Up $43.00 in One Day; Did You Own Any?
Monday, November 24th, 2008
By Michael Lombardi, MBA for Profit Confidential
The stock market rebounded Friday from severely oversold conditions, and my favorite investment was up $43.00 in a single day.
And what is that favorite investment?
Gold, of course. Gold bullion ran up $43.10 an ounce Friday to close at $791.80. Most importantly, the gold stocks jumped, as the Dow Jones U.S. Gold Mining Index was up 20% in a single day (yes, that’s 20%). And my favorite gold stocks, including Goldcorp, Newmont, Barrick and Agnico Eagle, were all up about $6.00 each.
Here’s what I said way back on December 13, 2002, in PROFIT CONFIDENTIAL: “I’ve been pushing gold bullion and gold shares for over a year now. Bank in January 2002, I personally started buying gold shares.” Back then, gold bullion was trading at about $300.00 an ounce. Today, it’s at about $800.00. Since then, I’ve been urging whoever will listen to seek refuge (and sanity) in gold- elated investments.
Now, here’s what I said back on September 21, 2005: “Despite all my ‘yelling’ and ‘screaming’ about gold, I believe only a few of my readers and a small fraction of the general public have taken a position in gold. Why? Because gold’s not trendy…buying condominiums for investment is! If you are an investor, you need to seriously look at investing in gold stocks because gold bullion prices will likely continue to rise.” (I guess I was right: We all know what happened to the idea of buying condominiums for investment purposes.)
Today, the majority of investors (the “herd” as I like to call them) flocks to the U.S. dollar each time the stock market moves a further leg down or each time another financial institution reports turmoil. One day, and it could be soon, investors will no longer flock to the security of U.S. T-bills.
As I have written extensively, at some certain point ahead, the herd will question the viability of the U.S. dollar. While, I’d hate to see what the balance sheet of the Federal Reserve looks like these days, the fact remains that the U.S. government continues to churn out debt.
I’m not saying government debt is a bad thing. In fact, if we learned one thing from the Great Depression it is that the government needs to spend its way out of this economic mess. But, at a certain point, spending like drunkards will play havoc with our currency…a currency that with each passing day becomes more encumbered by debt.
I continue to argue that eventually investors will move away from the American dollar and into gold bullion and quality gold stocks.Some old timers like me are expecting the price of gold bullion and
the Dow Jones Industrial Average to cross at some point; be it at 5,000, 4,000 or 3,000. That’s a very frightening thought. But, as we have seen lately, anything is possible. As aggressive as this sounds, investors not exposed to gold-related investments might be doing themselves long-term harm.
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Tags: Dow Jones Industrials, gold bullion, investing in gold, stock market, U.S. dollar
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
