Gold feels a lot like Apple

The important thing about the yellow metal is not where it's been but where it's going.

By Jim Cramer Oct 26, 2010 8:42AM

jim cramerBy Jim Cramer, TheStreet

 

"I missed it." Those three words follow any mention of gold I have made within the past year. And the tone has changed from regret to anger at my bringing it up.

 

Yet when I look at what people are willing to pay for TIPs, Treasuries with inflation protection, I think gold should not only be higher, it should be much higher.

 

Think about it: The only reason you would go for a negative yield on a Treasury is if you believed not only that inflation is right around the corner but that it will be a rager. If that's the case, the notion that you "missed" gold at $1,330 is pretty fanciful.

 

I usually tell people to divide a stock's price by 10 when they are trying to deal with a Google (GOOG) or an Apple (AAPL) or a Chipotle(CMG) or a Netflix(NFLX). I say that they need to think about it in a lower, more manageable dollar amount.

Fortunately, we have the SPDR Gold Shares(GLD) fund, which is a divide-by-10 situation -- each share represents 1/10th of an ounce of gold. Here's a stock that, four months ago, was at $123. Now it is at $133. There are so many stocks that have moved up a similar amount that people don't feel they have missed. So how can people dig in their heels on gold and let it pass?

 

Or how about year over year? GLD is up $24. Again, think of what Netflix or Apple or Chipotle has done. Think of what IBM(IBM) has done, a very similar percentage move. Or Caterpillar(CAT) or Cummins(CMI). Post continues after video:

It's all in the mind of the buyer, who recalls gold being at a different price for so long. But the circumstances have changed. Radically. There is much less gold to find. There is much more demand from emerging countries. There's an unbelievable amount of paper currency being printed and no sign of it easing.

 

Gold feels like Apple at $133. Maybe not as good as Apple. But I would never have said I "missed" Apple at $133 in May 2009, even if it traded at $80 in March 2009.

 

I care about where it is going, not where it has been. And judging by this TIPs auction, gold and Apple feel an awful lot alike.

 

At the time of publication, Cramer was long Apple and Cummins.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Click here to follow Cramer's trades for his Charitable Trust.

 

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2Comments
Oct 26, 2010 9:33PM
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Why is this site calling our posts "spam"??? I would add to GLD on any weakness.  GLD is only 1% of my portfolio right now , but I need to make it at least 10%.  It's really hard for me to buy $200k of GLD, but what Cramer and many others say is true.  US Dollar being debased by Feds, massive, insulting federal deficits, world economic power shifting to the BRICS and away from the US forever.  Vampire bat
Oct 26, 2010 12:36PM
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I ask.... What lesson did you learn from King Midas and his golden touch?

 

Be careful.. Gold may roll over and bite you very hard..

 

I would wait and see do not buy now.

 

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