What’s going on in the gold market?

If you follow the markets at all, and, in particular, gold, you will have likely seen that the price of gold is higher but the price of the companies that mine it are not.

I hear people throwing out various reasons as to why this is the case. Many people think they can predict prices by looking at charts and say we are heading for a major gold correction. I say ‘who knows?’ No one can with absolute certainty predict what billions of people will decide to buy or sell tomorrow. Even the people themselves don’t know what they will buy or sell tomorrow.

What I do know is that as the price of gold is close to $1300 and some of the producers of gold are selling cheaply compared to when the price of gold was lower. When many of these company’s financials hit the news in the coming quarter, they will show higher earnings due to the higher price of gold.

Now if gold falls in price, these companies will likely get whacked too.

Remember no one knows what will happen over the next few days and weeks. But what we do know is that historically these gold companies are selling cheap compared to many other asset classes.

I think we could have a sell-off in the gold price and the mining stocks. But, I also think that the mining stocks are cheap relative to the price of gold.

So, what do you do think?

It’s your choice. I’m preparing for both. I plan on adding to some stocks I already own but I’m also ready in cash in case of a pull back.

One thing I have noticed over the years with regards to speculating is that you need to make your own choices and you need to own that choice. Take other people’s advice with a pinch of salt.

Listen to all and follow none.

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