In the past few days, the news headlines have been dominated by financials and technology. First, there are new taxes being proposed on financial firms. We bailed them out and now it’s payback time. At least, that seems to be the attitude in Washington. No more too big to fail. Then, we have earnings. Several financial firms are reporting their earnings in the next few days. JP Morgan kicked it off this morning. As a group, financials have performed pretty well this year. But, besides financials, technology have also been the talk of the town. Smartphones were extremely popular for Christmas gifts and with Windows 7 causing a technology upgrade, these stocks have done very well also. Then, we get word that Google wants to pull out of China because they are concerned about the Chinese government hacking into their systems. Other American companies admit the same but have been too scared to say anything in fear of losing business in China. All of this news in the financial & tech industries has caused investors to forget about some of the sectors that dominated the front page in 2009.
Gold, which was up about 25% last year, is off to a good start in 2010 as well but isn’t getting the headlines and I believe it’s on the verge of a big move. The dollar, which had a nice run late in the year has given back almost half of its gains but it’s not newsworthy anymore apparently. I think it’s still very relevant as are interest rates and gold will certainly be a mover in 2010.
You can see from the picture above that gold has been making higher lows for some time but has just recently been making lower highs as well. Something will give and I think it will be soon, just like sugar late last year. With the stock market overbought in the short-term, investors may look to re-allocate to another asset class and gold could be it. I’m bullish on lots of different metals but I wanted to highlight gold since I get so many questions about gold generally.
No comments:
Post a Comment