Que Sera Sera, for all the tracking lengths

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Bespoke Investing on Hold Money, Economics and business, Investing in gold now, Making money at home, Not off-the-rack investing approach, Prudent investing made simple, Wealth accumulation

Bespoke Investing feature #6

The upshot guidance is for gold to be soundly on the upside the precious metal must burst out of the USD1200 per ounce area and touch USD1300, more specifically meaning closing price of above that level at least for a week. Face the fact that there is no immediate upside action for any differing scenario.

The daily price movements of course do fan your emotions. You lose if emotions are not under control. The current swings within a USD60 or USD70 quantum range is best left to high volume day traders. I sense that precious gold at present is in pullback. It might very well consolidate to near USD1200 or slightly below. Well USD100 is not a very worrisome amount when the long term upside could be easily above USD1800 and even surpass historic USD1900s highs to touch USD2500 before 2020. If you are a Warren Buffet, yes. But being a prudent bespoke investor with limited funds the way forward is carry cash for the next legs up.

When will that happen? Use your own crystal ball. I rather shackle up in awaiting mode for averaging down on any gold holdings for now. Still, if it does not occur we have the cash to average up in likely two or three stage next legs up. China continues to heap up on gold while the manipulated low price persists. Bespoke investing on hold money keeps a running total of the lengths, and if we miss a few, que sera sera.

Last week’s near USD1300 high and this week’s Monday above USD1300 high will leave many emotional small investors forlorn and dry had they take it as a signal to buy because only the Warren Buffets can carry the holdings for a year or more of flat trading range. By the way the one and only Buffet do not dabble in gold.

On 2 May 2016 gold was hovering around USD1292 per ounce at one stage and now on 4/5 it has declined to USD1282 with our EP (equivalent world gold price in MYR) at $166.65 taking MYR4.041 to the greenback.

The EP was $156.09 when we recently liquidated our gold holdings. It’s 6.7% higher and so what if at the recent peak of over USD1300 per ounce it was even higher? This is because a non-Bespoke investing player would not have liquidated his holdings, very much like a punter in a casino – always hoping the winnings will be higher.

We aren’t really bothered with comparing the Monday 2/5 high gold price of above USD1300. In fact and incidentally, we are not able to establish the EP because there are no local bank forex quotes on that particular bank holiday. All said and enough said, we like to keep things the Bespoke investing way.

Update on 11 May 2016: The EP this morning is $166.42 (meaning 6.3% higher than on 15/4 or almost the same as on 4/5 % change of 6.5%). In terms of USD per ounce gold price the current USD1266 is 3% higher than USD1229 on 15/4. Compare this with USD1282 on 4/5, meaning 4.3% higher, the EP comparison is more meaningful. It factors in the forex rate decline of MYR from 4.0410 to 4.1060.

Incidentally, if we apply the 10 May forex rate of 4.1190 the 11/5 EP = $166.95 or 6.7% higher than on 15/4. The corollary is that forex rates, crude oil prices impacting on MYR and the U.S. equities market are factors of concern relative to local gold prices.

Yesterday’s Dow +222 points and the index closed at 17,928 points. The rebound rode on news that U.S. job openings for March had surged to an 8-month high. That being a “lead” indicator the market gains is not out of synch with real positive economic data. This does not bode well for gold because as USD and equities firm gold upside has not gained any traction since early Monday.

On the blind side, despite Canada and Nigeria outages Nymex crude oil is still struggling to touch USD50 per barrel. While the job openings are great news the April employment gains numbers are flat perhaps indicating skills mismatch in the U.S. labor market.

Just as economics models cannot predict financial crisis, gold investing commentarial will not make any substantial dents on the side way trending of world gold prices until structural changes are seen. Can the U.S. impose a use tax at the retail point to initiate support measures of the shale oil industry? Only then will low crude oil price be truly imbedded in the grand scheme of things of the global economy.

Will financial institutions and central banks gold price manipulation peter out? Only then gold prices movement is in tandem with demand and supply forces to usher in prudent economics utilization; and the opportunity cost criteria will be the basis for investors to tune in to precious gold as a long range worthwhile commodity to hold.

Note to self: so what if those scenarios remain a pipe dream?  We stick to history and rely on world gold price 5-year trend posturing (bottoming of world gold prices) as well as stick to bespoke investing on hold money prudence. Sounding like a broken record we just need to update readers on the latest developments albeit non-significant and non-consequential for the moment. Hence a mere update insertion, not a new article on Bespoke Investing on hold money.

Calm has returned to the markets from Brexit knee-jerk price slumps and the Dow closed on 30 June 2016 at 17,929 meaning only a 0.45% decline from the recent high of 18,011 of 23/6/16.  1 July 2016 world gold price is hovering around USD1330/oz which is only 0.15% lower than the recent high of USD1332 on 27/6/16.

The very recent lowest world gold price was USD1315, occurring on 28/6/16, a day after the recent high of 27/6/16 but representing only a 1.3% drop.

In terms of EP (Equivalent Ringgit per gram of gold) the statistics are 27/6 EP=180.70(MYR4.2050/USD); 28/6 EP=177.80 (MYR4.2050/USD) or 1.6% lower; 1/7 EP=173.89 (MYR4.0640/USD) or 3.9% lower.

The EP price dipping is a slight contrast to the world gold price week’s trend. We added only 1 gram to our gold holdings, thus still having 80% of hold money. Que Sera Sera, for all the tracking lengths.

What’s our bespoke take now? For one thing, gold is still extremely overbought. It would be very hard for gold to make much upside progress being so overbought. Up to mid-June 2016 based on the Commitments of Traders report (COT), gold and silver still have way too many speculative long positions open versus commercial short positions. We are also entering the seasonally weak summer months, a period of lackluster physical demand around the globe.

Nonetheless, because of Brexit, Janet Yellen would likely not increase rates too soon. The U.S. dollar indeed has broken out to the upside. While many gold pundits have now ignore their Artificial Intelligence forecast chart of gold we continue to prudent even as world gold price now has burst out of the USD1200 per ounce area and remained in the USD1300 area for a week.

We do have the hold money to load up as gold price goes up. The EP was $156.49 (world gold price was around USD1229 per ounce) when we recently liquidated our gold holdings. At current prices we are mere negative 2.7% if we cash out. At replacement cost (cimb sell quote MYR172.10) for our average gold holdings cost of MYR171.59 is very slightly above breakeven. No doubt we did not gain from the recent gold price surge.