Can I be so bold today and use a comment made by Alan Greenspan in a speech years ago and equate our equity markets with the so-called DOT-COM bubble as a market of “Irrational Exuberance.” Ok I hear some of you yelling back at me. You are quite pleased looking at your stock accounts and 401k statements.
I get it.
But let me share with you some statements from people on Wall Street who have a lot to say.
I asked a friend of mine who is a commodity fund manager, “I’m looking at the overnight inflow into all four Precious Metal ETF Funds. With the Dow up over 300 points yesterday and all the money that has been on the sidelines now heading into equity markets, where is the interest coming from for the ETFs?”
He indicated that he would never put all his eggs in one basket and has been told by some of the smart fund managers they are starting to take profits off the table and diversify into the metals arena. I guess you can call it “commercial diversification.” As I indicated to you before, of all the financial advisors I spoke with, none indicated that there was any interest from the retail investor to invest in commodities at this time. So how else do you explain the continued inflows into the Gold ETF arena over the last two weeks? And looking at where gold has traded from Jan 1st to today, we are up 7 percent even while looking at a remarkable rally in the Dow S&P and Nasdaq. As a gold trader for more than 40 years, if I had just arrived back from Mars after a two month trip and you told me how high equities have come I would have thought gold would be down 7 percent not up 7 percent.
What this all means is that even with the stronger dollar, higher yields in the U.S. ten yield treasuries, AND the Dow, S&P and Nasdaq crushing the markets; the price of gold is continuing at a steady higher pace. If you believe that the U.S. debt and the entitlement programs will never be an issue, you might want to go out today and buy a couple of picture frames and put our future monthly equity statements on the wall for all to see.
Just having some fun.
Have a wonderful Thursday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.