Economic Stimulus Plan Signals Gold Take-Off
Gold technicals
Aside from the technicals of the gold chart, let us also get back to fundamentals: the supply of gold and silver is pretty much fixed. Money supply is undergoing huge and unprecedented expansion.
At present, governments are printing money like “there’s no tomorrow” and little is happening to their economies because banks, companies and individuals are hoarding cash. But eventually pulling on this string will work, and money will flood into the economy in an uncontrollable way.
It is at this point that gold prices will go ballistic. That should not be more than nine months to a year away based on past precedent. However, before that golden age occurs there will be increasing speculation about the future of the gold (and silver) price. More and more investors will read articles like this one and be impressed by the argument - which is far sounder than trying to come up with a new bull market for equities, bonds or real estate.
Merril Lynch agrees
Gold prices may hit $1,500 an ounce in the next 12 to 15 months, Gary Dugan, the Chief Investment Officer (CIO) of Merrill Lynch, said yesterday. With confidence in currencies shaken to the core, the yellow metal is increasingly assuming the role of “the most trusted currency”, Dugan said. “We have never seen such a rush to buy gold. It’s bringing in security and it’s still affordable.”
Merrill Lynch commodity price forecast authored by Dugan showed that gold prices can rise from the currently prevailing $913/oz to $1,100/oz in the first quarter of 2009 and to $1,150/oz in the second quarter. “While demand for gold has been rising production has been declining. South Africa, which accounts for the major share of global gold production, is facing political issues and has energy problems,” Dugan said.
Bond crash
Sometime soon the bond markets of the world are also going to weaken much further, and that will give precious metals another reason to rise in value as an alternative safe haven class.
For investors in precious metals then it is just a matter of holding on and taking advantage of price dips to stock up with bullion and shares, although it is surely arguable that the best buying opportunities are behind us now as the price trend is about to head back up.
Trying to time the market exactly or using borrowed money is not a clever approach in volatile markets, but a diversified precious metals portfolio is going to be a winner over the next two years.
In conclusion
If you’re looking for a way to capitalize on the government-sponsored bull market in infrastructure, I expect there will be some upside to the usual cast of companies that benefit from government construction and engineering projects. Companies like Fluor (NYSE:FLR), Shaw Group (NYSE:SGR) and Jacobs Engineering Group (NYSE:JEC).
But the real winners – in the long-term – will be those investments that benefit most from rising inflation… precious metals and precious metals mining stocks.
Article Sources:
Source: The Great Stimulus Boondoggle (And How to Profit)
Seeking Alpha
Fool.com (Merril Lynch)
62 Responses to “Economic Stimulus Plan Signals Gold Take-Off”
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hi i am writing to find out when they will deposit the stimulus than you
when will you be depositing our stimulus bonus thank you
we are a family of 4 now i have a baby i we have to buy diapers and so forth for our 7yr.old and we have other needs aslo and we we looking forward for the little extra money also!i myself dont think it is right as people in louisiana and other countries are looking for this extra money in the time of need .and we are geeting dumped on and other countries are getting ahead of that is what we all worked for How that helping us ciizens of the UNITED STATES when we cant used our hard earned sweat and time way from our kids and our spouses and our parents to used this money is worth of using in our time of need!
I THINK THAT AS A PARENT OF 2 .1 7YROLD,AND 1OF A12 MONTHOLD WE WERE LOKING FORWARD THE STIMULUS CHECK BECAUSE WE HAVE THE NEEDS LIKE OTHER COUNTRIES.I THINK THAT IS RIGHTFULLY EVERYONE THAT WORKED AND TAKE TIME FROM ALL HER KIDS ANSPOUSES AND ELDERLY PARENTS TO GO TO WORK TO MAKE ENDS MEET.WHAT ABOUT US AS PEOPLE THAT MAKES THIS WORLDWE DESERVE SOME OF THIS STIMULUS PAY AS WELL.NOT MAKE IT ANY HARDER THAN IT HAS BEEN FOR ALL THESE YEARS!
ireally need a stimulus pament when will i get it
Do we have to pay back the tax stimulus at the end of the year when we do our taxes? I don’t really understand. The way I see it i’ll owe more taxes at the end of the year.
I’m talking about the little the IRS is takeing off my pay check each week. The way it figures I’ll more this year because they didn’ withhold enough taxes each week. Will I have to pay more mext April?
When will the stimulus checks be sent out? I was under the impression that it would be sometime in May.
hi,
i was wondering if everyone was going to receive the stimulus plan. i hope everyone is receiving it because bush gave it to everyone and obama should too. thankyou
i have went to all the websites to help people out and they all are asking for money and that is suppose to help us how????
we are struggling and need some help. you have promised us some help and i havent seen any yet!! can you please tell us when we will receive our stimulus?
as i had written what happen to the people that are living without. the government. seems to be giving money to people that get’s a check every month anyway. it not fair for the people that can’t draw dissability. or get a veteran’s check. or ssi. not to get a stimilus check. i’am raising my nephew.off the 155.00 a month .and a 95.00 ulitility check. can’t find a job. but get’s no help.from the anyone so why should people that already get’s all the benifits
my name is Jennifer I am a single mother of two I was woundering If we will get a stimulas check and when will it come.I am in despreat need of extra money for the kids and bills.