Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17
Bitcoin Hits New All-Time High Above $5,000 As Lagarde Concedes Defeat and Jamie Demon Shuts Up - 13th Oct 17
Golden Age for GOLD, Dark Age for the Stock Market - 13th Oct 17
The Struggle for Bolivia Is About to Begin - 13th Oct 17
3 Reasons to Take Your Invoicing Process Mobile - 13th Oct 17
What Happens When Amey Fells All of a Streets Trees (Sheffield Tree Fellings) - Video - 13th Oct 17
Stock Market Charts Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why - 12th Oct 17
Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill - 12th Oct 17
Two Highly Recommended Books from Bob Prechter - 12th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

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

© 2005-2017 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

Catching a Falling Financial Knife