FWIW, there was a lot of response to the observation that lately, gold is not trading less a currency (inverse to dollar) than like a hedge against bonds. Expanding on the point, I see two possibilities: gold shares and general equities continue rising while bonds sink, or bonds hold their ground, while gold and equities sink.
Incidentally, for those who keep score, the DOW:Gold ratio can still decline in that situation (e.g., INDU 7000, POG 350), so gold is "outperforming" the DOW even as POG drops)
At the end of the day, Greenspan keeps his investments almost entirely in US bonds and virtually nothing in stocks, and that must influence a person's thinking whether he admits it conciously or not. Russ Winter's call will likely be right IMO (out PM, in shorts). However, the danger is being too heavily weighted in one direction, for if bonds hold or rise, the fella with no gold will get absolutely creamed, IMHO.
A strategy of playing a down cycle in equities and gold in the coming 9 months is probably a winner, but holding a core position no less than 20% PM as a hedge (the "core position") is critical ... advice to myself.
If anyone can explain why a significant PM hedge is not necessary, I'm all ears.
Regards,
crusty |
