Taking Profits in Gold
By Adrian Ash
January 14, 2008
Too hot, too fast? Is it all
over in gold...?
IMAGINE YOU'D been really smart and put some
cash into gold at the start of last month.
You didn't need perfect foresight to see a good
profit inside six weeks. The trend clearly looked strong, and
your only concern was being late to the party after three years
of rising Gold
Prices.
Now your imaginary self shows a profit of 14% in
terms of the Dollar. Measured in Euros you stand some 13%
higher. Versus the Canadian you're 16% up. Your return in terms
of the British Pound comes a shade under one-fifth in less than
a month and a half...
Too hot, too fast? You were smart in December; now
it's time to get smart again.
So you look at the charts...and you decide to take
a profit in gold.
I mean, it might all be over below $900 per ounce.
The loss of confidence in central bankers could suddenly reverse
this weekend. Sentiment in the credit markets could return like
sub-prime never happened.
Oil quadrupling...grain prices at record
highs...surging demand for copper from China...all the reasons
for today's rising Gold
Price might evaporate with a few choice words from, umm,
well from Ben Bernanke or Hank Paulson.
Hell, even bond prices might come down – driving
yields above the inflation rate and putting a stop to the
destruction of wealth in your mutual and pension funds.
So you choose to get out of gold. It's time to take
profits
Question: Where will you now put your money?
Hmmm...maybe you should switch into stocks? Yes, so
the S&P now stands more than 10% off its top of the summer.
The slump took a while, too...ticking first lower then higher,
but never quite high enough to prevent a grinding loss for
investors.
Kind of sounds like the Tech Crash, but with
finance stocks leading. Things change though. Or rather, they
might do...even if Bernanke's fresh promise of cheap money
failed to stem the slide this week.
What about bonds? Sure, yields are now below
inflation. But everyone loves a regular income – the bond
bull-market proves that, especially if you count the gains in
the shrinking Dollar.
Or you could hold your wealth in real estate.
Prices turn when no one expects it, remember! And no one expects
Florida, California or even London house prices to turn higher
any time soon. Least of all potential home-buyers waiting for
prices to fall further before they dare to get in.
No? Well okay...simply keep your gold profits in
cash then. You know, cash like the Dollar, or the Euro, or
Loonies, or Pounds.
Just decide first which currency you trust to hold
value. Go on – make your choice. Then sell your gold.