Only Fools Rush In

While I’ve been telling whomever will listen to buy gold shares for the past three years, the media is only now catching on to the only bull market out there.

In the business section of one of the more popular financial newspapers today we find the headline, “Gold soars to 16-year high of $435.” That’s $435 U.S. an ounce, up from about $260 in January 2001. (Hey, that’s a gain of 67% in less than four years!)

There are many reasons why gold is soaring, the two most important and simple ones being:

— The U.S. has gone from being a creditor nation to a debtor nation.

— American dollars are declining rapidly in value against other world currencies.

If you believe the above two trends will continue, as I do, then you can expect gold bullion and gold shares to continue to shine.

However, I warn my readers that nothing ever goes up in a straight line for a prolonged period of time. If you regret not getting into gold, and now see the writing on the wall, you may be tempted to jump in with both feet now, especially with the media starting to follow the incredible gold story.

My caution: Don’t rush in. Over the past couple of months, gold prices have been very strong. In the past, during periods of strong price advances for bullion, gold has tended to correct itself before moving higher.

In other words, I wouldn’t be surprised to see a natural and technical 5% or more pullback in gold bullion prices before the metal starts again on its trend to higher prices. I’d be a buyer of more gold shares on gold bullion weakness.