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Gold Bullion and the Big Banks

March 14, 2012 - Gold bullion is the investment of choice as banking sector stocks enjoy an eight-month high on news that only four out of nineteen failed Federal stress tests. While markets around the world rallied on this news, the affordability of gold really stands out at a time like this. Gold has been regaining ground since the understanding came from the Federal Reserve that another official round of Quantitative Easing was being delayed and has recently breached the psychologically important $1,700 level.

Investors looking to purchase may be seeing the best opportunity to do so as the performance of stocks makes the news and gold bullion is completely undervalued in its current position. Some of the best trading advice consists of the fundamentals. Buy low and sell high. Buying financial stocks makes no sense right now because they are probably enjoying the best prices they will see this entire year.

Yet gold, which is not making the news, is a relatively well-priced investment. Jim Rogers, legendary Wall Street investor and co-founder of the Quantum Fund with George Soros, has said in the past month that, “If gold goes to $1,600, I hope I’m smart enough to buy more.”

That is the essence the current dip in gold bullion. This is a temporary market fluctuation in an overall bull market. Gold has been in bull territory for 11 years and shows no signs of exiting the bull territory because of market fundamentals that include the policy of the Federal Reserve, the central bank in the United States. The Fed has openly stated it will keep interest rates low through 2014, veritably ensuring a bull market for gold during that time.

The Fed can’t raise rates without endangering the economy despite a “frustratingly slow” recovery, in the words of Fed Chairman Ben Bernanke. The mid to long-term trend remains the same and promises even further returns on gold. Gold bullion, not financials stock, is the best investment to make right now.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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