After such a big run its healthy for stocks to take a breather. It would be unhealthy if it continued to run higher. Depending on your thoughts on gold and the real underlying reasons of owning gold... I suppose in theory if what the gold bugs believe then gold could hit a time of explosive upside movements. These guys don't buy ETFs or anything paper related so I'm guessing you don't follow those thoughts. Gold looks healther than ever to me. It had a great bullish run up and now its been colidating sideways for about 7 months. Profit is being taken, but there isnt any high volume large sell offs representing some break down in gold. On the flip side there hasn't been any high volume buying showing big (smart) buyers entering the market.
I trade gold on and off fairly often. I'll be waiting for one of the two cases mentioned above to occur and then positions myself accordingly.
Anything that you can't "print" will continue to go up in the long term, however geopolitical events should make the journey quite bumpy.
My take on the current market is this: There is a cap on gold right now because everyone expects a huge slide when the shtf in Europe. Like in 2008, the mad scramble for selling anything of "value", like gold, oil, etc in order to meet margin and cash calls will cause everything to plummet except for the dollar and treasuries. This will be the buying opportunity as the only weapon the Central Bankers have is to print, and then print some more. At that point the rubber band will snap back and gold will skyrocket.
If the policymakers are able to re-inflate the economy without hyperinflation then gold will cap out again and probably trend down. This is a big if. If there is a worldwide currency collapse (a small possibility, but not one that can be completely dismissed) then physical ownership of precious metals would be vital, no matter how much they might cost today.
JMHO
JTS
