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Gold is getting sexier by the minute

Today's Financial News - Posted February 10, 2009

The equities market are taking Geithner’s proposal as kindly as flatulence at a funeral. It may be bad news for some investors, but gold bugs love it.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): Gold bugs are finally getting the fuel they need to get the price of their precious metal out of the rut it has fallen into.

With the Treasury’s latest banking-industry bailout going over like flatulence at a funeral, more and more investors are turning to the safety of gold. It has been the one asset class Washington has not been able to grossly manipulate… so far.

As I write, the price of an ounce of gold is trading for $914 an ounce, $21 higher than yesterday’s final price. As the market’s tank and volatility increases (just look at the VIX) for what seems like the nine hundredth time this year, investors are looking towards gold with a glistening eye.

Now that Obama is proving he and his team are not the overnight saviors so many voters thought they would be, gold demand is likely to continue its climb. In fact, most analysts expect gold demand to surge beyond 2007 levels this year.

If the precious metal climbed from $600 to nearly $1,000 in 2007, imagine what it could do this year.

We are just over a month into the New Year and already we have plenty of indications of what is to come. The U.S. Mint revealed this week that it sold over 92,000 ounces of its American Eagle coin in January. That adds up to more than four times what it sold during the same time last year.

Even more intriguing for gold bugs is the news trickling out of the gold ETF industry. It just announced that gold inflows increased to 1,317 tons last month, a record surge of 105 tons. That is a lot of gold. It proves investors are searching for safety and appreciation potential.

A golden opportunity

As always, you have several options if you want to take advantage of the bullish sentiment. You can take physical possession of a slab of gold in the form of bullion or gold coins.

But if you live in a rough neighborhood or don’t trust your mother-in-law, you may want to purchase shares of a gold-backed ETF like SPDR Gold Shares (NYSE:GLD). They are less prone to thievery.

Today’s action on the equities market is a good example of the portfolio-protecting abilities of gold. As I write, the S&P 500 is down by 3.68%, but the above-mentioned ETF is up by over 1.5%.

Some gold experts are calling for gold prices to hit $2,500 or even $3,000 by the end of this financial meltdown, but I am much more conservative. The figure is likely to top out at $1,500. That is a 60% gain from today’s prices. Not bad when the rest of the market’s are too afraid to move.

Gold may not be the sexiest or most thrilling investment out there. But we don’t invest to entertain ourselves. When the markets go haywire, you need to take action to protect what you have earned.

Now may be the last time to do it while prices are so cheap.


Next Article: Sirius investors: You get what you deserve

Posted by Andrew Snyder · Filed Under Featuring..., Gold and Resources 

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