Looking at maybe a 3-12 month holding period. Be happy with 20% +return over that time period. Anyone else see gold pulling back just a wee bit over the next year?
Barring small fluctuations, I see gold going further up into next year. Scenario: Economy stabilizes and improves further from here on. Risk aversion further decreases, money moves further into Foreign Assets, USD depreciates, Gold goes up as a hedge for inflation. This to continue till economy is seen TOTALLY out of the woods. And I dont think 2010 will see that. Scenario: Economy fizzles and goes into double dip recession from here. Flight to safety comes back. Money from equity and real estate moves into T-Bills, shorter term T-Notes and Gold. Gold goes up. Also, globally, there is a longer term sentiment that USD will depreciate. Central banks have started to diversify their USD assets into other currencies and Gold. India recently purchased 200 tonnes of Gold from IMF and still its Gold is only 6% of its total reserves. China and Russia are said to be already doing this secretly.
Give it some time before you buy GLL. I don’t buy the stories about foreign countries stock piling on gold. Other commodities yes, gold no. Their not going to load everything into gold because in the end gold is kind of pointless these days. i think it may have been designed this way, to make it so the country with the most amount of gold isn’t the most prosperous. Instead the country with the most of labor and output is. Its hard to explain but imo the only people who buy gold are those who feel the dollar is weakening and those involved in some type of hedging strategy. The hedgers are already hedged, meaning that you can’t expect a huge increase in demand for gold because people are suddenly going to start hedging. The pessimists already bought into gold this year. True they may increase their position, but most won’t put all eggs in one basket. I don’t see foreign countries increasing the demand for reasons stated up. Basically if India buys more gold, then what? They use all the gold to buy commodities ? Who would do that Russia, China? They are already buying lots of gold and commodities. Europe? Why do they need gold when they have a fiat currency? My opinion is also bias because I can’t stand mustard colored metals.
I think gold is a good place to be. I think it’s pretty clear the US govt will do most anything it takes to revive the economy and lower unemployment. The majority of these plans will lead to devaluing the dollar. Gold goes up by default.