Gold's Relative Appeal

Gold is unusual in that it is both a commodity and a surrogate currency. While gold's value has fallen along with other commodities, note that it has also displayed relative strength with respect to other commodities since the mid-year swoon. The chart above depicts the ratio of gold (GLD) to the commodities ETF (DBC). When stocks made their October lows along with commodities, gold's performance relative to other commodities was breaking to new highs.

While many commodities are falling due to economic weakness (oil, industrial metals), gold may be retaining a degree of interest given the worldwide race to zero interest rates--and the monetary expansion likely to ensue if those rates prove insufficient to stimulate growth.

Comments

[bosun.j:]

Agreed Brett.

Remember, part of the reason real gold is performing below where it should is the frantic selling of COMEX gold (read paper gold) to cover other paper positions.

It will be interesting to watch the value of real gold as fewer sovereign funds buy increasingly questionable American Treasuries.

2008 Nov 08 12:09 AM

[User 276915:]

GOLD in the Bank of the foothills is the "most" secure. USD....not so much...... FIat...ouch..

2008 Nov 08 12:52 AM

[Dr. O:]

I agree.

2008 Nov 08 08:44 AM

[sorgmot:]

The league of lawyers has retaken the USA Governments at all levels. Lawyers are not known for their management ability. They are known for raising costs and diverting profits to them selves. That is what regulation is all about.

The Fidelity Select Funds and the Fidelity foreign market funds are all down 50% to 75% from their 2007 peaks. What does they tell us? All savers and investors are ruined and they have also lost any hope of future success with their investments and they can not pay their bills as they come due. The investors must keep on selling assets and declare bankruptcy.

The lawyers will explode the money supply, explode the government payroll, dnd explode the number of regulations to keep more lawyers busy and rich.

Of course, these actions will drive the vast majority of citizens into poverty.

Non USA countries made big mistakes by holding leveraged US $ denominated investments. In the future, they will stay clear of these and sell US $ investments and dollars too.

Does this screen play hold water? If so, what would be a logical investment program for the next decade?

Good luck.




.

2008 Nov 08 10:06 AM

[dr.doolittle:]

totally agree with "sorgmot." it's only paper, right?

2008 Nov 08 01:53 PM

[User 30121:]

In the past few weeks our illustrious government has been BORROWING TRILLIONS OF DOLLARS from China, Japan, and any other foreign/emerging market that will lend them DOLLARS! I wonder if the grand scheme is to devalue the dollar completely, so they don't have to pay these debts, SWITCH to the GOLD STANDARD, and push gold to 4 or 5 figures???

2008 Nov 08 02:35 PM

[BRAD IN ANA...:]

Physical gold silver and platinum is very diffiuclt to obtain and trading at huge premiums over spot. One ounce silver American Eagles are selling for $20 each or $360 for a roll of 20. Silver is under $10 an ounce on the exchange. Gold American Eagles are trading at over $900 and spot gold is under $750 and platinum 1 ounce anything is trading over $1200 with platinum under $850 an ounce on the commodities exchange. There is no change in sight. The physical product is trading at much higher prices and something has to happen. It is our prediction that the metals will rise to a price that will cause the supply to flow again. Silver over $20 Gold over $950 and Platinum over $1500 and rising. If you buy physical product your downside is very limited. Stay out of the futures as the Big boys will take you down. Bradley B Mugar anaheimjewelry.com
Bradley B. Mugar
Business Owner
Anaheim Jewelry & Coin

888-476-5397 (toll-free)
714-974-6362 (local)
714-345-8906 (mobile)
714-998-6067 (fax) check our web page at anaheimjewelry.com

2008 Nov 08 07:44 PM

[GMiki1:]

A lot of folks are saying the COMEX will either default on some December contracts or push up the price in covering to buy back the contracts. That will be fun. Also, the falling dollar will help the PMs.

2008 Nov 09 11:55 PM