Waiting for Jackson Hole, Betting on America, is Gold in a bubble?
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I think that Fed Chairman Bernake, while reaffirming that the Fed will do what it takes, it will not announce a QE3 today.
As the main reason for QE is to lower yields there would be little rationale to do more now with 10y treasuries at the lowest in 50 years.
The main problem in the U.S. is the weak job market and a Q3 would not create new jobs. I think that, while a QE3 is still possible, it will be announced today. A form of QE3 was the announcement that the Fed will not raise rates till 2013.
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The German announcement that there will be no short sell banning while France, Italy and Spain extended their respective bans underlines the different views among EU regulators on short selling.
Without a Euro bond and a clear solution to the European Debt crisis European market are likely to remain very volatile till September with some value opportunities for investors.
Europe needs to fix the banking system before it is too late as there will be no sustainable growth (both in the US and Europe) without solid banks.
Betting on America============
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Warren Buffett vote of confidence in Bank of America shows how long term value investors are likely to benefit from "stocks on sale" regardless of the high volatility. With yields at generational lows investors are likely to benefit from investing in heavily discounted stocks right now. I would recommend blue chips both in U.S. and Europe (particularly these paying high dividends and solid cash positions). My preference is for companies with strong brands and a sustainable competitive advantage.
- Gold bubbling ?
In my two weeks ago interview I had warned investors about a possible correction in Gold which occurred in the last days. The Gold fundamentals are still in place but obviously Gold has to be used as way to hedge a portfolio and not as a core investment. Given the relatively high prices I would recommend buying after major corrections and diversification with other precious metals like platinum or a broad commodity basket.
Reader Commentary
at 03:22 pm
This article is relating to price fixing or tag of commoditing of market,service and goods with economical law.when this fail there should be economic,laws,labour and services,money inflation.
Government should deflate by seeking employment through self employed poverty eradication program,as to realise money to their bank for loans on a payable rate.that will be used in the nation or other nations for agriculture,buying ware out good that can be use to produce new model personal belongings other nations suffers.
Rate as of europe,will not short as they plan long lag time rate fixing.rates cant be change each day.but work for a stable economy.
Gold is a mineral resources,let feed those who dig gold by investing on agriculture where fertile land is possible,because,good good cant expend capital project and consumers project at a time.so search for other mineral goods.but agriculture can reduce crime in selfemployment and unemployment.spend this mineral money on investments,that will benefit the economy on business barter relationships with other nations.not creating weapons to distroy minirals labours and properties.think wise on economical matters before passed into laws.ok!.learn robort in economical stability.