Aug 22 2008
Gold’s ready to run!
Anyone who has dealt with precious metals knows that gold will go up. It’s just about to run again. It took a brief dip into the $700 zone, and now it’s streaking back up. Look at Kitco, which as posted a red warning:
“IMPORTANT NEW NOTICE: Demand for bullion products has increased significantly in recent days. As a result, we may experience delays in supply and possibly delays in processing and shipping by our vaults. We apologize for this inconvenience and will do everything in our power to service your orders as quickly as possible. While cancellation fees still apply, prices are guaranteed regardless of the length of the delay. We remain committed to providing you the best service no matter what market conditions prevail.”
Common folks and hot shot investors alike know that when a dip happens you should stock up. Gold is most likely on its way to $1200 next and probably not in short order. Grab some now for your bank box, and then look at how you can benefit your portfolio.
Some folks have struggled with why they should buy. Let’s go through this logically. First, the mass media will discuss anything to fill airtime and a magazine. If you read this blog or subscribe to several key newsletters, then you know that the general media does not always give cutting edge financial advice. This blog and most good financial newsletters are not emotionally tied to any one investment. Instead, anyone worth their salt is looking at the overall picture. In this case, government mismanagement of our fiscal policies has occurred, doesn’t matter who is to blame, and inflation is about to go higher. Doesn’t matter how high right now, just higher. When that happens, people flee to gold.
Another logical reason: the shortest bull run in precious metals lasted sixteen years. We are in year five or so. So it stands to reason that we are going to see more upward movement in precious metals.
Finally, with our planet overstuffed with people and everyone demanding food, fuel and goods in general, sooner or later commodities are simply going to rise in price to meet that demand. We don’t have enough of anything to go around, and watch for more wars to actually be fought over resources.
So how much should your portfolio be? Well, average financial advisors recommend 10% of your holdings should be in something like precious metals. But right now, some folks like financial advisor Larry Edelson is advising 30% or more. I would never recommend anything higher than 45% in commodities, but I probably have that much myself or more. It just depends on your risk tolerance and what you want.
How about your portfolio? Well, you can add silver (SLV) for hyperspeed. You can add GLD (which follows gold fairly close.) And you can get a whole passel of good commodities by buying Powershares DB Commodity Index Tracking Fund (DBC). It seems not too long ago that I mentioned I sold on a stop loss. Well, it’s turned around, and should do nicely the rest of this year.
Good luck stocking up while it’s on sale!
