Sunday, April 19, 2009
Hold your Gold and accumulate more on weakness
This article is hilarious to me as it spins the truth in MAJOR ways. First, China wants more Gold. Lots more. India always wants more Gold so this isn't really big news. Neither of these countries gives a rat's ass about tackling poverty - they want the IMF's Gold.
Gold being characterized as an "idle asset" on the IMF balance sheet is also funny to me. Perhaps selling China Gold from the IMF is a bribe to allow the U.S. Dollar to retain its death spiral for a few more years (or months)? Any promises made by China will be broken once it obtains the Gold, of course.
Hold your physical Gold and avoid the GLD ETF when seeking portfolio protection (the GLD ETF is a fine vehicle for trading the Gold price if you're brave enough, but offers unacceptable counterparty risk when looking for portfolio insurance). Accumulate more Gold on price weakness (like now). Remember that the final phase in a Gold bull market is the mania phase and the total rise from $250 to $1000/ounce over the past 8 years isn't even close to satisfying a mania requirement! As trust continues to break down, more and more people around the world will be accumulating physical Gold since paper fiat currencies will increasingly be seen as unreliable and overly volatile. The market will choose the global currency it knows will outlast the current chaos: Gold
This is a long-term bull market in Gold that could last 20 years and though we are in the midst of one of the more trying times during the bull, the trend remains up for the long term and this is one of the only vehicles available for accumulating on the long/bullish side that has good fundamentals!