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Markets to Retest March Lows—So Buy Gold: Strategist
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CNBC.com Writer
Can the recovery turn into a self-sustaining expansion where the markets continue to rise? Dan Deighan, founder of Deighan Financial Advisors, shared his outlook.
“We’ve got some major headwinds coming our way,” Deighan told CNBC.
“The massive unprecedented amount of treasury issues that are going on—that’s going to bump up supply, and that’s going to drive interest rates up in terms of this steep curve that we’re seeing.”
As a result, Deighan said he expects the bond markets to take a hit when the interest rates start to move.
“The ratio of dollars going into bond funds versus stock funds in 2009 was 13 to 1, so when those interest rates start to go up, we’re going to see a huge decrease in the fair market value of the bonds,” he said.
Deighan also said stocks will retest the March lows and will bust through them. He advised investors to buy gold instead of stocks.
“Seventy percent of China’s reserves is denominated by the U.S. [currency] and 1.9 percent by gold and [China's] the largest producer of gold," he said. "So I’m seeing gold up in demand in China for those reasons. You buy the gold on dips.”
Deighan Likes:
Crude Oil (Jan ‘10)
Natural Gas (Jan ‘10)
DJ Real Estate
More Market Point/Counterpoint:
- 'Powerful' Rally in First Half of 2010: Strategist
- Art Cashin: Market Rally Can Hold — If This Happens
- Stocks and Sectors to Play Coming Inflation: Strategists
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Disclosures:
No immediate information was available for Deighan or his firm.
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