Mark McHugh

Gold Poised to Move Higher

While I generally agree with the author's views (especially long-term), I must dispute a few points:

The Central Banks are more powerful than ever, our government is borrowing unprecedented amounts of money to rescue private, for-profit banks from the federal reserve. The federal reserve is nothing more than a collection of private, for-profit banks.

Gold is not the contrarian investment it was in 2001. The trade-du-jour is long stocks - long gold (as evidenced by the lack of short interest in stocks). My spider-sense tells me that many of these players are employing leverage, which means that the gold price and stock indexes fates are tied together for now. I fully expect to see a margin squeeze in the very near future, that will take down both gold and stocks.

In the long run, I think Adam will be proven correct. But, I am not inclined to add new gold positions right now. If you are really afraid that you are going to miss the gold explosion, consider buying a call option on the GLD. Just keep some dry powder around in case the price drops.