Did You Make $1,835 Trading Gold?

| October 20, 2009 | 0 Comments

This morning I sat in my office watching the sunrise.  The market was just opening and I was mulling over in my mind what to write about today.  I started thinking back over the hundreds of articles I’ve written and all the recommendations, suggestions, and predictions I’ve made.

Clearly some have been better than others.

Take for example my call for the Dow to break through 10,000 before the end of the year.  At the time, some readers called me crazy and claimed we were heading for the next Great Depression.  Here we are a few months later trading above 10,000.

One of my favorite recommendations, however, could have made you a nice chunk of money.

Back in May, the market was just showing early signs of life.  Gold had touched the $1,000 mark and promptly fallen almost 15%.  Gold was trading at less than $900 an oz. and it just didn’t make sense to me.

There were two big reasons I knew gold would move higher.

Number one on my list was inflation.

With the Federal Reserve running the printing press full time, I expected the value of the US Dollar to fall significantly.  As the dollar falls in value, it causes inflation to skyrocket.  What do you think happened?  Just look at a chart of the US Dollar.

The dollar is down more than 10% since May.

While official inflation figures in the US aren’t pointing to dramatic increases, we’re seeing the early stages of inflation in other parts of the world.  Take Australia for example…

Recently the Reserve Bank of Australia increased their interest rates by 0.25%.  This was the first major economy around the world to increase rates.  Their economy was heating up and the central bank was seeing the early signs of inflation.

If inflation is starting in Australia, it can’t be long before we see it here in the US.

One of the best ways to hedge the threat of inflation… Gold!

The other reason Gold was certain to move higher… the overall trend in commodity prices.

Back in May, I knew as commodity prices moved higher, so would Gold. Foreign demand was just starting to pick up and commodity prices were rising.  Just look at Oil prices.  In May, you could have bought all the Oil you wanted for $50 a barrel.  Now Oil is about to cross over the $80 level.
Industrial metal prices are up too.

Commodities are continuing to move higher.  And Gold is participating in this rally in a big way.

If you would have invested $10,000 in gold at the time, you’d be sitting on a gain of more than $1,835!  That’s more than 18% on your money… in less than six months!

So what’s next for Gold?

Honestly, I don’t see a lot of changes in the Gold market.

I still see the US Dollar falling in value.  The threat of inflation is real. Every investor needs to prepare for its crushing impact.

International demand for commodities will continue moving higher.  And China will be at the front of that line.  As a result, commodity prices are setting the stage for a big move to the upside.

These two big drivers will continue pushing Gold to new highs.  Could we see gold at $2,000 an oz?  I don’t think that’s an unrealistic target. That makes Gold a great long term investment.  If you don’t hold Gold now, consider adding a piece to your portfolio.

The easiest way to get exposure is through Gold ETFs.  Take a look at E-TRACS UBS Bloomberg CMCI Gold ETN (UBG), the iShares COMEX Gold Trust (IAU), or PowerShares DB Gold (DGL).  All of them will give you good exposure to the Gold market.

Tags: , , , , , , ,

Category: Commodities

About the Author ()

The Dynamic Wealth Report works with a number of staff writers and guest experts who specialize in everything from penny stocks to ETFs to options trading. These guest analysts post under the 'staff writer' moniker for ease of use.

Leave a Reply

Your email address will not be published.