Well, this one was telegraphed like Chris Iallegio's roundhouse in 6th grade...but this time, I reacted a little more quickly. Gold again hit a record high of $992 an ounce and is likely to break $1,000 this week. Platinum broke through $2245 per ounce.
In short:
- Our currency is continually weakening and our Fed has precipitated this decline even further by projecting further rate cuts.
- We are in a recession. There's very little doubt. The economists will look back and say it had already begun.
- Inflation is stoked and investors flock to gold in these times.
- Overseas, gold and platinum are still in short supply and consumption is outstripping supply.
Note several recent posts on African mining troubles, cheap car production worldwide driving platinum for catalytic converters and more.
So, this time around, I saw it coming. I went long gold with GLD, the gold bullion ETF and long platinum/palladium with Stillwater mining (SWC). SWC was up 8% today alone!
I don't believe it's too late to catch another couple months of continued ascension. The Fed's actions and our country's inability to spend less than we take in will continue to weaken our currency for some time to come. As other countries fail to cut their rates in lockstep with ours, I don't see what drives the dollar higher and depresses these commodity prices from here.
If you really want to jump on this commodities bandwagon, check out my other posts on the continuous commodities ETF to get exposure to soft commodities and the leveraged ETFs where you can double the return of gold:
http://everydayfinance.blogspot.com/2008/03/new-gold-etns-allow-for-double-return.html
http://everydayfinance.blogspot.com/2008/02/fair-and-balanced-new-commodity-etf.html
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