You say ‘gold’s valuation is also beginning to leave fundamental support levels behind’? Your more optimistic than I am. Fundamental support for gold is probably around the $350 level, where it was just a few years ago. We’ve been in gold’s speculative territory for years.

I’m getting rid of my debts as fast as I humanly can. Even if there is no crash, this period of ‘low’ interest rates is the most excellent opportunity to do so.

That’s a good thing DA. Just yesterday Trevor Manuel gave another warning about a rate hike. The way Tito and Trevor have been going on about household debt lately you’d think they’re going to increase the rate by a whole percentage or something.

It however appears that commodity prices may well climb further, if on nothing more than pure fizz. China has apparently announced plans to stockpile raw materials, and there are new capital expansion projects being announced in the M.E per Moneyweb.

http://www.moneyweb.co.za/education/investment_insights/305463.htm

The problem will come when China yanks the carpet out from under the market, when its demand for raw materials decreases. Of course the problem is that China will probably further push up the peak of the commodity cycle through its stockpiling (if through nothing more than speculators acting on such news) and when it does cut its purchases it could find itself with overpriced raw materials while the market is left with a supply glut. That means we’ll probably see a painful slide downwards after the peak ends – whenever on Earth that is?

But while it’s on the way up we’ll probably see global inflation growing even as the commodity appreciation assists the Rand. Of course, once that falls through and in light of the growing current account deficit, which will definitely pass 5% with the current growth plan, then rates could rise. Again, when it happens is not clear so that may still be some way off.

I saw a few snippets of the Berkshire Hathaway AGM on CNN the other day and heard Warren Buffet saying that “only fools are investing in commodoties now” and that he was “no where near commodities”. He also spoke at lsome lenght on why he thinks this is just an extended commodities bubble that looks to burst any time soon. Do you agree, Wayne?

Also, what do you think this means for Satrix40? From my very limited understanding of the stock market, Satrix40 is basically a commodoties tracker because of all the huge commodity companies in the top 40. As you may guess, I have some money in Satrix40 (I’m a student so its not much) and am becoming convinced that I should sell in the near future.

Satrix40, which tracks the Top40, is about 40% resource based. If I recall correct. Satrix Swix is the Top 40 with reduced resource weghting or Satrix indi25 has no resouce exposure.

I’m a bit wary of Buffets comments at times. His valuation method and strategy of buying certain value creating companies is indeed second to none. However he does apparently have substantial influence on the silver market so I’m not sure where he’s coming from with that statement. Although perhaps his holdings are more long term based.

I am also indeed considering moving funds out of Satrix40 and into the Fini or Indi trackers or something else. A 20% return over a little over 4 months on a market tracker is ferocious – and perhaps a too much. However I’m not certain when to do so at this time. I’m already in Itrix Europe as well.

I do however know that I won’t go into the US capital markets. That includes Google – which ironically seems to be another overpumped share, considering that M$ has begun its assault on Google’s markets, Yahoo may not be far behind and Google doesn’t seem to know of any large value creating projects to use the $10bn cash pile it secured from its listing on.

wayne, re your Satrix40. Selling depends on why you bought. if long term then stay in, if short then take the profits. But selling may see SARS declare you a trader with associated tax charges.

Good point ZaBlogger!