View Full Version : Traders Are Dumping Stocks and Buying Gold and Silver

06-07-2011, 09:07 PM
From CNBC...I am not sure if this is good or bad.

I guess there is more upside in trading the metals ?
...and a flight to safety.

The move is fueled by a number of worries: The European Union is planning its second Greek bailout, the Federal Reserve is angling to keep interest rates low while the second round of quantitative easing runs out—and global economic growth is slowing.

“Gold is more valuable at this juncture as the flight to quality accelerates,” said Stephen Weiss of Short Hills Capital. “Global equity indices will all be in decline as multiple growth engines sputter: US, China, Eurozone and Japan. Only place is commodities, and specifically gold, because that is where perceived safety and momentum will be.”

Over the last 80 years, gold has traded, on average, about 1.5 times the S&P 500, but traded as high as six-times the S&P 500 back in 1980 when inflation damaged the value of the dollar, according to John Roque, a technical strategist for WJB Capital. Roque, who like a lot of chart analysts, studies this ratio quite closely, is seeing a bullish breakout in gold.

For the metal to get back to its average price relative to stocks, it would need to increase 23 percent to $1900 from its current level around $1540.


06-07-2011, 09:14 PM