Principles of the Stock Market » Gold Update: 12/20/2007
Gold Update: 12/20/2007
GOLD  Gold has built an isosceles or sideways triangle since its November 8th bull market peak. at $833.59.  This in the larger context of a bull market which started back in 2001.  And this gold bull market in the even larger context of a commodity bull market which started back in 1999.  Jim Rogers, who called the start of the commodity bull market and who takes the long term approach to investing in which he’s made very few errors in predicting, says the commodity bull market will run for another 10 years or more.  And that various commodities at different times in this (normal) 18 year commodity bull market will have their time in the spotlight.  Like industrial metals have done well in the past few years as China spurred new global demand by becoming the world’s “factory floor.”  At this point, Rogers says its foodstuffs or “soft” agricultural commodities time to shine, be the leaders.  I agree.  The larger, new middle class built up in China, India, Brazil, Eastern Europe and elsewhere now has a bit more money to spend and thus are improving their diets, thus eating more meat.  Which in turn generates more demand for other agricultural commodities to feed the additionally-needed beef.  Schwartz View:  Gold (and oil) are the outliers which don’t fit nicely into categories like metals versus agriculturals.  Both oil and gold have other roles to play besides just being other commodities.  Gold is known as an inflation hedge; oil is needed for power generation.  Bottom line gold has consolidated for a month and a half now in the midst of an uptrend.  And the fundamentals, a still resilient economy along with rising inflation favors gold.  I would still hold some gold here.  My suggestion is to hold a position in streetTracks Gold Trust, symbol GLD.  Disclaimer:  I follow my own suggestions and thus hold a little GLD in my trading account.


Posted 12-20-2007 8:38 AM by Richard Schwartz
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