11/02/09 Gaithersburg, Maryland – I think we’re still in the early stages of what could become a gold mania. While there are a lot more people talking about gold now and the gold price is close to all-time highs, it remains an underowned asset. Only a small fraction of investors own any gold at all. Hardly any institutions own any gold, either. As we now have 10 years of market-beating data for gold, it’s going to attract more attention.
I think that attention will eventually carry it to a price of $2,000-3,000 pretty easily — maybe more. So far, gold has had a steady march up since 2000. The last leg, the mania phase, always has a rapid and explosive move before it’s all over. We’re not there yet.
As for what will pull gold back down, I think a strong economic recovery could derail gold’s story for a time, but as long as the U.S. dollar makes its way to new depths over time, I think the gold price will drift higher.
Most people think of gold as an inflation hedge. To me, it is more than that. Gold is primarily a bet against the creditworthiness of the issuers of paper currencies. In other words, as the creditworthiness of the U.S. government weakens — thanks to high debts and deficits — gold will be a strong asset… and gold stocks ought to be one way to juice the return you get from gold. Our two gold stocks are up 80% and 40% since we bought them earlier this year. If we get any pullback in gold, I’ll be a buyer.
Chris Mayer
Chris Mayer is managing editor of the Capital and Crisis and Mayer’s Special Situations newsletters. Graduating magna cum laude with a degree in finance and an MBA from the University of Maryland, he began his business career as a corporate banker. Mayer left the banking industry after ten years and signed on with Agora Financial. His book, Invest Like a Dealmaker, Secrets of a Former Banking Insider, documents his ability to analyze macro issues and micro investment opportunities to produce an exceptional long-term track record of winning ideas. In April 2012 Chris will release his newest book World Right Side Up: Investing Across Six Continents.
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Most articles on gold advise buying gold bullion, and some advise buying stocks of gold mining companies, claiming that the stock prices rise at a higher rate. But I rarely find any article listing and evaluating gold miner stocks it. We have all heard the consensus opinion that the price of gold will rise. What investors need is advice on which gold miner stocks to buy. Also, investors should be warned of the risks and pitfalls of buying, holding and selling bullion. My experience and horrendous loss in trading silver on margin has taught me that this is one of the most corrupt areas investing. Let the investor be warned!
Buying, holding and selling bullion has nothing to do with trading silver on margin. You didn’t have it in your hands. I’ve got mine in my hands at around $600 an ounce gold and $12 silver. Where did I go wrong? You wanna buy some? You aren’t getting mine.
The title is “When to Sell Your Gold.”
Uh, Chris, where in the article did you answer that?
Maybe you should retitle it.
DEAR SIR,
WE ARE LOCAL MINERS IN POSSESSION OF AU METALS BEING GOLD DUST, BARS, NUGGETS, INGOTS AND DORY BARS, AS WELL AS DIAMONDS.
WE ARE DIRECT MINERS LOOKING FOR DIRECT BUYERS/BUYERS MANDATE TO COME BUY OUR PRODUCTS AT LMB DISCOUNT.
BROOKERS AND AGENTS ARE ALSO WELCOMED TO ACT AS OUR MANDATE AS WELL.CONTACT ME BACK VIA EMAIL FOR MORE DETAILS AND FCO.
REGARDS,
MR. PATRICK KWAME
local.miners@personal.ro
+233201332513
Wait a minute, so when do we actually sell our gold?
Is gold really that great? Maybe we’re late when it comes to buying gold. Was watching this video – http://www.newsy.com/videos/wall_street_s_gold_rush – and one analyst says that that gold has already rallied a lot out of its function as a recession hedge over the course of the last year or so. Time to move on to oil and other commodities?
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