By: Alex Stanczyk, with commentary by John Fisher
Keep your eyes on the fundamentals! Tune out all the noise. Too many individuals who hold gold and silver as insurance will be scared out of their positions before we reach the top. Don’t let yourself be one of them.
Make sure you know what a true top in the markets will looks like: The “we buy gold” pawn shop signs all over the place will be replaced with “we sell gold” people waving signs in the medians of major streets. Everyone, literally everyone will be buying. That’s the top! And, we’re not there yet.
Each secular bull market will often have a “Bear Trap”, which is a substantial pullback in price prior to continuing upward into parabolic rise.
Note the chart below:
The last Bear Trap in gold’s 1980 bull market occurred from 1975 to mid 1976. It was a vicious 44% correction from $180 to $100. Although it seems like nothing to us now, it was huge back then. Yet after the correction gold went on to a 850%-plus increase over the next 3 years to over $850 an ounce.
To put that into today’s terms, it would be a pullback from $1420 to as deep as $795.20. Do you have the nerve to weather such a correction? If gold performed a repeat of the last bull market and this was indeed a bear trap, and gold again went to the upside afterward by applying the same percentage gains of the last bull market, gold would be at $6759.20 within three years.
This is not a prediction, and I am not suggesting a pullback would be that deep. What I am saying is to keep your eye on the ball – those reasons why you entered the market in the first place.
Thursday, we will review all the fundamental indicators that convinced us to enter the market in the first place.
All Things Considered – John’s Commentary:
Action to take: First, stay the course. It’s called a ‘bull’ market because the bull does everything in his power to throw the rider (investor) off.
Also, I will repeat what has invariably worked for me personally. Continue to buy as finances allow in modest amounts over regular intervals. Do not try to time the market. I observe people fail in their attempts far more often than not.
What to buy: Fractional European gold coins and 90% pre-1965 silver coinage. These are the lowest premium forms available.
Quote of the day: “Although gold and silver are not by nature money, money is by nature gold and silver.” – Karl Marx, German philosopher & social theorist (1818-1883)
