Everyone is asking me about one thing these days: Should I buy Gold?
Telling people to buy gold now is like yelling "Fire!" after everyone has left the building.
I do own a small stake (5%) in the largest gold ETF in the world, GLD and I believe every investor should own some as a hedge against inflation and a hedge against overall uncertainty with global economic growth.
But I would not suggest buying gold to make a quick buck. Lately, Gold has become very closely correlated with the entire stock market. So if you want to speculate, buy stocks instead. At least there is a valuation basis to owning stock and you can earn dividend income in the meantime.
As I described in an earlier blog "Time to Put Money to Work" there is a strong valuation basis to owning the stock market today. Additionally, there is a heavy upward momentum bias driving stocks higher. TV pundits refer to this as the "Risk Trade" whereby the US dollar goes down and the stock market rises. While I'm not a firm believer in the basis for this argument, I can't deny its effect on the market. So, there you have it, valuation and momentum, you're entry signs to get heavy on equities - advice that is worth its weight in gold.
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