The Goldwatcher: Demystifying Gold Investing [Hardcover]

John Katz (Author), Frank Holmes (Author), Marc Faber (Foreword)

Book Description

Publication Date: July 8, 2008

Why did the price of gold hit record highs in 2008? Take a look at the headlines - government bailouts of failed banks, mortgage and credit crises, rising inflation, slowing growth and global insecurity. In order to protect themselves from treacherous financial markets and depreciated paper currencies investors worldwide are turning to gold.

Gold has long been used as money and as a store of wealth, but what's the source of its value? Why does that value sometimes rise so high and at other times fall so low? And what do we know about gold's complex and often tumultuous past that may yield clues about how it may behave in the future?

Gold is a side show on a world financial stage dominated by the dollar. The tail can't wag the dog -gold prices are affected by changes in prospects for the dollar and not vice versa. With uncertain outcomes for the American and global economies, gold's stateless money franchise makes this book compelling reading.

"John Katz is a clear eyed independent strategist and analyst with an extraordinary ability to get to grips with subjects ranging from biotechnology via alternative energy to commodities and gold. Uniquely for a commentator on gold he has no dogmas. To assess the risks and rewards that come with owning gold he introduces opinions from an impressive range of commentators, examines different scenarios that may play out on the world economic stage and highlights situations when owning gold makes sense and when it doesn't. To complete the picture Frank Holmes's contribution to The Goldwatcher explains the risks and rewards. The Goldwatcher has been written for 21st century investors. It will be an indispensable resource for responsible people from institutional money managers to private savers - whether the gold price moves up, down, or sideways."
—Patrick H. Spencer, Managing Director, Head of Institutional Sales, Robert W. Baird Limited, London

"Frank Holmes's stellar track record as a resource portfolio manager is a clear reflection of his understanding of the business, the markets and the factors that affect them. His success is as much about unearthing value as it is about creating an investment process that is religiously followed. If you want to succeed in your resource investment,this book is a must. It's all the more enjoyable because the writing style is easy-going,clear and understandable."
—Pierre Lassonde, Former chairman, World Gold Council, and past president, Newmont Mining Corp

This book is also supported by The Goldwatcher blog - http://wwwthegoldwatcher.com, which addresses news and developments affecting gold and the dollar, updates statistical information and links with sources for data and commentary.

Editorial Reviews

Review

"In these troubled times, the insights could be invaluable." (City A.M. Thursday 26 June 2008)

"Katz & Holmes take over where Peter L. Bernstein's modern classic The Power of Gold left off… particularly timely." (Spectator Business July 2008)

From the Inside Flap

In this remarkably clear and accessible book, authors John Katz and Frank Holmes explain everything the independent investor needs to know in order to invest like a professional.

Presented in two parts, Part I demystifies the gold price by tracing its history and placing it in the current context of twenty-first century economic realities, explaining when to buy gold and when gold prices do or don't make sense. As an unbiased independent analyst John Katz is neither a gold bull nor a bear - rather, he offers an insightful analysis of gold's role in an evolving global economy. In doing that, he pulls together and sometimes pulls apart the arguments and assessments of leading commentators from money management, investment banking, academia, and the financial media.

Part II gives the reader a rare glimpse into the intricate workings of a leading gold investor. Frank Holmes is one of the world's most authoritative voices on the yellow metal, and an award winning fund manager. By opening a window into his company, U.S. Global Investors, Holmes provides an insider's vantage point to examine the many opportunities and challenges facing gold investors. Some of the nuggets from Holmes include:

• Here comes China - both as a gold consumer and gold producer
• Watch oil and the dollar to understand gold as an investment
• Bullion as a value investment and gold equities as a growth investment
• Return on capital as the best yardstick to use when measuring a gold-mining stock
• Think of gold as portfolio insurance, not as a way to get rich

See all Editorial Reviews

Product Details

• Hardcover: 352 pages
• Publisher: Wiley; 1 edition (July 8, 2008)
• Language: English
• ISBN-10: 0470724269
• ISBN-13: 978-0470724262
• Product Dimensions: 6.8 x 1 x 9.9 inches
• Shipping Weight: 1.8 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #217,011 in Books (See Top 100 in Books)
  • #72 in Books > Business & Investing > Investing > Commodities

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Most Helpful Customer Reviews

11 of 12 people found the following review helpful

4.0 out of 5 stars All You Want to Know (and Plenty You Don't) About Gold July 22, 2009

By Mercenary Trader

Format:Hardcover|Amazon Verified Purchase

"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.

14 of 16 people found the following review helpful

5.0 out of 5 stars Gold in the Current Economic Environment September 3, 2008

By Ian R. Campbell

Format:Hardcover

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.

11 of 13 people found the following review helpful

5.0 out of 5 stars From Doug Casey's "Big Gold" Newsletter November 26, 2008

By BigHornsFan

Format:Hardcover

"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