"Implications for Investors
"Armed with these data, there are definite steps you can take with your investments at this point, as well as reasonable expectations you can have going forward:
"You can buy gold today. As long as real interest rates are negative, gold will remain in a bull market. If you already own some gold, you can and should ask yourself if it's enough at a time when money in the bank is a losing proposition.
"Don't get flummoxed when you hear talk about rising rates. Watch the real rate instead.
"In our opinion, real rates will be negative for some time for the simple reason that we think inflation will be rising for some time. Ask yourself: Will the Fed and other central banks raise rates aggressively enough to catch up to inflation? Someday, sure… but not anytime soon.
"When real rates turn positive, especially above 2%, it may be time to sell. "We'll have to see what's going on in the world at that time; if there's financial chaos, the fear factor could cause gold to depart from this historic pattern. But even if not, keep in mind that while the price of gold fluctuates every day, the shift out of gold-based investments won't occur overnight. There should be time to gain clarity.
"There are a lot of reasons to own gold today, and there will likely be more before it's time to say goodbye. In the meantime, we take comfort in the fact that the strongest historical indicator of all tells us the gold bull market is alive and well and has years to play out.
Carpe aurum."
http://www.caseyresearch.com/cdd/critical-number-gold
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