I'm just assuming Jim Cramer was talking about the rock band "Nirvana" with the suicidal heroin addicted lead singer, but maybe he was talking about something else.
The truth is, if you bothered to actually look at the charts is that all of these commodities are still much higher than they were 1 year ago - right before Ben Bernake started cutting interest rates.
Please note: I am not giving investment advice. You need to do your own due diligence when it comes to any investment. I am an idiot and if you do what I say and lose money, it's your own dumb fault!
Let's look at some charts:
First gold (ticker: GLD):
Shares of the SPDR Gold shares went for 65.07/share (1 share = 1/10 oz. of gold) on August 21, 2007. Seven months later the shares surged to $99.17/share on March 17th, that's a 52.4% return! Since that time the direction has been basically down and it now sits at $82.30/share - but that is still a 26.4% return in 1 year!Compare that to the Dow, Nasdaq and S&P since last August and it's no comparison. There's also wierd things happening in the gold market. Gold has sold off about 20% from its peak, but the US Mint just announced they were stopping production of their American Eagle gold coins (they did the same thing back in March with the American Eagle silver coins).
If the price of something goes down, its usually because demand is crashing (example: housing). How can prices be declining at the same time that physical supplies are disappearing?
So is gold down? Yes, from it's peak, but year over year its still up huge.
Next we've got oil:
ONE YEAR AGO OIL WAS AT $67/BARREL! Even with the recent pullback, oil is still 80% higher than it was last year! Sorry if I'm not happy that gas prices have come down about $0.50/gallon since it peaked in June. I'm still paying about $15 more per fillup on my vehicles than I was last year at this time.
How's the dollar doing?
One year ago the dollar index was at 81. After the most recent dramatic rally, the dollar now sits at 76, down 6% in one year.
It is true that all of these items have reversed course pretty dramatically this past month, but I'm thinking that the original trends will start to assert themselves strongly very soon.
How much lower can gold go when physical supplies of gold coins are almost non-existant right now?
How much higher can the dollar go when the government is getting ready to issue hundreds of billions of dollars in additional debt in order to bailout or nationalize Fannie Mae and Freddie Mac? BTW - Fannie and Freddie shares have crashed below their share price when the bailout was announced last month.
How much lower can oil go with all this crap happening between Russia and Georgia? Not to mention the continuing problems with Iran, Iraq and Nigeria constantly popping up in the news?
My thousand yard stare (http://financialjudo.blogspot.com/2008/07/1000-yard-stare.html) says that we are not done. The market was falling apart until March when Bear Stearns was bailed out, but that rally failed and the market plunged even further until Fannie Mae and Freddie Mac were bailed out. Now we look to be at the beginning of another dramatic leg down that could smash through the July lows in the market.
The past month hasn't been kind to my portfolio. In Mid July I was kicking ass and was up more than 5% on the year. However, over the past month I have faced a dramatic reversal and am now down about 6% on the year. That hurt, as I thought I had stress tested my portfolio pretty well.
However, compared to how the market has done this year. I'm still in good shape, even with the loss.
The next month should be interesting.
It is true that all of these items have reversed course pretty dramatically this past month, but I'm thinking that the original trends will start to assert themselves strongly very soon.
How much lower can gold go when physical supplies of gold coins are almost non-existant right now?
How much higher can the dollar go when the government is getting ready to issue hundreds of billions of dollars in additional debt in order to bailout or nationalize Fannie Mae and Freddie Mac? BTW - Fannie and Freddie shares have crashed below their share price when the bailout was announced last month.
How much lower can oil go with all this crap happening between Russia and Georgia? Not to mention the continuing problems with Iran, Iraq and Nigeria constantly popping up in the news?
My thousand yard stare (http://financialjudo.blogspot.com/2008/07/1000-yard-stare.html) says that we are not done. The market was falling apart until March when Bear Stearns was bailed out, but that rally failed and the market plunged even further until Fannie Mae and Freddie Mac were bailed out. Now we look to be at the beginning of another dramatic leg down that could smash through the July lows in the market.
The past month hasn't been kind to my portfolio. In Mid July I was kicking ass and was up more than 5% on the year. However, over the past month I have faced a dramatic reversal and am now down about 6% on the year. That hurt, as I thought I had stress tested my portfolio pretty well.
However, compared to how the market has done this year. I'm still in good shape, even with the loss.
The next month should be interesting.
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