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- May 13, 2015
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Ask yourself today which has the greater downside to come: global equities or gold? And then on the other side, which of these asset classes has the greater upside potential?
Sure it is possible for global equities to tick higher over the next couple of days, though heaven only knows why with the Chinese economy in serious trouble, commodity prices cratering and Greece about to be kicked out of the euro.
Gold manipulation
It is also possible for global central banks to manipulate gold down as they did so blatantly over the past week in an effort to calm market fears about liquidity and a credit squeeze.
But gold has already had a four-year correction phase that bottomed out around $1,150 an ounce, down from $1,923. Global equities – with the exception of China at 35 per cent down and falling – are close to all-time highs set this year.
Clearly global equities have far more room to fall than gold. Even if gold retreated to its 2008 lows it would fall by far less than equity markets did back then. It simply has less distance to fall.
On the other hand, if we look at the spectacular recovery in gold and silver prices from those lows to their 2011 highs then the very large potential upside it evident.
Silver prices rose from around $8 an ounce up to $49; gold prices more than doubled. So if you are considering the risk:reward ratio of these two major investment classes right now then it is clear that you should be holding your nose at current precious metal prices and moving from global equities into gold and silver.
Bottom picking
For what is too high to last, and what is so low it may already be at a bottom? Can anybody seriously argue that equities can extend their rallies higher from here? That’s what they said in Shanghai just a month ago!
Besides eurozone holders of gold are already in the money as this precious metal is protecting them from the devaluation of their own currency. For them the choice between gold and owning stocks denominated in their own currency is much easier.
That’s the main reason why the rush to buy physical gold has been so enormous in Europe this year, and the wisdom of shifting from equities to gold will only become more stark as the year continues and others make this move.
Gold will be the last man standing as the dust clears from this battle field.
http://www.arabianmoney.net/gold-silver/2015/07/08/riskreward-now-favors-gold-over-global-equities/
Sure it is possible for global equities to tick higher over the next couple of days, though heaven only knows why with the Chinese economy in serious trouble, commodity prices cratering and Greece about to be kicked out of the euro.
Gold manipulation
It is also possible for global central banks to manipulate gold down as they did so blatantly over the past week in an effort to calm market fears about liquidity and a credit squeeze.
But gold has already had a four-year correction phase that bottomed out around $1,150 an ounce, down from $1,923. Global equities – with the exception of China at 35 per cent down and falling – are close to all-time highs set this year.
Clearly global equities have far more room to fall than gold. Even if gold retreated to its 2008 lows it would fall by far less than equity markets did back then. It simply has less distance to fall.
On the other hand, if we look at the spectacular recovery in gold and silver prices from those lows to their 2011 highs then the very large potential upside it evident.
Silver prices rose from around $8 an ounce up to $49; gold prices more than doubled. So if you are considering the risk:reward ratio of these two major investment classes right now then it is clear that you should be holding your nose at current precious metal prices and moving from global equities into gold and silver.
Bottom picking
For what is too high to last, and what is so low it may already be at a bottom? Can anybody seriously argue that equities can extend their rallies higher from here? That’s what they said in Shanghai just a month ago!
Besides eurozone holders of gold are already in the money as this precious metal is protecting them from the devaluation of their own currency. For them the choice between gold and owning stocks denominated in their own currency is much easier.
That’s the main reason why the rush to buy physical gold has been so enormous in Europe this year, and the wisdom of shifting from equities to gold will only become more stark as the year continues and others make this move.
Gold will be the last man standing as the dust clears from this battle field.
http://www.arabianmoney.net/gold-silver/2015/07/08/riskreward-now-favors-gold-over-global-equities/
