Gold used to be regarded exclusively as an inflation hedge. This made sense when the U.S. had a gold standard but made less sense after the gold confiscation of 1933. It made almost no sense as a philosophy after the closing of the gold window in 1973. Gold today is useful as just another asset class that's not closely correlated to equities; nothing less, nothing more. It helps diversify a portfolio when uncertainty plays havoc with other asset classes.
Meanwhile, Dr. Doom thinks gold is getting too big for its britches (through no fault of its own):
Okay. Who wants to be overweight an asset class that is getting frothy? Not me. My gold has done well but I'll probably begin pulling some money out of it soon even if it's still far from topping out. Why raise cash? Well, it pays to have some laying around in case I find something cheap to buy, like a foreclosed property:
Okay. I'm also betting that worries over rising unemployment will keep home prices depressed for a while. This is good for patient investors like yours truly.
Full disclosure: Long IAU and GDX (with covered calls).
Meanwhile, Dr. Doom thinks gold is getting too big for its britches (through no fault of its own):
Nouriel Roubini said investors are “chasing commodities” and there is a risk of new asset bubbles emerging as stock markets and commodity prices surge amid record-low lending rates.
Okay. Who wants to be overweight an asset class that is getting frothy? Not me. My gold has done well but I'll probably begin pulling some money out of it soon even if it's still far from topping out. Why raise cash? Well, it pays to have some laying around in case I find something cheap to buy, like a foreclosed property:
The outlook for the home market dimmed this week as residential construction and mortgage applications fell and loan delinquencies reached a record.
“I don’t think the housing crisis is over,” Mark Zandi, chief economist with Moody’s Economy.com, said in a telephone interview. “I think we’re going to see another leg down.”
Okay. I'm also betting that worries over rising unemployment will keep home prices depressed for a while. This is good for patient investors like yours truly.
Full disclosure: Long IAU and GDX (with covered calls).
