Tuesday, November 3, 2009

Gold & the Indians

We've been fortunate to be long this rally in Gold entering GLD at 920 and building positions in the Gold Miner Smallcaps which are rocketing higher today.  Favorite: New Gold NGD among the small miners.

Today marks a further confirmation.  The bull market in Gold for central bankers just got started today.  The forces of demand are gathering steam.

I have a 26% sector allocation to Gold in my portfolio, mostly in the miners and small caps which are really option plays on Gold.  The emerging market central bankers are now realizing that they need to be long this commodity.

Much has been made about Gold's move higher by those that don't get it.  Gold is not necessarily an inflation play, nor a deflation play, although I believe the miners are both, given deflationary trends in production costs and inflationary trends in pricing.

What Gold is simply, is a holding that gains in value when government policies erode the value of paper money.  Secondly it is a store of value and the only currency that has survived over 5000 years.  In an era where every major currency is a questionable value, Gold is the rock.

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