Saturday, November 7, 2009

How to invest in gold

One of the most famous events in the gold market was its run to $850/oz back in 1980.
Almost three decades later, gold finally made a new all time high, but it was an all-time high in nominal terms. Adjusted for inflation, we’re still nowhere close to what we saw in 1980.That being said, it’s important to keep in mind that the 1980 peak was a speculative bubble and comparing today’s price, in either real or nominal terms, to that speculative peak is nearly worthless.

It’s like saying that home prices can go up another 100% from here because that’s where prices were in 2005. Or like arguing that JDS Uniphase stock could go back to $1,000 per share because that’s where it was trading during the heights of the dot-com bubble. We might still be a long way from the real highs in the gold market, but there are much better theses on which to base a bullish case for gold.

Keep your eye on both the investing public for hints at speculative demand and the Federal Reserve for guidance on monetary policy. If investors around the world do start really speculating on gold, you can see from that chart how high it might go. There have been an awful lot of great bull markets in history that have ended in speculative frenzies. But should the Fed start taking some of these dollars out of the system and tightening up monetary policy to bolster the strength of the dollar, it would very likely be very bad for gold.

Motorola Droid

Motorola Inc's new Droid phone will be the first to use navigation software from Google Inc, in a direct challenge to GPS device makers Garmin and TomTom.The Droid will go on sale on November 6 at Verizon Wireless, the largest US mobile service provider, which said it will promote the phone with its biggest marketing campaign ever. It will cost $199 for customers who commit to a two-year service contract, Verizon Wireless said.Shares of TomTom fell 19 percent, extending their losses after the Dutch navigation device maker said that economic weakness was making holiday sales tough to predict. Garmin shares fell 12 percent.The Droid, which includes a computer-like keyboard and a new version of Google's software, Android 2.0, will also compete against Apple Inc's iPhone which is available on AT&T Inc's network in the United States.Verizon Wireless Chief Marketing Officer John Stratton said he believed the Droid would hold its own against the iPhone, even as he conceded that Apple had revolutionised the smartphone industry."We have to demystify the notion that (iPhone's) untouchable," Stratton told reporters at the launch event in New York. "This product can stand up and compete."Google said Android 2.0 would include a Google Maps Navigation product with real-time, turn-by-turn walking or driving directions.

Sony launches Vaio X

Thinning out competition, consumer electronics maker Sony launched its new range of ultra slim notebooks priced at Rs 65,000, which the company claims to be the world's lightest.The product, Vaio X, which is a direct competitor of Apple's Macbook Air, weighs around 600 grams and is half an inch thick.To emphasise the 'slimness' of the notebook, Sony has signed Kareena Kapoor as the brand ambassador for Vaio X and will invest Rs 15 crore in India to market it.Besides, Sony India Managing Director Masaru Tamagawa said, "We are planning to invest Rs 200 crore across all our portfolios in India in marketing this fiscal.”The company that also launched a new range of notebooks -- Vaio CW, starting at Rs 37,000 and netbooks priced at Rs 27,000, plans to garner 20 per cent market share in the consumer notebook segment by launching newer products, expanding buyer channels and investing aggressively in marketing, Tamagawa said.