New Article in SFO Weekly: Short Gold Miners
Over the past few weeks, I've made my case against gold. Its recent strength has not been confirmed by other inflation hedges, nor has the bond market's action been consistent with that of gold. With no justification for higher prices in the months ahead, I recommended a short position in gold mining stocks in the most recent issue of SFO Weekly.
To read the article, follow this link: "Short Gold Miners"
Excerpt:
There is no inflation. Let’s start with this somewhat controversial statement. By saying this, I have no doubt already become somewhat of a pariah in the investment industry. It is accepted as virtual holy writ that inflation is coming due to the Federal Reserve’s massive expansion of the monetary base in 2008 and 2009. And of course, the rise in the price of gold is offered as “proof” of this—the gold market is anticipating higher inflation down the road.
There is a big flaw in this argument, however. The bond market isn’t confirming it.
The 10-year Treasury bond currently yields 3.7 percent and the spread over inflation protected securities ("TIPS") suggests that the bond market sees inflation of less than 2.5 percent over the next ten years. So, either the bond vigilantes have completely fallen asleep at the wheel, or the gold price of $1,100 is indicative of hysteria over non-existent inflation.
Charles Lewis Sizemore, CFA
Chief Investment Officer, Sizemore Capital Management LLC
The views expressed in this post are the personal views of Charles Sizemore and may or may not reflect the investment policies and decisions of Sizemore Capital Management.
Sizemore Capital Management LLC is a registered investment advisor specializing in money management and financial planning for individuals. Please visit us on the web for more information: www.sizemorecapital.com
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Charles Lewis Sizemore, CFA
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