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Todd Harrison Talks Gold

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IT'S THE MINYAN MAILBAG!
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Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter. This post is a sample of the Buzz & Banter Minyan Mailbag, where market experts like Todd Harrison and Jeff Cooper address reader questions. 

Todd,

Now no scolding me please. I got into gold back when you first liked it in the 300's. It is still in my lock box in American Eagles. I read you over and over again not liking gold when it got to 1900, see I do read everything you write. So now my question, do you think gold is done for good? Or do you think sometime in the future it will be in favor again? I am very happy if I sell now as I have still done very well. I just don't want to be tempted to ever buy it again at a higher base cost than I now have. So without giving me any financial advice, I would just be curious what you would do if you were in that situation.

thanks,
Minyan Ed


Ed,

Please remember, I don't scold -- not my style -- I was the one who was scolded (which was in hindsight, a pretty good tell).

With gold now down 33% -- one-third of it's total price -- since that price point ($1900), my response is different than what it would have been at higher levels. If it were me, and I had a 600% gain, I would have sold 'some,' at the very least (and to be fair/honest, I probably would have sold some well before it rallied six-fold). What I've found -- and again, this is just me -- is that when in doubt, you can always make a partial sale to alleviate the pressure. Put a different way, if your price basis is +/-$300, you're still sitting on more than a 400% gain; so if you opt to sell 25% of your holdings, you effectively own the rest of your position for free.

In terms of my broader outlook for Gold, I think we work lower still, albeit not in a straight line. We've seen inflation in things we need and deflation in things we want; by the time the dust settles, I believe we'll see deflation in both. Remember, the Internet is the world's most deflationary investment, which is fine if you're a consumer but it sucks if you're a supplier. That is the "other side" to the Federal Reserve and unlike Ben Bernanke, it's not going away.

Hope this helps, and thanks for the kind words.

Todd
POSITION:  No positions in stocks mentioned.
TICKERS:  NASDAQ:GLD   

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