Best of the Week
Most Popular
1.China Crash, Greece Collapse, Harbingers of Stock Market Apocalypse Forecast 2015? - Nadeem_Walayat
2.Gold Price Awaiting Outcome of Greece Crisis - Clive_Maund
3.Gold Price Peculiar 6 Month Cycles - Rambus_Chartology
4.Gold Price Just a Little Bit More - Bob_Loukas
5.8 Unprecedented Extremes Indicate a Stock Market Bubble in Trouble - EWI
6.Gold And Silver – Without Either, You Will Be Greeced - Michael_Noonan
7.Lies, Damned Lies and Statistics - James_Quinn
8.China Crash, Greece Crisis Harbingers of Stocks Bear Market? Video - Nadeem_Walayat
9.Gold and Silver Record Shorting - Zeal_LLC
10.Markets Big Deflationary Downwave Quick Reference Guide... - Clive_Maund
Last 5 days
I’m Ready for a Stocks Bear Market. Are You? - 4th Aug 15
Top 6 Myths Driving Oil Prices Down - 4th Aug 15
Is This Stocks Bull Market Summit? - 4th Aug 15
EURUSD: An Ending Diagonal Triangle in Action - 4th Aug 15
Crude Oil Price at Levels Not Seen Since March - 4th Aug 15
The Troika Loan Shark Stock Market Rally  - 4th Aug 15
Plan for Surviving Gold's Summer of Discontent - 4th Aug 15
Stock Market SPX Triggers Sell Signal - 3rd Aug 15
The Gold Investment Demand Juggernaut - 3rd Aug 15
Stock Market Pullback at Hand, Gold About to Rally? - 3rd Aug 15
Gold – The More Hate, The More Bullish We Become - 3rd Aug 15
Stock Market Critical Week Ahead - 3rd Aug 15
Gold Price Near Intermediate Bottom - 3rd Aug 15
Stock Market Reluctant Primary Wave IV? - 2nd Aug 15
Power and Compassion - 2nd Aug 15
Preparing for The Stock Market Crash - Inverse ETFs and Puts Timing... - 2nd Aug 15
Commodity Prices Slump Signals Slow Economic Growth Outlook - 2nd Aug 15
BSE Sensex Stocks Bear Market Underway - 2nd Aug 15
What Microsoft’s Dismal Earnings Report Really Tells You - 2nd Aug 15
Gold And Silver Charts Are The Compelling Story. Fundamentals Do Not Apply - 2nd Aug 15
The Fed Can't Stop the Commodity Bear Market - 1st Aug 15
Meet the Leader Who Turned Google Into a “Buy” - 1st Aug 15
The Greek Coup: Liquidity as a Weapon of Coercion - 1st Aug 15
Gold’s Amazing Resiliency - 31st July 15
Silver – A Century of Prices - 31st July 15
Demand for Gold Bullion Surges – Perth Mint, and U.S. Mint Cannot Meet Demand - 31st July 15
Reasons Why the Greek Crisis Will Only Get Worse - 30th July 15
The War On Cash: Why Now? - 30th July 15
Greece - The IMF Experts Flunk, Again - 30th July 15
Threat Of Cyber Warfare the “Other Reason To Own Physical Gold” Warns Rickards - 30th July 15
The 5 Biggest Myths and Lies about the Middle East - 30th July 15
Greece, Diversion, and the New World Order - 30th July 15
Ibuprofen Warning - The Pain Killer that can Kill You! - 29th July 15
More Ritholtz on Gold, and Another Response - 29th July 15
Crude Oil Price Is Lower – and You’re Richer - 29th July 15
U.S. Home Sales Market Is Dead – This Chart Proves It - 29th July 15
Greece- What Happens When Economists Talk Politics - 29th July 15
The Gold - U.S. House Prices Ratio As A Valuation Indicator - 29th July 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stock Market Bubble in Trouble

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