Is gold safe from Eurozone debt crisis?

NEW YORK,NY (Commodity Online):Many investors are wondering: is Gold safe from Europe's debt crisis? Well, according to popular e-newsletter Profit Confidential, the sovereign debt crisis and lack of political will to resolve underlying problems will result in price correction not just in the stock market, but in precious metals and other assets as well.

According to Mitchell Clark, long-time analyst and contributor for Profit Confidential, he’s bullish on gold investments and Silver for the long term, “… but we’re in a situation now where financial markets are trading on fear, so any eventuality in any asset class is possible.”

During the market crash of 2008, investors sold across the board not just to meet margin calls, but for the safety of cash. Clark states, “The trading action we have now in the stock market and precious metals is very worrisome. Things are beginning to cascade.”

Profit Confidential advocates looking at the long term. “If there is a forced liquidation of assets, this would be an opportune event to take on significant new positions in precious metals,” says Clark.

Inflation continues to worsen in BRIC countries. Inflation figures in mature economies are pushing the upper limits of central banks’ ranges. Trading action in the stock market reflects poor global investor sentiment, according to the e-newsletter.

“There are good long-term fundamentals for gold investments; over the near term, however, anything can happen,” says Clark.

Investment risk has remained high all year. Currencies are at risk, with the involvement of politicians leaving stock market investors in a very precarious position. Uncertainty related to sovereign debt, currencies, economic growth, stock markets, and inflation might create the possibility of more asset liquidation, according to Clark.

Clark writes in Profit Confidential, “In this scenario, the U.S. dollar would strengthen and, because Gold investments tend to trade inversely to the dollar, they would be under pressure, not just because of a forced liquidation of assets.” While gold investments may under-perform in the short term, Clark views precious metals as offering some of the best potential returns the market has to offer.

Despite attractive valuations and good corporate earnings, Clark believes that, as long as the sovereign debt issue is not dealt with, the market will deteriorate. The analyst says, “eurozone politicians have until Christmas to get a handle on things or the euro currency is finished.”

Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged, the publication said in a press release.

Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.