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Don’t Sweat the Correction in Gold
By Jeff Clark, BIG GOLD
I’ve told more than one concerned investor that when the gold price falls, they should “come back in three months” and see if they’re still worried. The idea is that the daily and monthly gyrations are nothing to fret over, that the price will recover and, in time, fetch new highs.
That advice has worked every time gold underwent any significant correction (except in late 2008, when one had to take a longer view than three months). Here’s proof.
I’ve traded emails regularly with Brent Johnson ever since meeting him at an investor event I spoke at a couple years ago. He’s the managing director of Baker Avenue Asset Management, a wealth management firm with over $700 million in assets. He forwarded some charts he’d prepared for his clients that put gold’s September decline into perspective; it’s a good visualization of my standing advice to worriers.
The following charts document corrections in the gold price of 8% or more – first measured with daily prices, then monthly, quarterly, and finally annually. See if this doesn’t put things into perspective. Continue reading
Why Gold Should Set New Highs for the Holidays
By Jeff Clark, BIG GOLD
Most gold followers know the metal has a seasonal tendency to perform better in the fall and winter than in the spring and summer. Indeed, since 2001, the annual high for the gold price has occurred after Labor Day every year except two (2006 and 2008). Further, that peak was hit in November or December in seven of the last ten years.
So, are we destined for new highs in the gold price between now and New Year’s Eve? And what about gold stocks?
Perhaps one way to answer the first question is to determine if gold has been following its seasonal price trends so far this year. If it has, we might have a reasonable expectation of higher prices ahead. Let’s take a look… Continue reading
The Gold Investor’s Biggest Risk
By Jeff Clark, Casey Research
While we’re convinced that our gold and silver investments will pay off, they don’t come without risk. What do you suppose is the biggest risk we face? Another 2008-style selloff? Gold stocks never breaking out of their funk? Maybe a depression that slams our standard of living?
Though those things are possible, we at Casey Research don’t see that as your greatest threat:
“Your biggest risk is not that gold or silver may fall in price. Nor is it that gold stocks could take longer to catch fire than we think. Not even the prospect of the Greater Depression. No, your biggest risk is political. As bankrupt governments get increasingly desperate for revenue, any monetary asset held domestically could be a target. It is absolutely essential that every investor diversify themselves politically. In fact, at this point, it is the one action that should be taken before anything else.” – Doug Casey, September 2011
I know many reading this are prudent investors. You own gold and silver as solid protection against currency debasement, inflation, and faltering economies. You set aside cash for emergencies. You have strong exposure to gold stocks, both producers and juniors, positioned ahead of what is likely the next-favored asset class. You feel protected and poised to profit.
Yet, despite all this preparation, you remain exposed to one of the biggest risks. Continue reading
John Hathaway: Bullish on Gold and Gold Equities
Source: JT Long of The Gold Report (10/26/11)
The end of 2011 is a golden opportunity to participate in an anticipated upside for mining equities, says Tocqueville Asset Management Senior Managing Director John Hathaway. We caught up to him at the Casey Research/Sprott Inc. Summit “When Money Dies” for this exclusive interview with The Gold Report. Hathaway predicted that once investors realize higher gold prices will stick, they will take a chance on the big upside waiting in the junior and senior space.
The Gold Report: In your recent article “A Golden Mulligan,” you called gold mining equities “a rational way to participate in what appears to be the end game for paper currencies on an attractive risk-adjusted basis.” After trailing the metals prices substantially since 2010, why do you think they are ready for a turnaround?
John Hathaway: Gold mining stocks have underperformed for a number of reasons. Gold ETFs created competition for gold stocks even as it made owning physical metal more attractive. Also, as gold flirted with $1,900 an ounce (oz), investors may not have priced that into the stocks as they weren’t convinced it would stick. Now that we have had a correction, investor analysis will show that the average price over time, as opposed to variable spot prices, is steadily rising—proof that industry profitability should also be on the rise. The best is yet to come for gold mining earnings as confidence in government monetary policy continues to erode.
TGR: We have seen a lot of volatility lately. What price do you predict for gold going into 2012? Continue reading
A Golden Mistake Worth Repeating
By Jeff Clark, Casey Research
The following conversation took place between a friend’s son and me; he’s a bright but relatively young investor. He had purchased some gold based on some things I’d told his father. Shortly afterward, the price dropped hard. As you’ll see, he was not very happy with my advice and said so in an email to me. So I called him…
I: Sounds like you’re upset.
Friend: Yeah, that’s putting it mildly. What [...] am I supposed to do now?
I: Because the gold price has dropped?
Friend: Yes! It’s down 15% in a month! I thought you said this was going to be a good investment.
I: It is. And it will be. You might even consider buying more here if you have the funds.
Friend: I have some other money, but why would I put it in gold? It’s losing money. Continue reading
Is It Time to Load up on Gold Stocks?
By Jeff Clark, Casey Research
By almost any measure, gold stocks are undervalued. Should we load up?
After completing my research on this question, I’m convinced more than ever that we at Casey Research are in the right place. See if you agree…
Let’s first get a handle on the degree of undervaluation. The more undervalued, the lower the buying risk. A fairly valued stock, on the other hand, requires added caution.
Gold accelerated higher last month, peaking around $1,900/ounce, while gold stocks lagged. Here’s a chart of the HUI-to-gold ratio (HGR). In a rising gold environment, a climbing HGR indicates that gold stocks are outperforming the metal; a falling HGR means they’re trailing gold. Continue reading
How to Prepare for When Money Dies
An eye-opening interview with renowned speculator Doug Casey, conducted by Karen Roche and JT Long of The Gold Report. Doug explains why fiat currencies around the world are destined for collapse… and what investors can, and should, do to protect themselves.
If dollar-dumping turns from a trickle into a flood, look out. Exploding prices (aka exorbitant inflation) resulting from the devaluation of the dollar will compound the problems we saw in 2007–2009. Catastrophe will come when everybody realizes that the dollar is an “IOU nothing.” That’s the downside in the decade(s) ahead, according to Casey Research Chairman Doug Casey. But an optimist at heart, in this exclusive interview with The Gold Report, Doug also identifies some reasons to be hopeful.
The Gold Report: You’ve been talking about two ticking time bombs. One is the trillions of dollars owned outside the U.S. that investors could dump if they lose confidence. And the other is the trillions of dollars within the U.S. that were created to paper over the crisis that started in 2007. Are these really explosive circumstances that will bring catastrophic results? Or will it just result in a huge, but manageable, hangover?
Continue reading
Forecasting Gold and Silver Prices
Gold and Silver are the “talk of the town” right now after making substantial gains over the last ten years and meteoric gains over the last year. But recently they have lost a bit of their luster as they began a long overdue correction. Is this the end for gold and silver or only a brief pause on their ride to the moon?
Anyone who has spent much time on this site is familiar with Robert Prechter’s Elliott Wave. His fantastic team has been providing us with individual articles and links to some excellent information over at elliottwave.com.
Their experienced analysts keep a constant eye on the markets, and provide insights into trends that are available nowhere else. What could be better than having someone of that caliber to turn to in times of uncertainty?
Book of the Month:
How to Forecast Gold and Silver Using the Wave Principle
by Robert R. Prechter, Jr.
How to Forecast Gold and Silver will show you what matters — and what doesn’t — when you want to invest in precious metals.
Robert Prechter published specific gold and silver forecasts for 22 years during one of the metals’ most historically baffling periods and correctly called nearly every major turn and trend during that time. And now he offers that entire body of work for public scrutiny and personal education.
In beautiful 8 1/2 x 11-inch hardcover fashion, How to Forecast Gold and Silver Using the Wave Principle revisits all of Robert Prechter’s real-time metals commentary during the bear-market years of 1980-2001. Everyone from die-hard Elliott wavers to precious metal enthusiasts can benefit from its 500 pages packed with insight. More Info
More Books from Elliottwave
Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression (Updated for 2009)
by Robert R. Prechter, Jr.
There’s no question that Conquer the Crash foresaw and explained every chapter of today’s financial crisis, years in advance – including the stock plunge, the housing collapse and subprime debacle, the liquidity crisis, the Fed’s failures, and lots more. The unsettling part is how much of Prechter’s book includes chapters about what is yet to come.
Updated for 2009, a CD-ROM supplement and free Readers-Only Webpage, ensures the book’s message never goes out of date. More Info
Prechter’s Perspective (2004)
by Robert R. Prechter, Jr.
The best way to get experience without risking your neck? Find a personal mentor who has the time and interest to teach you everything they know. Bob Prechter has spent three decades building his market wisdom, and he shares it with you here in an intimate Q&A.
Buy it Now for $27 More Info
How Long Might It Take to Get Rich from Gold Stocks?
By Jeff Clark, Casey Research
Let’s just admit it: we’re invested in gold stocks not just to make money, but for the chance to change our lifestyles. And with their lackadaisical year-to-date performance, one may begin to wonder if they’re still going to bring the magic.
While the answer will depend as much on the individual investor as it does the market, let’s look at some historical patterns to get a hint as to how similar or different our situation is to past bull markets, as well as what realistic expectations we can hold about the future.
The first thing I wanted to know is if there is historical precedence for gold stocks to underperform gold during a bull market. If so, then maybe what we’re experiencing isn’t out of the ordinary, and more importantly, wouldn’t necessarily mean they are destined to continue lagging. And that brings us to our first historical observation… Continue reading
Why Aren’t Gold Stocks Out Performing the Metal?
Typically gold stocks out perform the metal itself because of the inherent leverage in a mining stock. If the company breaks even at $400 gold and gold is currently at $500 the company makes $100 for every ounce it mines. But if gold increases by 20% and goes to $600… profits for the mine increase by 100%… now the company is making $200 for every ounce produced. So why are mining companies underperforming the price of gold? In this essay Jeff Clark editor of “Big Gold” looks at this anomaly. ~Tim McMahon, Editor
Gold Stocks Prognosis: Catalyst, Please
By Jeff Clark, BIG GOLD
It’s probably the #1 question on every gold investor’s mind right now: Why are gold stocks underperforming gold? Aren’t they supposed to bring us leverage to the gold price?
Yes, they are, and their performance been both disappointing and puzzling. There are some exceptions, to be sure, but in the majority of cases the stocks are lagging the metal. And it’s been happening for most of the year. What’s going on? Continue reading
