MarketVViz

Is It Time to Buy Gold?

The best trade I can think of if you want to trade gold, is to short gold and go long gold related stocks! This is almost a no brainer, look at charts of the ratio between gold and gold stocks, the ratio has NEVER, EVER, in all history, been at the extreme level it is right now. I can't give you a timeframe, but it is absolutely certain beyond any doubt at all, that this ratio will narrow significantly in the future. What's this mean? Gold could go up, but gold stocks will go up a much bigger %. Gold could remain flat, but gold stocks will go up over time. Or Gold could go down, but gold stocks will go down less of a %. Gold stocks put in a very nice bottom in Oct and have been pretty solid every since, not really even coming close to going back to those Oct Lows, they have outperformed the rest of the market since that time, this is all a good sign of strength.

The inflation/deflation debate can go on and on. Personally I think inflation will win in the end, but the deflationary environment right now is very real and serious. In the grand scheme of things however, its almost meaningless.