Gold pdf by olliemerrill716


									             At What Prices Should Investors Sell Gold?

Since gold futures struck over $1750/oz a good deal of buyers are questioning
themselves whether they should sell their physical gold or reduce holdings in the
gold ETF. Several investors are sitting on a 450% potential capital gain. Who
wouldn't want to take the capital gain? Investors are always reminded of the
maxim that "pigs get slaughtered." In addition, traders always remind themselves
to buy low and sell high. Many traders feel that the gold price is high because it
has skyrocketed over the last decade.

Take a Look at Selling Gold

Even so, the sales approach for gold holdings is dependent on one question - is
there an attractive currency that is not being debased by central bankers? In what
currency should savers save their capital?

Have a Look at Gold Buyer

Currently, the yen, euro and dollar are the world's major currencies. However,
none of these currencies make investors sleep well at night. Unfortunately, the
Chinese Yuan does not float. In addition, resource currencies like the Australian
dollar and the Norwegian Kronor are small to be able to be used as major

See a Look at gold

Smart investors generally want to see the following actions before they even
consider selling their gold holdings::

a) a Paul Volcker sort of Federal Reserve chairman takes over at the Federal
Reserve. If the Fed had a man at the helm who was not a money printer one might
consider selling gold. If the Fed had a Chairman cared about a stable and sound
currency, investors would trade in their gold for central bank notes. What is the
probability that the Fed changes their money printing policy without a major
currency crisis? The same question can be asked of the Japanese and European
central bankers.
b) the other issue that concerns gold investors is whether U.S. Congress will
impose austerity measures. Most analysts agree that widespread budget cutbacks
are sorely needed. Entitlements would have to be cut massively as there are about
$50 trillion of unfunded liabilities which is why S&P cut the U.S. bond rating.
Similar to the probability of a changing of the guard at the Fed, it is unlikely that
Congress will cut entitlements unless there is a major dollar or bond market crisis.

Despite the fact that gold has rocketed in 2011 and is in the 11th year of a bull
market, most long term investors are not selling gold. There has been no policy
changes that would suggest that the Fed will stop money printing to "solve" the
debt crisis. If anything, it is starting to feel as though the debt crisis has just
entered a second and far more dangerous phase.

Mike Clemson writes a blog profiling the trades and strategies of hedge fund

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