Equity Correction Fuels Soaring Gold Prices

An article from The Street describes a correction in the equity market, and other factors, as the fuel for today's boost in gold prices. From the article:

There was a slew of factors pushing gold higher Friday. First, the metal had been under a barrage of technical selling in 2011. The word capitulation, however, was being thrown around Friday after reports circulated that SHK Asset Management sold gold future positions that came with a $850 million price tag. Open interest of 81,000 came out of gold on Monday. The Wall Street Journal first broke the news and said that Daniel Shak, who runs the fund, got spooked by a margin requirement increase and gold's recent selloff and decided to ditch his positions.

The shakeout of the "fast" money led many investors to see this week's selloff as a bottom, which was prompting a flood of money into the metal.

The article re-enforces that gold (and other precious metals - silver platinum palladium) will remain a portfolio stabilizer in the future.

This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.

GLD and SLV ETFs VS. Bullion

The distinction between investing in an ETF and investing in physical metal bullion is unclear to many. In an article on Seeking Alpha, Trace Mayer describes the differences.

Quoted from Seeking Alpha:

The ETFs GLD and SLV are commonly represented as being bullion. Accepting this assertion is naive and with potential financially lethal consequences. While GLD and SLV track the relative prices that is where the similarities with bullion end.

On May 20, 1999, Alan Greenspan testified before Congress, “Gold is always accepted and is the ultimate means of payment and is perceived to be an element of stability in the currency and in the ultimate value of the currency and that historically has always been the reason why governments hold gold.”

The ETFs GLD and SLV are not this ultimate form of currency. I will raise only a few essential issues, although there are many.

Read more by visiting the original article here.


This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.