Gold as a hedge

[Nelson Brady]

Is gold losing its hedge value?

[Frank1 Grossmann]

Gold, SP500 and Treasury volatility is higher then it was in 2008. Many investors get margin calls and have to sell what ever they have inclusive Gold. It is always better to sell everything and just wait until the market normalizes and Volatility is again lower than 20.

[sean_ca]

Hi Frank,

If you think the LI strategies wouldn’t work in this environment why not issue an email to all subscribers suggesting liquidating accounts until the market settled down? In this situation a monthly letter wouldn’t help and it was too late.

[sean_ca]

I mean liquidating accounts and wait to put positions on until the market settles down.

[Frank1 Grossmann]

It may be wrong at the moment to liquidate the hedge (GLD or TLT) as for example TLT was trading last Wednesday 5% below the value of it’s assets. This at least should recover once liquidity comes back to the markets.
In the forums I was telling that “I personally” close all my positions several times as it makes not sense to try to make money if volatilities of stocks, gold and treasuries are at these levels, however we are just not allowed by law to give a financial advice in an email like telling our subscriber to close their accounts. I can only reply to forum questions and tell what I do and I think.

[Korving99]

Dear Frank,

I understand your position.

But could you give more clearance when you move to the side line and when you go back into the market.

Willem

[Author]

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