Gold is on a hot streak as it continues to set records and rally on. The physically-backed exchange traded funds (ETFs) are glimmering, however, some are saying its time to short the metal.
Benzinga on MinyanVille reports that regardless of the movements of the dollar, investors seem lured by the safe haven glimmer gold has to offer. The correlation between gold and the greenback has increased to a negative 0.54, the strongest inverse relationship since April. [Gold ETFs Look for the Next Move.]
Sandy Shore for Associated Press on ABC News reports that the next move investors are waiting on is if the Federal Reserve will take steps to bolster the U.S. economy yet again with more liquidity. Gold has hit a series of record highs in recent weeks as the dollar has grown weaker against other currencies amid speculation about what measures government policymakers may implement to help economic growth. [Gold ETF Mania: Time to Stick A Fork In It?]
Jordan Roy-Byrne for MinyanVille reports that fake, fraudulent, and impostor contrarians think gold is a bubble and will soon decline. They see this simply because gold has gone up too far and too fast. Meanwhile, others see gold in a bull market but continue to be worried about a 2008-style setback.
There’s much more to contrarian investing than simply going against the herd or prevailing trend. First, the herd is usually right..for awhile, at least. As a bull market develops, more and more people come on board and sentiment will inevitably become more bullish as time goes on. Furthermore, an investor should also consider technicals, fundamentals, and value in their contrarian approach, to avoid being dismissed as a fake. In addition, having an exit strategy in place, can help investors get out of a fund if it declines below their sell point.
- ProShares UltraShort Gold (NYSEArca: GLL)
- SPDR Gold Shares (NYSEArca: GLD)
- ETFS Physical Swiss Gold Shares (NYSEArca: SGOL)
- iShares COMEX Gold (NYSEArca: IAU)
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.