By: Steve Smith
There’s been a lot of news about gold over the last couple of weeks.
First, we put in new highs, now we have a significant pullback…
Even though gold is not my primary area of expertise, we’ve been getting a lot of questions about what I expect to see gold do in the future..
Long-term gold is almost certainly guaranteed to go up. That’s the nature of prices thanks to the central banks who are always looking for small amounts of inflation.
Most people know that and agree with it, however, the short and mid-term analysis is a bit more tricky.
Gold is a highly emotional investment. Although I hesitate to call it an investment because the truth is it has zero returns.
Heck, that’s what gold bugs love about it…
It tends to freeze buying power over the long term. I’m sure you’ve heard the old adage that it took approximately the same amount of gold to buy a toga and chariot in ancient Rome as it does to buy a nice suit and a base model car today.
Not sure I believe that, but as a parable, it makes the point.
Gold has historically secured wealth, and it will continue to secure wealth as long as people believe that it secures wealth.
And remember, the gold market is very thin. The market cap of Apple is bigger than all the gold in the world! So it does not take much of a move in demand to move gold.
And if “the big money” ever starts buying gold en masse, we would see a huge run up against the dollar…
The question is, in the case of a big bull run in gold – would holding gold provide any ROI for investors, or just protect the buying power you put in?
As far as the recent news, I see the run-up in gold (in relation to the US Dollar) as a natural healthy diversification of assets for some people.
I look at gold as another form of currency/money.
The dollar was under a little pressure over the last month, so it’s not surprising that some people moved a portion of their dollar holdings into gold. Not as an investment but as a safe haven, “just in case.’
And as the dollar started leveling out, not surprisingly gold pulled back.
There’s no big concern about the collapse of the world as of today. If you feel more secure with some gold, pick some up…
Just don’t expect that money to work for you.
The stock market remains volatile, so while holding gold might give you some feelings of security – I think buying and holding stocks is a bad idea right now.
However, thanks to the volatility, we are having a banner year in my Options 360 service.
You can get full access with a trial membership for just $19. Frankly, it’s very possible that you’ll make enough profits from the trial membership to pay for an entire year and put some money in your pocket.
To Your Success,
Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.