Saturday, February 14, 2009

Gold or Industrial Commodities?

Gold is one of the hedges against the falling currency value. Majority of currencies around the world are expected to fall further and that's why speculators buy gold. Now, because the gold is only one of the hedges and has a competition from other commodities, like industrial commodities, it's hard to time the appropriate entry and exit points. It's too volatile. And all the more so, because gold ETF GLD is so easy to trade.

At his interview to Bloomberg in Davos, Barrick Gold Corp. Chairman Peter Munk predicted the gold to top $1000/ounce in the near future. But what would be the good reason for that to happen? Is that undervalued now? Is dollar going to loose 10-20% of its value? Will it be the speculative hype?

In my view, industrial commodities have more solid reasons to grow: rise of emerging economies and fall of currencies.

In his interview to Bloomberg on January 6, 2009, Marc Faber said he favored industrial commodities over gold.

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