-- Posted Tuesday, 6 March 2007 | Digg This Article
Well, everyone is concerned again about the gold price.
It went up and then went down. May heaven help us. As if this type of market volatility has never occurred before. But seriously folks what does it mean? Why is gold presently dropping in price?
“Gold was sliding again Monday as investors scrambled to raise cash as stock indices slid across the globe” “The effect on gold was another soft session as stock investors scrambled to find cash for margin calls and so liquidated futures holdings, such as gold. But at least one observer believes that the worst effects could be over for the yellow metal. "Most of the liquidation that needed to get done, has probably been effected," says Dennis Gartman, editor of The Gartman Letter, and he adds that at current levels the price could provide a good opportunity to start layering in buy orders” “Gold now rests right on top of long-term price trend lines, which should provide some steady technical support, so long as oil prices don't come tumbling down, Gartman says.” click
So, why has gold been dropping like a rock this past week? Investors are selling gold to raise cash to pay their debts. In this capacity gold is now acting as a good insurance plan by providing investors excellent liquidity to pay pressing margin calls and other quickening needs. And what further words of advice are the experts giving us concerning gold’s recent slide?
Kenneth J. Gerbino – “Let’s get some facts straight before you make any decisions regarding your gold stock portfolio and your other assets. Most of these facts point toward higher gold and metal prices after the panic selling stops.” “Gold and gold mining shares, despite a short term disappointment will surely recover as the investing world has been given a wake up call on the frailty of paper assets owned by global investors. Base metal stocks will also recover as the China and India growth story has many years to go.” click
And for our long term purposes why does gold remain a necessary long term core holding in our portfolio? The following is a bit of news that I believe acts to remind us well why gold will continue to reign at the top of the financial pyramid.
“Other nations hold a record 52% of it, leaving U.S. economy vulnerable.” “Foreigners now hold a record 52% of the government's $4 trillion in outside debt, up from a quarter in 1995.” “It makes the U.S. economy hostage to the whims of foreign investors, including governments.” “Eventually, they could decide they have better places to invest than in U.S. debt securities.” click
Yes, don’t lose your faith in your gold and silver holdings. Gold is doing a good job holding on and as the markets begin to settle again the precious metals equities will regain their balance and their previous foothold. Don’t give up the ship! Gold Letter emails brief reviews of undervalued gold, silver, uranium and other resource stocks that are under valued and poised to rise.
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David Vaughn
Gold Letter, Inc.
David4054@charter.net
The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. Authors of articles or special reports are sometimes compensated for their services.
© Copyright 2006, Gold Letter Inc.
-- Posted Tuesday, 6 March 2007 | Digg This Article
