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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