Four Reasons Stocks Are Up and Gold May Go Down
Many believe that that the "bull market" might have begun to come out of its comatose state. As I write it is Thursday, 1pm EST and the Dow is up 149 points to 7,079 and the S&P 500 is up 17 points to 738. This is the third day in a row the market averages are in positive territory.
At the same time gold and silver is also having a mini-rally of their own. Right now gold is up $20 to $920 and silver is up 12 cents to $12.89. They both were up higher this morning, but as the stock market and energy prices have rallied, gold and silver has lost some of their luster.
Very significant to my way of thinking is that crude oil is up almost $2 today to over $44 a barrel which indicates that the world thinks economic activity might be perking up and OPEC might really cut production when they next meet.
My colleague Keith Fitz-Gerald, the editor of Money Morning, had the following four reasons that the bull has awakened from its slumber. It might end up being true or it might just be more "bull". Time will tell. Here's Keith's points:
- We’re finally experiencing some good news. Pandit’s Citi memo has provided the first real glimpse of hope in months - fancy accounting aside - and could ignite a rush into stocks as investors fear getting left behind. That could turn into a self-fulfilling prophecy, because…
- Investors have trillions of dollars in cash on the sidelines. According to some studies, there may be as much as $3 trillion to $5 trillion on the sidelines, held by investors who are just aching to get back into the market. It is widely assumed that this money will come roaring in and that it will somehow help the markets recover faster than they would otherwise. (Personally, I have to be honest and say here that I just don’t see it; the estimated $50 trillion that’s been wiped from the face of the planet during this crisis did not go into some magical holding tank. Those losses are permanent. But that’s another story for another time).
- Technically speaking, the markets were primed for a rebound. And they remain so by many technical measures.
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