Too much hype about GOLD
Investors are afraid. They do not feel comfortable with the central banks nonsensical dialogue about NIRP, ZIRP, LTRO or QE. Trust is being eroded about the power of monetary policy or the capabilities of implementing wise growth oriented policies by our leaders - as demonstrated by the telling fight for the US presidency.
What do investors do when market conditions become uncertain? Buy gold, of course. Well, this is nonsense, as demonstrated by the above chart (click on the chart to enlarge it).
The chart shows the price of SPY (S&P 500), GLD, WTIC, and COPPER. They bottomed in mid January and rose (approximately) 10%, 14%, 34%, and 21% respectively.
My point is gold performs like any other commodity at important turning points of the commodity complex. There are always exceptions of course. But for the average investor is more prudent to think of gold as a commodity.
It is no coincidence gold peaked in 2011 like all other commodities and has declined since then - like most other commodities.
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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Author, Profiting in Bull and Bear Markets
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