Wall Street is at it again, stoking the fire of “stock-market fever” to lure investors back and away from certified gold.
Posted by Adam King on January 19, 2011
When Wall Street holds a sale, head for certified gold.
January 19, 2011 – Wall Street is at it again, stoking the fire of “stock-market fever” to lure investors back and away from certified gold. But Brett Arends in the Wall Street Journal issues a stern warning about falling victim to the hucksters’ pitch when Wall Street holds a “sale.”
These are the same drummers who drew in investors by the droves in 1999 and 2007. Now they are proclaiming that the market is on the move, pointing to the stellar rise in the Dow since last summer and quarterly earnings reports that are through the roof. In the first place, quarterly earnings actually have little to do with market value – it would take a full decade of profits to account for just 25% of market value.
In the second place, the fact that shares are “more expensive today than they were yesterday, does this still make you want to buy?” That buy-high-sell-low strategy would have produced an annual loss of 8.5% over the past 20 years, adjusted for inflation. Analysts that saw the last crisis coming are quite guarded about today’s stock market. Share prices are at or over true market value, and “long-term returns from these levels may well prove disappointing.”
Nothing at all has improved in the global economic climate to warrant a boom. Inflation is still necessary to get the economy moving, even if the Fed won’t publicly admit it. The US, Europe, and Japan are still playing games with their currencies trying to get a leg up on trade and sovereign debt. And eastern central banks are buying up gold in record quantities to hedge against the mess we are creating.
We can all profit from Wall Street’s “sale,” however, by investing in certified gold while the stock-market fever holds prices down.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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