Gold News

Taking Profits in Gold

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.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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