Ask anybody about why gold was in a bull market between 2002 and 2012, and they will most likely tell you that it was due to declining interest rates. Now, if you ask anybody if gold is even worth looking at as an investment, you’ll likely be told that it’s useless and does no good for an investor’s portfolio. The rationale given for this argument generally includes the sentiment that… Read More
investing in gold
Over the past three trading days, gold bullion has lost roughly $100.00 an ounce. This correction is good medicine! The speculators who got into gold late are being taught a lesson. The weak money is leaving gold. This is exactly the type of healthy correction in the 10-year bull market in gold that I’ve been waiting for!
There is one strategy investors have (or at least this investor has) been following for 10 years to make money in this treacherous market. The strategy is quite elementary. Every time the price of gold bullion moves down three percent, I like to go in and buy more gold-related investments. This strategy has worked for 10 years and I still see the opportunity continuing in buying gold stocks when the yellow metal has sharp, one-day corrections.
In turns out that gold stocks are resuming their upward price trend in an environment where the spot price is ticking close to its all-time record. Gold stocks are the place to be if you’re a stock market speculator and if you believe that investing in gold will be fruitful in a slow growth environment. Nobody can with any real expertise predict where the spot price of gold will trade in the future, but all the fundamentals continue to line up. Investing in gold is something that I really believe in.
I’ve learned many things about investing over a career that has spanned 30 years. One of the biggest lessons is that not a single investment goes either straight up or straight down. When an investment is rising in price (bull market), there are usually dips and corrections on the way up. Just look at the long-term secular bull market in stocks that started in the early 1980s and ended in 2007—there were many times stocks “took it on the chin” during that 25-year bull market run.
The key in this bear market with stocks is to stick with resource stocks if you’re a speculator. I like large, blue-chip companies that pay high dividends for long-term investors. For risk-capital equity traders, the best action remains with gold stocks, and some of the best value now is in oil.