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-- Posted Sunday, 4 January 2009 | Digg This Article | | Source: GoldSeek.com
You have to imagine the hedge fund professionals playing it cool yesterday while the Dow rallied by 2.9 per cent on the first day of the New Year. Only they know the size of redemptions that they need to fulfill after the rush to the exit at the end of last year. So allowing the optimists who drank too much at New Year to buy a few stocks and improve the liquidation prospects is just a good trading strategy. The numbers still look awful and the Dow is way too high given the outlook for losses. But is this rally a few days or a few months, that is harder to tell. Cash still kingIndeed, the sensible investor has sold and is hoarding cash. Indeed, that is a problem for the Fed and its stimulus plans. Until people can see a real upside they are likely to both hold onto cash and take cheap money and sit on it, ditto the banks. If you are looking for green shoots of recovery there are few in sight. Lower commodity prices, particularly oil, and some improvement to the credit markets provides a glimmer of hope but the downturn in the global trade cycle looks awesome for 2009. Besides Middle East instability and the Gaza War could send oil prices back up. Sucker’s rallyNo I am afraid any rally in stock prices will prove a sucker’s rally - and it will not be long before something happens to trigger the inevitable sell-off by the hedge funds for their redemptions, and once that starts it will be quite a big down leg. Will that also be bad for gold and silver? That was the lesson of 2008 but confidence in the dollar is beginning to wane with the size of bailouts and stimulus packages and the implications for the bond market. It would be unwise to place too much faith in the greenback, and better to at least hedge with precious metals. The rush from the dollar to gold could be very quick if history is any guide.
-- Posted Sunday, 4 January 2009 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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New Year’s Rally for Suckers, Hold Onto Gold!
