More investors are hedging their positions with gold investments.
Posted by Adam King on December 02, 2010
Guarded optimism.
December 02, 2010 – With all of the mixed messages coming out of Wall Street lately it’s small wonder that ever more investors are hedging their positions with gold investments.
Wednesday’s rally on the stock market was impressive – all of the Dow Stocks and all but 15 of the S & P stocks showed gains as November’s losses were all but wiped out. More significantly, the VIX, the CBOE Volatility Index, fell dramatically. The VIX is commonly called the “fear index” because it is an indicator of investors’ expectations of market volatility 30 days hence. When the VIX falls, it suggests improved optimism about the economy.
But hold on a minute. One thing noticeably lacking of late is good economic news. Today stock futures look to be taking a step backward in response to news of worse than predicted new claims for unemployment. So what is behind the “optimism”?
For one thing, among traditional investments stocks are the best thing going, with yields as compared to bonds far above the 90 year average. And little needs to be said about currency. So despite equity investments trading at 12 times projected earnings, they are still giving the most bang for the buck.
The VIX might only reflect that sentiment. A better measure of market confidence would be gold investments, which are still going strong. The true state of the economy is reflected in how heavily investors are hedging their stock portfolios with gold – and they are beefing them up more every day.
It is human nature to be optimistic when facing dire circumstances, but we still must confront the plain truth of our reality. Wise investing calls for guarded optimism, and investment in certified gold is the best possible safety net for these difficult times.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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