Gold and gold stocks, current view
Below is my response to an NFTRH subscriber by email. I think it is a good idea to briefly state clearly where I am at among the larger gold bug herd. I have not looked at the gold websites lately, but whatever is going on I don’t want to be just another bull tard after the breakout that everyone sees.
Subscriber ‘K’ asked why I have not recommended that subs “pile in” to gold stocks. For what it’s worth, I think that there is a good chance that the next bull leg has already started. But as noted below, the macro fundamentals are not yet fully aligned and there are many other aspects of the global asset markets on the bull. Even given a proper macro, I will never advise piling in. * I’d just discuss how bullish the situation may be and upside targets. Leaving decisions about whether to pile in to free thinking individuals using the info I churn up.
My response, with one redaction:
Hi K,
The breakout has been projected for some time now. It was only a matter of (long, drawn out) time.
Perhaps you do not know me well. I will never get out there touting with the gold bugs, especially AFTER a breakout that everyone sees. The target for gold is [2xxx], but interim pullbacks are likely before that level is reached. The longer-term target is 3000+. I think my targets speak for themselves, without the need to [wave] pom poms on my part.
As for the miners – and to a lesser extent, gold – the situation is unchanged. As per analysis to this point they were/are likely to rally but they are NOT unique. So I doubly am not going to cheer lead until gold grinds out a favorable stance vs. stocks, which it has already pretty much done vs. commodities.
It’s my nature not to get excitable. I don’t view subscribers as needing me to pump them up. I view them as decision makers based on the info I provide.
Hope this helps.
Regards,
Gary
* Although given the right macro situation (e.g. Q4, 2008) I may pound a table or two.
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For what it is worth, $.02. Every time the market hits a correction point (several examples in the last 25 years) people liquidate gold to cover their margin calls. This drops the price of gold quickly *and* when the price drops the miners drop as well. Right now I am in Treasuries for my 5% return. When the overall market corrects lowering the price of cold and consequently the prices of the miners, I will buy back in aggressively. Gary opened my eyes (just in time) to separate following gold bugs versus a calm and methodical approach based on facts. I could buy in now but I suspect by waiting I will get better values.