With the speculators now gone home with their tail between their legs, the bull market in gold continues on slowly but steadily.
—Gold bullion closed yesterday at $635 U.S. per ounce, now up 13% from their early October 2006 price correction low.
—The Dow Jones U.S. Gold Mining Index is up 12% from October 4, 2006.
—The resource and commodity stock rich S&P/TSX Composite (Canada’s equivalent of the NYSE) continues to post new record highs almost daily.
As a reader of PROFIT CONFIDENTIAL you’re obviously aware of my bullish opinion of gold bullion. I simply believe “too many” U.S. dollars in circulation will eventually lead domestic and foreign investors to seek a more stable currency. And lacking any real fiat (paper) currency alternative to the U.S. dollar, gold could be the currency of choice.
There are many quality gold stocks that trade on American and Canadian stock exchanges. Again, as a play, Americans should consider buying gold stocks on the major Canadian exchange so they can also profit from a decline in the value of the U.S. dollar and increase in the value of the Canadian dollar.
I predicted early in 2006 that gold would be one of the star performers of the year. Having started 2006 at $520 U.S. per ounce, gold’s already up 22% for the year. Some quality gold stocks are up even higher, some having doubled in price in 2006.
If you haven’t added gold to your portfolio as an investment and as a hedge against the weakening U.S. dollar, it’s still not too late. Stick with large, quality gold producers because yellow is looking good these days.
NEWSFLASH–Core inflation in the U.S. rose a less-than- expected 0.1% in October bringing core inflation up 2.7% from last year and down from 2.9% in September. These numbers bode well with my theory that the problem in the U.S. today is a threat of deflation, not inflation.
Happy Thanksgiving to all our American readers!