Tuesday, October 21, 2008

What Now? Silver? Gold? Stocks?

Should You Own Gold, Silver or Commodity Stocks?

Source: Seeking Alpha, Marc Courtenay 10/19/2008
...as always, gold gets dumped as the most liquid way to raise quick cash to cover losses elsewhere (or simply to hoard currency during a period that is, to say the least, volatile). Economists at research firm Action Economics report that some hedge funds have been forced to liquidate their positions for just that reason.
Bill Murphy, writing on LemetropoleCafe.com, offers his view of the situation right now: “Demand for physical gold is astonishing and yet the price goes nowhere. The dichotomy between the ‘real’ gold market and the Comex is widening. The US Government is petrified of gold rising to any degree because of its importance, in that a sharply rising price will shed light on ‘Dracula’ … or the hideous inflationary forces set in motion by Comrade Paulson’s bailout...JP Morgan said on Wednesday it is raising its price forecast for gold for 2008 and 2009 on expectations investors will buy into bullion as a haven from risk...The bank now sees gold prices at $904 an ounce in 2008, against a previous forecast of $884, and at $875 an ounce next year, up from $854 previously expectated...Frank McGhee, of Integrated Brokerage Services in Chicago notes that “you're seeing some buying coming back to gold on the wall of worry … The underlying problem in the credit markets is going to take a long time to work through.”McGhee added that it’s no simple matter, though. “It's going to be very volatile, very thin trading, very slippery. But if you look, gold is the strongest asset on the board,” he said...

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