Customer Reviews

The Goldwatcher: Demystifying Gold Investing

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Having spent significant time in the past three years studying and thinking about gold as an investment, I can say unequivocally that the first 10 Chapters of this book are the best 'balanced and unbiased' summary that I have come across of the things I consider topically relevant. I consider it 'must reading' and recommend it to anyone interested in gold and the gold market.

"The Goldwatcher" is a big, heavy slab of a book, with lots and lots of data points and charts and tables. In short, "GoldWatcher" is a great reference guide. This book could serve up nearly everything you want to know (and maybe a good chunk of stuff you don't) about gold.

The fact that the book makes a great reference guide is both a blessing and a curse. One normally does not read a reference guide straight through, for instance, and that applies to this book in spades. Some sections are heavy enough going to be useful as a late-night cure for insomnia.

In my opinion the second half of the book is actually better than the first. The first half, "Demystifying the Gold Price," is authored by John Katz. The second half, "Gold Investing Strategies," is authored by Frank Holmes.

Frank Holmes is the CEO and Chief Investment Officer for US Global Investors, a San Antonio, Texas based family of mutual funds. I first met Holmes backstage when we both presented at the New Orleans Investment Conference in 2006. He is very sharp, and it shows in his half of the book.

Holmes starts by going through the details of exactly how his firm gets an edge investing in gold stocks. Early on he gives the opinion that "bullion is for value investors and gold stocks are for growth investors," clearly placing his firm in the growth camp.

In the chapter "Investing in Gold Equities," Holmes lays out the difference between "majors," "intermediates" and "juniors," and lays out the details for investing in each. In the following chapter, "Gold Mining Opportunities and Threats," Holmes digs into the five "key trends" for the gold mining industry: geography, current and future production, exploration spending, industry consolidation, and cost pressures.

Holmes also covers a range of important topics like seasonality, precious metals volatility, and gold stock mutual funds (besides his own of course).

The first part of the book, written by John Katz, offers a much more wide-ranging, top-down type view of the factors driving gold. Katz begins by asking "Why Gold?" and goes on to discuss the yellow metal's role as "stateless money" and a store of value in time of crisis.

Katz also covers the topics of supply and demand, the present state of the gold mining industry, the rise and fall of the gold standard, the economic consequences of 9/11 and the George W. Bush presidency, and more.

Some of the numbers felt a little off for a book published in 2008. To the best of my knowledge they are all correct, though, except for one glaring typo: I nearly fell out of my chair upon reading on page 10 that the Dow "closed above 23,000" at the end of 2007. (No doubt he meant 13,000, a slight difference!)

Katz also makes reference to another excellent book: "The Power of Gold: The History of an Obsession" by Peter Bernstein. "The Power of Gold" is much more of a grand, sweeping historical tale... a wonderful walk through the pages of precious metals history, all the way back to the Lydian Kings of Old.

While Holmes and Katz are clearly not writers by trade, Bernstein most definitely is -- which makes Bernstein's offering far less useful as a reference guide, but far more pleasurable as a general read.

Another difference between the two books is that, while Katz and Holmes are clearly big fans of gold, the late Peter Bernstein is not - or at least he wasn't at the time "The Power of Gold" was first published back in 2001. At the end of Bernstein's book, spanning all the ages in which gold and silver have functioned as money, Bernstein finishes by noting that "the most striking feature of this long history is that gold led most of the protagonists of the drama into the ditch."

But "Bernstein changed tack," John Katz reports, after the events of September 11th 2001. A few years later, in 2005, Bernstein went on record in support of gold as a hedge against hyperinflation. (Something that is very much on investors' minds in mid-2009.)

So, really, there are two great books to consider here.

If you want a detailed reference guide with all the possible angles one could think of on investing in gold and gold stocks, complete with hundreds of charts and data points, then "The GoldWatcher" could be a great buy.

If, on the other hand, you're more interested in the fascinating tale of gold as money, stretched out over the great arc of history from ancient times to the turn of the new millennium, then Bernstein's "Power of Gold" might be a better choice for you.

"There is no doubt about why the mythical treasure at the end of the rainbow is always a pot of gold and never a few truckloads of copper, zinc, coffee or anything else. Gold is the great consolidator of value"

So begins the well-written, highly informative and useful new book "The Goldwatcher: Demystifying Gold Investing" by John Katz and Frank Holmes (foreword by Dr. Marc Faber). Part One is the work of John Katz, who is neither a gold bull nor a bear but an independent analyst. He provides a thoughtful examination of gold's history and of the metal's role in the turbulent 21st century. In Part Two, Frank Holmes offers a tour of the inner workings of U.S. Global Investors, including how they go about picking stocks and what companies he believes have the greatest potential in the current bull market.

By the time you finish, you'll be among the best-informed gold investors on the planet. It's that good.
The Goldwatcher: Demystifying Gold Investing

This book offers invaluable insight into Gold as an asset class. Its useful both for investors and investment advisors. It details the history of gold, its role in the Great depression in 1929 and various other eye opening facts. Also the book covers gold mining companies. The best part is that the authors give an independent view of this asset class and leave the judgement to the reader whether to be bullish or bearish about this precious metal.

"Katz and Holmes take over where Peter L. Bernstein's modern classic "The Power of Gold--the History of an Obsession" left off. Bernstein had the misfortune of having his biography of the so-called `barbarous relic' (a Keynes coinage now used more often ironically than not) first published in 2000 when the gold price was becalmed below $300. The price has more than tripled since then, just as the macro-economic and financial environment has gravely deteriorated. ... Permeating The Goldwatcher, in fact, is a sense of the fundamental scarcity of commodities (the impact of the demand shock from `Chindia' and the necessity of global economic rebalancing are well covered) compared to essentially unlimited financial products, most notably money itself, which can be conjured into being at the stroke of a computer keyboard. Which is surely the point behind the current mortgage and banking crisis: we have collectively lost all sense of the `sound money' that gold still represents. The credit party was undoubtedly a blast. The hangover is likely to be equally terrific. This book is particularly timely."

Tim Price

Meticulously researched with loads of historical references, charts and up-to-date industry analyses. The Goldwatcher is well balanced, and readers are challenged to understand the various forces influencing the price of gold. It isn't enough to say gold is a good investment. The authors encourage a balanced approach. Ideas like the subtlety between investing in a pure gold producing company and a gold-copper company, ETF, currency correlations and gold seasonality are very insightful. Not having an economic or investment background the book was a hard read for me. It should be a good reference as I learn more about gold investing.

A few typos: P.45, Table 3.3 are for Countries & Organisations owning over 100 tonnes - not "1000". Also the same table, the total tonnage doesn't add up to 24,305.8 but only 6,384.5 tonnes. P.85, it should be "But it is most unusual for the (creditor) to provide collateral to the (debtor)", not the other way round. P.99, in reference to the Vietnam war, "The original budget projection in 1966....." - not 1996.

This is the single best book on Gold investing so far, but the only issue is that it does need to be updated.(Are you listening Frank?) The books focus is that Gold is a geopolitical commodity and in essence is a stateless currency with no counter-party risk. Gold is used by Central Banks because governments are over indebted and do print money and have "informal" currency pegs even though currencies do float against one another but if they go too high or too low the Central bank will intervene in the markets. Two other books that are really good on this subject are Currency Wars by Jim Rickards and the other is Dollar Crisis by Richard Duncan, but they are more broad and far less narrow in scope and dont focus on Gold but focus on the US dollar instead.
Gold is no ones liability and if the amount of Gold was measured against the amount of paper currency, credit and debt in the world Gold would be far higher then it is now. Gold isnt the bubble, debt and paper money is since governments can't print Gold as hedgefund gurus Kyle Bass and Ben Davies would say. Dont listen to the media but learn about the facts and this book has many and a blog too.

Gold continues to cast its spell on investors, particularly in the wake of difficult and uncertain economic times. Gold market analysts John Katz and Frank Holmes seek to shed some light on this "stateless money," mining its history and technical details in order to guide curious potential investors. Published in 2008, their book predates the subsequent global financial crisis and gyrations in gold prices, but it is still spot-on with many of its predictions and comments. Though pockmarked with grammatical errors and a bit out of date, it offers good information on websites and references, as well as reams of charts and graphs that readers may find useful. getAbstract suggests this book to those wondering whether to take the gold plunge, particularly those who want an expert perspective on this valuable but volatile precious metal.

THIS BOOK WAS WRITTEN IN 2006 AND COPYRIGHTED IN 2008. IT IS TOO OLD TO KEEP UP WITH THE CURRENT GOLD MARKET, WHICH MOVES TOO FAST.
THE INFORMATION IS ALSO NOT NECESSARY FOR ANYONE FOLLOWING THE PRECIOUS METALS MARKET.

THE GOLDWATCHER
(Demystifying Gold Investing)
Pub John Wiley & Sons Ltd.

"Since I started reading THE GOLDWATCHER I've made about £45,000 out of gold (before tax)so thanks to the authors John Katz and Frank Holmes.

So I recommend it as a good investment".