Gold is getting a lot of attention on CNBC today.
Trying to game what gold may do short term is very difficult and probably not the right trade for too many people.
Long time readers know that I maintain exposure for clients with a gold stock. Usually gold and gold stocks have a low correlation to the S+P 500 and they tend to go up when there is some sort of crisis.
This week most gold stocks are up a lot. Maybe you saw this coming or maybe it is out of nowhere but either way by maintaining some exposure you could have added a few basis points of upside in what has been a down week. Gold stocks are zigging while the market is zagging.
This ties in with what I wrote the other day about Oz, NZ and PCL, all three of which are having a big week.
PCL is a client and personal holding.
Wikinvest Wire
6 comments:
The positive fundamentals of gold have been in place for a while. Historically, as inflationary pressures build and interest rates rise, commodity based stocks will outperform (1970's). Rogers call on International stocks has been correct for many of the same reasons (falling $USD). If you were fortunate enough to notice the commodity index rising when interest rates were at 40 year lows and acted on this, you have achieved some outstanding gains in energy and mining stocks. Too many small investors (and pros - not you Roger)will buy when they see it on TV (after the smart money is in), only to be buying at a clearly overbought level. The security will then drop and the investor will lose money and the public is once again fleeced. No one knows if gold will rise in the short term from here, but fading CNBC has been a great way to make money over the years. Should an informed trader feel guilty for fleecing the public? CNBC doesn't!
great comment
Roger,
What does "fading" CNBC mean?
Jim in LV
"fading" is a trading term (maybe it crosses over to other things?) that means taking the other side of a trade or the other side of what the market is doing.
For example if the market opens very strongly one day, selling into that open or shorting stock into that open would be referred to as fading the open.
As for gold today on CNBC; they are talking about buying it now that it is up. If you think TV late to the party with this sort of thing and you sold gold stocks as CNBC is touting them you are "fading" CNBC.
Let me know if this is not clear.
Roger,
Sort of like when a leading magazine declares the end of equities on its cover and you buy the market based on that you would be fading that magazine?
Jim in LV
bingo
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