This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Avoiding the Gold Trap

NEW YORK ( TheStreet) -- Gold has finally cracked $1,000 an ounce. It's been what all the gold bugs have been waiting for. Is now the time to go "all in" on gold? I think there's a classic trader's trap in gold right now and I'd advise you to steer clear.

Everything is working to gold's advantage right now and every argument that can be made seems to point to it moving higher and for you to consider being long gold and gold stocks.

There is, of course, the very obvious inflation trade that draws many investors to gold.

The historic deficit spending by the federal government to try to avoid a cataclysmic, "Depression-era" replay does not come as a free lunch, the gold advocates say.

The huge stimulus package, bailouts for financial institutions like the Troubled Asset Relief Program, the Term Asset Loan Facility program, guarantees of various other commercial and residential debt instruments and even "cash for clunkers" have sent the federal deficit in 2009 to an estimated $11.8 trillion dollars. Inflation surely looms and with it, higher gold prices.

And September is historically an excellent month to be long gold. Experts note that gold has rallied in 16 of the last 20 Septembers. They cite the start of gold accumulation in the fall by commercial metals providers for Christmas jewelry, as well as the oncoming Ramadan holiday, when gold is a traditional gift.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AUY $3.89 0.00%
FCX $19.50 0.00%
GOLD $71.01 0.00%
GLD $115.52 0.04%
NEM $22.16 0.00%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs