POCKETBOOK:Week ending Aug. 13, 2016

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  • It’s All About the Gold

Our USA Olympic athletes have certainly made all of us proud as the number of gold, silver and bronze medals continue to mount up–currently at 69 and likely to grow. Congrats to all who have completed in their respective competitions and good luck to those still facing challenges.

Looking only at the golden awards, 26 gold medals have been won as of this writing. And while there’s nothing quite like winning the top prize, there’s really not all that much gold in gold.

According to Good.com, “In an effort to cut down on costs, Olympic gold medals are composed of only 1.2 percent of the precious metal…”

Even at that skimpy rate, that same source reports, “A 500g medal made of pure gold would set the International Olympic Committee back a whopping $22,000 per medal. That would leave the committee with a bill of nearly $50 million – just for gold medals. “ That’s based upon a gold price of $1,343 an ounce.

CNN reports that gold medals are made of 494 grams of silver and 6 grams of gold with medal worth about $587.

And this from gold broker and blogger Dillion Gage: “The last time the Olympic Games handed out solid gold medals was a hundred years ago at the 1912 Summer Games in Stockholm, Sweden. Gold medals were in fact only gold for eight years.”

More on gold follows the “Mutual Fund” section below.

  • Market Quick Glance

Here’s something to think about before looking at the year-to-date returns of various indices: What’s up with all the talking heads referring to this market as a “boring bull market”?

Really? Boring? If you are making so much money that it’s boring, there is something very wrong with you, the way you think and your perception of investing. Count yourself fortunate and lucky to be making money. Not every investor does.

But what concerns me is the power of goofy collective thinking and the power it may–or may not–have.

I clearly remember in October of 1987, when Wall Street had a birthday party celebrating its then 5-year old bull market, that the following week Black Monday happened.

I’ve written about that before and while this time it’s no birthday celebration, it seems as though  goofy thinking  by too many can bring around goofy results.

Just sayin.

The indices all performed well last week. Below are the closing YTD performance numbers of four popular US indices as of Friday, August 12, 2016, according to Bloomberg. One-year performance figures are also included.

-Indices:

-Dow Jones +8.43% YTD

  • 1yr Rtn +9.14% (40 bps lower than last week’s +9.56%)

-S&P 500 + 8.33% YTD

  • 1yr Rtn +6.75% ( Down from+7.39%)

NASDAQ +5.13% YTD (A 2 percentage point improvement)

  • 1yr Rtn +4.92%

Russell 2000 +9.26 % YTD

  • 1yr Rtn +3.59%

-Mutual funds

At the close of business on Thursday, August 11, 2016, U.S.Diversified Equity Funds ended the week 1 percentage point stronger than the previous week at 6.33 % YTD on average, according to Lipper.

Instead of looking at the best performers in this categ0ry made up of 8,419 different funds, the three poorest performers were Dedicated Short Bias Funds down -21.57%, Alternative Long/Short Equity Funds at 1.17 % and Specialty Diversified Equity Funds with an average ytd return of 0.78 pecent.

Under the Sector Funds broad umbrella, Precious Metals Equity Funds continue to outperform but not by much: at +129.96 that’s only 70 bps higher that the previous week’s close.

Visit www.allaboutfunds.com for weekly updates to see how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

  • How much gold is there anyway?

Although there is no way of knowing how high—or low—the per ounce price of gold can ever go, one expert knows that no matter  how it’s price, it’s a rare precious metal.

I’ve known Frank Holmes since the 1980s and he’s always been a gold guy.  Holmes is CEO of U.S. Global Investors and what follows is  from a recently published piece titled, “Gold is one of the rarest elements in the world, making up roughly 0.003 parts per million of the earth’s crust.”

From it: “For some perspective, one part per million, when converted into time, is equivalent to one minute in two years. Gold is even rarer than that. If we took all the gold ever mined—all 186,000 tonnes, from the bullion at Fort Knox to India’s bridal jewelry to King Tut’s burial mask—and melted it down to a 20.5 meter-sided cube, it would fit snugly within the confines of an Olympic-size swimming pool.”

That’s it.

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