wearmanyhats

Mary Anne Aden, co-editor of the Aden Forcast spent an interview for the Money Show touting holding gold as an investment that has been quite stable since 2001. What a change from the MoneyShow of 2004, when many financial advisors scorned the gold metal, and called the rise in the value of gold a mere fluke.  Aden, however, was enthusiastic about the yellow metal’s returns in the past seven years  She pointed to a 17% average gain in yield over that time period.  She strongly urged people to invest in gold,  explaining tht stocks might drop into the 5000 zone. 

Not everyone shared this view:.  Howard Gold, editor of The Moneyshow.com pointed out that gold had been ice cold recently, as had so many other commodities.  He disagreed with people who share Aden’s view.  For him, he feels that overseas holds the best promise in growth, and that the growth of commodities are done.  He believes that since China holds quite a bit of cash, they can pump all kinds of money into stimulating the economy in China, and that other nations will provide them with enough growth to make up for the loss from the West.

No doubt that international stocks will do well.  However, there are pitfalls with international stocks that investors should investigate.  Let me give an example:  on a recommendation from one very saavy financial writer, I invested in a Mongolian oil company. The numbers had looked good, the work was running smoothly.  Suddenly the stock tanked!  Why?  Unbeknownst to me, a new leader in the government had decided to have the Mongolian government take over operations. If this had been an American stock, first off, the government would not be considering taking the company over, and I would have had clues in the press that this might actually be an issue.  Moral of the story:  consider ETFs or a good mutual fund and be prepared for volatility.

For those of you who followed this blog, you know that we pulled our gold and silver some weeks ago, and are waiting for the right time to rebuy, although we have advocated picking up palladium and platinum.  Seven years ago, when gold was around $298, my Cohort in Investing and I bought in quite a bit.  At that time, too, we took advice from the Weiss group and bought up international stocks.  Now, however, I feel it is almost time to snag up American stocks as well.  As a hedge against a falling market, I also advocated putting money into high yield dividend stocks that concern themselves with oil and shipping. 

Some folks believe that now is the premire time to buy inflation adjusted Treasuries.  It might be a good idea if you are trying to save a certain amount of capital for college or retirement, but keep in mind that the government figures out the rate of inflation without factoring in such things as fuel and housing costs.  Therefore, the inflation adjustment is suspect at best.  If inflation were to suddenly get carried away and ravage our land, TIPS would not be able to keep up with the adjustment fast enough.

 For the first time that I can remember, I am advocating a diversified portfolio, with bargains bought in thoughtfully. Since there are excellent stock bargains, and TIPs may become worthwhile to older investors, and when metals find their legs, money will be made by the dump truck full.  The point is to keep ahead of the others, to capture spring while the snow is on the ground, to get to the feast at the beginning, not halfway through.  Now is the time to be vigilant and smart.  How the winds have changed.

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