streetTracks: A Golden Road

01/07/2005 12:00 am EST


Mary Anne & Pamela Aden

Co-Editors, The Aden Forecast

Our final Top Pick selection-streetTRACKS Gold Trust-was selected by "a trio" of financial experts,  the Aden sisters as well as by Vivian Lewis. They have selected this gold-based exchange traded fund in large part on their expectations for continued weakness in the US dollar.

"The US dollar has been on the decline for the past couple of years," says Pamela and Mary Anne Aden, co-editors of The Aden Forecast. "Due to the size of the massive US current account deficit alone, we believe this trend will continue in 2005. That in turn will keep upward pressure on the gold price since these two markets move in opposite directions. Against this backdrop, our top stock pick is the gold bullion exchange traded fund,  streetTRACKS Gold Trust (GLD NYSE). It tracks the gold price and each share represents one-tenth of an ounce of gold."

Adds Vivian Lewis, editor of Global Investing, "I am not normally a gold bug. But I think that Americans should be buying physical gold right now. There should be an offset to the US dollar in almost every American stock portfolio. I therefore am recommending streetTRACKS Gold Trust. The price of gold moves inversely to that of the dollar. And the dollar faces a day of reckoning. The US has a structural government budget deficit. The US has a private savings problem. The US is running a mounting trade deficit. All threaten the dollar. A larger deficit mean that more dollars have to be converted into foreign currencies to pay for the imports.

"The big buyers of US Treasury bonds to finance our trade and government deficits are Asian countries, notably Japan, China, Taiwan, Hong Kong, and South Korea. They want to keep us spending so they can export ever more to the Wal-Marts of America. This situation is inherently unstable and foreign investors sooner or later will dump billions of dollars in US T-bonds as the dollar plummets.  I don't know when the red ink from Asia will hit the US Treasury market, but I expect it during 2005. To protect yourself from the huge current account shock-wave when the dollar crashes, you want to be in assets that will benefit, and that includes a position such as gold, which we recommended via buying streetTRACKS Gold Trust."

Related Articles on