Readings on Gold Backwardation, Adjusted Schiller P/E Ratios

Patience and wisdom



Jim Cramer on CNBC: I will take this call from a viewer in Cleveland, “BOOYAH!”

Caller from Cleveland: Big BOOYAH to you, Jim.  Jim I just bought SalesForce (CRM) and I am worried that the stock market could have a correction.

Cramer: “Don’t be foolish, Uncle Ben (Bernanke) wouldn’t let that happen. BOOYAH, BOOYAH! Next caller.

Markel:Annual Report_2012 and

Understand Schiller’s P/E and Cyclically Adjusted Earnings

More on Irrational Exuberance:

More on Bitcoin, Gold in Backwardation and money:Bitcoin and Acting MAn   This is an important read to understand if you want to improve your understanding of money.

A farce: Shut Up Savers Surowiecki

P.S. as of 11 AM I bought in equal measure (adding) AUQ, AUNFF, YNGFF, AUY, NGD, GQMNF, RBY, RTRAF, FNV, RGLD, SLW, AG, PHYS. Whoops….and EGO, GORO.

then I threw up all over my keyboard.



A reader asks, Why did you buy gold?” Well, besides massively negative interest rates, global central bank mania/panic and this report:

One argument is that managed money is bearish on gold. Whoa! So they were bullish in 2011 when gold hit $1,900 and now, after seventeen months, they are bearish? The chart below sure doesn’t support the sagaciousness of the “managed” money.


3 responses to “Readings on Gold Backwardation, Adjusted Schiller P/E Ratios

  1. Have your thoughts changed on gold since this post? Several of the stocks you have mentioned have decreased significantly on price since this date. To me, two items come to mind: don’t fight the fed; the market can stay irrational longer than you can stay liquid (at least, regarding the market’s nominal returns since this post compared to the returns and financial position of some of the entities mentioned).

    I agree with your thoughts and concerns, but am less convinced that they will lead to profitable trades (not sure how long this bubble in money will continue and how poorly these entities will perform in the meantime and what this means for their investors).

    I am just struggling to make since of the current environment. Feel that the market is “one full of mirrors”, but what that implies for profitable investments, I am now very confused. Can invest in gold or related entities or just hold cash. Believe in what should be a liquidating environment will drive down the price of all investable assets (see what happened to gold stocks in 2008).

    Are you not taking on additional risk by committing capital now and not waiting until later?

    • No. Gold is insurance and non-fiat money that has held its value against paper money for the past fifty years. However, it does not track phony indexes like CPI.

      Yes, I STILL own those gold stocks. I often hold stocks for years as long as undervalued.

      The Fed’s massive credit creations is negative for gold in the sense that Western investors flood into US stocks (Why own gold?) since the Fed will make everything OK. We all know how thatwill turn out– 2001/2009.

      I care about the real price of gold not the nominal price. And gold is rising relative to oil and commodities, so I own selected gold and silver stocks that have the property and balance sheet to survive for a few years. Miners are DEEPLY CYCLICAL so you have have multi-uyear patience. Lets see where we are in 2020. Right now I am underwater on all my gold stocks except for a few.

      I think now is one of the best times to invest in well-capitalized resource stocks in my career. Low prices beget high prices and right nw we are at low prices give or take 20%.

  2. Hugh Hendry was speaking my mind and feelings. Bonner provides a rational response:

    I will do my best to stick with the red pill. Will be interesting to see how all of this plays out. Thanks

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