the impending collapse of gold
shocking stats here boys, gold is not a long term play
Gold’s ‘Absurd’ Price Makes Stocks Look Cheap: Chart of the Day
Q
<cite class="byline"> By Bloomberg News - Aug 29, 2011 2:00 AM GMT+0800 </cite>
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Aug. 29 (Bloomberg) -- Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., talks about the outlook for Asian equities and gold. Naeimi speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
U.S. stocks are cheap and will outperform gold as bullion prices are poised to fall from “absurd” levels, according to Mirae Asset Securities Co.
The CHART OF THE DAY shows the price spread between the SPDR Gold Trust, an exchange-traded fund that tracks bullion, and the SPDR Dow Jones Industrial Average ETF, a fund which mimics the performance of the 30 stocks in the index. The premium widened by the most since the fund for the precious metal was started in November 2004.
Gold surged to an all-time high above $1,900 an ounce last week, pushing the value of bullion to $9.1 trillion based on cumulative supply, or about 2.75 times the market capitalization of companies in the Dow index, said John Wadle, head of regional banks research at the Hong Kong unit of Mirae Asset. Companies in the U.S. equities gauge have an average dividend yield of 2.7 percent and trade at 11.3 times estimated earnings as of Aug. 25, according to data compiled by Bloomberg.
“Gold is now a bubble compared with U.S. blue-chip stocks,” Wadle said in an e-mail in response to questions from Bloomberg. U.S. equities are “massively undervalued” based on future dividend yields of more than 3 percent, compared with no investment yields and storage costs associated with gold, he said in a report. Billionaire George Soros cut his holdings in the SPDR Gold Trust this year as prices rallied, while Paulson & Co., the hedge fund run by John Paulson, remained the largest holder, according to regulatory filings this month.
Investors can get a 130 percent return by investing in Dow stocks over the next two decades even if earnings rise by 2 percent under a deflationary scenario, Wadle said. To match this performance, gold prices would need to rise to $4,400 an ounce and the total value of bullion must surge to $27.6 trillion based on current and future supply, he said.
“This is absurd because it would represent two times the U.S.’s current gross domestic product and more than twice the current value of all U.S. equities,” he said. “The gold price is an absurdity waiting to correct.”
--Irene Shen, Zhang Shidong. With assistance from Richard Dobson. Editors: Allen Wan, Shiyin Chen
To contact the reporter on this story: Irene Shen in Shanghai at ishen4@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
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Gold’s ‘Absurd’ Price Makes Stocks Look Cheap: Chart of the Day
Q
<cite class="byline"> By Bloomberg News - Aug 29, 2011 2:00 AM GMT+0800 </cite>
Play Video
Aug. 29 (Bloomberg) -- Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., talks about the outlook for Asian equities and gold. Naeimi speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
U.S. stocks are cheap and will outperform gold as bullion prices are poised to fall from “absurd” levels, according to Mirae Asset Securities Co.
The CHART OF THE DAY shows the price spread between the SPDR Gold Trust, an exchange-traded fund that tracks bullion, and the SPDR Dow Jones Industrial Average ETF, a fund which mimics the performance of the 30 stocks in the index. The premium widened by the most since the fund for the precious metal was started in November 2004.
Gold surged to an all-time high above $1,900 an ounce last week, pushing the value of bullion to $9.1 trillion based on cumulative supply, or about 2.75 times the market capitalization of companies in the Dow index, said John Wadle, head of regional banks research at the Hong Kong unit of Mirae Asset. Companies in the U.S. equities gauge have an average dividend yield of 2.7 percent and trade at 11.3 times estimated earnings as of Aug. 25, according to data compiled by Bloomberg.
“Gold is now a bubble compared with U.S. blue-chip stocks,” Wadle said in an e-mail in response to questions from Bloomberg. U.S. equities are “massively undervalued” based on future dividend yields of more than 3 percent, compared with no investment yields and storage costs associated with gold, he said in a report. Billionaire George Soros cut his holdings in the SPDR Gold Trust this year as prices rallied, while Paulson & Co., the hedge fund run by John Paulson, remained the largest holder, according to regulatory filings this month.
Investors can get a 130 percent return by investing in Dow stocks over the next two decades even if earnings rise by 2 percent under a deflationary scenario, Wadle said. To match this performance, gold prices would need to rise to $4,400 an ounce and the total value of bullion must surge to $27.6 trillion based on current and future supply, he said.
“This is absurd because it would represent two times the U.S.’s current gross domestic product and more than twice the current value of all U.S. equities,” he said. “The gold price is an absurdity waiting to correct.”
--Irene Shen, Zhang Shidong. With assistance from Richard Dobson. Editors: Allen Wan, Shiyin Chen
To contact the reporter on this story: Irene Shen in Shanghai at ishen4@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
Want to save this for later? Add it to your Queue!
they have so many absurd loan it just doesn't make any sense
