When to Sell Your Gold

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.

By Chris Mayer

About The Daily Reckoning 150 Articles

Founded in Paris in 1999 by Bill Bonner and Addison Wiggin, as one of the world’s first email newsletters in the beginning of the Internet era, The Daily Reckoning is a pioneer in online publishing.

The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of the team and a guest essay from one of many leading thinkers and nationally acclaimed columnists.

Visit: The Daily Reckoning

Be the first to comment

Leave a Reply

Your email address will not be published.


*