Time to buy gold?
With stock futures shaky, the economic troubles and expectations for a rough earnings season ahead, is it the time to be heavily in gold?
Answers
178 points
KenTrester answered 11 months ago …
The 50-day moving averages of almost all asset classes remain below their 200-day moving averages, and in most cases far below. That is as bearish a chart trend as you can get. The lone major exception is gold, which is on the verge of giving an all-in buy signal.
Of course, gold has long been used as a contrarian trade to stocks. The most popular gold trade is a bet on inflationary consequences from the massive stimulus attempts being undertaken worldwide. Gold is also thought of as a bet on doomsday scenarios and could be garnering some interest from that angle, but we believe inflation is more likely in our future than doomsday.
But inflation is still down the road a ways. The near-term economic future points toward continuing deflationary pressures as U.S. consumers reign in spending and asset prices continue to fall. The best market indicator of this trend is oil, which remains mired in a bear market despite problems brewing in many oil-producing countries.
At best, stocks will remain in a trading range bounded roughly by Dow 9,000 on the upside and Dow 8,200 on the downside. If a downside breakout occurs, the Dow will head toward the 7,500 low it made in November. That will be an important test, and a successful test there could set the stage for a more enduring rally.
3963 points
MNSL answered 11 months ago …
Some including a top global investor say it is time to sell gold. They think gold is overvalued now when compare with other assets. Their argument is other commodity and assets have come down by more than 50%.
I think some assets prices will come down dramatically from 2nd half of 2009.
In addition they expect near term rebound in the market and on market weakness they prefer to buy some sectors, few commodities and some companies to take advantage in the market rally. They also prefer some long term investment in neglected and next rotating sectors.
I agree with them.
216 points
jrj90620 answered 10 months ago …
The U.S. federal govt can issue unlimited supplies of currency to bail out anyone and everyone.Time will prove that there is no free lunch.If the route to prosperity was for govts to just make currency this might work.Otherwise,just check every country,thoughout history that tried to print it's way out of financial problems.The result is always the same.A decline in the value of that currency relative to real money,gold.It amazes me that most people seem to believe that the U.S. has some kind of magic that will insulate it from reality and what has happened to other bankrupt govts thoughout history.The current,"flight to safety" buying of the debt of a bankrupt U.S. govt is crazy.Eventually,there will be a real "flight to safety"resulting in huge demand for gold. This will cause gold to soar to unimaginable heights relative to cheap fiat currencies worldwide.You don't need to put all your assets in gold to take advantage.Just buy a few cheap gold stocks that are way down from their previous highs.Make sure that they have the financial ability to survive the short term.
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