To Buy Or To Sell Gold Now?

FinancialSense has a new market commentator, Danielle Park, and on her market wrap editorial, she writes Feelings aside: Is gold more likely a buy or a sell here?

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  Since 2001 and for 7 long years as the US dollar fell, the price of gold had an exceptionally good run of more than 300%. But as the US dollar broke out last January gold broke down. Since then as the great reckoning broke loose in the global economy, we have seen gold make lower highs, and lower lows.
  
  I don’t profess to know the future. But with all the carnage that has hit the world this past year, shouldn’t gold have made a fresh high by now? If the economic world does come to an end any time soon, then gold may well break higher still. But the alternate scenario should also be considered. Maybe-- just maybe the worst of this market crisis is now passing by.
  
  Yes the US has a lot of problems. But the rest of the world is in tatters too, and relatively speaking most are worse off. Incredible to suggest I know, but what if the US stock market manages the now largely unexpected and begins to buck up?
  




• The most bullish argument I hear for gold is that retail investors, now sacred out-of-their-wits by the global downturn, mistrusting governments and paper money, will continue to feverishly snatch up gold bars, coins, wafers and gold ETF's. Maybe they will; but for how much longer? They can’t eat or drink it. They can’t use it for shelter; it won’t pay them an income. Even gold-obsessed East Indians generally stop buying gold to collect when its price passes $750 an ounce. East Indian demand collapsed last year, with India’s gold imports plunging 81% in December.
  
  Maybe with the on-going implosion of hedge funds that were recklessly speculating in this and other commodities over the past 7 years, dumb money is gone for a while, and gold prices will continue to fall. Maybe the world won’t end and the US dollar won’t lose its benchmark status- at least just yet. Maybe the beleaguered stock market will start to recover this year and gold will continue to contract from its multi-year high. Based on history at least, it would seem that gold’s inevitable reversion to the mean is now overdue.
  
  
  

Do read the rest of her views here: Feelings aside: Is gold more likely a buy or a sell here?