Quote:
Originally Posted by McDick
What do you think about GOLD in the long term (like in the next 3 months)???
I don't know about that paulson's plan... I think there might be selloff right after Friday tho.
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keep in mind with everything there is uncertainty...with that said this is my opinion. take it with a grain of salt.
the fed has lowered interest rates at the fastest pace in HISTORY. the last meeting they lowered 75 basis points while gold investors were looking for a full percentage point. they were dissapointed that is why we saw the price drop from $1000 to $900 in like 3 days. rate cuts are unlikely to be as aggressive in the next 2 meetings. most likely 25-50 basis points. putting a weak floor under the USD. remember the european and japanese central bank has been on hold instead of lowering interest rates. which props up the EURO and YEN and is bad for exporting countries like germany(#1 in the EU)and japan. they have incentive to lower rates to cool the currency to alleviate exporters pain. it is speculated they will do so during the next meeting. this is again good for the USD which has an inverse relationship with gold.
also financials make up a majority of the SP500 and as a foreign investor the number 1 focus for us is the currency of the USD. gains can be erased by currency movements and losses multiplied. and the opposite is true also.
rebate cheques start rolling out in spring and summer and i doubt americans are going to save it when its sunny out. again good for us economy.
so the combination of rebate cheques and low interest rates is a formula for easy money again for those who have the credit worthiness they will take advantage of this while the poor not so much.
the financial problem stemmed from too much easy money and apparently the fed is saying we have to flood the market with money to save it!
this is the equivelant to giving a crack addict more crack just to calm it down for the short term and postpone the real pain.
fyi ben bernake wrote his thesis on the crash of 1929. he theorized that if the acting fed lowered interest rates fast enough and flooded the market with money that the crash would have been prevented. it appears that helicopter ben is testing out his theory as we speak, with the american economy as his guinea pig. intersting times we live in that is for sure.
in summary 3 months i would consider short term. there will be weakness/sideways action.
long term inflation will overwhelm the fed (dont fuck with market forces!)
and gold will fucking skyrocket. i have been a goldbug since gold was around $300/oz.
think about 2009 and 2010 when gold wil start its march toward $2000/oz
silver will probably outperform gold tho. it is like the poor mans gold