DenisL

Gold Price Plunges: Might as Well Hold Stocks

Old conservative investors always believed that one should Hold at least 10% of assets in gold....always for unforeseen crises. I think that is prudent nowadays. This 10% is a minimum until we see what the monetary base/M1 money supply do next month. The monetary base had a huge jump this month giving a hint of future inflation. At some point the Fed MUST inflate. Government spending had gone nuts even BEFORE the housing price decline. The continuing decline at least until late 2009 underpins WAY too many overleveraged debt instruments held by banks that we are not even thinking about yet....but we will! The presumption now is that M1 inflation will kick in after next year. Then gold will be a great buy, but if they are inflating the base now (at it sure looks like they just might be), THEN one might want to hold a LOT more than 10% of assets in gold. Gold is GREAT to hold in economic crises (like we are in now) and in war. War with Iran is possible, not likely if we are sane, but if we go to war and we will then get $400+ oil, then one would be very happy to be holding gold. VERY happy.
So own some gold now....and buy a LOT more if it goes lower. It will go back up, the question is when. Just keep an eye on the warmongers, Bush/Cheney/McCain and the spend us into oblivion guy, Obama. The M1/monetary base and declining housing prices will dictate the timing...or a war or something other crisis. Everthing is kind of brittle and jittery and skittish right now. Just my opinion. Take it for what it is worth.