Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Buy the Dips in Gold (NYSE: GLD)

Commodities / Gold and Silver 2012 Mar 02, 2012 - 08:32 AM GMT

By: Money_Morning

Commodities

Best Financial Markets Analysis ArticleJack Barnes writes: SPDR Gold Trust (NYSE: GLD) experienced a major pullback on Leap Day this week, dropping almost exactly 100 points on the day.

This happened while the European Central Bank (ECB) offered its second tranche of three-year Long Term Recapitalization Operations (LTRO).


The sell-off in gold on Wednesday is a related sign that liquidity is currently in demand.

But you only have to look at gold's big move up since the start of 2012 to know this stage of the move was unsustainable short-term.

It's why investors shouldn't be surprised by the pullback, and should use this latest move down to increase their long-term exposure to gold.

This dip is a buying event and nothing more.

The pullback in the price of gold also hit equities along with bonds and some other commodities.

Even so, it appears that the ECB has provided enough liquidity to fight off the near-term fears.

Once these funds begin to work their way through the system, I believe they will be bullish for commodity prices.

Over time, banks will eventually put that capital to work, with an eye toward generating a positive rate of return on it. One of those avenues will undoubtedly be gold.

Here's why, along with a bit of background.

I'm Still Bullish on Gold

The global economy is not easy to beat on a consistent basis. It's why professional money managers privately share economic research and theories.

I'm blessed with an inbox full of these items and speak with many of these same money managers on a regular basis.

One of them is a friend we'll call "Unsure."

When he isn't living in some exotic locale, he can be found in Brazil. Having spent a significant time in Europe and in the U.S., he is worldly to say the least.

"Unsure" is the definition of a globally aware investor and yet, in my opinion, he has a weakness: He hates the U.S. dollar long-term.

In fact, we regularly have mocking sessions in private, as he vents about the latest lunacy infecting the global reserve currency.

"Unsure" also jokingly prides himself on being a horrible market timer, which means he probably has been burned trying to time certain markets recently.

So here's the reason for the backstory....

"Unsure" was pondering buying dollars and lowering his gold exposure - even though gold is normally one of his favorite investments.

So when he's looking to switch his bias, even only for the near-term, I pay attention.

However, I hope he doesn't take this story about advice on gold wrong. (I'm sure he'll read it and we can have another jovial chat.)

What "Unsure's" fear of gold tells me is that this move isn't over.

While the dollar had a huge one-day move up, I expect gold to continue outshining its fiat brother.
So let's fade his exit and buy this dip.

Going Long the SPDR Gold Trust (NYSE: GLD)

On the current pullback, it's time to buy SPDR Gold Trust (**) - The drop has been too fast, hard and focused not to be a raid.

You see, SPDR Gold Trust:

•Prices in electronic equity ounces
•Has a lower exposure cost than physical gold
•Offers market liquidity
One of the reasons I like GLD here is it gives us instant access to gold equivalent prices.

It represents 1/10 of one ounce of gold per share, or 10 shares per ounce. For investors who want exposure to gold but don't have enough funds to buy and sell in physical markets, buying shares of GLD allows exposure to physical gold's movements.

The ETF shares give investors a way to quickly trade in and out of physical gold because there's no way a physical-only investor can catch market moves the way those owning shares of GLD can.

The SPDR Gold Trust shares are brought to market by the State Street Global Advisors fund family.
The ETF was launched on November 18, 2004 and has over $71 billion dollars in assets under management.

Action to Take: Buy SPDR Gold Trust (NYSE: GLD). (**)
The hard, sharp pullback in gold prices in one day has left some people wondering if the run in gold is done.
I don't believe so. I am still bullish on gold.
Gold prices have and should continue to climb to new highs over the medium term as central bankers, specifically the ECB's LTRO, flood the world with new liquidity measures.
While these events might cause a short-term pull back in prices, we should continue to use these dips to dollar cost average into our longer-term holdings.

(**) Special Note of Disclosure: Jack Barnes has no interest in SPDR Gold Trust (NYSE: GLD).

Source http://moneymorning.com/2012/03/02/buy-sell-or-hold-buy-the-dips-in-gold-nyse-gld/

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in