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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
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
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
The Coming Currency Crisis
This essay from the July 2006 International Speculator captures the essence of Bud Conrad’s forward-looking, contrarian analysis… almost eerily so as we appear to be on the brink of the economic precipice described herein.
By Bud Conrad, Casey Research
Poor Ben Bernanke. The greatest financial train wreck in history is going to happen on his watch, and it will be mostly his predecessor’s doing. But not the work of Alan Greenspan alone. The Washington elite and their compulsively clever counterparts around the world have set the US (and global) economy up for a currency crisis of gargantuan proportions.
When?
Soon.
To explain why this seems inevitable and unavoidable, let’s look at the data. First, there are the deficits. They’re big, and they’re three. 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
The Zen of Resource Speculation
By Louis James, Casey International Speculator
Whenever gold and silver hit a correction, those are the times that try men’s souls. But they are also a classic case of making volatility our friend.
And there should be terrific bargains ahead on great stocks, if the market corrects from recent highs. It enables you to go long at prices as low as, or sometimes even lower than, those paid by speculators who picked winning plays early – but with the advantage of hindsight about the results of those companies’ exploration and development efforts. You get a combination of lower risk and lower prices.
How cool is that? (As my children say.) Continue reading
When Buying Gold Becomes a Life-or-Death Question
By Jeff Clark, Editor BIG GOLD, Casey Research
I was recently asked in an interview if I thought gold was going to $5,000 an ounce. “No,” I said bluntly. “I think it’s going higher.”
“You’re that optimistic?”
“No,” I replied. “I’m that pessimistic.”
Imagine the condition of our world if gold reached $5,000 an ounce – and kept soaring. We’ll likely be in a mania if that happens – but what kind of mania will it be? There’ll be some greed to be sure, but I think there’s a good chance a deeper reason will be at play. And it’s the same reason that will drive you to keep buying gold at $2,000 an ounce.
You’ll have to. Continue reading
