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Why Gold’s a Trade, Not an Investment

207 views  2013-04-02 00:20   Tagscentral  equities  Federal  precious  stock  technical  analysis 

I’m beginning to change my tone towards gold. After being patient since October 2011, I’m inclined to feel the yellow metal is now more of a trade than an investment. In a sign of optimism, gold recently broke above $1,600 an ounce on the banking concerns in Cyprus, as traders flocked to the metal as a perceived safe-haven pick. As an investment, gold has

underperformed in recent years, while the equities market has surged higher. The reality is that there are far better places to stash your capital other than gold, and I expect this will continue.

Gold has long been perceived as a safe haven for capital in times of turmoil and inflation. Yet if you look at the current situation, gold is stuck. Global inflation is under control, and unless we see a major war break out in the Middle East or Italy collapses, I’m becoming less optimistic on the buying of the yellow metal as a place to invest. Famed investor George Soros recently cut his gold holdings, but Paulson & Co. made no changes. (Source: Rooney, B., “ Soros dumps gold as prices sink,” CNN Money, February 16, 2013, last accessed March 28, 2013.)

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