Why gold is a good investment Going Forward

Originally published 11/15/2003, Updated March 2023

Before we delve into the subject of Why gold is a good investment: let us first consider the chart presented below. A cursory examination reveals that the stock’s value remained stagnant from 95 to 96. However, a close inspection shows that it underwent a remarkable 500% ascent from a modest 50 cents to an impressive high of around 2.50 during the early months of 1996. Regrettably, by August of the same year, it had surrendered a substantial portion of these earnings.

The stock had plummeted to approximately 96 cents, and by December of 1996, it had surrendered practically all its profits, languishing at a mere 64 cents. From then on, the stock lingered in this range, peaking at 1.80 and never reaching the high it had attained in 1996.

Notably, most technical analysts would have deemed this failure to breach the previous high as a negative indicator and advised you to offload this stock. One can wager that most investors deserted the stock, declaring it dead, given that it had failed to surpass its previous highs and was destined for oblivion.

Why gold is a good investment: The Story Continues

Following a year of sideways activity, the stock finally sprang to life in 1998, soaring from 1.50 in December of 1997 to a high of about 10.90 in August 1998. However, this joy was short-lived, and the stock experienced a painful 50% drop, hitting a low of 5 dollars in April of 1998.

Yet, it soon bounced back with a vengeance, soaring without interruption until it peaked at a staggering 71 dollars in August of 1999. A gut-wrenching correction followed as the stock plummeted 50% to approximately 37 dollars in June of 1999, reaching a lower high in July at 63 before plummeting to a lower low of 35 in August 1999.

Most technical analysts would have interpreted this as a sign that the stock was headed for a downturn, but they were wrong. Instead, we entered a super hyper bull phase, and the stock soared to a high of 162 on 1/04/2000. Even when the major uptrend was clearly broken in 2000, the penguins, who fancied themselves, expert analysts, clamoured that it was time to buy on the dip.

They continued to do so even after the stock made a much lower high of 135 in March of 2000. These same individuals who had earlier declared the stock dead in 96, 97, 98, and even 99 were now pounding the table, urging people to buy on the dip. However, history has shown that following the crowd is often a losing proposition, and the so-called experts are frequently wrong.

Do or Die: The Choice Is Clear

Suppose you had invested in this stock during its first run-up and made a 500% gain. In that case, you may have been delighted with yourself and may have even considered bailing out on the advice of an advisor who urged you to hold on to the position for a more extended period.

However, if you take a moment to reflect on what you missed out on, you may have found yourself weeping silently until the wee hours of the morning. By selling too soon, you may have relinquished a gain of over 101,212%, from the stock’s low of approximately 16 cents to its high of 162 dollars (admittedly, most people would not have purchased the stock at such a low price). Nonetheless, even if you had bought it when it was trading in the range of 1.50-1.62, which lasted for over a year, you could have made a gain of 10,000%. So, ask yourself this question, did you genuinely win? Suddenly, that 500% gain appears to be quite paltry. Why gold is a good investment? The dollar is about to put in a multi-year top, investors view it as an ancient relic and Inflation is just waiting to roar.

Most Investors Fold as they are not Bold.

Verily, the ones who held on until the very end and sold at the opportune moment have reaped the greatest rewards, albeit their numbers are few and far between, ranging from a mere 2 to 5 per cent. Furthermore, those who timed the market with precision, navigating its ebbs and flows with deftness and skill, comprise a scant 0.5 to 2 per cent of the populace, and the true figure likely lies closer to 1 per cent.

Now let’s look at the second stock.

Ladies and Gentlemen: If you bail out now, you will miss out on the biggest gains yet to come. The history of these types of stocks has shown that those who have the patience to hold on and weather the storms are the ones who reap the most significant rewards. Don’t be swayed by the short-term ups and downs; focus on the big picture and remember that investing in gold is a long-term game. So hold on tight and don’t let go because the future of this stock is bright, and the rewards will be immense for those who have the fortitude to stick it out.

A Trip down Memory Lane

For thine records, the initial stock did bear the name of CMGI, whilst the latter was of a gold nature, bearing the moniker GSS.

It doth come to pass that the market for gold is fraught with manipulation, to a degree of one hundredfold, if not more, than that of the internet market. Hence, it requires a greater measure of scrutiny and analysis than the era of the dot-com did ever call for. Moreover, the market for GOLD doth hold yet another stage, that of mass fear and panic.

The choice before thee is plain, whether to heed the penguins that doth urge thee to abandon ship presently and to purchase all else or whether to turn a deaf ear unto their cries and to gaze upon the charts, which doth hold the truth (in the form of long-term charts). The trend shall forever be thy companion; let it not escape thy memory.

Articles on why Gold is a good investment

“Gold as Inflation Hedge: The Ultimate Guide” by U.S. Money Reserve https://www.usmoneyreserve.com/blog/gold-as-inflation-hedge/
“Why Gold is a Hedge Against Inflation” by Investopedia https://www.investopedia.com/articles/basics/08/gold-as-inflation-hedge.asp
“How Gold Can Act as an Inflation Hedge” by The Balance https://www.thebalance.com/how-gold-can-act-as-an-inflation-hedge-4170606
“The Role of Gold in an Inflationary Environment” by World Gold Council https://www.gold.org/goldhub/research/role-gold-inflationary-environment
“Why Gold is a Classic Inflation Hedge” by Kiplinger https://www.kiplinger.com/investing/601893/why-gold-is-a-classic-inflation-hedge

Why gold is a good investment: What To Expect?