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Gold Investments Market Update − Goldman Sachs Plummets − Bodes Ill for Wall Street and US Financial System
Tue, Nov 11 2008, 15:10 GMT
by Mark O'Byrne
Gold and silver were up another 2% yesterday as bargain hunters continue to bottom feed. Oil and most commodities were somewhat higher on news of the Chinese $0.6 trillion stimulus injection while the dollar was flat and the pound fell again (reaching a new low against the euro) due to the sharply deteriorating UK economy.
Gold's non-correlation with equity markets continues with most equity markets again under pressure today after the Chinese stimulus induced another dead cat bounce which proved to be another false dawn. With recessions only beginning in all major economies and the likelihood that recessions will be protracted and deep, safe haven demand for gold is set to remain robust.
However, anything is possible in the short term and leveraged trading is for the foolhardy. Risk aversion should remain paramount today and in the coming weeks and investors should shun speculative short term get rich schemes for passive long term investing. Value investors should continue to remain properly diversified and maintain a minimum of 10% to 20% of their portfolio in gold bullion. The old Wall street adage of keeping 10% of your portfolio in gold and hoping it doesn't work has never been more appropriate.
Equities look set to continue to underperform - particularly the financials. Goldman Sachs can be regarded as a form of bellwether or as a proxy for Wall Street and its share price has fallen by some 2/3's in recent weeks. Goldman has fallen from over $240 to $71 per share. It collapsed just 8.5% yesterday alone. Its performance does not bode well for the US financials and US financial system.
Published on Tue, Nov 11 2008, 15:10 GMT
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The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Gold and Silver Investments Limited, trading as Gold Investments is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.Related reports
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