Keep Buying Gold on Every Decline

Gold prices are hitting new highs as investors are selling currencies and buying gold. This is the trend seen not only in the US but across the world, be it UK, China or India. According to noted economist Dennis Gartman, investors are buying into gold not on inflation fears but on a general distrust of currencies. He expects gold prices to climb higher but eventually expects the rally to end. Famed commodities investor Jim Rogers echoed similar sentiments while adding that although he believes that over long term gold prices will continue to rise, he is not investing in gold as he does not see strong fundamental reasons to invest at the current levels.

Fear and Greed

Speaking of fear, it was the rampant emotion in October 2008. Greed took over in March 2009. It's back to fear again. You might find it ironical but it is 'fear' that is driving asset prices up currently. And we are talking about all kinds of assets, ranging from stocks to gold. After the sharp rally of the past few months, investors are loading up on stocks for the 'fear' of missing out on the rally. Gold bugs 'fear' massive currency declines and are therefore gorging up on the yellow metal. Bond investors 'fear' deflation. This can be seen in rising bond yields in the US despite a considerable supply from the government.



Never before has fear felt so reassuring. Pick an asset class, and it's going up in price. All based on fear. Greed is yet to return to the markets.