Gold versus wood – putting passion before wisdom; not for the ‘maverick’ investor.

I love goooold!

From Bloomberg yesterday: “Commodities across the board are rallying, aggravating the inflation outlook,” said Chae Un Soo, a Seoul-based trader at KEB Futures Co. “For now, more and more investors are looking to precious metals as a shelter.”

Or the following quote from my hero Ned Goodman (Advisor.ca on April 8th)

Still room to run on gold: Goodman

Gold remains the cleanest insurance against such poor confidence, he added.  Goodman, who predicted $700 gold at a time when it was selling for $250, now says it would hit $7,500 an ounce, if it reclaimed its place as the world’s reserve currency.

As I outline in my book, ‘A Maverick Investor’s Guidebook’ there’s no room for emotional attachment to any investment.  Gold (and silver) is still the darling of the press, well until today anyway.  The announced takeover of Timberwest has provided a small spark that may wake them up from their gold-induced trance – reminds me of the Austin Powers movie where Goldmember says: “Dr. Evil, can I paint his yoo-hoo gold? It’s kind of my thing, you know.”  But I digress.

In December of 2010 to early January, gold got to around $1400 an oz.  Back on Feb 22nd I posted this comment, “I see no compelling reasons for higher gold. In fact, energy prices are going to put the brakes on the global economy.” Recently it’s $1460.  WOW, all those folks jumping on board and  it’s up about 4%.  Quite the windfall.  To be fair, since October of last year the return is around the 7% range.  This is nothing to scoff at, but by being more open minded and avoiding the human frailment known as ‘obsession’ you might have diversified into other interesting areas.  Below is a chart that compares the price of Gold to the stockprice of West Fraser Timber.

Gold versus Wood

Oh, but I have the benefit of hindsight you say?  This is from my commentary of Feb 10th, 2010 (yes, before Tsunami):   “I do believe fundamentally that corporations have much capital spending/upgrading to do after the recession (hence my favouring CISCO and productivity bolstering technology stocks) and there are still some good values (selected Forest Products companies that have restructured drastically as their world collapsed around them over the past few years, Coals, Railways, and such) to be found out there.  Love those stocks that haven’t gone up much, and are so out of favour they really can’t go down much since nobody owns them anymore (no sellers).” Admittedly, CISCO proved a bummer due to an attach by short sellers (the muggers of our industry), and the verdict is still out on coal, but the point wasn’t to provide stock picking advice, but to encourage a broader perspective. 

Since October of last year, West Fraser has gone up nearly 60%, and since early this year up 30%.  Oh, and it’s not even the one with a takeover bid.

I have no real political bias (too well educated I’m afraid) but did you hear Harper is the most ‘trusted’ of the party leaders?  Funny – confine your public appearances to playing and singing “Imagine” by Lennon very badly to kids, saying nothing of any substance publicly and ripping off only those social groups with no lobbying capability and gain trust!  Only in Canada!

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About Mal Spooner

Malvin Spooner is a veteran money manager, former CEO of award-winning investment fund management boutique he founded. He recently authored A Maverick Investor's Guidebook which blends his experience touring across the heartland in the United States with valuable investing tips and stories. He has been quoted and published for many years in business journals, newspapers and has been featured on many television programs over his career. An avid motorcycle enthusiast, and known across Canada as a part-time musician performing rock ‘n’ roll for charity, Mal is known for his candour and non-traditional (‘maverick’) thinking when discussing financial markets. His previous book published by Insomniac Press — Resources Rock: How to Invest in the Next Global Boom in Natural Resources which he authored with Pamela Clark — predicted the resources boom back in early 2004.
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One Response to Gold versus wood – putting passion before wisdom; not for the ‘maverick’ investor.

  1. Crash Davis says:

    In the late 60s I lived in Val D’Or Quebec. At that time they were closing the mines because, at the price of gold then, they could not make the mines profitable.
    How times change..

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