Gold and Silver: The Only Attractive Investment Option
Source: Seeking Alpha, Peter Cooper (8/2/09)
". . .with gold and silver it's heads you win and tails you win."
The outlook for the U.S. dollar is not good, even if a new market crash brings a short rally for the greenback. At the very least then hedging the dollar with a currency of fixed supply looks attractive.
That is where gold and silver come into play. You can inflate the money supply but not the gold supply, though, with IMF gold sales, that is exactly what the central banks are going to do.
The IMF does not hold enough gold to cause a serious price change, and might actually stimulate additional demand if this action is perceived as a desperate attempt to depress gold prices because inflation looks inevitable.
This year I have noted that the flat-earth, tree-hugging investors have become a little tired of waiting for gold to go up. But the new kids on the block are the hedge funds like Paulson & Co (who tend to get their timing right, which is why they've made billions), and also the more humble retail investor, represented by the enigmatic publisher Rich Dad or the gold ATM machines in Germany.
To my mind this is setting us up for a price spike, and actually it does not matter where the stock market goes this autumn.
A rising bull market would give rise to fears about inflation from the massive stimulus packages. A nasty little crash in October would send investors scurrying for safe haven assets in a renewed belief that the end of the world is coming. It would also mark a definite top for the bond market and investors would have no other alternative then except precious metals, fearing a surge in inflation from a second bailout package.
So with gold and silver it's heads you win and tails you win. That is why gold and silver look to be the only attractive investments out there now. You might get a chance to buy them a little cheaper before an autumn stock market event, but do not count on it!