From Teeka Tiwari, editor, Mega Trends Investing: I get a lot of emails about gold. We even own a little bit of it in the Mega Trends portfolio.
I don’t want to make a huge commitment to it, but I like having a small amount of gold in the portfolio as insurance. That’s why we own it.
But, we have it hedged (through a corresponding short position in the Japanese yen). When you take that hedge into account, we’re flat on our gold position (up 7% on one, down 7% on the other).
If you own a large gold position unhedged, you’re going to have a problem… the gold chart looks absolutely horrible.
The U.S. dollar is going up. It’s going through a six-month consolidation. It’s above the 200-day moving average. It’s above the 50-day. It’s above the 100-day.
This is bullish action… and that is bearish for gold.
I want you to release any preconceived notions you have of a worthless American dollar.
I know the Federal Reserve has printed an astronomical amount. But so has every other major central bank in the world. That means the greenback is still the world’s “cleanest dirty shirt.”
As such, we won’t to be papering our walls with the dollar any time soon.
It might be true in 20 years. It might be true in 40 years. But, in terms of the world you and I live in right now, it’s just not true.
Bottom line: The American dollar is undergoing a massive long-term bull market, and that’s going to be a huge headwind to gold. If you own a large gold position, keep it hedged. Mega Trends subscribers can review how we do it in the MTI portfolio, right here.