Posted on 07/01/2015 4:09:01 PM PDT by Leaning Right
Some precious metals funds I've been following are approaching lows not seen since 2002. China is buying gold. Russia is buying gold. India is buying gold. Yet these mining stocks continue to fall.
I'm thinking this might be a buying opportunity. But I'm usually wrong. And ideas from the FR market sages?
Thanks to all who respond.
Bad news for the Alaska Gold Rush boys...
I think gold is going below $1,000 per ounce and perhaps to the $950 range. I’m not buying yet, but stocks are different than the metal.
Generally there is an inverse relationship with mining stocks and the metal itself, weird but I believe it is true. Mining stocks are sort of like pork bellies.
After 2008 crash I went heavy on gold stocks. I recovered 75% of everything I had lost with gold stocks, then got out just in the nick of time.
You can make money if you time it right but it is not for the faint of heart. At some point it’s worth getting in.
Emotional influences -- especially your emotions -- can also affect market prices and investment strategies and decisions. For many investors, gold's emotional appeal and belief in its enduring value make for disabling effects. They lose sight of market fundamentals and basic investor maxims about cutting losses, making quick decisions, and hedging risks. They fail to take profits when they can and tend to let fear and greed get the upper hand.
I once knew a wealthy Canadian, a retired businessman worth near a hundred million dollars who started speculating in the gold market in the late 1970s on the reasoning that the dollar was doomed to continuing decline. For a time, he did remarkably well, but then lost almost everything when the market turned against him as Reagan's economic policies took hold and the dollar rose in value. Oddly, the Canadian was a stalwart conservative who greatly admired Reagan and agreed with his policies even as he failed to reckon with the effects of their success on his speculative position in the gold market.
The bottom line: the gold markets, including that for gold mining stocks, are especially opaque and tricky for investors. I would avoid gold and gold mining stocks, and if I did get in, I would not put more at risk than I was willing to lose. Above all, I would not fall in love with gold or become a believer if I became an investor in it or in gold mining stocks.
everyone is buying in volume, yet the metals are dropping.
of course, this is counter to econ 101
unless you factor in the federal reserve.
what they’re doing is buying gold at the end of the day using freshly minted cash ... then sell the gold at a loss just before open (they don’t care, as they print as much as they need)
why?
this sets the momentum of gold for the day, keeping it from elevating too much.
(I prefer silver because it has actual valuable uses besides jewelery and from my research there is less available ounces of silver then gold because of it)...Do your own DD
Calling gold and silver "insurance policies" overstates their value in that they would be most suited for dire circumstances after a general collapse when cash is no longer accepted. If that ever happens though, food, water, guns, and ammo would likely often be more valuable in trade than gold and silver.
Even better would be living in a defensible rural home with family and reliable neighbors, and a working garden, greenhouse, chickens and goats and perhaps beef, well water, a stock of gasoline, and EMP hardened off the grid solar electric power. After a general collapse, it would take a lot of gold and silver to buy that, and reliable men with guns to hold it.
But the stocks went down as the metal went up.
Lead as a precious metal? I must be getting older, because it took me more than a moment to get your post.
Well played, Daffy.
There’s a big difference between precious metals and precious metals stocks, which usually means mining companies. We’re in a deflationary period and the dollar will go up in value. That means gold and silver will decline in dollar terms. Mining companies will probably not do well.
Some folks 'round here are of the same opinion ....my broker is not one of them.
I have held gold mining mutual funds for years.
They sort of reflect gold demand, but due to my technical mining process exposure to some of the majors, it seems they values more reflect their position in the market, their prospects for being able to produce at good economics and any proprietary technologies they may have to distinguish them from other miners.
I bought in when gold and the MF was pretty low. I stick with them, as playing Day Trading style is too subject to rapid and sometimes short lived big moves. Over the long haul they have appreciated much more than not.
My 2cents worth.
Goldbug ping..
Just plain good sense. Know the sector, go fo the long investment. Good job.
precious metals stocks and physical metals might be down for 5-10 years due to the oil/gas/energy complex being down due to the fracking revolution. Flight to the USD for safety (Greece situations) also hurts precious metals.
But precious metals ownership (gold especially) will preserve wealth during a deflationary collapse which could happen within 3-5 years
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