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Trim Your Gold Positions

Summary

Gold has not been performing very well, which isn’t surprising considering the stock rally.

Gold will continue to disappoint as fear subsides.

Despite many rounds of QE, inflation remains under control.

Many experienced investors thought that the Fed was leading us towards destruction, but they were wrong.

We experienced some shock in 2016, but given the current economic outlook, I don’t expect fear to return.

Gold (NYSEARCA:GLD) is still up for the year, but ever since the market (SPY, DIA, QQQ) started another bull run in July, gold has not gone anywhere.

This is somewhat expected since gold tends to underperform when stocks rise. If an investor included gold as a part of a diversified stock portfolio as I have mentioned before (as opposed to investing in gold in isolation, which is a bad idea), there is no reason for gold's performance to trouble you.

Ignoring the portfolio factor, will gold continue to disappoint? I believe so.

Take inflation, one of the many short-term factors impacting gold. Gold does well when inflation is high, and though some investors were concerned that "helicopter money" (i.e. quantitative easing) was going to cause rampant inflation, it never happened. Furthermore, now that quantitative easing has been over for around two years, we can be sure that there isn't some pent-up...


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