Talk of a gold bubble is premature, while fears of a deepening global recession continue to worry investors and the never ending problems in the Eurozone provide cause for concernAuthor: David Levenstein
Posted: Tuesday , 06 Sep 2011
JOHANNESBURG -
Gold prices punched through the $1900 level on Monday after falling by almost $200 an ounce in two days only two weeks ago. This rebound comes in spite of a series of margin hikes for gold futures by the CME, the Hong Kong Mercantile Exchange, the Shanghai Gold Exchange as well as the Thai Exchange. Obviously traders are confident that betting on the long side is worth the risk. I believe the initial leg of this rebound occurred almost as soon as gold hit $1702 an ounce. And, I see prices soon making new record highs in the short-term despite all the regular drivel made by the same usual gold critics. Only two weeks ago they were screaming their regular disparaging remarks and warning people of an impending bubble in the gold market. I wonder what they have to say now.
As investors turn to safe haven assets amidst this turmoil, we can expect to see higher gold prices. In addition, and while I do not recognise them as a safe haven investment, investors will turn to US Treasuries. And, when it comes to currencies we have seen the SNB intervene in the currency market to try and keep a lid on the Swiss Franc.
I have long advocated having at least 10% - 30% of your portfolio in physical precious metals. Since early 2003, this has turned out to be profitable advice, as gold and silver have outperformed most other asset classes. ......
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