So many prognosticators are telling people to buy gold and gold stocks now. However, gold is in a down trend. In other words, prices are continuing to fall. Why buy now when prices are trending downwards with no correction in sight? Here is an article by Dr. Bart DiLiddo excerpted from this week’s VectorVest overview. Learn how VectorVest can help you make informed decisions on when to buy–and sell!–gold and gold stocks.
Why I Love the Midas Touch
The Gold Bugs Index, HUI, hit an all-time, intraday high of $638.6 on 9/9/2011. It pulled back to an intraday low of $372.7 on 5/16/12; then rallied to a recent high of $529.8 on 9/21/12. It has been falling ever since, and closed yesterday at $264.3.
During this time an incessant barrage of TV ads exhorted viewers to buy gold. As I watched these ads, I wished there was a way I could tell unwitting viewers not to buy gold or gold related stocks while they were falling in price. Ironically, the recent catastrophic drop in gold prices unleashed a flood of emails to my box telling me what to do about gold and gold stocks.
On Tuesday, I received an email from Mr. Alexander Green, Chief Investment Strategist of The Oxford Club, entitled, Forget the Gold Bulls…and the Gold Bears. It said, “Gold bulls are now proclaiming that this ‘correction’ represents an excellent new entry point before the next big rally. Gold bears, on the other hand, claim this is only the beginning of a more serious pullback. Who should you believe? Neither. No investment is more misunderstood than gold. And the prognosticators are often just as confused as their followers.”
Mr. Green also said, “Unlike stocks, you can’t value gold on sales, earnings, cash flow or price-to-book value. Unlike bonds, you can’t judge it on credit history, coupons or yields-to-maturity. Unlike real estate, you can’t value it on rental income or tax benefits. In short, gold is the ultimate speculative asset class.” It’s OK to buy some gold, but stocks do better over the long-term.
On Wednesday, I got an email from Mr. Matt Badialli, editor, S&A Resource Report. It was headlined, What I’m Telling My Readers To Do With Gold and Silver Stocks. Here’s the lead in: “Get out. Don’t wait for it to get better. Don’t try to pick the bottom. Don’t look for cheap stocks. Just get to the sidelines… because it could get worse.”
This sounded like good advice to me, but he was four months late making the call. This is not to say Mr. Badialli is not a good commodities analyst, because he is. In fact, he’s an excellent analyst. He just hasn’t got the benefit of using VectorVest’s Midas Touch, a timing system for when to buy and sell gold stocks.
On Thursday, I received an email from Mr. Nathan Slaughter, a Leading Expert from the Street Authority Daily. Its headline said, Gold Is Plunging–Here’s My Next Move. Mr. Slaughter’s observation was that gold’s historic collapse this week could actually be good news for commodity investors. He wasn’t about to tell you to enter into the gold market now because he thinks we haven’t seen the last of this gold selloff. But there is a silver lining.
“Indiscriminate selloffs like this week’s create truly exceptional buying opportunities. Along with gold’s fall, other commodity groups have been hammered despite solid (and in many cases improving) fundamentals. Platinum, aluminum, oil, grains and other resources have been unfairly punished and could snap back sharply once the panic subsides.” So he’s keeping some cash on the sidelines while he searches for the best entry point.
This morning, I spotted an item on Yahoo!Finance called, 12 (Misguided) Commandments of Gold Bugs: by Barry Ritholtz. It has an interesting video and article that are also informative, but it’s not going to tell you when to buy and sell gold stocks. I can get this information anytime I want from VectorVest. That’s why I love the Midas Touch.
Did you find this article informative? If so, be sure to share with your friends and colleagues by clicking on the icons below. VectorVest is now on Facebook and Twitter. Be sure to follow us to keep up with upcoming events and pricing specials!
What you should do next…
- Get our latest blogs delivered right to your inbox, subscribe to our newsletter.
- The market moves fast! Get our most current evaluation of this stock with our FREE stock analysis tool.
- Looking for stock picks? Not sure if now is the right time to buy/sell? For a limited time, enjoy the full benefits of a 30-day subscription to VectorVest for only $9.95 (usually up to $139/month) . Get access to our full list of screeners showcasing our top stock picks that tell you exactly what to buy, when to buy, and when to sell.
Dear Dr DiLiddo,
Have men not unsuccessfully tried to create gold from the time of the ancients? On the other hand they have ‘printed ‘ money excessively many times. So people trust gold, and distrust the paper stuff.
Excessive ‘printing of money’ is now taking place at an increasing rate. When we fully and finally sense what is happening, will there not be, a huge stampede?
Please warn us.!
But for now I will definitely stick with some gold!
Jonathan,
It’s OK if you want to hold on to the gold you have but the crux of the article is not to buy gold when it is trending downward. It’s the old, “Buy low, sell high” adage come to fruition.
I don’t think that with the way the dollar index is fluxuating that it is unreasonable to think that gold will rise to 1,350 an ounce or even 1,400.
THE TORONTO MONEY SHOW WAS A GREAT LECTURE ON THE COMPANY GOALS AND INVESTMENT STRATEGIES FOR THE FUTURE STOCK AND TRADERS MARKET WHEN, WHERE AND WHY TO BUY AND SELL TO AVOID THE LOST OF EARNING AND GAINS THAT WILL PROFIT YOUR DECESION OF THE DATES CHOSEN TO GET STARTED. IT WAS VERY EDUCATIONAL ON THE MAY 5 AND OCTOBER 26,TH OF BUYING AND NOT TO BUY THEROY BASED EXPERT ADVISE.