re: Just dumped some cash and bought gold, good or bad?

quote:

---

Did he also tell you stocks are historically high, I would wait for a correction before I bought any at all? While interest rate increases have driven down the price of metals in the past these artificial low rates are as just as likely to hammer stocks when they rise and that is what the fed is absolutely terrified of. Stocks and metals both have their place in a portfolio, but nothing has ever remained as overpriced as stocks are right now. Either fundamentals have to vastly improve without upward motion in the market or prices will come down, you decide which is more likely and place your bets accordingly.

---

I think we're in agreement on equities and interest rates. At some point the bubble in the market created by TARP, quantitative easing and cheap money will burst. How far will the market drop to find equilibrium and fair value is the question. If you listen to the Cramers, Kudlows and others (who are touted as top notch economists and investment gurus) they think this market can continue to track upward albeit at a slower pace. This whole market recovery is real but has been based off of record government spending in many forms. I would like to see someone extrapolate the real growth of the economy minus government spending. Lets be real, at some point the debt/deficit is going to matter contrary to what Dick Cheney says and as you say if interest rates rise back to their historic averages we'll see the prime at +6%, feds funds at +4% etc. and this will have a serious negative effect on the market. This will make interest payments on the debt/deficit of the US impossible, we won't be able to service the debt if/when this occurs, and let's not forget many corporations are operating on cheap money too.