good time to get back in gold funds?

Philistine · Newbie Joined: 25 Sep 2004 Posts: 6 Location: Houston

some of them are down almost 50% this year

tgldx or fgldx in particular

HenryTo · Posted: Tue Oct 07, 2008 7:23 am Post subject:

Hi Philistine,

Long time no see - hope you guys are doing well.

My sense is that the cost structure of mining companies will take a dip for the short-term as wage/raw materials inflationary pressures subside. At the same time, gold should do relatively well as the Fed and other central banks try to unclog the commercial paper markets by directly buying up short-term debt, easing rates, or just "printing more money" by expanding their balance sheets.

Take care,

Henry

Odysseus · Posted: Mon Oct 06, 2008 8:43 pm Post subject:

Hey Philistine,

I have similar thoughts. For what it is worth, the ratio of gold to the XAU is about as skewed as I can remember. The miners have been trashed along with everything else.

The fund I follow is Pro Shares PMPIX. The mgmt fee is a bit steep but it is levered 1.5X XAU so there is some management involved.

Around $20, it is selling at the same price as it was in 04 when the metals were substantially lower.

The risk reward looks good here for the miners vs. the metals. If you think all this worldwide liquidity bleeds over into the PM's, It's probably a good set up. Longer term, you might be looking at a three bagger with the usual hiccups along the way.

Anyway, I've used it as an intermediate trading vehicle in the past. Beware as they have a 3:30 NY close so sometimes you can get jerked around in the last half hour.

It's on my radar when I break into my margerine account.

Regards...
_________________
Psychic with Alzheimers. I can predict what I will forget.