Gold Bullion Versus The Miners

The question most gold bugs are probably asking themselves right now is this: How high must gold bullion go before the gold-stock ETFs stage their own key breakouts and rally alongside gold?

The answer, quite simply, is: Higher than the price is today. Disappointment and surprise are part of investing. 

So is diversification, and at the 2008 lows, I was emphatic that the US stock market had to be bought. Now, I recommend investors lighten up but don’t go 100% to the sidelines.

Stocks, bonds, real estate, and gold are assets. They are not casino chips. Buy them modestly on price weakness and sell them modestly into price strength. It’s really that simple.

(Click on image to enlarge)

Gold looks fabulous. It closed above the September highs yesterday and that’s significant.

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weekly chart

The big picture for gold, both technically and fundamentally, is superb.

The Coronavirus is a serious matter, but it’s simply the newest of many positive drivers for gold. Government debt is the big one. Demographics in the West (and in China) is also a concern.

Every month, more big-name money managers are buying gold as a respected asset, and rightly so!

It’s important for young investors to stay away from people who have a negative view of gold. Keep a positive attitude and everything will be fine.

India’s budget announcement is just days away and the gold industry is again pushing the government to cut its draconian import tax.

I’m adamant that the tax is the main cause of the decline in GDP growth, from almost 10% to under 5%. That’s because the tax kills the spirit of Indian citizens. Once an entrepreneur’s spirit breaks, productivity inevitably declines.

Prime Minister Modi is under substantial pressure to reverse the economic decline, so he’s likely to be more open to reducing the duty than in previous years.  Western gold bugs should cheer for a duty cut, but don’t count that egg until it hatches.

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