Do Investors need to own Gold; The answer might surprise you

You don’t purchase insurance on your home because you know your home is going to burn down. You purchase it because in the event it does burn down, you are protected.  Sol Palha

 Do Investors need to own Gold; The answer might surprise you

Central bankers have embarked on an extremely risky endeavour; they have maintained rates low for an unusually lengthy period and now they are embracing the era of negative rates. Low rates foster speculation and we know that when people speculate things don’t end well. Prudence dictates that one have a core position in precious metals; Gold, Silver or Palladium. You don’t purchase insurance on your home because you know your home is going to burn down. You purchase it because in the event it does burn down, you are protected.  Hence, Gold bullion should be viewed along the same lines

Some interesting stocks in the Gold sector

There are several stocks we like, but at the moment we are neutral on Gold stocks as our trend indicator has not turned bullish. However, for those who are not familiar with technical analysis or mass psychology, the following stocks are good long-term plays.  Gold would need to put in higher lows for us to start to turn bullish on Gold stocks, so far Gold bullion has put in a series of new lows.

DRD Is a more volatile in nature but it tends to move rapidly and in tandem with Gold. It’s a mid-tier Unhedged Gold producer.  It has a quarterly earnings growth rate of 805% and a forward P/E of only 5.8. It is also 5th in the Gold sector regarding relative strength.

SBGL  is the 3rd in terms of relative strength, it sports a forward P/F of 7.4, has a decent quarterly revenue growth rate of 11.8% and cash flow of $260 million.

HMY sports a forward P/E of 8.8, has nice quarterly revenue growth rate of 23%, positive operative cash of $178 million and it has been in a strong uptrend since January.

We would wait for a pullback before deploying new capital into any of the stocks mentioned above, as they are trading in the overbought ranges and need to let out some steam.

Final Words

Until the M2  (Velocity of money) starts to trend upwards or Gold closes above $1350 on a monthly basis,  every rally in Gold will fail.  Subscribe to our free newsletter to keep abreast of the latest developments. Mass Psychology knows no limits, utilized properly it can spot trends in any market and we can show how to protect yourself and benefit from these new trends.

Other Articles Of Interest:

Oops we are doing it again; Subprime Auto Loan Crisis party has begun (12 April)

Federal Reserve’s Game plan; create a new class of slaves (12 April)

China dumping worthless dollars & buying Gold bullion  (9 April)

Wall Street Mafia Utilize Psychological War Fare to Con the masses  (7 April)

Now this is what you should not be doing, he was wrong in 2013, 2014, 2015 and before that; he will continue to get it wrong going forward. Gold markets are not ruled by logic

 

  • Truthseeker

    So, in other words, there is no gold rally until there is one. Thanks for the tip.

  • Tactical Investor

    Gold has not held up well given the amount of new money the world has created it since it topped out in 2011. In fact, we bailed out at the top. Having said that, we have always stated that the current pullback was a good time to add too or open new positions in Gold bullion. Hence the comment in the article

    “Prudence dictates that one have a core position in precious metals; Gold, Silver or Palladium.”

    Gold has hardly rallied in 2016 when you compare it to oil for example, which we turned bullish on in Feb of 2016. Yet many of the stocks are trading at extremely lofty levels that would be more reflective of Gold trading in the 1650-1700 ranges.

    By the way we opened bullion positions in all three, but we are not going to go overboard.

  • EarlyRetirementNow

    Gold stocks? Why not. High Risk high reward.
    Physical gold has yielded less than 1% real return annualized over the last 145 years. Silver has lost value in real terms since 1871 (not a typo EIGHTEEN seventy one):
    https://earlyretirementnow.com/2016/06/29/gold-vs-paper-money/