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STOCKS ARE RISING Even with Monday's stock market drop, stocks have surged this year. Investors are optimistic that the U.S. economy is poised to decisively pull out of its slump following the Great Recession. That's pushed the Dow Jones industrial average and the Standard & Poor's 500 index to record levels. The Dow is up 11 percent this year. Before the big sell-off, gold was down almost 7 percent. "In this world of hot money, 'what have you done for me lately,' people have lost patience. Especially when the Dow started making new highs, they started thinking,
'Why am I in gold? I'm missing all the action,'" says Peter Schiff, CEO of Euro Pacific Capital. INTEREST RATES COULD RISE The Fed has started contemplating ratcheting back its economic stimulus. If the economy continues to improve, the Fed may even raise interest rates to keep the economy from overheating, pushing up the cost of goods too much. Holding gold makes sense when interest rates are close to zero, as they are now. That's because your money isn't earning anything in your bank account. If your money is earning a return on deposit, the attraction of gold fades.
[Associated
Press;
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