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Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Escheat
Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Contracts
Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017

Social Security
Issue #450, December 26, 2016

My Outlook for 2017: Part II of II
Issue #449, December 19, 2016

My Outlook for 2017: The Market
Issue #448, December 12, 2016

Medicine in 20 Years
Issue #447, December 05, 2016

Higher Interest Rates
Issue #446, November 28, 2016

Trump and the Markets: The Bad and Ugly
Issue #445A, November 23, 2016

Trump and the Markets: The Good
Issue #445, November 21, 2016

Negative Trends: The Suits aren’t Makin’ Steel
Issue #444, November 16, 2016

The New DOJ Fiduciary Rule
Issue #443, November 07, 2016

Barron’s Conference, Part IV of IV
Issue #442, October 31, 2016

Barron’s Conference, Part III of IV
Issue #Interim Bulletin #441A, October 26, 2016

Barron’s Conference, Part II of IV
Issue #441, October 24, 2016

Barron’s Conference, Part I of IV
Issue #440, October 20, 2016

This Newsletter
Issue #439A, October 12, 2016

Memoirs of US Grant: Vol II
Issue #439, October 10, 2016

More Points on Collecting, Investing and the Economy
Issue #Interim Bulletin #438A, October 05, 2016

Personal Memoirs of US Grant
Issue #438, October 03, 2016

Ideas for a High School Part-Time Job
Issue #Interim Bulletin #437A, September 29, 2016

Collecting, Investing, and the Economy
Issue #437, September 26, 2016

Free College
Issue #436A, September 22, 2016

A Military Commitment to Pay for Med School
Issue #436, September 19, 2016

When a CD isn’t a CD
Issue #435, September 12, 2016

I Made a Mistake
Issue #Interim Bulletin #434A, September 07, 2016

What is Your Spare Time Worth?
Issue #434, September 05, 2016

Credit Cards and Bonus/Loyalty Points
Issue #433, August 29, 2016

The Write-off of Student Loans
Issue #Interim Bulletin #432A, August 25, 2016

412 Retirement Plans
Issue #432, August 22, 2016

Join the Club
Issue #Interim Bulletin #431A, August 18, 2016

The Case for Precious Metals and Hard Assets
Issue #431, August 15, 2016

When the US went off the Silver Standard
Issue #430, August 08, 2016

Why NOT to Open a Restaurant
Issue #429, August 01, 2016

Some Tips on Life Insurance
Issue #428, July 25, 2016

More Observations on Negative Interest Rates
Issue #427, July 18, 2016

Embezzlement
Issue #426, July 11, 2016

Is a PhD Worth It? Part II of II
Issue #425, July 04, 2016

Is a PhD Worth It? Part I of II
Issue #424, June 27, 2016

Avoid Part-time real Estate Agents
Issue #423, June 20, 2016

The VIX
Issue #422, June 13, 2016

The Problem with Auction Reserves
Issue #421, June 06, 2016

Make Full Use of Your Capital Investments
Issue #420, May 30, 2016

The Fed’s Announcement
Issue #419, May 23, 2016

Quit While You’re Ahead: A True Story
Issue #418, May 16, 2016

The Precious Metals
Issue #417, May 09, 2016

Negative Secular Trends: Part Ii of II
Issue #416, May 02, 2016

Negative Secular Trends: Part I of II
Issue #415, April 25, 2016

Not Winning is not the same as not Losing
Issue #414, April 19, 2016

Behavioral Economics: Part II: Weaknesses
Issue #413, April 11, 2016

Behavioral Economics: Part I: Valid Points
Issue #412, April 04, 2016

The Most Important Books I’ve Read
Issue #411, March 28, 2016

Secret to Success: Take Risks and do Things Differently
Issue #410, March 21, 2016

The Over-Priced Food Presentation Hustle
Issue #409, March 14, 2016

The War on Cash
Issue #408, March 07, 2016

Precious Metals: Don’t Jump in Yet
Issue #407, February 29, 2016

The Bear is Growling
Issue #406, February 22, 2016

The Importance of Showing Respect
Issue #405, February 15, 2016

The 80-20 Rule of Thumb Pareto Principle
Issue #404, February 08, 2016

Some Tips on Commercial Real Estate
Issue #403, February 01, 2016

Economic Outlook for 2016
Issue #402, January 25, 2016

Selling Short: Part II of II
Issue #401, January 18, 2016

Short-Selling. Part I. How it Works
Issue #400, January 11, 2016

Who Can You Trust, and How to Spot a Con Man
Issue #399, January 04, 2016

Outlook for 2016: Part II of II
Issue #398, December 28, 2015

THE PHYSICIAN INVESTOR NEWSLETTER

HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.

Precious Metals: Don’t Jump in Yet

Issue #407, February 29, 2016

    From mid-January to mid-February, the ETF GDX, a basket of the large miners, shot up 55% on record volume. Gold exploded from $1,080 to $1,263. This action is impressive, but I believe it is still too early to declare the bear market in the precious metals is over and the bull market has resumed.
    To recap: gold bottomed in 1999 at $255. As our stock market tanked, the commodity boom started, interest rates came down and the US Dollar weakened. Gold took off, to peak at $1,910 in September, 2011. Gold then backed off, and in April, 2013, suffered a Hiroshima-like smackdown, dropping from $1,550 to $1,400 in one day.
    Let’s look first at fundamentals, since major moves are always driven by primary forces. Studies have shown that the most important factor in gold prices are interest rates. Gold pays no dividend, and furthermore, costs money to store. If inflation is +2%, and the rate on a CD is +6%, the real interest rate is +4%. Gold is not competitive. But if there is 9% inflation, while the 10-year Treasury is paying only +6%, as was the case in the 70s, real interest rates are -3%, and gold shines because it preserves purchasing power. In January, the precious metals took off almost to the day that they began discussing the possibility of negative interest rates in the US.
    Watch the US Dollar, because gold and the dollar have a strong negative correlation. Gold weakened over the last several years as the dollar took off, and has again showed strength when the dollar failed to break out to new highs. Likewise, the Dollar popped last Friday, and gold was spanked. If the dollar breaks above 100, gold will weaken, whereas if the dollar breaks down below 93, gold will go bonkers.
    Also watch the US stock market, and especially the ratio of the DJIA to gold. At the market peak in May of last year, the DJIA was 18,000 and gold was $1,200. It took 15 oz. of gold to buy the Dow. The current ratio is about 13.75. If this is the start of another bull move in gold, this ratio should fall.
    I am a believer in the importance of both technicals and fundamentals: the latter to determine what to buy or sell, the former to determine when to pull the trigger. Gold must first break above the recent high of $1,265. The next resistance level after that will be $1,350, then the real biggie of $1,550, the level from which it broke down in April, 2013.
    Another important factor is the COT, the Commitment of Traders. Traders are divided into 3 groups by the commodities exchanges: 1) the small speculators (specs) like me, who trade 2, 3 or 4 contracts. 2) The large specs, such as hedge funds, and 3) the commercials (see more below), such as the miners and the large bullion houses, the “big boys”. Not surprisingly, at major turning points, the large specs are invariably wrong and the commercials are right: that’s why they are the “smart money”. At tops, the large specs are caught long, and the commercials have all the short positions. At present, the commercials had built up quite large short positions, mandating caution. 
    In the meantime, there is never a wrong time to buy physical gold. Consider this an insurance policy to financial turmoil and whatever else might happen. “Paper gold”, from GLD to the miners to the futures, are an investment. I just can’t recommend these to you at present.
    Stay tuned. It will be interesting. 
                                                            RMD
    The miners routinely have short positions. It is how they do business, it’s how they sell their product into the market. Say they sell the futures short at $1,250. If gold goes down, they cover their short, keep the gold, and take the profit. If gold goes up, they just deliver the physical gold to satisfy the contract. They can’t lose.
    Nobel Prize winner Robert Shiller called the tech bust in Irrational Exuberance, and the real estate bust in Irrational Exuberance II. Several weeks ago, Barron’s noted that since last August Shiller had sold ½ of the stocks in his retirement account. He further commented that when he buys back in, it will be in Europe and Japan.
    RMD comment: Shiller is a smart guy. His opinion carries a lot of weight with me.
    It’s tax time, so let me remind you of 2 things.
    Should you be audited, have your accountant or lawyer handle all of the communications. Even if you are not under oath, telling a lie to an IRS agent (or any agent of the Federal Government) is perjury. The first question you are always asked is “have you reported all of your income?” If you haven’t, you have committed a felony, and you will be prosecuted. Just ask Martha Stewart, who lied to the FBI.
    Communications with your physician and lawyer are privileged, communications with your accountant are not. You say “I’m an honest man, I have nothing to hide” Don’t be naïve. Say you ask a totally innocent question because you just don’t know—about something that is patently illegal: you don’t want that in writing. 
    I believe Oscar Robinson was the most talented basketball player ever (my med school roommate saw him play at Crispus Attucks HS in Indianapolis). Michael Jordan, and LeBron James were/are certainly good, and my hero Bob Pettit (of the St. Louis—now Atlanta—Hawks) was the best forward ever. But Wilt Chamberlain was the greatest and the most dominant player ever. To be truthful, if Wilt was white, he would be as revered as Babe Ruth.
    The 10 highest scoring games in NBA history:
    1) Wilt Chamberlain   3/2/62     100     36 Field Goals, 28 of 32 Free Throws
    2)  Kobe Bryant       1/22/06     81
    3)  Wilt Chamberlain 12/8/61     78
    4)  Wilt Chamberlain 1/13/62     73
    5)  Wilt Chamberlain 11/16/62     73
    6)  David Thompson   4/9/78       73
    7)  Wilt Chamberlain 11/3/62     72
    8)  Elgin Baylor       11/15/60     71
    9)  David Robinson   4/24/94     71
    10) Wilt Chamberlain 3/10/63     70
    From Kissinger: Volume I by Niall Ferguson: Kissinger commenting (in the late 60s) that a gap had opened in many countries between the requirements for reaching high office and the qualities needed to exercise it.
    “When political leaders are characterized primarily by their quest for power, when they decide to seek office first and search for issues later, then their technique to maintain power is necessarily short-range and manipulative”.
    RMD comment: as applicable in 2016 as it was 50 years ago. In fact, it fits with what a Jew of eastern European descent recently told me: “The campaign vulgarity and nationalistic rhetoric is increasingly disturbing”.
    Over the next 2 weeks I’m going to discuss “The War on Cash” and the “Over-priced Food Presentation Hustle”. 
   

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