Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
Syriza Convinces Greece to Commit Suicide, GrExit Beckons, Market Reaction - 6th July 15
Financial and Commodity Markets Become Scary: Crash Point Or Turning Point - 5th July 15
A Revolutionary Pope Calls for Rethinking the Outdated Criteria That Rule the World - 5th July 15
Forget 'Haircut', Instead Syriza Plans Beheading of Greek Bank Depositors, Theft of Deposits - 5th July 15
The Pentagon’s 2015 Strategy For Ruling the World Through Endless War - 5th July 15
United States Celebrates the Disastrous Secession From Great Britain - 5th July 15
Greece Referendum Vote Result Forecast Yes Win, But Depression Will Continue - 5th July 15
The Great Greek Economic Depression - 4th July 15
Happy 4th of July Stock Market Analysis - 4th July 15
The Most Pressing Reason Yet You Want to Avoid Investing in Retail Stocks - 4th July 15
Fed’s Full Normalization and the Stock Market - 3rd July 15
The U.S. Dollar's 2014-2015 Rally: Wave 3 in Action - 3rd July 15
Stock Market Where are we? And where are we Going? - 3rd July 15
Xi’s Anti-Corruption Campaign Is Key to China’s Prospects - 3rd July 15
How the New Iranian Nuclear Deal Will Impact Crude Oil - 3rd July 15
China's Stock Market Rollercoaster Ride Continues - 3rd July 15
Gold Stocks Cheap to Buy but Not for Long - 3rd July 15
Capital Controls and a Bank Holiday in Greece… Here’s How You Can Profit - 3rd July 15
Greece's Varoufakis: I will Resign if there's a 'Yes' Vote - 2nd July 15
The Student Loan Bubble: Gambling with America’s Future - 2nd July 15
Inflation Is Lurking, but This Asset Can Protect You - 2nd July 15
Three Total Wealth Stock Investor Tactics You’ll Need Because Greece Isn’t Over - 2nd July 15
Why This $5.6 Trillion Investor Profit Boom Is Set To Take Off - 2nd July 15
Greek Debt Crisis: "Too late to prepare now" - Video - 2nd July 15
Guaranteed US Dollar Death Dynamics - 2nd July 15
The Greek Stress Test & The Reality Of Incremental Changes - 2nd July 15
Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros! - 2nd July 15
Greece Debt Crisis Trigger for Stock Market Crash or Bull Rally? Video - 1st July 15
Gold Stocks Break Below 2008 Low - 1st July 15
SPX Stock Market Retracement May be Over - 1st July 15
Silver Tunnel Vision 'Experts' - 1st July 15
Gold And Silver - Monthly, Quarterly Ending Analysis - 1st July 15
Europe’s Controlled Demolition - 1st July 15
The End of Dow 18,000; Bailouts No Longer Extended  - 1st July 15
Athens Mayor: Greek Government Should Resign - 1st July 15
China Stocks - This Is What a Bubble Looks Like - 30th June 15
Stocks Plunge on Greece Euro-Zone Financial Armageddon Blackmail - 30th June 15
Greece Crisis Shows Importance of Gold as Europeans Buy Coins and Bars - 30th June 15
Stock Investors Express Route to Profits in the Healthcare Sector - 30th June 15
Beyond the Greek Impasse - 30th June 15
Gold GDXJ : Impulse Move Pending - 30th June 15
Fed Interest Rate Increase Could Be Best Thing to Happen to Gold - 30th June 15
Marc Faber - Greece is Basically Bankrupt - 30th June 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

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

© 2005-2015 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

Biggest Debt Bomb in History