Tags: Deighan | Gold | Protect | Against | Second | Dip | dan

Deighan: Buy Gold to Protect Against Second Dip

Tuesday, 29 Dec 2009 02:04 PM

Dan Deighan says the market is likely to reverse itself, CNBC reported.

Deighan, the founder of Deighan Financial Advisors, says investors should not expect more increases in the market.

“We’ve got some major headwinds coming our way,” he says.

Investors should prepare for an increase in interest rates, Deighan says.

“The massive unprecedented amount of Treasury issues that are going on — that’s going to bump up supply, and that’s going to drive interest rates up in terms of this steep curve that we’re seeing,” he says.

Bond markets will take a bruising when interest rates start to rise, Deighan says.

“The ratio of dollars going into bond funds versus stock funds in 2009 was 13 to 1, so when those interest rates start to go up, we’re going to see a huge decrease in the fair market value of the bonds,” he says.

Instead of buying stocks investors should stick with investing in gold, Deighan says.

“Seventy percent of China’s reserves is denominated by the U.S. (currency) and 1.9 percent by gold and (China's) the largest producer of gold," he says.

"So I’m seeing gold up in demand in China for those reasons. You buy the gold on dips.”

Gold performed well during the past decade, the San Francisco Chronicle reported.

While gold began with a multi-decade low, it increased about 15 percent per year on average.

“People were looking for an alternative to the U.S. dollar and paper money in general, something to hedge themselves should inflation return,” says Gary Motyl, chief investment officer with Templeton Global Equity Group.

S&P equity strategist Alec Young said gold prices will not stop rising since Russia’s, India’s and China’s central banks have a low amount of foreign exchange reserves in gold.

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Dan Deighan says the market is likely to reverse itself, CNBC reported. Deighan, the founder of Deighan Financial Advisors, says investors should not expect more increases in the market. We ve got some major headwinds coming our way, he says. Investors should prepare...
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2009-04-29
Tuesday, 29 Dec 2009 02:04 PM
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