Yup! We can all pack up and go home now. The markets are recovered and there is no need to rely on gold and silver anymore to protect our assets.
Stocks are up and the mood in the financial world can be described as exuberant. I mean, what’s not to be excited about? The S&P right now has almost climbed back up to being down just 14% in the last 7 weeks. Meanwhile, gold and silver are off 2% from yesterday’s highs (record high for gold) and the sky is falling.
This morning it has been suggested that rising stocks are due to an anticipated announcement by Ben Bernanke that some form of QE3 is on its way. In a recent article, I provided charts showing how much the markets love printed money. I also showed how much precious metals love printed money. So, why are stocks up today while gold and silver are down.
It’s a matter of perception. Stocks are up from a 12-month low and gold is down from an all-time high. The S&P, for example, is still down 200 points over the last 7 weeks. Gold at $1835 right now, is still up 22% over the last 7 weeks, despite its recent pullback. Gold and silver should be off yesterday’s highs. Despite the outlook for gold and silver down the road, there are always those who want and need to take profit. Especially after the markets spanked everybody so hard the last few weeks.
The question now is, where too for both? If there is some other form of QE3 coming, it would be in pattern for stocks to rally around the promise — with one proviso!! The can has only been kicked down the road Again! We’re still driving the car off the end of a cliff, only now we’re moving toward it at a slightly lower speed.
Gold and silver also appreciate printed money, as every time the printing press fires up, the new money injected into the system devalues, or, destroys the purchasing power of the money already in existence. Hence, higher gold prices as investors turn to gold to hedge against weaker currencies.
If you are wondering which is the better investment, remember I have no crystal ball. I only write about my opinions based on what I observe every day. With respect to stocks, I observed that when the supply of printed money is threatened, the markets dip. Gold and silver on the other hand continue to rise as both become a safe-haven play against financial Armageddon.
That’s why I think gold and silver are in a win win situation right now. It’s a debt trap and only gold and silver have shown the potential to spring you from its grip. For up to the minute reports on Gold visit LearCapital.com for a variety of free services and breaking gold news.