share consider as government share?pls reply tx.

Zac Lim said...

i'm always a fan of Rothschild and Baruch

Alex Lu said...

Hi Teh,

Sometime the poor market sentiment can lead investors to ignore good news. If Titan can stay above its uptrend line of RM1.15, you may want to hold onto it. Currently it is at RM1.14-15.