Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Nothing Sweet About Gold

Commodities / Gold & Silver Jun 12, 2008 - 11:39 AM GMT

By: Nadeem_Walayat

Commodities Best Financial Markets Analysis ArticleOne thing that I have noticed whenever I publish an article on gold that concludes with a bearish outlook, it tends to be followed by an healthy email response usually informing me that I am completely wrong and that gold is destined to travel to the moon. No other market analysis generates such a response. This clearly signals to me that many, many investors are over weighted in the gold and precious metals which in itself is a warning sign of an imminent peak.


One of the keys to successfully investment is not being overweight in a particular stock, sector or commodity group.

Gold itself is not the best performing precious metal, and far from the best performing commodity. So it is puzzling why so many hitch their wagons to an under performing asset? When you have the likes of crude oil that has consistently proved itself to be a more favourable commodity to be invested in for the long-run with so many more liquid vehicles from oil production, exploration and servicing oil companies, funds and ETF's and a multitude of vehicles giving leverage to the actual crude oil price.

Many Investors Definitely Need to Guard Themselves Against Becoming Seduced by Gold!

Yes have gold exposure, but please keep your exposure in perspective since the objective is to allocate ones portfolio for long-term gains whilst controlling risk, thus investors should aim to invest in the strongest sectors, and within the strong sectors in the strongest stocks or funds or commodities. Rather than to become emotionally attached to an under performing component of the precious metals group.

Personally, I would not, and have not committed more than 2% of my stocks portfolio to gold and silver. And the maximum allowable to any group such as commodities is limited to 15%. This is to ensure that emotional attachment does not come into play when analysing the market, i.e. if you have for say 20% of your portfolio in gold, then you will have a tendency to be bias in favour of good news on gold, and have a tendency to ignore bad news, much as tek stock investors experienced during the great dot com boom and subsequent bust, that saw over 90% of wealth evaporate, whilst those with exposure of less than 15% at the dot com peak perhaps knew when to get out and rotate some of their holdings into other sectors much earlier during the bear market that followed, and even if worst came to the worst and they hung on to the bitter end, their portfolio's will not have been devastated by a loss of more than 90% that many have experienced.

So the key to successful long-term investing is to ensure appropriate portfolio diversification across asset classes, which means not to have the degree of exposure where emotions start to play a role in the investment decision process.

As to where gold is headed, my last analysis of 20th April still stands, which is for gold to exhibit a volatile down trend towards the target zone of $800 to $830.

By Nadeem Walayat

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

narco
15 Jun 08, 19:15
Gold

I feel you are misrepresenting the role of having gold and silver in your portfolio.

It doesn't matter whether gold goes up or down $50 here or there in the next month or two. What matters is that you hold a portion (5% to 10%) of wealth in physical gold or silver, especially now during these financially turbulent times.

Gold is a base portfolio hedge that should be kept at home in a safe place. No certificates, no ETFs, no paper promises just the ACTUAL metal itself. You cannot do this with any other commodity and this is what makes it a such a great diversifier.

If the international financial / monetary system is facing a 1930's depression or 1970's inflationary event then this is merely a matter of being prudent.


Nadeem_Walayat
19 Jun 08, 05:58
Gold Holding

What if gold fell another $300 or 33% ?


narco
12 Jul 08, 07:57
Gold Thoughts?

Hi Nadeem

What are your current thoughts on gold at this moment given the current economic climate?

If Freddie and Fannie Mae are backstopped by the US government, what would this mean for the currency and also for the credit worthiness of the USA?

Surely the best thing to posess during these uncertain times is physical gold. I think you may have misled investors a little bit here when they should have been accumulating some gold and silver during the last correction.


Nadeem_Walayat
13 Jul 08, 13:50
Gold Portfolio Weighting

Hi

My opinion is in favour of portfolio diversification so as to ensure that one is not overcommitted to an asset class which results in emotions guiding decisions rather than technicals.

Those with a heavy exposure to any market will not be able to detach themselves when it is time to do so, be it gold or teck stocks in the latter stages of the bull market.

and 1 months activity is not a long-term investment.

Yes by all means buy and hold gold, but only to the point where it does not blinker your decision making process, in my humble opinion.


David
17 Jul 08, 10:38
Gold Sites

Better analysis on the outlook for gold at gold sites such as goldseek.com

Dave.


Nadeem_Walayat
17 Jul 08, 11:54
One trick pony Gold Sites.

Hi David

The problem with sites that focus on one sector of the markets is that they have a vested interest in for example the maintenance of gold bull trend, therefore will have a bias in that favour by ignoring analysis that does not support the case for gold prices to go higher.

That is why they missed the peak at 1030 and the subsquent decline to $850.

Whilst an unbias site, will give analysis prospectives from BOTH sides therefore giving the reader a fair representation of the actual likely trend without bias or favour for a particular market direction other than which is reflected in the accumulative analysis of posted research / forecasts.

Regards

NW.


narco
17 Jul 08, 12:00
Gold & silver true alternatives to fiat currencies

The point I was trying to say was that gold and silver are the only true alternatives (except maybe real estate)to paper asset classes denominated in fiat currencies.

You can hold the wealth itself in your own hands.

It is important that people keep a minimum of 5% and maybe a more at this time. Who knows how reckless central banks will be with their currencies now that everyone needs a bail out?

Think of it more as an insurance policy rather than a performance asset.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules