This AM in the news--
James Dines, publisher of the Dines Letter, said gold will turn out to
be one of the greatest sleeping investments.
"The Asian turmoil looks like a very strong kind of buying signal for
Asian gold because we are getting that flight to safety and the scared Asian investors are going into the ultimate asset," he said.
Central bank selling and a strong dollar have contributed to the
bearish sentiment toward gold, whose appeal as an insurance policy
against hyperinflation has also been undermined by the lowest inflation rate since the 1960s.
But the gold bugs who tend to have an apocalyptic view of financial
markets believe that when everybody else is bearish, then, it is time to be bullish.
And, a worldwide correction in stocks could bring an accelerated rise
in gold, which has attracted only the most adventurous speculators in
the last few years.
Analysts said the metal's fundamentals are improving because
depressed gold prices have caused mines to close while demand is
growing.
"Supply-demand is very closely balanced, and any supply dislocation
would cause a very tight market," said John Geraghty at North
American Equity Services, a consulting firm.
He said that "political" supplies from the central bank selling have kept a lid on gold. The leading central banks of Europe have been steady sellers of gold to raise money to pay for popular social programs and balance their budgets.
"Effectively, they have been burning the furniture to keep their houses warm," Geraghty said.
Geraghty said that the inevitable results of the central banks' selling is bullish for gold.
"As the banks divest themselves of their gold and their supplies
become less of a psychological overhang, the more likely the value of
gold will increase," he said. |
