Originally Posted by magnamx-5
The new hedge lol some on is forgeting that people always went to gold before but now for reasons i state later in this post it no longer holds true.
Lol are you serius dude. I invested in gold years back i have several ounces of 14 karat or better and alil rough diamond stock. Gold is a suckers play ever since the miners figured out how to produce it for 450$ an ounce. Down from 700 or better an ounce that was the standard 3 yrs ago so basically all the money above 600$ an ounce is speculation this and the amount of resistance i see when it hits 1,000$ an ounce and the sharp drop off to the low 900's high-mid 800's make it rather unatractive to me. But then agian i like to stay mobil with my money. If you realy wanna trade i suggest you do the reaserch and pick stocks you like on the basics. This is not a very long term type market so long as the voilitility stays the way it is you are a fool to not try to catch a few waves and snap a few 10-40% upswings on some underweight stock. In AIG and Ford alone i have more than double my net profits this year. Yeah city burned some of us back in january but not to horridly.
Gold is was just the flavor of the week that week. In times of uncertainty, people flock to *commodities*- gold is simply one of them that falls in and out of favor, and one that comes up frequently because, well, it's more exciting to talk about gold than copper, aluminum or iron- or nonmetal commodities (with the exception of oil, but there isn't much going on there at the moment).
Gold's most recent surge was driven by the same people, and the same types of people who over the summer were pushing oil as a hedge. Then it was "buy oil now! It has nowhere to go but up!," and then it crashed when people realized that supply/demand didn't justify the $150/bbl price tag. Then the speculators moved here and there, and recently to gold, pushing it over $1000/ounce, and then it came back down. And round and round we go.
Yes, gold has a long history of being a precious metal, and it comes into (and subsequently falls out of) favor regularly. And it is true that over the long haul, if purchased at a reasonable price, it should hedge against inflation. But simply hedging against inflation is a terrible investment strategy if one actually plans to make some decent amount of money out of the market. To do so, one must speculate, and it's usually a safe bet that if the masses are flocking to something already, you're too late to the party- just as you point out. It's about catching the waves on the way up, rather than the way down.