Hey, what's up with gold, supposedly the bullet-proof investment when things look like they're going to hell (like now)? Somehow, the script got screwed up. Instead of roaring, gold is crawling, and not only that, it's going backwards to boot.
After tripling since 2001 and steadily ballooning in recent years to an all-time high a couple of weeks ago of $1,250.40 an ounce -- about a 50% jump from its 2007 close of $833 and nearly a 15% gain from last year's wrapup of $1,098.60 -- the yellow metal is starting to tarnish. Last week alone, it dropped $54.40 or 4.4%.
Granted, nothing goes up forever, but the sudden retreat by the investment darling of the flight-to- safety crowd into the $1,100s -- coupled with growing predictions of more erosion ahead -- seems totally out of line, given a slew of gold-buying catalysts. These include:
--Europe's worsening sovereign debt crisis.
--A growing number of forecasts that Greece will default.
--Swelling currency concerns, led by the collapsing Euro.
--French President Sarkozy's threat to pull France out of the Euro.
--Burgeoning money printing world-wide, a sure harbinger of future inflation.
--Fears that the European debt crisis will lead to a faltering global recovery, maybe even a recession.
--Our exploding debt and deficit.
--A warning by former Treasury Secretary Paul O'Neill that the U.S. could go the way of Greece, that "if we don't change course, we could become a basket case ourself."
--Increasing worries about bonds, including long-term U.S. Treasuries.
--An increasingly erratic U.S. stock market, characterized by growing daily triple-digit losses in the Dow Industrials and the recent nasty one-day decline in the Dow of nearly 1,000 points.
Actually, given world-wide financial turmoil and no indication of any let-up in sight, some gold traders think the metal should already be commanding a price tag of around $2,000. But even some bulls see additional weakness, with the metal, currently around $1,192, seen falling over the near term to $1,120 and perhaps even retesting $1,000.
One concern, as a number of gold experts see it, is a worrisome contrary indicator, namely there are way too many bulls. "It's a crowded trade on the upside," says Larry Edelson, who monitors precious metals trends for Weiss Research in Jupiter, Fla. and notes that sentiment readings show 98% of investors are bullish on gold. "Near term, it's putting in a little top, says Edelson, who thinks the metal could drop to the $1,130-$1,150 range.
One reason, he believes, that gold is being negatively impacted short term is stepped-up overseas demand for the U.S. dollar for safety purposes, although Edelson views such buying as tantamount "to jumping from the frying pan into the fire."
Although concerned about the near term outlook for gold, the analyst takes a far more positive view beyond that, arguing that it's surely headed higher. Pointing in particular to the collapsing Euro and growing financial distress in the U.S., Edelson sees gold subsequently rising to $1,500 this year and on to $2,300 in 2011. As another positive for the metal, he notes that gold, before its recent spell of weakness, has been climbing even in the face of a rising greenback. "That's proof positive of a crisis in the fiat currency system," says Edelson.
Taking a longer term view, he thinks gold should be part of every investor's portfolio. His favorite is the physical gold itself, which can be purchased from such well known outfits as Monex; Manfra, Tordello and Brookes, a New York bullion dealer, and Kitco.com., an online dealer. As for individual stocks, he goes for the biggies, notably Barrick Gold., Goldcorp., and Newmont Mining.
A fella who has made some excellent up and down calls on the direction of gold prices -- in fact, he accurately predicted the recent weakness -- is Mark Leibovit, editor of the VR Gold Letter in Sedona, Ariz.
He drew my attention to several recent negative technical signs that suggest gold could continue its recent drop to around $1,060 an ounce, which would be equivalent to an overall retreat of say 15%. which Leibovit contends would represent a buying opportunity. One of those signs was what he calls a reversal pattern, which occurred when gold rose to higher highs during one recent trading session and then reversed to lower lows the following day. Another red flag was the failure of a couple of gold indexes -- the Gold Bugs Index and the Philadelphia Gold Index -- to accompany and confirm the metal's recent rise to record highs.
Leibovit cited the possibility of a strengthening Euro, which could hurt gold, maybe even lead to a retesting of the $1,000 price tag, but he thought a more likely course was the fear that the European debt crisis might expand, leading instead to a higher gold price. In any event, he thinks the wind is at gold's back and views $2,000 or $3,000 as only a matter of time.
He also points out that despite his near-term conerns, gold stil has the wherewithall to rebound sharply at any given moment.
A HuffPost reader in Brisbane, Australia, Cornel Campeanu, a chartist at Techpro.au.Com, e-mailed me with an entirely different scenario. Based on his work, he believes we are a short time away from a meltdown of biblical proportions in mining stocks, with such names as BH Billiton and Rio Tinto leading the charge. As for gold, he sees a potential drop of hundreds of dollars an ounce, preceded by a possible near term drop to $1,120.
Campeanu, it should be duly noted, is spouting contrarian views. Most market pros I talk to overwhelmingly feel that long term, the outlook for gold remains golden.
What do you think? E-mail me at Dandordan@aol.com
We've all heard, ad nauseam, the traditional commands to save paper: recycle, print double-sided, don't use more than you need. And so on. By now, I'm going to assume, you're looking for a fresh stock of ideas for your green-living arsenal.
With that in mind, I've compiled four new tips about how to cut down on paper use. There are many reasons to, perhaps the foremost of which is that much of climate change is caused by deforestation. Also, paper production consumes a lot of energy, paper mills are big polluters, and thrown-away sheets clog landfills. So here's what you can do:
1. Post a Reminder
We know you wouldn't use more paper towels or napkins than you need - but what about everyone else? Engage in some minor guerrilla tactics by ordering a stash of these wonderful stickers, which you can post on paper-towel dispensers in public restrooms, or anywhere else paper products are dispensed, to remind people that, as the stickers say, "These come from trees." Each of these little pieces of positive propaganda, say its creators, saves 100 pounds of paper per year. Plus, profits are donated to the Sierra Club. Want to start combating mindless napkin-pulling right away? Get creative and make your own reminder signs to post.
2. Opt for Hemp
It's Hemp History Week, and while hemp has a controversial history in the U.S., buying paper made of hemp instead of trees isn't illegal. And it's certainly a lot more environmental, considering that as a crop, hemp needs no pesticides, grows back quickly, and preserves the soil it's in better than most commercially grown plants do. No trees need to be killed for a hemp-paper product such as this one or this one.
3. Cure "Bagnesia"
It happened again: You were in line at the grocery store, satisfied with your organic, vegetarian, not-too-packaged purchases. Then it hit you: A vision of your reusable grocery bags -- collecting dust in your car's trunk or kitchen cupboard. You sighed and lugged home your loot in bags of paper or plastic, swearing to remember better next time.
To help you, consider getting Bagnesia's Reusable Bag Solution Kit ($20), which includes two reusable bags, plus two ways to remind yourself to bring 'em along: a doorknob hanger that instructs, "Grab your bags," and a steering-wheel wrap with the same imperative. To save the cash, you can develop your own reminder system -- as long as it works.
4. Go Electronic
The rise of e-mail has saved forests' worth of trees. Which is great -- but perhaps it's time to take the paper-saving up another notch. Are you willing to rethink social graces traditionally carried out with paper? If you're planning a wedding, say, would you consider making your save-the-dates electronic? How about the actual invitations? Can thank-you cards be e-mailed instead of produced, bought, and delivered? How do you feel about sending electronic special-occasion cards, like for this upcoming Father's Day? A Google search turns up plenty of services for sending online greetings; a high-quality choice is Pingg, which stocks stunning nature imagery.
Please comment: What are your innovative tips to save paper?
[via The Green Life]
Mike Fuljenz Mike Fuljenz
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