Are gold and silver good investments to hedge against a falling stock market?
August 27, 2010 by
Filed under Silver Investment FAQ
Are the markets safe for the little guys?
August 27, 2010 by
Filed under Silver Investment FAQ
Are the markets safe for the little guys?
yes very much so.
Yes, Gold and Silver are good investments to hedge against a falling stock market. This is because Gold has a negative Beta (which means that it tends to move against changes in the stock market.) Gold moves against the stock market because when there is uncertainty in the market consumers tend to place money in Gold to conserve the value of their wealth.
Yes, when investors panic they pull there money out of stocks and usually put them into more safe investments. Gold is a very popular investment option when these things happen. Commodities also become more popular.
Now is NOT the time to buy gold…
Wait for it to go back down to 650-730$ an oz, then I would keep 10% of your portfolio in gold, ‘just in case’ not for growth, but for stability in panic.
People buying gold at 850$ – 1050$ an oz are pissing away their money and listening to gold speculators too much.
The old addage of “Buy Low, Sell High” is true… and gold is high right now, and the stockmarket is low. Guess what you should be buying?
i think it depends on whether we go into a deflation or inflationary situation. I thought that inflation was a no-brainer ( govt. can create money), but:
– japan in the 90s
– asset value deflation, due to devaluing of mortgage assetts
– foreign countries have built up excess productive capacity, with buyers (u.s.) likely to quit buying, and they have inflation problems already, even with their interest rates mostly rather high. this would usually be the part of the economic cycle where recession/ deflation comes in.
– If the big money was thinking “inflation” we wouldn’t have the big declines in commodities we’ve been seeing. commodity inflation is usually a feature of end-of-cycle times. boom times, everyone is building things?
I think we’re hanging between inflation or deflation, and this accounts for the volatility in every kind assett we’ve been seeing.
I reccomend investing in canned food and shotguns
Gold and Silver, aka “precious metals” generally move counter to the stock market. Most financially efficient way to position yourself in the metals is to buy some of the more substantial gold mining stocks. The difference between bid and ask prices for the stocks are much narrower than for buying physical gold and silver.