Is now the time to sell gold 9 8-2011

Gold: Time to Buy, Sell, or Hold?

Presented By: Will Carter

Director of Wealth Management

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Gold has had a strong run recently…

Gold versus S&P 500 July 1, 2011 – September 2, 2011


… but that could be a signal to sell, as it was in March 2009.

Gold versus S&P 500 January 1, 2009 – December 31, 2009


…when stocks substantially outperformed gold through year-end

Gold versus S&P 500 March 6, 2009 - December 31, 2009


Gold cynic: certain, closedGold has no fundamental value (unlike silver)


Gold versus silver July 5 – September 7, 2011

Gold versus silver September 7, 2010 – September 7, 2011


Gold cynic: certain, closedGold has no fundamental value (unlike silver)Mass marketing of gold is fueling demand



Gold cynic: certain, closedGold has no fundamental value (unlike silver)Mass marketing of gold is fueling demandGold is way outside its recent trading range


Some Gold Bulls Say Time to Cash In, Rally Overdone Published:23-Aug'11 19:11 ET By:ReutersAs gold prices near $2,000 an ounce, some bulls say its time to take money off the table after the safe-haven rally extended too far too fast in recent weeks. Gold investors at several firms said that gold prices could correct sharply, citing overvaluation. While that does not mean prominent bulls are now bears, they recommended investors take profit on gold holdings, after the precious metal traded briefly above $1,900 on Tuesday for the first time.


Gold cynic: certain, closedGold has no fundamental value (unlike silver)Gold is way outside its recent trading rangeMass marketing of gold is fueling demand

Gold skeptic: humble, openCompare to other options

BondsAlternatives: commodities, currencies, optionsStocks


Gold should be compared to larger basket of commodities within “alternative” allocation, which have been insulated from recent drops

Gold (black) compared with S&P 500 (gold) and broad commodities index (DJP-blue)July 6, 2011 – September 1, 2011


Gold versus stocks: reasons for pessimismUS consumers: less new money to spend, lower confidence


A tale of two eras: rising stock markets fueled by rising wages in U.S. (1945-1964) versus rising debt levels in U.S. (1981-2004)


Growth in household spending after early 1980s came from unsustainable sources


US consumer confidence is at historic lows


Gold versus stocks: reasons for pessimismUS consumers: less new money to spend, lower confidenceUS dollar is lower than it has ever been


U.S. dollar is buying less abroad than ever


Gold versus stocks: reasons for pessimismUS consumers: less new money to spend, lower confidenceUS dollar: lower than it has ever been US debt: high and rising to levels not seen since years after WWII


U.S. Debt to GDP ratio 1945-2011


We are entering a “New Normal”:

“Advanced economies will face sluggish (call it 2%) growth and persistently high unemployment that becomes more structural (and therefore protracted) in nature…,”

“debt and deficit concerns will not go away….”

“Bonds have seen their best days…. Over the long term, stocks return more than bonds when appropriately priced at the beginning of an investment period."

Bill Gross and Mohammed El Erian, PIMCO


Last few times consumer confidence was this low, stocks soared over the next decade


Last few times the U.S. dollar was this low, stocks doubled and even tripled in value over next decade


Last time US debt/GDP ratio was this high, stocks tripled over next 15 years


Objection!!

Stock market growth for past 60 years was driven by profits generated by U.S.

consumer – where will such growth come from in the future?


Economist, February 12, 2009

Rising middle class in emerging markets will replace U.S. consumer driving growing corporate profits and stock market growth


Economist, August 4, 2011

Emerging markets are on the move.


In conclusion:

There are good reasons to be skeptical about gold, but investors should be open to its potential value in portfolios as part of a broader commodity play

Much of the recent interest in gold is driven by pessimism about the stock market, but even those believing we are in a “New Normal” see stocks as having more growth potential than bonds.

This new potential for stock market growth is fueled by rising global middle class, which will provide the new spending needed to generate future stock market growth.

Disclosures

This presentation is limited to the dissemination of general information pertaining to the investment advisory/management services McKinley Carter Wealth Services, Inc. (“MCWS”) and is not intended to be specific advice as to whether you should engage in a particular trading strategy or buy, sell, or hold any financial product. Investing in the stock market involves gains and losses and may not be suitable for all investors. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable.

McKinley Carter Wealth Services, Inc. (“MCWS”) is an SEC registered investment adviser with its principal place of business in the State of West Virginia. MCWS and its representatives are in compliance with the current registration and notice filing requirements imposed upon registered investment advisers by those states in which MCWS maintains clients. MCWS may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by MCWS with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of MCWS, please contact MCWS or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov).

For additional information about MCWS, including fees and services, send for our disclosure brochure as set forth on Form ADV from MCWS using the contact information herein. Please read the disclosure statement carefully before you invest or send money.

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Contact Information

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Economy & Finance

Is now the time to sell gold 9 8-2011