Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Gold Investments

Gold is used as an investment in order to reduce the overall risk on an investment portfolio. The precious metal has in the past—and continues to do so—provided investors with safety against currency devaluation; it acts as one of the best hedges against inflation and provides safety in times of uncertainty. Gold is not only used by investors to diversify their risks; central banks around the world also use the yellow metal to reduce the volatility in their foreign exchange reserves.

There are many different kinds of gold investments investors can use to protect their portfolios. They may consider buying gold bullion—in the form of bars and coins (with this, they will have to keep storage costs in mind). Investors may choose to buy gold certificates, futures contracts, or exchange-traded products (with this, they will have to keep the expiry date and other specifications in mind). They can also buy gold mining stocks to diversify their risk in their portfolio. By buying mining shares, investors have to become very knowledgeable about where the mining is being done and how much does it cost to extract one ounce of gold from the ground.

Since early 2013, gold investments haven’t performed well. This is mainly due to the lower precious metal prices. However, the fundamentals suggest that gold prices will head higher. As a result, gold-related investments will see a rise as well.

Stock Market Correction’s Here—Put Dividend Paying Stocks on Your Radar Screen

By for Profit Confidential

earnings seasonThis is the correction we’ve been expecting and it’s affecting stocks as well as commodities. The stock market has been due for a correction after a solid first-quarter earnings season and, because share prices moved so strongly since the beginning of the year. It doesn’t really matter what the catalyst is for the correction; it is well-deserved and a healthy development in my view.

I think the S&P 500 Index is vulnerable now to the 1,300 level and, if it gets there, this would be a meaningful correction and a good buying opportunity for higher dividend paying, large-cap companies. Generally speaking, I think we’re in a time now where the stock market will be more apt to reward income over growth. Large-cap, dividend paying stocks have been leading the stock market since last October and I think this trend will continue right into 2013.

Along with large-cap stocks, both smaller companies and commodities are also experiencing a pullback. Growth concerns in the global economy are real and whether it’s related to price inflation in China or sovereign debt problems in Europe, the new normal is slower economic growth rates, especially among mature economies.

I don’t see any reason why the U.S. stock market can’t reaccelerate this year, especially as we are likely to see sporadic improvement in the economic news. And, while the outlook for corporate earnings isn’t robust, it’s still solid and stock market valuations are reasonable. Investment risk remains high for all equities, but it’s been like this since the financial crisis.

I think that big corporations are keeping earnings expectations purposefully low, in order to outperform come … Read More

Debt Crisis in Europe Highlights Continued Strong Fundamentals for Gold

By for Profit Confidential

It’s pretty difficult to get enthusiastic about the stock market with sentiment so focused on the sovereign debt situation inGreece. Even in the face of solid earnings expectations for the third quarter, investors are looking into the future and seeing slow economic growth, translating into slower earnings. It’s the perfect storm for equities and it makes choices for equity investors very limited.

Inflation at Almost 5%…Is It Any Wonder
Dollars Buy Less and Less?

By for Profit Confidential

Gold prices rising for 10 years straight…the money supply greatly expanded…the printing press for dollars running overtime…am I the only one concerned about rapid inflation? I rarely read or hear a report talking about today’s rising prices or the hyperinflation we may sustain in the years ahead. We all know prices are rising—only housing prices have remained low. Inflation is real and it is here now.

Great…Just What We Need…
More Money Printing

By for Profit Confidential

It’s a bird. No, it’s a plane. Maybe it’s Superman! Sorry, it’s none of these things; it’s your friendly central banker to the rescue again! Couldn’t believe the news yesterday morning… To calm banking concerns in Europe, mostly centered around the repercussions of a default by Greece, the European Central Bank, the Bank of England, the Bank of Japan, the Swiss National Bank and even our own Federal Reserve are providing three-month loans to euro-area banks.

Huge Bearish Sentiment to
Propel Stock Market Rally

By for Profit Confidential

Loyal and long-term readers know I’m a contrarian investor at heart. When investors are selling in droves, I want to buy. Similarly, when investors are buying stocks as a herd, I’m selling. And this brings me to today’s very important issue.

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