We have seen downgrades on Barrick Gold (ABX) for years. Many keep looking lower and lower, with som...
Should You Be Buying Gold?
03/16/2015 12:01 am EST
MoneyShow's Jim Jubak reviews how gold has done so far in 2015 and shares his view on what role gold should play in your portfolio.
Okay, gold had a really nice rally in January and it started to sell off again.
The reasons for that are really pretty obvious.
As the markets start to think that the Fed is actually going to raise rates, and I know we've heard that story over and over and over again, so it may not necessarily happen, but the fear that the market is going to raise interest rates and that the dollar will get stronger hits gold pretty hard.
Basically, we've had a move up to mid or late January and then we've had a move back down so that gold is now actually below where it was at the beginning of the year. You look at this and you go, okay, so a lot of gold stocks are really cheap, gold itself is trading, you know, $1150 or $1160, not terribly expensive, so do you want to buy some and you want to add some to your portfolio as a hedge against something.
Well, at this point, I would say to you, “What are you hedging against?”
There's really no inflation out there. Interest rates look like they're going to go higher. There's not a whole lot of need to buy gold as a hedge and I think that's part of the problem right now.
Until you get some kind of real fear, some kind of fundamental portfolio reason to buy gold, to add it to a portfolio, metal is not going to move up more than what you get from, say, the start of Indian wedding season or something like that that spikes demand or the $10,000 gold Apple watch but those are very transient things.
What we're looking for here is some reason to add gold to a portfolio as a hedge and, right now, it's very hard to see so I think what you're going to see is gold trapped in this range while we wait for some kind of fundamental change, either rising inflation or an end to rate cycles, and I don't see either of those being really, really soon.
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