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Strategies & Market Trends : Ride the Tiger with CD

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To: Canuck Dave who wrote (201816)	8/1/2011 3:15:41 PM
From: Jaakko	1 Recommendation Read Replies (1) of 312813

"What's going to take to get gold stocks to unhook from other equities?" A lot of "gold money" has found its way into gold ETFs... Once it becomes common knowledge that some of them don't have physical gold to back them up, there will be an exodus out of ETFs into gold shares... (George Soros already made his move)... In the 1980 cycle, when the Fed raised interest rates to kill rampant inflation, gold shares performed well for many years as their costs (both capital and production costs) were contained and in many cases went down in nominal terms... gold came down too but there were profitable margins... Any move in the current environment that will render future inflation (not to talk about hyperinflation) unlikely, should be very good for gold shares given the current favorable gold price and profit margins... Fixing the US debt ceiling and staying away from additional QE are considered such moves by the market... Whether they can be maintained in the long run is another question...

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