BlueSky&Sunshine

Where are Precious Metals Headed in 2008?

The bottom line seems to be that gold's recent rise to $1000+ is sustainable and in fact it will remain in a strong primary uptrend. But other writers are warning that a sharp if only short/mid-term correction is likely. Then again there's also talk of a deflationary spiral that could see gold sink from it's current high for several years. The question then is: How strong a stomach to gold bugs need to have? Do we hold our gold and ride out the correction? Or do we try to trade it - with all the timing errors, tax consequences, and other headaches that this entails? Or do we bail out at what we hope is a peak? My 2 cents worth: Given: The increasing demand for gold (new exchange opened in China recently along with recent poor performance of Chinese equities, long-term aversion to USD and US equities by foreigners, the apparent start of an inflationary cycle), The unstable and gradually diminishing supply of gold, and Potential for geopolitical events, especially involving crude oil or the US current account deficit (e.g. sharp devaluation of USD), it seems to me that IF you can afford an unrealized 15 - 20% loss on gold for perhaps 2 years, then holding long positions now, and either opening them (if you aren't already long) or adding to them at the bottom of the nearterm correction, is the least risky course of action. Any better ideas?