The "G" Word- GOLD: A Look at 2009
Gold is catching my attention of late. There's more than a few market gurus talking about the ancient and precious metal of Cleopatra fame as a good spot to park some capital in 2009.
Gold had a marvelous run up in 2008 in sympathy with the highly infationary gigantic oil boom of last year. No doubt, the precious metal traded up as a "proxy" for the inflation associated with exploding energy prices and skyrocketing real estate prices.
You are looking at a chart of GLD- the ETF that trades up and down in conjunction with the price of gold. As you can see, GLD had a great run up into 2008. The metal pulled back in the Fall as oil tanked and all equity classes fell off a cliff. It gave back it's entire 2008 gain, and then some.
However, GLD has been behaving fairly well of late. Since making its bottom at about $700 per ounce last October, GLD has certainly been in a nice uptrend, and is close to breaking a multi month downtrend line that would be very bullish. A break above about $930 would be very bullish.
There are many forces building that bode well for the price of gold. In times of uncertainty, investors tend to flock to the tangibility of this commodity. It seems to me the current state of the US economy offers some potential fuel for higher gold prices.
It seems inevitable we will have a trillion dollar plus stimulus package, and we don't have the money to pay for it. The US government doesn't really have any money. It has the ability to borrow money and generate tax revenues.
Raising taxes would be counter productive. Therefore, I think we're going to borrow and print our way into the money we need put the stimulus package in place.
All this artificial money "stimulating" us out of this recession is clearly likely to put upside pressure on Gold.
AI
