By John Fisher
The gold price has risen faster than silver, which is commonplace during market corrections. Gold needs to climb through $1,132 and then $1,150, the last high, in the near term. If it does not, we may well see gold trade in a range of $1,060 to $1,120 for as much as 12 months or more. Not to be frustrated, gold is simply consolidating its gains after convincingly piercing $1,000 last year.
This is normal and very healthy for those of us holding gold and silver. We have likely already experienced the lows for silver and gold. Watch over the next couple of weeks for a sustained rally over $1,120, or a failure thereof.
What to do now: Continue to accumulate in moderate, regular installments. DO NOT try to pick a bottom – you will be left behind. I remember several years ago when clients, friends and work associates who were waiting for gold to pull back to $350 from $400 in order to purchase. Some of them are still waiting… and gold at $400 now looks incredibly cheap.
When I started buying gold at $420, I felt like I had absolutely bought at the top when the price retreated to $256… but I stuck with it. In the end, it has worked out great. Just continue to accumulate – don’t worry too much about the price today or next week. Focus instead on the price next year or in three years.
What to buy: With the gold to silver ratio standing at 70 to 1, continue to favor silver over gold by a ratio of 2/3 – 1/3 or 70/30. Best silver values are 90% pre-1965 silver coin, 100 ounce silver bars and generic 1 ounce silver rounds. There are great values right now in gold Australian Nuggets, Mexican 20 and 50 pesos and Austrian 100 Coronas. Buy the lowest premium possible. Remember, in a bull market all premium will eventually evaporate.
Thought of the day: Gold and silver are commodities. When you melt them down, it all looks the same. Aside from demand premium, everything else is a marketing gimmick that attempts to increase profit. Don’t buy any “story”. Call us to discuss what you have done or what you are considering doing.
