Gold? 'Let It Be'
By Alan Steel
30 September 2011
Gold as we all know, or have been told by those in the know, is "…an ideal hedge in times of trouble".
Wars and tsunamis (be they actual or financial), currency and debt debacles, even inflation worries are typical breeding grounds for a rising Gold price.
And that's what we've seen over the last 10 years.
"When I find myself in times of trouble mother Mary comes to me…"
It's only a week or so ago the talking heads and the dead tree press were telling us Gold was on an upward course unchecked to $2500 to $3000 an ounce.
Then from $1950 or so it starts falling, heading rapidly instead to $1600.
Not long after private investors dumped stockmarket investments to buy it in a run to perceived safety.
But why the collapse?
"…speaking words of wisdom......."
According to some sources, gold has plummeted as holders rush to cash, based on worries over the financial stability of the Eurozone.
Oh, yes. You read that correctly.
What utter nonsense!
If the Eurozone was in such danger, gold would be rising faster than Andy Murray's blood pressure.
You've probably noticed over the years that things like oil rising, and then oil falling is apparently down to good news followed by bad news.
But Gold is the panic button; the safety net, meaning that if the Euro was in trouble it would go up!
So what's up? Could it be the smart money sees the demand from private investors (Gold being overbought), who always make the wrong call? Or a realisation that Global growth will continue and the smart money is moving back to stocks significantly.
"Let it be, let it be, let it be, let it be..."
Gold has certainly been showing signs of bubble territory.
And is it the smart folks who recognise indicators in the US and Asia suggest global growth is likely to continue, albeit more slowly, and that recession will be avoided and trade and capital spending increases are signs it's time to stock up on an undervalued asset class----equities ?
"Speaking words of wisdom…"
I'd back that move now.
Especially as we move into the season for best performance; October 2011 to Spring 2012.
What to buy?
Investors could tuck away M&G Global Basics, M&G Global Dividend, Neptune Global Alpha or Newton Global Higher Income for a nice balanced midfield...
...if you had a fantasy fund management football team in mind.
"...let it beee"
For and on behalf of Alan Steel Asset Management
Authorised and regulated by the Financial Services Authority
Award Winning Investment Advisers