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A Golden Chance to Take Out Some ‘Insurance’

By    |   Thursday, 13 May 2010 01:15 PM

I have always told people that they should have some gold in their investment portfolio, whether it is via stocks or bullion.

Gold is a sort of financial insurance.

You put a small amount into your portfolio so it can hedge the rest of your investments. Like insurance, you hope you never have to collect it.

Get David Skarica's Gold Stock Adviser — Click Here Now!

Earlier this week, we saw the European community come together with a nearly $1 trillion rescue package. This package included details to buy Greek and debt of other distressed European nations.

Basically, it is another form of monetization (printing money and exchanging this money for bad assets), kind of like what the Fed did when they bought mortgage-backed securities.

Printing money debases the currency and creates inflation. Gold is a hedge against this.

This is why despite the dollar’s rally against the euro, gold is going up. People know that it is not the dollar's strength and that the United States is printing just as much money. This is why gold is going up in terms of both currencies.

The action in gold reminds me a lot of 2003.

Gold pulled back early that year, and then began to break out in the spring. Gold then rallied the rest of that year.

I think that in the very short term (the next few weeks), gold could pull back.

However, with gold breaking its December 2009 high, this breakout should be for real — and from now until year’s end, we should see higher prices in both the price of gold and gold equities.

The monetary fire is burning, the money is being printed and it is time for that gold insurance to pay off!

About the Author: David Skarica
David Skarica is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He also writes the Gold Stock Adviser. Discover more by Clicking Here Now.

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I have always told people that they should have some gold in their investment portfolio, whether it is via stocks or bullion. Gold is a sort of financial insurance. You put a small amount into your portfolio so it can hedge the rest of your investments. Like insurance,...
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2010-15-13
Thursday, 13 May 2010 01:15 PM
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