When to Sell Out of Gold
You have probably seen what's been going on in the gold department. Here's when you should sell...
You have all probably seen what is going on in the gold department.
However, you probably haven’t seen a chart of gold from a logarithmic perspective (percentage rather than absolute change).
We would say that the upside is only just getting into gear.
Remember, for about 10 years, it went nowhere.
We aren’t seeing any behavior that is typically associated with a maturing of a bull market such as daily rapid price moves.
Furthermore, we aren’t seeing speculative buying activity from retail investors, like what we have seen in the likes of the Mag 7 and Nvidia in particular (up until the last six months at least).
Of course, we can make an argument for considerable more upside due to all the antics of central banks ever since the GFC in 2008 and added to that the COVID crisis where governments tried to print their way out of trouble.
It’ll be hard to know exactly when gold tops out, but until most everyday investors and fund managers believe that owning 5% in gold is more important than owning the Magnificent 7 or crypto, the gold rally likely isn’t over. And we’re still far from that point.
The trick is that one cannot really look at gold in isolation as its price is relative to something else.
Taking gold and gold miners relative to the S&P 500… well, if you believe in the idea of “mean reversion” it isn’t hard to justify “somewhat more” outperformance in gold and gold miners (that maybe gold and gold miners going up more than the S&P 500 or going down by a lot less).
Our feeling is that we probably have to hang onto our gold and gold miner positions for another five years, so be cool and let this trend get away from you.
An interesting piece of trivia.
Bitcoin has only doubled relative to gold since the start of 2018. With all that euphoria, that is all that Bitcoin could manage relative to gold.
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