Stay In Gold
Source: The Daily Reckoning (2/12/09)
"In Washington a deal is close on the stimulus. Stocks were up. But gold was up more. . ."
Brokers and talking heads are talking up gold. That's worrisome in the short-term. It means you could see a big spike up in gold back to $1,000. And then? Profit taking. That doesn't change our long-term outlook at all. Just keep in mind that any time you get this much momentum, it's bound to exhaust itself. You'll get a shakeout, a consolidation, and, if we're right, a resumption of the move higher.
Stay in gold. Our favorite yellow metal will prove to be one of the safest bets for a store of wealth in this topsy-turvy economy. Yesterday, while Wall Street was sinking on the news of Geithner's stimulus plan, investors flocked to their safe haven: gold. After dipping a bit on Monday, gold for April delivery jumped $21.40 to settle at $914.20 an ounce.
As we've pointed out many times, during a period of economic turmoil, investors increasingly turn to gold as a buffer against market volatility. We don't know about you, but we have the sneaking suspicion that this 'volatility' in the markets is here to stay, at least in the foreseeable future. And in turn, gold will have a lot higher to go.