Stay Focused on the Glitter

Source: Seeking Alpha  (9/16/07)

...At this stage I would be inclined to have about 66% exposure to the yellow metal with the balance invested in a basket of gold stocks such as the Merrill Lynch Gold and General Fund...

...The last week’s move has taken the gold price to above $700 for the first time in more than 16 months. It has also taken gold to within $143 of its all-time high of $850 that was reached on January 21, 1980, and within $23 of its May 12, 2006 high of $730 (which, incidentally, was the highest level since 1981)...

At this stage I would be inclined to have about 66% exposure to the yellow metal with the balance invested in a basket of gold stocks such as the Merrill Lynch Gold and General Fund. Any pull-back in gold stocks, from what is possibly a short-term overbought situation, can be used to adjust the weightings to equal proportions.

The fundamental and technical gold story looks decidedly positive. Any short-term correction should therefore be viewed as a buying opportunity. This may come in the form of investors once again becoming preoccupied with raising liquidity as seen in July, but don’t let that scare you off – stay focused on the glitter.

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