Time Ripe For ‘Overweight’ Positioning In Gold, Silver
September 21, 2012 by Gold Editor
SOURCE:[Kitco News]- Gold might be due for some kind of a correction after the recent run higher, yet the macroeconomic backdrop is as supportive for the metal as ever for those taking a longer-term approach to investing, said Jeff Clark, senior precious-metals analyst with Casey Research.
He described current conditions as a good time to be “overweight” in gold and silver investments.
“If there is ever a time when someone needed to have meaningful exposure to gold and silver, this would be it,” he said in an interview with Kitco News. “We have runaway debt. We have all of these money-printing schemes. We have massive deficit spending. All of these things are highly inflationary and we have not experienced that fallout from those things yet.
“It’s going to come. You cannot escape the consequences.”
As of 9:21 a.m. EDT Friday, spot gold was trading at $1,784.80 an ounce, which represented a run-up of 12% from the mid-August low of $1,590.25. The boost came from expectations and then further monetary easing from the U.S. Federal Reserve, as well as plans by the European Central Bank and Bank of Japan to buy more bonds. After this run-up, however, a pause could occur in the near term, Clark said.
“Fall is typically the strongest time of year for gold and silver,” he said. Prices tend to rise into year-end due to a number of gift-giving holidays around the world, starting with the so-called wedding season in India and continuing through to the Chinese New Year holiday early in the following year.
“And we just had the big money-printing announcement from the Fed, and that is a strong catalyst,” Clark continued. “So there’s lots of reasons to think this (rally) is going to continue. But precious metals and the stocks have both run up a lot. So it would be normal for them to take a breather, first of all.
“Second of all, we’ve had a lot more bullish announcements than usual, some even coming from mainstream banks. They’ll eventually be right, in my opinion. But it would be just like the market to correct and scare some of these weaker hands or late-comers out of the market. So it wouldn’t surprise me to have a little pullback. But that’s just in the short term. Long term, I’m very bullish.”